Exhibit 13
Item 5. Market for Registrant's Equity and Related Stockholder Matters - page
35 of annual shareholder report below:
MARKET PRICE OF COMMON STOCK
The Company's Common Stock is traded under the symbol "CRY." The following table
sets forth, for the periods indicated, the intra-day high and low sale prices
per share of Common Stock on the NYSE.
2000 High Low
- ----------------------------------------------------------------- -------------------- -------------------
First Quarter 16 5/12 7 1/2
Second Quarter 16 1/4 10 3/8
Third Quarter 23 1/8 14 7/8
Fourth Quarter 35 7/8 17 5/6
- ----------------------------------------------------------------- -------------------- -------------------
1999 High Low
- ----------------------------------------------------------------- -------------------- -------------------
First Quarter 8 1/2 6 5/6
Second Quarter 12 5/12 6 2/3
Third Quarter 10 1/6 7 1/2
Fourth Quarter 9 1/4 7 3/8
- ----------------------------------------------------------------- -------------------- -------------------
Reflects adjustment for 3-for-2 stock split effected December 27, 2000.
1
Item 6. Selected Financial Data - page 36 of annual shareholder report below:
SELECTED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------------------------------------------
(In thousands except percentages and per share data) December 31,
OPERATIONS 2000 1999 1998 1997 1996
- --------------------------------------------- ------------- ------------- ------------- -------------- -------------
Revenues $77,096 $66,722 $60,691 $50,571 $36,866
Net Income 7,817 4,451 6,486 4,725 3,927
Research and development as a
percentage of revenues 6.8% 6.6% 7.8% 7.8% 7.6%
EARNINGS PER SHARE 1,2
- --------------------------------------------- ------------- ------------- ------------- -------------- -------------
Basic $ 0.42 $ 0.24 $ 0.36 $ 0.33 $ 0.28
Diluted $ 0.41 $ 0.24 $ 0.35 $ 0.32 $ 0.26
YEAR-END FINANCIAL POSITION
- --------------------------------------------- ------------- ------------- ------------- -------------- -------------
Total assets $112,009 $94,025 $98,390 $54,402 $34,973
Working capital 68,449 59,597 62,310 19,478 10,787
Long-term liabilities 11,905 6,177 8,577 17,846 2,799
Shareholders' equity 89,395 80,226 80,421 30,227 24,929
Current ratio 7:1 9:1 8:1 4:1 3:1
Shareholders' equity per diluted
common share 1,2 $ 4.65 $ 4.27 $ 4.38 $ 2.03 $ 1.68
1 Reflects adjustment for the 3-for-2 stock split effected December 27, 2000.
2 Reflects adjustment for the 2-for-1 stock split effected June 28, 1996.
1343997v1
2
Item 8. Financial Statements and Supplementary Data - pages 22-37 of annual
shareholder report below:
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO CRYOLIFE, INC.:
We have audited the accompanying consolidated balance sheet of
CRYOLIFE, INC. AND SUBSIDIARIES as of December 31, 2000 and 1999, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the two years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The financial
statements of the Company as of December 31, 1998, and for each of the two years
ended December 31, 1998, were audited by other auditors whose report dated
February 2, 1999 expressed and unqualified opinion on those statements.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principals used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of CryoLife, Inc. and
subsidiaries as of December 31, 2000 and 1999 and the results of their
operations and their cash flows for each of the two years ended December 31,
2000 in conformity with accounting principles generally accepted in the United
States.
ARTHUR ANDERSEN, LLP
Atlanta, Georgia
February 7, 2001
1344382v1
3
CryoLife, Inc.
Consolidated Balance Sheets
(in thousands, except per share data)
ASSETS
December 31, 2000 1999
- ----------------------------------------------------------------------------------------------------------
Current assets:
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents $ 17,480 $ 6,128
Marketable securities, at market 21,234 24,403
Receivables:
Trade accounts, less allowance for doubtful accounts of
$85 in 2000 and $528 in 1999 11,454 11,694
Note receivable, less allowance of $723 1,833 --
Income taxes 574 31
Other 711 608
- ----------------------------------------------------------------------------------------------------------
Total receivables 14,572 12,333
- ----------------------------------------------------------------------------------------------------------
Deferred preservation costs 20,311 17,652
Inventories 3,994 4,597
Prepaid expenses 893 1,123
Deferred income taxes 674 983
- ----------------------------------------------------------------------------------------------------------
Total current assets 79,158 67,219
- ----------------------------------------------------------------------------------------------------------
Property and equipment:
- ----------------------------------------------------------------------------------------------------------
Equipment 12,911 11,882
Furniture and fixtures 4,327 3,147
Leasehold improvements 14,149 14,487
Construction in progress 8,219 1,001
- ----------------------------------------------------------------------------------------------------------
39,606 30,517
Less accumulated depreciation and amortization 14,027 11,843
- ----------------------------------------------------------------------------------------------------------
Net property and equipment 25,579 18,674
- ----------------------------------------------------------------------------------------------------------
Other assets:
- ----------------------------------------------------------------------------------------------------------
Note receivable, less allowance of $241 643 --
Goodwill, less accumulated amortization
of $405 in 2000 and $311 in 1999 1,495 1,590
Patents, less accumulated amortization
of $850 in 2000 and $794 in 1999 2,540 2,363
Other, less accumulated amortization
of $436 in 2000 and $742 in 1999 2,423 2,780
Deferred income taxes 171 1,399
- ----------------------------------------------------------------------------------------------------------
Total assets $ 112,009 $ 94,025
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
4
CryoLife, Inc.
Consolidated Balance Sheets
(in thousands, except per share data)
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, 2000 1999
- ----------------------------------------------------------------------------------------------------------
Current liabilities:
- ----------------------------------------------------------------------------------------------------------
Accounts payable $ 2,914 $ 975
Accrued expenses 1,054 1,595
Accrued compensation 2,097 1,711
Accrued procurement fees 3,537 2,874
Current maturities of capital lease obligation 173 180
Current maturities of long-term debt 934 287
- ----------------------------------------------------------------------------------------------------------
Total current liabilities 10,709 7,622
- ----------------------------------------------------------------------------------------------------------
Capital lease obligations, less current maturities 1,361 1,534
Convertible debenture 4,393 4,393
Bank line of credit, less current maturities 6,151 --
Other long-term debt -- 250
- ----------------------------------------------------------------------------------------------------------
Total liabilities 22,614 13,799
- ----------------------------------------------------------------------------------------------------------
Commitments and Contingencies
Shareholders' equity:
Preferred stock $.01 par value per share;
authorized 5,000 shares including 2,000
shares of series A junior participating preferred stock;
no shares issued -- --
Common stock $.01 par value per share;
authorized 75,000 shares; issued 20,077 in 2000 and
20,041 shares in 1999 201 200
Additional paid-in capital 64,936 64,359
Retained earnings 31,381 23,564
Deferred compensation (45) (57)
Accumulated other comprehensive income (1,088) (785)
Treasury stock; 1,356 shares in 2000 and 1,701
shares in 1999, at cost (5,990) (7,055)
- ----------------------------------------------------------------------------------------------------------
Total shareholders' equity 89,395 80,226
- ----------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 112,009 $ 94,025
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
5
CryoLife, Inc.
Consolidated Income Statements
(in thousands, except per share data)
Year Ended
December 31, 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------
Revenues:
- ---------------------------------------------------------------------------------------------------------
Preservation services and products $ 76,480 $ 65,845 $ 60,179
Research grants and licenses 616 877 512
- ---------------------------------------------------------------------------------------------------------
77,096 66,722 60,691
- ---------------------------------------------------------------------------------------------------------
Costs and Expenses:
- ---------------------------------------------------------------------------------------------------------
Preservation services and products 33,347 30,170 25,303
General, administrative, and marketing 28,731 24,693 23,907
Research and development 5,207 4,396 4,708
Nonrecurring charges -- 2,355 --
Interest expense 299 387 670
Interest income (1,952) (1,556) (1,490)
Other income, net (169) (224) (1,078)
- ----------------------------------------------------------------------------------------------------------
65,463 60,221 52,020
- ---------------------------------------------------------------------------------------------------------
Income before income taxes 11,633 6,501 8,671
Income tax expense 3,816 2,050 2,185
- ---------------------------------------------------------------------------------------------------------
Net income $ 7,817 $ 4,451 $ 6,486
- ---------------------------------------------------------------------------------------------------------
Earnings per share:
- -------------------
Basic $ 0.42 $ 0.24 $ 0.36
- ---------------------------------------------------------------------------------------------------------
Diluted $ 0.41 $ 0.24 $ 0.35
- ---------------------------------------------------------------------------------------------------------
Weighted average shares outstanding:
Basic 18,541 18,512 17,961
- ---------------------------------------------------------------------------------------------------------
Diluted 19,229 18,800 18,396
- ---------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
6
CryoLife, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31, 2000 1999 1998
- ---------------------------------------------------------------------------------------------------------
Net cash flows from operating activities:
- ---------------------------------------------------------------------------------------------------------
Net income $ 7,817 $ 4,451 $ 6,486
Adjustments to reconcile net income to net cash
flows provided by operating activities:
Deferred income recognized -- (1,176) (387)
Gain on sale of marketable equity securities -- (112) (4)
Depreciation of property and equipment 3,023 2,854 2,586
Amortization 199 300 905
Provision for doubtful accounts 21 121 176
Deferred income taxes 1,658 (970) (1,948)
Nonrecurring charges -- 2,355 --
Tax effect of non-qualified option exercises 595 -- --
Changes in operating assets and liabilities:
Trade and other receivables 469 (1,707) (1,797)
Income taxes (543) 40 771
Deferred preservation costs (2,659) (3,413) (1,982)
Inventories (1,433) (2,882) (3,010)
Prepaid expenses and other assets 230 822 (706)
Accounts payable 1,095 (686) 295
Accrued expenses (193) 1,321 (158)
- ----------------------------------------------------------------------------------------------------------
Net cash flows provided by operating activities 10,279 1,318 1,227
- ---------------------------------------------------------------------------------------------------------
Net cash flows from investing activities:
- ---------------------------------------------------------------------------------------------------------
Capital expenditures (9,491) (3,853) (6,693)
Net proceeds from sale of IFM product line -- -- 15,000
Other assets 43 (783) (752)
Purchases of marketable securities (5,729) (5,123) (34,063)
Sales of marketable securities 8,542 6,149 7,604
- ---------------------------------------------------------------------------------------------------------
Net cash flows used in investing activities (6,635) (3,610) (18,904)
- ----------------------------------------------------------------------------------------------------------
Net cash flows from financing activities:
- ---------------------------------------------------------------------------------------------------------
Principal payments of debt (287) (514) (13,990)
Proceeds from debt issuance 6,835 -- 1,680
Proceeds from note receivable 360 -- --
Principal payments on obligations under capital leases (180) (224) (203)
Proceeds from exercise of options and issuance of stock 1,660 571 46,298
Purchase of treasury stock (612) (4,296) (3,350)
Net payments on notes receivable from shareholders -- -- 16
- ---------------------------------------------------------------------------------------------------------
Net cash flows provided by (used in) financing activities 7,776 (4,463) 30,451
- ---------------------------------------------------------------------------------------------------------
Increase (decrease) in cash 11,420 (6,755) 12,774
Effect of exchange rate changes on cash (68) (2) --
- ---------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of year 6,128 12,885 111
- ---------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 17,480 $ 6,128 $ 12,885
- ---------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information -
cash paid during the year for:
- ---------------------------------------------------------------------------------------------------------
Interest $ 471 $ 369 $ 742
Income taxes 2,215 3,816 3,568
- ---------------------------------------------------------------------------------------------------------
Non cash investing and financing activities:
Establishing capital lease obligation $ -- $ -- $ 2,141
- ---------------------------------------------------------------------------------------------------------
Debt conversion into common stock $ -- $ -- $ 608
- ---------------------------------------------------------------------------------------------------------
Purchase of property and equipment
in accounts payable $ 844 $ 6 $ 185
- ---------------------------------------------------------------------------------------------------------
Tax effects of non-qualified option exercises $ 595 $ -- $ --
- ---------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
7
CryoLife, Inc.
Consolidated Statements of Shareholders' Equity
(in thousands)
Notes
Common Shares Additional Accumulated Receivable Total
Outstanding Paid-In Retained Deferred Other Treasury From Shareholders'
Shares Amount Capital Earnings Compensation Comprehensive Stock Shareholders Equity
Income
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 14,553 $154 $17,642 $12,627 $-- $-- $(180) $(16) $30,227
- -----------------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- 6,486 -- -- -- -- 6,486
Unrealized gains on
investments -- -- -- -- -- 139 -- -- 139
-------------
Comprehensive income 6,625
Follow-on equity offering,
net of $703 of offering
costs 4,464 44 45,403 -- -- -- -- -- 45,447
Exercise of options 150 1 338 -- -- -- 121 -- 460
Employee stock purchase plan 46 -- 294 -- -- -- 97 -- 391
Convertible debenture 75 1 604 -- -- -- -- -- 605
Purchase of treasury stock (514) -- -- -- -- -- (3,350) -- (3,350)
Payment on shareholder note -- -- -- -- -- -- -- 16 16
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 18,774 200 64,281 19,113 -- 139 (3,312) -- 80,421
- -----------------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- 4,451 -- -- -- -- 4,451
Unrealized losses on
investments -- -- -- -- -- (922) -- -- (922)
Translation adjustment -- -- -- -- -- (2) -- -- (2)
-------------
Comprehensive income 3,527
Exercise of options 74 -- (126) -- -- -- 305 -- 179
Employee stock purchase plan 60 -- 144 -- -- -- 248 -- 392
Issuance of stock options
to a nonemployee -- -- 60 -- (60) -- -- -- --
Amortization of deferred
compensation -- -- -- -- 3 -- -- -- 3
Purchase of treasury stock (567) -- -- -- -- -- (4,296) -- (4,296)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 18,341 200 64,359 23,564 (57) (785) (7,055) -- 80,226
- -----------------------------------------------------------------------------------------------------------------------------------
Net income -- -- -- 7,817 -- -- -- -- 7,817
Unrealized losses on
investments -- -- -- -- -- (235) -- -- (235)
Translation adjustment -- -- -- -- -- (68) -- -- (68)
-------------
Comprehensive income 7,514
Exercise of options 392 1 338 -- -- -- 1,389 -- 1,728
Employee stock purchase plan 66 -- 239 -- -- -- 288 -- 527
Amortization of deferred
compensation -- -- -- -- 12 -- -- -- 12
Purchase of treasury stock (78) -- -- -- -- -- (612) -- (612)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000 18,721 $201 $64,936 $31,381 $(45) $(1,088) $(5,990) $-- 89,395
===================================================================================================================================
See accompanying notes to consolidated financial statements.
8
CRYOLIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Nature of Business
Founded in 1984, CryoLife, Inc. (the "Company") is the leader in the
preservation of viable human tissues for transplant, and is developing and
commercializing additional implantable devices for use in vascular,
cardiovascular, and orthopaedic applications. The Company's primary business
segment, cryopreservation of human tissues, marketed in North and South America,
Europe, and Asia. The Company develops proprietary implantable bioadhesives,
including BioGlue surgical adhesive, which it has begun commercializing for
vascular and pulmonary applications in North America, Europe, South America,
Asia, South Africa, and the Middle East. In addition, the Company's
bioprosthetic implantable products include stentless porcine heart valves
marketed in Europe, South America, the Middle East, Canada, and South Africa, as
well as a proprietary project to transplant human cells onto the structure of
animal tissue. Until October 9, 2000, the Company served as an original
equipment manufacturer for single-use medical devices for use in vascular
surgical procedures. International revenues were $5.1 million in 2000 and $4.0
million in 1999 and 1998. Net revenues by product for the years ended December
31, 2000, 1999, and 1998 were as follows:
2000 1999 1998
----------------- ------------------ -----------------
Preservation services:
Heart valve tissue $29,685 $29,043 $30,836
Vascular tissue 21,279 19,273 14,270
Connective tissue 16,132 11,200 7,720
--------------- --------------- ---------------
Total preservation services 67,096 59,516 52,826
BioGlue surgical adhesive 6,405 1,657 883
Single-use medical devices 2,208 3,717 5,672
Bioprosthetic products 771 955 798
--------------- --------------- ---------------
$76,480 $65,845 $60,179
=============== =============== ===============
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany balances are
eliminated.
Reclassifications
Certain prior year balances have been reclassified to conform to the 2000
presentation.
Use of Estimates
The preparation of the accompanying consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.
9
Revenue Recognition
Revenues for preservation services are recognized as services are performed.
Revenues from medical devices and other products are recognized at the time the
product is shipped or title passes pursuant to customer terms. Revenues from
research grants are recognized in the period the associated costs are incurred,
and license revenues are recognized in the period cash is received and all
licensor obligations have been fulfilled. Amounts recognized as revenues are
fixed and collectibility of the related receivables is reasonably assured.
Cash and cash equivalents
Cash equivalents consist primarily of highly liquid investments with
insignificant interest rate risk and maturity dates of 90 days or less at the
time of acquisition. The carrying value of cash equivalents approximates fair
value.
Marketable Securities
The Company maintains cash equivalents and investments in several large,
well-capitalized financial institutions, and the Company's policy disallows
investment in any securities rated less than "investment-grade" by national
rating services.
Management determines the appropriate classification of debt securities at the
time of purchase and reevaluates such designations as of each balance sheet
date. Debt securities are classified as held-to-maturity when the Company has
the positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are stated at amortized cost. Debt securities not
classified as held-to-maturity or trading and marketable equity securities not
classified as trading are classified as available-for-sale. Available-for-sale
securities are stated at their fair values, with the unrealized gains and
losses, net of tax, reported in a separate component of shareholders' equity.
The amortized cost of debt securities classified as available-for-sale is
adjusted for amortization of premiums and accretion of discounts to maturity.
Such amortization is included in investment income. Realized gains and losses
and declines in value judged to be other than temporary on available-for-sale
securities are included in investment income. The cost of securities sold is
based on the specific identification method. Interest and dividends on
securities classified as available-for-sale are included in interest income. At
December 31, 2000 and 1999, all marketable equity securities and debt securities
were designated as available-for-sale.
Deferred Preservation Costs
Tissue is procured from deceased human donors by organ procurement organizations
and tissue banks which consign the tissue to the Company for processing and
preservation. Preservation costs related to tissue held by the Company are
deferred until shipment to the implanting hospital. Deferred preservation costs
consist primarily of laboratory expenses, tissue procurement fees, fringe and
facility allocations, and freight-in charges, and are stated on a first-in,
first-out basis.
Inventories
Inventories are comprised of single-use medical devices, bioprosthetic
implantable products, and implantable bioadhesives and are valued at the lower
of cost (first-in, first-out) or market.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided over the
estimated useful lives of the assets, generally five to ten years, on a
straight-line basis. Leasehold improvements are amortized on a straight-line
basis over the lease term or the estimated useful lives of the assets, whichever
is shorter.
10
Intangible Assets
Goodwill resulting from business acquisitions is amortized on a straight-line
basis over 20 years. Patent costs are amortized over the expected useful lives
of the patents (primarily 17 years) using the straight-line method. Other
intangibles, which consist primarily of manufacturing rights and agreements, are
being amortized over the expected useful lives of the related assets (primarily
five years).
The Company periodically evaluates the recoverability of noncurrent tangible and
intangible assets and measures the amount of impairment, if any, by assessing
current and future levels of income and cash flows as well as other factors,
such as business trends and prospects and market and economic conditions.
Long-lived Assets
The Company records impairment losses on long-lived assets in operations when
events and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amount of those assets.
Income Taxes
Deferred income tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted income tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Stock Split
On November 27, 2000, the Board of Directors declared a three-for-two stock
split, effected in the form of a stock dividend, payable on December 27, 2000,
to shareholders of record on December 8, 2000. All share and per share
information in the accompanying consolidated financial statements has been
adjusted to reflect such split.
Comprehensive Income
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income" ("Statement 130"), establishes standards for the reporting
and display of comprehensive income and its components in a full set of
comparative general-purpose financial statements. The statement became effective
for the Company in 1998. Comprehensive income is defined in Statement 130 as net
income plus other comprehensive income, which, under existing accounting
standards, includes foreign currency items, minimum pension liability
adjustments and unrealized gains and losses on certain investments in debt and
equity securities. Comprehensive income disclosures are included in the
Consolidated Statements of Shareholders' Equity.
New Accounting Pronouncement
On January 1, 2001, the Company was required to adopt SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("Statement 133"), as
amended. Statement 133 requires the Company to recognize all derivative
instruments on the balance sheet at fair value, and changes in the derivative's
fair value must be recognized currently in earnings or other comprehensive
income, as applicable. The adoption of Statement 133 impacts the accounting for
the Company's forward-starting interest rate swap agreement.
The Company maintains a construction line of credit, which converts to floating
rate debt (i.e., term loan) upon completion of the expansion of the Company's
corporate headquarters (Note 5). This floating rate debt exposes the Company to
changes in interest rates going forward. On March 16, 2000, the Company entered
into $4 million in notional amounts of a forward-starting interest swap
11
agreement that take effect on June 1, 2001. This swap agreement has been
designated as a cash flow hedge to effectively convert a portion of its
anticipated term loan balance to a fixed rate basis, thus reducing the impact of
interest rate changes on future income. This agreement involves the receipt of
floating rate amounts in exchange for fixed rate interest payments over the life
of the agreement without an exchange of the underlying principal amounts. The
differential to be paid or received is accrued as interest rates change and
recognized as an adjustment to interest expense related to the debt. Upon
adoption of SFAS 133 in 2001, the Company recorded an unrealized loss of
approximately $175,000 related to the interest rate swap, which was recorded as
part of long-term liabilities and accumulated other comprehensive income. The
reclassification of any gains or losses associated with the interest rate swap
into the statement of income is anticipated to occur upon the various maturity
dates of the interest rate swap agreement, which expires in 2006.
During 1999, the Securities and Exchange Commission released Staff Bulletin 101,
"Revenue Recognition in Financial Statements" which clarifies the basic criteria
for recognizing revenue. The Company adopted this bulletin during the fourth
quarter 2000. The adoption of this bulletin did not have a material impact on
the consolidated financial statements.
2. Ideas for Medicine, Inc.
On March 5, 1997 the Company acquired the stock of Ideas for Medicine, Inc.
("IFM"), a medical device company specializing in the manufacture and
distribution of single-use medical devices, for consideration of approximately
$4.5 million in cash and approximately $5.0 million in convertible debentures
plus related expenses. The cash portion of the purchase price was financed by
borrowings under the Company's revolving term loan agreement. Pursuant to the
purchase agreement, an additional consideration of $700,000 was paid in January
2000. In connection with this acquisition, the Company also entered into a
consulting agreement with the former majority shareholder of IFM requiring
monthly payments to such shareholder of approximately $17,000 until March 2002.
On September 30, 1998 the Company completed the sale of substantially all of the
IFM product line and certain related assets to Horizon Medical Products, Inc.
("HMP") for $15 million in cash pursuant to an asset purchase agreement.
Concurrently, IFM and HMP signed a Manufacturing Agreement (the "Agreement")
which provided for the manufacture by IFM of specified minimum dollar amounts of
IFM products to be purchased exclusively by HMP over each of the four years
following the sale. Thereafter, responsibility for such manufacturing was to be
assumed by HMP.
The Company recorded deferred income at the transaction date totaling $2.9
million, representing the selling price less the net book value of the assets
sold, which included $7.7 million of goodwill, net of accumulated amortization,
and the costs related to the sale. The income was deferred because the sale and
manufacturing agreements represented, in the aggregate, a single transaction for
which the related income should be recognized over the term of the manufacturing
agreement. Accordingly, the deferred income was reflected in cost of goods sold
during 1999 and 1998 to maintain margins that would have been approximately
equal over the four-year period of the Agreement on the products manufactured
and sold by IFM to HMP. During 1999 and 1998 amortization of deferred income
totaled $1.2 million and $387,000, respectively.
On June 22, 1999 IFM notified HMP that it was in default of certain provisions
of the Agreement. Specifically, HMP was in violation of the payment provisions
12
contained within the Agreement, which called for inventory purchases to be paid
for within 45 days of delivery. Additionally, HMP was in violation due to
nonpayment of interest related to such past due accounts receivable.
After notification of the default, HMP indicated to the Company that it would
not be able to meet and did not meet the minimum purchase requirements outlined
in the Agreement. At December 31, 1999, the Company determined that it had
incurred an impairment loss on its IFM assets due to the significant
uncertainties related to the Company's ability to realize its investment in IFM.
In calculating the amount of the impairment loss, management used its best
estimate to determine the realizable value of its increase in working capital
due to the HMP default and the recoverability of IFM's long-lived assets,
consisting primarily of leasehold improvements and equipment. As a result,
management recorded a $2.1 million impairment loss on working capital and a $2.6
million impairment loss on leasehold improvements. Additionally, the Company
offset the above charges with $2.5 million of deferred income recorded in
connection with the sale of the IFM product line to HMP. The net pretax effect
of the above nonrecurring charges was $2.2 million and has been included under
the caption "Nonrecurring charges" in the accompanying Consolidated Income
Statements. At December 31, 1999, after recognition of the impairment loss, IFM
assets consisted of $800,000 of accounts receivable, $1.7 million of inventory,
$1.6 million of building, and $360,000 of equipment.
On October 9, 2000 the Company sold substantially all of the remaining assets of
IFM to HMP. The assets consisted primarily of inventory, equipment and leasehold
improvements. The transaction provides for HMP to pay the Company the sum of
approximately $5.9 million, payable in equal monthly installments of principal
and interest of $140,000. The note consists of a portion, approximately $3.8
million, which bears interest at 9% per year, and a non-interest-bearing portion
of approximately $2.1 million. The note also requires an additional $1 million
principal payment at any time prior to April 3, 2001. If the $1 million payment
is made when due, and no other defaults exist under the note, then $1 million of
the non-interest-bearing portion of the note will be forgiven. In addition, at
such time as the principal balance has been paid down to $1.1 million and there
have been no defaults under the promissory note, the remainder of the note will
be forgiven and the note will be canceled.
In addition, CryoLife has entered into a sublease agreement with HMP under which
HMP has assumed responsibility for the IFM manufacturing facility. Also,
substantially all of the employees of IFM have become employees of HMP.
3. Marketable Securities
The following is a summary of available-for-sale securities (in thousands):
Unrealized Estimated
Holding Market
December 31, 2000 Cost Losses Value
----------------- ----------------- -----------------
Municipal obligations $ 17,789 $ (2) $ 17,787
Equity securities 9,889 (1,540) 8,349
---------------- ---------------- ----------------
$ 27,678 $ (1,542) $ 26,136
================ ================ ================
Unrealized Estimated
Holding Market
December 31, 1999 Cost Losses Value
----------------- ----------------- -----------------
Municipal obligations $ 20,223 $ (226) $ 19,997
Equity securities 9,444 (959) 8,485
---------------- ---------------- ----------------
$ 29,667 $ (1,185) $ 28,482
================ ================ ================
13
The gross realized gains on sales of available-for-sale securities totaled $0
and $112,000 in 2000 and 1999, respectively. Differences between cost and market
of a $1.5 million (less deferred taxes of $524,000) and a $1.2 million loss
(less deferred taxes of $403,000) are included as a separate component of
shareholders' equity as of December 31, 2000 and 1999, respectively.
At December 31, 2000 and 1999, approximately $4.9 million and $4.1 million,
respectively, of debt securities with original maturities of 90 days or less at
their acquisition dates were included in cash and cash equivalents. At December
31, 2000 approximately $8.3 million of investments mature within 90 days, no
investments had a maturity date between 90 days and 1 year, and approximately
$21.2 million of investments mature between 1 and 5 years.
4. Inventories
Inventories at December 31 are comprised of the following (in thousands):
2000 1999
-------------------- -------------------
Raw materials $1,796 $1,555
Work in process 405 578
Finished goods 1,793 2,464
----- -----
$3,994 $4,597
====== ======
5. Long-Term Debt
Long-term debt at December 31 consists of the following (in thousands):
2000 1999
---------------- --------------
Line of credit bearing interest equal to the Adjusted LIBOR plus 2%,
to be adjusted monthly. Upon the earlier of completion of construction
of the Company's expanded headquarters or June 30, 2001, the line will
convert to a 5 year term loan bearing interest at Adjusted LIBOR plus
1.5%. $6,835 --
7% convertible debenture, due in March 2002 4,393 4,393
8.25% note payable due in equal annual installments of $250,000 250 500
Note payable due in 2000 with an effective interest rate of 8%, net of
unamortized discount of $3,000 in 1999 -- 37
---------------- --------------
11,478 4,930
Less current maturities 934 287
---------------- --------------
Total long-term debt $10,544 $4,643
================ ==============
14
As amended on June 12, 1998, the Company executed a $10 million revolving loan
agreement (the "Loan Agreement") with a bank which permits the Company to borrow
up to $2.0 million at either the bank's prime rate of interest (9.5% at December
31, 2000) or at adjusted LIBOR, as defined, plus an applicable LIBOR margin. The
Loan Agreement expires on December 31, 2001. The Loan Agreement contains certain
restrictive covenants including, but not limited to, maintenance of certain
financial ratios and a minimum tangible net worth requirement. The Loan
Agreement is secured by substantially all of the Company's assets, excluding
intellectual property. Commitment fees are paid based on the unused portion of
the facility.
On April 25, 2000 the Company entered into a loan agreement ("Line Agreement")
which permits the Company to borrow up to $8 million under a line of credit
during the expansion of the Company's corporate headquarters. Borrowings under
the line of credit bear interest equal to the Adjusted LIBOR plus 2% to be
adjusted monthly (8.8% at December 31, 2000). Upon the earlier of completion of
construction or June 30, 2001, the line of credit will be converted to a term
loan to be paid in 60 equal monthly installments of principal plus interest
computed at Adjusted LIBOR plus 1.5%. The Line Agreement contains certain
restrictive covenants including, but not limited to, maintenance of certain
financial ratios and a minimum tangible net worth requirement. The Line
Agreement is secured by substantially all of the Company's assets. A commitment
fee of $20,000 was paid when the Company entered into the Line Agreement. At
December 31, 2000, $1.2 million was available to be borrowed under the line of
credit.
In March 1997 the Company issued a $5.0 million convertible debenture in
connection with the IFM acquisition. The debenture bears interest at 7% and is
due in March 2002. The debenture is convertible into common stock of the Company
at any time prior to the due date at $8.05 per common share. In conjunction with
the Company's follow-on equity offering in April of 1998, $607,000 of the
convertible debenture was converted into 75,000 shares of the Company's common
stock on March 30, 1998.
On September 12, 1996 the Company acquired the assets of United Cryopreservation
Foundation, Inc. ("UCFI"), a processor and distributor of cryopreserved human
heart valves and saphenous veins for transplant. The Company issued a $1.25
million note in connection with the acquisition. The note bears interest at
prime, as adjusted annually on the anniversary date of the acquisition.
Scheduled maturities of long-term debt for the next five years are as follows
(in thousands):
2001 $934
2002 5,760
2003 1,367
2004 1,367
2005 1,367
Thereafter 683
-------
$11,478
6. Fair Values of Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments", requires the Company to disclose estimated fair
values for its financial instruments. The carrying amounts of receivables and
accounts payable approximate their fair values due to the short-term maturity of
these instruments. The carrying value of the Company's other financial
instruments approximated fair value at December 31, 2000 and 1999.
15
7. Commitments and Contingencies
Leases
The Company leases equipment, furniture, and office space under various leases
with terms of up to 19 years. Commencing January 5, 1998 the Company leased
office and manufacturing facilities under a capital lease for $24,125 per month
with an interest rate at 8% per annum through January 2008 from the former
majority shareholder of IFM. This lease is subject to a sublease agreement with
HMP as discussed in footnote number 2. Certain leases contain escalation clauses
and renewal options for additional periods. Future minimum lease payments under
noncancelable leases as of December 31, 2000 are as follows (in thousands):
Capitalized Operating
Leases Leases
--------------------------------------------------------------------------------------------------
2001 $ 290 $ 2,061
2002 290 1,947
2003 290 1,942
2004 290 1,896
2005 290 1,905
Thereafter 579 20,779
--------------------------------------------------------------------------------------------------
Total minimum lease payments 2,029 $ 30,530
=================
Less amount representing interest 495
------------------------------------------------------------------
Present value of net minimum
lease payments 1,534
Less current portion 173
------------------------------------------------------------------
$ 1,361
==================================================================
Property acquired under capital leases at December 31, 2000 consists of the
following (in thousands):
Buildings $ 1,987
Accumulated depreciation 596
-----------------
$ 1,391
=================
Total rental expense for operating leases amounted to $1,478,000, $1,457,000,
and $1,321,000, for 2000, 1999, and 1998, respectively. Total rental income
under the sublease with HMP was $95,000 in 2000. No rental income was received
in 1999 and 1998.
Litigation, Claims, and Assessments
The Company is party to various legal proceedings arising in the normal course
of business, most of which involve claims for personal injury and property
damage incurred in connection with its operations. Management believes that the
outcome of its various legal proceedings will not have a material adverse effect
on the Company's financial position or results of operations.
16
8. Stock Option Plans
The Company has stock option plans which provide for grants of options to
employees and directors to purchase shares of the Company's common stock at
exercise prices generally equal to the fair values of such stock at the dates of
grant, which generally become exercisable over a five-year vesting period and
expire within ten years of the grant dates. Under the 1993 Employee Incentive
Stock Option Plan, the 1998 Long-Term Incentive Plan, and the amended and
restated Nonemployee Director's Plan, the Company has authorized the grant of
options of up to 1,050,000, 900,000, and 594,000 shares of common stock,
respectively. As of December 31, 2000 and 1999, there were 994,000 and 575,000
shares of common stock reserved for future issuance under the Company's stock
option plans. A summary of stock option transactions under the plans follows:
Exercise Weighted Average
Shares Price Exercise Price
-------------- ----------------- --------------------
Outstanding at December 31, 1997 1,131,000 $2.00-12.29 $5.96
Granted 496,000 8.00-11.50 10.35
Exercised (155,000) 2.08-6.83 3.20
Canceled (232,000) 2.08-12.29 10.69
-------------- ----------------- --------------------
Outstanding at December 31, 1998 1,240,000 2.00-11.50 7.17
Granted 503,000 7.92-11.42 9.24
Exercised (74,000) 2.00-6.83 2.44
Canceled (150,000) 6.83-11.42 11.30
-------------- ----------------- --------------------
Outstanding at December 31, 1999 1,519,000 2.33-11.50 7.67
Granted 492,000 11.50-29.15 13.99
Exercised (416,000) 2.33-9.00 3.85
Canceled (45,000) 6.83-9.00 8.64
-------------- ----------------- --------------------
Outstanding at December 31, 2000 1,550,000 $5.67-29.15 $10.67
============== ================= ====================
The following table summarizes information concerning currently outstanding and
exercisable options:
Options Outstanding Options Exercisable
- ---------------------------------------------------------------------------- --------------------------------
Weighted Average Weighted Weighted
Remaining Average Average
Range of Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
- -------------------- ----------------- ---------------------- -------------- ----------------- --------------
$ 5.67-8.21 393,000 2.8 $7.52 291,000 $7.46
8.23-11.42 506,000 3.6 9.64 275,000 10.56
11.50-11.63 556,000 4.9 11.56 225,000 11.50
12.92-29.15 95,000 6.1 24.04 -- --
----------------- -----------------
$5.67-29.15 1,550,000 4.0 $10.67 791,000 $9.69
================= =================
In September 1999, the Company granted options to a nonemployee to purchase
18,000 shares of common stock at an exercise price of $8.21 per share. In
connection with the issuance of these options, the Company recognized $60,000 as
17
deferred compensation for the estimated fair value of the options. Deferred
compensation is amortized ratably over the vesting period of the options.
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and related interpretations ("APB
25") in accounting for its employee stock options because, as discussed below,
the alternative fair value accounting provided for under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation"
("Statement 123"), requires use of option valuation models that were not
developed for use in valuing employee stock options. Under APB 25, because the
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of the grant, no compensation expense is
recognized.
Pro forma information regarding net income and earnings per share is required by
Statement 123, which requires that the information be determined as if the
Company has accounted for its employee stock options granted under the fair
value method of that statement. The fair values for these options were estimated
at the dates of grant using a Black-Scholes option pricing model with the
following weighted-average assumptions:
2000 1999 1998
----------------- ----------------- ----------------
Expected dividend yield 0% 0% 0%
Expected stock price volatility .540 .540 .520
Risk-free interest rate 6.39% 5.78% 5.30%
Expected life of options 4.3 Years 3.6 Years 3.8 Years
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair values of the options
are amortized to expense over the options' vesting periods. The Company's pro
forma information follows (in thousands, except per share data):
2000 1999 1998
----------------- ---------------- -----------------
Net income--as reported $7,817 $4,451 $6,486
Net income--pro forma $6,634 $3,421 $5,705
Earnings per share--as reported:
Basic $ 0.42 $ 0.24 $ 0.36
Dilutive $ 0.41 $ 0.24 $ 0.35
Earnings per share--pro forma:
Basic $ 0.36 $ 0.19 $ 0.32
Dilutive $ 0.35 $ 0.18 $ 0.31
Other information concerning stock options follows:
2000 1999 1998
---------------- ----------------- -----------------
Weighted average fair value of options granted
during the year $6.97 $3.75 $4.36
Number of shares as to which options are
exercisable at end of year 791,000 923,000 757,000
18
9. Shareholder Rights Plan
On November 27, 1995 the Board of Directors adopted a shareholder rights plan to
protect long-term share value for the Company's shareholders. Under the plan,
the Board declared a distribution of one Right for each outstanding share of the
Company's Common Stock to shareholders of record on December 11, 1995.
Additionally, the Company has further authorized and directed the issuance of
one Right with respect to each Common Share that shall become outstanding
between December 11, 1995 and the earliest of the Right's exercise date or
expiration date. Each Right entitles the registered holder to purchase from the
Company one-thirtieth of a share of a newly created Series A Junior
Participating Preferred Stock at an exercise price of $100. The Rights, which
expire on November 27, 2005, may be exercised only if certain conditions are
met, such as the acquisition of 15% or more of the Company's Common Stock by a
person or affiliated group ("Acquiring Person").
In the event the Rights become exercisable, each Right will enable the owner,
other than the Acquiring Person, to purchase, at the Right's then current
exercise price, that number of shares of Common Stock with a market value equal
to twice the exercise price times the number of one-tenth of a share of Series A
Junior Participating Preferred Stock for which the Right is then exercisable. In
addition, unless the Acquiring Person owns more than 50% of the outstanding
shares of Common Stock, the Board of Directors may elect to exchange all
outstanding Rights (other than those owned by such Acquiring Person) at an
exchange ratio of one share of Common Stock per Right appropriately adjusted to
reflect any stock split, stock dividend or similar transaction.
10. Stock Repurchase
On October 14, 1998, the Company's Board of Directors authorized the Company to
purchase up to 1.5 million shares of its common stock. The purchase of shares
will be made from time-to-time in open market or privately negotiated
transactions on such terms as management deems appropriate. As of December 31,
2000, 1999 and 1998, the Company had purchased an aggregate of 1,159,000,
1,081,000 and 514,000 shares, respectively, of its common stock for an aggregate
purchase price of $8,258,000, $7,646,000 and $3,350,000, respectively.
11. Employee Benefit Plans
The Company has a 401(k) savings plan (the "Plan") providing retirement benefits
to all employees who have completed at least six months of service. The Company
makes matching contributions of 50% of each participant's contribution up to 5%
of each participant's salary. Total company contributions approximated $407,000,
$351,000, and $241,000, for 2000, 1999, and 1998, respectively. Additionally,
the Company may make discretionary contributions to the Plan that are allocated
to each participant's account. No such discretionary contributions were made in
2000, 1999, or 1998.
On May 16, 1996 the Company's shareholders approved the CryoLife, Inc. Employee
Stock Purchase Plan (the "ESPP"). The ESPP allows eligible employees the right
to purchase common stock on a quarterly basis at the lower of 85% of the market
price at the beginning or end of each three-month offering period. As of
December 31, 2000 and1999 there were 688,000 and 754,000, respectively, shares
of common stock reserved under the ESPP and there had been 212,000 and 146,000,
respectively, shares issued under the plan.
19
12. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per
share (in thousands, except per share data):
2000 1999 1998
----------------- --------------- ----------------
Numerator for basic and diluted earnings
per share -- income available to common
shareholders $7,817 $4,451 $6,486
================= =============== ================
Denominator for basic earnings per share -
weighted-average shares 18,541 18,512 17,961
Effect of dilutive stock options 688 288 435
----------------- --------------- ----------------
Denominator for diluted earnings per share
- adjusted weighted-average shares 19,229 18,800 18,396
================= =============== ================
Basic earnings per share $ 0.42 $ 0.24 $ 0.36
================= =============== ================
Diluted earnings per share $ 0.41 $ 0.24 $ 0.35
================= =============== ================
13. Income Taxes
Income tax expense consists of the following (in thousands):
2000 1999 1998
------------------ ------------------ ---------------
Current:
Federal $2,272 $2,912 $3,854
State (114) 108 279
------------------ ------------------ ---------------
2,158 3,020 4,133
Deferred 1,658 (970) (1,948)
------------------ ------------------ ---------------
$3,816 $2,050 $2,185
================== ================== ===============
20
Such amounts differ from the amounts computed by applying the U.S. federal
income tax rate of 34% to pretax income as a result of the following (in
thousands):
2000 1999 1998
------ ------ ------
Tax expense at statutory rate $3,955 $2,210 $2,947
Increase (reduction) in income taxes
Resulting from:
Entertainment expenses 47 47 90
State income taxes, net of federal 231 163 173
Benefit
Nontaxable interest income (264) (232) (63)
Research and development credits (125) (100) (585)
State and local tax refunds -- -- (256)
Other (28) (38) (121)
------ ------ ------
$3,816 $2,050 $2,185
====== ====== ======
The tax effects of temporary differences which give rise to deferred tax
liabilities and assets at December 31 are as follows (in thousands):
2000 1999
----------------- ----------------
Long-term deferred tax (liabilities) assets:
Property $(756) (556)
Intangible assets 538 579
Impairment of IFM long-lived assets -- 993
--------------- --------------
(218) 1,016
Current deferred tax assets (liabilities):
Impairment of IFM inventory -- 634
Unrealized gain on marketable securities 524 403
Allowance for bad debts 398 201
Accrued expenses 104 98
Deferred preservation costs and inventory reserves 87 57
Other (50) (27)
--------------- --------------
1,063 1,366
--------------- --------------
Net deferred tax assets $845 $2,382
=============== ==============
At December 31, 2000, the Company has recorded a net deferred tax asset of
$845,000. Realization of the net deferred tax asset is dependent on generating
sufficient taxable income in future periods. Although realization is not
ensured, management believes that it is more likely than not that the deferred
tax asset will be realized.
14. Executive Insurance Plan
Pursuant to a supplemental life insurance program for certain executive officers
of the Company, the Company and the executives share in the premium payments and
ownership of insurance policies on the lives of such executives. The Company's
aggregate premium contributions under this program were $53,000, $33,000, and
$43,000, for 2000, 1999, and 1998, respectively.
21
15. Equipment on Loan to Implanting Hospitals
The Company consigns liquid nitrogen freezers with certain implanting hospitals
for tissue storage. The freezers are the property of the Company. At December
31, 2000 freezers with a total cost of approximately $1.9 million and related
accumulated depreciation of approximately $1.2 million were located at the
implanting hospitals' premises. Depreciation is provided over the estimated
useful lives of the freezers on a straight-line basis.
16. Transactions with Related Parties
The Company expensed $78,000, $60,000, and $68,000, during 2000, 1999, and 1998,
respectively, relating to services performed by a law firm whose sole proprietor
is a member of the Company's Board of Directors and a shareholder of the
Company. The Company expensed $102,000, $64,000 and $75,000 in 2000, 1999 and
1998, respectively, relating to consulting services performed by a member of the
Company's Board of Directors and a shareholder of the Company. The Company
expensed $150,000, $195,000, and $210,000 in 2000, 1999, and 1998, respectively,
relating to consulting services performed by a shareholder of the Company.
1343740
22
SELECTED QUARTERLY FINANCIAL INFORMATION
- -------------------------------------------------------------------------------------------------------------------
(In thousands except per share data)
First Second Third Fourth
REVENUES Year Quarter Quarter Quarter Quarter
- ----------------------------------------------- ---------- ------------- ------------- ------------- --------------
2000 $19,623 $19,454 $19,524 $18,495
1999 16,325 17,395 16,529 16,473
1998 14,561 15,554 16,014 14,562
NET INCOME
- ----------------------------------------------- ---------- ------------- ------------- ------------- --------------
2000 $1,604 $1,979 $2,308 $1,926
1999 1,380 1,727 1,714 (370)
1998 1,172 2,048 1,902 1,364
EARNINGS PER SHARE - DILUTED 1
- ----------------------------------------------- ---------- ------------- ------------- ------------- --------------
2000 $ 0.09 $ 0.10 $ 0.12 $ 0.10
1999 0.07 0.09 0.09 (0.02)
1998 0.08 0.10 0.10 0.07
1 Reflects adjustment for the 3-for-2 stock split effected December 27, 2000.
1343997v1
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