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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarterly period ended July 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___ to ____
Commission File Number 0-13907
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SYNOVIS LIFE TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
State of Incorporation: Minnesota
I.R.S. Employer Identification No.: 41-1526554
Principal Executive Offices: 2575 University Ave. W.
St. Paul, Minnesota 55114
Telephone Number: (651) 796-7300
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]
On September 8, 2004, there were 11,573,539 shares of the registrant's common
stock, par value $.01 per share, outstanding.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SYNOVIS LIFE TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED JULY 31, 2004 AND 2003
(in thousands, except per share data)
Three Months Ended Nine Months Ended
July 31, July 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Net revenue $ 15,145 $ 15,279 $ 40,407 $ 43,046
Cost of revenue 9,593 8,551 23,592 24,309
---------- ---------- ---------- ----------
Gross margin 5,552 6,728 16,815 18,737
Operating expenses:
Selling, general and administrative 4,076 3,604 12,324 10,585
Research and development 1,129 903 2,933 2,817
Other 153 - 153 -
---------- ---------- ---------- ----------
Operating income 194 2,221 1,405 5,335
Other income, net 86 (2) 211 (3)
---------- ---------- ---------- ----------
Income before provision for income taxes 280 2,219 1,616 5,332
Provision for income taxes 93 756 527 1,829
---------- ---------- ---------- ----------
Net income $ 187 $ 1,463 $ 1,089 $ 3,503
========== ========== ========== ==========
Earnings per share:
Basic $ 0.02 $ 0.15 $ 0.09 $ 0.36
========== ========== ========== ==========
Diluted $ 0.02 $ 0.14 $ 0.09 $ 0.34
========== ========== ========== ==========
The accompanying notes are an integral part of the interim unaudited
consolidated condensed financial statements.
2
SYNOVIS LIFE TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
AS OF JULY 31, 2004 AND OCTOBER 31, 2003
(in thousands, except share and per share data)
July 31, October 31,
2004 2003
---------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 14,015 $ 44,102
Short-term investments 26,959 -
Accounts receivable, net 7,748 6,541
Inventories 10,458 10,849
Deferred income taxes 738 738
Other 1,548 1,153
---------- -----------
Total current assets 61,466 63,383
Property, plant and equipment, net 13,391 10,559
Goodwill 4,890 4,843
Other intangible assets, net 1,983 2,049
Other assets 11 11
---------- -----------
Total assets $ 81,741 $ 80,845
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,638 $ 2,051
Accrued expenses 3,359 3,852
Current maturities of long-term obligations 77 281
---------- -----------
Total current liabilities 5,074 6,184
Deferred income taxes 554 554
Long-term obligations 5 45
---------- -----------
Total liabilities 5,633 6,783
---------- -----------
Shareholders' equity:
Preferred stock: authorized 5,000,000 shares of $.01 par value;
none issued or outstanding at July 31, 2004 and
October 31, 2003 - -
Common stock: authorized 20,000,000 shares of $.01 par value;
issued and outstanding, 11,540,539 at July 31, 2004 and
11,435,638 at October 31, 2003 115 114
Additional paid-in capital 70,912 69,956
Retained earnings 5,081 3,992
---------- -----------
Total shareholders' equity 76,108 74,062
---------- -----------
Total liabilities and shareholders' equity $ 81,741 $ 80,845
========== ===========
The accompanying notes are an integral part of the interim unaudited
consolidated condensed financial statements.
3
SYNOVIS LIFE TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED JULY 31, 2004 AND 2003
(in thousands)
Nine Months Ended
July 31,
2004 2003
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,089 $ 3,503
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of property, plant and equipment 1,654 1,393
Amortization of intangible assets 223 212
Tax benefit from exercise of stock options 283 -
Other - 40
Changes in operating assets and liabilities:
Accounts receivable (1,207) (1,361)
Inventories 391 (3,965)
Other current assets (395) (342)
Accounts payable (413) 963
Accrued expenses (493) 1,070
-------- --------
Net cash provided by operating activities 1,132 1,513
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of property, plant and equipment 76 -
Purchase of property, plant and equipment (4,562) (3,605)
Investments in patents and trademarks (157) (104)
Purchases of short-term investments (65,835) -
Redemptions of short-term investments 38,876 -
Other (47) (26)
-------- --------
Net cash used in investing activities (31,649) (3,735)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds related to stock-based compensation plans 674 1,341
Repayment of capital lease obligations (167) (219)
Repayments of other long-term obligations (77) (50)
-------- --------
Net cash provided by financing activities 430 1,072
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (30,087) (1,150)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 44,102 7,866
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 14,015 $ 6,716
======== ========
The accompanying notes are an integral part of the interim unaudited
consolidated condensed financial statements.
4
SYNOVIS LIFE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
(1) BASIS OF PRESENTATION:
The accompanying unaudited consolidated condensed financial statements of
Synovis Life Technologies, Inc. ("Synovis" or the "Company") have been prepared
by the Company in accordance with generally accepted accounting principles
applied in the United States for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. For further
information, refer to the consolidated financial statements and notes thereto
included in the Company's Annual Report to Shareholders and incorporated by
reference in the Company's Form 10-K for the year ended October 31, 2003.
In the opinion of management, all adjustments considered necessary, consisting
only of items of a normal recurring nature, for a fair presentation of the
consolidated financial position, results of operations and cash flows of the
Company as of and for the interim periods presented have been included.
Operating results and cash flows for the three and nine months ended July 31,
2004 are not necessarily indicative of the results of operations and cash flows
of the Company that may be expected for the year ending October 31, 2004.
(2) SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION:
July 31, October 31,
2004 2003
------------ ------------
Inventories:
Raw materials .................................... $ 2,220,000 $ 2,596,000
Work in process .................................. 4,928,000 3,365,000
Finished goods ................................... 3,310,000 4,888,000
------------ ------------
$ 10,458,000 $ 10,849,000
============ ============
(3) GOODWILL AND OTHER INTANGIBLE ASSETS:
The following table summarizes the Company's amortized intangible assets:
As of July 31, 2004 As of October 31, 2003
------------------------------- -------------------------------
Gross Carrying Accumulated Gross Carrying Accumulated
Amount Amortization Amount Amortization
-------------- ------------ -------------- ------------
Amortized intangible assets:
Patents and trademarks $ 1,225,000 $ 439,000 $ 1,068,000 $ 381,000
Developed technology 1,102,000 342,000 1,102,000 259,000
Noncompete agreements 1,050,000 613,000 1,050,000 531,000
-------------- ------------ -------------- ------------
Total $ 3,377,000 $ 1,394,000 $ 3,220,000 $ 1,171,000
============== ============ ============== ============
Amortization expense was $223,000 for the nine months ended July 31, 2004 and
$212,000 for the nine months ended July 31, 2003. The estimated amortization
expense for each of the next five years is approximately $297,000 per year,
based on the Company's present intangible assets.
5
SYNOVIS LIFE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
The following is a summary of goodwill by business segment:
Interventional business Surgical business Total
----------------------- ----------------- -----------
Goodwill as of:
July 31, 2004 $ 4,093,000 $ 797,000 $ 4,890,000
October 31, 2003 $ 4,093,000 $ 750,000 $ 4,843,000
No impairment losses were incurred during the nine months ended July 31, 2004.
(4) STOCK BASED COMPENSATION:
The following table demonstrates the effect on net income and earnings per
share, net of taxes, as if the fair value based method of accounting had been
applied to all outstanding and unvested stock compensation awards in each
period:
Three Months Ended Nine Months Ended
July 31, July 31,
2004 2003 2004 2003
-------------- -------------- -------------- --------------
Net income as reported $ 187,000 $ 1,463,000 $ 1,089,000 $ 3,503,000
Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of related tax
effects 214,000 165,000 465,000 366,000
-------------- -------------- -------------- --------------
Pro forma net income (loss) $ (27,000) $ 1,298,000 $ 624,000 $ 3,137,000
============== ============== ============== ==============
Basic earnings (loss) per share:
As reported 0.02 0.15 0.09 0.36
Pro forma (0.00) 0.13 0.05 0.33
Diluted earnings (loss) per share:
As reported 0.02 0.14 0.09 0.34
Pro forma (0.00) 0.12 0.05 0.30
As of July 31,
2004 2003
-------------- --------------
Options outstanding .............................. 962,955 1,092,574
Range of exercise prices ......................... $2.00 - $25.07 $2.00 - $24.23
Range of expiration dates ........................ 2004 - 2014 2003 - 2011
Non-vested stock awards .......................... - 2,233
6
SYNOVIS LIFE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
(5) EARNINGS PER SHARE:
The following table sets forth the presentation of shares outstanding used in
the calculation of basic and diluted earnings per share:
Three Months Ended Nine Months Ended
July 31, July 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Denominator for basic earnings per share -
weighted-average common shares 11,532,167 9,819,841 11,496,058 9,706,747
Effect of dilutive securities:
Shares associated with deferred
compensation - 2,233 - 2,233
Shares associated with option plans 343,470 697,203 505,716 598,924
---------- ---------- ---------- ----------
Potential dilutive common shares 343,470 699,436 505,716 601,157
---------- ---------- ---------- ----------
Denominator for diluted earnings per share -
weighted-average common shares and dilutive
potential common shares 11,875,637 10,519,277 12,001,774 10,307,904
========== ========== ========== ==========
Options excluded from EPS calculation because
exercise prices are greater than
the average market price of
the Company's common stock 59,647 - 31,810 -
========== ========== ========== ==========
(6) SEGMENT INFORMATION:
The following table presents certain financial information by business segment
for the three and nine months ended July 31, 2004 and 2003. Operating income for
the surgical business reflects $153,000 in other operating expenses for the
three and nine months ended July 31, 2004.
Three Months Ended Nine Months Ended
July 31, July 31,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Net revenue:
Surgical business $ 6,950,000 $ 6,608,000 $ 20,250,000 $ 19,004,000
Interventional business 8,195,000 8,671,000 20,157,000 24,042,000
------------ ------------ ------------ ------------
Total $ 15,145,000 $ 15,279,000 $ 40,407,000 $ 43,046,000
============ ============ ============ ============
Operating income (loss):
Surgical business $ 623,000 $ 1,431,000 $ 2,692,000 $ 3,633,000
Interventional business (429,000) 790,000 (1,287,000) 1,702,000
------------ ------------ ------------ ------------
Total $ 194,000 $ 2,221,000 $ 1,405,000 $ 5,335,000
============ ============ ============ ============
7
SYNOVIS LIFE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
(7) SHAREHOLDERS' EQUITY:
During the nine months ended July 31, 2004, stock options for the purchase of
86,699 shares of the Company's common stock were exercised at prices between
$2.59 and $12.20 per share. During the nine months ended July 31, 2003, stock
options for the purchase of 274,342 shares of the Company's common stock were
exercised at prices between $2.09 and $12.21 per share.
(8) SHORT-TERM INVESTMENTS:
During the nine months ended July 31, 2004, the Company purchased $65,835,000 of
highly liquid debt securities with maturities greater than three months and
redeemed at maturity $38,876,000 of highly liquid debt securities with
maturities greater than three months, resulting in net holdings of $26,959,000
of such securities at the end of the period. The investments are classified and
accounted for as being held-to-maturity, and are carried at amortized cost.
(9) SHAREHOLDER LITIGATION
Between June and August 2004, five lawsuits were filed against the Company and
certain of its executive officers in the United States District Court for the
District of Minnesota by individual shareholders who seek to represent a class
of purchasers of the Company's common stock during the period from October 16,
2003 and May 18, 2004. The complaints generally allege that the defendants
violated the Securities Exchange Act of 1934 by issuing false or misleading
statements about the Company's business and prospects, which artificially
inflated the price of the Company's securities. No damages have been specified.
The Company believes that the lawsuits have no factual basis and intends to
vigorously defend the actions. Two related actions brought by individual
shareholders who seek to represent the Company derivatively have also been filed
in United States District Court for the District of Minnesota. Those lawsuits
allege that certain officers and the Company's directors violated their
fiduciary duties to the Company. The board has also received a demand to
commence a claim against certain directors and officers and is in the process of
creating a special litigation committee to address that demand. The Company is
unable to evaluate the likelihood of prevailing in these cases at this early
stage of the proceedings. The Company has incurred legal expenses and expects to
incur additional legal expenses related to these suits in the future,
potentially up to $500,000, the amount of deductible under the insurance policy
the Company believes provides coverage for such lawsuits.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements:
The disclosures in this Form 10-Q may include "forward-looking statements" made
under the Private Securities Litigation Reform Act of 1995. Without limiting the
foregoing, words such as "should", "could", "may", "will", "expect", "believe",
"anticipate", "estimate" or "continue" or the negative or other variations
thereof or comparable terminology are intended to identify forward-looking
statements. All forward-looking statements in this document are based on
information available to the Company as of the date hereof, and the Company
assumes no obligation to update any forward-looking statements. You are advised,
however, to consult any future disclosures we make on related subjects in future
filings with the SEC. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results to
differ materially from any future results, performance or achievements expressed
or implied by such forward-looking statements. Such factors may include, among
others, the "important factors" listed from time to time in the Company's
filings with the Securities and Exchange Commission, such as the year-end Annual
Report on Form 10-K for the year ended October 31, 2003 as well as risks related
to the ongoing shareholder litigation as discussed in Part II, Item 1 of this
Quarterly Report on Form 10-Q.
OVERVIEW
Synovis Life Technologies, Inc. is a diversified medical device company engaged
in developing, manufacturing and marketing products for the surgical and
interventional treatment of disease. Our business is conducted in two reportable
segments, the surgical business and the interventional business, with
segmentation based upon the similarities of the underlying business operations,
products and markets of each.
Our surgical business develops, manufactures and markets implantable biomaterial
products, devices for microsurgery and surgical tools, all designed to reduce
risk and/or facilitate critical surgeries, leading to better patient outcomes
and/or lower costs.
Our interventional business manufactures components and devices used primarily
in cardiac rhythm management, neurostimulation, and interventional vascular
procedures, including micro-wire components such as fixation helices, conducting
coils, stylets, and guidewires, as well as other complex polymer and machined
components.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED JULY 31, 2004 WITH THE THREE MONTHS ENDED
JULY 31, 2003
The following table summarizes our condensed consolidated operating results for
the quarter ended:
July 31, 2004 July 31, 2003
$$$ % $$$ %
------- ----- ------- -----
Summary of Operating Results (in thousands)
Net revenue $15,145 100.0% $15,279 100.0%
Cost of revenue 9,593 63.3 8,551 56.0
------- ----- ------- -----
Gross margin 5,552 36.7 6,728 44.0
Selling, general and administrative 4,076 26.9 3,604 23.6
Research and development 1,129 7.5 903 5.9
Other operating expenses 153 1.0 - 0.0
------- ----- ------- -----
Operating expenses 5,358 35.4 4,507 29.5
------- ----- ------- -----
Operating income $ 194 1.3% $ 2,221 14.5%
======= ===== ======= =====
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
Net revenue decreased 1% to $15,145,000 in the third quarter of fiscal 2004
compared with $15,279,000 in the third quarter of fiscal 2003. Our consolidated
operating income decreased 91% to $194,000 in the third quarter of fiscal 2004
from $2,221,000 in the prior year quarter. Consolidated net income decreased 87%
in the current quarter to $187,000, or two cents per diluted share, from
$1,463,000, or fourteen cents per diluted share, in the same quarter of fiscal
2003.
The following table summarizes our condensed consolidated operating results by
business segment for the quarter ended:
July 31,
Business Segment Information (in thousands) 2004 2003
-------- --------
Net revenue
Surgical business $ 6,950 $ 6,608
Interventional business 8,195 8,671
-------- --------
Total $ 15,145 $ 15,279
Gross margin
Surgical business $ 4,200 $ 4,332
Interventional business 1,352 2,396
-------- --------
Total $ 5,552 $ 6,728
Gross margin percentage
Surgical business 60% 66%
Interventional business 16% 28%
Total 37% 44%
Operating income (loss)
Surgical business $ 623 $ 1,431
Interventional business (429) 790
-------- --------
Total $ 194 $ 2,221
Our surgical business generated net revenue of $6,950,000 in the second quarter
of fiscal 2004, a 5% increase from $6,608,000 in the year-ago quarter. The
increase in surgical business revenue was primarily due to increased volumes of
product sold.
Worldwide net revenue from the sales of Peri-Strips(R) was $3,197,000 in the
third quarter of fiscal 2004, a one percent increase compared to the third
quarter of fiscal 2003 and a 15 percent sequential increase compared to the
second quarter of fiscal 2004. Peri-Strips are used to reduce risks and improve
patient outcomes in several procedures, notably gastric bypass surgery. Gastric
bypass is a surgical treatment for morbid obesity, which affects an estimated 23
million Americans. While Peri-Strips revenue gained momentum throughout the
third quarter of fiscal 2004, we believe it is too early to predict a continuing
trend due to several factors within the gastric bypass market which have not
stabilized. These factors appear to continue to affect our business, and
include: capacity constraints of many surgical practices that perform gastric
bypass, the development of centers of excellence driven by the American Society
of Bariatric Surgeons ("ASBS") and insurance providers encouraging patients
towards such centers which specialize in gastric bypass surgery and have an
expected lower rate of complications, certain hospitals electing not to support
gastric bypass programs, and the concerns of some insurers that offer either
health care or liability coverage. A new competitive product was introduced at
the ASBS meeting in June 2004, but we believe this product has not yet had any
discernable effect on Peri-Strips sales. Also during the third quarter, the
Centers for Medicare and Medicaid Services announced that they now consider
obesity to be an illness, meaning they will evaluate obesity treatments to reach
conclusions about their effectiveness and potential coverage.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
Revenue from other surgical business product lines, which include among others
Tissue-Guard, Veritas(R) and Microsurgery, was $3,753,000 in the third quarter
of fiscal 2004, an increase of $316,000 or 9% compared to the third quarter of
fiscal 2003. Tissue-Guard revenue increased $169,000 or 9% to $2,068,000 in the
third quarter of fiscal 2004. Veritas revenue increased $73,000 or 55% to
$206,000 during the third quarter of fiscal 2004. Revenue from our Microsurgery
product line increased $71,000 or 21% to $405,000 in the third quarter of fiscal
2004, driven by an increase in sales of the Microvascular Anastomotic Coupler
System ("Coupler"). The Coupler is a device used by microsurgeons to connect
extremely small arteries or veins, without sutures, quickly, easily and with
consistently excellent results.
Our interventional business customers predominantly operate in the cardiac
rhythm management ("CRM") market which includes the following three market
segments: pacing, implantable cardioverter defibrillation ("ICD") and congestive
heart failure ("CHF"). For each of these market segments, we produce conductor
and shocking coils for pacing and defibrillator leads, helices for active
fixation leads, and stylets used to deliver and place all types of leads.
We also serve customers in the neurostimulation market, where we supply
conductor coils for stimulation leads as well as stylets to deliver the leads,
and the interventional vascular market, where we produce core wires, coils and
guidewire assembly components. Other customers of our interventional business
operate in numerous markets and our services to these customers include polymer
injection molding, computer numeric control ("CNC") machining, micro machining
and product development services for interventional devices.
The following table summarizes our interventional business net revenue by market
for the quarter ended:
July 31,
Interventional Business Net Revenue (in thousands) 2004 2003
-------- --------
Cardiac rhythm management $ 5,985 $ 6,784
Other 2,210 1,887
-------- --------
Total $ 8,195 8,671
The following table summarizes our interventional business net revenue by
product for the quarter ended:
July 31,
Interventional Business Net Revenue (in thousands) 2004 2003
-------- --------
Coils and helices $ 4,773 $ 4,932
Stylets and other wireforms 2,230 2,597
Machining, molding and tool making 763 572
Other 429 570
-------- --------
Total $ 8,195 $ 8,671
Interventional business net revenue decreased 5% to $8,195,000 in the third
quarter of fiscal 2004 from $8,671,000 in the third quarter of fiscal 2003. The
revenue decrease is due to a continued slowdown in customer orders for CRM
device components. We believe this slowdown in customer orders is due to our
customers' accumulation of inventory in prior periods as a result of lower than
expected demand for their end devices. Third quarter interventional business
revenue increased 15% over the second quarter of fiscal 2004.
Machining, molding and tool making revenue increased 33% in the third quarter of
fiscal 2004 compared to the third quarter of fiscal 2003. This increase is due
to the addition of new customers as well as added capabilities, such as micro
machining and micro molding, which have expanded the scope of services we
provide.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
Our interventional business was recently issued two patents from the U.S. Patent
and Trademark Office - one for a steerable stylet delivery system and another
for an adjustable stiffness stylet delivery system. We expect these technologies
to have applications in site-specific and minimally invasive therapies. In March
2004, our interventional business received clearance from the FDA regarding
510(k) approval for its Navi-Glide(TM) Steerable Stylet ("Navi-Glide"), a
proprietary single-use device intended to enable the physician to define and
vary the curvature of the sytlet during implantation of the cardiac lead,
thereby avoiding the need to remove and recurve the stylet during introduction
of the lead. Our interventional business is moving the Navi-Glide and its
patented steerable technology towards commercialization through our customers,
with any related revenue dependant upon the time required to develop the
technology to our customers' specifications, acceptance by our customers of the
developed technology and market acceptance of the products using this
technology, as well as variability of customer orders.
Our interventional business has customarily experienced variations in revenue
from period to period primarily due to inherent variability in the timing of
customer draws against annual purchase orders. Such variations are difficult to
precisely predict and are expected to continue in the future.
The consolidated gross margin percentage decreased seven percentage points, from
44% to 37%, during the third quarter of fiscal 2004 from the comparable quarter
of fiscal 2003. Factors which affect the consolidated gross margin include the
relative revenue of each business unit, product mix, volume and other production
activities. Gross margins in our interventional business decreased to 16% in the
third quarter of fiscal 2004 from 28% in the prior year. The 12 percentage point
decrease in interventional gross margins primarily reflects two factors. First,
seven points of the margin decrease is the result of an adjustment of overhead
rates attributable to lower production volumes and reduced labor hours, directly
related to lower than planned revenue. Second, manufacturing variances resulted
in five points of the margin decrease. Factors which resulted in manufacturing
variances include: standard costs that are not reflective of current
manufacturing costs, labor efficiencies, quality of raw materials and the
training costs of new manufacturing staff and processes. Gross margins for our
surgical business decreased six percentage points in the third quarter of fiscal
2004, from 66% to 60%. The decrease is primarily due to lower utilization of
manufacturing resources and higher fixed production costs, which thereby
resulted in higher overhead rates associated with fiscal 2004 manufacturing
activities.
Selling, general and administrative ("SG&A") expense during the third quarter of
fiscal 2004 increased $472,000, or 13%, to $4,076,000 from $3,604,000 in the
comparable fiscal 2003 quarter. As a percentage of net revenue, SG&A expense was
27% in the third quarter of fiscal 2004 as compared to 24% in the prior year
quarter. Planned increases in regulatory and clinical expenses, facility
expansion costs and marketing efforts, combined with lower revenue levels are
the primary reasons for this percentage increase.
Research and development ("R&D") expense increased 25% during the third quarter
of fiscal 2004 to $1,129,000 from $903,000 during the prior year quarter. As a
percentage of revenue, R&D expense was 7% in the third quarter of fiscal 2004 as
compared to 6% in the prior year quarter. In both business units, R&D expense
fluctuates from quarter to quarter based on the timing and progress through
external parties of the projects, and the timing of such expense will continue
to be influenced primarily by the number of projects and the related R&D
personnel requirements, development and regulatory approval path, expected
costs, timing and nature of those costs for each project.
During the third quarter of fiscal 2004 we incurred $153,000 of other operating
expenses, which were recorded within our surgical business. We incurred $133,000
of expenses related to our consideration of a significant acquisition, which was
terminated for a variety of reasons. The remaining $20,000 was for legal fees
incurred through July 31, 2004 pertaining to recently filed lawsuits against the
Company which allege that the Company and certain of its executive officers
violated the Securities Exchange Act of 1934 by issuing false or misleading
statements about the Company's business and prospects, which artificially
inflated the price of the Company's securities. We believe that the lawsuits
have no factual basis and intend to vigorously defend the actions. However
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
we expect to incur additional legal expenses related to these suits in the
future, potentially up to $500,000, the deductible under the insurance policy
the Company believes provides coverage for such lawsuits.
Operating income decreased 91% in the third quarter of fiscal 2004, to $194,000
from $2,221,000 in the third quarter of fiscal 2003. Third quarter operating
income for our surgical business, after inclusion of the other operating costs
noted above, decreased to $623,000 in fiscal 2004 compared with $1,431,000 in
fiscal 2003. Operating income for our interventional business decreased from
operating income of $790,000 in the third quarter of 2003 to an operating loss
of $429,000 in the third quarter of 2004.
We recorded a provision for income taxes of $93,000 in the third quarter of
fiscal 2004, at an effective tax rate of 33.2%, as compared to $756,000 at an
effective tax rate of 34.1% in the second quarter of fiscal 2003.
Comparison of the Nine Months Ended July 31, 2004 with the Nine Months Ended
July 31, 2003
The following table summarizes our condensed consolidated operating results for
the nine months ended:
July 31, 2004 July 31, 2003
Summary of Operating Results (in thousands) $$$ % $$$ %
------- ----- ------- -----
Net revenue $40,407 100.0% $43,046 100.0%
Cost of revenue 23,592 58.4 24,309 56.5
------- ----- ------- -----
Gross margin 16,815 41.6 18,737 43.5
Selling, general and administrative 12,324 30.5 10,585 24.6
Research and development 2,933 7.2 2,817 6.5
Other operating expenses 153 0.4 - 0.0
------- ----- ------- -----
Operating expenses 15,410 38.1 13,402 31.1
------- ----- ------- -----
Operating income $ 1,405 3.5% $ 5,335 12.4%
======= ===== ======= =====
Net revenue decreased 6% to $40,407,000 in the first nine months of fiscal 2004
compared with $43,046,000 in the first nine months of fiscal 2003. Our
consolidated operating income decreased 74% to $1,405,000 in the first nine
months of fiscal 2004 from $5,335,000 in the prior year period. Consolidated net
income decreased 69% in the first nine months of fiscal 2004 to $1,089,000, or
nine cents per diluted share, from $3,503,000, or thirty-four cents per diluted
share, in the same period of fiscal 2003.
The following table summarizes our condensed consolidated operating results by
business segment for the nine months ended:
July 31,
Business Segment Information (in thousands) 2004 2003
---------- ----------
Net revenue
Surgical business $ 20,250 $ 19,004
Interventional business 20,157 24,042
---------- ----------
Total $ 40,407 $ 43,046
Gross margin
Surgical business $ 12,903 $ 12,290
Interventional business 3,912 6,447
---------- ----------
Total $ 16,815 $ 18,737
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
Gross margin percentage
Surgical business 64% 65%
Interventional business 19% 27%
Total 42% 44%
Operating income (loss)
Surgical business $ 2,692 $ 3,633
Interventional business (1,287) 1,702
---------- ----------
Total $ 1,405 $ 5,335
Our surgical business generated net revenue of $20,250,000 in the first nine
months of fiscal 2004, a 7% increase from $19,004,000 in the same period of
fiscal 2003. The increase in surgical business revenue was primarily due to
increased volumes of product sold.
Worldwide net revenue from the sales of Peri-Strips(R) increased $410,000 or 5%
to $9,078,000 in the first nine months of fiscal 2004, from $8,668,000 in the
first nine months of fiscal 2003. The growth rate of Peri-Strips revenue in the
first nine months of fiscal 2004 is lower than in previous periods due to
several factors within the gastric bypass market: capacity constraints of many
surgical practices that perform gastric bypass, the development of centers of
excellence driven by the ASBS and insurance providers encouraging patients
towards such centers which specialize in gastric bypass surgery and have an
expected lower rate of complications, certain hospitals electing not to support
gastric bypass programs, concerns of some insurers that offer either health care
or liability coverage and the impact of new competition in the first quarter of
fiscal 2004.
Revenue from other surgical product lines, which include among others
Tissue-Guard, Veritas(R) and Microsurgery, was $11,172,000 in the first three
quarters of fiscal 2004, an increase of $836,000 or 8% compared to the first
nine months of fiscal 2003. Tissue-Guard revenue increased $486,000 or 9% to
$6,097,000 in the first three quarters of fiscal 2004. Veritas revenue increased
41% to $495,000 during the first nine months of fiscal 2004. Revenue from our
Microsurgery product line increased $298,000 or 30% to $1,289,000 in the first
nine months of fiscal 2004.
The following table summarizes our interventional business net revenue by market
for the nine months ended:
July 31,
Interventional Business Net Revenue (in thousands) 2004 2003
-------- --------
Cardiac rhythm management $ 14,687 $ 18,740
Other 5,470 5,302
-------- --------
Total $ 20,157 $ 24,042
The following table summarizes our interventional business net revenue by
product for the nine months ended:
July 31,
Interventional Business Net Revenue (in thousands) 2004 2003
-------- --------
Coils and helices $ 10,628 $ 13,842
Stylets and other wireforms 6,032 7,483
Machining, molding and tool making 2,115 1,554
Other 1,382 1,163
-------- --------
Total $ 20,157 $ 24,042
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
Interventional business net revenue decreased 16% to $20,157,000 in the first
nine months of fiscal 2004 from $24,042,000 in the first nine months of fiscal
2003. The revenue decrease is due to a material slowdown in customer orders for
CRM device components. We believe this slowdown in customer orders is due to our
customers' accumulation of inventory in prior periods as a result of lower than
expected demand for their end devices.
Machining, molding and tool making revenue increased 36% in the first nine
months of fiscal 2004 compared to the first nine months of fiscal 2003. This
increase is due to the addition of new customers as well as added capabilities,
such as micro machining and micro molding, which have expanded the scope of
services we provide.
Our interventional business has customarily experienced variations in revenue
from period to period primarily due to inherent variability in the timing of
customer draws against annual purchase orders. Such variations are difficult to
precisely predict and are expected to continue in the future.
The consolidated gross margin percentage decreased two percentage points, from
44% to 42%, during the first nine months of fiscal 2004 from the same period of
fiscal 2003. Factors which affect the consolidated gross margin include the
relative revenue of each business unit, product mix, volume and other production
activities. The decreased gross margin is primarily attributable to decreased
gross margins within our interventional business, somewhat offset by revenue mix
between the business units being weighted more heavily towards the surgical
business in the first nine months of fiscal 2004 (50%) compared same period in
fiscal 2003 (44%). Gross margins at our interventional business decreased to 19%
in the first nine months of fiscal 2004 from 27% in the first nine months of
fiscal 2003. The eight percentage point decrease in interventional gross margins
was impacted primarily by two factors. First, five percentage points of the
margin decrease is the result of an adjustment of overhead rates attributable to
lower production volumes and reduced labor hours, directly related to lower than
planned revenue. Second, manufacturing variances resulted in approximately three
points of the margin decrease. Factors which resulted in manufacturing variances
include: standard costs that are not reflective of current manufacturing costs,
labor efficiencies, quality of raw materials and the training costs of new
manufacturing staff and processes. Surgical business gross margins decreased one
percentage point in the first nine months of fiscal 2004 to 64% from 65% in the
same period in fiscal 2003. The decrease is primarily due to higher fixed
production costs, which thereby resulted in higher overhead rates associated
with fiscal 2004 manufacturing activities.
SG&A expense during the first nine months of fiscal 2004 increased $1,739,000,
or 16%, to $12,324,000 from $10,585,000 in the comparable fiscal 2003 period. As
a percentage of net revenue, SG&A expense was 30% in the first nine months of
fiscal 2004 as compared to 25% in the prior year. Planned increases in
regulatory and clinical expenses, facility expansion costs, and marketing
efforts, combined with lower than expected revenue levels are the primary
reasons for this percentage increase.
R&D expense increased 4% during the first nine months of fiscal 2004 to
$2,933,000 from $2,817,000 during the prior year period. As a percentage of
revenue, R&D expense was consistent at 7% in the first nine months of both
fiscal 2004 and fiscal 2003. In both business units, R&D expense fluctuates from
period to period based on the timing and progress through external parties of
the projects, and the timing of such expense will continue to be influenced
primarily by the number of projects and the related R&D personnel requirements,
development and regulatory approval path, expected costs, timing and nature of
those costs for each project.
During the first nine months of fiscal 2004 we incurred $153,000 of other
operating expenses, both recorded within our surgical business. We incurred
$133,000 of expenses related to a significant acquisition opportunity, which was
terminated for a variety of reasons. The remaining $20,000 was for legal fees
incurred through July 31, 2004 pertaining to recently filed lawsuits against the
Company which allege that the Company and certain of its executive officers
violated the Securities Exchange Act of 1934 by issuing false statements about
the Company's business and prospects, which artificially inflated the price of
the Company's securities. We believe that the lawsuits have no factual basis and
intend to vigorously defend the actions. However, we expect to incur additional
legal expenses
15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
related to these suits in the future, potentially up to $500,000, the deductible
under the insurance policy the Company believes provides coverage for such
lawsuits.
Operating income decreased 74% in the first nine months of fiscal 2004, to
$1,405,000 from $5,335,000 in the first nine months of fiscal 2003. Operating
income for our surgical business, after inclusion of the other operating
expenses noted above, decreased 26% to $2,692,000 in the first nine months of
fiscal 2004 compared with $3,633,000 in fiscal 2003. Operating income from our
interventional business decreased from operating income of $1,702,000 in the
first nine months of 2003 to an operating loss of $1,287,000 in the first nine
months of 2004.
We recorded a provision for income taxes of $527,000 in the first nine months of
fiscal 2004, at an effective tax rate of 32.6%, as compared to $1,829,000 at an
effective tax rate of 34.3% in the first nine months of fiscal 2003. The 1.7
percentage point decrease in our estimated effective tax rate in fiscal 2004 is
primarily due to lower levels of pre-tax income combined with expected
comparable levels of R&D tax credits.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $14,015,000 at July 31, 2004 as compared to
$44,102,000 at October 31, 2003, a decrease of $30,087,000. The decrease in cash
is primarily related to our net purchases of $26,959,000 of short-term
investments during the first nine months of fiscal 2004. These investments
represent highly liquid, low-risk commercial paper with maturities greater than
three months. Additional cash used was primarily for investments in capital
equipment and facilities necessary to support our expected future growth. As of
July 31, 2004, the Company had long-term obligations (including current
portions) of $82,000, requiring payments through 2005.
Operating activities provided cash of $1,132,000 in the first nine months of
fiscal 2004, as compared to providing cash of $1,513,000 during the first nine
months of fiscal 2003. Cash decreases related primarily to accounts receivable
(net increase of $1,207,000) and accrued expenses (net decrease of $493,000).
Positive cash impacts were related to net income of $1,089,000, depreciation and
amortization of $1,877,000 and inventory decreases of $391,000.
Investing activities used $31,649,000 of cash during the first nine months of
fiscal 2004, primarily due to the net purchases of $26,959,000 of short-term
investments. Additionally, $4,562,000 in purchases of property, plant and
equipment and leasehold improvements were made during the first nine months of
fiscal 2004. During fiscal 2004, we currently expect to invest up to $6,500,000
in capital assets for various manufacturing, research and development,
information technology and facility projects necessary to support our expected
future growth.
Financing activities provided $430,000 of cash during the first nine months of
fiscal 2004, which consisted of proceeds of $674,000 received upon the exercise
of stock options under our stock option plan, offset by $244,000 in cash
repayments of capital equipment lease and other long-term obligations.
We primarily utilize internally generated cash flow and existing cash balances
to fund the operations of our businesses. We believe existing cash, cash
equivalents and short-term investments, coupled with anticipated cash flows from
operations will be sufficient to satisfy our operating cash requirements for the
next twelve months. This forward-looking statement regarding sufficiency of cash
and cash flows, as well as our long-term cash requirements, will be a function
of a number of variables, including research and development priorities,
acquisition opportunities and the growth and profitability of the business.
CRITICAL ACCOUNTING POLICIES
Cash and Cash Equivalents: Our cash and cash equivalents consist of cash as well
as highly liquid investments with maturities of three months or less. These
investments are carried at cost, which approximates fair value.
16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - CONTINUED
Short-term Investments: Our short-term investments consist of highly liquid debt
securities with maturities greater than three months, and are classified and
accounted for as being held-to-maturity. These investments are carried at
amortized cost.
Goodwill: In accordance with the Statement of Financial Accounting Standards
("SFAS") No. 142, goodwill is no longer amortized, but is reviewed annually for
impairment as of the end of each fiscal year. Please see Note 3 to the unaudited
consolidated condensed financial statements for additional goodwill information.
Other Intangible Assets: Our other intangible assets, primarily developed
technology, patents, trademarks, and non-compete agreements pertaining to
previous business acquisitions, are recorded at cost and are amortized using the
straight-line method over their estimated useful lives, generally seven to 17
years. These assets are reviewed annually for impairment as of the end of each
fiscal year. Please see Note 3 to the unaudited consolidated condensed financial
statements for additional intangible asset information.
Revenue Recognition: Our policy is to ship products to customers on FOB shipping
point terms. We recognize revenue when the product has been shipped to the
customer if there is evidence that the customer has agreed to purchase the
products, delivery and performance have occurred, the price and terms of sale
are fixed and collection of the receivable is reasonably assured. Our sales
policy does not allow sales returns.
Inventories: Inventories, which are comprised of component parts, sub-assemblies
and finished goods, are valued at the lower of first-in, first-out ("FIFO") cost
or market. Overhead costs are applied to sub-assemblies and finished goods based
on annual estimates of production volume and such costs. These estimates are
reviewed and assessed for reasonableness on a quarterly basis.
Derivative Instruments and Hedging Activities: We do not enter into any
derivative instruments or hedging activities. Our policy is to only enter into
contracts that can be designated as normal purchases or sales. In addition,
substantially all of our contracts are negotiated, invoiced and paid in U.S.
dollars.
ADDITIONAL INFORMATION ON SYNOVIS
We are currently subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. As a result, we are required to file periodic
reports and other information with the SEC, such as annual, quarterly and
current reports, proxy and information statements. You are advised to read this
Form 10-Q in conjunction with the other reports, proxy statements and other
documents we file from time to time with the SEC. If you would like more
information regarding Synovis, you may read and copy the reports, proxy and
information statements and other documents we file with the SEC, at prescribed
rates, at the SEC's public reference room at 450 Fifth Street, NW, Washington,
DC 20549. You may obtain information regarding the operation of the SEC's public
reference rooms by calling the SEC at 1-800-SEC-0330. Our SEC filings are also
available to the public free of charge at the SEC's website. The address of this
website is http://www.sec.gov.
In addition, our website also contains a hyperlink to a third-party SEC Filings
website which makes all of our SEC filings, such as annual, quarterly and
current reports and proxy statements, available to the public. The address of
our website is www.synovislife.com. Neither our website nor the information
contained on any hyperlink provided in our website, is intended to be, and is
not, a part of this Quarterly Report on Form 10-Q. We also provide electronic or
paper copies of our SEC filings (excluding exhibits) to any person free of
charge upon receipt of a written request for such filing. All requests for our
SEC filings should be sent to the attention of the Chief Financial Officer at
Synovis Life Technologies, Inc., 2575 University Ave. W, St. Paul, Minnesota
55114.
17
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The principal financial instruments we currently maintain are in cash
equivalents, short-term investments and accounts receivable and long-term
obligations. We believe that the interest rate, credit and market risk related
to these accounts is not significant. We manage the risk associated with these
accounts through periodic reviews of the carrying value for non-collectibility
of assets and establishment of appropriate allowances in connection with our
internal controls and policies. We do not utilize any derivative financial
instruments, derivative commodity instruments, other financial instruments or
engage in any other hedging activities.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we conducted an evaluation,
under the supervision and with the participation of our principal executive
officer and principal financial officer, of our disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation, the
principal executive officer and principal financial officer concluded that our
disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in reports filed or submitted under the Exchange
Act are recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms. There was no
change in our internal control over financial reporting during our most recently
completed fiscal quarter that has materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting.
18
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Between June and August 2004, five lawsuits were filed against the Company and
certain of its executive officers in the United States District Court for the
District of Minnesota by individual shareholders who seek to represent a class
of purchasers of the Company's common stock during the period from October 16,
2003 and May 18, 2004. The complaints generally allege that the defendants
violated the Securities Exchange Act of 1934 by issuing false or misleading
statements about the Company's business and prospects, which artificially
inflated the price of the Company's securities. No damages have been specified.
The Company believes that the lawsuits have no factual basis and intends to
vigorously defend the actions. Two related actions brought by individual
shareholders who seek to represent the Company derivatively have also been filed
in United States District Court for the District of Minnesota. Those lawsuits
allege that certain officers and the Company's directors violated their
fiduciary duties to the Company. The board has also received a demand to
commence a claim against certain directors and officers and is in the process of
creating a special litigation committee to address that demand. The Company is
unable to evaluate the likelihood of prevailing in these cases at this early
stage of the proceedings. The Company has incurred legal expenses and expects to
incur additional legal expenses related to these suits in the future,
potentially up to $500,000, the deductible under the insurance policy the
Company believes provides coverage for such lawsuits.
The Company is also currently involved in other litigation which is ordinary,
routine litigation incidental to its business. Management believes losses, if
any, that might eventually be sustained from such other litigation would not be
material to the Company's consolidated financial position, results of operations
or cash flows for any period. Further, product liability claims may be asserted
in the future relative to events not known to management at the present time.
Management believes that the Company's risk management practices, including its
insurance coverage, are reasonably adequate to protect against potential
material product liability losses.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
31.1 Certification of Chief Executive Officer pursuant to Rule 13a -
14(a) of the Securities Exchange Act of 1934 (filed herewith
electronically).
31.2 Certification of Chief Financial Officer pursuant to Rule 13a -
14(a) of the Securities Exchange Act of 1934 (filed herewith
electronically).
32.1 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section
906 of the Sarbanes - Oxley Act of 2002 (filed herewith
electronically).
19
b. Reports on Form 8-K
On May 19, 2004, Synovis filed a report on Form 8-K filing certain
financial information under Item 5 and furnishing a press release under
Item 12, all relating to its earnings for the three and six months
ended April 30, 2004.
On May 26, 2004, Synovis filed a report on Form 8-K filing and
furnished a transcript of a conference call under Item 12, discussing
its financial results for the three and six months ended April 30,
2004.
On June 9, 2004, Synovis filed a report on Form 8-K under Item 5 and
Item 7 in connection with a press release expressing sympathy on the
death of Anton R. Potami, a board member of the Company.
On June 23, 2004, Synovis filed a report on Form 8-K under Item 5 and
Item 7 in connection with a press release announcing the promotion of
David Buche to vice president of Synovis Life Technologies, Inc. and
chief operating officer of the Synovis Surgical Innovations division.
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SYNOVIS LIFE TECHNOLOGIES, INC.
Dated: September 14, 2004 /s/ Connie L. Magnuson
----------------------------------------
Connie L. Magnuson
Vice President of Finance,
Chief Financial Officer and
Corporate Secretary
(Principal Financial Officer)
21
SYNOVIS LIFE TECHNOLOGIES, INC.
INDEX TO EXHIBITS
31.1 Certification of Chief Executive Officer pursuant to Rule 13a -
14(a) of the Securities Exchange Act of 1934 (filed herewith
electronically).
31.2 Certification of Chief Financial Officer pursuant to Rule 13a -
14(a) of the Securities Exchange Act of 1934 (filed herewith
electronically).
32.1 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section
906 of the Sarbanes - Oxley Act of 2002 (filed herewith
electronically).
22