Greetings ladies and gentlemen, and welcome to the Edwards Lifesciences First Quarter 2009 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. David Erickson, Vice President, Investor Relations. Thank you. Mr. Erickson, you may begin.

Welcome and thank you for joining us today. Just after the close of regular trading, we released our first quarter 2009 financial results. During our call today we’ll focus our prepared remarks on information that complements the material included in the press release and financial schedules and then use the remaining time for Q&A. Our presenters on today’s call are Mike Mussallem, Chairman and CEO; and Thomas Abate, CFO and Treasurer. Before I turn the call over to Mike, I would like to remind you that during today’s call we will be making forward-looking statements that are based on estimates, assumptions, and projections. These statements include, but aren’t limited to, sales, gross profit margin, expenses, net income, earnings per share, and free cash flow goals or expectations for 2009, the regulatory approval and sales of heart valve therapy products including Magna Ease and Magna Mitral Ease, the competitive dynamics of the heart valve market, the timing, progress, and results of clinical studies including the PARTNER trial, the continued adoption in Europe, and expected 2009 sales of the Edwards SAPIEN valve, expected sales and enhancements for the FloTrac system and the development of continuous blood glucose monitoring technology. These statements speak only as of the date on which they were – are made and we do not undertake any obligation to update them after the date they are made. Although we believe them to be reasonable, these statements involve risks and uncertainties that could cause actual results or experiences to differ materially from the forward-looking statements. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements may be found in our press release, our annual report on Form 10-K for the year ended December 31st, 2008, and our other SEC filings, which are available on our website at edwards.com. With that, I’ll turn the call to Mike Mussallem. Mike?

Thank you, David. We are pleased to report strong first quarter results, highlighted by robust heart valve sales, the achievement of important product development milestones, and P&L leverage, which drove strong bottom line performance. On a reported basis, total sales grew 5.6% to $313 million. Our total underlying sales growth was 11.5% for the quarter. And we made important progress on our US PARTNER trial and our new SAPIEN XT Transcatheter Heart Valve. While the impact on our results was modest, we felt the effects of the slower global economy this quarter, which was most pronounced in the US. More specifically, in critical care, although sales of disposable products did not seem to be impacted, the smaller hardware component of our business slowed. In surgical heart valves, we are experiencing a more deliberate process of new product adoption. Now, I’ll shift to a more detailed of our product line sales and progress on our new products and then Tom will discuss the financial results. For the first quarter, reported sales for heart valve therapy increased to $170 million, which was negatively impacted by $5 million of foreign exchange. On an underlying basis, sales increased 20% for the quarter, lead by robust growth from our transcatheter heart valves and strong performance from our Magna platform. Turning to surgical heart valves, on a global basis we grew 8% in the quarter on an underlying basis, driven by our new products. We continue to take global surgical market share as we have over the past four quarters. In the US, we gained share in valves, which grew over 6% in the first quarter. Our strong valve performance helped to offset declines in repair that occurred because our Myxo and IMR rings were temporarily off the market. Outside the US, our surgical heart valve…

Thank you, Mike. In addition to the strong sales performance that Mike has discussed, we achieved non-GAAP diluted EPS of $0.70, a 25% increase versus prior year, driven primarily by a strong gross profit margin expansion. This EPS improvement was achieved at the same time that we increased our R&D investments by 21% in the quarter. For the quarter, our gross profit margin was 69.1% compared to 65.3% in the same period last year. This quarter’s 380 basis point improvement was due to product mix and favorable FX hedge outcomes, which were partially offset by critical care manufacturing variations. Based on the strong performance, we have increased confidence in achieving our full-year gross profit margin guidance of 68% to 70%. The first quarter SG&A expenses were $122 million or 38.9% of sales, an increase of $7.3 million over the prior year. Increased expense for the SAPIEN valve program in Europe and sales and marketing expenses in both heart valve therapy and critical care drove the increase. This was partially offset by foreign exchange. For the full year 2009, we continue to expect SG&A as a percentage of sales to be between 37% and 39%. R&D investments in the quarter were $40 million or 12.7% of sales compared to $33 million in the prior year. This increase was primarily a result of additional investments in our transcatheter heart valve and glucose programs. For the full year 2009, we continue to expect R&D as a percentage of sales to be between 13% and 13.5%. During the quarter, we recorded three special items that resulted in a pretax gain of $30.8 million. The largest item was the receipt of a $27 million milestone payment associated with the LifeStent PMA approval. Additionally, we recognized a $2.8 million gain associated with the sale of our…

Thanks, Tom. Overall, 2009 is off to a great start. In heart valves, our transcatheter technology continues to build momentum and we are gaining share in surgical valves. In critical care, we expect several upcoming product introductions later this year to elevate our growth and we continue to anticipate the achievement of important milestones that will bring innovative products to more patients. We look forward to sharing our continued progress with you. And with that, I’ll turn it back over to David.

In order to allow everyone a chance to participate, we ask that you please limit the number of questions. If you have additional questions, please re-enter the queue and we’ll answer as many as we can during the remainder of the call. Operator, we are ready to take questions.

Thank you. (Operator instructions). Our first question is coming from Amit Bhalla with Citigroup. Please state your question. Amit Bhalla – Citigroup: Hi, good afternoon. I had a couple of quick questions to start on SAPIEN in Europe. Can you give us kind of a mix in share between transfemoral and transapical in the quarter? And to go a little bit deeper into your comments that your growth in the quarter was deeper penetration in existing accounts, maybe you could quantify that, maybe this quarter versus last? Start there.

Yes, Amit, I’d be happy to. It was much the same, the mix of transapical and transfemoral was much the same as it has been in past quarters, running about two to one transapical to transfemoral. In terms of what we mean by increased penetration, we track the number of procedures per month that each account does. So, for example, how many are doing three procedures a month, four procedures a month, on up to eight procedures a month and so forth. And if we track that data, we are seeing that the accounts are just doing more cases. And so that’s why we are saying – a good part of this growth is coming from single accounts that are growing larger and less attributed to new accounts. We still added new accounts as you noticed in the quarter, but the penetration is the biggest driver. Amit Bhalla – Citigroup: Mike, can you – you didn’t answer the question on share and I think last quarter you said you felt like you were getting a turn in transfemoral share upwards. So, address that one and then two other quick ones, Germany, reimbursement update there and SAPIEN XT. You did say full preclinical testing is required. Why is that a change?

Okay. Yes, let’s see if I can get these both, Amit. When you are talking share, then obviously we need to know if you are talking about competitive share, we need to know what that is. What I meant to say is, of our sales, about two-thirds of our sales were transapical, one-third transfemoral. Were you asking about share versus competitors? And if so, that one is a little tougher to discern. We know it’s going to be reported, we are hoping it’s going to be reported publicly. Now, their quarters are a little different than ours, but we continue to think that it’s – we have a similar amount of share as the competitor in Europe. Now, it’s a little different mix because we have all the transapical share, but transfemoral, I don’t know, it might be running three to one, something like that, Amit. If that answers that question? Amit Bhalla – Citigroup: Yes.

And then I’ll answer the next one and then we’ll ask you to get back in the queue just to be fair to the others. Amit Bhalla – Citigroup: Okay.

On the – or on what FDA is expecting, it was – it’s been a little bit more vague in the past. They – it seems as though they came out and very specifically clarified that they want full preclinical testing complete before you start an IDE study. In the past that might have been possible to have most of your preclinical testing and you get a conditional approval once you complete the testing later. That no longer appears to be the case. We’ve already been proceeding very aggressively down that path and we are so hopeful to get an IDE approval before the end of the year, but it seemed like the bar went up for everybody just recently. Amit Bhalla – Citigroup: Okay. Thanks.

Sure.

Our next question is coming from Glenn Novarro with RBC Capital. Please state your question. Glenn Novarro – RBC Capital: Hi, thanks guys. A couple of things. Can you – I was jumping between calls, did you talk anything about – talk about the SAPIEN pricing in the quarter? That’s question one and then also on the reimbursement side, Amit just asked about Germany, but can you tell us about reimbursement in specific countries in the quarter? Thanks.

Yes, thanks, Glenn. What we reported is that pricing was favorable this quarter, really no big changes. We see a little bit of mix based on country mix, but pricing really is very consistent. In terms of reimbursement, there is really nothing that’s changed substantially there. We still expect the major countries to be in place here over the next couple of years with the first of the substantial countries coming on before the end of this year. So, we are still operating without formal reimbursement in place, but are making good progress down that path. Glenn Novarro – RBC Capital: Okay. And I’ll just ask one quick follow-up. I’m just curious, does Medtronic buying core valve, what does that do to the overall market? Does it expand the market? Can it be some dislocation in the business in the near term that you can pick up share? Just your thoughts there and I’ll get back into queue.

Well, I’ll report on the first quarter. I’m not sure that we saw much difference in Q1, Glenn. It remains to be seen what will happen in the future. We know that Medtronic has a history of developing markets and so, we look forward to their help on that one, but I’m not sure that I have much more than that. Glenn Novarro – RBC Capital: Okay, great. Thank you.

Sure.

Our next question is coming from Michael Weinstein with JPMorgan Chase. Please state your question. Michael Weinstein – JPMorgan Chase: Thanks for taking the questions. A couple of follow-ups. First on the number of the centers, you’ve gone from I think it was about 50 centers in the third – sort of the third quarter to now, nine months late or less, 125 centers. Talk about the training requirements for each center. Is that different in any of the geographies, I mean in Europe versus say Middle East or elsewhere? And then the second question is if we think about the XT pathway in the US, can you give us any sense on the size of the trial, the design of the trial, and how much follow-ups you’ll need? Thanks.

Yes. First of all, in terms of training, yes, I don’t recall exactly where we were in the third. In the fourth quarter, I think we said we had 100 sites that implanted and this first quarter, we set 125 plants – sites that implanted. So, you can see there was growth, we probably trained 20 plus centers again this first quarter. In terms of training requirements, they are very much the same, Mike, as we have seen right along the path. So, really no difference there. When we go internationally, we obviously try and be efficient with our time and so, make sure that they are committed, that they have a partner team in place, that they are committed to buying valves, and have procedural success at the top of our mind. But again this quarter, those centers were a very small part of the additional growth. In terms of XT and the US PARTNER trial, we really don’t have anything to report because we don’t have IDE approved and really don’t have the substantial discussions that are already complete that allows us to really provide any guidance. Michael Weinstein – JPMorgan Chase: Okay. And then, just one follow-up if I could. On the sales you lost on the ring side of the valve business this quarter, do you expect to recapture that in the second and/or second and third quarter? Might there be a bolus [ph] demand in the quarter to come?

Yes. You might recall what happened in the fourth quarter, Mike. So, there was about $5 million worth of product that was withdrawn from the marketplace in the fourth quarter. And in our reported results that was reflected and – but we sort of treated it as pro forma because we believe that would all go back. And so we excluded it from our pro forma results. In the second quarter, that whole thing should probably reverse. So, reported results will show those sales coming back, probably a similar number, $5 million. But on a pro forma basis, we’ll exclude that top line or bottom.

Right. Our EPS guidance excludes any impact from that this year, actually both years. Michael Weinstein – JPMorgan Chase: So, that $5 million will be called out in the second quarter?

Right, absolutely, absolutely. All the way through the P&L. Michael Weinstein – JPMorgan Chase: Okay.

Our next question is coming from Kristen Stewart with Credit Suisse. Please state your question. Kristen Stewart – Credit Suisse: Hi, thanks for taking my call. Tom, I was wondering if you can just go over the gross margin just on a year-to-year basis, just how much of that was foreign exchange and to what degree did that flow through to the bottom line.

Sure. Let me say that we are very pleased with the step-up this quarter; it’s pretty much on track to what we were guiding to. If you remember, we said 68% to 70%, this quarter came in right on 69%. Now, the mix between foreign exchange and mix and some of the things, the components, are going to change over the course of the year. So, foreign exchange rate now is at the higher end of what we talked about when we set guidance. I think I said about 150 basis points. Right now, it’s probably close to the 250 basis points and that will ramp down over the course of the year. What we do have that’s also temporary in nature is the fact that the manufacturing variations we experienced related to the critical care activities were somewhat of an offset. Those two are pretty much offsetting and I’d say the underlying product mix continues to be, if anything, slightly favorable to what we expected in the quarter. So, the picture gives us more confidence than we even had at the beginning of the year that that range is achievable. Kristen Stewart – Credit Suisse: And so critical care is a negative 250, basically offsetting –?

And that’s a full 250, Kristen, more like 200 basis points going the other way. Kristen Stewart – Credit Suisse: Okay. And I guess just on the earnings impact, was there anything more on the positive or negative side? Does that flow through the P&L?

For the change, the $15 million? Kristen Stewart – Credit Suisse: Yes. No, just – yes, I guess with your guidance.

Okay, good question. We continue to be pretty fortunate with the structure, our hedge agreements and so forth. Therefore, the $15 million had put a little pressure, but not much on the bottom line. So, we continue to be very happy with the hedge agreements that we have in place this year. Kristen Stewart – Credit Suisse: Okay. And then I guess, Mike, just on the number of centers, clearly you’ve been ramping up quite quickly across Europe and other regions. Where do you still expect this year to finish out? I think before you were talking maybe 75 to 100 centers. Is that still something that you are comfortable with or could we see even more?

I suppose that’s a believable number. We are less focused on centers and although we added them again in the first quarter, I’m not sure that’s going to be as big a driving factor as what we started to see in the first quarter, which was increased penetration. So I think, just keeping score on centers is probably not the only indicator. What we are pleased about is we feel confident at this point that we are in a very good position to double the number of procedures versus 2008. Kristen Stewart – Credit Suisse: Okay. Thanks, I’ll get back in queue.

Our next question is coming from Larry Biegelsen with Wachovia Securities. Please state your question. Larry Biegelsen – Wachovia Securities: Hi, and thanks for taking my question. On the continued access program, could you talk a little bit more about how that works, you mentioned its still randomized, just the mechanics of that, any revenues that you expect to book and will just pause there.

Yes. What was – what you should think of is that the same randomization scheme and protocol that has been in place in the past is going to continue to be in place in the future, so because we fully enroll the other – not going to be different decision-making that will take place on the part of clinicians, they will continue to place patients the way they have in the past. Does that help Larry – did you follow that?

It’s mainly about keeping the technology available for patients in the interim of keeping the clinical skills up to the highest standard. Larry Biegelsen – Wachovia Securities: How is the data going to be used? Are there limitations to the number of patients you can enroll? And are you going to book revenue from that?

Yes. I believe that what happens Larry is that we’re going to take the data from the first 350 patients and that’s what’s going to be rolled up and used for the clinical analysis, but what it does is that it maintains this equilibrium that we have right now so that as we continue to enroll the Cohort A, you have the same dynamics that you had in the first part of the trial.

And the revenue, Larry, is very negligible.

Yes, that – it continues to be small, that’s maybe a million a quarter kind of a contribution. Larry Biegelsen – Wachovia Securities: Is there a limitation on how many patients you can enroll in the continued access program?

What they have done is limited it to existing sites. So, yes, there – it’s limited from that perspective and – there may be a limitation on the number of patients as well, but – do you have anything else Larry because to be fair – Larry Biegelsen – Wachovia Securities: Thanks, I’ll get back in the queue.

Thanks.

Our next question is coming from Jason Mills with Canaccord Adams. Please state your question. Jason Mills – Canaccord Adams: Hi, Mike, thanks for taking the question. First question is on the other 95% of your business, surgical heart valves seem to – the growth seemed to tick up a bit from what we’ve been seeing, some of your revenue ticked up from the fourth quarter, may be spend a minute and give us a color on what you are seeing and whether anything has changed in the domestic landscape for surgical heart valves as well as the international landscape and anything you are seeing from a competitive standpoint that may be impacting you or if you are just simply seeing share gain vis-à-vis or new product launches.

Yes, thanks for the question, Jason. We look forward to talking about that. That is a pretty big piece of our business. Yes, as we mentioned, surgical heart valves grew 8% in the quarter in which we continue to see really strong growth, so double digit internationally and Japan really help drive that growth. It’s still first year of Magna there and it really contributed. And then the US, we grew over 6% and really part of what you are seeing there is really strong performance in the US on the mitral side, so the new Magna mitral valve that was just introduced I guess six months ago now is gaining momentum and gaining share. And so that’s driving – a matter of fact, US would have been even stronger if it wasn’t for this repair thing that caused us some sales because Myxo and IMR were out of the market. Competitively I can tell you that we are seeing much different dynamics than we have seen over the past year, I suppose the competitive launches are getting a little older than they were at that time, but we are probably the ones with the newest products in the market place at this point Jason. Jason Mills – Canaccord Adams: Just as an half sheet to your comment about strong mitral – Magna mitral performance, could we possibly might be seeing degradation in repair growth as we see the actual valve replacement performance tick up in the Magna mitral game traction?

I don’t think so, Jason. I don’t think that’s what’s going on – there might be something just on the margin, but I think in general, what we saw in the repair side was just a reflection of the fact that we were out with mix on IMR and a matter of fact, there is a lot of excitement about Physio II. So we expect that we only had a very small amount, less than $1 million for the sales in the quarter from Physio II, but we really expect that to pick up and start to drive some repair growth going forward. Jason Mills – Canaccord Adams: Okay. And then two quick follow-ups back on – say I will be back in queue. The 850 implants you reported this quarter, does that compare apples-to-apples versus the 650 implants you reported last quarter? So was that about the third? And secondly, the new synergy you added while new center adds you say won’t be the biggest contributor to your growth going forward. Wondering if you could give us some color on the profile of those new centers. I think you said last quarter, you are not – while you may be getting into smaller centers, you don’t necessarily expect the mix in terms of utilization to be impacted significantly implying that you expect to do pretty good volume at the near centers albeit smaller ones, and I will get back in queue, thanks.

Sure. To your first question, yes, it is apples-to-apples. So the – if the 850 compares to the – I think we reported the exact same thing last quarter, which was a number of valves implanted, so that’s an apples-to-apples comparison. In terms of new centers, it’s the same profile, it’s the same kind of thing that we expect out of them. In general, yes, they are smaller sites than the first centers that we put in there, and so particularly the ones in Europe and as we say we’re in 20 countries at this point, when we go outside of Europe, this is some pretty big centers that end up getting added net, net I would say the profile probably stays somewhere.

It’s also a bit of what we talked about greater penetration in the overall base of centers, so it’s not necessary that these centers are as large, but we also have that contributing to the overall utilization. Jason Mills – Canaccord Adams: Thanks guys.

Our next question is coming from David Lewis with Morgan Stanley. Please state your question. David Lewis – Morgan Stanley: Good afternoon. Mike, you mentioned the percent of hospitals that have gone independent, can you can give me that percentage this quarter, where you expect it to be by year-end? And then secondarily, presumably you free up reps as hospitals become sort of independent, where do we redeploy those reps going forward?

Yes, so right now, I guess we would say that probably more than 10% of the cases are done at hospitals that are independent at this point. So we are still at the pretty early stages of that and it’s rolling out. In terms of – we’re going to continue to add new sites, I don’t know exactly where it’s going to end up, to tell you the truth, David, we are going to continue to work on this pretty aggressively. What it does for us is, rather these tend to be clinical specialists and so rather than the clinical specialists have to be in every case, it means they can be redeployed to new centers and help the new centers either come up on new technology or start from scratch. So it really allows us to get some leverage and drive some capabilities.

Instead of scheduling the advantage for those centers that are independent so that they don’t have to wait for a clinical specialist in order to schedule cases, so I mean that’s one of –

Yes, I think – I think that’s a good point. I think just to build on that point that Tom made, you can picture if you are a center rather than wait for the Edwards representative to come, which normally we are standing by, but it’s helpful if they don’t have to factor that in when they want to do a case. David Lewis – Morgan Stanley: Mike, that number could be 25% by the end of the year, but is unlikely to be much higher than that?

David Lewis – Morgan Stanley: Okay, great. And then two more questions here, first is obviously on pacing. One of your competitors has obviously reported for a couple of years – obviously has increased pacing upon implant, but that seems to be sort of in a relevant issue from a marketing and commercialization standpoint in Europe, I wonder if you could comment on that particular issue and whether you think it’s clinically relevant and whether you think the FDA would think is clinically relevant?

We don’t think it’s an irrelevant factor, a matter of fact, we think it’s something that people will pay attention to, it will be interesting to see what people report at PCR, I think that should be a good place for people to be able to see the landscape and see what the CoreValve product is doing and the safety and products is doing, so we are pretty pleased with how it’s going on our side right now. David Lewis – Morgan Stanley: Okay and just lastly Mike, I want to clarify your comments on NICE SUGAR, at least from our perception it was not a particularly positive result, so maybe just clarify your comments, do you think that NICE SUGAR has no impact on the commercialization of your product over the next six to 12 months or is likely to have some impact?

To answer at a very high level, it’s likely to have some impact, but it’s difficult to sort of take it on its surface. So what it says is, with say today’s or yesterdays technology, if you start going low with your target, you run the risk here of getting into a dangerous zone and so there is not a lot of upside for doing it. What it does is that, if you have the ability to continuously control glucose and nowhere you were from a tight perspective, you can feel more comfortable coming down. And so there is the desire that we hear even in the face of that is very strong for continuous monitoring and we expect that patients are going to improve more quickly because of it, but we probably are going to have a little bit more explaining it to along the way. David Lewis – Morgan Stanley: Okay, thank you very much.

Our next question is coming from Keay Nakae with Collins Stewart. Please state your question. Keay Nakae – Collins Stewart: Yes, good afternoon. Mike, with your comments regarding FloTrac and the product improvements in the second half of the year, how married to the hip is the hardware upgrade with the software algorithm? Can you be successful with one without the other especially if the capital equipment environment remains problematic?

Yes, thanks Keay. Yes, really they are not connected. We are able to upgrade the software actually just by using the thumb drive and being able to download the software into existing monitors, and so our plan is to be able to do that. Separate from that though we have this new hardware platform, which we think could be a very nice upgrade for both, so they are additive. The other thing that we are going to have later on the year obviously is a new medical ICU parameters and that will require the hardware increase and so if there is no connection on the third generation FloTrac, there is a connection on the MICU parameters. Keay Nakae – Collins Stewart: Which do you expect to be impactful, the algorithm or the hardware?

We expect the algorithm to be more impactful. Keay Nakae – Collins Stewart: Okay, thank you.

Our next question is coming from Tim Lee with Piper Jaffray. Please state your question. Tim Lee – Piper Jaffray: Hi guys, good afternoon and thanks for taking the question. Just in terms of the SAPIEN outlook here I mean from 90 days here to today, now you are looking for a sales north of $100 million, I mean is the thinking that – is the market getting bigger than we thought 90 days ago or did you get picking up more share from the competition?

No, it’s – we clearly believe that the market is getting bigger. It’s expanding – we just think that what happens is as this technology is now in its second year, you have more physicians and more patients that are aware of it, you’ve got referral patterns that are better developed and you have more people coming in. I would say share gain would be a bonus to that. Tim Lee – Piper Jaffray: And we often tend to think of Europe as one country, but I mean is there any specific areas within Europe, any certain geographies that are going faster than the average?

Tim Lee – Piper Jaffray: Okay. If I could just slip one more critical care question, and you talked about the – some capital budget constraints impacting hardware sales, are you still seeing that trend here in Q2 and any sense of when we could see that alleviate? Thank you.

Yes, it’s not obvious to us when it will alleviate. One of the things that we have done is to introduce some more flexible options for our customers that will help them overcome some of this sales objection and our sales people are optimistic that this will have some impact on this and so we would hope to start seeing some results of that in the second quarter, but its not clear exactly the hospitals are changing behavior yet. Tim Lee – Piper Jaffray: Okay, thank you very much.

Sure.

Our next question is coming from Brooks West with Craig-Hallum Capital. Please state your question. Brooks West – Craig-Hallum Capital: Hi guys, thank you for taking the question. Quick pricing question, Mike and Tom, specifically on the surgical valves and critical care, are you seeing greater than normal pricing pressure there and I guess I would focus that even more on the US market?

For the main business, no, we are not seeing significant change with delivery. Brooks West – Craig-Hallum Capital: Okay. And then, with the softness in the critical care business that you have described, I guess following on Tim’s question, do you feel like we have seen a bottom in Q1 and then looking at the guidance, how backend loaded is your guidance for the year there?

Yes, while the short answer is yes, we do think that this growth rate is by far the lowest that we would expect for the rest of the year. When we say we expect to put up 6% to 9% growth underlying for the rest of the year, that means it’s going to step up and you will see it in Q2, but we think it will actually be even stronger yet in Q3 and four. Brooks West – Craig-Hallum Capital: Great. Thanks guys and a nice quarter in this environment.

Well, thanks very much Brooks.

Thanks, Brooks.

The next question is coming from Spencer Nam with Summer Street Research. Please state your question. Spencer Nam – Summer Street Research: Thanks for taking my questions. Just have a couple of quick questions. With the new outlook on SAPIEN Europe revenues, is that including expectations that there will be some changes in reimbursement environment in Q4 of this year or how does reimbursement in Europe at least in one of the countries affect your outlook here?

It’s probably not a big factor. We had an assumption that one of the major countries would get approval before the end of the year and we continue to see it that way, but I don’t know that that in itself is going to really change the growth curve on this and so I think its pretty independent of – at least based on what we have seen so far, Spencer, I think its pretty independent of what’s going to happen there. Spencer Nam – Summer Street Research: Great. And then second question is, with the CoreValve being acquired by Medtronic, do you guys see any change or potential slowdown? Was there any sort of positive impact on SAPIEN sales throughout the European countries because as CoreValve was going through some transition maybe that you hadn’t more opportunities to being involved with physicians out there.

Well, yes, thanks Spencer. We are obviously looking for opportunities to do anything that to be more aggressive, but I can’t tell you that we’ve really seen any change at this point in time, right. Spencer Nam – Summer Street Research:

Sure.

Our next question is coming from Sara Michelmore with Cowen and Company. Please state your question. Sara Michelmore – Cowen and Company: Yes, thank you. Tom, thanks for the detail on the gross margin, I did just want to clarify the manufacturing variances. Does it totally go away in Q2 or does it just moderate over the course of the year?

There will be a piece in Q2, but then we are hoping that it’s over after that. Sara Michelmore – Cowen and Company: Okay. So in terms of the gross margin dynamics, on the positive for Q2, we will have mix benefit from FX, but probably more moderate than this quarter and then again a more moderate negative thing on equipment manufacturing variances.

Exactly. Sara Michelmore – Cowen and Company: Okay. And Mike, just wanted to ask you a product development question, I know that SAPIEN XT is really optimized for the transfemoral position. Can you just give us an update in terms of next generation transapical products? Are you working on products that are specifically designed for that approach? Thanks.

Yes, thanks for – I appreciate that, the short answer is, yes. The SAPIEN XT itself actually is going to be used in the transapical position and we are excited about using it there. What it will get is its own unique delivery system, so we’ve got next generation delivery systems coming for transapical as well as some enabling accessories, so the low profile actually does help transapical and the accessories we think are going to make that procedure even better than it has been in the past. Sara Michelmore – Cowen and Company: Okay. And are there specific enhancements for the delivery for that product in the transapical position?

Yes, I would mention that we’ve really laid those out in detail. In general, it’s around ease of use. There is – it’s still a skill set for people to learn and what we’ve liked to do is to make it accessible for more surgeons. Sara Michelmore – Cowen and Company: Okay, understood, thank you. And this question, big picture I know that the new products are really the main growth driver for the traditional surgical valve business, but Mike you talked about previously that transcatheter could have just a beneficial impact on referral volumes and things like that, so that it could be a positive kind of undergrowth for that transcatheter surgical valve business. Just wondering what your latest thoughts were there and if that’s starting to play out for you at all. Thanks.

Yes, we continue to be believers that this – the fact that there is a transcatheter option in place is going to bring patients of the sidelines and in Europe, there are several examples where exactly that is taking place, where more patients come in and therefore, the surgical volumes go up. I can’t tell you that if you look at our overall surgical growth rate in Europe that we’ve really seen that step up. It seems as though it’s similar to what we were expecting and what we’ve been experiencing over the last couple of years, but that might be that we are still at the early stages.

Our next question is coming from Josh Zable with Natixis Bleichroeder. Please state your question. Josh Zable – Natixis Bleichroeder: Hey guys, congrats and a great quarter here and thanks for taking my question.

Thanks, Josh.

Thanks, Josh. Josh Zable – Natixis Bleichroeder: Most of them have been answered, but I just got a couple of quickies here, just Magna Ease, I know you commented 3Q approval, you still seem to echo that or reiterate that I should say, launch 3Q or 4Q, do you have any color into that? I think last time you said, still hoping for 3Q, does that seem reasonable still?

We have – we can never predict the FDA, so that’s my disclaimer write off the top, but we would think we really do understand what they’re interested in. We think we have fully answered all their outstanding question, so we think we are in pretty good chance to actually get a launch – a good hard launch in the third quarter, so that’s our plan. Josh Zable – Natixis Bleichroeder: Great. And then Tom, just some balance sheet cash flow questions. You paid down some debt here, a lot of debt obviously in the second quarter in a row, just to give us some idea kind of thinking going forward, is this kind of you guys plan to serve aggressively, pay down debt for the rest of the year or just kind of as the cash comes in?

That’s a good question Josh. No, it’s not a major initiative for us, but we were able to do it successfully, get cash by a couple of techniques into the US where the debt has – where the debt sits. If you remember last quarter and this quarter, we actually have more cash on hand than debt. So any debt that’s remaining at this point in time is just an issue of where the cash is isolated in a different region and where the debt exists. So we look at it as we are all ready positive in the sense that cash exceeds debt, and from this point on, it will be just opportunities to move it around. Josh Zable – Natixis Bleichroeder: Great. And then just to follow-up, receivables went up a lot, I know you made some comments about DSOs, could you just give us a little bit of color there?

Good question. The DSOs were essentially flat. The difference in the receivables is – was the impact of reversing the securitization of some Japan receivables. The number should be around 39 million I said I am not sure that’s exactly what shows up in the balance. But somewhere in the area of $40 million difference is due to the fact that we previously securitized them and that program was terminated, so those receivables are back in our book. Josh Zable – Natixis Bleichroeder: Great. Thanks for answering my question, congrats again guys.

Sure.

Thanks.

Our next question is coming from Bruce Nudell with UBS. Please state your question. Bruce Nudell – UBS: Well, good afternoon. Thanks for taking my questions. The first is we scale a US aortic unit, surgical opportunity, around 75,000 valves, what is the equivalent – what’s the size of the units’ opportunity for surgical valves in what you deem to be in Europe?

I am going to make sure that I understand that, do you mean, how fast can surgical valves grow in Europe? Bruce Nudell – UBS: No, no, no. How many units – how many surgical – aortic surgical replacements are there in Europe?

I think it’s about the same. I want to say it’s about the same number. Bruce Nudell – UBS: 75,000. And of the – you have 1700 percutaneous valves run rate per quarter across all vendors in Europe right now, what percent of those would you guess are targeted towards surgically ineligible patients?

So say – could you say that one more time please. Bruce Nudell – UBS: So of the – you had 850 valves in Europe, your valve had about the same according to what you just said, so it’s like 1700 units. What percent of those are going into surgically ineligible patients?

Yes, I think that what we saw in the first quarter continues to be what we’ve seen in the past, which is these kind of patients that are – I think averaged around low 80s in terms of their age. The – I think 82 years old, I think the majority of the cases are high-risk and non-operable, so they are not just non-operable they are also high-risk for surgery. And so that’s the indication that we have from the CE Mark perspective and I can’t tell you what the mix is between those two because I don’t know, but maybe – there will be some reports at PCR when people break that out. Bruce Nudell – UBS: Thanks so much.

Sure.

Our next question is coming from Suraj Kalia with SMH Capital. Please state your question. Suraj Kalia – SMH Capital: Mike, well, congratulations on the nice quarter.

Thanks, Suraj. Suraj Kalia – SMH Capital: I know you guys are worn out with all of the badgering questions, so I’ll just keep it simple. Michael, in terms of vascular closure is that – just given the size of the SAPIEN, do you all see competitively it affecting you all in Europe, not the US for now, but competitively in Europe, do you all see the size of the SAPIEN XT core valve and any others affecting you all?

Yes. What – I expect actually is that the competitive landscape is going to change, so if SAPIEN were to be the valve that was out there on a long-term basis, I would say vascular closure would be an issue, and we are actually – more broadly vascular access because it’s a bigger unit. But with SAPIEN XT, what’s going to happen is the devices are going to be very similar in size and I don’t expect vascular access and vascular closure to be very much of an issue, particularly when you consider that people might have an opportunity to access what we believe is a superior valve. Suraj Kalia – SMH Capital: And finally, Michael, if I come to a physician let’s say in Germany and how is the decision metrics made for – let’s say I am deemed high-risk inoperable, how it is deemed between transfemoral and transapial? How is that decision matrix algorithms being made?

Yes, the – what happens is the and what our desire to approach is, and we think it works pretty well this way across most centers is that the physician get together and this is both cardiac surgeons and interventional cardiologists. They review the patient, talk about the options and make a decision based on what they think is the best therapy to offer, and that’s the whole idea behind the PARTNER concept. We’ve tried to help encourage that and teach that and we think that based on the feedback that we get, the physicians really believed in that approach.

While – there are a lot of patient attributes maybe vascular access is one of the things that they definitely look at and try to evaluate what the option is best for that patient given their comorbidities and so forth. Does that answer your question? Suraj Kalia – SMH Capital: Yes, gentlemen. Great quarter.

Thanks.

Thanks.

Our next question is coming from Michael Weinstein with JPMorgan. Please state your question. Michael Weinstein – JPMorgan Chase: Thanks. I don’t know I’d be able to come back in queue. Just one very easy question. FX was only 3.4% headwind for you guys and I guess we’ve have struggled about how to model it, because you do have about 56% of your sales I guess outside of the US and so when you look at comparable companies, they are coming more in the range of 6%, 7% invest this quarter. Maybe help us just understand why there isn’t a bigger FX than the one what you saw before.

Mike, the numbers I have – I have reported growth, I think it’s 5.6%, correct? Yes, and underlying is 11.5%. So, isn’t that the way you would measure it?

Yes, but I think what Mike is doing is of course discontinued is part of it, he just took the FX. But you have to remember we have both Japan and Europe in this equation and we’ve got some pretty substantial Japan sales, maybe more Japan sales than most companies would have in terms of percentage of their total and that’s probably helped to offset it. Michael Weinstein – JPMorgan Chase: And how do you calculate the FX impact quarter end average over the course of the quarter, how you are doing that?

No, well the impact will be – as we – on sales in particular, you said the transaction rate for every month and then that becomes our average, that’s how you translate into the US dollars when you compare it to the prior year. Michael Weinstein – JPMorgan Chase: Can you maybe just give us a sense of what you are expecting for the second quarter at this point?

Yes, I would say at least right now the current rates I think it’s not a 100 yens of a dollar and about 1.30 exchange for $1.33 for the euro something like that. Michael Weinstein – JPMorgan Chase: No, No. I know the exchange rates. I was wondering if you could tell me what you think the FX impact would be.

What the number is. The remaining of the 60. I think it’s our biggest number. I’m going to say about 20, 25 in the quarter and one second, I am pretty sure that’s right. Michael Weinstein – JPMorgan Chase: Good. Thanks.

Okay.

Okay. Well, it doesn’t appear that there is any other questions. And so, thank you very much for your continued interest in Edwards and Tom and David and I welcome any additional questions by telephone. With that, back to you David.

Thanks for joining us on today’s call. Reconciliations between GAAP and Non-GAAP numbers mentioned during this call, which include underlying growth rates and amounts adjusted for special items are included in today’s press release and can also be found in the Investor Relation section of our website at edwards.com. If you missed any portion of today’s call, a telephonic replay will be available for 72 hours, and to access this please dial 877-660-6853 or 201-612-7415, and use account number 2995 and the pass code is 318217. Let repeat those, dial 877-660-6853 or 201-612-7415, the account number is 2995 and the pass code is 318217. Finally, an audio replay will be archived on the investor relations section of our website. Thank you very much.

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