Good day ladies and gentlemen and welcome to the Alphatec Spine’s Fourth Quarter and Fiscal Year End 2013 Results Conference Call. At this time all participants are in a listen-only mode, later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a remainder this call is being recorded, if you have any objections you may disconnect at this time. I would now like to introduce your host for today’s conference, Ms. Christine Zedelmayer, Investor Relations. Please go ahead.

Good afternoon and welcome to Alphatec Spine’s quarterly update conference call to discuss our fourth quarter and fiscal year 2013 financial and operating results. This conference call contains forward-looking statements and involved risks and uncertainties including statements regarding the Company’s expectations regarding its financial performance, strategies for revenue growth, development of new products, customer acceptance of the Company’s products and overall trends in economic conditions in the Company’s market. The Company undertakes no obligation to update the information presented on the conference call. Actual results could differ material from those projected in the forward-looking statements as a result of certain risk factors. For more information for our potential factors that affect our business and financial results, we suggest you review our filings with the Securities and Exchange Commission. Throughout the conference call the Company will reference some financial metrics those derived in accordance with generally accepted accounting principles or GAAP. For other metrics are not in accordance with GAAP. This approach is consistent with how management measures the Company’s results internally. However, non-GAAP results are not in accordance with GAAP and may not be comparable to non-GAAP information provided by other companies. Non-GAAP information should be considered as supplement to and not as a substitute for financial statements prepared in accordance with GAAP. Our reconciliation of a non-GAAP information to the corresponding GAAP measures is in the press release that was filed today prior to this conference call. Now, let me introduce the other members of the Alphatec management team that are here today. Les Cross, Chairman and Chief Executive Officer; Mike O’Neill, Vice President-Finance and Chief Financial Officer, Tom McLeer, Senior Vice President-U.S. Commercial Operations; Mike Plunkett, Chief Operating Officer and Ebun Garner, General Counsel. I will now turn the call over to Mr. Les Cross.

Thank you, Christine. Good day everyone and welcome to Alphatec Spine’s conference call to discuss our fourth quarter and year end financials and operations. This afternoon our comments will build on both press releases issued earlier today. In the interest of providing ample time to review and discuss our results as well as our settlement of the OrthoTec matter and the Deerfield credit agreement that we’ve announced today. We will shorten our comments regarding 2014 and give further comments on our first quarter call, which should be held before the end of April. After my introductory remarks, Michael provide additional details on the fourth quarter and full year financial results and provide more details on the outlook and guidance for 2014. 2013 was a pivotal year for Alphatec, and I’m very pleased by the record results of the organization delivered. During the last two years, our strategy has been to strategically improve the overall operations of the Company in order to strengthen sales and overall profitability. I’m very proud to say that 2013 demonstrated our ability to deliver and execute to that strategy. We have streamlined our R&D process to deliver valuable, innovative solutions into the marketplace. We’ve also strengthened our U.S. and international sales leadership. At the same time we continue to seek to increase our bottom line probability by implementing operational efficiencies and effectiveness throughout the supply chain manufacturing an all back-office operations. We feel as though our strong execution in 2013 establish positive momentum for us to grow the business in 2014 and provides us with an extraordinary opportunity to maximize shareholder and stakeholder value this year and beyond. We will provide more details about our strategy for 2014 later in the call. However, before I provide these key highlights for our fourth quarter’s performance, I would…

Thank you, Les. As Les has already provided the key revenue highlights both the fourth quarter and fiscal year 2013, I will focus the majority of my remarks on the reported operating performance for the fourth quarter and full year ended December 31, 2013. I’ll then provide full year 2014 guidance. As it’s quite clear from the press release today, there is a significant number of moving parts impacting our financial results for the fourth quarter and full year 2013. I encourage you to look at the non-GAAP reconciliation tables accompanying our press release for more detailed information. These measures represent important metrics that we use to manage the ongoing operations of the business. As I go through this review there are a number of adjustments that I will need to highlight in order to give you a better understanding of the underlying performance. Before I provide additional details on the fourth quarter and fiscal year 2013, I’d like to provide some additional commentary with respect to the OrthoTec settlement and the debt facility with Deerfield that we announced earlier today. Under the terms of the secured loan facility with Deerfield, Alphatec has the option to draw up to $50 million in one or more increments by January 30, 2015. This facility matures in five years at an interest rate of 8.75%, payable quarterly in cash following the execution of a drawdown. Alphatec issued Deerfield 6.25 million warrants upon initial execution of the facility and will issue an additional 10 million warrants on a pro rata basis as the facility is drawn down. With each disbursement, Deerfield will receive a transaction fee equal to 2.5% of the amount disbursed. I’d like to take the opportunity to thank both Deerfield and MidCap Financial for their flexibility and commitment to the future…

Thanks Mike. Good job. As I look back on my second year with Alphatec, I am extremely proud of the tremendous progress the team has made. With this strong foundation that we have built, our team now has an opportunity to provide greater focus externally on gaining market share and expanding our global business and continuing to establish long-term stakeholder value. I am excited about the opportunities that lie ahead for Alphatec. We have great confidence in the momentum as we enter 2014. In closing, I’d like to reiterate that along with the Alphatec’s Spine Board of Directors and leadership team, we are committed to executing our plan and creating even greater value for our employees, customers, patients and shareholders around the world. Additionally, I would like to acknowledge and thank our employers and our distribution partners for their hard work and commitment has enabled the company to deliver the record results for this quarter and the full year. So with that said, operator, let’s take some questions.

Thank you. (Operator Instructions) And our first question comes from Raj Denhoy from Jefferies. Please go ahead. Raj Denhoy – Jefferies & Company, Inc.: Hi, good afternoon.

Hey, Raj, how are you doing? Raj Denhoy – Jefferies & Company, Inc.: Doing okay, thanks. Wondering if I could ask a little bit about the settlement. As we talked about before, as you described before there were still some questions in terms of where the ultimate liability my rest in that issue and whether they’ll be with you or perhaps pervious parties that might have some exposure. And I’m curious what led you to ultimately decide that you should settle for the entire amount or at least some amount with OrthoTec?

Hi, it’s Ebun. I think when we looked at it, it really came down to five basic factors we’re looking at. Number 1, there could have been a significant amount of interest attached to the verdict; two, get to Phase II you would incur at least a couple of million dollars of legal expenses to win Phase II. You also had exposure in New York. There were certain directors of Scient’x that were defendants in New York and there were indemnification obligations with respect to those directors. Even after you get through all of the trial stage matters you still have what would prove to be a lengthy appeal process, if we’re successful on all of this. And then finally, just the added distraction of our resources and management through what was destined to be a multiyear process still to come. Raj Denhoy – Jefferies & Company, Inc.: Okay. But that basic idea, I mean you sort of assumed all of the liabilities would eventually rest with you, I mean was it sort of decided along the way that whether it was Healthpoint or even the previous Scient’x organization whether there was any liability that might rest with those parties as opposed to passing all the way through?

Well, I mean we purchased all the stock of Scient’x and so any liabilities that would lie with Scient’x eventually would lie with Alphatec because we consolidate their financials into ours. So it’s not as if we’re a position where we could just leave Scient’x hanging with a large liability. Raj Denhoy – Jefferies & Company, Inc.: And that goes similarly for Healthpoint?

No, it is not similar for Healthpoint. Raj Denhoy – Jefferies & Company, Inc.: Okay. Well, I’ll leave it there. We can chat off-line about it. But then the other point of it was the way you structured the deal in terms Deerfield getting, I think, it was $6.25 million more, so at $1.39. How did you arrive at that, both the dilution you’re willing to take also the evaluation of that $1.39 in place?

Yes. So I think one of the things we did was we obviously looked at a number of institutions that were potentially in a position to be able to give us some support on quite a short amount of time. So we actually had some competitive bits, some competitive offers to be able to see what we could do here and Deerfield came through with a highly competitive offer and certainly have been great partners all the way through the process today. I think at the same time you have to acknowledge we have a senior lender MidCap Financial and obviously you have to consider their willingness and ability to entertain subordinated debt. And I think, overall, we have very good solution between both of our lenders and the company. Raj Denhoy – Jefferies & Company, Inc.: Okay. That’s fair enough. And just lastly on the business, I wonder if I could ask about. The EBITDA performance in the quarter was certainly good, as you look at out into 2014 and beyond, it strikes me that you’re making significant progress there. And I am curious that you could give us a sense of what you’re thinking, you might end 2014 on a run rate basis on EBITDA, could you can be pushing $10 million as you get out of the year?

Well, I think our guidance range for EBITDA would suggest that that’s a little aggressive, for the final quarter of the year. I think what we have been comfortable saying is that we continue to make a lot of progress on our gross margin expansion certainly the actions that we have taken in France would legitimatize that statement. And we expect our gross margins to improve as each quarter of the year unfolds. I don’t want to get into specific quarter guidance at this point in time. But I think it’s fair to say that Q4 is likely to be one of the more profitable quarters from an EBITDA basis that we would see in the year. Raj Denhoy – Jefferies & Company, Inc.: Okay, fair enough. Thank you.

Thanks, Ross.

Thank you. And our next question is from Matt Miksic from Piper Jaffray. Please go ahead. Matt S. Miksic – Piper Jaffray & Co.: Hi, thanks for taking my questions.

Hey, Matt Matt S. Miksic – Piper Jaffray & Co.: Hey, so, maybe just a follow-up on those the warrants and through what’s just going to in terms of dilution. I didn’t maybe I missed it, but did you give just sort of round number as to what we should expect this year for weighted average shares outstanding couple of shares?

So, upon execution of the agreement today you’ll see, so 6.25 million warrants at $1.39, So that’s effective with the signing of the agreement. To the extent that the Company is in a position to drawdown against the $50 million facility, we will issue pro rata up to a maximum of $10 million warrants. So, if we pull down for example, wallet payment is $17.5 million, if we pull down $17.5 million you’ll see a pro rata warrant adjustment for that. But you can think of the worst case scenario in terms of that number would be 16.25 million shares at the end of the year, if we would have drawdown the full amount of the facility. Matt S. Miksic – Piper Jaffray & Co.: Is that a case or rate that you expect to execute on this facility or this opportunity?

I don’t want to get into the specifics of how much we’re going to drawdown as we go throughout the year. Obviously, the facilities in play for a reason, we want to be in a position to use it, but I am not prepared to comment at this point exactly what number by when. Matt S. Miksic – Piper Jaffray & Co.: Sure. And just to push a little bit on that Mike, I mean the nature of your business the cash you are generating, and it’s just fair to say over the term of this agreement that should be more like that you use it a little bit more heavily in the beginning?

No, I think clearly we have an initial, an initial payment that is due on the settlement. We also have access to some growth capital, working capital within the facility, and I think that’s clearly an opportunity for us to think about the utilization of the cash that we have as well as contributing to more cash in the event we needed. I think it’s fair to say that we’re going to use the facility in quite a substantial way at this point in time. Matt S. Miksic – Piper Jaffray & Co.: That’s helpful. A couple of follow-ups on the fundamentals, you mentioned Illico clearly driving some of your, in particular some of your international sales in Japan. I’d like to understand maybe what of your new products were sort of making at the significant contribution here and what we saw in Q4 and which products and maybe when throughout the year we suspect to think of them having an impact heading into this year, I’m thinking of Pegasus and Solus?

Hi, this is Tom McLeer, so I’d say in the U.S. Illico has continued to drive things internationally the same sort of situation with the continued training we have, so getting longer constructs on the MIS, side Solus certainly has moved along nicely for those surgeons that believe in a ALIF approach. So, we continue to focus training there and then was some of the new biologics, we launched and the Pegasus cervical implant, I think those are all going to be contributing factors through out the year. Matt S. Miksic – Piper Jaffray & Co.: So, as I hear you talked about, we should kind of expect look over Illico, just to remain kind of the biggest driver just coming years, is that fair?

Yes, I think that in addition to some new products that we launched in second half of the year, but certainly Illico continues to be a strong driver as we train more and more surgeons. Matt S. Miksic – Piper Jaffray & Co.: Okay, and then just last from me as you could as you can mention Mike, the weather somehow may have impacted your guidance in someway. Is obviously a lot of talked about that last week at AAOS, wondering in terms of pace of the year, should we be expecting kind of a little bit of more than a seasonal dip here in Q1?

I think as we came into 2014, to the extend that there is a seasonal dip and out there they may not be consistent with the rest of the industry, I think we certainly were impacted with the cancellation of a number of procedures in the January, February timeframe. What I think we’re looking at right now is when do that come back. Matt S. Miksic – Piper Jaffray & Co.: Great, okay. I’ll hop of there, thanks again for taking my questions.

Thanks Matt.

Thank you, and our next question comes from Phil Skolnick from Canaccord. Please go ahead. Phil Skolnick – Canaccord Genuity, Inc.: Great, thanks, good evening, can you hear me okay.

We can hear you Bill. Phil Skolnick – Canaccord Genuity, Inc.: Thank you. So just the $1.1 million you are going to pay quarterly, you start that in Q4 when did the Biomet payments roll off?

It rolls off in Q4 2014. Phil Skolnick – Canaccord Genuity, Inc.: Okay, so you are swapping in one out for the other?

Yes, it’s not lost on me. Phil Skolnick – Canaccord Genuity, Inc.: Okay, and then so kind of that increase to margin goes away, just one for the other, the 74.4% I think it was on the U.S. gross margin, how sustainable is that at current levels. Is there, can we can keep that at 74% or is that going to bounced around certain levels?

We definitively had a strong fourth quarter in the U.S. Our mix was good, in addition unlike prior periods and prior quarters, I think Mike and his team have done an absolutely tremendous job managing some of the inventories, the obsolescence and the excess and so we are not seeing any extraneous charges come through that vary the gross margin. So as Tom indicated out our strength in Illico and Solus helped, but overall we had a good quarter. Phil Skolnick – Canaccord Genuity, Inc.: Tommy, the way I should think about this is maybe 70% or higher is how I should think about the U.S going forward, and then any improvements did you talk about gross margins improvements through the year would be coming via the changes going on for the international businesses.

That’s true, that’s fair. Phil Skolnick – Canaccord Genuity, Inc.: Okay, and then as we think about there is a lot cross winds in your revenue line, so we got I think annualization of the PureGen being pulled off to market somewhere half way between Q1. And then now you’ve got the French business coming off, like how much per quarter was the French business in 2013. How much are we going to have to pull out of our numbers for 2014? I just want to know how to think about that?

So you’ve got essentially $5.5 million coming out from France. Phil Skolnick – Canaccord Genuity, Inc.: Full year?

.: Phil Skolnick – Canaccord Genuity, Inc.: And then would you pull in that…

Just under $1.5million a quarter. Phil Skolnick – Canaccord Genuity, Inc.: And then is there any opportunity to replace that within stocking distributor over time?

We’re still in the process of restructuring our French operations, so that is not something that we are planning on in the near future. Phil Skolnick – Canaccord Genuity, Inc.: Okay, in the PureGen headwind, it’s what about $1 million…

It’s about $1 million that came in Q1 of 2013. Phil Skolnick – Canaccord Genuity, Inc.: Okay, so maybe, it’s about close to $1 million that is coming off, okay.

Yes. Phil Skolnick – Canaccord Genuity, Inc.: And then last question, just on guidance as you look at the guidance you are giving, how much of that include, is it getting into distributor in France, new products that are yet to be launched. Any change in the macro?

So I think in terms of macros, I think we are looking at U.S category growth of low single digits. We are continuing to forecast mid-single pricing declines in the U.S that is actually a consistent assumption across many of our international markets as well. I thought in terms of some of the prepared remarks, in terms of the back half versus the front half. So, products that we launched in 2013, Solus, Illico, multi-level, Zodiac DVR, Pegasus they all contribute and build throughout the year. And obviously we have some launches tailored to the back half of 2014 that kind of drive that second half number, higher than the first half.

Well I think, to answer your question there is nothing in the U.S budget that requires FDA approval. Phil Skolnick – Canaccord Genuity, Inc.: Right.

That we don’t have. The only approvals we are waiting for are Brazil and China Phil Skolnick – Canaccord Genuity, Inc.: Yes.

For rights to sell our products. There is nothing in the U.S numbers that could go south, because of the FDA. Phil Skolnick – Canaccord Genuity, Inc.: That Brazil and China are not in guidance.

Right. Brazil and China are not in the guidance. Phil Skolnick – Canaccord Genuity, Inc.: . And the last part of the guidance is just, I think on the POD business, you’ve less than 10%, less than 5%. I don’t know what the number is today. If I am thinking about the numbers that is the only potential headwind you could see if the two companies that used to play that our PODs, you end up not supplying anymore.

Yes. Phil Skolnick – Canaccord Genuity, Inc.: Or is that already in your guidance?

It’s less than 5% in 2013. Phil Skolnick – Canaccord Genuity, Inc.: All right, that is all I had. Thank you very much.

Right, thanks Phil.

Thank you, and our next question comes from Mark Landy from Summer Street. Please go ahead. Mark Landy – Summer Street Research Partners: Good evening, folks.

Hey, Mark. Mark Landy – Summer Street Research Partners: Hi, guys, can you hear me okay.

Yes. Mark Landy – Summer Street Research Partners: Oh, excellent. Can we start with easy questions? Mike, I think you said normal litigation expense in 2014 and how should we think about that kind of either through the quarters for the year relative to 2013?

And relative to – so I think we highlighted the difference in litigation expenses of $4 million through the first nine months. And we backed out 3.7 of pre-trial cost in adjusted EBITDA for Q4. So we would be – I’m looking at G&A as getting back to normalized legal expenses, which is probably going to be in $3 million to $4 million rank, as opposed to what has been an exceptional period in 2013. Mark Landy – Summer Street Research Partners: Okay. So can you kind of just give us a blunt number, Mike?

I thought I gave you $3 million to $4 million. Mark Landy – Summer Street Research Partners: Okay, sorry, my bad. And then just looking at the adjusted EBITDA for the full year, can you discuss what the estimate for depreciation, amortization and stock-based compensation is?

Hang on a second, Mark. Mark Landy – Summer Street Research Partners: I thought that was my easy question.

Yes, right. I don’t know if I’ve got that on my fingertips right now. Mark Landy – Summer Street Research Partners: You can give it to me right now.

I can follow-up offline, but there’s nothing. Depreciation comes down because we’re out of the French market. And our amortization doesn’t change. The amortization is scheduled the same. And then obviously we’ll take a route where the settlement expense goes. We took that expense now. So it will be cash going forward, not P&L. Mark Landy – Summer Street Research Partners: Exactly, and they’re just stock-based comp.

No significant changes versus what was reported in 2013. May go up a little bit. Mark Landy – Summer Street Research Partners: Awesome. All right, Mike. Okay. I guess at the risk of drawing some ire here, I’m going to ask the question. If we go back to some of the judge and the jury and appeals rulings on the OrthoTec and the Scient'x litigations back in California, there is mention of fraudulent activity. So the way you’ve stated this, now how do you deal with that with respect to perhaps legal action going forward and D&O insurance et cetera, et cetera?

I think you’re confusing – this is Ebun. I think you’re confusing what we generally refer to as, you run-of-the-mill fraud with a fraudulent transfer, which is nothing more than what the verdict held was that assets were bought of a distressed company for less than their fair market value. That’s a far cry from the general allegations of fraud that it seems like you’re talking about. In California it’s actually called constructive frauds. So it’s actually a different course of action entirely than your run-of-the-mill fraud. Mark Landy – Summer Street Research Partners: Okay. Don’t get me wrong. I’m not insinuating any fraud. I’m just reading transcripts, legal transcripts. And I guess the comment is that insurance companies are not in the charity business, and they are going to look for every opportunity to try and renege on what they have to pay up. So I guess my question is are you quite comfortable now that any issue that will come out, the share, the losses to anything going forward will be covered by the insurance that you have in place?

Right now there are no shareholder losses. We’ve been dealing with this litigation since 2009 into 2010. There haven’t been any shareholder losses related to this litigation and so to the extent that there is one will address it at that time. Mark Landy – Summer Street Research Partners: Right. But it’s fair to say that the ruling have only tended down in the last couple of months, right? The lawsuits have been going on, but the awards are recent and it takes time for these things to get momentum.

Thus far we haven’t seen any activity that would lead us to think that a shareholder lawsuit is imminent or even being planned.

Already we can pick it up, when that happens, if it happens. I hope it doesn’t. Mark Landy – Summer Street Research Partners: Thanks, guys.

Thanks Mark. Is there any additional questions?

There are no further questions. I would now like to turn the call back to Mr. Les Cross for any further remarks.

Great, thank you very much. Well, that obviously concludes our call and our question-and-answer section for today. So, I thank everybody for their time and attention and assure you about our commitment to continue to improve the performance of this company on a go-forward basis. So, thank you everybody.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program. You may all disconnect. Everyone have a great day.