8-K 1 c85715e8vk.txt FORM 8-K -------------------------------------------------------------------------------- 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): May 19, 2004 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 Address of principal executive offices: 2575 University Ave. W. St. Paul, Minnesota 55114 Telephone Number: (651) 603-3700 ---------- ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE On May 19, 2004, Synovis Life Technologies, Inc. (Synovis) issued a press release announcing its earnings for the three and six months ended April 30, 2004. Second-quarter consolidated net revenue was $13.7 million compared to $15.3 million in the year-earlier period. Operating income declined to $644,000 from $1.9 million in the year-ago quarter. The company posted net income of $483,000, or four cents per diluted share, versus $1.2 million or twelve cents per diluted share, in the second quarter of fiscal 2003. First half consolidated net revenue was $25.3 million compared to $27.8 million in the year-earlier period. Operating income was $1.2 million compared to $3.1 million in the year-ago first half. Consolidated net income was $902,000, or eight cents per diluted share in the first half of fiscal 2004 compared to $3.1 million or twenty cents per diluted share in the year-earlier period. SURGICAL BUSINESS Surgical business revenue increased 5 percent in the second quarter to $6.6 million from $6.3 million in the year-ago period. The gross margin of 66 percent was three percentage points higher than the year-earlier quarter. Second-quarter operating income was $967,000 compared to $1.1 million in the same period last year. The surgical business develops, manufactures and markets implantable biomaterial products, tools to facilitate cardiovascular surgeries and products for microsurgery. Peri-Strips, a patent-protected biomaterial device, again led surgical product sales by contributing net revenue of $2.8 million in the second quarter, virtually the same as the prior-year period. Microsurgery product revenue, primarily Coupler sales, increased 49% over the prior-year period to $513,000. INTERVENTIONAL BUSINESS Interventional business revenue declined to $7.1 million in the 2004 second quarter from $9.0 million in the same period last year. The second-quarter gross margin was 18 percent, an 11 percentage point from 29 percent in the prior-year quarter. Applied overhead per labor hour increased substantially as a result of lower-than-expected revenue and labor hours, driving the gross margin down. The quarterly operating loss was $323,000, versus operating income of $814,000 in the prior-year quarter. The interventional business develops, prototypes, manufactures and assembles components and deices. This business specializes in micro-components, such as coils, helices, stylets, guidewires and complex micro-wire, polymer and machined components for the interventional medical device industry. Most interventional products are used by manufacturers in devices for cardiac rhythm management; devices used in neurostimulation and vascular procedures also represent significant markets. SYNOVIS LIFE TECHNOLOGIES, INC. Condensed Consolidated Results of Operations (unaudited) (In thousands, except per share data)
Three Months Ended Six Months Ended April 30 April 30 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Net revenue $ 13,743 $ 15,298 $ 25,262 $ 27,767 Cost of revenue 8,098 8,731 13,999 15,758 Gross margin 5,645 6,567 11,263 12,009 Gross margin percentage 41% 43% 45% 43% Selling, general and administrative 4,091 3,610 8,248 6,981 Research and development 910 1,053 1,804 1,914 Operating income 644 1,904 1,211 3,114 Interest, net 58 (2) 125 (1) Income before provision for income taxes 702 1,902 1,336 3,113 Provision for income taxes 219 655 434 1,073 Net income $ 483 $ 1,247 $ 902 $ 2,040 Basic earnings per share $ 0.04 $ 0.13 $ 0.08 $ 0.21 Diluted earnings per share $ 0.04 $ 0.12 $ 0.08 $ 0.20 Weighted average basic shares outstanding 11,497 9,689 11,478 9,647 Weighted average diluted shares outstanding 11,992 10,211 12,017 10,135
Business Segment Information (unaudited) (In thousands)
Three Months Ended Six Months Ended April 30 April 30 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Net revenue Surgical business $ 6,614 $ 6,326 $ 13,300 $ 12,396 Interventional business 7,129 8,972 11,962 15,371 ------------- ------------- ------------- ------------- Total $ 13,743 $ 15,298 $ 25,262 $ 27,767 Gross margin Surgical business $ 4,358 $ 4,007 $ 8,703 $ 7,958 Interventional business 1,287 2,560 2,560 4,051 ------------- ------------- ------------- ------------- Total 5,645 $ 6,567 $ 11,263 $ 12,009 Gross margin percentage Surgical business 66% 63% 65% 64% Interventional business 18% 29% 21% 26% Total 41% 43% 45% 43% Operating income Surgical business $ 967 $ 1,090 $ 1,491 $ 2,202 Interventional business (323) 814 (589) 912 ------------- ------------- ------------- ------------- Total $ 644 $ 1,904 $ 902 $ 3,114
Condensed Consolidated Balance Sheets (unaudited) As of April 30, 2004, and October 31, 2003 (in thousands, except share and per share data)
April 30, October 31, 2004 2003 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 20,070 $ 44,102 Short-term investments 20,958 -- Accounts receivable, net 6,765 6,541 Inventories 11,710 10,849 Other 1,996 1,891 ------------- ------------- Total current assets 61,499 63,383 Property, plant and equipment, net 12,643 10,559 Goodwill and other intangible assets, net 6,868 6,892 Other 11 11 ------------- ------------- Total assets $ 81,021 $ 80,845 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 4,391 $ 5,903 Current maturities of long-term obligations 226 281 ------------- ------------- Total current liabilities 4,617 6,184 Long-term obligations and deferred income taxes 568 599 ------------- ------------- Total liabilities 5,185 6,783 ------------- ------------- Shareholders' equity: Preferred stock: authorized 5,000,000 shares of $.01 par value; none issued or outstanding at both dates -- -- Common stock: authorized 20,000,000 shares of $.01 par value; issued and outstanding, 11,501,839 and 11,435,638 at April 30, 2004 and October 31, 2003, respectively 115 114 Additional paid-in capital 70,827 69,956 Retained earnings 4,894 3,992 ------------- ------------- Total shareholders' equity 75,836 74,062 ------------- ------------- Total liabilities and shareholders' equity $ 81,021 $ 80,845 ============= =============
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits. (99.1) Synovis Life Technologies, Inc. News Release dated May 19, 2004. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On May 19, 2004, Synovis Life Technologies, Inc. (Synovis) issued a press release announcing its earnings for the three and six months ended April 30, 2004. A copy of the press release is attached hereto as Exhibit 99.1, and is furnished in accordance with Item 12 of Form 8-K. In accordance with General Instruction B.6. of Form 8-K, all of the information in this Item and the accompanying exhibit shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act. Synovis will also publish the press release, including the supplemental information contained therein, on its website at www.synovislife.com. SIGNATURE 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. By: /s/ Connie L. Magnuson ------------------------------- May 19, 2004 Connie L. Magnuson Vice-President of Finance, Chief Financial Officer and Corporate Secretary