Welcome to the LeMaitre Vascular first quarter 2010 financial result conference call. My name is Crystalline and I will be your operator for today. (Operator Instructions). As a reminder, today's conference is being recorded for replay purposes. At this time, I would like to the turn call over to Mr. J.J. Pellegrino, Chief Financial Officer of LeMaitre Vascular. Please go ahead sir.

Thank you, Crystalline. Good afternoon and thank you for joining us for our Q1, 2010 conference call. Joining me on today's call is our Chairman and CEO, George LeMaitre and our President, Dave Roberts. Before we begin I would like to read our Safe Harbor statement. Today we will discuss some forward-looking statements, the accuracy of which is subject to risk and uncertainties, whatever possible we will try to identity those forward-looking statements by using words such as belief, expect, anticipate, forecast and similar expressions. Please note these words are not the exclusive means for identifying such statements. Please refer to the cautionary statement regarding forward-looking information and the information under the caption of risk factors in our 2009 10-K and subsequent SEC filings including disclosure of the factors that could cause actual results to differ materially from those expressed or implied. During this call, we may discuss non-GAAP financial measures. Please refer to our earnings release in our website www.lemaitre.com for a discussion and reconciliation of non-GAAP financial measures. I will now turn the call over to George LeMaitre

Thanks J.J. top to bottom I was quite please with Q1. We are growing sales and we are growing profits, as it has become my habit, I'd like to summarize the quarter with three headlines. Number one, we posted record sales of $13.8 million, 22% ahead of Q1, 2009. Number 2, we recorded an operating profit of $1.3 million and number 3, we received six regulatory approvals in the first four months of 2010. As to our first headline, we posted record sales of $13.8 million in Q1, 2010. Sales increased 22% over Q1, 2009 with all three major geographies contributing. The Americas were up 20%, Europe increased 23% and Japan 34%. By category open vascular increased 28%, endovascular was up 12% and general surgery increased 9%. Q1 marked another impressive quarter for our open vascular category. In fact for the last four quarters, vascular sales growth has been 6%, 16%, 23% and now 28%. Our continued success in this category is due to our broad pallet of gold standard niche devices and the continued worldwide strength of the LeMaitre vascular brand. In Q1 we received substantial sales growth contributions from our Valvulotome, AlboGraft, and Vascular Graft and XenoSure Biologic Patch. In Q1 our vascular category accounted for 69% of our sales. Also in Q1, 2010 our endovascular category experienced a small rebound. Our VascuTape Radiopaque Marking Tape, UniFit abdominal stent graft and Powerlink Abdominal Bifurcated Stent Graft all contributed to our 12% endovascular growth. In Q1 our endovascular category accounted for 24% of our sales. The increase size of our 61 rep sales force was a key driver for Q1, particularly in North America where most of the recent salesforce expansion has taken place. Overseas, we continue to benefit from our emerging direct sales outfits in France, the United…

Thanks George. I will now say a few words about our operating results, share buyback program and guidance. As we heard from George Q1 sales growth was strong both domestically and overseas. In addition, our core product lines continue to show significant gains. As we move down the P&L there was more good news, we reported a gross margin of 74.7% in Q1, up from 72.8% in Q1, 2009. This 190 basis point increase was driven by manufacturing efficiencies and higher average selling prices, and was partially offset by a change in product mix. Of note our gross margin in the last two quarters has approached 75%, a level which we believe is sustainable over the coming quarter. Sales and marketing expenses increased to 18% in Q1, 2010 to $4.9 million representing 35% of sales versus 37% in the year earlier quarter. The spending increase was driven mainly by our larger direct salesforce as well as increased commissions. We ended Q1 2010 with 61 sales reps versus 52 at the end of Q1, 2009. General and administrative expenses increased 4% in Q1, 2010 to $2.6 million representing 19% of sales versus 22% in the year earlier quarter. R&D expenses increased 17% to $1.5 million in Q1, 2010 representing 11% of sales versus 12% in the year earlier quarter. Also Q1, 2010 operating profit was $1.3 million versus the Q1, 2009 adjusted operating profit of $284,000. Sales growth and the expanded gross margin drove this fourfold improvement, partially offset by increased operating sense. While the total adjusted operating expenses were up 13% year-over-year as a percent of sales, they decreased from 70% of sales in Q1, 2009 to 65% of sales in Q1, 2010. Operating margin for the period was approximately 9%. Turning to the balance sheet, our cash balance as…

My question pertains to the leverage that you guys have experienced on your sales and marketing line. It looks like roughly you had the same margin of sales and marketing expects the quarter as you did in the prior quarter, do you expect that you can get further benefits or is this where you are going to plateau out at?

I am unclear if you are talking about sequential or year-over-year?

Sequentially yes

You are asking sequentially. On a year-over-year basis I do know that we produce leverage in that category, I believe it was 37% of sales in Q1,'09 and 35% of sales in Q1 '10. On a sequential basis, as you are pointing out it is flat at 35%. As to whether we will get more leverage on that line, I don't know. The place that I look for leverage at this company right now will be the G&A line to start with. Obviously we don't need to hire that many more new in the executive suite as we grow larger.

Can you talk a little about the product launches, timing the new product launches, the timing of them and potential, what kind of goals are you looking to meet maybe deferred share?

First of all I'd start off any kind of conversation about product launches by saying everything we talk about we baked into our 2010 sales guidance, and in general I am a believer that these launches always take longer and they last longer than you think and so I feel in some ways we are talking about 2011 issues when you look at those six regulatory approvals that we talked about. But maybe if we could drill into a couple of them and give you some nuggets on the important one. It feels to me like the important ones of the six regulatory approvals we showed you today, the important ones are probably the AlboGraft in the US and the details on that are, we have received the 510(k) in either January or February? And we have done about 15 implants so far. The product reception from the doctors seems to be excellent and perhaps more importantly the product reception from our sales channel and we have 35 US sales reps has been excellent and they seemed to be embracing it. that could be a big one overtime, we guesstimate that the market for Dacron Graft in the United States is approximately $80 million and shrinking to the tune about 3% to 5% a year and obviously we start with a 0% market share and we probably have one of the top five or seven peripheral vascular sales channel in the US. So that combined with an excellent device should give us some nice sales overtime. So that's the AlboGraft. The other side sort of significant launch which we are excited about is the AnastoClip GC and GC is short for grip clip and what the issue is there is that the clips they were putting out now are grippier…

Yes, we are call that a soft (inaudible) we leave the old catalogue number out there for the doctors to take because a lot of them are going to tell me I would like to use the old product because it doesn't penetrate. This new one is a penetrating device. We think it's a lot better, but our general approach is well let the doctors vote with their feet overtime and the catalogue numbers are not wide enough or you wouldn't want to just keep all the catalogue numbers open, so no hard switch on that, we'll go over the soft switch.

(Operator Instructions). Your next question comes from the line of Sara Michelmore with Cowen and Company.

Just one question on your guidance. You assume the sales guidance organic growth of 10% and you have Q1 organic growth of 18% so can you help just reconcile that?

FX has a pretty significant effect on our topline, we have about 42% of sales outside of the US and so FX while it helped in Q1, is actually going to reverse or has been reversing in and if it stays where is at now about 133 it will continue in that same direction over the rest of the year. so you had the combination of things, you had a weaker prior year last year and then you had a nice recovery throughout the year in '09 and Q3 and Q4, so you had pretty Q3 and Q4 comparably. On the whole we think a 10% sort of year-over-year growth rate is pretty nice for us. We are pretty pleased with that and if it blends that it is higher at the beginning of the year and sort of muted from that during and throughout year because of FX and because of varied comps quarter-to-quarter, then I think that's pretty good.

Okay, and on gross margin, you highlighted this couple of quarters of strong gross margin performance. How much upside can we expect going forward, if you look at 70% plus gross margin, is that achievable in the near term?

We have rotated upto the sort of 75% range. We are pretty happy with that, I think it compares pretty favorably to our peers as you know. I would expect us to stay in this range for a while unless we do something structural. You may keep creep up a little bit with price increases overtime and creep up a little bit with kaizens and cost efficiencies as you get in the back room overtime and those would be great but I would say step function improvements come with larger pieces.

I think the utilization of NOLs and tax rate was little bit higher than what I thought it would be in this quarter, can you just tell us just how much NOLs have been utilized and how should we think about the tax rate for this year?

Yes, so our effective tax rate was around 21% in the quarter. I think in the high level you can think of us rotating up to 38% to 40% statutory rates overtime, what's going on as we become profitable and so we have used significant amount of NOLs maybe $3 million to 3.5 million over the last three quartersish and we are also using R&D tax credits that we have been accumulating and so as we work through those, we will start rotating up to those higher statutory tax rates. We got about million dollars of NOLs left or so maybe a little less and R&D tax credits maybe in the $500,000 range something like that. So you can expect that to happen over the next quarters.

The 21% for this quarter, they should go up from these levels?

I think so, you probably make your way up to the high 30%, 40% overtime over quarters.

(Operator Instructions). And there are no further questions. I would like to hand the call back to George LeMaitre for closing comments.

Thank you, Crystalline and I like to thank you everyone for participating and we will look forward to our next call.

Ladies and gentlemen that concludes today's conference. Thank you for your participation. You may now disconnect and have a great day.