Greetings, and welcome to the CryoLife Third 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. This is Steve Anderson, CryoLife’s CEO. And I would like to welcome you to CryoLife’s third quarter 2011 conference call. With me today is Ashley Lee, CryoLife’s CFO and Executive Vice President. This morning, we announced quarterly revenues of $29.7 million, a 4% increase over the same period last year. Our earnings for the third quarter were $0.07 compared to a loss of $0.11 in 2010. BioGlue’s quarterly sales in Japan are ahead of our expectations again. As we previously communicated, we had predicted that we would sell $600,000 worth of BioGlue in Japan during its first 12 months on the market there. Instead, we had sold over $1 million of BioGlue in the first six months; it has been on the market in Japan. We were also pleased with sales of $2.1 million of the Cardiogenesis products during the quarter. The agenda for today’s call is as follows. Ashley will discuss this morning’s press release in detail and by product. He will update you on the integration of the Cardiogenesis acquisition into the CryoLife product line. He will also discuss the first-in-man implant of three valve exchange valves in Paraguay and the timetable for the application for a CE mark for this valve. I will discuss and describe our recent acquisition strategy and the reposition the company to a higher growth cardiovascular surgery products. I will discuss our acquisition of PerClot, a powdered hemostatic agent; it’s European sales success and our plans for filing an IDE for PerClot in the United States. At this time, Ashley will comment on this morning’s press release.

Thank you, 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 that look forward in time, involve risk 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 subsequently filed Form 10-Qs 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 applicable GAAP measures 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 third quarter and first nine months of 2011. Before getting into the details a few highlights of the quarter included the fact that we continued executing on our strategy to position the company in higher growth and larger addressable market opportunities with our investment in ValveXchange, our ongoing integration of the Cardiogenesis acquisition, and continued progress in rolling out PerClot in international markets, while preparing for the resubmission of our IDE to being U.S. clinical trails for PerClot. We also had an all time third quarter revenue record of $29.7 million, driven by strengthness in…

Thank you, Ashley. Beginning in the first quarter of 2010, Ashley and I began an aggressive campaign to identify and buy, undervalued or under financed products or companies that were focused on cardiac and vascular surgical products. We were particularly interested in products that addressed complex cardiac and vascular repair. We were interested in products or companies that had high gross margins and extensive market opportunities. We were also very interested in leveraging our worldwide distribution network that is focused on cardiovascular and vascular reconstruction. I think that we investigated about 12 to 15 products or companies. As Ashley has discussed earlier in third quarter of 2010, we announced our first technology acquisition and that we have signed a worldwide manufacturing and distribution agreement for a unique powered hemostatic agent PerClot with Starch Medical of San Jose, California. PerClot is an ideal replacement for the hemostatic powder that we had been distributing worldwide. The primary difference is that PerClot’s gross margin will be 80%, whereas our previously distributed hemostatic agents had a gross margin of 50 plus percent. PerClot and BioGlue give us the opportunity to sell these two hemostatic agents together in European markets and we are doing so successfully. We estimate that the worldwide market for PerClot will be about $1.5 billion in 2014. As you will recollect, we filed our IDE for PerClot with the FDA in March of this year. The FDA had questions about our submission that we have been addressing. We will be reaching our IDE to the FDA in mid November. We expect to begin the clinical trial for PerClot during the second quarter of next year. The clinical trial will probably involve about 300 patients, 150 PerClot patients and 150 control patients. We expect that with six months enrollment and three months…

We expect 2011 revenues to be slightly below $122 million, which is the lower end of our previous total revenue guidance for the full year of 2011 of between $122 million and $125 million. This guidance includes revenues of approximately $0.50 million related to the use of funds received from the U.S. DoD in connection with the development of BioFoam. We expect combined BioGlue and BioFoam revenues to increase in mid single digits on a percentage basis in 2011 compared to 2010. Tissue processing revenues to be flat in 2011 compared to 2010. And revenues from powdered hemostats including PerClot and HemoStase to be between $4 million and $5 million. We expect revenues from the Cardiogenesis product line to be between $5 million and $5.5 million in 2011. We expect research and development expenses to be between $7 million and $8 million in 2011, down compared to the previous expected range of $10 million and $12 million as a result of the shift in timing of certain R&D expenses into 2012. We expect earnings per share of between $0.23 and $0.25. Excluding transaction and integration expenses, related to the acquisition of Cardiogenesis, and other business development charges of approximately $0.09 per share incurred in the first nine months of 2011, and accounting for normalized tax rate of 36%, we expect non-GAAP adjusted earnings per share of between $0.32 and $0.34 in 2011, up from our previous range of guidance of between $0.28 and $0.32 per share. We believe we are successfully executing on our strategy of positioning the company for accelerated revenue and earnings growth, by expanding our addressable market opportunities, through our internal development and business development activities. Looking forward, we have several key milestones that we expect to complete in the upcoming months. One, complete enrollment in our BioFoam IDE feasibility study in preparation for pivotal U.S. clinical trial. Two, re-file our PerClot IDE in mid November and begin clinical trials next year positioning us to potentially enter the U.S. market with the next generation hemostat by 2014. Three, initiate a European study of the phoenix autologous stem cell TMR system and file an IDE to begin human clinical trials in the U.S. using the TMR procedure in conjunction with autologous stem cells. And four, continue evaluating potential acquisitions that will allow us to enter large high growth segments of the cardiovascular market and accelerate the growth of the company. That concludes my comments and I will turn it back o Steve.

At this time we will open up the call for questions.

Thank you. (Operator instructions) Thank you. Our first question is from Matt Dolan with Ross Capital Partners. Please proceed with your question.

Great. First question on the guidance, just looking at the revenue at this point it implies maybe around 10% sequential uptick in Q4. So how far below $122 million should we expect or what gets you to that type of sequential uptick, meaning, is there a category that improves something on the macro level that rebounds?

We think that the upside is in the Cardiogenesis product line and the PerClot product line as well as potentially BioGlue in Japan.

Okay. But given your guidance on those categories it still requires a pretty big sequential uptick?

Yeah well the possibility exists again that we could do better and then we expect to do better in Cardiogenesis, PerClot, and BioGlue in Japan. And that -- we think that that’s, we have more upside in those three areas than the rest of the business.

Okay. And then on the earnings guidance just to clarify, I think the delta between adjusted and GAAP last quarter was $0.05 as supposed to an $0.08 differential at mid year. So I wanted to make sure that that’s the reason for the increase in the earnings guidance? And secondly the implied guidance for Q4 cuts EPS basically in half. So I’m just trying to understand why that would be?

The primary driver in non-GAAP, the increase in non-GAAP EPS as compared to the end of the second quarter is primarily due to the shifting of some R&D expenses due to some delays and getting some studies started, as those will be shifting out of 2011 into 2012. As it relates to the fourth quarter we provided for some additional expenses in the fourth quarter this year to account for the ongoing discovery and the acceleration of the discovery in our litigation with Metaphor.

Okay. So I think about, you’re exiting the year at a much lower EPS run rate? What’s a normalized earnings number for the company is $0.04 or what we just saw here in Q3?

Well a lot of it’s going to be dependent upon how we perform up on the top-line. It’s going to be dependent upon the timing and enrollment of clinical trials as well as the progress of what’s going on with the litigation with Metaphor. So we’re anticipating giving our initial guidance for 2012 in our year-end conference call, which is scheduled for February.

Okay. And last one on Cardiogenesis, I know it’s doing I think $11 million in the year before you acquired it. Your guidance still puts you below that run rate. Have you lost any revenue in that business or I know you mentioned it might be conservative? So maybe you could chalk it up to that?

The one thing that we haven’t realized yet since we acquired Cardiogenesis is the sale of any consoles. And one of the things that they had -- certainly had some sale of consoles in each of the previous two years. Our focus has been primarily on going out and focusing on hospitals that already have consoles placed and trying to increase handset usage.

Our next question comes from the line of Raymond Myers with Benchmark. Please proceed with your question.

Hi Ashley. Hello Steve. What charges might we expect from the discontinuance of the potential acquisition. Did that occur, that decision to discontinue, did that occur in Q3 or Q4 and what are the charges get placed?

That decision occurred late in the third quarter of this year. In the third quarter we incurred roughly about $450, 000 worth of expenses. And over the course of the year we incurred close to three quarters of a million dollars in expenses related to the target that we were pursuing.

So nothing more in Q4?

We don’t anticipate anything more related to that particular target in Q4 and all that shows up in the G&A line.

Okay, great. And then, how much of the Japan BioGlue sales year-to-date has been stocking and how much is a reasonable run rate?

I think we’re a little bit to determine that Ray. In the second quarter of this year we had roughly about $550,000 in revenue, in the third quarter about $650,000. We know that as we indicated in the comments there has been over 160 accounts that they have ordered, certainly some other has been stocking, but our distributor has been ordering from us regularly since they began. So I think it will probably have more color on stocking as opposed to actual usage although the indications are that we’re getting a lot of usage of the product in Japan.

Yeah, it’s good to hear. What level of SG&A and marketing expense should we expect as more of a normalized rate here in Q4 now that you’ve made the acquisition?

Well if you look at the results for the third quarter, which were about $14.7 million and we included, I think that we indicated that there was about $1.4 million related to business development cost in the third quarter. We also have brought on some additional. So you would normalize it for that. We’ve also brought on some additional infrastructure related to Cardiogenesis. We essentially brought on their sales force of 10 to 12 people along with two or three other additional employees and roughly on an annual basis that being probably $3.50 million to $4 million of additional expense for that infrastructure that we brought on. So if you want to go back to previous quarters, say the second quarter probably adding about $4 million in additional G&A is probably, I would say normalized. But what that doesn’t take into account is any acceleration and legal expenses associated with the ongoing Metaphor litigation. And we expect that to accelerate starting in the fourth quarter of this year.

And that was going to be my next question. So let’s get right to that. Roughly how much Metaphor litigation expense should we expect?

If you go through the end of the third quarter we had spent about $1.4 million and we’re expecting a similar amount in the fourth quarter of this year about $1.4 million. And then going forward into 2012, as the litigations proceeds, we’re going to have a better handle on what the 2012 levels are going to be and we’re going to be able to share that with you in our conference call in February of 2012 when we give our initial guidance.

Right great. Is there, is it reasonable to assume that that $1.4 million quarterly run rate would continue potentially throughout all of 2012 or is that drastically too high or low?

It's difficult to say at this point. A lot of it just depends on the scheduling with the courts and how it proceeds to the courts and that's inherently unpredictable. So it's really kind of hard to say at this point. But yeah, I certainly, I mean year-to-date including the fourth quarter we’re guiding to well maybe $2.8 million for all of 2011. We wouldn’t expect it to be any less than that going into 2012, but beyond that we’re going to have more color on that in the year-end conference call.

Okay, great thanks. And then a question about the Phoenix stem cell delivery system. Is that launched in Europe and if so how is that going?

We had our first exhibition of the Cardiogenesis products at the EACTS in September, and it was received very well. There had been a CE mark issued for that product line some time ago but it had just never ever been distributed in Europe. And we are in the early stages of setting up a pilot study in Europe for the autologous stem cell technology.

And when do you expect to start to commercialize that in earnest or get any revenue for the Phoenix system?

I think what we would like to do is conduct this pilot study or this study, 30-patient study in Europe and once we get the results of that actually we will have some data to begin rolling out and marketing the product in Europe. So it will probably will be sometime in 2012 before we see any noticeable revenues from the Phoenix system in Europe.

Yeah, how long will that pilot take to do?

Excuse me, Ray, I didn't hear you.

When should the pilot conclude?

Again that's going to be based on the rate of enrollment. We hope it would be some time in the first half of the 2012. But again it’s going to depend on the rate of enrollment.

Our next question is from the line of Joe Munda with Sidoti & Company. Please proceed with your question Joe Munda - Sidoti & Company: Couple of quick questions here. I was wondering if you can you give us a little bit of color on the acquisition that you didn't go through and why you didn't go through was it more of a evaluation or was the technology that you didn't find beneficial to you guys?

That decision was really based around our technological evaluation of the product. Joe Munda - Sidoti & Company: Can you give us what was the nature of the product?

Can’t answer that question. Joe Munda - Sidoti & Company: Okay.

All we can say is that it was consistent with our strategy to locate cardiovascular surgical products. Joe Munda - Sidoti & Company: Okay and in terms of your investment in ValveXchange $3.5 million, 19% and you guys have said that you would provide $2 million in credit facility for the company. With that did you increase ownership of the company if you guys were to provide that credit facility for them?

No would not. Joe Munda - Sidoti & Company: And my other question was in regards to cardio and vascular were flat this year is that more to future demand or were is there new players entering the market that you’re seeing?

I think it’s primarily due to the issues that we’re seeing with cost containment at hospitals. There are some competitive activities that are going on there. There aren't any new players, particularly in the market, but it’s hospitals under pressure to go out and find the lowest cost option. Joe Munda - Sidoti & Company: What would be the alternative? That’s really what…

There is a not for profit entity based in Virginia that's our primary competitor in the Allograft tissue space. So that's one thing, the primary competitor there. But a lot of it just comes from the environment that we’ve been operating in, it’s nothing new now as compared to the last several quarters it’s a very challenging environment for hospital spending. Joe Munda - Sidoti & Company: Okay and then actually just one more follow-up to before. You guys have PerClot revenues going $4 million to $5 million right now you -- for the first nine months at $1.9 million. What is going to jump that, to that $4 million to $5 million? Is it a new order or I know you talked about investing in other markets but really what is the driving that (inaudible) $4 million to $5 million?

The $45 million includes revenues from HemoStase also that we distributed in the first quarter of this year. So the $4 million to $5 million is combined covered hemostat revenue, which includes PerClot and HemoStase.

We have no further questions in the queue at this time. I would now like to turn the floor back over to management for closing comments.

Thank you for joining us for the third quarter. And we look forward to meeting with you in February of 2012 for our year-end conference call.

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.