Good afternoon and welcome to AtriCure’s Fourth Quarter 2013 Earnings Conference Call. My name is Briana and I will be your coordinator for the call today. (Operator Instructions). I’d now like to turn the call over to Lynn Pieper, AtriCure’s Investor Relations Consultant from Westwicke Partners for few introductory statements. Please proceed.

Thank you. 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 statements. 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 website. 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 Afib 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 Afib or stroke reduction, unless the product is so indicate it. These restrictions do not prevent doctors from choosing to use the products for the treatment of Afib 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 uses. AtriCure educates and trains doctors in the proper use of its products and related technologies, including for the treatment of Afib 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. Good afternoon and thank you for joining us on our fourth quarter call. 2013 was a strong year for AtriCure, a period of remarkable growth and accomplishments across the entire organization. We started the year by raising the necessary capital to fund our growth, innovation and education agenda and our team executives deliver on our strategy. In the fourth quarter we announced and closed the acquisition of Estech which broadens and strengthens our minimally invasive platform meaningfully. In sum we finished 2013 strong and exceeded our financial and business goals for the year. This solid execution allows us to set the stage for our follow on offering completed earlier this month bringing 66 million in net proceeds to the company. I’m proud of what we have accomplished and confident in our 2014 outlook and long term growth prospects. Consistent with our preannouncement we expect top line growth for 2014 of approximately 22% to 26% year-over-year on a GAAP basis which includes the contribution from products acquired in the recent Estech acquisition. I will start today’s call with a quick overview of our results for the quarter followed by an update on the business, 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 will come back to make concluding remarks and we will open it up for questions. Looking at the quarter fourth quarter revenue reached $22 million or an increase of 19% compared to last year. Growth in the quarter was driven by strong U.S. sales which grew up 20% versus 2012. We experienced a good balance across our various product and solution areas. Our momentum continues and we’re now solidly seeing the results…

Thank you Mike. For the quarter of 2013 revenue increased 19.2% to $21.9 million. Revenue from product sales in the U.S. was $16.4 million an increase of 20% from the fourth quarter of 2012. Revenue from open chest ablation related product sales in the U.S increased by approximately $1.6 million to $9.9 million and U.S. sales of products used in minimally invasive procedures increased approximately $100,000 to $3.5 million. U.S. sales of the AtriClip system during the fourth quarter of 2013 were $2.9 million as compared to $1.9 million for the fourth quarter of 2012, an increase of 55.4%. International revenue grew 16.6% on a GAAP basis and 13.7% on a constant currency basis as compared to the fourth quarter of 2012 to $5.5 million. Gross margin for the fourth quarter of 2013 was 71.6% as compared with 70.8% for the fourth quarter of 2012. Note that the medical device excise tax expense for the fourth quarter was $19,000. The increase in gross margin was driven primarily through volume leverage partially offset by increased OUS capital sales. Pricing remained relatively steady. Operating expenses increased 38.1% or approximately $5.7 million from $14.9 million for the fourth quarter of 2012 to $20.5 million for the fourth quarter of 2013. Research and development expenses, which include clinical activities were $3.6 million for the fourth quarter of 2013 or 16.7% of sales, an increase of $681,000 over the fourth quarter of 2012. SG&A increased approximately $5 million from the fourth quarter of 2012 to a total of $16.9 million or 77% of sales. Note that approximately $1 million to $2.2 million of this increase is driven by cost related to the recent Estech acquisition. The remaining increase was due primarily to increases in selling, marketing and training costs. Our operating loss for the quarter…

Thank you Andy. In summary our team made significant progress in 2013 in growing our business and we have begun 2014 with substantial momentum. Our core growth strategy is to expand the market and capture share by increasing awareness through education and training and driving innovation through clinical and commercial support. We look forward to updating you on our progress during future calls and we will now open the call for questions.

(Operator Instructions). And your first question comes from the line of Danielle Antalffy with Leerink Partners.

First I wanted to touch on the AtriClip and what you’re expecting or factoring in for guidance from a potential Watchman approval. Obviously sales there has been strong, Watchman is supposed to get approval at some point this year potentially mid-year time frame. So just wondering how you’re thinking about the halo effect? Will it actually I assume expand the market how much does it actually help your MIS clip business more so than your open business. How do we think about that?

In terms of our best estimates for AtriClip really assume at this point since we don’t know what’s going to happen and when the timing is going to be for the FDA approval or for the Watchman, our goal is really just to focus on our business and what we’re seeing in the market based on the procedure volumes and the momentum that we already kind of have. So really haven't factored that into our numbers per se. Now we do believe it if the Watchman does get approved that there will be a long term effect, a positive effect of the buzz around that to managing the appendage. I don’t know if it will have much impact on 2014 like you will start to see in ’15 and ’16 that should help the market overall and should help us continue our growth long term. So that’s kind of how we think about it, not much for 2014 but if it does get approved I think it will have a positive impact on this long term. I think it will actually affect both MIS and the open side of our business if people begin to believe as we’re starting to right now that managing the appendage matters people will begin to use the clip on a more regular basis. It's an easy part to use and we know that it's safe and effective. We know that it's a great product and so as a result of that we think we’re going to benefit from any kind of discussion around the management of the Left Atrial Appendage.

And then one follow-up question on Medtronic impact to the open surgical ablation business. Just wondering you guys have talked in the past about benefiting from a sort of defocus from Medtronic gaining market share clearly. Has that trend persisted now in Q4 into Q1 and do you factor continued market share gains from Medtronic defocus there in your 2014 guidance?

The Medtronic thing is an interesting kind of plus and minus and what I mean by that is I think that you’ve articulated what the one of the pluses that are out there in terms of them kind of defocusing on it. We clearly believe that we’re gaining market share, we don’t know their exact numbers obviously but we know that we’re turning accounts that we’re previously using or solely focused on the Medtronic devices and actually have been moving over. We anticipate that we will continue to see growth and penetration in those markets and those customers. We’re seeing a lot of wins and we see expansion within the account, when last year I talked on the call about a 122 net wins many of those work accounts that came from Medtronic. We also had 17 customers that opened up accounts with us but didn’t purchase from us last year. We anticipate that will also generate some of the growth and a lot of those again are coming from Medtronic. The one thing about Medtronic not being in the field that I would say purchase a little bit is we’re the ones out there putting the stake in the ground and as a result we’re the missionaries and we’re the ones that are pushing and pushing the industry. If they were in there they are much likely to pass about Boston [ph] and the Watchman I think there will be even more awareness if two of us were out there really pushing it hard. Yes we benefit by taking share, I do believe that’s occurring but I think the market would grow even faster if both of us were out there marketing and labels from that standpoint.

Your next question comes from the line of Tom Gunderson with Piper Jaffray.

Could you talk a little bit more you had some in the script but talk a little bit more maybe even just on a percentage basis of what you think the rule that international revenue growth will play in 2014 and beyond.

We anticipate that international will be a big part of the revenue growth in line with the numbers that we have got in the top line in that 22% to 26%. It might outsize that a little bit overall because Estech does bring in a larger portion of the revenue relative to what we had in revenue comes from the international side of the business. So we anticipate a couple of points up maybe from what were this year on the international side but pretty close to the same number.

And then speaking of Estech could you give us a sense you gave us an overall employee growth in 2013, what was the starting sales force and the ending sales force and where do you think it goes in ’14 and in that include the Estech side of it.

We started the year at around 35 in direct selling people and I think we had 11 or 12 ablation specialist or clinical specialist out in the field at the beginning of 2013. We ended the year with about 39 and this is U.S. I’m focusing now and about 21 or 22 ablation specialist with the Estech team and everybody else and they anticipate that we’re at about 43 moving into that 44 so range as the year goes on the direct 25 or so clinical specialist and we’re evaluating now how do we actually either increase that or not we’re going do some evaluation in the long term for our business on that front. Probably won't have as much impact on 2014 but will have impact on ’15 and ’16 as we kind of look at what the sales force makeup needs to look at for the long term. Right now the goal is to get all 45 of the people we have got are approximately 44-45 people to get them understanding and selling the products. We just had a global training meeting last week and we spent two full days getting everybody up to speed understanding the procedures and they are often running this week on that right now and talking to other customers and feel really good about the team that we have got in place. Internationally we have about 10 or so people, at the beginning of the year we had about six. With the Estech team we have got about another 3 to 4 and in terms of on a direct and managing the distributor basis as well. Our direct presence is Germany, Benelux region and now France and we have agency or kind of mix of agency in distributor in UK and the rest of the world is a distributor business for us.

Your next question comes from the line of Jason Mills with Canaccord Genuity.

I have been bouncing between a few calls, so my apologies if you’ve covered -- first question is just U.S. hopefully ablation procedural trends as you work through 2013 clearly you had your hands full in converting accounts and I’m sure you had your minds on growing the overall procedural volume as well. But given your gain (inaudible) perhaps didn’t focus as much attention on that. As you move forward what sort of market are you encountering in terms of procedural growth on the open side potential for procedural growth expansion from sole-therapy with the trials coming up and just thinking about that both in ’14 and as you move forward and account wins or you know important or perhaps less important than they in ‘13

I actually completely agree with you. In terms of procedural volume for the treatment of Afib during the cardiac surgery, we anticipate that our team will continue to expand on a per doctor basis or per physician basis and within the accounts they are continuing to grow the number of procedures that they are doing. The number of cardiovascular procedures aren’t growing necessarily but then our Afib procedure is being performed. We believe we did see that trend increase at the back half of the year as the education and training came to fruition and we anticipate that will continue and it's a big focus area. As I mentioned in my comments a little bit Jason we had a 122 accounts that were added this year that were not in the previous year. We can’t add that many new accounts every year like you said, we had a lot of net new adds, now it's a matter of growing those accounts in the size of those accounts and getting them to do MAZE procedure on every single one and our team is spending a lot of time in the field making sure that is the case and spending time with that. So you’re correct in your assumption on that front. On the MIS side, we continue with our tampered expectations relative to that, I do that, obviously we can’t go proactively market or push that particular piece of our business. I think we’re getting a little bit of halo relative to the ET is not getting good results so they are kind of pushing it our way and beginning to get more surgical interest on that front. As the trial picks up I would say that you might get some uptick on it, I wouldn’t say 2014 will hit too much because the trial probably won't be up and running until late ’14 or early ’15 depending on feedback back and forward with the FDA. When we get that up and running maybe I will have a better feel for exactly what volume increases could occur but it probably won't be meaningful to the overall number for a couple of years.

On the open side just from the market standpoint, based on your market research. Can you put quantitative numbers to what the growth is affecting the second of the year? What environment you’re looking at in terms of market growth in ‘14? I do have one follow-up on the LAA side if you don’t mind.

It's tough for me to put an exact number because I don’t know what Medtronic sales were. So what I do know is I believe we have taken some share but I also believe that a huge portion of our business were basically a growth in the market not just taking share. I think on the last call I talked about a 50-50 kind of split between taking share and growing the market. I would say I feel it's probably about the same this quarter but again I just don’t know what their numbers are relative to that. So I’m doing it based on, okay I took this account from them therefore and I’m extrapolating out as opposed to knowing they just don’t break that out for me unfortunately. So I don’t have a good feel for it on the open side. But, one other thing that is probably important for everybody to know and when you asked about the question about MIS. It's important to understand that Estech obviously most of the products are MIS platform products. So we will likely see some growth on the MIS side just for the fact that we’re selling the Estech products when you look at kind of just the growth year-over-year growth because of that and it may not be our natural growth rate in terms on an organic basis but because we’re selling procedurally together what you might see is an increase in the overall MIS revenue for us as a business because of that. So as you think about your modeling.

Yes that’s very helpful. Those were my expectations whether Estech was doing a bit more on the MIS side so thanks for that confirmation. On the LAA side quickly I think in the past you talked about and perhaps you’ve given this already I missed it sorry. You talked about customer penetration both from the open and the minimally evasive side with the clip. If you ever try those numbers or even if you have could you give us again in terms of your accounts that are doing ablation, they are not buying the clips both from the open and minimally evasive side. Thanks.

The penetration is consistent. I think some of the investors have called it our batting average, I think it's a great term when they use it and we have been pretty consistent in the 65% to 70% range on the open side and close to 90% on the MIS side in terms of the accounts buying from us and we held that trend in the fourth quarter like the third quarter, they were pretty consistent. So, we will continue to focus on obviously growing that and we anticipate long term. We can grow it but we have made great progress over the last 18 months going from a much lower number upto that 70% and 90% number respectively.

Your next question comes from the line of Jose Haresco with JMP Securities.

Could you give us a bit of a sense of the overlap in the commercial footprint from the folks at Estech and your organizations?

What we did when we put the two companies together and we have made all the decisions relative to the sales force at this time. In the U.S. what we did is we mapped out that 44 or so 45 territories and they took over some of the roles. There were several that were kind of overlapping but many of them – a couple of them were net new territories, I would say maybe three net new territories that we added. We did not keep the entire sales force for Estech when there was overlap. There was quite a bit of overlap in about 8 or so territories that did not come over when we put the two together. Different story over in Europe, over in Europe it was less overlap and much more complementary where we actually they had a German team, we had a German team. We had to split it up and split up Germany in north and south and they had a gentlemen who was running all their distributor relationships and France and he actually just added and complimented us on the distribution side. So we pretty much brought those that entire team over from Estech.

Okay. As you think about you guys have obviously done a huge and great amount of work in changing how you train your surgeons, is that protocol locked in at this point in terms of how you get your surgeons to be trained or are there still changes to be made over the next year?

Well we’re definitely moving from what I would call didactic 101 training and awareness about, here is what the MAZE is, here is why it's important, here is how to treat Afib on the open concomitant basis. That was really the basis of it and Dr. Cox did a wonderful job of really redoing that course. We will continue to do that for sure because people continue to need to be reminded especially those who took the course early on and weren’t a part of the great teachings that Dr. Cox put into the plan really in the latter half of the year in the second or third quarter of last year. However, we have trained a lot of sites and so there is two things that really are the focus of ours, number one on an international basis taking that same training protocol and bringing it to Europe and then bringing it over to Asia. We feel that that’s going to be a big growth opportunity for us, I talked a little bit about that. The second piece is what we call advanced training courses and the advanced training courses will include the 101 as the beginning portion of it. People will likely stay overnight and then they will have an opportunity to actually get advanced training about why that lesion that was in place and have good debate and discussion amongst surgeons that are doing the procedures. We believe this is critical to the question that was asked earlier around penetration in the accounts. [I think] we’re getting and be really excited about Afib to talk about when they have seen success et cetera and the showcase studies like that and they will possibly even have case, show them a live case also. So there is a lot more that’s going on the advanced course, it will likely be about a day and half course that we send people to as opposed to just the two hour didactic.

There are no further questions in the queue. I will now turn the call back over to Mr. Mike Carrel.

Good. Well again thank you everyone for participating in the call tonight. We realized it is a very busy night with everybody out there on different earnings call. So have a wonderful evening.