Ladies and gentlemen, thank you for standing by and welcome to the AngioDynamics Fourth Quarter 2010 Financial Results Conference Call. During today's presentation all parties will placed in a listen only mode. Following the presentation the conference will open for questions. (Operator instructions). This conference is being recorded today, Thursday, July 15th of 2010. And I would now like to turn the conference over to Doug Sherk. Please go ahead, sir.

Thank you for joining us today for the AngioDynamics conference call to review the results of the fiscal fourth quarter and full year which ended on May 31, 2010. The news release announcing the fourth quarter earnings crossed the wire this afternoon after the market closed and is available on the AngioDynamics website. The call is being broadcast live on the web at www.angiodynamics.com. A replay of the call will also be archived on the AngioDynamics website. Before we get started, during the course of this conference call the company will make projections or forward-looking statements regarding future events including the statements about revenue and earnings for fiscal 2011. We encourage you to review the company’s past and future filings with the SEC, including without limitation the company’s Forms 10-Q and 10-K, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. In addition, today’s presentation includes certain financial measures used to better understand our business that have not been prepared in accordance with the Generally Accepted Accounting Principles, better known as GAAP. An explanation and reconciliation of these non-GAAP measures has been provided in today’s news release issued by AngioDynamics and is available on the website at www.angiodynamics.com. AngioDynamics uses non-GAAP measures to establish operational goals and believes that non-GAAP measures may assist investors in analyzing the underlying trends of the company’s business overtime. Investors should consider these non-GAAP measures in addition to, not as a substitute for or superior to financial reporting measures prepared in accordance with GAAP. In today's call, the company has reported non-GAAP EBITDA and EBITDA per share and has reviewed these measures as an internal analysis and review of operation performance. Finally, during the question-and-answer period today we’d like to request each caller to limit themselves to two questions and encourage callers to re-queue to ask additional questions. We appreciate everyone’s cooperation with this procedure. And now, I’d like to turn the call over to Jan Keltjens, President and Chief Executive Officer of AngioDynamics.

Thanks, Doug, and good afternoon everyone. Thank you for joining us in our fourth quarter conference call. With me today is Joe Gersuk, our CFO. There's a lot we like about our fourth quarter financial performance. Top line growth of 14% and operating income growth excluding items of 17%, combined with a rock solid cash flow provided a very strong finish to fiscal 2010. With this performance, we delivered on one of our key objectives for the year which was profitable growth. The drivers for our fourth quarter was strong revenue growth paired with strong operating expense leverage. These drivers have proven to be more than sufficient to offset the impact of an on-going price environment as well as unfavorable sales mix on our gross margin. Our fourth quarter revenue growth was broad based as all three businesses contributed at 14% our organic growth rate is as strongest as it has been in the last two years. Engines of growth in Q4 were Varicose Vein products, Micro-introducer kits, LC Beads and last but not least our RF and NanoKnife ablation products. LC Beads still benefited from the competitive product entitled been out of the market this quarter. We believe the LC Bead growth rate will slowdown from the fourth quarter because this competitive product has returned to the market. However, we also believe that LC Bead should generate positive growth during fiscal 2011. The partnership at Biocompatibles, the manufacturer of LC Beads continuous to be mutually beneficial and we will be exploring ways to continue this beyond January 1, 2012. At the same time our shareholder should know that we believe there are a number of scenarios that will allow us to be able to achieve continued profitable growth into calendar year 2010 and beyond. We are very pleased with…

Thank you, Jan, and good afternoon ladies and gentlemen. We ended fiscal 2010 with a very solid quarter, reporting fourth quarter sales of 60.3 million, a 14% growth on last year's fourth quarter. The 14% growth rate was entirely organic and is the highest rate of organic sales growth for AngioDynamics in eight quarters. We note however that there was one additional business day this year, which means the growth rate on a daily sales basis was still an impressive 12% for the quarter. For the fiscal year, sales grew 11% to $216 million. Organic sales growth was 10% which is a substantial improvement on the 6% organic growth rate reported in fiscal 2009. We achieved two important milestones this quarter. The first was crossing the $60 million threshold in quarterly sales and the second was exceeding $1 million in quarterly sales of IRE products for the first time. Our growth this quarter was again led by our oncology surgery unit, which grew 35% to 16.8 million. We saw strong sales of LCDs and RF ablation products in addition to $1 million in NanoKnife system sales. This is our third consecutive quarter of solid NanoKnife system sales and brings IRE sales for the fiscal year to $2.5 million. Four hospitals acquired systems in the fourth quarter and we continue to be pleased with both the commercial and the clinical response to the technology. The list of 14 hospitals that are actively using NanoKnife today on a commercial basis is available on our website. As Jan mentioned, the withdrawal of ethiodol from the U.S. market resulted in an increased demand for LCD. Using the more normal growth rate relatively that we saw in the first half of the fiscal year prior to the withdrawal of the ethiodol, we consider a normalized…

(Operator Instructions). And our first question comes from the line of Jayson Bedford with Raymond James. Please go ahead.

Good afternoon guys and thanks for taking the question. Just to start off on the Access business, can you just maybe talk about some of the traction I guess on Centros Triple Lumen PICC. I guess we would have thought you would have seen a little more impact in the quarter. I'm wondering was a full launch in the quarter or was it partial or just maybe talk about the trends generally with those new introductions.

Yeah Jayson, good afternoon. Good question. Actually you know, we typically don’t break up revenue on even product families, let alone product lines. The second thing I want to add is that we always set something for the PICC line in particular that the, those were halo effects or the absolute revenue for that individual SKU as one number by those who make the entire PICC family more competitive. Now Centros was released fairly early in the quarter, initially on a limited. I wanted to test mark a little bit and see what the user feedback was and then we release it more fully. Smart PICC I think was frankly at the very end of the quarter. I think in the last handful of weeks it does. So I say the impact of that has been very, very marginal as such.

Okay, and when you look at the Access business, was there a specific sub segments, whether it be PICC, sports or dialysis that did better than another?

I believe -- I'm opening up the page here while I speak and actually our PICC family was the best in that mix of three. So they above that average of 1%.

Okay, and then lastly for me and I'll jump back in queue, in terms of the guidance, you just did 10% organic growth in 2010. The guidance is 6% to 9%. Just wondering what's the source of your caution there and then secondly is there a way you can maybe breakout the expected growth or contribution from each of the segments for 2011? Thanks.

The basic methodology as we did last year Jayson was essentially quiet close to the industry growth rate and we essentially bracketed it, so we’ve taken the same methodology this year, but we don’t offer any guidance with respect to the individual segments as to how that, those might break down.

Okay and maybe if you just comment on, again the guidance implies a deceleration in organic growth and I'm just wondering, is there a specific area of caution or is that just conservatism?

What do you call that? Conversation or caution, I think in certain segments – I think in the overall Access market, apart from our own performers, I think we have seen the market slowing down a little bit. Although still volume growth is outweigh in the marketplace at least it is outweighing price erosion. So, maybe there is a little bit of guarding in there, how to say, but we want set us up well and we thought this was the right number. Again as is said in my remarks, the 6% we think estimates that we are holding share, the 9% would be that we continue to gain share, I think we took down market growth at one point in the mix from 7 to 6% for this year and that’s how we came up with this math. I understand the flavor, I understand the background of your question but we believe it's the kind of guidance and sets us up right and creates the right expectation out there as well.

Fair enough. Thank you.

Thank you and our next question comes from the line of Jason Mills of Canaccord. Please go ahead.

Thank you.

Thank you. Jamar Ismail – Canaccord: My first question is on oncology. Can you just give us a little bit more color on how you guys are gaining share and little bit about the competitive landscape and the sustainability of you guys share gain in oncology.

The oncology market, Jamar, is probably the hardest one to frame in terms of market size and market growth, because there is frankly a lot of market creation going on and conversion from very, very different areas like brachytherapy, et cetera. So, in the RF side I think we're coming up with a good quarter. How to say whether we gain share or holding share market is hard to triangulate, but we did well and we think it's sustainable. LC Beads, in a way you may argue that, that was a share gain, but at the expense of ethiodized oil that was pulled off the market in that quarter. We think that’s going to drop back a little bit but still year-over-year we will continue to show growth in that area, meaning that some of those customers that converted away from Ethiodized oil to LC Bead, we believe that we can retain and keep and like the benefits of a product of like LC Beads so much, that it will stick with us throughout the year. Beyond that also with this market growth, the HCC prevalence is going up and there is a broadening use of the product, but we are gaining share, but we certainly see in Q4, begin in Q1, we're probably clipping in terms of, what we say close to a market separation, but again, on going growth. NanoKnife, I'd say is entirely market creation and $1 million on the oncology business is a substantial number, $2.5 million for the year, Joe, is what about 4% - 5% of that growth number coming from NanoKnife, in the quarter, probably even a little bit even more than that. And that is I would say, virtually, entirely creation. Those who are patients that went to other type of procedures, some of them maybe RF but I think the majority are coming frankly from either surgical resection or even counter indicated for that. And what else do we have -- I think those were the highlights, I guess.

Yes, the only thing I just chime in on that Jamar to say that in the U.S. markets certainly we have an undisputed number one position in RF ablation. So, we've got the strength of market leadership. And secondly, I would just say that we have a very strong oncology sales force that’s been intact for a long time and is really excellent at establishing the physician relationships and selling the product. So, a very strong sales force is also part of our success there in oncology. Jamar Ismail – Canaccord: Okay, let's move outside of IRE, did you see differences in growth rate in U.S. and OUS for oncology?

Yes, I think you're following up on Joe's comments, so we got a very strong position in RF in the U.S. I'd say the flipside of that is frankly a good chunk of our RF growth is coming from international markets where we are arguably, I would say, we estimate a number three behind Covidien and Boston Scientific, but that's what we see about average growth and it goes up and down over the quarters a little bit. NanoKnife has been heavily slated towards the U.S., thus far, Q4 a significant success for us, a first ever international commercial sales, and we like to believe that it’s the first of more to come. I think (inaudible) has frankly been performing outside the U.S. quite well better than in the U.S. and LC Beads of course is a domestic U.S. product, so we're not carrying that product outside the borders of the U.S. So, that gives you a bit more color, Jamar? Jamar Ismail – Canaccord: Yes, it does, thanks. I'll get back in queue.

Great.

Thank you. And our next question comes from the line of Brooks West with Craig-Hallum Capital. Please go ahead.

Hi, guys. Can you hear me?

Very well, Brooks.

Great, congratulations on a good quarter.

Thank you.

I wanted to ask in kind of follow-up question on guidance mirroring an earlier question on revenue but testing gross margins. Joe just wanted to understand the thought process there and also how we might see gross margins ramp throughout the year, kind of taking into consideration product launches, LC Bead contribution and also the sales force re-organization?

Yes, essentially we've got a number of programs going on intending to target material costs which are a large element of the cost and goods, and we think those will begin to bear fruit heavily in the second half of the year. So, the improvement should all take place in the second half of the fiscal year in terms of getting towards that 59% range that we're talking about.

So, it's primarily coming from the manufacturing side versus the revenue driving side or in the mix side?

Yes, it's going to be more on manufacturing activities, some vertical integration programs that we have going on, a number of things, but then mix should also help somewhat. IRE as well as will be an increasing element of our sales and that has an attractive gross margin in it as well. So, it really is a combination of all of those factors but in the aggregate the improvement is expected to be back loaded into the second half of the year.

Okay. And a couple of other quick ones. Our quick math, you got about a $1 million benefit from the LC Bead competitor being off the market in Q4, is that in the range?

We calculated it little bit less than that.

A little less than that, okay. So still good performance in Q4 despite that competitor being off. And then Jan, lastly on OUS sales, only 10% in Q4. You have hired new management. What’s the opportunity or the plan you see for OUS in the following year or in this coming year, I guess the current year?

Yeah, the quarter was a little softer international, nothing systemic. The overall number was -- currency didn’t play a major rule in case that question comes up, that actually was virtually a wash. The growth is coming by and large right now from RF, but in general I think the plans going forward are strong and again we don’t give guidance by region and all that. But we would expect the international division to grow above our average growth rate for the fiscal year and certainly our hope would be that it grows substantially faster. So, we were looking forward to those results coming through and being able to report those, Brooks.

Great. Okay I'll jump back in queue. Thanks guys.

Thank you. And our next question comes from the line of Robert Goldman with C.L. King. Please go ahead.

Okay. Thank you. Good afternoon guys. Couple questions on NanoKnife. First, if you could just help me through some of the vocabulary. On the hepatocellular trial, that is characterized as a pilot study, could you just help me understand what a pilot study is and what additional clinical data if any the FDA would be requiring to render a judgment on the use of NanoKnife for that indication?

Bob, that’s a good question. The name pilot study for the international HCC study is somewhat arbitrary because the study is not designed to drive any indication, nor in the U.S., nor in Europe, where we frankly don’t need is because we have a very broad indication that works well. We don’t have the regulatory shackles in the international market or at least in the European market we have here. The reason we called it pilot, and we could have called it many things, but the reason we called it pilot is because the pool of 25 patients that will be enrolled in this trial is somewhat on the smaller side. We wanted to do a first high quality study, a top notch protocol using all the right parameters for end points, et cetera, with some real big names, some movers and shakers, say, frankly on the global field of liver ablation involved in the trial, creative base line. And we do anticipate that following this trial we will set up more levered efforts that could lead to indications in the U.S. but that has not been a decided upon strategy.

Okay. And relative to the IDEs, you mentioned prostate and pancreatic cancer. Is there anything that you could share with us as far as what the issues are with the FDA, what generally their questions are or concerns that resulted in a bit of a time delay here?

Yeah, I can’t go into details for obvious reasons but the way to frame it, because I could imagine that the bystander would think by now we have a substantial body of clinical data, what can animal trials and preclinical data add to that? But there is a couple of safety points that you cannot really test in humans and don’t want to test in humans. You really go beyond the normal use of the device and make sure that even in extreme situations there is no collateral damage, et cetera, et cetera. And that kind of stuff you can typically only do in a preclinical setting. So it’s questions of that kind of a nature that we're trying to address here, it’s fairly straightforward animal trials followed up by histology and pathology and then get a report in adding that. But in this environment between contract negotiations, setting up the animals, doing the work, doing the follow-up, doing the histology and pathology, it chews up time. And it’s a little disappointing but again very important to note here as well that we do not make revenue growth contingent on getting those IDE trials started or let alone finished anytime soon. It's decoupled at this point in time.

One more question if I could. It's not on NanoKnife but it's on acquisitions. I think, Jan, you mentioned on the last quarterly call that you did have some interest to the exploring acquisitions and there's actually been a number of medical device acquisitions since that time. Given what we're seeing in the marketplace as far as the valuation of medical device acquisitions, things like ev3 and Micrus and even Bard made one or two. Is their appetite increased or decreased over the last few months?

Well Bob, I've never been accused of not having a healthy appetite. I think what we said last time is we purposely held back on acquisitions. We've been accumulating cash. We did not plan on buying back shares or paying dividend. We didn’t like the interest we got on banks. So we think we can actually invest it in the business. We are somewhat picky. We are looking for synergy. We're looking for strategy. We're looking for leverage. We're looking for bottom line contributions. We're looking for growth. I've said in smaller circles that stuff that’s cheap is cheap for a reason. I think the prices that recently have been paid for the companies you mentioned are not necessarily all that much higher than some of the other transactions that were done in the, let’s say, the two years before that. Good stuff that is worthwhile always expects a solid price. And a final thing I'd say is, yes, we forked [ph] the Senior VP of Business Development function with Lynda Wallace. We're in a strong position. Very important also to mention, I kind of slipped it in there in my remarks, we have a much more articulate [ph] strategy than we had 12 months ago and yet I would imagine that we get more and more active in that whole space.

Great, okay. Thank you, Jan.

Welcome.

Thank you. And our next question comes from the line of Thomas Kouchoukos with Stifel Nicolaus. Please go ahead.

Hi, good afternoon guys. Thanks for taking my questions.

Hey Tom.

I guess on the gross margin side, I know you've talked a lot about this already but just looking kind of back to the beginning part of last year, one of the things you talked about was bringing – I think you had 30% of products manufactured outside the company at that point, and one the goals like with DuraMax and then bringing the Benephit product manufacturing in house in Queensbury. We thought we'd see this kind of push upward with gross margin. I realize that your prices are a factor there but I'm wondering, if you take price out of the equation, how much progress are you making with the initiative to bring more product in house and then as you have your new PICC's and Ports and Access products, is that going to help bolster that as we go through next year.

Yeah, it’s a great question, Tom. I'll make two comments and, Joe, I'm not sure you want to chime in here. But two comments I will make is, as I said a couple of times before, moving a significant product in house, and it depends a little bit whether the product of course is owned by the supplier, it gets a little harder because then you have to redesign the product versus we have contract manufacturing going on, if we move it in house it’s a little easier. But in the medical device world in 2010, things take a little bit of time, I mean we started executing on this kind of a strategy about a year ago I guess and Benephit is an example of that. There is a few other, I would say, relatively small examples, but I think the bigger initiatives wouldn’t come on stream until let say deeper into fiscal '11 and they will contribute to what Joe was signaling, a bit of a starting an upward trend in gross margins deeper in the year. The margin, the contribution of excellently produced products as a portion of a total revenue, it's coming down a little bit. Some of the reasons for that is, that our high growth products are actually internally manufactured products, I mean NeverTouch. So, our Laser Fiber business is growing, is growing very, very healthy. Within that our NeverTouch product line which we manufacturer internally gets a bigger share of that volume. And in those product lines, we can't share those details with you, if you will appreciate, we do see healthy steps forwards in gross margin. So volume really helps and it’s a part of our strategy and we want to load up the factories and we want to create more volume and we're committed to that strategy. So again major -- more major and more substantial initiatives of moving external products in house will happen over the next couple of months and quarters. And top of that, maintaining volume growth will do very well for us.

Okay, thanks. And then Joe, a couple of financial questions here, looking at next year, just in terms of the R&D line and your expenses there, I would assume if you’re pushing the IDE studies, approvals kind of towards the back half of the year, should we assume that R&D would come down until you start enrolling patients in earnest or is there -- will you focus those dollars towards internal projects as an offset?

Yeah, it won't come down; it will rise over the course of the year, and still be heavier though in the second half of the year than in the first, but it will rise in absolute dollar terms throughout the year. In fiscal '10, we spent 8.9% of sales on R&D and our expectation for next year is to spend slightly more than 9%.

Okay, and then last one, Joe, on the tax rate, came in little bit below what we're looking for this quarter, was there anything going on there? And I think you said 37.5 for next year, is that correct?

No, it's just that the final analysis of the taxes brought it down a little bit in the fourth quarter, but nothing really special and as we said 37.5% next year.

Okay great. Thanks a lot guys.

Thank you. And our next question comes from the line of Larry Haimovitch with HMTC. Please go ahead.

Good afternoon and two questions Jan, one tremendous progress and congratulations on the all the cash flow you have generated. You are facing what appears to be the loss of a key product at the end of next year. Is it possible that, that cash in some way could be used to solve that problem either with some sort of deal with Biocompatibles or some other manufacturer that would have fill the hole that the loss might occur with Biocompatibles.

And what's the second question Larry?

I'm saying, you have lots of cash, you got the potential loss of the Biocompatibles and second question is you want me to give you that now?

I was wondering whether it was related or not.

No, it's not. It's completely a different question so let's --

Okay, fair enough. We'll do this one first, Larry. And thanks for the question profusely I would say. I said -- what I said in my remarks, we got a very healthy business, it's a win-win scenario. This relationship has been and continues to work well for both parties and the first and foremost, our energy is focused on just continuing a very successful mutually beneficial relationship. Secondly, I had said very strongly that we believe that regardless of the outcome, we can manage the company through that period and that we can continue to show profitable growth going into 2012 in either the scenario. Now you also will appreciate I cannot or will not elaborate on the potential of both of the scenarios. As such some of them may require use of cash funds, some of them can be done differently. And you know what, it also maybe more than one solution and maybe at the end of the day, two-three things coming together that clearly seamless transition into a new reality from that point of view. So we're not dazed by it. Nor Joe nor I, not the management team here is incentified to be naïve and sit on their hands. So we're trying to deal with all eventualities, project a vision of the future and deal with that. But again, the energy right now is focused on just continuing what has been a great run.

Okay, great. And second question and I guess will it just preference my question but saying I am a major believer in IRE but I look at what you're spending now which was 11 million I think you expended in this current fiscal year that just ended. I don’t know if you projected a number. I joined the call a tad late. I don’t know if you projected a specific number for IRE. Your sales are growing but are very modest. Do you have unlimited faith Jan that this is going to ultimately payoff because with this loan as of with the FDA, it appears that you maybe facing many more quarters when this continues to be a significant drag on the company. I just want to understand your real commitment to this business and is warranted because it's just so difficult to get FDA approvals even to begin clinical trials.

Yes, great question Larry and it is my first of all black and white and you know I have an engineering background so ask me if I believe unlimited I have to say no. And we are in a certain ways as interested in making certain milestones as the investment community as in as you are. We of course have the advantage of seeing a little bit more detail. I certainly personally also have the advantage of spending a lot of face time with customers that use their system in front of the FDA, work with the big thought leaders. I had dinner two weeks ago with Lencioni. I am going to be at the ECIO meeting next week. So spending a good chunk of my time there. Tell you what I wish sometime that I could share the enthusiasm of individual positions that have used this and their belief in how big this is going to be in the future. Some of the patient's testimony they are in the public domain because of being disseminated by our customers. I had said before also Larry you and in perfect compositions and one on one composition’s that it takes a think a couple of things to build a great business. One is a big unmet clinical need. I think we all easily agree that we have one in certain tumors in pancreas, prostate, liver and other organs. The second thing it takes is a viable solution for that and I absolutely believe NanoKnife is it. Now I also add as a third dimension which is an ability to execute which is determined by capabilities of the company, a reimbursement situation, a regulatory environment et cetera, et cetera and yet it's more difficult and than it used to be and yet therefore…

That’s a great answer. Let me just ask one more quick question and I'll jump back in queue. What would you say was your most pleasant surprise in the past fiscal year and what would you say you were disappointed with in the past fiscal year?

Do you want me to lie in the couch before I answer that question?

Yeah that will be good. I am from California, we have lot of couches. So if you want to come along we can…

I have a road, this gold part of the Northern Western European area and so (inaudible). Listen, what I am excited about is, two things -- I knew oncology was really something I was intrigued by when I look at this opportunity and I'm very excited about the potential of interventional oncology. It's a complicated market, it's a fragmented market, but by Joe's, and I understand we're here to make profits and deliver returns on investments and all that kind of stuff, but one rewarding opportunity is, I found it a privilege and I find the VenaCure's vein market, the Venous Intervention market quite intriguing, very different dynamics in many ways, in certain ways much more a consumer kind of a market, much more commercial market for sure. Tremendous opportunities. So definitely from a business point of view, I think we got a tremendous team. I have said a couple of times; this has been the easiest leadership assimilation program. I have gone through great people willing to do the right thing, capable people. Disappointments, although probably could escape by not answering the question, but disappointments, I think margin erosion in Access took the shine off what otherwise has been a very, very strong fiscal year I think. We are not one of could have, should have, but if Access would have hung in there, if only the margins would have hung in there we could have added that to top-line growth and we could have added that to bottom-line. I think it would have made a solid year, a great year.

Very good. Thanks very much.

Thanks. Michaela, anything else there or? Hello?

I'm sorry. We lost the operator.

Is that you Larry?

Yes it's me. I guess that they have lost the operator. Well, you and I can have a private conversation then.

I'm not sure it's private. I wouldn’t bet on that. I would pull rig in one here but then.

No, no, no yeah. I suppose maybe a disappointment this year has been that it's been a little bit slower with the FDA as far as IRE and that has, none of us thought it was going to be this slow to get some of these approvals moving.

Michaela? Larry, do you have to hit a button? No, I don’t think so?

No, no. I wonder if anyone else is on.

Well they can't talk.

Never had this happen before. I've had other strange things on the calls but this is a new one.

Let me put you on mute for one second there Larry. I'm going to check via the web here.

Yeah, I'm sorry. Go ahead.

Michaela, I don’t think your back on? No. Larry, and I assume the rest can hear us as well. It sounds like they locked the bridge but also our systems tell us there was nobody else in queue. So go out on a limp and we just assume that. So I want to thank everybody for their interest in AngioDynamics. We will obviously continue to provide updates on our progress and very much look forward to talking with all of you again on our first quarter fiscal 2011 conference call which should take place in October. Thank you all very much and talk to you soon. Bye.