FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 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: 01-19890
LIFECELL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 76-0172936
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
ONE MILLENNIUM WAY 08876
BRANCHBURG, NEW JERSEY (zip code)
(Address of principal executive office)
(908) 947-1100
(Registrant's telephone number, including area code)
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 by Rule 12b-2 of the Exchange Act). YES NO X
--- ---
As of April 28, 2003, there were outstanding 21,338,190 shares of common stock,
par value $.001, and 73,417 shares of Series B preferred stock, par value $.001
(which are convertible into approximately an additional 2,660,045 shares of
common stock), of the registrant.
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
LIFECELL CORPORATION
BALANCE SHEETS
(unaudited)
March 31, December 31,
2003 2002
------------- --------------
ASSETS
Current assets
Cash and cash equivalents $ 5,186,000 $ 5,202,000
Short-term investments 256,000 256,000
Receivables, less allowance for doubtful accounts of
$40,000 in 2002 and 2003 4,055,000 4,332,000
Inventories 7,213,000 6,367,000
Prepayments and other 290,000 257,000
------------- --------------
Total current assets 17,000,000 16,414,000
Fixed assets, net 7,600,000 7,091,000
Other assets, net 590,000 611,000
------------- --------------
Total assets $ 25,190,000 $ 24,116,000
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 1,989,000 $ 1,438,000
Accrued liabilities 2,617,000 3,173,000
Current maturities of long-term debt 631,000 337,000
------------- --------------
Total current liabilities 5,237,000 4,948,000
Deferred revenue 296,000 351,000
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Long-term debt 748,000 526,000
------------- --------------
Other liabilities 150,000 94,000
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Commitments and contingencies
Temporary equity
Common stock, subject to redemption, $.001 par value, 113,836
shares issued and outstanding in 2003 and 2002 478,000 478,000
Stockholders' equity
Series B preferred stock, $.001 par value, 182,205 shares authorized;
73,995 and 74,278 shares issued and outstanding in 2003 and 2002
(liquidation preference at March 31, 2003 of $7,400,000) -- --
Undesignated preferred stock, $.001 par value, 1,817,795 shares
authorized; none issued and outstanding -- --
Common stock, $.001 par value, 48,000,000 shares authorized;
21,203,412 and 21,193,159 shares issued and outstanding in
2003 and 2002 21,000 21,000
Warrants to purchase shares of common stock;
2,284,211 outstanding in 2003 and 2002 4,002,000 4,002,000
Additional paid-in capital 78,037,000 78,037,000
Accumulated deficit (63,779,000) (64,341,000)
------------- --------------
Total stockholders' equity 18,281,000 17,719,000
------------- --------------
Total liabilities and stockholders' equity $ 25,190,000 $ 24,116,000
============= ==============
The accompanying notes are an integral part of these financial statements.
2
LIFECELL CORPORATION
STATEMENTS OF OPERATIONS
(unaudited)
Three months ended March 31,
--------------------------
2003 2002
------------ ------------
Revenues:
Product revenues $ 8,585,000 $ 7,310,000
Research grant revenues 410,000 349,000
------------ ------------
Total revenues 8,995,000 7,659,000
------------ ------------
Costs and expenses:
Cost of products sold 2,540,000 2,396,000
Research and development 1,259,000 1,122,000
General and administrative 1,321,000 1,044,000
Selling and marketing 3,497,000 2,858,000
------------ ------------
Total costs and expenses 8,617,000 7,420,000
------------ ------------
Income from operations 378,000 239,000
Interest and other income (expense), net (14,000) (51,000)
------------ ------------
Income before income taxes 364,000 188,000
Income tax benefit, net 198,000 248,000
------------ ------------
Net income $ 562,000 $ 436,000
============ ============
Net income per common share:
Basic $ 0.03 $ 0.02
============ ============
Diluted $ 0.02 $ 0.02
============ ============
Shares used in computing net income (loss)
per common share:
Basic 21,308,099 20,777,407
============ ============
Diluted 24,581,273 25,076,643
============ ============
The accompanying notes are an integral part of these financial statements
3
LIFECELL CORPORATION
STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended March 31,
------------------------
2003 2002
----------- -----------
Cash flows from operating activities:
Net income $ 562,000 $ 436,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 377,000 494,000
Deferred revenues (55,000) (55,000)
Deferred rent expense 56,000 6,000
Increase (decrease) in cash from working capital:
Receivables 277,000 351,000
Inventories (846,000) (804,000)
Prepayments and other (33,000) 59,000
Accounts payable and accrued liabilities (5,000) 119,000
----------- -----------
Net cash provided by operating activities 333,000 606,000
----------- -----------
Cash flows from investing activities:
Capital expenditures (865,000) (44,000)
----------- -----------
Net cash used in investing activities (865,000) (44,000)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 1,451,000 -
Principal payments on long-term debt (935,000) (307,000)
----------- -----------
Net cash provided by (used in) financing activities 516,000 (307,000)
----------- -----------
Net increase (decrease) in cash and cash equivalents (16,000) 255,000
Cash and cash equivalents at beginning of period 5,202,000 4,650,000
----------- -----------
Cash and cash equivalents at end of period $5,186,000 $4,905,000
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 23,000 $ 47,000
=========== ===========
The accompanying notes are an integral part of these financial statements.
4
LIFECELL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in the annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations. This
financial information should be read in conjunction with the financial
statements and notes thereto included within the Company's Annual Report on Form
10-K for the year ended December 31, 2002.
The unaudited financial statements reflect all adjustments (consisting only of
normal recurring adjustments) considered necessary by management for a fair
presentation of financial position, results of operations and cash flows for the
periods presented. The financial results for interim periods are not
necessarily indicative of the results to be expected for the full year or future
interim periods.
2. INVENTORIES
Inventories consist of the following:
March 31, December 31,
2003 2002
---------- -------------
Tissue and materials . . . . . . . . . . . . $3,226,000 $ 2,940,000
Tissue products in-process . . . . . . . . . 1,821,000 1,446,000
Finished tissue products . . . . . . . . . . 2,166,000 1,981,000
---------- -------------
Total inventories. . . . . . . . . . . . $7,213,000 $ 6,367,000
========== =============
3. FINANCING ARRANGEMENTS AND LONG-TERM DEBT
In January 2003, the Company secured a $4 million credit facility through a
financial institution consisting of a $2 million revolving line of credit and an
equipment line for up to an additional $2 million. The credit facility is
collateralized by the Company's accounts receivable, inventory, intellectual
property, intangible and fixed assets. The agreement contains certain financial
covenants and a subjective acceleration clause. The revolving line of credit
bears interest at the bank prime rate plus 0.75% and is available through
January 2004. The equipment term note bears interest at the bank prime rate
plus 1.5%. In January 2003, the Company received proceeds of $880,000 under the
equipment line portion of the credit facility and used these proceeds to repay
the debt and accrued interest outstanding at December 31, 2002. In March 2003,
the Company received additional proceeds of $571,000 under the equipment line
portion of the credit facility to finance capital expenditures. Advances under
the equipment line were only available through March 31, 2003 and, accordingly,
the unused portion of the equipment line has expired.
Long-term borrowings at March 31, 2003 had the following scheduled maturities:
2003 $ 473,000
2004 631,000
2005 227,000
2006 48,000
----------
Total $1,379,000
==========
5
4. INCOME TAXES
In January 2003, the Company realized $235,000 through the sale and transfer of
$3.0 million of state tax net operating losses. The sale and transfer was made
through the Technology Business Tax Certificate Program sponsored by the New
Jersey Economic Development Authority. The amount realized has been reflected
as an income tax benefit in the statement of operations.
The Company has provided a full valuation allowance against its net deferred tax
assets due to its lack of historical profitability. However, the first quarter
of 2003 was the Company's sixth consecutive profitable quarter and once the
Company achieves cumulative profitability over a three-year period, it will
assess whether to recognize some or all of these deferred tax assets. The
reversal of all or a portion of the valuation allowance would lead to a
significant tax benefit being recorded.
5. CAPITAL STOCK, OPTIONS AND WARRANTS
Options
In March 2003, the Company's Board of Directors approved an amendment to the
Company's 2000 Stock Option Plan (the "2000 Plan") increasing the number of
shares reserved for issuance under the 2000 Plan by 2,000,000 shares, from
1,500,000 to 3,500,000. The amendment is subject to shareholder approval at the
Company's Annual Meeting of Stockholders in May 2003.
In March 2003, the Company's Board of Directors adopted the LifeCell Corporation
2003 Non-Employee Director Stock Option Plan (the "2003 Directors Plan").
Under the 2003 Directors Plan, options may be granted to purchase up to 750,000
shares of the Company's common stock through March 2013. Options granted will
vest on the first anniversary and will have a maximum term of ten years. The
2003 Directors Plan is intended to replace the Second Amended and Restated 1993
Non-Employee Director Stock Option Plan, which terminates in July 2003. The
2003 Directors Plan is subject to shareholder approval at the Company's Annual
Meeting of Stockholders in May 2003.
The following table illustrates the effect on net income and earnings per share
if the company had applied the fair value recognition provisions of FASB
Statement No. 123, Accounting for Stock-Based Compensation:
Three Months
Ended March 31,
----------------------
2003 2002
---------- ----------
Net income, as reported $ 562,000 $ 436,000
Less: Total stock-based compensation expense
determined under fair value based method
for all awards, net of related tax effects (292,000) (333,000)
---------- ----------
Net Income, Pro forma $ 270,000 $ 103,000
========== ==========
Income per common share - basic
As reported $ 0.03 $ 0.02
========== ==========
Pro forma $ 0.01 $ 0.00
========== ==========
Income per common share - diluted
As reported $ 0.02 $ 0.02
========== ==========
Pro forma $ 0.01 $ 0.00
========== ==========
6
6. NET INCOME PER COMMON SHARE
The following table sets forth the computation of basic and diluted net income
per share:
Three Months Ended March 31,
------------------------
2003 2002
----------- -----------
Net income $ 562,000 $ 436,000
----------- -----------
Weighted average common shares outstanding 21,308,099 20,777,407
----------- -----------
Denominator for basic net income per share 21,308,099 20,777,407
----------- -----------
Effect of dilutive securities:
Series B preferred stock assuming conversion 2,690,136 3,220,833
Warrants 466,996 764,534
Common stock options 116,042 313,869
----------- -----------
Denominator for diluted net income per share 24,581,273 25,076,643
----------- -----------
Basic net income per share $ 0.03 $ 0.02
=========== ===========
Diluted net income per share $ 0.02 $ 0.02
=========== ===========
The calculation of net income per share for the quarters ended March 31, 2003
and 2002 excludes potentially dilutive common stock equivalents of 5,165,623 in
2003 and 4,402,077 in 2002. These common stock equivalents, which consisted of
warrants and outstanding common stock options, were not included in the
calculation of the net income per share because their inclusion would be
antidilutive.
7. COMMITMENTS AND CONTINGENCIES
Litigation
- ----------
In June 2002, a complaint was filed in the Superior Court of California, Los
Angeles County, Central District, captioned Joan Savitt, individually and on
behalf of others similarly situated, v. Doheny Eye & Tissue Bank, et al. The
complaint alleges among other things, the Company, by engaging in the storing,
processing and distribution of human tissue, violates the public policy and laws
of the state of California in various ways. In March 2003, the Company filed a
response to the complaint and discovery has commenced. The Company believes
that the claims against it in this complaint are without merit and intends to
vigorously defend against such action.
The Company does not expect the final resolution of this matter to have a
material impact on its financial position, results of operations, or cash flows.
However, there can be no assurance that the resolution of this matter will not
be material to the Company's financial position, results of operations, or cash
flows.
The Company maintains insurance coverage for events and in amounts that it deems
appropriate. There can be no assurance that the level of insurance maintained
will be sufficient to cover any claims incurred by the Company or that the type
of claims will be covered by the terms of insurance coverage.
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations.
-------------
The following discussion of our results of operations and financial condition
should be read in conjunction with the Financial Statements and Notes included
in Part I. "Financial Information".
This report contains forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements typically are identified by use of terms such as
"may," "will," "should," "plan," "expect," "anticipate," "estimate," "believe"
and similar words, although some forward-looking statements are expressed
differently. Forward-looking statements represent our management's judgment
regarding future events. Although we believe that the expectations reflected in
such forward-looking statements are reasonable, we can give no assurance that
such expectations will prove to be correct. All statements other than statements
of historical fact included in this report regarding our financial position,
business strategy, products, products under development and clinical trials,
markets, budgets, plans, or objectives for future operations are forward-looking
statements. We cannot guarantee the accuracy of the forward-looking statements,
and you should be aware that our actual results could differ materially from
those contained in the forward-looking statements due to a number of factors,
including the statements under "Risk Factors" and "Critical Accounting Policies"
detailed in our annual report on form 10-K for the year ended December 31, 2002
and other reports filed with the Securities and Exchange Commission.
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K and all other documents filed by the Company or with respect to its
securities with the Securities and Exchange Commission are available free of
charge through our website at www.lifecell.com.
OVERVIEW
We develop and market biological products for the repair and replacement of
damaged or inadequate human tissue in numerous different clinical applications.
Our patented tissue processing methods produce a unique matrix - a complete
three-dimensional structure that contains proteins, growth factors and vascular
channels - that provides a complete template for the regeneration of normal
human tissue. We currently market a broad range of products: AlloDerm(R)
acellular tissue matrix for skin grafting for burn and cancer patients as well
as reconstructive surgical procedures and periodontal surgery; Cymetra(R), a
version of AlloDerm in particulate form for non-surgical correction of soft
tissue defects; Repliform(R), an acellular tissue matrix for urologic and
gynecologic procedures; and Graft Jacket(TM), an acellular tissue matrix for
orthopedic applications. We also distribute cryopreserved allograft skin for use
as a temporary dressing in the treatment of burns and we are the exclusive
marketing agent for the SmartPReP(TM) Platelet Concentration System in the
United States to ear, nose and throat, plastic reconstructive and general
surgeons in hospitals. Our development programs include the potential
application of our tissue matrix technology to vascular, nerve and orthopedic
tissues; investigation of human tissues as carriers for therapeutics;
ThromboSol(TM), a formulation for extended storage of platelets and technologies
to enhance the storage of red blood cells for transfusion.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
Total revenues for the three months ended March 31, 2003 increased 17% to $9.0
million compared to $7.7 million for the same period in 2002. The increase was
primarily attributable to a 17% increase in product revenues to $8.6 million in
the current period as compared to $7.3 million in the prior year. The increase
in product revenues was largely due to increased demand for AlloDerm. AlloDerm
revenues increased 27% to $4.8 million in the three months ended March 31, 2003
compared to $3.8 million in the same period in 2002. Repliform revenues
increased slightly to $2.4 million in the three months ended March 31, 2003
compared to $2.3 million for the same period in 2002. Other product revenue
including Cymetra, cryopreserved allograft skin and Graft Jacket increased 17%,
contributing $1.4 million in the first three months of 2003 compared to $1.2
million for the same period in 2002. Cymetra revenue declined in the three
months ended March 31, 2003 compared to the same period in 2002 and we expect
Cymetra revenues for the balance of the year to be below 2002 levels.
For the three months ended March 31, 2003, our sales and marketing agents and
distributors generated 44% of our total product revenue. Boston Scientific
Corporation is our exclusive worldwide sales and marketing representative for
Repliform for use in the urologic and gynecologic markets and OMP, Inc. is our
exclusive sales and marketing representative for Cymetra for office-based
dermatologists and plastic surgeons. During the three months ended March
8
31, 2003, sales of our products through Boston Scientific Corporation and OMP
represented 28% and 5%, respectively, of our total product revenues compared to
32% and 9%, respectively, for the same period in 2002. Both Boston Scientific
and OMP are paid agency fees based on the amount of product revenues they
generate for us. Such fees are recorded as selling and marketing expenses. No
other individual distributor generated more than 5% of our total product
revenues in the three months ended March 31, 2003 or 2002.
Total revenues were also favorably impacted by a 17% increase in research grant
revenues, which totaled $410,000 in 2003 compared to $349,000 in 2002. This
increase was primarily due to an increase in research spending on projects
funded by research grants, since research grant revenues are recognized as
qualified expenses are incurred. During the first quarter of 2003, we were
awarded a research grant from the National Institute of Health totaling $98,000.
As of March 31, 2003, $3.5 million of approved research grant funding was
available to fund future research and development expenses through 2004.
Cost of products sold for the three months ended March 31, 2003 was $2.5
million, or 30% of product revenues, compared to cost of products sold of $2.4
million, or 33% of product revenue for the same period in 2002. The cost of
products sold decreased as a percentage of product revenues due to efficiencies
realized in our processing operation, resulting from volume increases and
process improvements.
Total research and development expenses increased 12% to $1.3 million in the
three months ended March 31, 2003 compared to $1.1 million for the same period
in 2002. The increase was primarily associated with higher spending on research
focused on the potential application of our tissue matrix technology to vascular
tissue, which is funded through a grant from the Department of Defense, and
increased spending on other product development projects.
General and administrative expenses increased 27% to $1.3 million in the three
months ended March 31, 2003 compared to $1.0 million in the same period in 2002.
The increase was primarily attributable to an increase in professional fees and
payroll and related expenses.
Selling and marketing expenses increased 22% to $3.5 million for the three
months ended March 31, 2003 compared to $2.9 million in the same period in 2002.
The increase in 2003 was primarily attributable to higher selling expense
associated with the increase in product revenues and an increase in marketing
expenses.
Interest and other income (expense), net decreased $37,000 in the three months
ended March 31, 2003 compared to 2002. The net decrease was due to a $44,000
decrease in interest expense resulting from a decrease in debt outstanding,
partially offset by a $7,000 decline in interest income resulting from lower
average interest rates during the period.
In the three months ended March 31, 2003, we recorded a net tax benefit of
$198,000 consisting of a provision for state income taxes of $37,000, offset by
proceeds of $235,000 from the sale of state net operating losses. The sale was
made through the Technology Business Tax Certificate Program sponsored by the
New Jersey Economic Development Authority. No federal provision for income
taxes has been recorded as we intend to utilize net operating loss carryforwards
to offset our estimated federal tax liability. We were unable to utilize net
operating loss carryforwards to offset our state tax liability in 2003 because
the State of New Jersey enacted tax legislation in July 2002 suspending the use
of loss carryforwards to offset taxable income in 2002 and 2003. We have
provided a full valuation allowance against our net deferred tax assets due to
our lack of historical profitability. However, the first quarter of 2003 was
our sixth consecutive profitable quarter and once we achieve cumulative
profitability over a three-year period, we will assess whether to recognize some
or all of our deferred tax assets. The reversal of all or a portion of the
valuation allowance would lead to a significant tax benefit being recorded.
Net income for the three months ended March 31, 2003 was $562,000, representing
a 29% improvement from the $436,000 net income for the same period in 2002. The
improvement in net income in 2003 was principally due to the positive
contribution from higher product revenues, partially offset by increased
operating expenses. Basic and diluted net income per common share in the three
months ended March 31, 2003 were $0.03 and $0.02 per share, respectively,
compared to $0.02 per share basic and diluted net income in the same period in
2002.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2003, we had cash and cash equivalents and short-term
investments of $5.4 million compared to $5.5 million at December 31, 2002.
Working capital increased to $11.8 million at March 31, 2003 from $11.5 million
at December 31, 2002. The increase resulted principally from increases in
inventory, partially offset by a decrease in accounts receivable and an increase
in the current maturities of long term debt. Inventory increased as a result of
an increase in the receipts of tissue from our organ procurement organizations
9
and tissue banks and an increase in stock levels of AlloDerm and Repliform to
meet the increase in demand. Accounts receivable decreased as a result of
collection of certain grant receivables that were due at December 31, 2002.
Our operating activities generated net cash of $333,000 for the three months
ended March 31, 2002 compared to $606,000 for the same period in 2002. Although
net income increased in the first quarter of 2003 compared to the same period in
2002, net cash provided by operating activities decreased due to lower non-cash
charges and higher cash used to fund the net increase in working capital
discussed above.
Our investing activities, which consist of purchases of capital equipment, used
net cash of $865,000 for the three months ended March 31, 2003 compared to
$44,000 for the same period in 2002. The increase in 2003 resulted principally
from the purchase of hardware and software for a new enterprise resources
planning (ERP) system.
Our financing activities generated $516,000 for the three-month period ended
March 31, 2003 compared to $307,000 used for principal payments on long-term
debt in 2002. In the first quarter of 2003, we received proceeds of $1.5
million under our credit facility. The proceeds were used to retire $863,000 of
existing debt and to fund equipment purchases. In addition, the credit facility
consists of a $2 million revolving line of credit available until January 2004.
At March 31, 2003, we had an aggregate of $1.4 million outstanding under our
borrowing arrangements compared to $863,000 outstanding at December 31, 2002.
The following table reflects a summary of our contractual cash obligations as of
March 31, 2003:
Payments Due by Period
--------------------------------------------------------------
Less than One to Four to After
Total one year three years five years five years
---------- ---------- ------------ ----------- -----------
Long-term debt (1) $1,379,000 $ 631,000 $ 748,000 $ -- $ --
Operating leases 6,868,000 833,000 1,746,000 1,839,000 2,450,000
---------- ---------- ------------ ----------- -----------
Total contractual
cash obligations $8,247,000 $1,464,000 $ 2,494,000 $ 1,839,000 $ 2,450,000
========== ========== ============ =========== ===========
(1) Under our debt agreements, the maturity of our outstanding debt could be
accelerated if we do not maintain certain covenants.
We believe that our current cash resources together with anticipated product
revenues, committed research and development grant funding and remaining
availability under our credit facility will be sufficient to finance our planned
operations, research and development programs and fixed asset requirements in
the foreseeable future. However, there can be no assurance that such sources of
funds will be sufficient to meet our long-term needs and as a result, we may
need additional funding. There can be no assurance that we will be able to
obtain additional funding from either debt or equity financing, collaborative
arrangements or other sources on terms acceptable to us, or at all. Any
additional equity financing may be dilutive to stockholders, and debt financing,
if available, may involve significant restrictive covenants. Collaborative
arrangements, if necessary to raise additional funds, may require us to
relinquish our rights to certain of our technologies, products or marketing
territories.
At March 31, 2003, there were 113,836 shares of common stock outstanding that
are subject to redemption by us under certain conditions. These shares were
issued to one investor in a private placement in November 1999. Pursuant to the
terms of the purchase agreement, if we do not maintain a listing on or quotation
of our shares of common stock on a U.S. stock exchange or market system we will
be required to redeem such shares at $4.20 per share or $478,000 in the
aggregate.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
----------------------------------------------------------------
We are exposed to changes in interest rates primarily from our debt arrangements
and, secondarily, from our investments in certain securities. Although our
short-term investments are available for sale, we generally hold such
investments until maturity. We do not utilize derivative instruments or other
market risk sensitive instruments to manage exposure to interest rate changes.
We believe that a hypothetical 100 basis point adverse move in interest rates
along the entire interest rate yield curve would not materially affect the fair
value of our interest sensitive financial instruments at March 31, 2003.
10
Item 4. Controls and Procedures.
-------------------------
Within 90 days prior to the date of this report, we carried out an evaluation,
under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures pursuant to
Securities Exchange Act Rule 13a-14. Based upon that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective in timely alerting them to material
information relating to us required to be included in our periodic SEC filings.
There have been no significant changes in our internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------------
A. EXHIBITS
99.1 Certification of the Registrant's Chief Executive Officer,
Paul G. Thomas, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99.2 Certification of the Registrant's Chief Financial Officer,
Steven T. Sobieski, pursuant to Section 906 f the
Sarbanes-Oxley Act of 2002
B. REPORTS ON FORM 8-K
On April 24, 2003, the Company issued a press release
regarding results for the three months ended March 31, 2003.
11
SIGNATURES
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 thereunto duly authorized.
LIFECELL CORPORATION
Date: April 30, 2003 By: /s/ Paul G. Thomas
------------------
Paul G. Thomas
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: April 30, 2003 By: /s/ Steven T. Sobieski
----------------------
Steven T. Sobieski
Vice President, Finance
Chief Financial Officer and Secretary
(Principal Financial Officer)
Date: April 30, 2003 By: /s/ Bradly C. Tyler
-------------------
Bradly C. Tyler
Controller
(Principal Accounting Officer)
12
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul G. Thomas, certify that:
1. I have reviewed this quarterly report on Form 10-Q of LifeCell Corporation;
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 officer 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 officer 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
functions):
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 officer 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.
Date: April 30, 2003
/s/ Paul G. Thomas
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Paul G. Thomas
Chairman of the Board
President and Chief Executive Officer
13
I, Steven T. Sobieski, certify that:
1. I have reviewed this quarterly report on Form 10-Q of LifeCell Corporation;
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 officer 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 officer 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
functions):
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 officer 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.
Date: April 30, 2003
/s/ Steven T. Sobieski
- -------------------------
Steven T. Sobieski
Vice President, Finance
Chief Financial Officer and Secretary
14