David Erickson Michael A. Mussallem - Chairman of the Board and Chief Executive Officer Thomas M. Abate - Chief Financial Officer, Principal Accounting Officer and Corporate Vice President

Jason R. Mills - Canaccord Genuity, Research Division David H. Roman - Goldman Sachs Group Inc., Research Division Lawrence Biegelsen - Wells Fargo Securities, LLC, Research Division Imron Zafar - Jefferies & Company, Inc., Research Division Glenn J. Novarro - RBC Capital Markets, LLC, Research Division Frederick A. Wise - Stifel, Nicolaus & Co., Inc., Research Division Kristen M. Stewart - Deutsche Bank AG, Research Division Michael N. Weinstein - JP Morgan Chase & Co, Research Division Amit Bhalla - Citigroup Inc, Research Division Misha Dinerman Ben Andrew - William Blair & Company L.L.C., Research Division Bruce M. Nudell - Crédit Suisse AG, Research Division Spencer Nam - Janney Montgomery Scott LLC, Research Division Danielle Antalffy - Leerink Swann LLC, Research Division David R. Lewis - Morgan Stanley, Research Division

Greetings, and welcome to the Edwards Lifesciences Corporation First Quarter 2013 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, 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 2013 financial results. During Today's call, we'll discuss the results included in the press release and accompanying financial schedules and then use the 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, earnings per share, SG&A, R&D, taxes, free cash flow, diluted shares 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 reimbursement conditions, as well as expectations regarding market opportunities, the U.S. launch of SAPIEN, other new product introductions, patent matters and our pipeline. 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 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, 2012; 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. Additional information about our use of non-GAAP measures is included in today's press release. And now I'll turn the call over to Mike Mussallem. Mike? Michael A. Mussallem: Thank you, David. Our global THV sales growth of 40% was driven by the continued adoption in the U.S. Our clinical results continue to be very positive and we're making good progress on our pipeline of products designed to strengthen our leadership position. Yet global sales this quarter across all product lines were below our expectations, so we're lowering our 2013 guidance primarily to reflect the slower start to the year and an updated foreign exchange impact. Now turning to the quarterly results. Reported sales grew 8% to $497 million. Sales growth, excluding the impact of foreign exchange, was 10%. The favorable health care utilization trends we saw in Q4 did not continue in Q1. Additionally, selling days were lower this quarter and were most pronounced in Japan where we experienced the 4-day difference. In Japan -- I mean, excuse me, in Europe, sales grew 4% despite a weakened economic climate. In the U.S., total sales grew 22%. In transcatheter heart valves, first quarter sales of $170 million were driven by the ongoing U.S. launch of SAPIEN. In the U.S., THV sales were $83 million for the quarter, which included clinical sales of $7 million and net stocking sales of $6 million. Stocking orders were less than expected as we trained fewer TA sites than anticipated. While we estimated procedures nearly tripled from a year ago and were 20% high year than the fourth quarter, they were below our expectations. Today, more than 225 sites in the U.S. offer SAPIEN to their patients. Of these sites, 180 have been trained on a transapical approach. While interest among heart teams for this important delivery option remains high, approximately 20 sites have postponed their TA training. We believe the backlog of TA patients who are awaiting therapy has now been addressed. Overall capacity is still increasing, while some sites report that they currently have capacity constraints. Importantly, clinicians have continued to maintain very high procedural success rates overall even while adopting the new TA approach. As a reminder, we'll continue to report procedural growth in the impact of net stocking in 2013. And in 2014, we expect reported sales to begin tracking procedures performed. Overall, we believe the reimbursement for TAVR is designed to be fair on a national basis yet regional payments are highly variable. There are some hospitals that question the profitability of this procedure based on their regional reimbursement, as well as how they account for other related services and the allocation of overhead. We continue to engage with these centers to share best practices with a focus on reducing length of stay, as well as lowering procedure-related costs and complications. Outside the U.S., THV sales grew 8% in the quarter or 7% excluding the impact of foreign exchange. Our units grew approximately 10% with pricing decline to slightly year-over-year similar to last quarter. Growth was strongest again in Germany, while ongoing austerity measures resulted in negative growth in Southern Europe. Our transfemoral units outside the U.S. grew significantly while non-transfemoral units declined again this quarter driven by a TF-first approach and the impact of competitive transapical products. Last month at the ACC meeting, there were a number of presentations and live cases featuring our SAPIEN technology, including to 2 important late-breaking datasets. First, the results of our cohort A of the partner trial continue to demonstrate comparable outcomes between the treatment with Edward SAPIEN transcatheter heart valve and open heart surgery for patients at 3 years. These data indicated mortality and stroke rates were similar in 3 years, further strengthening the evidence supporting the use of TAVR in high-risk patients. And second, preliminary results from Cohort B, a PARTNER II trial, demonstrated similar 1-year outcomes and mortality at major clinical events between SAPIEN and XP yet fewer vascular events with a lower profile XT valve. While not directly comparable, we were most pleased to see improved outcomes in both SAPIEN and SAPIEN XP patients as compared with earlier trials. Now looking at our transcatheter product pipeline. We're still enrolling patients in Cohort A, the surgical arm of our U.S. Partner II clinical study, which is evaluating our SAPIEN XT technology. We continue to expect to complete enrollment around midyear. Additionally, we anticipate submitting our PMA for Cohort B of the PARTNER II trial next week, which we anticipate leads to U.S. approval of SAPIEN XT next year. We continue to enroll patient for the CE Mark trial of our advanced SAPIEN III valve, which is delivered through a 14-French eSheath and designed to reduce paravalvular leak. This keeps us on track to receive a CE Mark and launch this product in Europe by year end. In Europe, we're continuing to enroll at our self-expanding CENTERA valve trial and clinical experience with this novel valve will be discussed at the EuroPCR next month. Also at PCR, we anticipate a number of important presentations, including early data from our PROTAVI study, which is evaluating the process of stroke and our Embrella device, as well as updates from the source XP registry. In Japan, we continue to expect to receive both regulatory approval and reimbursement for SAPIEN XT by year end, which positions us to have the first commercially available transcatheter valve in that country. Recently the first implantations of the new delivery system for our Helio aortic insufficiency technology were performed. This new system uses a completely transfemoral approach, making it an interventional procedure. As you may recall, earlier feasibility work with Helio required both transfemoral and transapical access. We're continuing our feasibility work with this system and expect additional clinical experience to be discussed at EuroPCR. With respect to our THV patent litigation with CoreValve, we collected $84 million for Medtronic in the quarter, which reflected damages for willful infringement and interest through early 2010. Later this year, we expect the Delaware District Court to address the amount of damages due to Edwards from 2010 forward, as well as our request for an injunction. The patent office granted our request for a second interim expansion of the Anderson patent, which now extends its life to May of 2014. We expect the final decision on the patent extension to be issued during the first half of next year. And in Germany, the trial for the first of 3 new THV patent infringement cases against Medtronic Core Valve is scheduled for later this month. In summary, U.S. THV sales are below our expectations, which we believe is primarily the result of evolving economics for some hospitals and still developing capacity of both hospitals and their heart teams. As a result, we're lowering our 2013 guidance primarily to reflect our first quarter experience. We now expect global 2013 transcatheter heart valve sales to grow 25% to 30% on an underlying basis. This would result in sales of $670 million to $750 million, which includes $350 million to $400 million of sales in the U.S. In light of the reduced guidance, I'd like to remind you how we view the U.S. transcatheter valve opportunity. We are rapidly learning about the factors that influence adoption or continuing and we're continuing to work closely with sites. The untreated aortic stenosis population remains large and we believe a less invasive catheter-based approach remains attractive to patients and clinicians. This is especially true in light of the growing body of clinical evidence and the increasing demand in Europe even 6 years after introduction. For these reasons, our estimate of the size of the U.S. transcatheter valve opportunity for the longer-term remains unchanged. Now turning to the Surgical Heart Valve Therapy product group. Reported sales declined 3% over last year to $198 million. Excluding the impact of foreign exchange, sales were essentially unchanged compared to the prior year. This quarter's growth rate reflects a tougher comparison and was further tempered by the earlier impact from a competitor's introduction in Japan. Globally, our pricing remains stable. Late in the quarter, we received approval to sell our Magna Ease platform in China, which complements the approval of our paramount valve received late last year. This quarter, INTUITY is starting to impact our sales growth rate. We continue to make progress on our key milestones with this minimally invasive valve system. In Europe, our trials to assess the economics and benefits of INTUITY are progressing as planned and we continue to expect a CE Mark on INTUITY Elite in the third quarter. Elite is our next-generation platform with a lower profile designed to further enable small incisions. In the U.S., we recently received approval from the FDA to include INTUITY Elite in our ongoing transform IDE trial and enrollment is on track. We continue to enroll patients at our commenced U.S. IDE trial. This trial is studying the GLX tissue on our Magna Ease platform, which now includes both our market-leading aortic and mitral valves. We now expect underlying sales growth in the Surgical Heart Valve Therapy product group to be between 2% and 5% in 2013 aided by the commercialization of INTUITY but tempered by the slower than expected start to the year. Turning to the Critical Care product group. Total sales of $129 million for the quarter declined 4% over last year or remained flat excluding the impact of foreign exchange. Growth in advanced monitoring products in Europe and the U.S. was offset by a reduction of distributor inventory in China and an expectant sales decline related to the ongoing exit of our ACCESS product line. The integration of BMEYE is going well and the incorporation of our noninvasive monitoring technology into our EV1000 platform is still on track. While this technology have long-term potential, sales were negligible in the first quarter and will remain moderate until 2014 when we plan to introduce the integrated platform. We remain enthusiastic about the significant opportunity represented by our GlucoClear system and expect 2013 to be a pivotal year as we complete additional studies in Europe and attain greater clarity on the pathway toward U.S. approval. We're on track to meet our key milestones and are encouraged by the early experience. Based on the lower sales this quarter primarily resulting from our decision to reduce distributor inventories in China, we now expect full year 2013 underlying sales growth of 2% to 4% in the Critical Care product group driven by continued growth in our advanced monitoring products. And now I'll turn the call over to Tom. Thomas M. Abate: Thank you, Mike. This quarter on a GAAP basis, we achieved diluted EPS of $1.24, which benefited from the Medtronic payment and the 2012 R&D tax credit. Excluding these special items, our non-GAAP diluted EPS was $0.72 or 36% growth over last year. Also during the quarter, we repurchased 1.3 million shares of our stock. As Mike mentioned, we have reduced our 2013 projected sales resulting in full year estimated diluted EPS excluding special items of between $3 and $3.10. For the quarter, our gross profit margin was 75.4% compared to 72.3% in the same period last year. This improvement was driven by a more profitable product mix as THV sales continue to grow and a favorable impact from FX. For full year 2013, excluding special items, our guidance remains between 74% and 76%. First quarter SG&A expenses were $185 million or 37.3% of sales, an increase of 4.5% over the prior year. This increase is driven primarily by the U.S. medical device tax and U.S. transcatheter expenses. Given our revised sales projections, we now expect SG&A as a percentage of sales for the full year to be similar to the current rate. We continue to aggressively invest in R&D and spending in the quarter grew 16% to $80 million or 16% of sales. This increase was primarily the result of additional investments in a number of active heart valve clinical studies. We expect R&D investments to remain at this current ratio of sales for the remainder of the year. As previously announced, in the first quarter we received $84 million from Medtronic related to the damages award for infringement of the U.S. Andersen THV patent. Also, as required by GAAP, this quarter we recorded $8.4 million benefit from the 2012 Federal R&D Tax Credit. For comparison purposes in our non-GAAP results, we already reflected the benefit of the credit in the fourth quarter 2012 and, therefore, excluded it from this quarter. These 2 Special Items increased diluted EPS this quarter by $0.52. Our reported tax rate for the quarter was 24.6%. Excluding the impact from our 2 special items, our tax rate was 22.4%. We now expect our full year tax rate, excluding special items, to be at the low end of our previous 23% to 24% range. FX rates negatively impacted first quarter sales by $8 million compared to the prior year. Compared to our recent guidance, FX rates negatively impacted EPS by $0.02. Looking forward with the changes in the yen FX rates, we now expect a $50 million negative impact of full year sales compared to last year, which compares to the $15 million negative impact we provided at our investor conference in December. Free cash flow generated during the quarter was $64 million. We defined this as cash flow from operating activities of $87 million less capital spending of $23 million. Excluding the impact of the payment from Medtronic, our free cash flow was $7 million. For 2013, excluding special items, we now expect free cash flow to be between $270 million and $310 million. During the quarter, we spent approximately $108 million on share repurchases. For modeling purposes, we now project fully diluted shares outstanding to be approximately 116 million in 2013, which is 2 million shares lower than our December guidance. At the end of the quarter, approximately 140 million was available under our existing share repurchase authorization. Turning to our balance sheet. At the end of the quarter, we had total cash and cash equivalents and short-term investments of $558 million. Total debt was $193 million. Our DSO at the end of the quarter was 56 days, a 2-day reduction from the prior quarter. Inventory turns were 1.7, a small decrease from the prior quarter. Turning to our sales guidance for 2013. Given the lower utilization we experienced in Q1, we now expect full year total sales of $2.0 billion to $2.1 billion, which represents an approximate 10% underlying growth rate. This includes a $35 million larger penalty from foreign exchange compared to the guidance provided in December. For Surgical Heart Valve Therapy product group, we now expect sales of $770 million to $810 million. In transcatheter heart valve, we now expect sales of $670 million to $750 million. And in the Critical Care product group, we now expect the sales of $530 million to $570 million. Excluding Special Items, we now expect full year 2013 diluted EPS of $3 to $3.10 for a growth rate of approximately 13%. For the second quarter, we project total sales of $500 million to $530 million and second quarter diluted EPS excluding special items to be between $0.75 and $0.79. And with that, I'll hand it back over to Mike. Michael A. Mussallem: Thanks, Tom. We remain committed to our high level of investment and our pipeline of new products for the clinicians we serve and the patients they treat. We believe this enables us to aggressively develop our innovative product lines, driving long-term growth and extending our focused leadership position in structural heart therapies and Critical Care technologies. With that, I'll turn the call back over to David.

Thank you, Mike. [Operator Instructions] Operator, we're ready for questions, please.

[Operator Instructions] Our first question comes from the line of Jason Mills with Canaccord Genuity. Jason R. Mills - Canaccord Genuity, Research Division: Mike, you intentionally, in the press release, mentioned that your U.S. market opportunity expectations hadn't changed. Obviously recognizing that similar to the debate out here on the Street, could you give us a bit more granularity as it relates to how you're sizing it? Maybe a bit more color as it relates to the current target population as you see it relative to the current technology and how that target population expands or does whatever you expect it to do as new technology comes through the FDA. And I have one follow-up. Michael A. Mussallem: Sure, Jason. I'll speak to the U.S. market because that's really where we changed the estimate for the year and be would imagine that it would cause people to wonder if we thought the opportunity was smaller. And although we thought here in the near term, here, that there may be some capacity constraints and there may be some economic conditions for some sites that might be limiting in the near term, our expectation about the treatment opportunity hasn't changed at all. We continue to be bullish. Our models are driven by the prevalence. We believe that prevalence of this disease has not changed in any way. There's 260,000 patients with severe symptomatic aortic stenosis that are out there and only a quarter of those patients are treated. And we believe that as this technology continues to prove itself, and we're delighted with how it's demonstrated its impact on a long-term basis, that it's going to encourage these patients that are untreated for a variety of reasons to come off it and to gain treatment, particularly since you have this attractive catheter-based option. We think there's a component of that, which is simply accounts that are still on a learning curve that are coming up, Jason. There's accounts that are developing their referral networks, still training, general cardiologists, clinicians and their patients. So there's a fair amount of that, that's still going on right now. And we think as the technology improves and as the clinicians improve their technique, that this only grows. Jason R. Mills - Canaccord Genuity, Research Division: I'd like to follow-up on that. Then my second question I'll just ask and get back in queue. The follow-up would be, I think in the past you've identified the U.S. market, broadly speaking, it's about 100,000 patients. Relative to current SAPIEN technology, what percentage of that with the current approvals do you think you're addressing? And the follow-up question is, given the evolving economic that you discussed, Mike, is there a contemplation in the near term that perhaps there would be some pricing considerations you would be giving to various hospitals and various geographies, who obviously are -- in some sort of smaller metropolitan areas we're obviously hearing that they're having a little bit more trouble with the economics than the larger ones. So could you talk about your pricing strategies near term? Michael A. Mussallem: Yes. Just to be specific, I don't know where the 100,000 number came from, Jason. When we built this, we built this out of the 260,000. We feel like with a transfemoral and the transapical approach that we still have the ability to treat most patients. The transapical became very important particularly with this -- the large French size of SAPIEN. So, no, we don't the market really limited from that perspective. In terms of pricing, you all know how expensive this is to be able to bring this technology to the market and to demonstrate all the clinical evidence that we generate. And we think our pricing continues to be fair. Of course, we'll reward high-volume centers with more attractive pricing, but I wouldn't expect any substantial changes in our pricing picture, Jason.

Our next question comes from the line of David Roman with Goldman Sachs. David H. Roman - Goldman Sachs Group Inc., Research Division: I wanted just to start with going through maybe just at the high level, if you could provide some perspective on what's really changed in your thinking about 2013. And I understand that there are some macro economic factors. But as I look at the original guidance and some of these segments, whether it's a surgical heart valve business, that business was obviously very pressured in 2012. The guidance that you originally provided for 2013 assumed a turnaround. So I guess I'm really wondering, as you look at the guidance that you provided today, how much are you banking on things getting better versus taking what you now see as reality and extrapolating that forward? Michael A. Mussallem: Sure, I'm happy to get into it, David. Out of the change that we provided in our sales guidance, remember that a big piece of that is foreign exchange. So you can sort of set that aside. That was either $35 million from the investor conference or $30 million since the last time we talked. Separate from that, there was a component of that, that was related to Critical Care. The component that wasn't FX there was largely related to this change in our inventory in China. In heart valves, the change in addition to what we already talked about that's climate related was also related to this competitor in Japan that launched a little bit early. And the biggest single change is in the U.S. THV. That change in guidance was around $40 million. If we say that about a quarter of that already happened in the first quarter, David, this is a reflection that we're off to a slower start. And so that would be the key changes aside from the macro ones that we're explaining. David H. Roman - Goldman Sachs Group Inc., Research Division: Okay. And then maybe just a follow-up on the U.S. business. I was a little bit surprised to hear the commentary regarding 20 sites canceling their TA training. My additional readout on the net stocking numbers, that you might have been transitioning to consignment faster. But it sounds like the dynamic is that you blew through the bolus of patients and TA and now sort of taking a little bit longer to get sites up and running. Is there any more detail you can provide us on why these sites are canceling and what do you think it's going to take to get them to, A, go through training; and then, B, really get up the curve in doing procedures? Michael A. Mussallem: Sure, David, let me get into it. On the 20, I don't know that I would say they canceled, but we would say that they postponed. And we didn't expect 20 sites to postpone. There were a variety of reasons for why they did. Some would say, gee, they're waiting for their hybrid OR to be completed. Some might say that the surgical teams, for one reason or another, weren't ready to be trained. Some people cited waiting for TAo before they actually jumped into it. So there were a variety of reasons, but those 20 sites would have probably generated something in the neighborhood of $5 million or more of stocking sales, which we did not realize in the quarter. David H. Roman - Goldman Sachs Group Inc., Research Division: Understood. And then last, just on the R&D spending. It looked -- does look like that there was -- that you're continuing to spend at a very high level. And if you're willing to provide any further detail on what's in those numbers, that'll be helpful. And if not, when do you think we can start to see what's sort of beneath their kimono, so to speak, there? Michael A. Mussallem: Yes, well, as we tried to suggest, the key component of that is we have a lot of heart valve clinical trials going on right now. And I tried to tick through an awful lot of those in the course of our commentary. Those consume more than 50% of the R&D budget for Edwards Lifesciences. So we're continuing to follow PARTNER patients. You've got PARTNER II and you've got the trials that are going on in surgical heart valves. You've got some of the other things that are related to registries. So when you add it up, it's pretty substantial. Separate from that, we've got the R&D programs that we cited in each of our businesses and what we have going in advanced technology. So the combination of those are pretty significant. We think that we're excited about the prospects of those investments generating future sales. And so we've really been hesitant to pull back on that and continue to think that that's a good investment of our funds.

Our next question comes from the line of Larry Biegelsen with Wells Fargo. Lawrence Biegelsen - Wells Fargo Securities, LLC, Research Division: Mike, let me start with a long-term question. You have Japan coming on that should help your growth 2014. But could you talk about what's going to drive your growth in 2015 and 2016 before we have the PARTNER IIa indication approved? Because I assume this year the guidance is for 10% underlying growth, but what -- how are you going to maintain that kind of growth beyond -- between 2015 and '16? And then I have one follow-up. Michael A. Mussallem: Yes, I wasn't prepared to actually go through that in detail, but I could take a shot at it for your -- just to answer your question, Larry. We think that the SAPIEN technology is going to continue to grow. Those referral patterns and those patients are going to continue to come off the sidelines and that's going to grow. In Europe, we should be bringing our new lower profile technologies into being and so SAPIEN 3 and CENTERA have an opportunity to lift those. In our heart valve area, we have INTUITY that should be hitting its stride and lifting the growth rate of surgical heart valves. We have an opportunity for our noninvasive technology and our glucose to be lifting our growth rates, within Critical Care, we have MIS products within our CSS product line, which should be lifting it. So we think there's a - we think we have a pretty good lineup, a pretty good -- it was noted earlier how much we have invested in R&D. We have quite a lineup of new things that have an opportunity to lift us. Lawrence Biegelsen - Wells Fargo Securities, LLC, Research Division: All right. My second question, Mike, I'm sorry to sound like a broken record, but is there any color you can give us on mitral first-in-man timing? Michael A. Mussallem: Well, I'll just reiterate what we said at the time of the investor conference, that we thought it was likely that we're able to do it first-in-man in the mitral position this year. And we haven't been deterred on that. And so given that it's April, that means that we're that much closer and we continue to express the same sentiment. This is one that I hesitate to say too much before we know because we set some pretty high internal hurdles. Before we go to a first-in-man, we want to make sure that we check all those boxes and feel comfortable about that before we do it. But we continue to feel excited about the mitral opportunity. It's a big one, it's a big one for the company, it's a big one for patients. And we're hopeful that this is going to be a year where we have a novel first-in-man.

Our next question comes from the line of Imron Zafar with Jefferies. Imron Zafar - Jefferies & Company, Inc., Research Division: Just trying to understand the TAVI guidance a little bit better. Can you talk about volume trends that you're seeing in Cohort A patients versus Cohort B patients? And also TA versus TF delivery, was there underperformance in one segment versus the other in these categories? Michael A. Mussallem: Yes, one of the things that I try to note to the extent that it's helpful is that if you strip out clinicals and you take out net stocking orders, that the actual reorder rate was about 20% higher in Q1 compared to Q4. So it gives you some sense of the ramp. You have to be a little bit careful with the split of TA and TF because you still have TA that's being bought on stocking orders. There's a little bit more TF purchases than TA this quarter although they're somewhat similar. But again, the TA was listed by the stocking orders. And also note that you have a very different split outside the U.S. where you have a lower profile SAPIEN XT device. So even though you have the split, trying to do math on that is difficult. We don't have a great handle on how many, which patients are inoperable as opposed to high risk. That tends to be a gray area and we don't really have much that we could offer up on that front. I don't know if I answered your question, but happy to take a follow-up. Imron Zafar - Jefferies & Company, Inc., Research Division: No, that helps. And in terms of the U.S. target centers, going forward, I think last quarter you mentioned 200 new centers over the next 2 years. What's the updated target there? And is there any change in the strategy in terms of focusing more on utilization at existing centers versus more resources on adding new centers? Michael A. Mussallem: Yes. We don't have a formal update on the 200 centers to be added over the next 2 years. It's still a reasonable estimate. I think we infer that, that would be about 100 this year, 100 next year. I would say the 100 this year is probably at the high end of the estimate. I don't expect it to be above that, but there's still a number of centers that want to get in. There are a few centers, maybe 1 or 2, that have cited economics for not coming in, but for the most part there continues to be strong demand. Was there another part of your question? Imron Zafar - Jefferies & Company, Inc., Research Division: Yes. I just wondered if there was any revisiting of the longer-term strategy of maybe focusing more on existing centers and driving utilization at those centers versus... Michael A. Mussallem: Yes, it's a great question. I would say a lot of our growth has continued to come out of existing centers with well developed patterns. And there is a steep learning curve that's going on right now in all centers. There are capacity constraints and we hear it on all kinds of shapes and sizes. So we hear some that they need to, for example, get another nurse coordinator to do patient screening. We heard from some that they need to get additional days set aside in the cath lab and the ORs. We hear from others that it's time to get a second team up. So there's a variety of those things going on, some people building hybrid ORs that aren't finished yet. So if -- there's not one single theme that I can put my finger on that says it's going to relieve the capacity constraints. Our sales teams are engaged heavily with each of their sites trying to help them through their capacity increases.

Our next question comes from the line of Glenn Novarro with RBC Capital Markets. Glenn J. Novarro - RBC Capital Markets, LLC, Research Division: Mike, I'm wondering if you can discuss U.S. volumes, U.S. SAPIEN volumes in the quarter. Were they soft throughout the quarter, things maybe better in March? Maybe some color as to how the quarter progressed. Michael A. Mussallem: Yes, that's a tough one. I mean, we know how that went. It was pretty slow start to the quarter, but it's hard for us to say that it was really a steep ramp after that. So January was our softest month and we saw a pretty steady ramp after that. So I don't know if that helps provide any color, Glenn. Glenn J. Novarro - RBC Capital Markets, LLC, Research Division: Yes. No, that's fine. And then the 20 sites on TA that postponed, should we assume that they come back in the second quarter and therefore we should be modeling stocking that's closer to $10 million? Michael A. Mussallem: Yes. We would expect that they would eventually get trained whether it be on TA or even to those sites that talk about TAo, our system could potentially -- well, the short answer, yes, they'd be trained. Now remember that even though we expect to have those stocking orders come in, Glenn, there is going to be some offset for consignment. And so I think when we try to provide some help on this, we thought that net stocking would be somewhat of a lift in the first part of the year and not so much in the back part. But you know what, as the business gets bigger, net stocking is going to start to become a smaller and smaller part of total sales and so it will have a diminishing impact. Glenn J. Novarro - RBC Capital Markets, LLC, Research Division: Okay. But if these 20 states -- sites do get trained this quarter, we could get a lift from stocking in 2Q and then a slow ramp thereafter, is that a fair modeling assumption? Michael A. Mussallem: Well, yes, I do think that, that's true. We should get a lift from that. But again, I'm not in a position to predict exactly how the net stocking is going to turn out, Glenn. Glenn J. Novarro - RBC Capital Markets, LLC, Research Division: Okay. Then one last quick question. Of the PARTNER sites, when we talk to the partner sites, they're maxed out. They're doing 8 to 10 cases a week. And clearly, where the slowing is occurring is in the non-partner site. And you talked about how some of these sites are having a hard time developing referral patterns. Is there anything Edwards can do to help these sites develop these referral patterns faster, so that the ramp could -- can reaccelerate? Michael A. Mussallem: Yes. I didn't put a big emphasis on referral patterns. I think that's one that's going to have an impact on a long-term basis. I don't know how much of an impact it's really having in the near term. But to be specifically -- or to speak specifically to your question, there are several things that we're doing that we think can have long-term impact. One we mentioned before is we've engaged with the American College of Cardiology on the championing care initiative, which is really designed to train cardiologists and then ultimately general practitioners in the treatment of aortic stenosis. And there's a big need for that. The American Heart Association is developing a section on their website to actually speak to patients with aortic stenosis. That's never been there in the past. Edwards has helped launched a new patient-focus site called yournewheartvalve.com (sic) [yourheartvalve.com], which helps direct patients that are wondering what they might do about their aortic stenosis. So there are a number of things going on right now, Glenn, that I think will be helpful.

Our next question comes from the line of Rick Wise with Stifel, Nicolaus. Frederick A. Wise - Stifel, Nicolaus & Co., Inc., Research Division: Mike, a couple of questions, just a general one to start with. I know it can be fun to have a guidance for the U.S. Help us think why you're confident that you've got the correct range now given the understandable surprises as the new procedure gets rolled out and the complication around referrals and reimbursement, et cetera. Michael A. Mussallem: Yes, thanks, Rick. You could imagine when we have a very novel innovative technology like this, there are so many variables that go into the rate of adoption. And we try hard to model that. And we've got a very talented group with an awful lot of feedback. We're very close to our clinicians in our sites and do our best, but we're not able to get that just perfect. What we always try to do is share our best insight or our best knowledge. And we believe that what we're sharing right now is our most accurate picture of how we think the U.S. is going to turn out in 2013. We're fortunate that we -- we've got the first quarter under our belts. So we know that, so I would imagine there'd be less risk in it now than when we were making those estimates in December. And so we're just that much more confident this is the right level. Frederick A. Wise - Stifel, Nicolaus & Co., Inc., Research Division: Yes, but when you think about it sequentially, Mike, and I don't know if it's the right way to think about it, let's just assume clinical trial sales and net stocking are sort of -- somewhat like the first quarter. I mean, it still seems like we should see -- the math could be something like 20% sequential growth in commercial sales. Is that too aggressive a thought, do you think? Michael A. Mussallem: Yes, in terms of what are the range of possibilities, there are probably -- it's fair that the range are large. Given the dynamics, what we remind ourselves, Rick, is that if each of the 200 centers that we started the quarter with just did one more case in the quarter, that would've resulted in $6 million more sales. And so we're very sensitive to slight changes in almost every variable. And so, yes, it's always possible that we do better than this, but we're sharing this guidance as what we think is the clearest picture, the way we see it today. Frederick A. Wise - Stifel, Nicolaus & Co., Inc., Research Division: And just one last quick one. When does net stocking turn negative in 2013? Michael A. Mussallem: So far we've gotten in trouble trying to predict exactly what net stocking will do because there's so many variables. We think generally that it's a positive influence in the first half and it turns negative in the second half. But again, it starts to be a smaller percentage of total, Rick, so I think it gets -- it starts diminishing as an important impact over time.

Our next question comes from the line of Kristen Stewart from Deutsche Bank. Kristen M. Stewart - Deutsche Bank AG, Research Division: Mike, just to kind of, I guess, follow along with Rick's question just on the confidence with 2013. I guess, how should we -- I guess I'm having a hard time reconciling kind of entering the year, having confidence in 2013, now we're kind of taking some numbers down but yet you guys are still very confident in the longer-term outlook for the technology. I recognize that there's a very large, from a prevalence perspective, amount of patients out there with aortic stenosis. But how do you just think about that dynamic but then also considering the fact that there actually are constraints as you mentioned affecting this year like economics, which probably aren't going to get better and then capacity constraints? So I guess, why not kind of change, I guess, the outlook longer term unless you expect the economics or capacity issues to really flesh out, which doesn't seem to be a likely scenario... Michael A. Mussallem: No, no, thanks, Kristen. Yes, well, actually, maybe we have a little different view. We do think that economics improve and we do think capacity improves over time. Here you have this disease that's just a devastating disease for these patients and we're still early in the experience of these centers. They're on a learning curve. They're still building their capacity. They're far from efficient at this point. And that's growing. The economics, there's 2 components to the economics. One is the reimbursement and admittedly that changes slowly, but I would imagine that there would be changes to improve that over time. But more importantly is the cost side of this. And the cost side, this is driven by things like length of stay, like the actual procedure intensity itself, its complications. All those are improving, which should improve the economics. So we think there's a number of factors that improve over time. They are more difficult in the short term than they are in the long term. Kristen M. Stewart - Deutsche Bank AG, Research Division: Okay. And then just on the surgical valve business. Could you just maybe give us what the underlying rate of growth was there in the U.S., as well as outside the U.S.? Michael A. Mussallem: Sure. Let me take a look. So the U.S. underlying rate of growth was, I think, in the low to mid-single digits, so sort of in the 3 to 5 range as a growth rate. Negative. I don't know if I said that, but that's what I wanted to make sure that you were clear. Sorry about that. Kristen M. Stewart - Deutsche Bank AG, Research Division: So U.S. surgical valve business was down low to mid-single digits? Michael A. Mussallem: That's correct. Kristen M. Stewart - Deutsche Bank AG, Research Division: Okay. And is that because of selling days or you think just the overall market was softer or competition... Michael A. Mussallem: Yes. There was a one less sales day, which is worth about a minus 2. So a component of that was sales days, Kristen. But the market wasn't particularly robust either in our view. We don't feel like we took a share hit.

Our next question comes from the line of Michael Weinstein with JPMorgan. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: First question, just a couple of cleanups here. So our math just based on the numbers you gave suggest that the number of centers in the U.S. that were put -- had shifted to consignment this quarter was actually less than the number that shifted in the fourth quarter. Do you have that in front of you? Is that right? Michael A. Mussallem: Boy, I don't know that. I can tell you, Michael, that right now I think there's about half of the centers that are somewhere going through the consignment process. But I wouldn't be able to put my finger on it because this consignment number, once somebody starts on consignment, each valve they use moves to consignment, so it gets to be variable. It's not easy to do, to back out the accounting. It's one unit at a time. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: Okay. The surgical valve commentary, the conversation you just had with Kristen. What about the view or the thesis, Mike, that the launch of TA and the focus of surgeons in the U.S. now in TA is taking them away from doing surgical valve cases and that you're seeing more cannibalization, at least early on, than what we saw in Europe? Michael A. Mussallem: Yes, it's possible that that's the case. There's also some theory out there that there's an awful lot of valve trials going on in the U.S. at this point, as well, that could be tapping off some volume. So those could be factors that are influencing the surgical valve growth. Again, our pricing is solid. We don't feel like we're losing share. It's just not generating much growth right now. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: Okay. 2 other quick once. So one question I got from a lot of people between the press release and the call was, why didn't the company preannounce given the shortfall here on the top and bottom line and the change to guidance? Why did you guys sit on this until tonight? Michael A. Mussallem: We feel like this was sort of within our -- within the norms of reporting the way we do right now, Mike. So we didn't feel like there was any need to preannounce. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: Okay. And then last one. Given the quarter, given your lowered growth outlook for the year, given the obviously increased questions here from the Street, has your view on acquisitions changed at all, Mike, and your appetite for doing anything that might be a larger deal? Michael A. Mussallem: No, we're long-run guys, Mike. So when we think about acquisitions, we think about how we create long-term value. We think about what kind of things that suit Edwards. We have a very focused strategy around structural heart disease and critical care technologies. And so any acquisitions we think about are those that would provide growth particularly in those areas, where we're leaders. And so our philosophy, overall, has not changed. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: But no bigger deals? Michael A. Mussallem: We don't particularly -- our history, Mike, is to look at technology deals. We always consider a full range of options, but I can't tell you that there's really been any change in our view.

Our next question comes from the line of Amit Bhalla with Citigroup. Amit Bhalla - Citigroup Inc, Research Division: Mike, in your prepared comments you were talking a little bit about European competition impacting o U.S. TAVI. Could you flesh that out a little bit more? To what extent does it impact numbers? And how is it playing through in terms of pricing in the European market? Michael A. Mussallem: Sure. Yes, I would say for the first time we felt that competitors in the non-transfemoral competitor -- the non-transfemoral segment took some share. We estimate that maybe about 10% -- it's maybe 10% of that alternate access position, overall. So that's what it would look like. That's probably something in the order of maybe 150 units in the quarter, the bulk of those all in Germany. Amit Bhalla - Citigroup Inc, Research Division: Okay. And secondly, I know you talked about 20 or so sites that have postponed procedures. I'm wondering in the U.S. market, is there any dynamic of centers who were trained and performing the procedures that have decided that transapical -- I'm sorry, that TAVI is just no longer a procedure they want to offer because of economics or any other reason? Michael A. Mussallem: Yes, I'm not aware of anybody that has walked away and stopped doing TAVI based on economics. You asked the question earlier, too, about pricing in Europe. If I hadn't mentioned it earlier, it's continued on a similar trend what we've seen in the past, about 3% year-over-year decline principally driven by the volume discounts that we give in large centers. Amit Bhalla - Citigroup Inc, Research Division: And just, Mike, the question I asked, the second question in terms of centers walking away, I meant for economics or any other reason. And I think you just answered it strictly on economics. Michael A. Mussallem: Yes, no, I didn't mean to say that I'm aware of any centers that have walked away from TAVI, that I'm aware of.

Our next question comes from the line of Brooks West with Piper Jaffray.

This is actually Misha Dinerman for Brooks West. Mike, in your opening comments you noted that TA backlog has been addressed, but it sounds like the TA sites are still postponed. So I was wondering if you could comment on that a little bit. Michael A. Mussallem: Yes. I guess what I was trying to refer to is in advance of the approval of Cohort A, we believe that sites were, more or less, sort of saving up their patients that didn't have good femoral access for a transapical approach. Given that we got that approval in late October of last year, we don't think those patients are still around. We think those patients have been treated. This is not the kind of disease that here we are almost 6 months later, that they would still be there. So the TA cases have gone very well. They've had a high procedural success rate. We actually wonder here whether some of the cases that'd previously be done transfemorally were maybe borderline transfemoral cases, now that there's a TA approach, actually are being done by TA.

Our next question comes from the line of Ben Andrew with William Blair. Ben Andrew - William Blair & Company L.L.C., Research Division: Just a quick question for you. Did you -- if I missed it, forgive me. But did you give the breakout in revenues for TF versus TA in the quarter? I think you did last quarter. Michael A. Mussallem: I think, I mentioned that in the U.S. -- in Europe, I think our mix has been running around 70% TF, 30% TAA (sic) [TA]. So I think the market might be slightly richer than that, but that's our mix at this point. What I said was that we had much more growth on the TF side and actually some decline on the TA side. Ben Andrew - William Blair & Company L.L.C., Research Division: Okay. And on the sales and marketing side, as you think about the progression through the year and you gave us some guidance on the percentages, but what would it take for you to think about those spending levels differently as you go through the year, say you had another disappointing quarter on trans basis like this in the second quarter? Michael A. Mussallem: Yes, we try and discipline our sales and marketing expenses. You saw even our expenses this quarter a little lower probably because of some of the incentive comp that goes along in follow sales. But our focus is on really driving the growth. We think there's a lot of unmet need out there and we try and really line up our resources to be focused on that. And then those that aren't focused on driving growth, we try and be very thoughtful and judicious about how we apply that. So the estimates that Tom offered of an SG&A rate of around 37% for the remainder of the year, we think is a pretty reasonable way to think about us in 2013.

Our next question comes from the line of Bruce Nudell with Credit Suisse. Bruce M. Nudell - Crédit Suisse AG, Research Division: Mike and Tom, it looks like based on that $350 million to $400 million guidance and about 30-ish in clinical and 0 in net stocking, it's working out to like $320 million to $370 million in guidance for U.S. commercial sales. First, simple question, is that the right way to be thinking about it? And then given the fact that it's probably going to take time to recruit the unreferred prevalence pool of patients, should we be thinking that 2014 PARTNER I opportunity is somewhere between $400 million and $500 million? Michael A. Mussallem: Yes, let me take a shot at your first question. In terms of what we're guiding to, that was everything that included clinical and net stocking. We don't know how net stocking is actually going to work out. It's not going to be a big number one way or another. And so the difference probably between our estimate and what you're trying to calculate are the clinical sales. And if you just took the clinical sales this quarter and took them times 4, it probably wouldn't be a bad estimate to use for how it might turn out for the year. I'm sure it's not perfect, but it's not a bad estimate. Does that answer that part of the question? Bruce M. Nudell - Crédit Suisse AG, Research Division: And the second question really was, given the work you're going to have to do to draw out the unreferred prevalence pool, should we be thinking about the 2014-ish market potential for PARTNER I in the $400 million to $500 million range if, in fact, this year's commercial sales are somewhere between $320 million and $370 million? Michael A. Mussallem: Yes. We're not ready to forecast 2014, Bruce. The things that are going on right now in addition to the work that I mentioned earlier that we're doing with the societies and so forth, there's also work going on with each individual site. And those sites are probably the most powerful generators of improving their capacity, improving their economics and working on their referral networks. And so I expect there to be progress on all those fronts, but it's too early for us to offer 2014 guidance.

Our next question comes from the line of Spencer Nam with Janney. Spencer Nam - Janney Montgomery Scott LLC, Research Division: I wanted to ask you just a couple of quick questions on the center behaviors and then kind of how you guys looked at the outlook. First of all, you guys talked about 200 centers signed up as of last December and then another 200 joining the program by end of next year, 2014. With this sort of the recent activities, do you now have a different view on that, or how do you guys think about some ramp up here with the program? Michael A. Mussallem: Yes. No, we don't have a different view of that. As I mentioned at the end of this quarter, we're just over 225, so we're tracking just on that rate. But this is the one that as we get more visibility, we'll let you know, but that estimate is our current reasonable estimate. Spencer Nam - Janney Montgomery Scott LLC, Research Division: Okay. That's helpful. And then in terms of once the centers get trained and signed up, for example, what sort of ramp-up period do they have in terms of doing cases? It seems like the time it takes for a center from a consignment stance to fully functional, if you will, is taking a little longer than we had previously expected, is that fair? Michael A. Mussallem: It's tough to generalize, Spencer. As you know, when they come to training, they bring some cases with them and then generally they get proctored immediately thereafter. So usually something in the neighborhood of 5 cases usually happen in pretty short order after their training. And then generally because they place stocking orders, they have a certain level of commitment to continue. But it's highly variable for a whole host of reasons, so I'm not sure that I can provide much help on that.

Our next question comes from the line of Danielle Antalffy with Leerink Swann. Danielle Antalffy - Leerink Swann LLC, Research Division: Mike, I was hoping you could follow-up on a comment you made about reimbursement and potential improvements there and help us understand what that could mean -- what improvements you're talking about and then when we could see that, number one. And then number two, I was hoping you could comment on the potential penetration into the moderate-risk patient population, particularly after the GARY data we saw in APC and how, if at all, that changes your view of potentially penetrating that patient population? Michael A. Mussallem: Sure. Yes, I think that there's a couple of kinds of reimbursements. There's physician reimbursement and that would get -- that's going to get readdressed. That'll be -- that happens routinely, pretty much happens on an annual basis and so that will get dressed. In terms of the overall DRG system, that that's to be slower moving. It takes some time. I think generally people think it takes a couple of years here before CMS reassesses a DRG. But over time, they try and reassess. And then so these things aren't frozen in time was my inference. In terms of the GARY registry and whether it had impact, we really have not seen any negative impact. I think one of the things that I mentioned is actually Germany itself is one of our fastest growing countries in Europe. It doesn't change our view of how attractive this is going to be for patients. If you look at the -- that have -- patients that are current surgical patients, if you look at the 3-year ACC data, which we think is far more important data than the GARY data, we found that comparing the SAPIEN valve to surgery was looking quite attractive. They were equivalent and it becomes a very interesting option for these high-risk patients. So we think that PARTNER II, which is going to get into it in a bigger way, is going to demonstrate that even greater. The early look that you had in PARTNER IIB highlights the benefits of XP and the lower profile and the improved vascular complication. So we think this just gets better for these moderate-risk patients.

We have time for one final question today. And it comes from the line of David Lewis with Morgan Stanley. David R. Lewis - Morgan Stanley, Research Division: Mike, just one question; one financially related for Tom. I guess, Mike, the question I keep on getting during the call was going on is some of the dynamics you're talking about on the short term, you don't get materially better in the next 6 to 12 months, but you're also very confident that the total opportunity for SAPIEN remains sort of unchanged. So is a fair way of thinking about this is it's the same total market opportunity, but maybe you get to that level of penetration or that opportunity 6 months, 12 months or 2 years later than you would have thought? Michael A. Mussallem: I was going to give Tom a chance to answer a question here so... David R. Lewis - Morgan Stanley, Research Division: I've got a second one for Tom. Michael A. Mussallem: He hasn't been very popular. Thomas M. Abate: No, he had the second part was me. Michael A. Mussallem: Okay. Now to the first one, yes, that may well be the case. I mean, I hesitate to change a view of a market after one more quarter. As we see things sort of unveil itself, David, we'll have a sharper view of what we think this looks like in the long term. But the premise that you lay out there, that it may take a little longer to get these patients, that's one explanation, that might be it. It's just too soon for us to have a clear view and we'll certainly sharpen that up over time. David R. Lewis - Morgan Stanley, Research Division: Okay. And then, Tom, I promised to give you a financial question here. If we think about the guidance, specifically on earnings, the call focus more on revenue, if I adjust for the top line, really THV sales, work it down at a high contribution, the earnings reduction kind of makes sense to me. But I guess what made less sense was it looks like the way you're approaching the sales and spending this year is relatively similar adjusted for that revenue. And given Mike's commentary on seeing less traction at smaller centers, I guess I was surprised that you're seeing that relative contribution to earnings. And I'm wondering, has there been any change to sales and your spending expectations for '13 based on what you're seeing in the marketplace? And if this were to continue into next quarter, do you think then we'd start to see a change in how you're thinking about sales spending in the U.S.? Thomas M. Abate: No, it's a good question. We looked at expenses and we looked hard, but what we tried to do very much is to make sure that everything and anything that was directed at sales growth was preserved. So we've done some things. You also have to remember that when we do something like this to top and bottom line, we're talking sales growth adjustment and EPS adjustment, there's adjustments to the incentive programs inside the company. So there's a piece of that, that might be misleading you when you're looking at ratios and so forth. So some of it's that. Now we're convinced that this is all the growth opportunity we've ever had and it's just -- we might have to work a little harder, so spending is probably not the place we would go short term. Michael A. Mussallem: Okay. Well, thanks, everyone. We appreciate your continued interest in Edwards. Tom and David and I will welcome any additional questions by telephone. And with that, back to you, David.

Thank you for joining us on today's call. Reconciliations between GAAP and non-GAAP numbers mentioned during the call, which include underlying growth rates, sales results, excluding currency impact 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 and use pass code 411660. Additionally, an audio replay will be archived on the Investor Relations section of our website. Thank you very much.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.