The Company is uncertain whether the demand for PerClot will be seasonal, as
PerClot is a new product and the nature of any seasonal trends in PerClot sales
may be obscured.
The Company is uncertain whether the demand for revascularization technologies
will be seasonal, as the Company only recently acquired this product line in
The Company is uncertain whether the demand for HeRO Grafts will be seasonal, as the Company only recently acquired this product line in
The Company's demand for its cardiac preservation services has traditionally been seasonal, with peak demand generally occurring in the third quarter. Management believes this trend for cardiac preservation services is primarily due to the high number of surgeries scheduled during the summer months for school-aged patients. Based on experience in recent years, management believes that this trend is lessening as the Company is distributing a higher percentage of its tissues to adult populations.
The Company believes the demand for its vascular preservation services is seasonal, with lowest demand generally occurring in the fourth quarter. Management believes this trend for vascular preservation services is primarily due to fewer surgeries being scheduled during the winter holiday months.
Liquidity and Capital Resources
June 30, 2013net working capital (current assets of $77.9 millionless current liabilities of $18.8 million) was $59.1 million, with a current ratio (current assets divided by current liabilities) of 4 to 1, compared to net working capital of $56.1 millionand a current ratio of 4 to 1 at December 31, 2012.
Overall Liquidity and Capital Resources
The Company's largest cash requirement for the six months ended
June 30, 2013was cash for general working capital needs, as the Company's accounts receivable balance increased significantly and its accrual and payable balances decreased significantly from December 31, 2012. The accounts receivable increase was due to the Company's recent sales, which have not yet been converted to cash, along with the fact that accounts receivable as of December 31, 2012was lower than normal due to timing of payments. The accrual and payable decrease was due to a large number of scheduled annual payments which were made in the first quarter that are not normally paid in the rest of the year. In addition, the Company's other cash requirements included capital expenditures, repurchases of the Company's common stock, and cash dividend payments. The Company funded its cash requirements through its existing cash reserves and its operating activities, which generated cash during the period. CryoLife'scredit agreement with GE Capital(the "GE Credit Agreement") provides revolving credit for working capital, acquisitions, and other corporate purposes. The borrowing capacity under the GE Credit Agreement is $20.0 million(including a letter of credit subfacility), and the GE Credit Agreement expires October 28, 2014. The borrowing capacity may be reduced or increased from time to time pursuant to the terms of the GE Credit Agreement. As required under the terms of the GE Credit Agreement, the Company is maintaining cash and cash equivalents of at least $5.0 millionin accounts in which GE Capitalhas a first priority perfected lien. As a result, these funds will not be available to meet the Company's liquidity needs during the term of the GE Credit Agreement and, as such, have been recorded as restricted cash and securities on the Company's Summary Consolidated Balance Sheets. Also, the GE Credit Agreement requires that, after giving effect to a stock repurchase, the Company maintain liquidity, as defined in the agreement, of at least $20.0 million. As of June 30, 2013the outstanding balance under the GE Credit Agreement was zero, and $20.0 millionwas available for borrowing.