Good afternoon ladies and gentlemen. Thank you for standing by. Welcome to the Merit Medical first quarter 2010 earnings conference call. During today’s presentation all parties will be in a listen-only mode. Following the presentation, the conference will be opened for question. (Operator Instructions) I would now like to turn the conference over to Fred Lampropoulos, Chairman and CEO; please go ahead sir.

Good afternoon, ladies and gentlemen. We are broadcasting from Salt Lake City. We’re in the midst of spring time in the Rockies. We’ve had heavy snow most of the day and it’s cold. I’m delighted that you’ve taken the time and I’m pleased to be able to discuss with you today the results of our first quarter. I’d like to start first by having our General Counsel, Michelle Perry, to talk about our Safe Harbor provisions.

In the course of our discussion today, reference maybe made to projections, anticipated events, or other information which is not purely historical. Please be aware that statements made in this call which are not purely historical maybe considered forward-looking statements. We caution you that all forward-looking statements involve risks, unanticipated events, uncertainties and other factors that could cause our actual results to differ materially from those anticipated in such statements. Many of these risks, events, uncertainties are other factors are discussed in our Annual Report on Form 10-K and other reports and filings with the SEC, which are also available on our website. To the extent any forward-looking statements are made in this call, such statements are made only as of today's date, and we do not assume any obligation to update any such statements.

Michelle, thank you very much. Ladies and gentlemen, I am pleased to report the results of our first quarter. I’d like to start with a brief discussion of our revenues. Sales for the first quarter ended March 31 was $67.4 million, an increase of 16% over sales of $58.4 million for the first quarter. We beat our internal forecast by approximately $2 million. Of note, is the fact that sequentially orders from a large OEM customer were $2.8 million, and from the year ago period, approximately $800,000. So I think when you look at this performance, particularly in light of the sequential results, it’s extraordinary. Let me just discuss for a minute a little bit about why our revenues are improving, and why we think they will improve going forward. First of all one of the products that we introduced was our EnSnare product. You’ll recall that our initial forecast was approximately $5.8 million. In our conference call in January, early February, we discussed that number was now ramping at approximately, and moved that up to about $7.8 million. We are currently ramping as of the sales for the first quarter at $8.4 million, and we believe that this product has the potential to produce revenues in the $9 million to $10 million range this year based on that ramp. I think we’ve been extraordinarily successful in not only converting the existing accounts, but we’re using the product in the best of class area here, but also taking market share away from some of our competitors, in again what we believe is the best of class product. We are also producing this product at atleast 80% gross margins, and a good portion of the increase sequentially on our gross margins, we think in the range of 90 basis points came…

Just also, a lot of these investments added people in sales in Europe and then in the US and we’ve some of the results of that. We’re seeing the growth rates accelerate as we get a return on that investment. I suppose in the sense of higher volumes to sales, particularly in some of the new countries, where Germany, Sweden, Austria, Ireland, are all seeing big growth because of the recent increases by adding people there.

Yes, as an example I think Germany is up approximately 25% this year, and that’s with the fall in euros, so its even when we are looking at higher numbers, but that’s a significant deal. I think in the United Kingdom, we are up over 20% this year, in France we are up. So across the board business is strong and they are getting stronger ever day and so we feel good about our business. We are trying to explain the things that are in place, that are needed to be there to support the growth going forward. It’s an extraordinary time, the most extraordinary time in our corporate history. Never see a time like this where there has been so much opportunity, and where we are candidly are better prepared than we ever have been before. We have facilities; we have support, sales, marketing. We have all the pieces I think of the puzzle that help us build our business. Let’s talk about the groups for a minute. We take a look at the first quarter of the year verses last year, catheter sales grew 21%. Now let’s think about this for a second. If we take a look at procedures, some would argue that intervention procedures are flat; I’ve heard 3%, 5% pick a number if it not 21%. If we take a look at stand alone devices; now you’ll recall that standalone devices are all of our signal catalog items that are often put together in a kit, up 19%. So what’s going on here? How do things grow at those kinds of level when we know procedure rates aren’t growing, and here is the answer? We are taking market share, we are getting broader geographical support across the board, and we are introducing new products that…

You’ve already introduced it really with the engineer production and the profitability of that and you can expect maybe more though RAF, and even some of the volumes in our contract business that Ireland builds for the US sales and distribution. We’ve seen increases in productivity, positive variances. So bottom-line there is more profit in Ireland. We continue to have advantages here. For example, we have an R&D tax credit that’s increasing again this year for Uttar, and you put it all together, hopefully we’ll get an R&D credit out of the US gentlemen someday, and that all will help us lower our tax rate. It was actually below what we expected this quarter, and it’s lower that 29%. So that’s a good progress, a good trend.

I appreciated it, thank you Kent. Just a couple of more items and then we’ll open it up to questions. A couple of issues on the FX issue. The FX improved our sales volume by $233,000, but because of the cost on the other side, it decreased and we had unfavorable expense, but it about netted each other out. It was a relatively small amount, but it did affect gross margins by about 20 bits. So its almost neutral, a little bit to the downside in terms of the cost to Merit. Another thing that is something that we have our eye on and something that I think is for us to understand, and for you to understand, and that is that in this first quarter our estimate of increased input cost relative were about $200,000. We also will see at least based on our pricing that we are receiving, essentially it started on the first of May, an additional increase of $250,000, and increase input cost due to the cost of risings. These are in input costs that are already in that first quarter. We’re going to have a little bit more of that cost going forward, just sometimes because we’ve seen this all, and as you all have seen recently, you’ve seen kind of a pull back on inventories, they’ve drawn down on inventories. We are going through what some percent could be an economic recovery, to whatever extent that is, but we’ve seen these oil prices sitting up here in the $80 to $87; and I haven’t looked at them today. I looked at them yesterday and they were down a couple of bucks, but that is something that does affect our business and does affect our margin. So it’s a headwind so to speak. I believe…

(Operator Instructions) Your first question comes from Eric [Inaudible] - Thomas Weisel Partners. Eric – Thomas Weisel Partners: I guess just first of on the gross margins. I know that last quarter you said that you are kind of thinking about 100 basis point improvement year-over-year as what you are targeting. So with everything you are seeing now, with where they ended up, how confident are you that you can hit that target?

Well, as I mentioned in the conversation with the EnSnare accelerating and adding gross margins there, that’s a big factor, with I think more sales going forward. When I see more sales I see the acceleration opportunity and I think there is a good opportunity to do that. The other side of the coin is, I don’t know what all those other headwinds are. Like I said, when you start adding a couple hundred thousands for resins in this net, so I don’t have any reason to doubt that we can do that at this point, but there are two sides for that and that was our estimate at the end of the year, and that was by one of the positive factors to address this question. It was on the point that I made if you were on the line, and discussed this issue of negative variances. So what we are starting to do now, and what we are hopeful we’ll be able to do going forward, is to create positive variances, work all of those negatives that I think are almost through the system. We’ve got a little bit more to go, but its almost all out of there. So with this acceleration, and this busyness that we see, we should start to see positive variances, which will possibly affect the gross margins going forward. So I am reasonably confident we should be able to do that, and in fact, if we look back for the last three or four years, we’ve been able to do that. So I am still reasonably confident we can do that. Eric – Thomas Weisel Partners: On the European side of things, given all the issues with the credit they are having there, and throughout the various countries, anything that’s kind of concerning you right now as far as accounts may be not paying or if you have to increase reserves against that?

No, we’ve not seen that. I mean I was asked the question independently today during an audit committee meeting as, are we seeing any effect with same, Greece and Spain. Spain is our largest stand long distributor in Europe, and we have not seen any difficulty in collecting. We saw more of it a couple of years ago. We started to see a meltdown in the financial markets a couple of years ago, and I was more concerned then, but we are not seeing. In fact I think all evidence is to the contrary. Sales were up 26% when we take a look at our direct sales business over there, and even our dealers right here, European direct, they’re down a little bit. So European dealers are down a little bit. So on the sales side we are seeing some respect there, but the bright part of it is, is that our business direct is much larger, and that’s up 26%. So we are working directly with our customers there. We’ve gone direct in Finland, Sweden, Norway, Austria, those distributors are gone and they are now full time working directly with the hospitals, so in some ways that mitigates that risk. Eric – Thomas Weisel Partners: And just lastly, it looks like just quickly going through it, standalone device was up I think 19% in the quarter. We had almost 10% in our estimates, so what was driving the growth there?

Well, I think the engineers in that group, so that’s going to be part of it, and then one of the problems that we saw with the competitor, is they were having difficulties delivering kits, so we were delivering a lot of standalone products that we could deliver overnight. So in a kit you’re going to get a manifold, tubing, syringes, guide wires, that sort of thing. On a standalone basis, all those products Merit sells on a standalone one up basis. When those guys started having delivery and getting product, let met just say one of the largest hospitals in New York, didn’t have product to do a procedure. Literally didn’t have product, with patients coming to be on the table in the morning. Merit was able to take and ship product, but their one option, they had to assemble them, but we saved the vacant, and they were able to go out and do those procedures for those patients. So having a standalone business in the breadth of that market is a big thing for us to sell in both standalone and the kits, because even when we make a mistake, and we do from time-to-time, we have the ability to get product to the customer overnight, almost on any basis. So that’s another part that’s driving the standalone business. Eric – Thomas Weisel Partners: A couple of other products; infusion bags are up 32% from the year ago quarter, needles are up 36%, tort devices are up 28%, so we got a few other products that gives strength.

And when we are talking about infusion bags 32%, this is a product that’s still in $3 million or $4 million, so that’s a pretty significant increase; and again, that has to do with a lack of focus on behalf of one of our major competitors. That’s another competitor that we haven’t talked about a lot in the past, because its kind of a unique product, but 32% needles has to be both with an OEM opportunity that we are working on, and just the fact that med believes we have the best needle on the product. Sounds a little insignificant, but you’ll be amazed at what one little product can do. So that’s our best answer.

Your next question comes from James Sidoti - Sidoti & Co. James Sidoti – Sidoti & Co.: I’m sorry I missed the first five minutes of the call. Did you break out the Endotech sales in the quarter?

No, we did not, but I got it right here. Kent do you have it?

Yes, I got it ready. The grip was $1.8 million roughly. No sorry, $2.4 million and the increase was $1.8 over on our press release.

Yes, so $2.4 million, which I would mention is just short of $10 million on a ramp basis and I think our internal forecast was $8 million, but it’s ramping substantially higher than our forecast that we built in.

Hopes had a big help in that.

Yes, but it’s that whole GI markets. James Sidoti – Sidoti & Company: And did you break out the ends in your sale?

Yes, we talked about it. Jim as you recall, I think our initial number was 5.8. We then moved it up to 7.8 out of the couple of million. We are now ramping as of the first quarter at 8.4, and I said that I thought that its going to end up somewhere between $9 million to $10 million, which is really extraordinary.

It was a little over 2.1 to answer your question for the quarter. James Sidoti – Sidoti & Company: So between the two you expect to add $20 million almost?

Yes, a little shorter of that, because when we have three quarters of Endotech, we aren’t going to have a full year, and that’s true.

Endotech is going to be there for the rest year. This is the one quarter where you have a big one for the difference.

That’s right. Endotech was there last year for the last three quarters. James Sidoti – Sidoti & Company: Right, but between those two lines, you’ll have about $20 million of revenue.

That’s correct. James Sidoti – Sidoti & Company: And then on the SG&A, I don’t want to beat it to death, but as we look to go in to the year, I mean I imagine that you got about $600,000 of one time expenses or maybe a little more; its maybe $700,000 of one time expenses. We shouldn’t expect that to come back right, with the books on it and the move to Salt Lake?

That’s correct. James Sidoti – Sidoti & Company: Now those other costs sound like they are still there.

They are. James Sidoti – Sidoti & Company: How long do you think before the top line catches help with them?

You mean, are we going to get back to a normalized rate of 23% than we’ve had I think historically; and the answer is, I don’t think we’ll get there, and I’ll tell you why. I think our goal would be to be in that 25% to 26% range, here is why. With these great products, and more sophisticated products, you have to have more clinical personal, you have to have more samples, so that’s significant. One of the other things on this SG&A cost issue was in this first quarter, where we were getting ready to launch these products and we are doing MRTs, we spent a lot of money, because we had to get people in the field, we had people in Europe, we had for instance with one of our wire products, we had somebody out spending samples in this for almost a month, to make sure that we did a broad enough testing about products. So that’s kind of a quarter expense. At least as I look into the second quarter, I don’t see those type of expenses, because we are not running that many trials. We are running four different trials in the first quarter. So that will pull back a bit, both on travel, both on samples and that sort of thing. James Sidoti – Sidoti & Company: Okay. So do you think you’ll get back to that 25%.

I think 25.5%, maybe a little higher than that is about where we’ll be. Our business is changing, and again it requires a little bit….

Some good revenue growth should absorb that.

Yes, and it will take good revenue growth, but we think we can do that.

(Operator Instructions) Your next question comes from Jayson Bedford - Raymond James. Jayson Bedford – Raymond James: I jumped on a little late, so I apologize if some of these questions are redundant. Gross margin, I think you said 42.6 in January; you did 42.2 for the full quarter. I’m guessing, I thought you’re kind of fighting through some of that higher cost inventory. I am just wondering, kind of when does that reverse, and when can you see that trend start going higher?

Yes, there’s a couple of things. We talked about we had some input costs of about $200,000 increase resin cost in the first quarter. We talked about we are still working through those negative variances. I mentioned that in the month of March, we had the first positive variance from manufacturing since September. I mentioned that we are very, very busy. We have a little bit more stuff to push through, but my expectation is that we’ll see positive variances as we move forward in the balance of year. We are just simply very, very busy. Jayson Bedford – Raymond James: Okay, so this is the number, 40.22 is a number you’d expect to build on going forward?

That’s my hope. Jayson Bedford – Raymond James: Okay, and then on the R&D side. I guess specifically with respect to the reflux valves that you are looking at, have you decided to go forward with a trial for that, and is that kind of assumed in your guidance.

I’m glad you asked this question. First of all as you know, we do not have FDA approval in the United States for that product. What we do have is, we do have the CE Mark on it and we in fact did a trial and we have several more that are coming up, but we did a trial in the Netherlands maybe two to three weeks ago. In that trial, the patient had an improvement as he pointed out for the first time in years. He didn’t have excruciating pain. What happened is, because of the size of the anatomy, it wasn’t the ideal size for him, but it stayed in place for four or five days. He went home, I got a call the other day, he wants to come back and put another one. He says it’s such a vast difference. So we are working on the sizes, we are also working on a unique stent that will incorporate -- this is Merit's own stent. This valve and I’m talking about case, involved us putting a stent essentially within a stent. Our new product that we hope eventually we’ll get to would be our own valve and our own stent sized specifically to deliver that. So I continue to believe that this is a great opportunity for Merit, and that we will continue to pursue this. Jayson Bedford – Raymond James: Fred, when do you make the go, no-go decision on that one?

Well, I think it’s a good question. We need to do more trials, and we need to I think believe on our own stent, that we can deliver into somebody else’s stent. So I think the real key to it would be that we can keep them and they don’t migrate. I think ultimately though in order to do that, we are going to have to have the valve within our own stent, that’s what it’s going to take, and we are probably nine to 12 months away from having that capability. So it’s down the road Jayson, not in this year; although we hope that we’ll be able to do some trials. We will be able to do those in Europe, because we should have a CE Mark. We already have the CE Mark on the valve, much soon of course than we have FDA approval. So its going to be later on this year before we can discuss, but really its later on this year. It’s probably the best way I can answer it. It’s some time probably in the third or fourth quarter as we are able to take and incorporate it together, but I can tell you that just based on this case of one, that it was a significant issue. It didn’t deteriorate, it didn’t deform, it just wasn’t sized right for the patient, but in that short period of time, the guy is calling and wants to come back and have one put back in again. I think that’s astounding, but it’s a sample of one. Jayson Bedford – Raymond James: On the SG&A side, did you add any reps in the quarter, and can you just remind us…

Yes, one of the things that you recall is that we talked about -- Merit’s product line as you know Jayson is very broad and diverse, and one of the things that we started working on several years ago was kind of starting to divide the bag, so we could roll down, and let me give you some support for that. Kent just mentioned a few minutes ago that our pressure infuser product is up 32% for the quarter. That’s being sold by these guys that are doing what we call our procedures. You heard me mention that we’ve added thousands and thousands of kits, and because of the inability of one of our competitors, and that’s being sold by these split bags. I think the number was that we added 12; is that correct Kent?

We added 12,000 marketing people and most of those were reps, because we were splitting bags or adding a new territory. So we split a bag and won an open territory.

And those in the quarter came on in the last year, so we’ve added 12 new sales people in the last year. So we continue to do it in a territorial or opportunity. I’ll tell you this; we have a number of other territories that we are looking at. We are having discussions about whether we should take and expand other areas, where maybe our sales force or we have maybe one sales person who has got too big of a territory. So we’ll continue to do that what it’s timely to do so.

Your next question comes from Dave Turkaly - SIG. Dave Turkaly – SIG: Just to be clear, I know you mentioned that you didn’t really want to change anything, but should we take this as a reiteration of the EPS range that you guys had heading into today?

I hope not, that was not my purpose. My hope is, I’m trying to explain the expanses that we had and trying to tell you that we beat our forecast of $2 million, but until I can work out my own model, and have better evidence of what’s going forward, we are not going to change, we are not letting one quarter not going to go and change up on the up-side, but I suppose you made a very good point. You are seeing the revenues that may or may not be where you are with the $2 million internally ahead, but you are seeing these expanses and the question that has to be asked for everybody is, are they going to be able to accelerate those revenues, to absorb those expenses. What I’ve said is, I’m not changing the earnings per share down. I’m keeping everything the same and I believe, and my hope is that we are going to be able to make sure that we can absorb those expenses with higher sale, that’s the hope. I believe that based on the $2 million above our internal forecast, that that’s the opportunity to do so. So that’s where we are today. We think it’s too early to start jumping around with only one quarter done, especially when we are seeing the acceleration of revenues. So the momentum here is what’s going; is we are seeing so much opportunity. For the first time as I mentioned the positive variances in margin manufacturing, we are working overtime to keep up with the demand, because we have so much of it. Some all these things tell me that we are going to see higher revenues and we should be able to absorb those. So you can make your own call on it, that’s what you guys get paid to do, but I’m not prepared to move it one way or the other until I have more evidence that I either can absorb or I can’t or this and that. It’s just too early in the year to take a whole year and then try to prognosticate it on the quarter. Now, that’s what you guys do. I whichever way, I’m going to try to prove that I can outsell you. If you want to go the other way, I’m going to do every damn thing I can to make you wrong. So you go ahead and do whatever you want to do. Dave Turkaly – SIG: I appreciate that, and all the detail has been fantastic too. I guess without expressively really saying it, by saying we are not changing anything I read is implacably sort of a reiteration. If we look at these things, tax rates, I know you mentioned great progress in the quarter; they have been low 30’ for the year -- 31, 30 I don’t know.

That’s different from what we have said in the past, but we need another quarter, we need to see this stuff, we need to see the Laureate. We need to make sure that we have all of our transfer pricing right, when you start making a lot of money as an example. We are sitting back here in October. We give our numbers and we are working on a forecast, and we come with an effective tax rate. Well, we were at $5.8 million for the ends there, and all of a sudden we are saying “Oh, wait a second. This is as good or better than we thought it was going to be,” and so we are a little conservative. Well now we are talking about, well maybe its ramping at $8.5 through the first quarter. Could it make $9 million to $10 million for the year, it might; and if it does, what does that mean in terms of transfer pricing, particularly when we got all the bloodhounds with their hands out looking for money. So we are not going to change our tax rate yet, because we have to look at our transfer pricing and make sure that we are doing things correctly, so we could all stay out of jail. We are trying to do the right thing, but I’m not going to tell you, you saw 28, and we said what, 33 for the year, that’s 500 basis points; you hit the nail on the head. We think it had a change to be lower that 33, that helps our earnings per share based on the mode, but its just too early. We need another, maybe this quarter as we get through that. Then I think we have six months, and that’s probably appropriate at that point to say “Okay guys, based on all the stuff in six months, and this acceleration, and the acceptance of these new products, well maybe your product’s a dud.” Then I think we can “Sure it is” and I think at that point we would have valuated it and can say something, but its just too early now. Dave Turkaly – SIG: Fred, come on we all know Merit Medical has never had a dud.

Yes, wait a second. Yes we have, they are called Fred’s follies and there’s a few of them around. That’s all they ever talk about around here; they never talk about those great things. Dave Turkaly – SIG: No, I appreciate this. Obviously every company has a lot of things to consider when they are looking at how the year could turn out, and you guys do, and you have a lot of moving parts this year. I guess what I was just trying to get at again is, if your margins are where they are and you are going to grow a bit and your tax rate goes down, yes, you have a chance to absorb them. I think that’s probably what people would like to hear. That certainly this quarter might have been, given where you are starting from, you might be able to still show incremental upside on the bottom line moving throughout this year if those other things happen and your tax rate falls.

One of the things too, is we take a look for instance at moving some of our capital productions. That’s going to help us make more money with higher margins and lower costs. Its not just weather, there are a lot of other factors associated with that, but till it’s up and running, and observing when we say we did this and here’s the result, I don’t want to start promising that stuff. But we are going to make more money on those products building them here in Utah, than we are in Texas, that’s just the facts. So that’s going to affect us positively, but we are not going to be up and running full and have that duplication done until June, and then ramping it up over the year, and as we do that, its going to have a very positive effect on our business. Those are so esoteric, its hard for me to promise something, but that’s what my expectation is by the way, other than just saying the weather factor and the expanse than talk about the upside. The upside is substantial especially in the fastest growing part of our business.

Your next question comes from Shawn Fitz - Stephens Inc.

Just a quick question Fred; thinking about margins and maybe not specifics obviously, but just trying to kind of think about when something might start to manifest itself in a meaningful way in your P&L, you guys have obviously put a lot of new products in the didy-bag of your sales force, with some very attractive margins. Could you kind of help us understand just in terms of when those might start to really manifest themselves and your gross margin profile?

Well clearly the EnSnare is already doing that. I think we said that 80 to 90 basis points we believe in the first quarter. We’re probably going to end up, by the time we get through the year maybe closer to, maybe possibly 100 to 110 bips just on that loan if we continue to grow it and get more efficient. I think the product that has the most potential affecting our gross margins is our Laureate guide wire. We believe that we have the best hydrophilic guide wire on the planet, and I believe, so this is me speaking, that that has an opportunity of $30 million to $50 million. Now is that this year, next year, no, but we think we can ramp it there. Its that powerful. Its in Ireland at a lower tax rate. Its been essentially an R&D expense at this point now, just starting to go into, and that’s another reason why that R&D is up there, because it’s been R&D. Its now just starting to go in and get absorbed up. As that volume moves up, we believe that we can produce that product that would give us an excess of 50% to 60% gross margin. It would be almost like having an inflation device business again, and its that big of an opportunity for us. Its going to take the balance of this year to ramp it, its going to take next year’s gross, but we are going to be talking about that product for a very, very long time. I believe Shawn that when we were talking about something like a prelude sheath business, which we are selling 70,000 units a month, its taken us five or six years to get there. This product is going to ramp much faster than our sheath business, much faster. So I think that’s the product that has the biggest opportunity to really kind of knock the socks or knock the cover off the ball.

Okay, thanks Fred, and then just thinking about China, obviously that’s an enormous opportunity for Merit. You expressed a lot of confidence and optimism in terms of the opportunity there. Could you help us understand when you are going to be able to get a bigger chunk of your product portfolio into that market place?

First of all, China is already a great opportunity. If we were to take a look at the fastest growing areas of our business over the last several years, it would be China. It’s also the most bureaucratic and maybe the most difficult place to do business. As I mentioned earlier in the call, we are going to have almost have nine people on the ground just when you open your office up, and we have five or six of those right now and the office is being fitted out, and then we have all the issues that are associated and the expenses associated with that. We have been working now for the last two years in making sure that Merit had all of its licenses. We have outside consultants and now we have internal Merit employees in China, making sure that we have all of our products registered there, and we are going to register essentially 80% more than we have today. We are only selling 20% to 25% of our products there today. Not of all them are going to sell, but most of them are, and I believe by the time we get into the fourth quarter, we will be up and running, we will have inventory on the shop. It could roll early into next year, so we are going to have that expense this year. I mean its there, its not going away, and it’s I think candidly a bold move, but there is so much opportunity and there’s so much need for the products that Merit builds that we felt for the relatively short time and cost, that it was the right thing to do. I know Joe Wright’s sitting in the room who has that responsibility, and Joe speak to that; it’s your gig, you’re the guy that’s there on the ground. Why don’t you address it in our own words.

We have been working vigorously on new product renewals and that’s taken most of the time, so we expect to have renewals later this year. As far as new product registrations, we won’t have additional items until next year, but that will help accelerate the top line of course.

The one thing that that does for us, as I mentioned earlier, is it takes some of our input prices and it takes almost double the revenue that we get off that, thereby increasing our gross margins just on our existing products. It almost doubles the revenue, today that we are the importer versus the way that we are currently doing and most of that would be this year or at least starting this year. So it should have a big impact literally. That means our revenues are going to go up from $12 million to $25 million day one. So rather than going to the distributor, they come to Merit, and then go through the distribution network at almost twice the price.

Okay Fred thanks. One other quick follow-up question on China, you alluded to in some of your prepared comments about a benefit that you all receive as you realize kind of a higher end market price. Could you quantify in a general sense the amount of revenue that you are driving from China now, and maybe kind of describe to us what that might look like as we lookout 12 to 18 months.

Last year, we did $11 million in China through a distributor. We believe that as we take it into our warehouse that that revenue from day one should double. It’s almost a double from what we sell it to our current importer for, when it gets landed in the country. Once it lands there and it lands in the Merit facility, it would go through some of the same existing distribution channels, but Merit gets the benefit of almost 2X.

Now, we’ll start in the fourth, I’m hoping, to give you this year’s number if that’s what you’re worried about.

That’s great Kent, and then final question Kent and more of a housekeeping item. EnSnare, that’s in your standalone devices revenue segment, is that correct?

Correct.

(Operator Instructions) Your next question comes from Ross Taylor - C.L. King & Associates. Ross Taylor - C.L. King & Associates : You might have answered this question already, but the $2 million upside in revenue is compared to your internal forecast. Could you talk about what product categories or products that came from?

Well, we discussed this, but I will be happy to go through some of these for you. We were talking about some products like our pressure infuser bag that was up say 36% last quarter.

The kit is a big contributor. I remember the number was like $1.2 million over the prior year, but trades are up 900,000, I recall as I look at the list.

Needles were up 36.4% from a year go period. Let’s see what else do we have here. I’m going to go to -- I will give you one, our Prelude sheath, here is an interesting one. It’s up 53.4%.

Part of the catheter group.

Yes, that’s part of our catheter group from the year ago period. It grew by over $600,000, that’s the radio. So that’s the one we were talking about earlier when we were talking about the growth in radio procedures. Our smack and our mak, these are our vascular access of products up 62%. Our vessel sizing catheter, this product has been around a long, long time, up 34%. Even our pericardial setaceous treys has been a product in Merit's bag for many, many years, up 24%. So there is some pretty significant, even our found infusion catheter, up 32%, so there is a lot of things here, our vac-lack syringe. Merit has a pattern of vac-lack syringe that’s used by almost everybody in the world that has a aspiration catheter, that product is up 17%. So there is a lot of these things, infusion bags 32%. So there is a lot of stuff that’s doing very, very well. Here is another one Merit trends up 59%, these are kits, so a lot of stuff moving very, very nicely. Ross Taylor - C.L. King & Associates : Second question, just so I can maybe try to get a better handle on where margins might be going over the next year two, but if your SG&A is going to be up and around 25.5% of your sales, does that imply you are going to get better gross margins over time to offset that and protect your operating profit margin, or do you think there is contraction in the operating profit margin, you want it to stay there?

I think I’ll just turn it in the other direction. If we are going to have expansion, instead of this trough that we’ve been in, then that’s what we are going to have to do, that’s our plan, and so with the products that we are introducing, that being a higher margin, with things like the Laureate that have the ability to produce and yet 50% to 60% gross margins on a product that has the capability to do tens of millions of dollars. Those products which we’ve been investing in, now were built in plant and equipment form and all those sorts of things, and they are expensing that stuff. Now its time for those things, and we should be growing our gross margins. Listen, I still believe that given the proper time and we set out a plan three years ago or four years ago, talking about growing our gross margins of 150 basis points. Remember where we started at 38.3%. If we go back and take the up and downs in this, we’ve exceeded that plan. I still believe that we have an opportunity for a reasonable period of time that I can see to grow our gross margins by 150 basis points a year for several years. This year we just promised a 100, because we went though this trough in the first quarter, but if you look at the promise that we made in the last three years, we’ve exceeded that, we’ve exceeded it substantially. So we believe that we will see that, and that we will protect those operating profits, and if we can’t we are not doing our job. We ought to be able to do that and I believe we can. We’ve done it in the past, we’ve proven it. Ross Taylor - C.L. King & Associates :

It’s kind of on going until we finish up and commission the facility. It is running, its clean roads have been built but we are not into production. So we’ll stay in that mode obviously in the second quarter, and then starting from that point forward, then it will go into cost of goods. Ross Taylor - C.L. King & Associates : Its one time sort of for SG&A purposes, but not in total, because it will move over to the other part of the slate.

But then what we get to do is, we get to produce, and I meant for this earlier. Let me give you an example of why this is important to us. If we take a look as to operating expenses, we can produce a profit or a product in Salt Lake City over our Texas facility, our heath care costs half, working compensations half, we can do all of our distribution out of Salt Lake City, utilities are half. So when you take all of the taxes and shares, I can go on and on and on why Utah, and we live here. It’s probably the most favorable place to do business in the country. From a research and development tax point of view, I can give you lots of reasons that moving out here is going to be better for our company is the long run, and the long run is just around the corner, so its not very far away. There is a lot more reasons, not just the weather risk, its one of them, but there is a lot of reasons why producing that product here. I can give you an example; we are producing one product here for 10% to 15 % below what we are producing there. We just started, we are just into the kind of the pilot plant part of it. I believe that’s probably going to end up being in productive for 20% less, and almost all of it goes right to the bottom line, or at least goes to the pre tax line. So there is a lot of reasons as we’ve been on the road, and as we get this facility up and running. It secures our revenues, it’s a lower cost, and it’s also closer and easier for us to manage, and more capacity. So there’s lots of reasons why we believe it needs to be here. I know my friends in Texas don’t like to here this, but those are just the facts.

(Operators Instructions) I’m showing no further questions in queue. I’d like to turn the call back over to management for closing remarks.

Well again, thank you very much. It’s been a long call. We’ve been on here for a little over and hour. We’ve appreciate your interest in the company. I hope you are as pleased as I am with the revenue. I hope we’ve given adequate explanations for the various costs that came in to the model, some of then one time, some of them were settlements, and I hope you really will look at those things and understand them. As I mentioned our sales were some $2 million ahead of our internal forecast. We’ve got a great line-up of products, and now these are not things that we are talking, these things are that are lounging. You got the Finale, you got the Blue Diamond, we have the Impress hydrophilic catheter, we have the Laureate and more. I’m sure I missed a couple of them, but we have lots of products and opportunities and the EnSnare which is exceeding our expectations and is a best in class product. So we are building a business. We are changing it in terms of some of the technologies and things for the further. We are expanding it geographically. We are making the strategic decisions in terms of cost and security, and they are not easy to make. Someone is going to be mad at you. But the decisions have to be made for the best long term interest of our employees and our shareholders, so I’m excited about what we are doing. I hope you can feel it across the airways, that we’ve got a great business, and at the same time and I hate to revel in somebody’s misfortune, but believe me when I say that our competitors are really struggling. They have taken their eye off the ball, and they put it on the T for us, and we are just gong to knock it out of the park. So we appreciate your interest. We will look forward to talking to you in the future, and we are available. Kent and I will be available here for whatever period of time if there’s any clarifications that you would like to do. That being said, we will go ahead and sign off wishing you the best and [God’s peace]. Good night.

Thank you ladies and gentleman. This concludes the Merit Medical first quarter 2010 earnings conference call. You may now disconnect. Thank you for using ACT conferencing.