SYNOVIS LIFE TECHNOLOGIES INC - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For quarterly period ended January 31, 2003

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ________ to __________

Commission File Number 0-13907

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SYNOVIS LIFE TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)

State of Incorporation: Minnesota
I.R.S. Employer Identification No.: 41-1526554

Principal Executive Offices: 2575 University Ave. W.
St. Paul, Minnesota 55114
Telephone Number: (651) 603-3700

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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No X
--- ---

On March 4, 2003, there were 9,682,936 shares of the registrant's common stock,
par value $.01 per share, outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SYNOVIS LIFE TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED JANUARY 31, 2003 AND 2002
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(in thousands, except per share data)

The accompanying notes are an integral part of the interim unaudited
consolidated condensed financial statements.

2

SYNOVIS LIFE TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
AS OF JANUARY 31, 2003 AND OCTOBER 31, 2002
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(in thousands, except share and per share data)

The accompanying notes are an integral part of the interim unaudited
consolidated condensed financial statements.

3

SYNOVIS LIFE TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED JANUARY 31, 2003 AND 2002
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(in thousands)

The accompanying notes are an integral part of the interim unaudited
consolidated condensed financial statements.

4

SYNOVIS LIFE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
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(1) BASIS OF PRESENTATION:

The accompanying unaudited consolidated condensed financial statements of
Synovis Life Technologies, Inc. (Synovis or the Company) have been prepared by
the Company in accordance with generally accepted accounting principles applied
in the United States for interim financial information and with the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. For further information, refer to
the consolidated financial statements and notes thereto included in the
Company's Annual Report to Shareholders and incorporated by reference in the
Company's Form 10-K for the year ended October 31, 2002.

In the opinion of management, all adjustments considered necessary, consisting
only of items of a normal recurring nature, for a fair presentation of the
consolidated financial position, results of operations and cash flows of the
Company as of and for the interim periods presented have been included.
Operating results and cash flows for the three months ended January 31, 2003 are
not necessarily indicative of the results of operations and cash flows of the
Company that may be expected for the year ending October 31, 2003.

(2) SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION:

(3) GOODWILL AND OTHER INTANGIBLE ASSETS:

The following table summarizes the Company's amortized intangible assets:

Amortization expense was $71,000 for the three months ended January 31, 2003 and
January 31, 2002. The estimated amortization expense for each of the next five
years is approximately $285,000 per year, based on the Company's present
intangible assets.

5

SYNOVIS LIFE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
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The following is a summary of goodwill by business segment:

The $8,000 change in goodwill during the three months ended January 31, 2003 is
primarily attributable to an earnout payment to the sole shareholder from a
previous acquisition, partially offset by a tax benefit from tax deductible
goodwill pertaining to this acquisition. No impairment losses were incurred
during the three months ended January 31, 2003.

(4) EARNINGS PER SHARE:

The following table sets forth the presentation of shares outstanding used in
the calculation of basic and diluted earnings per share:

6

SYNOVIS LIFE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
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(5) SEGMENT INFORMATION:

The following table presents certain financial information by business segment
for the three months ended January 31, 2003 and 2002:

(6) SHAREHOLDERS' EQUITY:

During the three months ended January 31, 2003, stock options for the purchase
of 64,896 shares of the Company's common stock were exercised at prices between
$3.25 and $5.96 per share.

(7) NEW ACCOUNTING PRONOUNCEMENTS:

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires entities to record the fair value
of a liability for an asset retirement obligation in the period in which it is
incurred. The Company adopted SFAS No. 143 on November 1, 2002, and the adoption
had no impact on the Company's consolidated financial position and results of
operations.

In September 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS No. 144 requires that long-lived assets
to be disposed of by sale, including discontinued operations,

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SYNOVIS LIFE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)
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be measured at the lower of the carrying cost or fair value less cost to sell,
whether reported in continuing operations or in discontinued operations. SFAS
No. 144 also broadens the reporting of discontinued operations to include all
components of an entity with operations that can be distinguished from the rest
of the entity and that will be eliminated from the ongoing operations of the
entity in a disposal transaction. The Company adopted SFAS No. 144 on November
1, 2002, and the adoption had no impact on the Company's consolidated financial
position and results of operations.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
Among other provisions, this Statement eliminates the requirement that gains and
losses from extinguishment of debt be classified as extraordinary items. The
Company adopted SFAS 145 on November 1, 2002, and the adoption had no impact on
the Company's financial position and results of operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. This Statement requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability is
incurred, rather than when a company commits to an exit plan as was previously
required. SFAS 146 is effective for exit or disposal activities that are
initiated after December 31, 2002. The Company adopted SFAS 146 on January 1,
2003, and the adoption had no impact on the Company's financial position or
results of operations.

In December 2002, The FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." This statement amends SFAS No. 123,
"Accounting for Stock-Based Compensation" to provide alternative methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based employee compensation. It also amends the pro
forma disclosure provisions of SFAS No. 123 for companies that continue to apply
APB No. 25, "Accounting for Stock Issued to Employees," and related
interpretations to require prominent disclosure about the effects on reported
net income of an entity's accounting policy decisions with respect to
stock-based employee compensation. This statement also amends APB Opinion No.
28, "Interim Financial Reporting" to require pro forma disclosure about those
effects in interim financial statements. The Company will adopt the disclosure
requirements of SFAS No. 148 on February 1, 2003 and has elected not to
voluntarily change to the fair value based method of accounting for stock-based
compensation. The Company will include the additional disclosure requirements of
SFAS No. 148 in financial reports for interim periods beginning after December
15, 2002.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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Forward-Looking Statements:

The disclosures in this Form 10-Q may include "forward-looking statements" made
under the Private Securities Litigation Reform Act of 1995. The statements can
be identified by words such as "should", "may", "will", "expect", "believe",
"anticipate", "estimate", "continue" or other similar expressions. All
forward-looking statements in this document are based upon information available
to the Company as of the date hereof, and the Company assumes no obligation to
correct or update any forward-looking statements, whether as a result of new
information, future events or otherwise. You are advised, however, to consult
any future disclosures we make on related subjects in future filings with the
SEC. Forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results to differ materially from
any future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors may include, among others, the risk
factors listed from time to time in the Company's filings with the Securities
and Exchange Commission, such as the year-end Annual Report on Form 10-K for the
year ended October 31, 2002.

OVERVIEW

Synovis Life Technologies, Inc. (Synovis or the Company) is a diversified
medical device company engaged in developing, designing, manufacturing and
bringing to market products for the surgical and interventional treatment of
disease. Its business is conducted in two reportable segments, the surgical
device business and the interventional business, with segmentation based upon
similarities of the underlying business operations, products and markets of
each.

The surgical device business develops, manufactures and markets implantable
biomaterial products, devices for microsurgery and surgical tools that reduce
risks of critical surgeries, lead to better patient outcomes and lower costs.
The interventional business provides the services of concept development,
engineering, rapid prototyping and manufacturing of complex micro-wire forms and
polymer components used in many interventional devices in the cardiac rhythm
management, neurostimulation, vascular and other markets.

CRITICAL ACCOUNTING POLICIES

Goodwill: In accordance with the Statement of Financial Accounting Standards
(SFAS) No. 142, goodwill is no longer amortized, but is reviewed annually for
impairment. Please see Note 3 to the unaudited consolidated condensed financial
statements for additional goodwill information.

Other Intangible Assets: The Company's other intangible assets, primarily
developed technology, patents, trademarks, and non-compete agreements pertaining
to previous business acquisitions, are recorded at cost and are amortized using
the straight-line method over their estimated useful lives, generally seven to
17 years. These assets are reviewed annually for impairment. Please see Note 3
to the unaudited consolidated condensed financial statements for additional
intangible asset information.

Revenue Recognition: The Company's policy is to ship products to customers on
FOB shipping point terms. The Company recognizes revenue when the product has
been shipped to the customer if there is evidence that the customer has agreed
to purchase the products, delivery and performance has occurred, the price and
terms of sale are fixed and collection of the receivable is expected. The
Company's sales policy does not allow sales returns.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
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Derivative Instruments and Hedging Activities: The Company does not enter into
any derivative instruments or hedging activities. The Company's policy is to
only enter into contracts that can be designated as normal purchases or sales.

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED JANUARY 31, 2003 WITH
THE THREE MONTHS ENDED JANUARY 31, 2002

Net revenue increased 55% to $12,469,000 in the first quarter of fiscal 2003
compared with $8,029,000 in the first quarter of fiscal 2002. The Company's
consolidated operating income grew 61% to $1,210,000 in the first quarter of
fiscal 2003 from $752,000 in the prior year quarter. Consolidated net income
increased 58% to $793,000, or eight cents per diluted share, from $502,000, or
five cents per diluted share, in the same quarter of fiscal 2002.

The surgical device business generated net revenue growth of 46% in the first
quarter of fiscal 2003 to $6,070,000 from $4,159,000 in the year-ago quarter.
Worldwide net revenue from the sales of Peri-Strips(R) increased 106% over the
first quarter of fiscal 2003, contributing net revenue of $2,714,000 in the
first quarter of 2003, compared to $1,320,000 in the first quarter of 2002.
Peri-Strips are used to reduce risks and improve patient outcomes in several
procedures, notably gastric bypass surgery. Gastric bypass is a surgical
treatment for morbid obesity, which is considered epidemic in the United States.
This product's growth potential comes from its value in reducing the risk of
life-threatening complications from gastric bypass surgery and from the growing
number of these procedures. Projections estimate the number of gastric bypass
procedures are expected to reach 80,000 in 2003 and between 110,000 and 150,000
in 2004.

The microsurgery product line of the surgical business contributed net revenue
of $313,000 in the first quarter of 2003, a 26% increase over the prior year
quarter. The primary product sold to the microsurgeon is the Microvascular
Anastomotic Coupler System (Coupler), a device used to connect extremely small
arteries or veins, without sutures, quickly, easily and with consistently
excellent results. The Coupler is a platform technology which the Company is
currently building upon to enter other markets. The Company has filed a patent
to incorporate technology to detect blood flow and other critical parameters in
an anastomotic device, with the ultimate objective of entering the large cardiac
and vascular markets.

The interventional business generated net revenue of $6,399,000 in the first
quarter of 2003, a 65% increase over $3,870,000 in the first quarter last year.
In March 2002, the interventional business acquired a company to expand its
capabilities in polymer injection molding, CNC machining and tooling. The
acquisition contributed revenue of $480,000 in the first quarter of 2003.
Revenue for the base interventional business in the first quarter of 2003,
exclusive of acquisition revenue, increased 53% over the prior-year quarter.

The gross margin percentage decreased six percentage points, from 50% to 44%
during the first quarter of fiscal 2003 from the same quarter of fiscal 2002.
Gross margin for the surgical device business increased to 65% in the first
quarter of 2003 from 60% in the first quarter of 2002 due to increased
manufacturing efficiencies and sales mix. The interventional business' margin
decreased from 39% to 23% in the first quarter of 2003. This decrease is
attributable to several factors. During the first quarter of fiscal 2002, the
interventional business had revenue of $415,000 for milestone payments - with no
associated cost of sales or other period cost - related to successful work on an
embolic distal protection device designed and patented by Metamorphic Surgical
Devices, LLC (MSD), an unrelated company. Additionally, manufacturing costs
increased in the first quarter of 2003 due to training and scrap costs
associated with a rapidly growing workforce. Factors which affect the
consolidated gross margin include the relative revenue of each business unit,
product mix, volume and other production activities. While the Company's
consolidated gross margin may fluctuate quarter to quarter based on variations
in these factors, the Company expects the gross margin for the interventional
business to improve by fiscal year end.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
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Selling, general and administrative (SG&A) expense during the first quarter of
fiscal 2003 increased $579,000, or 21%, to $3,371,000 from $2,792,000 in the
comparable fiscal 2002 quarter. SG&A expense declined eight percentage points,
however, as a percentage of net revenue from 35% in the fiscal 2002 quarter to
27% in the fiscal 2003 quarter. Effectively planning and executing SG&A spending
increases in a period of significantly higher levels of revenue growth resulted
in this decrease.

Research and development (R&D) expense increased 87% during the first quarter of
fiscal 2003 to $861,000 from $460,000 during the prior-year quarter. This
planned increase is partially due to the development of various proprietary
devices for sale to interventional customers, along with the timing and nature
of various surgical device projects. In both business units, R&D expense
fluctuates from quarter to quarter based on the timing and progress through
external parties of the projects. This forward-looking statement will be
influenced primarily by the number of projects and the related R&D personnel
requirements, development and regulatory approval path, expected costs, timing
and nature of those costs for each project.

Operating income increased 61% in the first quarter of fiscal 2003, to
$1,210,000 from $752,000 in the first quarter of fiscal 2002. First quarter
operating income for the surgical device business increased $1,002,000 to
$1,111,000 in fiscal 2003 from $109,000 in fiscal 2002. The increase for the
surgical device business is primarily due to relatively greater increases in
revenue as compared to organizational operating expenses. Operating income for
the interventional business decreased $544,000, to $99,000 in the first quarter
of 2003 from $643,000 in the first quarter of 2002. The decrease is in line with
the Company's expectations, and is largely attributable to the $415,000
milestone payment received from MSD in the first quarter of 2002 as well as
decreased gross margins.

The Company recorded a provision for income taxes of $418,000 in the first
quarter of fiscal 2003, at an effective tax rate of 35%, as compared to $268,000
at an effective tax rate of 35% in the first quarter of fiscal 2002. The
effective annual tax rate expected to be applied for fiscal 2003 is consistent
with the Company's quarterly tax rate.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $5,588,000 at January 31, 2003 as compared to
$7,866,000 at October 31, 2002, a decrease of $2,278,000. The Company primarily
utilizes internally generated cash flow and existing cash balances to fund the
operations of its businesses. The decrease in cash is primarily related to
working capital requirements necessary to support two high-growth business
units. As of January 31, 2003, the Company had long-term obligations (including
current portions) of $585,000, requiring payments through 2005.

Operating activities used cash of $1,699,000 in the first three months of fiscal
2003, as compared to using cash of $551,000 during the first three months of
fiscal 2002. Cash was used by operations for working capital necessary to
support growth in both business units, primarily for accounts receivable (net
increase of $1,456,000) and inventories (net increase of $613,000). This was
partially offset by an increase in net income.

Investing activities used $746,000 of cash during the first three months of
fiscal 2003, which included $708,000 in purchases of equipment and leasehold
improvements, $30,000 of investments in patents and trademarks and $8,000 in
other investing activities.

Financing activities provided $167,000 of cash during the first three months of
fiscal 2003, which consisted of proceeds of $266,000 received upon the exercise
of stock options under the Company's stock option plan and stock purchases under
the Company's employee stock purchase plan, offset by $99,000 in cash repayments
of capital equipment lease and other long-term obligations.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
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The Company believes existing cash and investments, coupled with anticipated
cash flows from operations will be sufficient to satisfy its operating cash
requirements for the next twelve months. During fiscal 2003, the Company expects
to open a leased manufacturing facility in Puerto Rico that will expand the
capacity of the interventional business. The investment in the Puerto Rico
facility is expected to be financed through a combination of Puerto Rican
incentives for job creation and facility improvements, with the remainder to be
provided by the Company's cash and cash flow. This forward-looking statement
regarding sufficiency of cash and cash flows, as well as the Company's long-term
cash requirements, will be a function of a number of variables, including
research and development priorities, acquisition opportunities and the growth
and profitability of the business.

NEW ACCOUNTING STANDARDS

In December 2002, The Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure." This statement amends
SFAS No. 123, "Accounting for Stock-Based Compensation" to provide alternative
methods of transition for an entity that voluntarily changes to the fair value
based method of accounting for stock-based employee compensation. It also amends
the pro forma disclosure provisions of SFAS No. 123 for companies that continue
to apply APB No. 25, "Accounting for Stock Issued to Employees," and related
interpretations to require prominent disclosure about the effects on reported
net income of an entity's accounting policy decisions with respect to
stock-based employee compensation. This statement also amends APB Opinion No.
28, "Interim Financial Reporting" to require pro forma disclosure about those
effects in interim financial statements. The Company will adopt the disclosure
requirements of SFAS No. 148 on February 1, 2003 and has elected not to
voluntarily change to the fair value based method of accounting for stock-based
compensation. The Company will include the additional disclosure requirements of
SFAS No. 148 in financial reports for interim periods beginning after December
15, 2002.

ADDITIONAL INFORMATION ON SYNOVIS

We are currently subject to the informational requirements of the Exchange Act
of 1934, as amended. As a result, we are required to file periodic reports and
other information with the SEC, such as annual, quarterly and current reports,
proxy and information statements. You are advised to read this Form 10-Q in
conjunction with the other reports, proxy statements and other documents we file
from time to time with the SEC. If you would like more information regarding
Synovis, you may read and copy the reports, proxy and information statements and
other documents we file with the SEC, at prescribed rates, at the SEC's public
reference room at 450 Fifth Street, NW, Washington, DC 20549. You may obtain
information regarding the operation of the SEC's public reference rooms by
calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the
public free of charge at the SEC's website. The address of this website is
http://www.sec.gov.

In addition, our website also contains a hyperlink to a third-party SEC Filings
website which makes all of our SEC filings, such as annual, quarterly and
current reports and proxy statements, available to the public. The address of
our website is www.synovislife.com. Neither our website nor the information
contained on any hyperlink provided in our website, is intended to be, and is
not, a part of this Quarterly Report on Form 10-Q. We also provide electronic or
paper copies of our SEC filings (excluding exhibits) to any person free of
charge upon receipt of a written request for such filing. All requests for our
SEC filings should be sent to the attention of the Chief Financial Officer at
Synovis Life Technologies, Inc., 2575 University Ave. W, St. Paul, Minnesota
55114.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The principal financial instruments the Company maintains are in accounts
receivable and long-term obligations. The Company believes that the interest
rate, credit and market risk related to these accounts is not significant. The
Company manages the risk associated with these accounts through periodic reviews
of the carrying value for non-collectibility of assets and establishment of
appropriate allowances in connection with the Company's internal

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - CONTINUED
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controls and policies. The Company does not utilize any derivative financial
instruments, derivative commodity instruments, other financial instruments or
engage in any other hedging activities.

ITEM 4 - CONTROLS AND PROCEDURES

The Chief Executive Officer (CEO) and Chief Financial Officer (CFO) evaluated
the effectiveness of the design and operation of the Company's disclosure
controls and procedures within 90 days before the filing date of this quarterly
report. Based on that evaluation, the CEO and CFO concluded that the Company's
disclosure controls and procedures were effective. There have been no
significant changes in the Company's internal controls subsequent to the date
the CEO and CFO completed their evaluation.

13

PART II. OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a. Exhibits

10.1 Amendment to Lease Agreement effective August 27, 1997 between Synovis
Interventional Solutions, Inc. and F&G Incorporated (filed herewith
electronically).

99.1 Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith
electronically).

14

SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

SYNOVIS LIFE TECHNOLOGIES, INC.

Dated: March 14, 2003 /s/ Connie L. Magnuson
-----------------------------------------
Connie L. Magnuson
Vice President of Finance and
Chief Financial Officer
(Principal Financial Officer)

15

CERTIFICATION BY CHIEF EXECUTIVE OFFICER

I, Karen Gilles Larson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Synovis Life
Technologies, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

March 14, 2003

/s/ Karen Gilles Larson
- -------------------------------------
Karen Gilles Larson
President and Chief Executive Officer

16

CERTIFICATION BY CHIEF FINANCIAL OFFICER

I, Connie L. Magnuson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Synovis Life
Technologies, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

March 14, 2003

/s/ Connie L. Magnuson
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Connie L. Magnuson
Vice-President of Finance and Chief Financial Officer

17

SYNOVIS LIFE TECHNOLOGIES, INC.
INDEX TO EXHIBITS
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