8-K 1 c95568e8vk.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 25, 2005 SYNOVIS LIFE TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) State of Incorporation: Minnesota Commission File No.: 0-13907 I.R.S. Employer Identification No.: 41-1526554 Address of principal executive offices: 2575 University Ave. W. St. Paul, Minnesota 55114 Telephone Number: (651) 796-7300 --------------------------------------------------- Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION ------------------------------------------------------- On May 25, 2005, Synovis Life Technologies, Inc. (Synovis) issued a press release announcing its earnings for the three and six months ended April 30, 2005. A copy of the press release is furnished herewith as Exhibit 99.1. Synovis will also publish the press release, including the supplemental information contained therein, on its website at www.synovislife.com. ITEM 8.01 OTHER EVENTS ---------------------- In the May 25, 2005 press release, Synovis reported second-quarter consolidated net revenue of $14.4 million, a 5 percent increase over $13.7 million in the same period last year. The company reported net income of $41,000, or $0.00 per diluted share, versus net income of $483,000, or $0.04 per diluted share, in the year-earlier period. In the first half of fiscal 2005, consolidated net revenue increased 10 percent to $27.8 million from $25.3 million in the first six months of last fiscal year. Consolidated net income was $246,000, or $0.02 per diluted share, compared with $902,000, or $0.08 per diluted share, in the first half of last year. In the just-completed quarter, R&D expense increased 39 percent, with the surgical business accounting for all of the $354,000 increase in consolidated R&D spending over the year-ago quarter. Second-quarter costs in the "corporate and other" category increased 32 percent, or $128,000, over the same period of the prior year primarily due to costs associated with complying with Section 404 of the Sarbanes-Oxley Act and the defense of previously disclosed shareholder litigation. Cash, cash equivalents and short-term investments totaled $41.8 million at April 30, 2005, compared to $41.6 million at the end of the fiscal first quarter. Cash provided by operations was $1.0 million in the second quarter, compared to $200,000 in the same period of the prior year. In the current quarter, capital expenditures totaled $1.1 million versus $1.9 million in the second quarter of last year. INTERVENTIONAL BUSINESS Interventional business revenue rose to $8.4 million in the fiscal 2005 second quarter, an 18 percent gain over revenue of $7.1 million in the same period of fiscal 2004. The interventional business reported operating income of $169,000, compared to an operating loss of $306,000 in the year-ago period. Revenue from manufacturing transferred to Synovis Caribe during the second quarter increased to $1.9 million, up 56 percent from the same quarter of fiscal 2004. SURGICAL BUSINESS In the second quarter, surgical business revenue was $6.0 million, down 10 percent from $6.6 million in the year-ago period. The surgical business generated $212,000 in operating income, compared to $1.4 million in the same period last year. In the quarter, revenue from Peri-Strips(R), the company's staple line buttress and the surgical business' largest revenue generator, totaled $2.2 million compared to $2.8 million in the year-ago period. Veritas is used as a material for pelvic procedures for women, and second-quarter Veritas revenue in these applications was $198,000, up 38 percent over the year-ago period. Microsurgery product sales rose to $640,000 in the second quarter, a 25 percent increase over the year-earlier period. 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 2005 2004 2005 2004 ---- ---- ---- ---- Net revenue $ 14,366 $ 13,743 $ 27,789 $ 25,262 Cost of revenue 8,966 8,098 17,162 13,999 Gross margin 5,400 5,645 10,627 11,263 Gross margin percentage 38% 41% 38% 45% Selling, general and administrative 4,238 4,091 8,400 8,248 Research and development 1,264 910 2,172 1,804 Other 50 -- 86 -- Operating income (loss) (152) 644 (31) 1,211 Interest, net 197 58 382 125 Income before provision for income taxes 45 702 351 1,336 Provision for income taxes 4 219 105 434 Net income $ 41 $ 483 $ 246 $ 902 Basic earnings per share $ 0.00 $ 0.04 $ 0.02 $ 0.08 Diluted earnings per share $ 0.00 $ 0.04 $ 0.02 $ 0.08 Weighted average basic shares outstanding 11,762 11,497 11,744 11,459 Weighted average diluted shares outstanding 12,006 11,992 12,004 12,017
Business Segment Information (unaudited) (In thousands)
Three Months Ended Six Months Ended April 30 April 30 2005 2004 2005 2004 ---- ---- ---- ---- Net revenue Surgical business $ 5,950 $ 6,614 $ 12,493 $ 13,300 Interventional business 8,416 7,129 15,296 11,962 -------- -------- -------- -------- Total $ 14,366 $ 13,743 $ 27,789 $ 25,262 Gross margin Surgical business $ 3,582 $ 4,358 $ 7,492 $ 8,703 Interventional business 1,818 1,287 3,135 2,560 -------- -------- -------- -------- Total 5,400 $ 5,645 $ 10,627 $ 11,263 Gross margin percentage Surgical business 60% 66% 60% 65% Interventional business 22% 18% 21% 21% Total 38% 41% 38% 45% Operating income (loss) Surgical business $ 212 $ 1,355 $ 1,089 $ 2,845 Interventional business 169 (306) (106) (824) Corporate and other (533) (405) (1,014) (810) -------- -------- -------- -------- Total $ (152) $ 644 $ (31) $ 1,211
Condensed Consolidated Balance Sheets (unaudited) As of April 30, 2005 and Oct. 31, 2004 (in thousands, except share and per share data)
2005 2004 ------- ------- ASSETS Current assets: Cash and cash equivalents $ 5,745 $15,369 Short-term investments 36,060 26,931 Accounts receivable, net 7,735 7,722 Inventories 10,405 11,591 Other 3,503 3,555 ------- ------- Total current assets 63,448 65,168 Property, plant and equipment, net 14,049 13,704 Goodwill and other intangible assets, net 7,759 6,853 ------- ------- Total assets $85,256 $85,725 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 5,264 $ 6,457 Current maturities of long-term obligations 15 40 ------- ------- Total current liabilities 5,279 6,497 Deferred income tax liability, net 1,227 1,227 ------- ------- Total liabilities 6,506 7,724 ------- ------- 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, 11,796,928 and 11,713,700 at April 30, 2005 and October 31, 2004, 118 117 respectively Additional paid-in capital 73,116 72,614 Retained earnings 5,516 5,270 ------- ------- Total shareholders' equity 78,750 78,001 ------- ------- Total liabilities and shareholders' equity $85,256 $85,725 ======= =======
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS ------------------------------------------- (c) Exhibits. (99.1) Synovis Life Technologies, Inc. News Release May 25, 2005. 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. Dated: May 25, 2005 By: /s/ Brett Reynolds ----------------------------------------- Brett Reynolds Vice-President of Finance, Chief Financial Officer and Corporate Secretary EXHIBIT INDEX
EXHIBIT DESCRIPTION METHOD OF FILING NO. ---------- -------------------------------------- ----------------------------- (99.1) Synovis Life Technologies, Inc. News Filed herewith electronically. Release dated May 25, 2005