David Erickson – Vice President, Investor-Relations Michael Mussallem – Chief Executive Officer Thomas Abate – Chief Financial Officer

Jason Mills – Canaccord Genuity Larry Biegelsen – Wells Fargo Kristen Stewart – Deutsche Bank Amit Bhalla – Citigroup Michael Weinstein – JP Morgan Bruce Nudell – Credit Suisse Glenn Novarro – RBC Capital Markets David Roman – Goldman Sachs Tom Gunderson – Piper Jaffray Raj Denhoy – Jefferies & Co David Lewis – Morgan Stanley Bob Hopkins – Bank of America Spencer Nam – ThinkEquity

Greetings and welcome to the Edwards Lifesciences Corporation Second Quarter 2012 Earnings Conference Call. (Operator Instructions) As a reminder this conference is being recorded. It is now my pleasure to introduce your host, David Erickson, Vice President and 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 second quarter 2012 financial results. During today’s call we’ll discuss the results included in the press release and the accompanying financial schedules and then use remaining time for Q&A. Our presenters on today’s call are Mike Mussallem, Chairman and CEO and Tom Abate, CFO. Before I turn the call over to Mike, I’d 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, our expectations regarding sales and sales growth, gross profit margin, net income growth, earnings per share, SG&A, R&D, taxes, free cash flow, diluted share outstanding and foreign currency impacts. These statements also include our current expectations for the timing, status and expected outcomes of our clinical trials, regulatory submissions and approvals and new product introductions as well as expectations regarding market growth and potential impacts of supply interruptions, economic conditions and competitive products. These statements speak only as of the date on which they are made and we do not undertake any obligation to update them after today. Although we believe them to be reasonable these statements involve risks and uncertainties that could cause actual results to or experiences to differ materially from the forward-looking statements. Information concerning factors that could cause these differences may be found in our press release, our annual report on Form 10-K for the year ended December 31, 2011 and our other SEC filings which are available on our website at Edwards.com. Also a quick reminder that when we use the terms underlying, excluding the impact of foreign exchange and excluding special items, we are referring to non-GAAP financial measures. Otherwise we are referring to our GAAP results. Information about our use of non-GAAP measures is included in today’s press release. Now I’ll turn the call over to Mike Mussallem. Mike?

Thank you, David. Even in a challenging economic environment this quarter we reported strong growth in sales driven by the continued success of our US transcatheter heart valve launch. As the number of US safety and procedures grows rapidly we’re extremely pleased with the continued high procedural success rate being achieved. During the quarter we also cleared two significant milestones, the favorable FDA panel evaluating safety and for high risk surgical patients and the issuance of the final NCD defining US reimbursement. Turning to quarterly results, reported sales grew 12% to $482 million driven by the US launch of SAPIEN. Sales growth excluding the impact of foreign exchange was 16%. With the THV launch, US sales grew 37% and represent a growing proportion of our total sales. In the second quarter surgical heart valve therapy products group sales were $201 million which includes $29 million from Cardiac Surgery Systems. Surgical heart valve sales of $172 million where down 3% or 1% on an underlying basis. The sales trend in the US was comparable to last quarter while sales growth outside the US declined. Globally our pricing remains solid. In the US a competitor’s product introduction last year continued to impact sales growth this quarter. We expect this impact to diminish in the second half of 2012 as we pass the anniversary of that product’s introduction. In Europe the ongoing economic conditions in Southern Europe weighed more heavily on our results. In Japan, the ongoing conversion of customers to our newly approved Magna Mitral EASE valve was tempered by the recent approval of a competitor’s aortic valve. We expect these somewhat offsetting impacts to continue in Japan for the remainder of the year. During the quarter we initiated a voluntary recall outside the US of specific lots of heart valves due to a problem with the package equipment in our European manufacturing facility. The majority of the effective products were still in our possession. We promptly communicated with customers and regulators and supply was not interrupted. And most importantly we are confident this did not impact patient safety. The disposition of the effective inventory resulted in a special charge to cost of goods this quarter. We do not anticipate any additional financial impact. Turning to our cadence and foundation post approval studies of INTUITY, we are currently training centers and expect all of the centers to be enrolling in the fourth quarter. These studies are focused on generating data supporting the patient benefits and health economics of this new procedure compared to traditional open heart surgery. We are very pleased with the pace of enrollment of our TRITON trial, a CE Mark study of our next generation INTUITY system in Europe which features enhancements to both the delivery system and the valve. We continue to expect to complete enrollment this year. We received a CE Mark in May for Magna EASE with GLX, our next generation tissue platform, and are continuing to gain clinical experience. GLX is a proprietary technology designed to provide additional protection for Bovine pericardial tissue by enhancing anti-calcification for improved durability, and ultimately could be applied to our surgical and transcatheter heart valve platforms. We are very excited about our US surgical valve pipeline and pleased to have recently received two conditional IDE approvals from the FDA. First we received clearance to initiate the TRANSFORM trial, a prospective, multi-center study that will evaluate the INTUITY valve system. The transform trial, which is expected to begin enrolling in the third quarter, will be a single arm study that will follow standard heart valve guidance and historical controls. We expect to enroll approximately 650 patients. In June, we received approval to begin an IDE study in the US of our Magna EASE surgical valve using GLX. Like the INTUITY study, the GLX study will also follow standard heart valve guidance and control, and we expect to begin enrollment later this year. Cardiac Surgery Systems sales for the quarter were $29 million, up 6% or 8% on an underlying basis. This quarter’s growth was driven by strong sales of our MIS product line aided by the US and European launch of our IntraClude aortic occlusion device. We spent much of the quarter upgrading existing customers to this new MIS technology. As expected, late last month we received regulatory approval in the US and Europe for our ProPlege retrograde cardioplegia device designed to protect the heart during aortic and mitral valve MIS procedures. Early clinician feedback from the limited launch has been positive and we plan to broaden the launch in the third quarter. In summary, given our first half performance in the Surgical Heart Valve Therapy product group we now expect to achieve underlying sales growth for the full-year at the low end of our previous 3% to 5% range. Second half growth rates are expected to approve as prior-year comparisons moderate. Turning to transcatheter heart valves, second quarter sales were $146 million, 71% growth or 83% underlying growth over last year driven by the US launch of SAPIEN. Transfemoral systems which represent more than 75% of our global THV sales continue to be lifted by the US commercial ramp which is entirely TF and the launch of our 29mm system in Europe. Outside the US our sales grew 6%. On an underlying basis sales grew 15% which we estimate was also the approximate growth rate of the market. Continued strong growth in Germany was tempered by negative growth in Southern Europe and a sharp decline in procedures in the Netherlands. Product pricing remains stable and we now expect this years market growth in Europe to be 15% to 20%. We received a CE Mark mid-quarter and off to a strong start with our 29mm SAPIEN XT valve with NovaFlex plus transfemoral delivery system. Sales were more than $7 million including approximately $2 million of stocking. Late in the quarter we received a CE Mark for our Ascendra Plus delivery system for both the Transapical and a new transaortic approach. These approvals will provide heart teams in Europe with a even broader array of patient options that are expected to drive stronger growth in the second half. Turning to the US, we’re very pleased to report robust US sales of $61 million for the quarter. Commercial sales were $53 million with about 25% coming from net stocking units which represents stocking sales less consignment. As we broaden consignment net stocking units are expected to contribute less to sales. So this interest in our SAPIEN program remains very high and with the final NCD release in May, hospitals now have a better understanding of the requirement for becoming a TAVR center. From launch to the end of the second quarter we have trained more than 110 centers and are confident we’ll train 150 to 250 commercial sites by the end of the first year of launch. In June we were very pleased to receive a strong endorsement by the FDA advisory panel recommending approval of our SAPIEN Heart Valve via transfemoral and Transapical delivery for high risk patients. While we hope for a more rapid approval our financial guidance assumes an approval time line for Cohort A that is comparable to the approval time line for Cohort B last year. Upon approval we will use some of our training capacity to rapidly train our existing customers on the Transapical approach. Turning to our US PARTNER II clinical study, which is evaluating our SAPIEN XT technology, we’re continuing to enroll patients in Cohort A, the surgical arm. We remain on track to complete enrollment by mid-2013. Enrollment in two of the four nested registries of PARTNER II was completed this quarter which contributed to the clinical sales we reported. In Europe we’re making significant strides with our two important new lower profile transcatheter valve platforms that we believe will enable us to reach more patients and further extend our leadership position. Promising first in human data for CENTERA and SAPIEN 3 were presented at two major meetings during the quarter, and clinician interest is very high. Of note were the results for SAPIEN 3 which demonstrated very high procedural success and an extremely low incidence of paravalvular leak. Turning to our CE Mark trials, enrollment in our clinical study for our repositionable and self-expanding CENTERA valve began in June and we continue to expect trial enrollment for our next generation balloon expandable SAPIEN 3 to begin by year end. In Japan, we remain on track to receive regulatory approval and reimbursement for SAPIEN XP in 2013. In May, we initiated the PROTAVI trial in Europe to study the costs of stroke and evaluate our Embrella device. The initial results of this study should become available by the end of this year. In our THV litigation we continue to expect a decision any time now on Medtronic’s appeal of the willful infringement verdict against them in 2010. Given the strong second quarter performance we now expect $240 million to $260 million of full-year THV sales in the US. Additionally, we now expect global THV sales in the range of $550 million to $600 million with an underlying growth rate of 80% to 90%. Turning to Critical Care product group, total sales for the quarter were $136 million which included $13 million from vascular products. Within this product group, Critical Care sales were $123 million for the quarter, down 4% or 1% on an underlying basis. Growth of our Advanced Technology Disposable products were offset by both lower sales of hardware in the US and a reduction of distributor inventory in China. Additionally, sales were impacted by approximately $1 million due to a voluntary recall in May of certain lots of Swan-Ganz catheters. These catheters had a lumen that impeded guide wire usage which led to clinician inconvenience but not a patient safety concern. We’re pleased to announce that we launched globally our next generation EV1000 monitor at the end of the quarter. This marked the full introduction of this platform in Japan where we expected to have a significant impact. With respect to our glucose program we are completing product validations on our enhanced GlucoClear system and remain on track to receive a CE Mark before the end of the year. Total reported vascular sales which is comprised of our Fogarty products were at $13 million this quarter down slightly from the prior quarter. Given the first half performance we are lowering our full year 2012 underlying sales growth rate in the critical care product group to 2% to 5%. We expect improved performance from advanced monitoring in the second half of the year lifted by the launch of our newest EV1000 platform. And now, I’ll turn the call over to Tom.

Thank you, Mike. This quarter our strong gross profit rate combined with a favorable tax rate allowed us to achieve diluted EPS of $0.57 and non-GAAP diluted EPS of $0.67. A 37% increase over the prior year. At the same time we increased our R&D investments by 14%. For the quarter our gross profit margin was 73.1% and included an $8 million charge to reflect the estimated cost of our voluntary recalls of Heart Valves and critical care catheters. Excluding the impact of the charge our gross profit margin was 74.8% compared to 70.4% in the same period last year. This improvement was driven by the impact of foreign exchange and favorable product mix primarily driven by the US launch of SAPIEN. For 2012 the continuation of these factors is expected to further strengthen our gross profit margin. For full year 2012 excluding special items we now expect a gross profit margin between 74% and 75%. Second quarter SG&A expenses were $182 million or 37.8% of sales, an increase of 12% over the prior year. This increase was driven primarily by US transcatheter launch related investments. As a percentage of sales SG&A should trend up in the third quarter due to seasonality and decrease to approximately 37% in the fourth quarter. For the full year we are now narrowing the range of expected SG&A to be between 37% and 38% of sales. R&D investments in the quarter grew 14% to $74 million or 15.4% of sales. This increase was primarily the result of investments in PARTNER II, and new product development efforts in our transcatheter valve programs. For full year 2012 with the investments in further clinical studies we now expect R&D as a percentage of sales to be between 15% and 16%. During the quarter we recorded a $7 million in process R&D charge related to licensing agreements for two development stage technologies. Combined with an $8 million charge impacting our gross profit margin special items this quarter reduced diluted EPS by $0.10. Our reported tax rate for the quarter was 24.6%. While the rate is significantly higher than last year, it is lower than expected as a result of a more favorable regional mix than anticipated. Excluding special items, we expect our rate to be approximately 26% next quarter and drop to approximately 20% in the fourth quarter assuming renewal of the federal R&D tax credit. FX rates negatively impacted second quarter sales by $14 million. Relative to our prior guidance, FX did not have a material impact on earnings in the quarter. Looking forward at current rates, foreign exchange will have an approximate $60 million negative impact to full-year sales compared to last year. Free cash flow generated during the quarter was $126 million. We define this as cash flow from operating activities of $147 million, less capital spending of $21 million. For full-year 2012 excluding special items, we continue to expect free cash flow to be between $240 million and $260 million. During the quarter we spent approximately $53 million on share repurchases. For modeling purposes we now project fully diluted shares outstanding to approximately $119 million in 2012. Turning to our balance sheet, we had total cash and cash equivalence and short term investments of $506 million and total debt of $185 million. Short term investments were $202 million representing highly liquid bank timed deposits. Our DSO at the end of the quarter was 59 days, a five day improvement from the prior quarter as a result of significant payments received in Spain. Inventory turns were 2.0 compared to the first – were comparable to the first quarter. Turning to our 2012 sales guidance, at current exchange rates for surgical heart valve therapy we now expect sales to be between $775 million and $805 million which includes approximately $115 million of cardiac surgery system sales. In transcatheter hearth valves we now expect sales of $550 million to $600 million. Lastly in critical care we now expect sales of $550 million to $580 million which includes approximately $50 million of vascular sales. Given our updated projections and the recent movement in foreign exchange rates we now expect full year sales of $1.9 billion to $1.97 billion which represents an underlying growth rate of approximately 20%. Excluding special items we now expect diluted EPS of $2.60 to $2.68 and continue to expect full year 2012 net income growth of approximately 30%. For the third quarter we project total sales of $465 million to $485 million and diluted EPS excluding special items to be between $0.57 and $0.61. And with that, I’ll turn it back over to Mike.

Thanks, Tom. We remain on track to deliver strong sales growth and bottom line performance this year even with a challenging global economy. We expect our transcatheter technologies to continue to drive our growth well into the future. Also, we remain enthusiastic about the potential of our robust product pipeline to benefit even more patients and strengthen our leadership position. Before we open it up to questions I want to encourage you to mark your calendars for Tuesday, December 4th where we will be hosting our 2012 Investor Conference at our corporate headquarters here in Irvine, California. This event will include updates on our new technologies as well as our outlook for 2013. More information will be available in the next couple of months. And with that, I’ll turn it back over to David.

Thank you, Mike. In order to allow broad participation in the Q&A 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 hour. Operator, we’re ready for questions, please.

Thank you. Ladies and gentlemen at this time we will begin a question and answer session. (Operator Instructions) Our first question comes from the line of Jason Mills from Canaccord Genuity. Please proceed with your question. Jason Mills – Canaccord Genuity: Thanks, Mike, for taking the question. Congrats on the good quarter in TAVI. Let’s start there if you don’t mind. Perhaps you could give us a bit more color on the differences in utilization early on between the partner sites and the sites you’ve been adding. And then reiterating your guidance for number of centers this year – new center adds – as you think about over the next couple of years perhaps refresh our memory as to what you expect in terms of TAVI sites in the next couple of years.

Okay. Thanks, Jason. Yeah. One of the things to keep in mind – I know it’s a tough thing to deal with averages and I will make some generalizations but there’s a fairly large disparity between accounts, whether it’s partner sites or the new sites. And so there are some of those that tend to get quite large and others that are smaller. But having said that – it’s kind of interesting. We’ve got quite a bit of balance. There’s still growth in the partner sites. They are strong and growing. And having said that, we got a similar amount of growth probably from our new sites. They’re ramping up and we’re getting a significant contribution from them as well. Remember, there’s quite a few of those. So we’re seeing usage ramp on both. In terms of the number of sites, yeah, right now we believe that there are 300 to 400 sites that probably qualify within the NCD. There are others that are interested and are working through the requirements to get there, but that’s where we think we are at this point in time and so we’re pleased on the way the ramp is going. Jason Mills – Canaccord Genuity: Okay. And then my follow up is in Europe. Obviously you’re being impacted by the macro there as well as the currency movements. What do you see as underlying growth in Europe for TAVI for the second half of the year? And with new competition, are you willing to sort of target a bogey for growth in 2013 with the addition of Japan coming at some point next year presumably as well?

Yeah. Well let’s break it into pieces. First of all, in terms of what we think Europe is going to do, we think Europe might be slightly faster in the second half than it was in the first half. We were estimating overall growth for the year will be somewhere in the 15% to 20% range. And what that is, it’s lifted by companies like Germany where the growth is strong and pulled down by Southern Europe by comparison. In a place like France we know there are some new sites that have been turned on right on the first of July so that will help lift the growth rate to some extent. Now switching to our performance. We’re really not going to give projections at this point in 2013, Jason. You’re correct that there will be new competition but at the same time we’ve got a robust pipeline, so you’re going to have to wait until we get toward the end of the year and we work through our planning process to give estimates. Jason Mills – Canaccord Genuity: Thanks, Mike. I’ll get back in queue.

Sure.

Our next question comes from the line of Larry Biegelsen from Wells Fargo. Please proceed with your question. Larry Biegelsen – Wells Fargo: Good afternoon. Thanks for taking the question. Let me just start with the gross margin which was obviously very strong in the quarter. Tom, 74% to 75% for full year 2012 and I think you said expanding through the year. Where do you expect to exit in the fourth quarter and how much of that can carry through to 2013?

Well you know, Larry, that’s a great question. I’d say there’s a couple of factors that we pointed to both factors continue into the second quarter. So we’ll continue to see an improvement sequentially on product mix. It’s almost 50/50 between product mix and foreign exchange is actually going to lift the rate in the second half. In the second quarter it was neutral to the rate but as the rates have worsened and the hedge contracts kick in it’s actually going to lift. So it’s partially responsible for the improvement for the full year. And so that portion would be coming and going with hedges. The rest based on product mix is something that we would fully expect to carry into next year. Larry Biegelsen – Wells Fargo: Do you expect the gross margin to be higher in 2013 obviously?

Than the full year of 2012? Larry Biegelsen – Wells Fargo: Yes.

Yes. Larry Biegelsen – Wells Fargo: And second, Mike, would you be willing to tell us a little bit more about the timing in Japan on the first have of 2013, second half of 2013? And any color around the approval and reimbursement process there? And then I’ll drop. Thanks.

Yeah, thanks, Larry. Yeah, as you know, in our view sales don’t pick up appreciably until reimbursement is in place. And reimbursement tends to trail the regulatory approval by up to six months. So a significant amount of time. So I think maybe for modeling purposes if you assume that reimbursement is not in place until the end of 2013 that’s probably a fair assumption. Larry Biegelsen – Wells Fargo: Thank you.

Our next question comes from the line of Kristen Stewart from Deutsche Bank. Please proceed with your question. Kristen Stewart – Deutsche Bank: Hi. Thanks for taking the question. I just wanted to just go back and clarify Larry’s question on gross margins. Tom, I think you had said that the FX was neutral in the second quarter. Was that relative to your expectations set from back in April or are you talking year-over-year?

Okay. That’s a great clarification point. It’s always going to be in reference to something so FX there’s so many different ways to look at it. What I was trying to reflect there is on the quarter rate, the rate in the quarter, there’s very little impact. On a year-over-year basis it’s a very big difference. But it was primary because last year was suppressed. So as close as the quarter we’re going to see is probably the quarter we just reported in terms of unaffected by foreign exchange. Does that help? Kristen Stewart – Deutsche Bank: Can you maybe just quantify what the year to year impact was just for FX relative to product mix? Was that the 50/50 you were talking about? Or

No. I’m sorry. Relative to product mix, you’d probably say – I think the total was 440 and it’s probably 60/40, actually leaning, favoring foreign exchange. There was a big difference. There was a big negative hedge impact

Yeah, almost 300 basis points in all of our metrics, yeah.

But mix was strong, also. Kristen Stewart – Deutsche Bank: Okay. Perfect. And then just kind of walking through the US sites. I think you mentioned it earlier in the prepared remarks – I’m sorry, I missed it – but how many centers did you say you had up and running as of today? And I think you still reaffirmed the 150 to 250 for the first full-year out?

Yeah, Kristen. We didn’t give an update of where we are today; we gave an update at the end of the second quarter and we said at the end of the second quarter, we had trained 110 sites since the approval in November. And we said based on that trend we felt very comfortable with the 150 to 250 being trained by the one-year anniversary. Kristen Stewart – Deutsche Bank: Okay. And that would be in addition to those that were already up and running as a part of PARTNER I and PARTNER II, correct?

That’s correct. Kristen Stewart – Deutsche Bank: Okay. And then just last question just on ASPs, I think you had mentioned that they’re holding up in Europe. Is that true if you look at just pure price and take away the kind of FX component?

Yes. If you take currency out of it our pricing is very stable, very steady in Europe. Kristen Stewart – Deutsche Bank: Okay. Thank you very much.

Sure.

Our next question comes from the line of Amit Bhalla from Citigroup. Please proceed with your questions. Amit Bhalla – Citigroup: I wanted to start with just a question on Europe. Can you clarify the Netherlands – you said there was a sharp fall-off there in valves – and secondly on U.K. – can you give us an update on how the U.K. is ramping with TAVI given the nice approval?

Okay. Yeah. Let me break it into pieces. First of all in the Netherlands. The Netherlands has not had formal reimbursement. We were expecting, and as a matter of fact the clinicians in the Netherlands were expecting that formal approval would occur at the end of Q1. That didn’t happen and it looks like it could be substantially postponed. And so we’re not expecting it this year. As a result, what happened is rather than seeing a lift in the number of procedures in the Netherlands we actually saw a sharp decline. And so that’s what happened in the Netherlands, and at the same time, the U.K. is growing significantly. The U.K. I think is growing in the neighborhood of – I don’t know – close to 40%, but remember we’re coming off a small base there. Amit Bhalla – Citigroup: Okay. Thanks, Mike. And just, I can’t imagine Netherland being a big market but can you just give us a rough idea of how big the Netherlands has been for TAVI? And just my quick follow up would be on the 29mm valve. It looks like in the quarter it made up about 10% of your OUS sales. I know it’s ramping. Where do you think this 29mm valve ends up? Thank you.

Okay. So the Netherlands probably down something like $1.5 million year-over-year if that helps calibrate you in terms of dollars. Amit Bhalla – Citigroup: Yeah. That’s helpful.

Okay. And the other question, could you say it again please? Amit Bhalla – Citigroup: Yeah. The 29mm valve, you said $7 million in revenue in the quarter. Overseas TAVI is about $85 million total so that would be about 9%, 10% of overseas revenue. Where do you think the 29mm valve goes as a percentage of total?

Yeah. We’re not sure, is the short answer. Remember we only had the 29mm in the TA position and so we know some of the volume moved over from TA to TF. We wouldn’t be surprised if it’s in the 15% range of total as an estimate. Amit Bhalla – Citigroup: Okay. Thanks, Mike.

Sure.

Our next question comes from the line of Michael Weinstein from JP Morgan. Please proceed with your question. Michael Weinstein – JP Morgan: Thank you. So you have this really strong quarter in SAPIEN sales in the US in particular, and globally it’s a strong SAPIEN performance, and again you raised your guidance in different elements. But your third quarter guidance is a little bit below consensus and so I was hoping maybe you could spend just a little bit more time on the FX impact as we go into the back half of the year down the P&L. And then second, on the R&D spend, because you are increasing your planned spending on R&D for the year to a higher percentage of sales. Can you just talk about where those dollars are going and how we think about returns on those investments? Thanks.

Yeah. Perfect, Mike. Be happy to get into it. First of all, the Street is high on Q3 and I think it’s understandable. If you go back to the slides that we presented at our Investor Conference we sort of – we try and show you what normal seasonality is and we showed Q3 trending higher than Q2 and that probably was a good signal to the Street. In fact, when the Cohort A approval got delayed approximately a quarter it really took the Q3 numbers down. And then we adjusted those last quarter but we didn’t give specific quarterly guidance and so that’s really what happened in Q3. In terms of foreign exchange, I think Tom mentioned we think it’s going to have about a $60 million impact, so a growing impact based particularly on how much the euro was moved for the year. Because of what you think a pretty effective hedging program we think it will have minimal impact on our bottom line. It’ll be small but not significant. To get into R&D a little bit, what you’re really seeing ramp up, Mike, are clinical trials. At this point the most substantial of those is the PARTNER II trial and the PARTNER II trial clearly is the most expensive trial that we’ve won. We still have the post approval studies associated with PARTNER and then we’ve got trials like PROTAVI going and starting CENTERA and SAPIEN 3. So the accumulation of those certainly takes spending off and that comes up and then starts peaking sort of in Q4, Q1. If that’s helpful. Michael Weinstein – JP Morgan: That is helpful. So, Tom, we were debating whether you said $60 million or not for full year FX. So that equates to 5.5% FX headwind in the second half of the year. But you’re indicating that you’ve got that managed for the second half which means that the benefit to your gross margin line will be greater in the second half than what we saw in the second quarter. Is that right?

That’s exactly correct. Michael Weinstein – JP Morgan: Okay. Any other thoughts...

60 is the full year, Mike. Not just the back half. Okay? Michael Weinstein – JP Morgan: Yes, I know. Understood. But the math I was doing, Mike, was I was netting out with the impact of the first half of the year to get to the second half and basically it ends up being like 5.5%. Okay?

Right. Michael Weinstein – JP Morgan: Okay. And then we look at Europe and the macro issues in Europe. Are there particular countries, outside of the event that you talked about in the Netherlands, where you have incremental concerns? Either about TAVI reimbursement or about the health of your underlying business recognizing that you called out southern Europe, is as it impacted the full business for Edwards?

Yeah. Thanks, Mike, and probably we need to let other people get in line, but overall as we said, Southern Europe is the biggest drag. With Spain not growing and Italy, which is a pretty substantial country, going slightly negative that certainly is a drag on growth rates. And those we believe are prosperity driven. In terms of countries that don’t have solid reimbursement in place I think the Netherlands and Belgium sort of stand out at this point in time. We expect them to approve it but what they’ve done is sort of make the barriers a little higher here and we’ll work through them. But they’re going slow.

Our next question comes from the line of Bruce Nudell from Credit Suisse. Please proceed with your question. Bruce Nudell – Credit Suisse: Thank you for taking the question. Mike, terrific launch, clearly. The range of sales in Europe is extraordinarily large. I think you commented 310 to 340. With FX that’s like for Edwards somewhere in between 4% and 24% constant currency. Really just based on your commentary it really doesn’t sound like the low end of that range is even plausible. Could you just give some color around that?

Well, you went through some numbers that we didn’t use exactly. You obviously calculated those, Bruce. We tried to give guidance that we think is pretty realistic. And you’re right, Europe is a mixed bag. You’ve got portions through Europe that just aren’t growing and other portions that are really growing fast like Germany. I don’t know, can you maybe give a more specific question I can answer more clearly, Bruce? Bruce Nudell – Credit Suisse: Yeah. I guess I’m just saying that if you take the US guidance of 240 to 260, subtract it from 510 to 600, or 550 to 600, you wind up with 310 and 340. And that results at the very low end of $310 million. A pretty puny growth rate for Edwards which just doesn’t sound very plausible.

Yeah. Well, again, I think our believe here is that we should do even better in the second half of the year than we do in the first half of the year. So depending on how you’re using those ranges whether you take the top one range and apply it to the bottom of the other, I don’t know. You can decide how you want to spread the ranges and the risk around. But overall in Europe we think the second half will be better than the first half because of the introductions of the 29mm TF and the Ascendra Plus system. Bruce Nudell – Credit Suisse: Perfect. And just the other question. As we looked at the market again, and if you could just comment on this, is that the issue of bicuspid valves is something we really didn’t consider very much. I know it’s not an absolute contraindication but there’s some evidence that’s it’s a reasonably prevalent condition among people let’s say under 75 who get aortic stenosis surgery. What’s your view on where TAVI is with regards to these bicuspid valves?

Whether it’s applicable for bicuspid valves? Yeah, it’s a congenital condition. So it’s not a big one. It’s also, I would say, not a true contraindication. We have a limited amount of experience there so we probably can’t say anything meaningful about how well TAVI works in bicuspid valve. So that’s probably where we are right now. It’s probably not a big driver of numbers in our future. I’m sure we’ll collect data on that and we’ll get a view through things like the TVT registry and some of the registries in Europe. So It’ll be helpful. Ultimately I think there’s no reason to believe we shouldn’t be able to treat those. We just lack data today. Bruce Nudell – Credit Suisse: Thanks so much.

Sure.

Our next question comes from the line of Glenn Novarro from RBC Capital Markets. Please proceed with your question. Glenn Novarro – RBC Capital Markets: Hi. Good afternoon, guys.

Hiya, Glenn. Glenn Novarro – RBC Capital Markets: Hey. I had a question on the surgical valve business particularly in the US. It looks like the US came in a little bit lighter again, and Mike, I know you cited competition. But I was wondering, has there been any benefit yet from the SAPIEN pull-through? In other words, patients coming in for SAPIEN not eligible and then going off to surgery? And if there hasn’t been a benefit yet, when should we expect to see it? And then just a quick question on some of these early development stage products that you acquired in the quarter. Anything material, anything you can share with us? That would be great. Thanks.

Okay. Thanks, Glenn. Yeah. In the quarter, probably the US might have been ever so slightly better a trend than it was in the first quarter but we’re still suffering from the fact that we haven’t anniversaried on the competitor’s valve. We’d like to think that we ultimately get a lift out of the transcatheter sites but it’s still early, I think is the short answer to the question. Remember we said we’d trained 110 new sites and the surgical valve business treats – I don’t know – we probably sell to 1,100 sites. So you can picture that there’s more people that certainly that we are selling to that don’t have transcatheters than do. So we’re going to look for that in the future. One thing for sure, we think that Edwards benefits. The combination of transcatheter heart valves plus our surgical heart valves certainly lift. In terms of the deals that we talked about, we’re not going into extraordinary detail but a couple of things; one relates to some tissue technology, particularly intellectual property we acquired, and the other is of some pretty interesting accessories for MIS for minimally invasive surgery. Glenn Novarro – RBC Capital Markets: Okay, great. Thanks for answering my question.

Sure.

Our next question comes from the line of David Roman from Goldman Sachs. Please proceed with your question. David Roman – Goldman Sachs: Thank you and good evening. Mike, I was hoping you’d talk in a little bit more detail about the impact the NCD’s issuance in early May might have had on your ability to open centers and how that potentially accelerated centers? I don’t know if you’re willing to offer any more color. I think at the end of last quarter you had said that you had trained 60 centers on the April 24th call. As of the end of Q1, I think the number you quoted today was 110. So of those 50, how much did the NCD help? And then maybe if you could characterize what that’s done to your training backlog or your pull-through rate and how that influences the balance of the year?

Yeah, thanks. I’ll see if I can provide a little bit of color. Although we said it certainly provided clarity and probably gave some people confidence it also would have probably placed the hurdle out there for other people that became an obstacle. So, overall we probably could have trained a few more sites than we did. We have the capability of probably training more than 20 in a month and you can – I think your math is correct that we did around 50 in the quarter. So the NCD helped existing sites. It took a lot of uncertainty out and it’s clarified things a lot. But it also for others it gave them a clear target that they have to achieve. The one portion of the NCD that people are probably most targeted at trying to achieve is the structural heart requirements. That’s a little confusing because to some sites. We still don’t believe the big picture. There’s 300 to 400 sites that probably meet these requirements. David Roman – Goldman Sachs: Okay. And then one of the things that you referenced in your prepared remarks was I think you said something like extraordinarily low rates of procedure complications or can you maybe just talk about what you’re seeing in terms of complication rates and obviously your training program being fairly extensive. How successful has that been in keeping the complication rates to a minimum relative to your expectations?

Yeah. You know we’re able to measure is the procedural success rate and we’re actually able to be at all these early procedures our self and so we feel just great that the training is very effective. You’ll remember us talking in the past about the fact we actually incent our sales force on procedural success rate, so it’s really paying off. All that investment that we put up front to make sure that we have great training and a great team that was well trained was great. And so rather than trying and quoting exact numbers, David, I’ll just say that it’s going as well if not better than any of our prior experience. David Roman – Goldman Sachs: Okay. And then, lastly for Tom, on the tax rate. I was a little bit surprised given the US starting to comprise a larger and larger percentage of revenue, the tax rate actually would be going up. Can you maybe just talk about the dynamics that are driving the tax rate in fact lower and then how we should think about that on a sustainable basis particularly assuming that the US over time is going to become a larger and larger piece of your business?

Yeah, you’re absolutely right. It’s somewhat counterintuitive, but we try to be clear here, David, that the rate is actually higher than last year. All right? And the projection is that it’s going to be a couple hundred, 250 basis points probably higher than last year. So it’s clearly being impacted by the US profitability it just wasn’t has high. Our model was probably conservative a little bit on where the sourcing was happening. So keep in mind that when I have to make an adjustment in midyear what we’re doing is the adjustment looks bigger than it actually is because it has to be a retroactive effect. So I’m adjusting two quarters within one. So you pretty much cut the difference in half and it’s not that big of a difference and I would attribute it to the model, difference in the model that I was using. David Roman – Goldman Sachs: Okay, got it. Thank you.

You bet.

Our next question comes from the line of Tom Gunderson from Piper Jaffray. Please proceed with your question. Tom Gunderson – Piper Jaffray: Hi. Good afternoon. Say, Mike, last quarter on European TAVI growth for the year you were expecting 20% to 25% now it’s 15% to 20%. Other than the Netherlands and the euro is there anything else contributing to the slight adjustment there?

Yeah, Tom. Good question. Yeah, really the euro wasn’t in there. When we try and get those growth rates we try and do what on constant currency so we really do – we did change what we bought. We thought Europe was growing 20% to 25% or we thought that would be the growth rate for 2012 and now we think 15% to 20%. We think there’s two pieces of that, that are somewhat similar. One is this sharp drop in the Netherlands. And part of it was the drop in the Netherlands and also that we thought it was going to rise. We thought that you actually might see an extra 100 procedures per quarter that happened in the Netherlands and that’s obviously not going to happen. Instead, we saw the decline. But the other part of this – we probably saw a little further softening in Southern Europe. A little more. We thought it would probably, it would have bottomed, but there still looks like there is a bit more further softening, Tom. Tom Gunderson – Piper Jaffray: Okay. Thanks. And then, Tom, on guidance for Q3 the revenues are almost the same with a little slack there as Q2 but earnings a little bit lower. Other than just the revenue delta can you break out what contributes to the difference between similar revenues with different earnings sequentially?

Yeah. I’d say I don’t see – you know, in our models and looking back to check in the revenue I have a bit less revenue on the one hand than you may have. I think they see the rates looking pretty similar. What typically happens is the SG&A is a percentage in that quarter because of the lower sales, but you’re saying you’re not getting that. But obviously in a higher SG&A percentage and the rest is pretty even. Tom Gunderson – Piper Jaffray: Tax rate. And is SG&A a little higher in total dollars sequentially?

Percentage we usually refer to. And tax rate, tax rate a little bit higher. Remember, Thomas, that I had took a full half year of quarter adjustment in the quarter so we’re trying to get to a full year rate. So if you look at the first half rate, it’ll give a better estimate of what we’re running at in the third quarter. Tom Gunderson – Piper Jaffray: Okay. Thank you, guys.

Okay.

Our next question comes from the line of Raj Denhoy from Jefferies & Co. Please proceed with you question. Raj Denhoy – Jefferies & Co: Oh hi, good afternoon, guys.

Hi, Raj. Raj Denhoy – Jefferies & Co: What if I could ask about some of the information that’s come out over the several months on perivalvular leakage and some of the data out of Europe suggesting that balloon expandable valves might have a lower rate of leakage than self expanding. I’m curious what your thoughts are around that and whether you think ultimately, that could prove to be a competitive advantage for you, particularly in Europe.

Yeah, you know the fact that there was a correlation between perivalvular leak, I think we all found interesting and we, being a surgical valve company, we’ve always been focused on trying to get zero leaks with transcatheter heart valves. There probably the most fortunate thing for us is the approach that we had all previously taken on SAPIEN 3, which was really designed to have a dramatic improvement on perivalvular leak. We still know that it correlates. We don’t know that it’s causal and I don’t know if there’s good data that’s out there, Raj, that really gives you detailed information on self expanding valves versus balloon expandable. We like to think so, but we don’t have the comparable data on the self expanding to be able to make that comparison cleanly. Raj Denhoy – Jefferies & Co: So I guess, net, you don’t think there’s going to be much impact in terms of market shares in Europe, for instance?

Well, I think ultimately there’ll be data that’ll be out there. There’s much more 3D imaging that’s going on. I think there’s much better sizing going on than ever before, and much more use of CT scan. So I think ultimately the story will be told, but I don’t know that there’s anything that’s really playing out in the present that’s going to be that stark in comparison. Raj Denhoy – Jefferies & Co: Okay, and then if I could ask about physician reimbursement here in the United States. I guess the CBT code is still being worked on for next year. Do you have any current thoughts around what that updated code could mean for you? And also really how physician reimbursement is being worked right now in the United States. How are you seeing centers deal with splitting various reimbursements among various clinicians right now?

Yeah, I’ll give you my best estimate, Raj. And again, we need to give other people a chance. Right now what’s going on is highly variable, depending on the center. Many centers sort of work in teams. They take the income and they split it up amongst the clinicians. I can’t tell you that every center is doing that. We believe that the direction the CBT codes are going in is that they should be fair. There’s a process that goes on and we think that recommendation which we understand as a pretty fair one has gone to CMS. They often adopt those recommendations. Not every time, but they often and generally do. So if it goes the way that it’s been teed up, we think it should be a fair reimbursement. And we think that would be welcome.There is variability out there in terms of how some of the regions are paying on CBT codes. There are some that fully pay and others that we even know one or two places where they actually don’t pay and they’re in arrears and they have to catch up at some point in time. So it’s still messy in that regard.

Our next question comes from the line of David Lewis from Morgan Stanley. Please proceed with your question. David Lewis – Morgan Stanley: Good afternoon.

Hi, David.

Hi, David. David Lewis – Morgan Stanley: Hey, Mike, I had a strategic question for you. As Edwards sort of transitions from more of the clinical milestones where you’ve been successful into more execution, I wonder if you could sort of help us understand how you’re thinking about the top line growth versus leverage. And specifically it’s hard to argue with the gross margins in the quarter. And obviously with better mix those margins probably trend higher. But R&D was obviously the highest we’ve seen in the company. And I wonder if you can just sort of talk about when do you think that leverage inflection occurs in the business. And based on the R&D programs you’d be sort of comfortable at this point saying that something around 15% probably does represent a peak for R&D spending at the company.

Thanks, David. I think I know where you’re going, but let’s talk about it strategically. We’re not sure there’s any substitute for driving great sales growth. Although we, like you, want to see real leverage come through the P&L, we wouldn’t want to do that at the expense of sales growth. And so we always try and strike that balance where we think we can have really bright innovations that change the way medicines practice so we can get rewarded for it. We obviously opt for that. What – your point specifically, when are you going to see leverage, we think you’re already seeing some of that leverage. And I think that starts continuing. We’ve made a large investment in launching in the US. And although we’ll make continuous investments in the US, particularly on the SG&A line, the sales are going to grow faster than the SG&A expenses, which is the largest proportion of our expense base. It should’ve caused our operating margin to rise. As you correctly see here with this quarter here is that the R&D rate has risen. And I think this is just the byproduct of what it takes to really make future sales a reality. It requires clinical studies and that’s not cheap. In terms of the high watermark, I actually think that this rate that we gave for full year to be between 15% and 16%, I don’t know whether that’s going to continue next year or not. It may be the high watermark. I hope so. With the way we expect to grow sales it should be that. But we’re not going to hesitate to make the clinical investments that we need to, David, to drive the top line. David Lewis – Morgan Stanley: Great sir, very clear, just the second really quick question. We talked a lot about European pressure but you talked about a little bit of critical care pressure in the US in the release but not so much on the call. Was there any second quarter capital pressure in your critical business and could we see that potentially rebound in the back half of the year if, when a lot of companies have reported in the second quarter was really more of a delayed capital purchasing. I wonder if you think that will come back in the back half.

Yeah. We did see our growth rate in capital decline in Critical Care. It’s not as though the environment really dried up; part of it is the prior-year comparison. We had just launched EV1000 and we were in the middle of that and so we did quite well in Q2 2011. So some of that was the decline, it’s just a tough comparison, David. I like to think that the climate is good enough for us to be able to do better in terms of growth rate on hardware going forward, especially with our new EV1000. Again, we’re not exactly the same as some of the big box guys because our hardware is not nearly as expensive as a robot or an MRI, but we still get affected by some of the similar trends. David Lewis – Morgan Stanley: Great, thank you very much.

Sure.

Our next question comes from the line of Bob Hopkins from Bank of America. Please proceed with your question. Bob Hopkins – Bank of America: Hi. Thanks. Can you hear me okay?

Sure, Bob. Bob Hopkins – Bank of America: Great. Good afternoon. Just two quick questions, one a little bit in the weeds and then one a little bit bigger picture. Last quarter as it related to your US TAVI sales you were kind enough to break down the $41 million and I think you said in terms of commercial revenues it was roughly $24 million and stocking revenues $10 million and then trial revenue about $7 million and I was wondering if you’d be willing to do the same thing here for Q2.

Okay. Well, let’s see. We said overall – you’re talking about US in particular? Bob Hopkins – Bank of America: Yeah. So again, the US breakdown of that $61.4 million.

We said $61 million in the quarter. Commercial was $53 million. So that pretty much, that gets you to what the clinical was; that’s $8 million. And then we said of the $53 million, 25% were net stocking units. And net stocking units get pretty easy this quarter because consignment was pretty much negligible. Okay? One, it was about a million dollars. Okay? So you can pretty much get yourself there, huh? Bob Hopkins – Bank of America: Yep. And then you trained 50 centers. Is that roughly the pace we should expect for Q3, Q4?

I think so. The one thing that changes there is the fact that when we get the approval for Cohort A we’re going to need to train all the existing centers again and that’s going to be a formal training. We’ll actually bring people into our training center. It won’t take two days like it does today. It’s more like a one-day training, but it will consume some of that training capacity. So that’s the one thing we wanted to alert you to. Bob Hopkins – Bank of America: Great. And then lastly on gross margins, just a little bit bigger picture, cause right now currency and product mix, but as we think longer term about gross margin, now that you’re kind of into the US launch and obviously annualizing at a really nice rate right now. In your view would it be a mistake to suggest that Edwards thinking out longer term? And I’m not talking about 2013, I’m just thinking about longer term, that this can’t be a 78% to 80% gross margin company?

I hesitate to get out in front of ourselves. The Valve business by itself is profitable, and it does have a chance to certainly lift our gross margins, but I think it’s premature to talk about those numbers at this point. Bob Hopkins – Bank of America: Okay. And then on the Analyst Day, are you going to be giving longer-term? How long-term guidance are you going to be providing?

That’s a good question. What do you think we should do? Bob Hopkins – Bank of America: The next five years.

Okay. Thanks for your input, Bob. Bob Hopkins – Bank of America: Thanks, guys.

Sure.

We have time for one last question. Our last question comes from the line of Spencer Nam from ThinkEquity. Please proceed with your question. Spencer Nam – ThinkEquity: Hi, guys. Thanks for taking my questions. So I just have one question. There were a lot of discussions at the beginning of the year based on some data points that myself and peers, my peer analysts have gathered suggesting that the adoption, particularly just with Cohort B, maybe a lot slower than you guys had outlined. But it seems like you are actually blowing numbers away, at least the first couple of quarters. And also just based on the way you guys are guiding, you guys also are adjusting some of those numbers yourselves, or the parameters yourselves. We’re just curious what things that you are learning as you launch the product, what are some of the things that you are learning that you had not seen prior to this year? And then what are some of the things that we should be thinking about as we try to model this more properly?

Yeah. It’s a good question. The one big question that was out there, Spencer, that’s always hard to understand is how many patients are on the sideline that were not being treated? And that’s what we’ve really learned. We had some experience in Europe, but we didn’t – when we started Europe we didn’t have this kind of experience. We didn’t have a randomized trial under our belt. We didn’t have this full reimbursement that was pretty well defined. So to have all those pieces in place, what we’re seeing here are these untreated patients are coming in. They’re coming in a big way and because procedure results are so good, they’re getting pretty dramatic results, which gets physicians excited. And so it’s driving real enthusiasm, which I think does help with the referral network. So what we’re – what we’ve basically saw is probably patients that either were just too sick or wouldn’t even think about surgery in the past are coming and getting treated. And that’s probably the biggest learning. Spencer Nam – ThinkEquity: Thank you.

All right. Thanks very much, all, for your continued interest in Edwards. Tom and David and I welcome any additional questions by telephone. I yield back to you, David.

Thank you 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 Relations 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. To access this please dial 877-660-6853 or 201-612-7415, use account number 2995 and passcode 396813. Let me repeat those numbers. 877-660-6853 or 201-612-7415; the account number is 2995 and the passcode is 396813. Additionally, an audio replay will be archived on the Investor Relations section of our website. Thank you very much.

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