Good afternoon, ladies and gentlemen, and welcome to the Orthofix International first quarter earnings release conference call. At this time, all participants have been placed on a listen-only mode. The floor will be opened for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Dan Yarbrough. Sir, the floor is yours.

Thanks, Mandy. Good afternoon, everybody, and thanks for joining us to discuss Orthofix International's financial results for the first quarter of 2010. During this call, we will be making forward-looking statements that involve risks and uncertainties and all statements other than statements of historical fact are forward-looking statements, including any earnings guidance we provide, and any statements about our plans, beliefs, strategies, expectations, objectives, or goals. Factors that could cause actual results to differ materially from forward-looking statements made by us on this call include the risks disclosed under the risk heading ‘Risk Factors’ in our 2009 Form 10-K and subsequent Form 10-Qs filed with the SEC. On today's call with me are Orthofix's President and Chief Executive Officer, Alan Milinazzo; and our Executive Vice President and CFO, Bob Vaters. At this point I will turn the call over to Alan.

Thanks, Dan, and good afternoon, everyone. On today’s call we’ll cover three main areas. I will start with a summary of the key drivers of our first quarter results as well provide a brief update on a couple of key activities. Bob Vaters will then provide some additional financial details on our first quarter results, including the key elements of our balance sheet and cash flow. And, finally, Bob will provide an update of our expectations for the remainder of 2010. Starting off with our first quarter results, we reported quarterly revenue of approximately $139 million, which represented an 8% increase year-over-year and a 6% increase on a constant currency basis. Excluding the impact of the sale of our vascular business as well as another non-core product, which we discontinued distributing in Italy, our adjusted year-over-year growth was a healthy 10%. Our first quarter growth was the result of solid performance in a few different areas highlighting the benefits of our diversified revenue streams. Let me begin with our Spine business, which grew 8% overall and now represents 52% of the total revenue for the entire company. We believe our Spine Stimulation business continued to take market share with a 12% increase in the sales of our market-leading devices. These results are primarily due to the fact that we have the only FDA approved device for cervical indications as well as from the fact that we maintain a direct sales force, which is dedicated to selling this technology. Another indicator of our success in Q1 was that we increased the number of surgeons who prescribed this therapy by 11% when compared to prior year. Moving on to our Spinal Implants and Biologics business, as we expected our overall growth rate in Q1 was modest compared to prior year due to…

Thanks, Alan, and good afternoon, everyone. I will cover three primary areas during my discussion; first, I will focus on the income statement, including one item in the earnings reconciliation, and a continued improvement in the operating results, particularly at our Spinal Implants division. Second, I will talk about EBITDA and the balance sheet, including our cash and debt balances and our related finance covenants. And third, I will go over some revised guidance metrics for 2010. As Alan mentioned, total first quarter revenue was up 8% year-over-year, 6% on a constant currency basis. In the Spinal Implants and Biologics division, we grew 3% overall with our cervical and lumbar implant revenue increasing by over 10%. This was partially offset by a decrease in revenue for Biologics. The Biologics revenue decrease was a result of our deal with MTS where we record a marketing fee equal to 70% of the end user sales price for Trinity Evolution versus previously recorded 100% of the end user sales price for our previous stem cell allograft. If we adjust this year-over-year difference in the basis for recording Trinity revenue, our total Spinal Implants and Biologics revenue increased by approximately 9% over last year. With regard to the Sports Medicine division, we reported a revenue decline of 3%. However, if we adjust for the revenue recognition change related to one of our distributors that we explained last quarter, total adjusted Sports Medicine revenue in the first quarter was flat year-over-year. If you recall, in the fourth quarter of last year we began netting one distributor’s commissions against the revenue generated from that distributor. Prior to that commission expense was included in sales and marketing expenses. Moving to the gross profit margin, we reported 76.4%, which included the impact of a $1.9 million inventory reserve…

Thanks, Bob. Before we take some questions, I want to take a few minutes and comment on a couple of additional items. First, we believe the legal complaint filed by NuVasive last week to be wholly without merit and an effort on their part to resolve their business challenge in the courts rather than in the marketplace. Our position on this issue is very clear. We did our diligence. We found a novel and proprietary, next generation product from a world-class partner in MTS and we absolutely do not infringe the 239 Patent as asserted by NuVasive. Second, we close to completing the move and consolidation of our North American operations to our headquarters in Louisville, Texas, which will be ready by mid-summer. Similar to our Verona, Italy facility, which serves our international markets and our Orthopedic fixation training, we are building a world-class training facility for our surgeon customers here in the United States. As the consolidation nears its completion our operating metrics are steadily improving as we had forecasted when we announced this plan to reorganize the business 18 months ago. With that, operator, I think we are ready to open the lines for some questions.

(Operator instructions) Our first question is with Raj Denhoy with Jefferies. Please pose your question. Raj Denhoy – Jefferies: Hi, good afternoon, guys.

Hey, Raj.

Hey, Raj. Raj Denhoy – Jefferies: I wonder if I guess a little bit about the Trinity Evolution results in the quarter, I don’t think you gave us exact numbers, you sort of alluded to the fact that I guess in outside of Spine, it was slightly better than last quarter. Any way you will give us anymore color around what those numbers were, both Spine and outside of Spine in the quarter?

Yes, we are not going to broken down between Spine and Orthopedics for a number of reasons at this point, but we can tell you that we are at the 6.1 million total, which is the gross sales. Remember, that includes some amortization charges related to the investment that we made in December so that netted down to probably 5.9-ish. So within the 15% growth that we got, remember we talked about 15% to 20% sequential growth per quarter. So – and we mentioned it would be on the low end at the beginning of the year and start to ramp up as the year goes on. Raj Denhoy – Jefferies: Okay. So, it was though at the lower end of that and that’s kind of what I was wondering about. And then the overall Spine business, I guess it was a little slower than it’s been in the past. And I am curious if there is anything you can offer as to why growth was 3% this quarter versus 15% last quarter. You know the dynamics as far as the change in the Trinity profitability are the same but the growth rate is still quite a bit slower.

I think it’s a combination of things. Actually, when you really normalize, Bob mentioned this in his notes earlier, when you normalize the Evolution sales this year to osteo [ph] sale last year, you take out that 70 – 100% of revenue recognition. You actually get up closer to 10% overall sales with metal implants being in the low-teens growth. So, it’s not unusual for us to have a very strong Q4 followed by a little bit of a dip in Q1, but the overall business continued to grow into – I mean from the first quarter standpoint I thought we started the year of actually pretty well. So, remember, those things, Raj, you got to normalize the Biologics revenue. Raj Denhoy – Jefferies: Sure, of course. And so again you are not seeing any change in the complexion of that business sales force or otherwise and everything is moving forward?

No, not at all. I mean from our standpoint we are wherever we expected to be and feel very good about the rest of the year. Raj Denhoy – Jefferies: Okay. Just on Spine, well one follow-up also. I think you said it was breakeven on kind of a report basis, but you had this reserve for the Advent trial I think so. It was actually I guess somewhat profitable. Is that $1.9 million on kind of an adjusted basis for profitability in Spine.

Raj, this is Bob. The reported pre write-off is $2.0 million to $2.1 million and then the – I am sorry, it’s not write-off, but reserve, so we were on a normalized basis profitable to the tune of about $2.0 million to $2.1 million. Raj Denhoy – Jefferies: Sorry, so $2.0 million to $2.1 million was profitability for Spine. Okay.

Yes, again that is – Raj Denhoy – Jefferies: Adjusted for the Advent reserve.

Correct. Raj Denhoy – Jefferies: Okay. And then just lastly, just on the profitability or actually more like your guidance for the year, I mean you guys beaten this quarter relative to the guidance you gave back in – at the beginning of March on the vascular sale, you beat by something I notice $0.16 to $0.19 relative to that guidance. You paid down a little more debt. Mix is seeming to get more favorable for you guys, but you only raised your guidance for the full year by about $0.14 and I am curious, is that just a little bit of conservativism on your part, is there something else we should be looking at as to why that – why that little bit of step down?

Yes, Raj, this is Bob. You really got to break it out. if you look at – it’s – the $0.14 is really approximately $0.08 from operation, about $0.06 from a greater gain than we thought in the vascular sale. We reiterated sales both total and Trinity Evolution. At this stage of the year, we are not redoing any full year guidance at this point. Having said that, you are right, we did have a strong quarter and we feel good about that. Raj Denhoy – Jefferies: Okay, very good. Thanks.

Thank you. Our next question is with Spencer Nam with Summer Street Research. Please pose your question. Spencer Nam – Summer Street Research: Guys, I just wanted to – thanks for taking my questions, first. I wanted to maybe start off with Trinity Evolution. You started very confident that you guys do not infringe – there are no IP issues. Could you guys maybe elaborate (inaudible)?

Well, hey, Spencer, it’s Alan. Probably not appropriate to go into too much detail other than we can say that we have – we looked at this space very carefully. We feel very confident that we understood the patent landscape before we move forward with MTS. MTS has been working with a project for a number of years. So we have a lot of confidence that we don’t infringe the 239 Patent. Spencer Nam – Summer Street Research: Great. And then in terms of the outlook for Trinity Evolution revenues, you sounded like the range that you provided seems to be pretty similar to kind of what – when you guys had Trinity before all those changes happened. It seems like it’s kind of that cliff [ph] the $30 million your kind of a rate right now. I mean you mentioned that there is definite increase in interest and also demand. I am just curious kind of how – how we should think about your trajectory. Outlook on Trinity Evolution, and whether that’s in line with what the overall interest in stem cell part is growing or is it conservative, how should we think about that?

Well, there is a lot of interest in stem cell therapies in the market in general. Our number this year of 28 to 30 was really driven off of a combination of things, but as we are ramping inventory we’ve been pretty clear in saying that we are grow our business 15% to 20% sequentially each quarter through the year and so we are – and we mentioned previously that we’d be on the low end at the beginning of the year, high end at the back of the year. And so that’s a fairly good growth rate for the overall year. So, yes, on a dollar for dollar basis, Spencer, when you look back last year, you have to remember that we recorded 100% of the revenue for half the year on the Osteocell and the back half of the year, we only recorded $0.70 on every dollar, and we had very limited inventories. And so that’s why we’ve given the guidance for the year of 28 to 30 with the 15% to 20% sequential growth quarter-to-quarter. Spencer Nam – Summer Street Research: I see, appreciate that. And then on the – you mentioned the Sports Medicine being hurt by the soft economy. Can you give us a little more color on the overall impact, the impact of the economy on your overall business right now? I mean are you feeling in the Spine or Orthopedics, are you feeling any perhaps from the hospitals still being a little bit conservative on their inventory levels as well as their purchasing behavior.

No, we really not. You know again when you look at our overall growth rate if you take out some of the non-core business activity that we’ve had, we grew 10%, so we exceeded market growth in virtually every segment that we participated in. Sports Medicine was a bit of an anomaly for us in that, as Bob noted, we had this revenue recognition the way we account for the conditions with just one distributor, so that would bring us to flat. And then we’ve just seen really over the past several quarters, we’ve seen some dynamics with regard to our bracing products where some of the higher end bracing products aren’t being chosen as often by physicians as they would normally just given the fact that they are more expensive, the co-pay is higher. And so patients are opting for more off-the-shelf products. But, and again our solution there is that we’ve got eight products that we are launching in Q2 and Q3 to help reaccelerate the growth there because we’ve historically performed at two or three times the market growth rate for Sports Medicine and feel very comfortable by the end of the year we’ll be at that point again. Spencer Nam – Summer Street Research: Great, appreciate it. Thank you.

Thank you. Our next question is with Michael Matson with Wells Fargo. Please pose your question. Michael Matson – Wells Fargo: Hi, just wondering with the strength that was seen in the international (inaudible) wondering if there were any stocking orders there and do you think that this type of a growth rate is sustainable given the changes you made in your sales force?

Hey, Michael, it’s Alan. Now, you recall, we’ve made some major changes to strategy going back a couple of years ago where we really have isolated on certain international markets to put more focus on those key areas as opposed to being very broad, we are trying to be much deeper. And that’s why we sort of gave the example in Latin America, 50% growth over the prior year. So, we have introduced some new products, as we’ve talked about in the past, we got some new fixation products on the Expic [ph] side. So, from my standpoint we’ve guided people to slightly above market growth rate. So, the 16% growth rate, 22% overall, 16% in constant currency basis, I wouldn’t put that into your models. But I think we’ll continue to see a very strong year in the overall Orthopedics business. Bob?

Yes, Michael, just in stocking – I think there was one stocking order less than $0.25 million so not material. Michael Matson – Wells Fargo: Okay. And then just on the sale of the vascular business, it seem to be pretty dilutive and just running some math, it looks like that business, the revenue that you are giving up there had something like a 26% net margin. So, that seems awfully high to me. So, A), is that accurate, and, B), how do we get comfortable that there is not some kind of pattern [ph] built into that number. It’s not actually a lot less than that.

Well, as you know, the earnings from that stream was that of very little tax rate so that distorts some of the operating numbers. But in all our guidance that we gave at the time and the guidance that we reiterate today factor that in. And keep in mind in the first quarter we operated only two-thirds of the quarter with the vascular business. So– Michael Matson – Wells Fargo: All right. And then just the Spine growth, I understand the issues with Trinity and so forth but even at 9% or 10% there is other smaller spine companies out there, they are growing at 25%, 30% high growth rates and Blackstone was growing at that rate at one point in time. So is that just a trade-off between being much more focused on our profitability that you are probably not going to be able to grow that much faster than the market, or do you think there is potential that you could actually get to the point where you are taking some significant share in that market, even while remaining profitable.

No, I mean, Michael, the point again, we certainly are focused on balancing the top and bottom line growth in the business. It’s been kind of extremely important for us. And so when you see a lot of companies throwing up those kinds of numbers, we are looking to make sure that we are doing it on a profitable basis and so – do we think we can grow it faster than the market, absolutely, no doubt about it. And as we get into the next several months, we’ll start to see the comps improve on the Biologics side. We’ll also have the roll out of the deformity system. So, we’ve got three major product launches for this year, one in the MIS area. We are already in that market, but we are bringing in new product to the market. So that’s a $400 million plus market we can attack more of. Our inner body devices, we are updating those this year, a $330 million market. Again, we think we can get a bigger piece of it. And then entering the deformity market at $500 million plus, brand new segment to us. so, I think we can grow faster than the market, and I think we’ll do it very profitably, which is a focus for us to do both. Michael Matson – Wells Fargo: Okay. And then the – there has been some questions on the NuVasive, and I understand your position on the patent infringement, but just working at the legal cost, is that something that you’ve taken into account in your updated guidance and how much have factored in for dealing with that to–?

Yes, we’ve looked at it. It’s very early. As we sit here today we haven’t even been served. I mean we learned about this on NuVasive’s conference call or earnings call, sort of an unusual way to learn about it. So, we’ll certainly respond to it appropriately. We are very confident in our position. And all the guidance we’ve given today reflects any potential legal expenses associated with that. Michael Matson – Wells Fargo: Okay. And then just one final question. Just the commentary around the fact that there was a lot of sale kind of concentrated in March, we’ve heard some other companies that (inaudible) in February were a little weak and then the weather and things like that and is that kind of what happened here or I mean why was the sales so concentrated towards the end of the quarter?

Well – this is Bob, it wasn’t that it was so concentrated. It was probably about 10% more than last year. But I do think there was some February sales that became March sales, and frankly there were probably some March sales that have become April sales. Michael Matson – Wells Fargo: Okay. That’s all I have. Thank you.

Thanks, Michael.

Thank you. Our next question is with Jim Sidoti from Sidoti & Company. Please pose your question. Jim Sidoti – Sidoti & Company: Good afternoon, Alan, good afternoon, Bob.

Hey, Jim. Jim Sidoti – Sidoti & Company: Just a quick – when you announced the divestiture of the vascular therapy business, I think you said you were going to two years worth of the pads to go along with the – to Covidien as part of the agreement.

Right. We have a commitment to provide them with support. As you may recall it, Jim, we moved the manufacturing of those products from the U.K. to Mexicali, which is where we do a fair amount of our Breg, our Sports Medicine manufacturing, so as part of this we have a transition services agreement that will allow us to provide them with products for that period of time, Correct. Jim Sidoti – Sidoti & Company: All right. And can you just give us a ballpark or a sense what kind of revenue that will generate?

Yes, it’s really not a material amount and it’s not anything, Jim that would significantly impact our business either way. So it’s – we’ll report it as part of our other, which we will – which we do now and our other product sales have gone from $1.60 million to I think on an ongoing basis it will be less than $20 million. And it will be included in that as much smaller part obviously. Jim Sidoti – Sidoti & Company: Okay. And then it will be included for up to two years. You’ll have that included in the other product line?

And then on the (inaudible) that you are distributing in the UK, when does that agreement happen [ph]?

In middle of this year. So, we actually exited the business in Italy last year and so when you look at our comps in first quarter we had that business in first quarter in 2009 in Italy. So we are now out of Italy and we finish up in the UK, middle of the summer, I think in the June timeframe is when it’s entirely done. Jim Sidoti – Sidoti & Company: Okay. And then I just want to follow-up on what Mike was asking about legal expenses. Did you say you have included expenses in the updated guidance and can you give us a sense of how much you’ve recorded in there?

The answer is yes, we have included it and no, we can't say exactly how much. Jim Sidoti – Sidoti & Company: Okay, alright, thank you.

Thanks, Jim.

Thank you. Our next question is with Bill Plovanic with Canaccord. Please pose your question. Mark – Canaccord: Hey guys, this is Mark [ph] on for Bill.

Hi Bill. Mark – Canaccord: Looks like you guys had a nice – saw some nice traction in penetrating your orthopedic customer base with Trinity Evolution. Wanted to know if you were able to penetrate your implant customer base?

Mark, it’s Alan. We continue to improve our inventory position, which has allowed us to start to bring on some new customers on the Spinal Implant side, so we were able to open up new accounts on both Spinal Implant and Orthopedic. We have, as you may recall, we’ve sort of given preferential treatment to our Spine customers, give those representatives significant; they are most significant part of our business. And so we were able to provide the Orthopedic business with more inventory this quarter. So, we had a very good quarter as is Spinal Implants. But we were open to – we were able to begin to introduce the product into some new customers on both sides of the fence. Mark – Canaccord: Okay, great. And as far as debt refinancing whether – could you give us some color on what your current options are?

Sure, this is Bob. As you can imagine, with our – we have many options to the extent that we decide to take one of those. Mark – Canaccord: Okay, great, thank you very much, guys.

Thanks, Mark.

Thank you. Our next question comes with Dave Turkaly with SIG. Please pose your question. Shawn Bevec – SIG: Hey, guys, this is Shawn Bevec for Dave. I just had a question about the – any additional one-time charges we’ll see for the balance of 2010. I know I think at the beginning of the year you guys mentioned the Animplant [ph] Systems milestone payment in Q2. I was just wondering if that was still going to be there and what other charges you might see, so that we can get sort of an operating versus GAAP number.

Yes, you are referring to the IIS payment. We are looking now that’s probably going to be the latter half of the year, not in the current quarter, and that’s really the only one obviously where we have been in a process of moving completely towards GAAP and we’ve been reporting on GAAP for the last six quarters. So, we tend to go in that direction. But at this point the only one that we’ve highlighted last quarter is the IIS payment we think will happen in the last six months of the year as opposed to this quarter. Shawn Bevec – SIG: And that was about $1 million, right, million dollars?

Approximately. Shawn Bevec – SIG: Okay, and then on the gross margin, it was pretty strong this quarter. I think previously you guys said 74% to 76%, which is confirmed for the year. do you still maintain that or should we sort of look at the base and – little kick up more.

We are reiterating our 76%. Shawn Bevec – SIG: Okay, thank you.

Or 74% to 76%, but obviously we came in at 76%, so –

Thank you. That was our last question. I will now turn the floor back to Mr. Milinazzo for closing remarks.

Thanks, Mandy, and thanks everyone for joining us today. We are excited about the strong start to 2010 and we look forward to talking with you again after our second quarter results. Thank you.

Thank you. Ladies and gentlemen, this does conclude today’s conference call. You may disconnect you phone lines at this time, and have a wonderful day. Thank you for your participation.