Good day, ladies and gentlemen. And welcome to the Q4 2013 CONMED Earnings Conference Call hosted by Bob Yedid from ICR. My name is Sunny, and I will be your event manager this morning. Throughout the conference you'll remain on listen-only. (Operator Instructions) I'd like to advise all parties that this conference is being recorded for replay purposes. And now, I'd like to hand over to Mr. Bob Yedid. Please go ahead.

Good morning. During this call CONMED’s management will be making comments and statements regarding their financial outlook, which represent forward-looking statements that involve risks and uncertainties as those terms are defined under the Federal Securities Laws. The company’s actual results may differ materially from current expectations. Please refer to the risk factors and other cautionary factors in today’s press release, as well as our SEC filings for more details on factors that may cause actual results to differ materially. You will also hear management refer to certain non-GAAP adjusted measurements during this discussion. While these figures are not a substitute for GAAP measurements, the company’s management uses these figures to aid in monitoring the company’s ongoing financial performance from quarter-to-quarter and year-to-year on a regular basis and for benchmarking against other medical technology companies. Adjusted net income and adjusted earnings per share measure the income of the company, excluding credits or charges that are considered by management to be special or outside of the normal ongoing operations of the company. These adjusting items are specified in the reconciliation in the press release issued this morning. With these required announcements completed, I will turn the call over to Joe Corasanti, CONMED’s Chief Executive Officer and President for his remarks. Joe?

Hey. Good morning. Thanks very much Bob. We exited 2013 having generated fourth quarter sales and adjusted EPS results above our guidance. CONMED sales for the fourth quarter 2013 were $203.4 million or 2.1% increase on a constant currency basis versus the fourth quarter of 2012. We encouraged by the growth we have achieved in both our single use and capital equipment products, which were up over 2% on a constant currency basis for the quarter. Adjusted diluted earnings per share for the fourth quarter were $0.53, excluding the impact of the medical device excise tax adjusted diluted EPS was $0.57 up 10% compared to Q4 2012. Other Q4 highlights include adjusted EBITDA margin of 18.1%, consistent with the prior year period, excluding the medical device excise tax in 2013 adjusted EBITDA margin for the fourth quarter of 2013 would have 18.9%, an increase of 80 basis points from the prior year period on an apples to apples basis. We also return more capital to shareholders by increasing our quarterly cash dividend by 33% to $0.20 per share Now I would like to go into a bit more detail on our sales for the quarter. During the fourth quarter our sales of single-use products were up 2% on a constant currency basis. This continues the trend we saw last quarter and overall the second half of 2013 was stronger than the first half of the year. Capital products were up 2.4% in constant currency, which represents a good rebound versus the third quarter. This capital product sale increases were largely driven by strong sales of our surgical visualization imaging devices in the international markets. For the full year 2013, the operating results reflected the various headwinds that we have previously outlined related to the medical device tax and currency headwinds.…

Thanks, Joe, and good morning, everyone. As Joe mentioned, we had a much better quarter to finish out 2013 than we had originally anticipated. Europe performed well and our capital products, particularly our surgical visualization product line, had much better growth than we had forecasted. As a result of the increased sales and with continued improvement in gross margin, adjusted earnings per share exceeded the earnings guidance we provided on our third quarter conference call in October. In the December 2013 quarter, total sales grew 1.1% or 2.1% on a constant currency basis to $203.4 million, while adjusted earnings per share increased 2% to $0.53. For full year 2013, sales grew to $762.7 million, up 0.2% on a constant currency basis. By geography, fourth quarter sales in the United States grew 0.4% year-over-year on a reported basis. CONMED’s international sales grew 1.7% on a reported basis and 3.8% on a constant currency basis. This quarterly growth trends are stronger than the growth rates for the entire year, and are as a result we believe of strengthening economies and increases in procedure rates. This bodes well for 2014. I will now review the performance of our major product lines for the fourth quarter and full year and will discuss sales on a constant currency basis. We achieved sales increases in the fourth quarter across all of our major product lines. In orthopedic surgery, the sports medicine devices and tissue revenues grew 3.4%, while powered instruments were relatively flat. In total, the orthopedic line sales increased 2.2% on a constant currency basis. Surgical visualization had a very strong quarter, up 5.6% on a reported and constant currency basis from the fourth quarter of 2012 as we increased our sales in export markets. We're forecasting relatively flat growth in capital products for the…

Thanks very much Rob. I would like to make closing remark regarding our long-term goals. In 2013, we faced headwinds from both the medical device tax and adverse foreign exchange rates that cost us about $0.18 per share. Further, as with other medical technology companies, we suffered from lackluster surgical procedure growth while we have reason to believe that the recovering world economy will result in improved numbers of procedures and greater hospital capital spending. For 2014, we are being conservative with our forecasting. Consequently, we are guiding to modest organic sales growth for 2014 that will generate high single digit EPS growth at the midpoint of our $1.90 to $2 per share range. We look forward to updating you on our continued progress during our first quarter 2014 conference call and upcoming investor event appearances. In addition, please look for our press release on CONMED’s new and upgraded products that will be released prior to the start of the AAOS on March ‘11. Thank you for participating in the call today. At this point, I would like operator to open the call up for questions. Thank you.

Thank you. (Operator Instructions) We have a question. And the first question comes from Mike Matson from Needham & Company. Please go ahead. Mike Matson - Needham & Company: Hi. Glad to hear about your new AES product but I was just wondering -- I know there has been a lot of litigation in that area and I was wondering what your comfort level is with your IP position there running that product?

Yes Mat, good question. We’re very comfortable with it. We have done extensive research in that area and quite frankly some of the patents that would have prevented our entering the bipolar market in the past has now expired. So I think we are in a good shape there. Mike Matson - Needham & Company: Okay. And then I guess just with regard to Altrus, I mean obviously you’ve seen some pretty good growth on a year-over-year basis but considering the size of that market, it seems like there's potential for it to be a lot bigger. So it seems like it's a good product. I'm just wondering what you think that sort of limiting factor is there for preventing the sales from growing even more quickly?

Yes. We agreed it’s a great product. It has superior performance. We think it feels better than other products on the market. The biggest features that I have talked about in the past is nonstick performance that it offers. Surgeons recognize that they like this and see the value in the product but limiting factors right now and having rapid sequential quarterly growth is simply, where the fourth company get into the market. So we’re really coming from a position where the new players and its going to just take time I think to build up a reputation and to get in front of surgeon who are willing to trial the product and sometimes it’s a challenge even after the surgeon trials the product and says that they like it and want to switch. It’s still a challenge. It’s not an automatic conversion for us. There are still several administrative hurdles to overcome in order to get the business into a particular hospital. So I think the short answer is we are seeing sequential growth, slow sequential growth but nevertheless it is growing and it’s just going to take more time. Mike Matson - Needham & Company: Okay. And then just a final question on the new IM 8000 camera. So is this the first camera to reach the market with the three chip CMOS technology? And are there any advantages from a cost standpoint to CMOS versus CCD?

This is not the first CMOS. We are -- we're very happy with our trial so far with this video system We have gotten just great reviews from surgeons that have seen the picture, the image quality, et cetera. It really provides a lot of good color and definition. So the next question was about the cost, I guess I don’t think there is any significant cost differential between this technology and our previous technology. Mike Matson - Needham & Company: Correct. That’s what I asked. Thanks a lot.

Thank you.

Thank you for your question. Next question comes from Jeff Cohen from Ladenburg Thalmann. Please go ahead.

Hi. Thank you for taking the call. Joe, I wondered if you could extrapolate a little bit more on the visualization instrumentation and talk about both Viking and it’s uptick and talk a bit about international markets in 2D versus 3D there?

Absolutely. Viking, great technology, we acquired it year and half ago or so and it has been slow going in the United States but we have had better results outside the U.S. that seems to be more than appetite for 3D technology outside the U.S. where we believe customers would like to have 3D picture quality but are unwilling to spend the millions of dollars required to get that when you purchase a complete robotic system. So this is a much lesser expensive way to get 3D. Our system is to remind everyone to sell for about $145,000 for one of our 3D systems. So -- and as far as sales generally for video, there have been a little more robust outside the U.S. for 2D and 3D. We would expect that to continue. However, with the new IM 8000 we are very bullish on this product because of the quality, the image quality that we talked -- that I talked about just a moments ago and I think its going to make us -- it will make us a lot more competitive in these very competitive situations involving hospital conversions for general surgery video systems as well as arthroscopic video systems. And of course having a competitive video system, its very important for pull through of some of the other products that we are selling namely the Shaver Blade products, pumps and pump tubing products that are used in arthroscopic procedures.

Okay. Thanks. That’s helpful. As far as 510(k), that’s going back in for Altrus, are there any other modifications that are worth noting, or do you expect the other modifications over the next 12 months?

And I assume you are referring to modifications for the device. They are not, this product performs extremely well and so you should not expect to see modifications to the device over the next 12 months. However, we do have a products underway to come out with what we will be calling the second generation ultras device. But I would say the primary purpose for this product -- project is to significantly reduce the cost of Altrus. We really don’t think there is need for improvement to the device other than the placement of one of the buttons on the device for just better ergonomics. But in terms of cutting and sealing and the nonstick performance, we feel there is no reason to make improvements there. It’s already performing the best of any device in the market.

Okay and the second generation will also be rigid, correct?

Yes.

Okay. And just one more, if I May, may be for Rob, could you just go over the current facility footprint as you see it over the next 12 months including the transition of Denver?

Sure Jeff. The Denver transition may take up to 24 months. So that is not going to happen. So we want to be very, very specific about how we move our manufacturing and make sure we are validating all the processes and so forth. So we've been very good about doing this and other situations and we know that these transitions take some time to do it right. But after that’s done, our manufacturing will be in three locations. Here in upstate New York, the facility in Largo, Florida, just outside of Tampa and the Chihuahua, Mexican manufacturing site. We will have R&D and marketing locations for couple of our lines in other locations. Denver will remain the same for those types of activities for the energy products and we’ve got the Westborough location for the visualization devices.

Okay. So, Santa Barbara and Tempere finished?

Santa Barbara is closed. Tempere, if not absolutely closed, it’s going to be closed very soon. And of course, we have the sales offices all around the world, so we've got 16 locations with sales offices in areas outside the United States.

Perfect. Thanks very much.

Thank you. Next question comes from Matt Miksic from Piper Jaffray. Please go ahead.

Hi, Joe, Rob. This is Young Li for Matt. Thanks for taking our questions. The first question is on hospital capital. Just the trend in hospital capital spending and that seem to be sluggish or maybe little bit delayed in Q4 across some other players have reported. I’m wondering, would you anticipate any sort of either catch-up or uptick in Q1?

Predicting capital has been a challenge for every company. It’s been choppy as we said in our prepared remarks. We did see a pickup in Q4 as we reported. Our thinking on this all along has been, it’s a replacement market at this point. There's been very little technology upgrading. So at some point, the theory has been that our customers just simply can't hold on to the little systems very much longer and they're going to have to replace. So we’re slightly optimistic about an uptake, but it’s been very difficult to predict.

Okay. Sure. Yeah, that’s very fair. I guess another question on joints or (inaudible). So when we -- actually look at total joint recount trends, there is a deferral period and as a result sort of a backlog of patients who are now just coming in to get treatment. Do you thing your sports medicine has that type of backlog in patients as well? And do you expect that to help improving growth at any point?

Yeah. Young, when we look at the numbers outside the U.S, especially in Europe, I think there is the potential that there could be some backlog there. We did see our procedures were slow, primarily in our European markets. In some cases that was mandated by the government and some countries in Europe to slowdown those procedures. So, yes, I think there's a potential for that to come back as a backlog built.

All right. Great. Thank you. That’s all the questions for us.

Sure.

Thank you. Next question comes from Mark Landy from Summer Street. Please go ahead.

Good morning, folks. Good morning. Can you hear me, okay?

Yeah, you are fine.

Good. Just looking a little bit into Altrus, I think in the past you kind of guided us to $5 million to $10 million, you kind of hit the road into $5 million for 2013. Just looking at 2014, should we think of kind of the $5 million to $10 million range to keep getting to the upper end or toward the lower end again?

Yeah.I think, now with the experience we’ve had in terms of how long it takes to get a conversion, meaning from the time it takes to get -- the surgeon is already using a competitive device, to get the surgeon interested in trying something new. Then scheduling the evaluation and then after getting a positive evaluation, the time it takes to get it through hospital administration. So they tend to buy the device for the surgeon who likes it, that experience leads us to believe that we’ll probably be again at the low-end of that range. So around $6 million is I think what’s forecasted for Altrus for 2014.

And now with respect to the new 510(k), are you able to continue to sell new systems or do you have to stop those activities, or you’re able to supply minimal to guys who are out there and how is the operation on this 483?

Yeah, I mean, today, we’re selling Altrus but I can’t give you definitive answer today about that because we’re still in discussions with the FDA on that very issue. We have a response, written response that is due to the FDA and we’ll be making that response shortly. And after that, there’s probably discussions that take place. So, unfortunately, I can't give you definitive answer on that. But the possibility does exist that we may have to stop selling for the period of time that takes to get the 510(k) cleared.

And where are you anticipating in terms of an approval time for that 510(k)?

510(ks) generally take 90 days, so I think that’s what we’re expecting.

I think we had spoke to and I had ask the question specifically, maybe they’ll plan a little bit about whether or not, you talked that you had to go back to the agency with some of the changes. What was position that you’ve taken relative to the agency’s position? That they see that there is a new 510(k) and you perhaps couldn’t?

This happens quite often. We have experience with this with some of our other products and I know other companies do as well. What generally happens when there is new product that’s launched is that, it’s very typical to make a number of changes. And most of those changes relate to manufacturing process changes that will do a number of things, improve the yield, make reduce costs, just make it much more easy to manufacture. Some of the changes involve adding poke-oke systems to the manufacturing process that eliminates operator error, things of that nature and some lean manufacturing changes so. And the things that I’m describing don't relate to the performance of the device. And so I think many companies, CONMED included think that those types of changes aren’t the types of design changes intended to impact performance for the device that require a submission of a new 510(k).

I understand what you are saying and that was the reason why I had asked the question during the year. But what’s specifically relating to device performances is the FDA concerned with relative to just improving the product from a manufacturing perspective, yields, et cetera, or there is a lack of documentation to be able to go from the changes to do the divine process and to the final product from a QA perspective and the QC perspective.

Yeah, so the FDA starts with a kind of a high level wins. The FDA in the letter talks about, I guess, three high-level issues, right. They are concerned about the process in Denver for design controls, that’s paperwork issue. Our process for deciding when to file a new 510(k), that’s another process paperwork issue. Our process for reporting adverse events and field actions, that's another good manufacturing process, net practice process issue. So those are the three high level issues contained in the letter. The specific change that gives concern apparently to the FDA is the change to the method that we use to secure the ceramic inserts, that go inside the jaws of the device and by the way this is an important part of the device. It provides us with the non-stick performance. So, anyway we made a change -- a manufacturing change that made it easier to make this device and improved our yield. If we had a better way to -- by creating a better way to secure the inserts, we've better yield, they plus fall out a bad product. In our view other performance issue and then the other one would be we've changed the number of permitted activations of the handpiece. When we first launched it, we had 200, we moved it up to 450. So those of the two, those are, that's it.

Thanks, guys. I appreciate the clarity. So we are catching -- they are somewhere between -- somewhere around $2 million to $3 million of risk that just kind of pull part and go through the 510(k) to this year’s guidance?

Yeah, I mean, the way to look at it is, let's take it say worse case scenario we thinks it's -- assume that if you want to take those position or make those assumption say the market will not be sold four, three months. And so you can kind of figure it out that way I guess if you said 2 million to 3 million maybe is a possibility, yeah.

Okay, fair enough. And turning it over to Europe, in general I think Europe has been showing constraints. Are you seeing it at the grassroots level or is it more towards the specialized hospitals and then the breakup between the improvements versus disposables against capital equipment?

In Europe, I think the difficulty was in the public hospital arena less so with private, I think that’s the case in Spain in particular. And capital is off significantly and in Europe, but to our surprise this year now we saw the disposals flatten out really up until Q4. So the good news is, we're hanging on to what we saw in Q4, hoping that we're in a turnaround situation with our international sales for disposables and even to some extent for our capital products. And of course what's also going to be helping us going forward is the launch of new capital. We have the new video system and the new helix are going to be in generator and some new powered instrumentation, the new 18-minute lithium-ion battery which is going to be very signification outside the U.S. and Europe in particular and the new Hall 50 powered instruments for large bone procedures.

Got it. And then just last question. (Inaudible) airports etcetera kind of a little bit up in arms about some of the changes that we made to pay to kind of last year. Are you kind of structuring for 2014 the similar type of commission structure? Have you made major changes to it and most would be actually from the sales force?

All right. It's funny every year we modify our commission structure slightly to have focused selling on certain products that we think are important, I think this year will be no different. We'll have -- with eight new products, we'll have certain incentives to get a good start on the product launches. And in terms of maybe a longer-term strategy with our sales forces, we're contemplating improvements in the variety of areas in order to generate greater organic sales growth, especially in United States.

(Inaudible) I am sure you related all that in 2014.

2014, the plans have been rolled out, yes.

Okay. Thanks guys. I appreciate the time.

Thank you. We have another question. And this question comes from Jim Sidoti from Sidoti & Co. Please go ahead. Jim Sidoti - Sidoti & Company: Good morning. Can you hear me?

Yeah, Jim. How are you? Jim Sidoti - Sidoti & Company: Great. You could start sending us some of your snow, we've got enough.

Well, good luck with it.

Enjoy it, right. Jim Sidoti - Sidoti & Company: Anyway, just one follow-up on the Denver plant and the decision to shut that down, was that at all related to the 483 in the FDA warnings or is that strictly a financial decision?

Like all of our factory consolidations, it's a financial consideration and it really was part of the, I'd say the long-term planning of the company that was I guess contemplated say five years ago and although obviously know decision was made regarding the Denver facility five years ago, there was a long-term plan to look at how we could cut cost out of our structure. And as you saw, it's started with Chelmsford and Finland and then the two facilities in Utica and the opening of the Chihuahua, Mexico factory some five years ago. So I think it's just a good business practice to take cost out of your structure where you can and when you can. And I think that's where we are right now with Denver. We are at the point where we would call this when we can. And so, that's what’s happening. Jim Sidoti - Sidoti & Company: Okay, all right. And then just switch gears a little with the pending acquisition of ArthroCare do you see any opportunity to add to your sales force for that market?

We've seen this in the past with M&A activity. There is always the opportunity for sales reps to want to make it change. And so, yes, to the extent that exists we will take a look at the opportunities that present themselves for any sales as they want to make a change. Jim Sidoti - Sidoti & Company: Okay. Can you make some comment on the overall size of those sales force, particularly in the orthopedic market and if just in general if you plan to add sales people, I guess in that market and as well as your other businesses in 2014?

No, we're planning to do a few things with the sales forces, but they're really still on the planning -- in the planning stages. We added sales reps over the last couple of years in several of our sales forces, so I really probably not prepare to comment on sales force say at this time. Jim Sidoti - Sidoti & Company: Al right, great. That's it for me.

Thank you. We have no further questions.

Well, I want to thank everyone for participating in today's fourth quarter and year end earnings conference call for CONMED Corporation. We thank you for your attention and we look forward to talking to you on our next earnings conference call. Thank you very much.