Good morning and welcome to the AtriCure First Quarter 2011 Earnings Conference Call. My name is Kerris [ph], and I will be your coordinator for the call today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s call. (Operator Instructions) As a reminder, this call is being recorded for replay purposes. And I would now like to turn the call over to Mr. David Drachman, President and Chief Executive Officer of AtriCure. Mr. Drachman, please proceed.

Thank you, Kerris. Good morning and welcome to our first quarter earnings conference call. Joining me on the call today is Julie Piton, Vice President of Finance and Administration and Chief Financial Officer. At this time, I would like to turn the call over to Julie for a few introductory comments.

Thank you, Dave and good morning, everyone. By now you should have received a copy of the earnings press release. If you have not received a copy, please call Sarah Luken at 513-755-4136 and she will fax or e-mail you a copy. Before we begin, let me remind you that the company’s remarks today may include forward-looking statements. These statements include but are not limited to, those that address activities, events or developments that AtriCure expects, believes or anticipates will or may occur in the future such as revenue and earnings estimates, other predictions of financial performance, launches of new products and market acceptance of new products. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond AtriCure’s control, including but not limited to the rate and degree of market acceptance of AtriCure’s products, governmental approvals and other risks and uncertainties described from time to time in AtriCure’s SEC filings. AtriCure’s results may differ materially from those projected on today’s call and AtriCure undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additionally, we will refer to non-GAAP financial metrics. A reconciliation of these non-GAAP measures is included in our press release, which is available on our website. I would like to remind everyone on the call today that the Food and Drug Administration, or FDA, has not cleared our products for the treatment of atrial fibrillation or AF or for stroke reduction. The company and others acting on its behalf may not promote any of its products or train doctors for the surgical treatment of AF or stroke reduction. With that, I would like to turn the call back to Dave.

Thank you, Julie. First quarter 2011 revenue was $15.6 million, an increase of $1.7 million or 12% over the first quarter 2010. U.S. revenue was $12.1 million, up 10% and international revenue was a record $3.5 million, up 21%. In addition, we continue to demonstrate operating leverage. As adjusted EBITDA improved by approximately $500,000 to $250,000. These results reflect the impact of our growing product portfolio, investments in our sales and marketing structure, our commitment to profitability, and the execution of our strategic priorities. During the quarter, we implemented the realignment and expansion of our U.S. sales organization from 30 to 39 sales territories which included transitioning customer accounts and increased trading activities for newer sales representatives. As a result, our U.S. sales force is well positioned to increase adoption in existing accounts and penetrate competitive accounts. The AtriClip system opens new doors and creates cross selling opportunities for a series of new ablation products. We believe the strength of our product portfolio combined with our best in class U.S. sales organization and the increasing opportunities and momentum from our international markets will enhance our market leadership and result in new growth opportunities. When reviewing the quarter in more detail, we are pleased with the continuous success and execution of our launch strategy for AtriClip in the U.S. U.S. sales of the AtriClip system were $1.5 million and during the quarter 20 additional accounts began stocking the system. The U.S. ablation revenues decreased approximately $400,000 or 4% compared to the first quarter of 2010, which reflects the reduction and sales of products used in minimally invasive procedures. This was primarily offset by an increase in sales from open-heart ablation products. The reduction in revenue from products used in minimally invasive procedures is partially a result of our plan to focus…

Thank you, Dave. I’ll begin by providing information related to revenue. For the first quarter of 2011 revenue increased $1.7 million or 12% to $15.6 million. Revenue from product sales in the U.S. grew 10% or $1.1 million to $12.1 million. Revenue from ablation related product sales in the U.S. decreased by approximately $400,000 driven primarily by a decrease in sales of product used in minimally invasive procedures. This decrease was partially offset by an increase in revenue from open-heart ablation products, which we believe reflects continued market share gain. U.S. sales of the AtriClip system were $1.5 million during the quarter. International revenues grew a record [ph] $3.5 million, reflecting 21% increase over the first quarter of 2010. The increase in international revenue was driven primarily by growth in our direct European markets, as well as an expansion in select Asian markets. Currency fluctuation would not have an impact on our reported revenue growth rate. Now turning to gross margins, gross margins for the first quarter of 2011 was 76.1% as compared with 76.5% for the first quarter of 2010. A change in gross margin was primarily the result of an increased mix of revenue from the AtriClip system, which initially has the lower gross margin than our other disposable product. We continue to anticipate gross margins on a quarterly basis to fluctuate in the range of 74% to 77% with variations driven primarily by product mix and the mix of revenue from international sales. Next, an update on operating expenses. Operating expenses increased 5% and a 12% increase in revenue from $12.4 million for the first quarter of 2010 to $13 million for the first quarter of 2011. Research and development expenses, which include clinical activities, increased 11% or approximately $300,000 from $2.7 million for the first quarter…

Thank you, Julie. In terms of outlook, we believe the recent launch of our AtriClip system. U.S. sales force expansion and realignment a serious of important new chronic introductions and anticipated atrial ablation accrual on the horizon in to our investments in DEEP AF hybrid ablation and so – therapy AtriClip clinical trials positions us for increased market leadership and sustainable growth. We are confident in our people and the power of our strategic plan and we believe that these initiatives position us for growth during 2011 and beyond. We will now open the call for your questions.

(Operator Instructions) And you have a question from the line of Tom Gunderson, Piper Jaffray. Please proceed. Tom Gunderson – Piper Jaffray: Hi, good morning.

Good morning, Tom.

Good morning, Tom. Tom Gunderson – Piper Jaffray: So on the sales expansion, Dave going from I think you said 30 to 39, can you describe those where those nine came from and if they are new, how long does it take them to get to full productivity as that six months, nine months can you give us some color on that?

We actually had a five day challenge and realigned some more junior people into territories. In terms of starting up and being minimally fishing, that can take two maybe three quarters, but people can be productive right out of the gate, selling the AtriClip System and our open-heart products is really a one or two quarter process, getting into the more sophisticated procedures whether it’s minimally based over hybrid that can certainly take a longer period of time. Tom Gunderson – Piper Jaffray: Thanks. And then on AtriClip, you got another quarter under your belt, can you – how is it going as far as making the calls have you knocked on the door and had it open at least for initial calls on all two 50, are you getting there. And then on the early, where you kind of, get in friends of the family and the low handing through, can you give us a little bit how reorders are going?

Sure. Well, we have basically out of the top 250 AtriCure account, a 100 of those accounts are now stocking the AtriClip system. The key issue is that we have average selling prices at about $1,100 per clip. We want to make sure that we maintain selling prices that we think are consistent with the premium nature of the product. So certainly in today’s hospital environment between value analysis committees and hospital administrators, stocking product is more of effort and it has been in the past, especially maintaining premium pricing on premium products. So we’re highly encouraged that we penetrated a 100 of our top 250 and a 100 of those accounts are placing reorders and stocking the product. We continue to be encouraged moving forward that we can use the AtriClip system to basically open new doors and fulfill a series of new ablation products with our standard sales force. Tom Gunderson – Piper Jaffray: Got it. That’s it from me, Dave. Thanks.

Thank you, Tom.

(Operator Instructions) And your next question comes from the line of Matt Dolan with Roth Capital Partners. Please proceed. Matt Dolan – Roth Capital Partners: Hi, guys good morning.

Good morning.

Good morning. Matt Dolan – Roth Capital Partners: Question, Dave on the sales side, maybe looking at both the international and domestic geographies, first internationally was a nice tick up sequentially. Can you help us to understand how much of that is the conversion to direct, if you have a direct presence over there versus underlying volume growth, this will help us to kind of see if this is sustainable type of growth rate?

It’s about half and half, we have been direct and Germany for quite some time now. So in Germany is 85 million people and almost one-third of the year in population, we feel very good about our progress in Germany and we have the significant number of targets going forward, we have approvals for cardiac arrhythmia and atrial fibrillation on our main products, do you think that’s a really powerful high growth markets for the company. In Benelux [ph], we went direct more recently and I would say it about 50% of the growth in that area is coming from just a transition to direct selling and 50% coming from extension. Matt Dolan – Roth Capital Partners: Okay. And then trying to may be better quantify your decision in the U.S. I understand there’s new product coming in lot of growth drivers, especially if you go into 2012, but with MIS being a drag in the near term, what type of growth rate are you – should we expect for both the market and then durability to take competitive market share?

Well, first of fall, we’re fairly the leaders in minimally invasive and hybrid; there is really not a close second competitor. Number two, I really wouldn’t use the word drag because we think minimally invasive and hybrid is our highest growth opportunity on a long term horizon. In the short term, we have taken some actions, some proactive actions to mitigate any risk in a highly dynamic enforcement and compliance environment. And those actions basically focus our training activities on our clinical trial sites to make sure that we mitigate any risk and don’t damage or set back the high growth opportunity that minimally invasive and hybrid offers to the company. In addition, minimally invasive is going to be a much bigger growth driver in the European markets. Now that we have more direct people which is what is required to expand minimally invasive in general, we anticipate that Europe is really going to come on strong in the area of minimally invasive. Matt Dolan – Roth Capital Partners: Okay. Now, I can speak one in on the – looking at you obviously maintained your guidelines, guidance for mid-2012 approval. But given the nature of the questions can you just walk us through how many, kind of, the next steps with FDA do you expect another round of questions or should this resubmission on your behalf take care of things?

I think there will be more questions from FDA. But remember the external review process is an interactive process and it’s worked out really well for us, we’re actually been talking to FDA while, we are developing our current responses. And the fact that FDA cannot go back and ask for additional patients, we think is a major benefit in terms of the overall outlook in approval process. So, we were very optimistic about the ability to gain FDA approval on our timeline. We think the classification issue is a sort of a evolving issue that we just need to respond to, our physician advisors who are independent have gone through the source documentation of our, of late patients and have discovered the source documentation and classified each patient based on their current definitions and nomenclature. So, we feel very confident that we can respond effectively that our patients fit a persistent long-standing, persistent classification and that the process going forward, if consistent with the mid-2012 approval. Matt Dolan – Roth Capital Partners: Great. Thanks for the time.

Thank you, Matt.

Thank you, Matt.

And your next question comes from the line of Jason Mills with Canaccord Genuity. Please proceed. Jason Mills – Canaccord Genuity: Good morning, Dave and Julie. Thanks for taking the questions. Can you hear me, okay?

Yeah. Hi, Jason. Jason Mills – Canaccord Genuity: Hi. Good morning, Dave. So, going back to Tom’s question on the AtriClip, in terms of the penetration of accounts at your state side, what do you think, Dave, it will take or what would be your strategy over the next, I don’t know what timeline you want to use, year or two years to go from a 100 to potentially, the majority 200 plus accounts in terms of your existing AtriCure customers? And then also separate from that, what sort of early successes have you seen with AtriClip penetrating the competitive accounts or should we see more of that when Synergy, the new Synergy product is launched towards the end of this quarter?

Excellent question, Tom. Jason Mills – Canaccord Genuity: It’s Jason anyway.

Sorry, excellent question, Jason. I think in terms of going forward in top 250, in fact that we’ve expanded our sales force and then we have more cost points on customers and then we can work the administrative process. And part of our strategy, with maintaining premium pricing on the AtriClip system and getting it on the shelf, is to basically use it and sell it for specific indication, for example, off pump CABG procedures where the clip is a very nice product because it’s a very tenuous procedure to exclude the appendage, while the heart is beating. So, in some of those accounts where it is a more torturous process, from a selling perspective, our strategy is to sell for specific, more challenging procedures and maintain the premium ASP to get our surgeons more comfortable, with the use of the clip and then expand its use. And that process beyond the low hanging fruit in the first 100 or so, accounts is a little bit longer process and I would anticipate that that is going to take another 12 to maybe 15 months before we can fully execute that. I hope that answers your question.

Thanks for the competitive accounts. Jason, it is just under 20 accounts and we really have not aggressively gone after competitive accounts at this point, but we do plan to do so, with the Synergy Access launch as well, as the cryo, the new cryo platform. Jason Mills – Canaccord Genuity: Okay. Thanks, guys. That is helpful on that front. So, more aggressive on the competitive side probably more second half of the year, correct?

Yeah. I think it’s a very good point, Jason, the way that you initially asked the question was, with the new product and part of our strategy is that, we really want to focus on AtriCure accounts now and then use the clip to open doors in competitive accounts where we have new ablation technologies and pull through those new ablation technologies, with cross-selling techniques. So part of our strategy is really to wait on Synergy Access, which is here in now and also the Cryoablation generator, I think you will see in the second half of the year that will take a more aggressive positioning and competitive accounts. Jason Mills – Canaccord Genuity: That’s helpful. And one follow up from me, in my opinion, DEEP AF along with the couple of other things, perhaps, one of the more important things for the company over the next couple of years. The hybrid procedure in our due diligence is gaining some traction. You guys are sort of right in the male stream there, in the middle of that. Could you talk, Dave, just help us understand any pitfalls that could occur as you go from the feasibility to the pivotal, I just want to make sure I understand everything there is to understand on that front, because I think the start of the DEEP AF, pivotal trial is an important inflection point for the company, as you mentioned and I agree with you. I just want to make sure we have our eyes wide open, as it relates to a relatively cantankerous FDA and regulatory process. We are really looking at every INT [ph].

Excellent question, Jason. I think the major issue for us, when I think about the DEEP AF is that we are combining epicardial and endocardial surgical and endovascular techniques and that requires training. So, I think we need to seek to maintain discipline in side selection. We currently have surgeons in EPs that are committed and then we also maintain discipline, in terms of running cases. One of the things that – it’s been a little bit of a dragging in terms of continuance feasibility trial, but have led to – we think superior results, is that we require each center to perform and run in procedures and make sure that we check the box before we move forward in a clinical trial. So, I think FDA is going to want to see at phase – procedure number one, knowing that we are combining two different sub specialties into one procedure and I think if we can do that, by maintaining the discipline and selecting the correct centers and making sure that we have a proper number of running cases and check those training activities, in terms of all the boxes with catheter labs and running cases, I think we will be in good shape going forward. Jason Mills – Canaccord Genuity: Great. I will get back in queue. Thanks.

Thank you, Jason.

And your next question comes from the line of Charlie Jones with Barrington Research. Please proceed. Charlie Jones – Barrington Research: Good morning. Thanks for taking my questions. I apologize that I missed this, but hoping, you can repeat the timeline, you have for U.S. and the year approvals on minimally invasive clips systems. And I guess this part of that, I was hoping that you could talk a little bit about – the latter two surgeons will have in the DEEP AF pivotal trial to used minimally invasive clip system and other people and I’ll stop there.

Well, first of all – let me just in terms of the DEEP AF clinical trial, the amendment was recently approved the use of AtriClip systems in the DEEP AF clinical trial. So that’s currently being done now. Each DEEP AF patient is being treated, is receiving a minimally invasive clip. Now that is with our current generation clip. Our plan is to file our IDE this quarter, for a feasibility trial with our current generation clip and then in our thoracoscopic ablation or our thoracoscopic AtriClip platform is ready for human use. We’ll do some GLP study and prepare that for pivotal trial. But, during 2012, we’ll complete our feasibility trial with our current generation AtriClip systems, and even then [ph] in 2013, we will anticipate being in a pivotal trial with our newer thoracoscopic AtriClip platform. Charlie Jones – Barrington Research: Right. That’s helpful. And can you talk a little bit about the potential impact of centers preparing to be included in the DEEP AF trial and the pivotal trial? When will they have everything in place that they need to begin treating patients, kind of on – these early patients before the patients are actually included in the trial?

We are currently actually selecting centers now. So, we are looking at new centers and talking to centers as out there, participation. We want to see how well the surgeons, neurologists, physiologists, partner and work together. We want to evaluate their facilities and we want to invite them to (inaudible) lab, which were R&D (inaudible) lab to ensure that they have their thoracoscopic skills and the common mindset to perform hybrid procedures. So we are actively presuming and selecting centers for that pivotal trial, now. Once we get beyond the feasibility phase and initiate our pivotal trial in 2012, we should be in good shape in terms of site selection, but each site will be required to perform a series of running procedures and we’ll need to check the box to make sure that the protocol is being followed as written and that we are comfortable before we begin enrolling patients into that pivotal trial. Charlie Jones – Barrington Research: If I can just squeeze one another, I am not sure you can answer anyway, could you just tell us what your success rate was in the ABLATE clinical trial or some rough range you can kind of give us a good sense of where you are out there?

Well first of all, these were patients that generally had a pre-existing history of atrial fibrillation that was in the range of five years. They had a left atrial diameter of 6 centimeters; our clinical advisors who are expert electrophysiologists that were involved in running the Herculean society [ph] consensus statement reviewed the source documentation to comment that these were patients that were not treatable with catheter ablation and the result in this permanent population of patients are consistent with the preview [ph] publications and basically in the mid 70s of anti-arrhythmia drugs with long-term follow up and monitoring. Charlie Jones – Barrington Research: Thanks a lot.

(Operator Instructions) And your next question comes from the line of Larry Haimovitch with HMTC. Please proceed. Larry Haimovitch – HMTC: Good morning, Dave and Julie.

Good morning, Larry.

Good morning, Larry. Larry Haimovitch – HMTC: Couple of questions on AtriClip, one how are the ASPs staring? Did they change much from the previous quarters and what are they approximately?

We had a slight uptick in ASPs Larry; they are over $1000. Larry Haimovitch – HMTC: That’s great. So you are actually staying at a very, very high level. And Dave, second, on the AtriClip as well any update on competitive products that are – are they in the clinic or moving towards – moving toward that status?

Not on the surgical side, we really haven’t seen any new products that we anticipate coming to the market at any time in the near future. So we believe that our first move advantage will continue for some period of time, and we are beginning to look at the endovascular devices as being our long term competition since we believe that’s a bigger market opportunity, and that we are going to compete very favorably versus the endovascular devices. Larry Haimovitch – HMTC: And I think in the press release, just wonder a follow-up on the AtriClip [ph] it was mentioned that the AtriClip continues to carry – a lower gross margin in the rest of the business. Are those gross margins improving though as you ramp up volume?

They are improving as a result of volume as well as next generation devices and cost mitigation activities within the business. So, we expect some additional cost reductions in that product offering, and we are pleased with the progress we’ve made with respect to those to the cost of that product. Larry Haimovitch – HMTC: Great. Thanks, Julie.

Thank you, Larry.

And at this time, there are no further questions in queue.

Thank you very much. We look forward to our next earnings call. We very much appreciate your support and wish you a happy day. Thank you.

Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a wonderful day.