Greetings, and welcome to the CryoLife Fourth Quarter and Year-End 2011 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, and welcome you to CryoLife’s Q4 and fiscal year 2011 conference call. This is Steve Anderson, CryoLife's President and CEO, and with me today is Ashley Lee, the company's Executive Vice President, CFO and COO. This morning, we reported record revenues of $119.6 million and earnings $0.26 for the year ended December 31, 2011. We achieved these results while also making substantial investments in business development and in our share buyback program, and we still achieved our sixth consecutive year of solid profitability. The agenda for today's call is as follows: Ashley will discuss this year's financial performance in detail. He will comment on the progress being made in the stock buyback program. I will comment on the technology and corporate acquisition that we made during the year. After my comments have been completed Ashley will return with financial guidance for 2012 that will include top line and bottom-line projections for this year. At this time, Ashley will discuss this morning's Q4 and year-end 2011 earnings release.

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 that look forward in time involve risk and uncertainties and are 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 2012 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 Factors section of our previously filed Form 10-K for the year-ended December 31, 2010, our subsequently filed Form 10-Qs, our Form 10-K for the year ended 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 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 fourth quarter and full year of 2011. Before getting into the details a few highlights of the quarter and year. We continued executing on our strategy to position the company in higher growth in larger addressable market opportunities. Achievements to this end include the launch of BioGlue in Japan, our ongoing integration of the Cardiogenesis acquisition completed in May 2011, our investment in ValveXchange and continued progress in rolling out PerClot in international markets, while preparing for our IDE to being U.S. clinical…

Over the past 20 months or so Ashley and I have been involved in acquisition and present product-line growth initiatives. Our core tissue and surgical adhesive business produces excellent cash flow, and our intent is to acquire innovative products or technologies with compelling market opportunities in the areas of cardiac and vascular surgery where we can leverage our commercial and clinical infrastructure. In September of 2011, we announced the finding of a worldwide distribution and manufacturing agreement for PerClot, a novel second-generation powered surgical hemostatic agent manufactured by Starch Medical of San Jose, California. PerClot which has received a CE mark for distribution with the European Union in a perfect complement to the company’s BioGlue surgical adhesive and we will have gross margin of around 80% when commercial sales begin in United States. PerClot stops bleeding quickly and is fully biodegradable within 48 to 72 hours. PerClot, BioFoam and BioGlue enable our European marketing team to bundle our surgical adhesives to hospital buying groups and effectively give the hospital a one-stop shopping opportunity for surgical adhesives and hemostatic agents. International sales of PerClot in 2011 were $2.5 million. We are forecasting sales of between $3.5 million and $4.5 million in 2012, a 50% to 75% increase over 2011 sales. And we anticipate filing or IDE application with the FDA within the next several weeks. We expect rapid enrollment in the trial followed by potential FDA approval and U.S. launch in 2014. We estimate the worldwide market for a powdered hemostat like PerClot to approach $1.5 billion by 2014. In April 2011, we announced the Japanese regulatory approval for BioGlue. Japan is the second largest market in the world for surgical adhesives and hemostats. We initially estimated our Japanese sales for the first nine months that BioGlue is on the market…

We expect 2012 revenues to be between $126 million and $129 million, representing growth of 5% to 8% over 2011. This guidance includes revenues of approximately $500,000 from funds received from the U.S. Department of Defense to develop BioFoam. Revenues from the tissue processing segment are expected to be flat in 2012 compared to 2011. Revenues from the company’s higher growth, higher margin product segment are expected to grow between 10% and 15% for the full year of 2012. We expect combined BioGlue and BioFoam revenues to increase in low to mid single digits on a percentage basis in 2012 compared to 2011 and PerClot revenues to be between $3.5 million and $4.5 million in 2012. We except revenues from the Cardiogenesis product line to be between $10.5 million and $11.5 million in 2012 which represents growth of 9% to 19% if you annualize our fourth quarter 2011 revenues. We expect research and development expenses to be between $10 million and $12 million in 2012 in order to support the clinical and regulatory advancement of BioFoam, PerClot and Cardiogenesis. We expect earnings per share of between $0.14 and $0.18 in 2012 which includes the increased R&D expenses along with increased legal expenses related to the company's ongoing litigation of medical work. The company's earnings per share guidance excludes expenses related to business development and the effect on earnings per share and potential share repurchases which cannot currently be estimated. We have estimated litigation expense conservatively on the high end because litigation expenses are extremely variable and not easily predicted. Going forward, we expect a normalized tax rate in the mid 30% range excluding the effects of any business development activities. We believe we are successfully executing on our strategy of positioning the company for accelerated revenue and earnings growth by…

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

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

Hey guys, this is Chris on line for Matt. How are you doing?

Hey, Chris, how are you?

Good. Just looking at your EPA -- EPS guidance for next year, we understand the impact of your incremental R&D investment but if we just stop the one-time charges associated with the Cardiogenesis deal, it looks like you’re losing some leverage on the SG&A line as well. Just wanted to know does that all stem from higher legal expenses, by which our math looks like around $3 million in added cost for the year or are there some other investments in that SG&A side that we should think about for the year?

The two primary factors that are increasing G&A year-over-year, one, is we’re going to have a full year of fully staffed Cardiogenesis sales force with CryoLife. So that’s one thing that’s driving the growth and the expenses there. And the other, quite frankly is the litigation. We have included a -- what we think is a very conservative budget for litigation expenses in 2012, which has resulted in what we believe as conservative EPS guidance for 2012.

Okay. And then, in terms of the cadence of investments, you generated $0.07 in the fourth quarter. Guidance assumes a quarterly run rate of $0.04 at the midpoint for next year. How should we think about the progression of these investments and therefore EPS throughout the course of the year?

Okay. We believe that the second and third quarters will be a heavy spend quarters for us, as it relates to the litigation. The discovery process is starting to ramp up right now. And we think that a large part of the increase, incremental increase in litigation expenses will incur during the second and third quarters of this year. As it relates to everything else, it should be fairly ratable throughout the year, as it relates to the additional cost for the Cardiogenesis sales and marketing infrastructure.

Okay. And then last question, given all you have going on in the R&D front here and considering you’re buying back some stock, are you still looking at acquisitions this year I know you kind of mentioned that in your comments. And if so, what is the timing and your financial capacity to execute on a deal?

We’re still looking at additional acquisitions and we’re in the early stages of evaluating two other acquisitions. I couldn’t give you an idea of the timing, those things kind of move ahead on there own timeframe. But I would expect that we would probably do one more acquisition this year.

Thank you. Our next question is coming from Raymond Myers from Benchmark. Please proceed with your question.

Well I’ll tell you what we have conservatively budgeted for litigation for this year. We could spend as much as $5 million to $6 million on litigation this year. So, if an opportunity presented itself to settle some of these issues on terms that are acceptable to us that number could prove to be very conservative.

Excellent that’s very helpful that number. Next maybe Steve could outline a little bit more about the clinical trial program for BioFoam. What progress have we made in the last say six months and what exactly are the milestones like going forward to get BioFoam in the market?

Well we have only recently began enrolling patients in the United States. And I would think that the enrollment process will take a good part of this year. And I think then that we should expect that product to get approved towards the end of 2013, early 2014.

Okay. And what is the expenses budgeted for BioFoam clinical trials?

That’s going to be largely variable rate this year and highly dependent upon enrollment rate. Right now, I mean, it could be as high as a couple of million dollars for the remainder of this year, if that we do end up spending that much, then the grant revenue associated with that particular project would be substantially higher than the $500,000 that we guided towards.

We didn’t expect that BioFoam would be strong enough to handle cardiovascular pressures, and it has turned out that a few physicians in Europe have used it for cardiovascular indications. And so, we are in the early stages of setting up an expended indication to our regulatory body in the UK -- I mean not the UK but Europe to get us a cardiac indication for that product, and if we are successful in doing that the potential for BioFoam expands greatly.

Okay, excellent. What specifically is the next step to get in the BioFoam US IDE pathway?

They have to complete the enrollment of the initial patients.

How many patients are involved now and how many do we need, and when do we expect that to be complete?

We are currently in the feasibility pilot study right now, Ray, we got a couple of people enrolled right now. We are going to enroll up to 20 patients in the pilot study. One key event that we are looking towards that will, we believe, significantly accelerate enrollment is we have an amendment that, we believe, an amendment to the protocol that we believe will be implemented in April of this year. And once we get that amendment implemented we think that the enrolment is going to increase significantly.

Then that’s the critical step I think that we are looking for. That in April and then we accelerate enrolment and hopefully complete the study within a few months after that, is that correct?

Yeah. Right now, the FDA has indicated that we need to follow-up these patients to an extended period of time related to the, what they want to see which is the degradation of the particular product. We are hopeful that they are going to allow us to shorten the follow-up not have to wait for the full follow-up period to begin the favorable study. So we expect to make some progress during this year in the BioFoam IDE.

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

All right. Thank you for joining us for this conference call and we look forward to speaking with you again to discuss our first quarter 2012 results.

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. We thank you for your participation.