Greetings and welcome to the CryoLife First Quarter 2011 Financial Results 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 and welcome to CryoLife’s First Quarter Conference Call. This is Steve Anderson; CryoLife’s CEO and with me today is Ashley Lee, CryoLife’s Executive VP, COO and CFO. This morning we reported record first quarter revenues of $30.2 million and earnings of $0.06 per share. Ashley will discuss these results in more detail in a few minutes. The agenda for today’s call is as follows. Ashley will discuss the results of the first quarter by product line and the financial implications for the potential acquisition of Cardiogenesis. I’ll discuss the recently announced planned acquisition of Cardiogenesis and the first quarter sales of PerClot, our new powdered hemostat that we acquired last September. I’ll also discuss the progress in the launch of BioFoam in Europe and I’ll discuss BioGlue in Japan. After my comments are completed Ashley will return to give you some financial guidance for the rest of the year. At this time Ashley will discuss this morning’s press release and our financial results for the first quarter.

Thanks Steve. To comply with the Safe Harbor requirements of the Private Securities Litigation Reform Act of 1995 I would like to make the following statement. Comments made in this call, which look forward in time, involve risks and uncertainties in our forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements include the statements made as to the company’s or management’s intentions; hopes; beliefs; expectations or predictions of the future including the guidance for 2011 that I’ll provide in a moment. Additional information concerning risks 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 previously filed Form 10-K for the year-ended December 31, 2010 and our Form 10-Q for the quarter-ended March 31, 2011, which we expect to file shortly and in the press release that went out this morning. On the call today I will discuss certain non-GAAP financial measures. You can find the comparable GAAP measures and a reconciliation of these non-GAAP measures to the equitable GAAP measures in the press release that went out this morning. A copy of which is contained on the Investor Relations portion of our Web site. This morning we reported our results for the first quarter of 2011. We set an all-time quarterly revenue record of $30.2 million. As of March 31, 2011 we had $42.9 million in cash, cash equivalents and restricted securities, which includes $1.6 million received from the DoD and $5.3 million in restricted securities. We generated cash flow from operations of $3.9 million in the quarter. Net income for the first quarter of 2011 was $1.7 million or $0.06 per basic and fully diluted common share compared to net income of $1.9 million or $0.07…

Historically, the company has focused on unique products for the treatment of complex cardiac and vascular reconstruction procedures. Its management thinking that with the aging of 78 million baby boomers, the indications for complex, cardiac and vascular repair will continue to significantly expand. To that end in March, we announced the planned acquisition of Cardiogenesis Corporation, Irvine, California. Cardiogenesis is a pioneer in the development and use of laser technology for Transmyocardial Revascularization in patients with severe or refractory angina. With its technology directed at severe cardiac disease this technology fits perfectly into CryoLife’s corporate focus of complex cardiac repair. It is approved by the FDA for distribution in the US and in CE mark for distribution in Europe. It is Medicare approved and is reimbursable. TMR is accepted as meaningful therapy by the American College of Cardiology, American Heart Association and the Society of Thoracic Surgery. Cardiogenesis also has a handpiece product that is approved in Europe that combines TMR with the delivery of biologic materials specifically stem cells derived from the patients’ bone marrow to promote cardiac angiogenesis. We are increased by the potential use of stem cells in conjunction with TMR and plan to submit an IDE request to the FDA to begin testing in the United States. Analysts estimate that the annual US market for our laser device like Cardiogenesis is about $175 million with an approved indication for use with stem cells; they estimate that the total annual US market could be greater than 700 million. Currently, Cardiogenesis handpieces have generated gross margins above the 80%. Cardiogenesis sales in 2010 were 11.3 million. We expect this acquisition to be break-even to slightly accretive to earnings per share in 2011, net of transaction expenses. We expect this transaction to close in mid-to-late May, after which time…

We believe that we are taking the steps necessary to position the company for future revenue and earnings growth, by expanding our addressable market opportunities through our internal development and business development activities including the PerClot transaction and the pending acquisition of Cardiogenesis. As we look to the future, there are several important milestones related to our business development activities that we expect to achieve in the coming months, as we progress towards increasing our addressable market opportunity. They include one, the closing of our announced acquisition of Cardiogenesis; two, the initiation of enrolment in our PerClot IDE schedule for later this year; and three, the filing of our IDE for the Cardiogenesis stem cell trial assuming the close of our pending acquisition of Cardiogenesis. Additionally, given our strong financial performance in cash position, we continue to evaluate opportunities on the business development front as a means to accelerate the growth of the company. We now expect total revenues for the full year of 2011 excluding any revenue related to our potential acquisition of Cardiogenesis to be near the lower end of our previously issued range of between 120 million and 126 million, which includes revenues of between 0.5 million and 1 million related to the use of funds received from the US DoD in connection with the development of BioFoam. We expect tissue processing revenues to increase in the mid single-digits range on a percentage basis in 2011 compared to 2010. BioGlue and BioFoam revenues to increase in the low single to mid single digits on a percentage basis in 2011, compared to 2010. With revenues from powdered HemoStase including PerClot and HemoStase to be between 5 million and 6 million, we expect research and development expenses to be between 10 million and 12 million in 2011. Excluding any…

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

Thank you. (Operator instructions) Our first question comes from Matt Dolan with Roth Capital Partners. Matt Dolan – Roth Capital Partners: Hi guys, good morning.

Good morning.

Hi, Matt, how are you? Matt Dolan – Roth Capital Partners: Good. First question on the guidance; it looks like tissue preservation, the growth rate has come down a little bit and the language around BioGlue and Foam is a little weaker as well. So maybe two parts; can you tell us what’s going on from a macro standpoint as it relates to growth to push you towards the low end of the guidance? And then secondly, assuming or not, but do you see any possibility of a benefit in the second half through the integration of the Cardiogenesis sales group?

There’re a couple of factors, Matt that are pushing us towards the lower end of our previously issued range, and I think that there are things that you hear quite often when you talk to companies that are providing services and products to hospitals, and those two are one, cost containment pressures, we continue to see those, and two, we are seeing some competitive issues with some of our products. So with that being said, that pushes us towards the lower end of our previously issued range. As it relates to any potential benefit related to, the pending acquisition of Cardiogenesis and hopefully the successful integration of our sales force with ours, there is a potential benefit there, as it relates to not only their part of line, but ours. But we haven’t really included a significant benefit for that integration in any of the numbers that we set forth right now. We think over the balance of the year, again assuming the successful completion of the acquisition, we would begin the integration of the sales forces immediately, and we would expect that to continue over the balance of the year. So maybe not an immediate benefit, but certainly longer-term, we would expect to see a benefit. Matt Dolan – Roth Capital Partners: Can you elaborate on some of those competitive pressures you’re sensing on?

As it relates to cardiac tissues, we’re seeing some of our cardiac patch business, there’s a new player in that market it’s been in there for like the last year or two and we’re seeing some competitive issues as it relates to that particular new product coming on board. It’s from a company called Matrix. We’re seeing some price pressures in that particular area. As it relates to the vascular tissues, it came out with a product a while ago, Propaten, which is used for a peripheral vascular reconstruction. So we’re seeing pockets of it, but again despite that we think that we’ve got a very strong core business in both of these areas. They continue to generate significant amount of operating cash flow for us that allow us to pursue these other business development activities that we’ve been focusing on. Matt Dolan – Roth Capital Partners: Okay, and then on Cardiogenesis, a couple of questions there. First of all, on the guidance, only $4 million to $5 million versus it would appear to be a run rate at a higher level than that. And then walk us through the integration strategy with the sales force that you could. It sounds like you are going to maintain the entire group. What do you do in the situation of territory crossover in those types of potential conflicts?

Well, first of all, those territory conflicts will be worked out. I’m pretty optimistic that with doubling of that specialty sales force that we won’t have increases right across the line in both of the product lines. It’s my opinion that it will take more work to train the Cardiogenesis people and the use of tissues and cardiac surgery than it will to train the CryoLife people and the function and use of Cardiogenesis lasers. That’s just my personal opinion. But I think that the reaction that we have seen from the physicians in the marketplace to the prospects of a stem cell trial using the Cardiogenesis instrumentation is very encouraging to us. And I’m expecting to have a great deal of enthusiasm from the surgeons regarding our participation in the stem cell clinical trial.

Matt, to your question on the revenue guidance, if you will notice that the numbers that we set forth, one, do not include any revenues from capital re-equipment just due to somewhat under predictable nature of that. We’ve not included any guidance and therefore capital re-equipment. And two, assuming that we meet the timetable that we’ve laid out there and closing and immediately beginning the integration, it is going to be a transition period. So we didn’t want to out of the gates get ahead of ourselves as it relates to further new guidance for the disposables, which are reflective of our procedure volume. Matt Dolan – Roth Capital Partners: And you are expecting volumes or disposables to grow on an underlying basis excluding those variables, is that fair to say?

Going forward, yes. We will say that this potential acquisition even with the existing approved product line that Cardiogenesis has; we think it makes a lot of sense for CryoLife and our shareholders. And we think that over the next few years that we are going to be able to grow that business in the low double digits and possibly better than that. If we are successful in getting the stem cell approval, which we are very excited about, it will only increase the upside and benefits for this potential transaction to CryoLife. Matt Dolan – Roth Capital Partners: Okay, thanks for the time, but the last one on the business development side. You proactively mentioned that, is that something that’s a true near-term opportunity, you could have another acquisition or in-licensing opportunity here shortly?

Yes. Matt Dolan – Roth Capital Partners: Thank you.

Our next question comes from Joe Munda with Sidoti & Company. Please state your question. Joe Munda – Sidoti & Company: Good morning, guys.

How are you?

Good morning. Joe Munda – Sidoti & Company: I wanted to touch a little bit on what Ashley had just said as far as the stem cell approval. Once the acquisition goes through what possible regulatory issue do you see occurring maybe from the FDA?

If we get the transaction completed as anticipated in mid-to-late May, at some point either late in the second quarter or sometime in the third quarter we would expect to file the IDE with the FDA to begin the clinical trial process. And only after we do that will we get a formal response from the FDA as to what their specific issues are, so it’s hard to say what those might be, but again we plan on filing the IDE in the very near future. And once we do that we’ll know exactly what the FDA talks are about. Joe Munda – Sidoti & Company: I’m just asking, because I know stem cell is a (inaudible) issue.

The thing about the project that we’d be working on is that they are autologous stem cells, which are the patients… Joe Munda – Sidoti & Company: The patients own some, yes.

So, we think that could possibly mitigate some of the issues that that you see with some of the other stem cell technologies are out there. Joe Munda – Sidoti & Company: Do you expect a similar timeline that you guys are experiencing with PerClot to occur with this type of approval.

You mean for the full development cycle? Joe Munda – Sidoti & Company: Yes exactly.

Again, we’ll only know after we file the IDE here from the FDA, but from beginning to end you could considerably get a trial like this done and improve within a three-year timeframe, but again it’s going to be dependent on what the FDA ultimately says

It is approved for useless stem cell in Europe and because of the fact that they did not have a lot of working capital they really haven’t pushed their product in Europe at all. So we look at that as a great marketing opportunity to have the basic laser technology and the stem cell technology already approved and ready to go in Europe. Joe Munda – Sidoti & Company: So basically you are using the same model that you have now for PerClot and you are applying to this.

Yes. Joe Munda – Sidoti & Company: Okay. The other thing in regards to PerClot you guys had mentioned FDA approval in 2013, or is that the beginning of 2013, or do you think it’s going to be end of 2013 going to 2014.

I think it’s going to be early in 2013 or even late in 2012. Joe Munda – Sidoti & Company: Okay. And just one other question. Can you comment a little bit on the amended tender offer what (inaudible) guys go back and amend the offer?

That was really dictated by some new answers in California law. And the amendment was really in response to a comment that we got from the SEC. In California, yes, you acquired more than 49.9% of the outstanding stock of a company. Let us say’s say its 50%, 51% or 52%. You have to use your own company stock. In this instance it’d be CryoLife stock to buy the remaining existing shares of the company. So the current plan is to hopefully at the conclusion of the initial period close on 49.9% of the outstanding stock, all of special shareholders meeting, and we get more than 50% of the vote in the affirmative for the merger then we will move quickly after the shareholders meeting to close on the merger. So it’s really more of a procedural issue than anything else. Joe Munda – Sidoti & Company: Okay. I know the Sharp [ph] period had just expired. Do you know if they were approached by anybody else?

It’s our understanding that they were not. Joe Munda – Sidoti & Company: Okay. All right, thanks, guys.

Our next question comes from Tim Lee with Piper Jaffray. Please proceed with your questions. Tim Lee – Piper Jaffray: Hi, guys, good morning.

Good morning. How are you? Tim Lee – Piper Jaffray: A couple of follow-ups. I think you touched on as well in the previous question, but what are the gaining factors in terms of, what need to happen to close the Cardiogenesis transaction in May, and is that purely a high confidence that that’s going to occur or what’s the risk that’s slipping a little bit?

The tender seems to be going according to plan at this point. Now, we won’t know until the end of the initial period, which is midnight on Monday as to whether or not we’ve gotten to 49.9%. But as it stands right now, things seem to be going according to plan. If things remain on target, then we’re pretty confident that we’ll be able to close the transaction in mid-to-late May. Tim Lee – Piper Jaffray: Got it. Okay, thank you. And then just kind of switching gears, in terms of HemoStase, was there any inventory left over at the end of the quarter. What was left over kind of in line with reserves you have previously taken?

That is correct. We actually sold about approximately $300,000 worth of HemoStase inventory that had been previously written off. So there are no additionally write-offs to occur related to HemoStase. Tim Lee – Piper Jaffray: Just make sure, I know what kind of (inaudible) 300,000 of inventory you had written off, there’s a slight gross margin benefit because of that.

That is correct. Tim Lee – Piper Jaffray: Okay, perfect. And then just lastly in terms of the BioFoam opportunity in Japan, I think you decided an initial opportunity about 10 million for the aortic dissection mark. You think it started the total market potential at 150 million was really needed to drive kind of year opportunity from 10 million to 150 additional clinical study with the different distribution, just any color on that from this, thank you.

We would have to have a completely different clinical trial. We have to have a clinical trial based around different indications than what the product was initially approved for. Tim Lee – Piper Jaffray: And then I guess (inaudible) 150 million opportunities is a three-year to five-year type opportunity, what is the timeframe in terms of realizing or entering those?

I would say five years. Tim Lee – Piper Jaffray: Perfect. Okay, thank you very much and I will get back in queue.

Our next question comes from Raymond Myers with Benchmark. Please proceed with your question. Raymond Myers – Benchmark: Great, thank you. Most of my questions have been answered, but let me ask this one. PerClot revenue in Q1 was 660,000. We’ll have a lot to compare that with except for Q4 where……(technical difficulty)

We lost you.

We lost you Ray. Raymond Myers – Benchmark: …… after having a very strong $660,000 in Q1, is any of that due to stocking and what does that tell you about the potential for the product over the course of the year?

We have actually seen the majority of our distributors reorder already. So we remain very optimistic about PerClot revenues for the balance of this year and our expectations are included in the guidance that we gave for all powdered hemostats that we talked about earlier. Raymond Myers – Benchmark: I guess what I’m driving at is trying to understand how contributed that guidance is. I’m assuming, for starters, we’re not going to sell any more hemostats, correct?

That is correct. Raymond Myers – Benchmark: And PerClot increased by well over 200% sequentially from Q4 to Q1. Was any of that due to stocking orders that you don’t expect to repeat in Q2?

No, most of the distributors have reorders by this time. Not all, but most. Raymond Myers – Benchmark: So with that kind of a quarter-on-quarter growth rate, what kind of PerClot revenue would we expect in Q2?

We don’t give quarterly guidance out Ray, but again we gave for powdered HemoStase, it could be as much as 5 million for the full year and we would expect to see sequential growth in PerClot revenues over the balance of this year, so we’ll leave it to that.

One of the things that we have pointed in the previous calls is that our R&D people feel that the PerClot absorbs two to three times the amount of fluid that the prior product absorbed and I can tell you that the difference in the activity of the product is striking, but you exhibit them side by side. Now it’s very hard to describe that conversationally. But what I would suggest is the next time we have a booth at a convention that you ask to personally see the demonstration of the two products side by side because the doctors’ reaction to the activity, the chemical activity of PerClot has been extraordinary, and we are very, very enthusiastic about that product. Raymond Myers – Benchmark: Well, that sounds great. I’ll do that and look forward to growth in that area. Thanks.

I now like to turn the floor back over to management for closing comments.

Thank you for joining us, and we look forward to talking to you after the second quarter.