Greetings, and welcome to the CryoLife first quarter 2010 financial conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder this conference is being recorded. It is now my pleasure to introduce your host Steve Anderson, President and CEO for CryoLife. Thank you Mr. Anderson you may begin.

Good morning everyone, this is Steve Anderson CryoLife’s CEO and I would like to welcome you to our first quarter 2010 earnings conference call. With me today is Ashley Lee the company's Executive VP, COO and CFO. We were very pleased to release our earnings report today as we reported record quarterly revenues of $29.7 million and 11% increase over the same period a year ago and earnings of $1.9 million or $0.07 per share. Revenues were up in all parts of our business. It was an all time record quarter for vascular tissue and our best first quarter record for BioGlue and BioFoam combined. This is the 13th consecutive quarter of profitability for the company. The agenda for today's call is as follows. Ashley will comment in detail on the company's operating results for the first quarter. He will comment on our significant cash position and how we intend to use that cash to enhance shareholder value. After Ashley completes his comments, I will comment on the initial clinical outcomes with BioForm in Europe and the overall European launch plans. I will also comment on the Department of Defense approval process for the BioForm IDE study and the timeline for patient enrollment once final approval is achieved. I will comment on the company's participation in the upcoming American Association for Thoracic Surgery meeting. After my comments, Ashley will return for the purpose of updating the company's financial guidance for the rest of the year. After his guidance comments, we will open the call for questions. At this time Ashley will comment on today's press release.

Thank you, Steve. To comply with the Safe Harbor requirements of the Private Securities Litigation Reform Act of 1995 I'd like to make the following statement. Comments made in this call, which look forward in time involve risk and uncertainties in our forward-looking statements within the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements made as to the company's or management’s intentions, hopes, beliefs, expectations or predications of the future. Additional information concerning risk and uncertainties that may impact these forward-looking statements is contained from time to time in the company's SEC filings including the risk factor section of our Form 10-K for the year ended December 31, 2009. Our Form 10-Q for the quarter ended March 31, 2010, which we expect to file by the end of this week and in the press release that went out this morning a copy of which is contained on the Investor Relations portion of our website. This morning we reported our results for the first quarter of 2010. We set an all time quarterly revenue record of $29.7 million in the first quarter of 2010. This represent an 11% increase compared to the corresponding period in 2009. As of March 31, 2010 we had $37.7 million or roughly $1.30 per diluted share in cash, cash equivalents and restricted securities, compared to $35.1 million at December 31, 2009. Of this $37.7 million, $2.5 million was received from the US Department of Defense as advance funding for the development of BioForm Protein Hydrogel Technology and $5.3 million was designated as restricted securities primarily due to our financial covenant requirement under our credit agreement. Our cash, cash equivalents and restricted securities balances as of today are approximately $40 million. Net income for the first quarter of 2010 was $1.9 million or…

During the first quarter progress continued on the European post market study for BioForm at three EU centers. The focus of the study is the assessment of BioForm as a surgical hemostatic adjunct in the open repair of liver parenchyma following liver resection or liver transplant surgery. A total of 53 patients have been enrolled into the study with a target enrollment of 55 patients at these three centers. This includes 13 in the United Kingdom, 15 in France and 25 in Germany. Interim analysis shows achievement of HemoStase within 1 minute in 88% of the application site and within 3 minutes in 94% of the application site. We are adding a fourth center from Leipzig, Germany to increase overall enrollment to 70 patients. As we broaden our clinical approach CryoLife is also establishing an online data registry for surgeons to document clinical information related to the use of BioFoam. Based on the successful outcomes and surgical technique refinements developed during the European post market study, distributor and direct sales team training was conducted in late January at the Annual European kickoff meeting that was held in Rome. The product was formally introduced to the marketplace at the European Association for the study of liver which was held in Vienna in mid-April this year. Initial sales to date have been made to distributors and clinics in Germany, Italy, France and Spain. -: We expect patient enrollment for the United States IDE for BioFoam used as an adjunct to conservative measures of achieving HemoStases on resected liver parenchyma tissue to commence in Q2. An interim analysis is planned once all 20 patients from the two pilot centers reach 12-month follow-up. The study report along with a request to initiate the pivotal phase of the study will be submitted to FDA and…

We are reiterating our guidance for the full year of 2010 subject to the ongoing litigation with Medafor including our continued ability to sell HemoStase. We expect total revenues for the full year of 2010 to be between $118 and $123 million which includes between $1.5 and $2.5 million related to funding received from the Department of Defense in connection with the development of BioFoam. We expect tissue processing revenues and BioGlue revenues to each increase between mid-single and low-double digits on a percentage basis in 2010 compared to 2009. With HemoStase revenues increasing significantly more than that on a percentage basis. R&D spending should increase for the remainder of the year as we anticipate beginning enrolment in our BioFoam IDE in late 2Q or early 3Q. We expect our effective income tax rate for the remainder of this year to be between 40% and 41%. We expect EPS between $0.36 and $0.40 for 2010. Our guidance includes general expenses associated with business development opportunities but does not include significant expenses associated with specific targets such as Medafor. We have withdrawn our proposal to acquire Medafor and do not currently anticipate a transaction with them occurring during 2010. However should we renew our proposal or take other actions to acquire Medafor such as a proxy contest or tender offer, we could incur expenses or changes in the value of the Medafor derivative that could materially affect our guidance. Medafor informed us on March 18, 2010 that the distribution agreement between the parties was terminated. We filed an emergency motion for preliminary injunction in federal court requesting that the court order of the agreement to not be terminated. The court has set a hearing date for May 10, 2010. If Medafor is successful in its attempt to terminate the agreement and elects to discontinue shipping HemoStase to us, then our full year 2010 guidance would be materially, adversely affected. We believe that Medafor does not have a basis for terminating the agreement, and the guidance above assumes that it will not be successful; however, there is no guarantee that the outcome will match our expectations. Additionally, we have budgeted for a certain level of expenses related to our ongoing litigation with Medafor. If actual future legal expenses exceed the amounts budgeted, then it could materially, adversely affect our expense and earnings guidance. We continue our efforts on the business development front to find complementary products for companies that we can acquire to leverage our existing infrastructure and sales force. We have carefully evaluated alternatives and believe business development efforts are a prudent use of our cash reserves in a strategy that will create value for our shareholders, however we are also considering other potential uses of our cash including a share repurchase. Whatever pathway we ultimately take will be with the intent of delivery value to our shareholders. That concludes my comments and I’ll turn back over to Steve.

At this time, we’ll open up the call for questions.

(Operator Instructions). Thank you. Our first question is from the line of Matt Dolan with Roth Capital Partners. Please proceed with your question. Matt Dolan – Roth Capital Partners: Hi guys, good morning.

Good morning.

Hi Matt. Matt Dolan – Roth Capital Partners: First question on the sales force, can you give us an update on where you are and your plans for expansion this year, looks like the base preservation business has come back nicely.

We currently don’t have plans to expand the sales force for the balance of this year domestically. We currently stand including sales managers at approximately 50 people. We are considering maybe expanding in Austria on a direct basis at this time. But domestically we’re not finding on doing anything at this point. Matt Dolan – Roth Capital Partners: And your maintenance of your earnings guidance, what costs have you baked in that are associated with business development and litigation and what allows you to maintain your guidance as those costs are obviously higher than probably what you thought initially?

Without giving you the specific numbers, I’ll frame it this way Matt. If our expenses for the last three quarters of the year are related primarily to litigation or similar to what they were in the first quarter of this year then we’ll be probably be closer to the lower end of our guidance. Matt Dolan – Roth Capital Partners: Okay, with respect to the Medafor agreement, where are you on HemoStase supply at this point, are they still shipping to you and how far along are you on any contingency plans you might have?

As it relates to their shipping product to us, the last purchase order that they were shipment was due to us was placed in January and they have substantially fulfilled the shipment of that purchase order. We recently placed additional purchase orders recently and the shipment for those particular purchase orders are not due until mid-May. So we will find out in mid-May as to whether or not they will – they’re planning on continuing to ship product to us. Matt Dolan – Roth Capital Partners: So you have inventory through mid-May.

No we actually have about three months of inventory on hand right now but the next shipment that is due for Medafor is at due in mid-May. Matt Dolan – Roth Capital Partners: Okay. And then a couple of other quick question, you talked about your business development evaluations continuing with also looking at a share repurchase. Maybe you could explain when you draw that conclusion to go with the share repurchase or how you get there, what are the major points of coming to that, that open determination.

Our annual meeting is towards the end of May and that will be discussed at the re-organizational Board meeting that takes place immediately following the annual meeting and I believe the date of the annual meeting is May 20. So that decision will be made that day. Matt Dolan – Roth Capital Partners: Okay, and finally on the gross margin and Ashley, it looks like it was a little lighter than what we had anticipated although BioGlue didn’t grow as well as the other side of the business. What do we account for there and just maybe give us some guidance on how that tracks this year?

We think that our margins for the balance of this year are going to be relatively stable, I mean they could fluctuate slightly either way, somewhat contingent upon what percentage of the revenue mix BioGlue is, but we expect revenue, I mean we expect gross margins to remain relative stable for the balance of the year. Matt Dolan – Roth Capital Partners: Thank you guys.

Okay.

Thank you. Our next question is from the line of Greg Brash with Sidoti & Company. Please go ahead with your question. Greg Brash – Sidoti & Company: Good morning Steven and Ashley, thanks for taking my call.

Hi Greg, how are you? Greg Brash – Sidoti & Company: Doing well. On the HemoStase side, you mentioned you have three months of inventory, I saw your inventory ended at the month of at the end of May, so you’re saying that you have inventories through July, is that correct?

Roughly, depending on what particular product it is and what particular size, but its roughly three months of the inventory as we sit here today. Greg Brash – Sidoti & Company: Okay, and you’re maintaining your guidance, so I’m assuming you have some confidence that (inaudible) determination but if he doesn’t you have plans to bring on some additional products to replace HemoStase.

We’ve stated that we remain very active on the business development front and we’re not going to talk about specific areas or specific targets until it’s appropriate to do so, but the HemoStase product line is important to us and to the extent that we came, we would like to protect that revenue stream going forward. Greg Brash – Sidoti & Company: Okay, switching to BioGlue, some past quarters you were seeing off label use, less off label used pricing pressure, hospitals just curtailing the use of surgical sealing. Any improvement there?

We continue to see those types of issues out in the field, I think one of the areas that first of all the business was up year-over-year, that’s the important thing but one of the areas of the country where we did see some challenges more so then recently was in the North East, but all the other issues that we see they’re still out there but we still remain focused on growing that business. Greg Brash – Sidoti & Company: Okay, and then just switching to cardiac, have you seen any of the hospitals that last year where restocking inventory, are they still running at lower levels, have any started to restock back to levels that they did prior to the recession and any change in pricing pressure. It feels like your gross margin is stabilized.

We’ve had very good results not only in the fourth quarter but the first quarter an increasing the unit shipments of allograft heart valves and that business has been quite strong for us. We also have been a number of new papers that have come out regarding allograft valve transplants and long (inaudible) and I think that’s also helping us but that business is thriving and our cardiac specialist approach that we started at the beginning I believe of ’08 has really paid off on that. So that’s a very strong and growing part of our business and with more usage, more unit shipments certainly the freezers in the hospitals are being restocked. Greg Brash – Sidoti & Company: Okay, no change in pricing pressure?

No we haven’t had any changes there at all. The longevity data for an allograft valve is very favorable and comparison to anything else that you might use in the patient populations we serve. So I think that that’s going to stay that way. I think our prices are fair and reasonable. Greg Brash – Sidoti & Company: Alright, and just lastly, were there any revenues from BioFoam sales in Europe this quarter?

In the first quarter, they were less than $50,000, but obviously expected that would increase as we develop more clinical data of the efficacy of the product. Greg Brash – Sidoti & Company: Great, thanks guys.

Thank you. Our next question is from the line of Raymond Myers from The Benchmark Company. Please proceed with your question. Raymond Myers – The Benchmark Company: Thank you.

Hi Ashley. Raymond Myers – The Benchmark Company: First question is what was deferred preservation cost in the first quarter?

Deferred preservation cost were $34.7 million at the end of the first quarter, so it was roughly a $1.7 million decrease from the end of the year balance. Raymond Myers – The Benchmark Company: That’s great, good. And then a little more question about the – of the earnings guidance. Does that include continued Medafor litigation expenses that would be anticipated from the current ongoing dispute?

It does. We do have an amount provided for in our budgets for litigation moving forward. If I refer you back to the press release and we had incurred roughly about $400,000 a little bit more than that in litigation cost associated with all the litigation is going on with Medafor. There were a couple of items of note in the first quarter. First, the action that Medafor brought personally against Steve Anderson was settled in the first quarter of this year. We incurred a significant amount of cost associated with that. And that is not going to be recurring in the last three quarters of the year. The other thing is that we spent a significant amount of money on the emergency preliminary injunction in the first quarter of this year. And we obviously don’t expect to incur that cost for the remainder of – for the balance of the year also. But again, litigation is inherently uncertain and the cost could spike, but there are a couple of things that occurred in the first quarter that we don’t expect to incur for the balance of the year. Raymond Myers – The Benchmark Company: So what you have visibility to currently in April and this current quarter is included in that.

That’s correct. And as we have stated, even if the litigation with Medafor continues at the levels it did in the first quarter of this year. In total, we think that that would push us towards the lower end of our guidance that we stated. Raymond Myers – The Benchmark Company: Okay that sounds good. And next I wanted you to explain the – why patent loss in – or explain whether the patent loss in Germany would impact your BioGlue sales?

We don’t think that that is filled. First of all, Tenaxis, the party that – the other party is Nova Reaction (ph) has already been distributing BioGlue, I mean their products, which is (inaudible) in Europe. So we have been competing against that in Europe for a year or two now. So even with that competitive product on the market, if I would recall correctly, we increased our revenues in Germany year-over-year about in excess of 20% and we expect to do even more than that in 2010 compared to 2009 as it relates to Germany. And then the Nova Reaction (ph) that resulted in us taking the charge in the first quarter is only specific to Germany, it doesn’t really affect any of the other countries in the EU. Raymond Myers – The Benchmark Company: Right, okay, good. Steve, you had mentioned that you were discussing a share repurchase at a restructuring meeting that you would be holding after your annual meeting.

Well, we have the Annual Board of Directors meeting that follows the annual meeting and assignments have to be made at that meeting of chairmanships of all the various committees, the officers all have to be re-elected. And so that is a busy meeting, more busy – busier than other meetings generally are throughout the year. Raymond Myers – The Benchmark Company: Okay, so we shouldn’t be anticipating a significant restructuring outcome of that meeting, okay.

No, it’s just I am hopeful that I get reelected. Raymond Myers – The Benchmark Company: I am sure you will.

Nothing is sure in this world. Raymond Myers – The Benchmark Company: Okay, great. Thank you, gentlemen.

Thanks Ray.

Thank you. Our next question is a follow-up from the line of Matt Dolan of Roth Capital Partners. Please proceed with your question.

Matt.

Mr. Dolan, your line is live for question.

I guess he left us. Are there any other questions?

Gentlemen, we do have a follow-up from the line of Raymond Myers with The Benchmark Company. Please go ahead with your question sir.

Okay. Raymond Myers – The Benchmark Company: Thanks. One other question, how is there a gain on the Medafor stock, when it’s not publicly traded, how do you value that?

That’s a long discussion, but I will do my best to answer here Ray. When we initially purchased our position in Medafor, we gave the selling shareholders a makeover provision whereby we could pay them additional compensation for their stock in the event that we were able to successfully acquire Medafor. So what we had to do is when we initially setup net asset on our books, we had to determine what we could – where that’s considered a couple of factors, the likelihood that we would acquire Medafor, what and eventual price might be. And so a lot of assumptions went into what the ultimate value was that we established on our balance sheet to acquire Medafor. Since we withdrew our proposal to acquire Medafor, all of those assumptions changed. And since those assumptions changed, the value of the derivative or the likelihood of the transaction might occur, all those assumptions changed and that resulted in us revaluing the derivatives associated with their stock. And as a result of that, we had to take income into other income for the first quarter of this year. There is going to be a long discussion about that in our 10-Q that we will provide you much more detail. But hopefully in a nutshell that wasn’t too confusing as to how that was altered in the gain in the first quarter. Raymond Myers – The Benchmark Company: So we shouldn’t assume any quarterly – necessarily any quarterly volatility based on share price or anything else unless there is a material change in your Medafor relationship?

That’s fair. Raymond Myers – The Benchmark Company: Great, thank you.

Thank you. And there are no further questions at this time. I would like to turn the floor back over to management for closing comments.

Thank you for joining us today and we look forward to talking with you at the end of the second quarter.