Good afternoon and welcome to the AtriCure’s Second Quarter 2013 Earnings Conference Call. My name is Juliana, and I’ll be your coordinator for the call today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today’s call. As a reminder, this call is being recorded for replay purposes.

Thank you, Julia. By now, you should have received a copy of the earnings press release. If you’ve not received a copy, please call 513-755-4136 to have one e-mailed to you. Before we begin today, let me remind you that the company’s remarks include forward-looking statements. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond AtriCure’s control, including 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. AtriCure undertakes no obligation to publicly update any forward-looking statement. Additionally, we may refer to non-GAAP financial metrics. A reconciliation of these non-GAAP measures is included in our press release, which is available on our webpage. I’d like to remind everyone on the call today, that the Food and Drug Administration, or FDA, has not approved certain AtriCure products for the treatment of atrial fibrillation, or A-fib, or for stroke reduction. The company and others acting on its behalf may not promote these non-approved products to train doctors for the surgical treatment of A-fib or stroke reduction, unless the product does so indicate it. These restrictions do not prevent doctors from choosing to use the products for the treatment of A-fib or stroke reduction or prevent AtriCure from engaging in sales and marketing efforts to focus only on the general attributes of the products for the current cleared usage. AtriCure educates and trains doctors in the proper use of its products and related technologies, including for the treatment of A-fib in accordance with the product-specified indication. With that, I’d like to turn the call over to Mike Carrel, President and Chief Executive Officer of AtriCure. Mike?

Thank you, Lynn. We are making continued progress in building our commercial, clinical and education focus teams and a strong second quarter. This includes adding many new conversion accounts and hiring some critical people throughout the company. Based upon these accomplishments and our year-to-date results, we are increasing our full year financial guidance for 2013 to 10% to 12% top-line growth. I will start today’s call with a quick overview of our results for the quarter, followed by an update on the business and our strategy for capitalizing on our AF approval, new product developments and our clinical trial progress. Then, I will turn the call over to our CFO, Andy Wade, who will provide an overview of our financial results. After that, I’ll come back to make concluding remarks, and we’ll open it up for questions. We are pleased to announce record revenue of $20.4 million, which is growth of 12% versus last year. Strength in the quarter was driven by record U.S. sales which were up 15% versus 2012. We experienced a good balance across our various product and solution areas. Our momentum is strong and we’re starting to see the results of our commercial and training focus. Key trends for the quarter were U.S. growth, U.S. MIS, the UK and Germany. (analogs) in Russia were a little softer than expected. Before turning to our business trends and clinical trial update, I want to provide some information on recent accomplishments we made in four key areas, our presence at key (inaudible), new additions to AtriCure, sales and marketing and our progress in establishing AtriCure as the education leader for atrial fibrillation. We continue to be pleased with the growth in the left atrial appendage or LAA market, and positive industry activities ongoing. At HRS this year, there was…

Thank you, Mike. For the second quarter of 2013, revenue increased 11.8% to a record $20.4 million. Revenue from product sales in the U.S. was $15.4 million, an increase of 15.2% from the second quarter of 2012. Revenue from open chest ablation related product sales in the U.S increased by approximately $769,000 to $9.2 million and U.S. sales of products used in minimally invasive procedures increased approximately $245,000 to $3.5 million. US sales of the AtriClip system during the second quarter of 2013 were $2.8 million as compared to $1.8 million for the second quarter of 2012. International revenue grew at 2.4% on a GAAP basis and 1.1% on a constant currency basis as compared to the second quarter of 2012 to $5 million. The increase in international revenue was driven primarily by growth in Germany, the UK and China, sales were softer in Russia and the Benelux region. Gross margin for the second quarter of 2013 was 74% as compared with 69.6% for the second quarter of 2012 and 72.5% for the first quarter of 2013. Note that the medical device excise tax expense for the second quarter was approximately $128,000 or 60 basis points. So after removing the impact of the MDET, gross margin would have been roughly 74.6% in the second quarter. Pricing remained relatively steady with some realized decreases in product cost. For the remainder of 2013, we continue to anticipate modest pressure on pricing in the U.S. The increase in gross margin was driven primarily through volume leverage, lower mix of international sales and the strong ASP of the AtriClip PRO. Operating expenses increased 19.5% or approximately $2.7 million from $14 million for the second quarter of 2012 to $16.8 million for the second quarter of 2013. Research and development expenses, which include clinical activities,…

We're pleased with our sales performance and other accomplishments in the second quarter, following our key goals for the remainder of 2013. Achieved our revenue guidance which calls for sustainable double digit growth and continued to gain market share in the U.S. by driving training and education initiatives in conversion of competitive accounts. We also plan to make progress investing our clinical and commercial efforts to further accelerate this growth sustainably. As the only company in the world with an FDA approval to treat the most serious forms of atrial fibrillation we are committed to advancing the field. By achieving these goals we will continue our path towards becoming a leading innovator in atrial fibrillation and left atrial appendage management. We look forward to keeping you posted on our progress, and we'll now open the call for questions.

(Operator Instructions). Your first question comes from the line of Jason Mills, Canaccord. Please proceed.

First question Mike is about AtriClip, clearly a phenomenal quarter, I guess the ultimate question has to do with just how much growth we could see going forward in this? And you gave a little bit of color with respect to how you see the market progressing over the next five years or so. So I wonder if the best way to ask is sort of within your account base and you are increasing your account base on the ablation side, what your attachment rates are for the AtriClip. And sort of what if any low hanging fruit exists to continue to penetrate or dry penetration of clip into those accounts and perhaps talk about outside of your accounts where you are doing clip so you can cross sell ablation?

It's a great question, so the first piece is really what some would call your batting average relative to that. We've seen our batting average on the open side continuously increase over the past six quarters or so in a row, where we're kind of now in that 60% to 70% of the customers are actually buying from us. We don't know when they are using the specific case, but we do know from an open procedure standpoint those that use our open products, it's in that 60% to 70% range, and that are also using our products for the clip as well in the open side. On the PRO side and MIS side, we also kind of look at that same kind of batting average, obviously about 1.5 years to go that was zero and we're moving nicely, we're not at 70% quiet yet, but we're moving nicely through those numbers, we're in that 30% to 40% range at this point.

So really you do have some land grab left I presume? What is the growth of 57% is difficult to model, I suppose it's doable. But it probably gets us above the top end of your guidance, all things equal. So how should we think about the second half of the year on that side and I have one follow up and then after that I will get back in queue.

We feel comfortable with the guidance in terms of where it is. In terms of the, a lot of that is we're kind of hedging our batch relative to the international market that as you saw was little bit lighter, we just want to sure that we're being conservative on that front. We do see continued growth on the AtriClip, like you said 57% is tough to model and we continue that path. Obviously we're coming of small numbers, as the numbers get bigger maybe more difficult to kind of achieve that in that area. But we're looking at that as continued growth driver for us for many years to come.

It's helpful. One last question maybe for you Andy on the gross margin side. Your gross margin guidance for the year sticks out a little bit, as perhaps conservative given what you have done thus far in the first half. You gave a little bit of granularity but I mean presumably your margins in the second half of the year has to be down sort of 68%, 69%, to be at the midpoint of that range. So help us get there, if that's in fact where you are telling us to go.

Jason some of it is being a little conservative, part of what Mike said in terms of the weakness and international, assuming that if that pops then the margin on the international business as you know is lighter. So we do anticipate a little bit of that. And some of it is, just being conservative on the PRO and some of those types of things. We’re seeing good leverage on the sales in terms of manufacturing cost, but we’re hesitant to raise that margin guidance significantly so.

Thank you next question come from line of Tom Gunderson of Piper Jaffray. Please proceed.

So if, Mike, if you look at the U.S. market and that you’re penetrating, what was the feel in Q2 or maybe year-to-date as far as procedure growth or stability? Do you get a sense there is more or less CABGs and valve implants out there right now?

Our perspective is that the procedure realm is pretty flat that is not growing in that, a lot of our growth is really due to increase penetration into the accounts that we’re in and then also competitive conservations that we have had over the course of the last six to nine months.

Yes, the competitive conversion last quarter you’ve mentioned some high profile medical centers Duke and Texas and USC, is there any update either on those centers or new centers that you added in Q2?

Both those centers drove revenue for us this quarter which was great. They continue to use our products. We added about 14 net new centers. They didn’t drive any revenue in this quarter but they were net new centers in the U.S. and six net new centers outside of the U.S that we brought into fold as well. Again those typically take anywhere from, once we get them kind of signed up and they starting to use our products, it takes anywhere from really three to six months to get some revenue. So we will start to see some of that revenue in the fourth quarter likely.

Got it thanks, and then if I look at international, little weaker than you expected, little weaker than we expected. When we look at medical device sales in Europe generally Germany and the U.K. lead the pack as far as total volume size, Benelux not so much and Russian more an emerging market, can you tell how strength in Germany and U.K. was counterbalanced by what would be seemed to be much smaller markets?

I think you’re articulated most of it pretty well which is that Germany and U.K are obviously two of our very large markets. They are showing good growth for us and continue to take share in those marketplaces. So we feel really good about that, especially in Germany, as we’re adding more coverage from an ablation specialist and sales perspective, which I talked about probably about six months ago. Relative to the other markets the Benelux is a small market but it’s a high concentration market for us and so as a result its probably larger than the population size would other indicate in terms of historical revenue that we’ve generated from them, so you’d see a little bit that, and Russia is the same, we have had a lot of success there historically. We think it’s a very market specific thing that we’re working through right now. We just took a trip over there recently and I believe we’ll get that back on track but it was definitely something that, that was probably the biggest European head overall or international head, we’re fine in the other markets internationally if China was as we expected, Japan is as expected so those other markets are really kind of moving along nicely, it was just a really primarily as Russia and the Benelux area.

And then I was going to ask about Japan and China but you answered that for me so I’m good, thank you guys.

Next question comes from line if Danielle Antalffy of Leerink Swann. Please proceed.

I was just hoping you could comment on the competitive landscape obviously you’re taking personnel from Medtronic at least any sense of your competitors commitment to the market and if they do exist the market, how incremental could that be to AtriCure?

You know when we look at the competition St. Jude used to be in the market but they actually publically announced back in the February timeframe that they were existing with the products they had whether or not they get in the market another way through different, we’re not seeing them now but they’ve publically done that’s helped us a little bit. Medtronic is still in the market and we’re competing every single day against them. They are a formidable competitor with excellent products out there and so we continue to compete day in and day out especially over in Europe where they have more market share than we have and so they’re good market player out there and we don’t anticipate that they’re going to go away, we’re just going to continue to sell through our strength which we have many and continue to take some of their customers.

Okay great that’s helpful and so obviously strong quarter for AtriCure, I was just wondering what your thoughts for this is further down the road but when the competitor does come on the market with an approved indication obviously in terms of Boston Scientific in the Watchman Device, how do you see that is impacting AtriCure growth just quality if directionally speaking?

I think that’s very positive for us because when you look at that they can’t treat all the patients and when as collaborative care becomes a norm and you’re having EP working closely with the surgeon on this when they can’t put the Watchman in its going to raise awareness to manage the left atrial appendage, when they do that they will look to another option if they can’t use the watchman or whatever other device they are going to be using. And so from our standpoint, the more activity around left atrial appendage is really good activity for us and we anticipate it will spillover affect relative to that and relative to whatever marketing they do around that.

Our next question comes from the line of Charley Jones, Barrington Research. Please proceed.

Yes, nice quarter, quick question on Benelux, so I think last year if I remember correctly you guys went direct there last year, is that right Andy?

No, that’s been a couple of years Charley.

There has been a couple, so was it a tough comp last year? I am just wondering if Benelux is in a position to kind of re-grow after a quarter or two or if you have lost an account or two or something there that’s leading to lower sales?

We haven’t lost an account I just think that you are having fewer procedures done. We don’t have any indication that there is a lost account relative to that. We’ve got surgeons that are busy doing some other procedures, but we don’t have anything that would indicate that it’s a lost account.

I know they are still doing a lot of DEEP AF over there?

They are doing some DEEP AF over there for sure, they are at both Amsterdam or AMC and (inaudible) and Brussels are actually part of that. And so we are seeing a couple of cases coming through the DEEP AF trial, but that’s not a meaningful number, they are doing a lot of hybrid procedures at both of those locations.

And you mentioned China did well in the quarter, was Asia in total down?

No, it was basically flat which is what we had expected for the quarter.

As far as pricing goes on the clip and the pro, can you give us any update on ranges or ASPs or thoughts?

I believe constant, and we are seeing new market entrance that are coming into the market that are basically at or even a little bit above us on the open side. So you see the TigerPaw that’s come in with Maquet, they have come in at a price that’s a little bit more expensive than ours and we think we have got a better product obviously so well there is not as much pricing pressure relative to that. There is always pressure against the sutures and I think it hasn’t been out there for a long time but the pricing has remained relatively constant and on the AtriClip PRO obviously it’s expensive relative to (inaudible) which is actually inexpensive relative to the Watchman and just considerably less expensive to what their charging on the marketplace.

And would you, it was pretty much entirely all the growth from PRO or did open at least grow 10ish percent?

Both of them grew nicely.

And I got a few more maybe I will jump back in queue but a quick question on your trial hopes for the Clip. Do you think you will do a trial eventually for both open and minimally-invasive or do you think you will focus on more minimally-invasive?

We are going to focus on, that's part of what we are working with a scientific advisory board on which is the exact protocol relative to the feasibility study that has been approved by the FDA is a minimally invasive procedure, TT procedure and so that is what is on the books right now that we will do for the feasibility study whether or not we expand it to the open side is one of the items that we will be discussing with that board. And will that drive and change referral patterns if we do it.

I will jump back in queue.

You have no questions at this time. I would now like to turn the call over to Mike Carrel for closing remarks.

Thank you very much and have a great evening.

Thank you for your participation in today’s conference this concludes the presentation. You may now disconnect. Good day.