##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 29, 2008
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to.
 Commission file number: 000-51348
 ev3 Inc.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    32-0138874
(I.R.S. Employer Identification No.)
 9600 54 th Avenue North, Suite 100
Plymouth, Minnesota 55442
 (763) 398-7000
 þ o
  Large accelerated filer
o
    
    Accelerated filer
þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



ev3 Inc.
FORM 10-Q
For the Quarterly Period Ended June 29, 2008
 TABLE OF CONTENTS
 Description
    
    PagePART I. FINANCIAL INFORMATIONITEM 1. Financial StatementsConsolidated Balance Sheets as of June 29, 2008 (unaudited) and December 31, 2007
    
    
    1Consolidated Statements of Operations for the three and six months ended June 29, 2008
and July 1, 2007 (unaudited)
    
    
    2Consolidated Statements of Cash Flows for the six months ended June 29, 2008
and July 1, 2007 (unaudited)
    
    
    3Notes to the Consolidated Financial Statements
    
    
    4ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28ITEM 4. Controls and Procedures
    
    
    29PART II. OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    31ITEM 1A. Risk Factors
    
    
    31ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    32ITEM 3. Defaults Upon Senior Securities
    
    
    32ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    33ITEM 5. Other Information
    
    
    33ITEM 6. Exhibits
    
    
    34SIGNATURE PAGE
    
    
    35Exhibit Index
    
    
    36Section 302 CertificationSection 302 CertificationSection 906 CertificationSection 906 Certification
  
 This report contains not only historical information, but also forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by those
sections. We refer you to the information under the heading Part I. Item 2. Managements
Discussion and Analysis of Financial Condition and Results of OperationsForward-Looking
Statements.
 In this report, references to ev3, the company, we, our or us in this report, unless the
context otherwise requires, refer to ev3 Inc. and its subsidiaries.
 All trademarks or trade names referred to in this report are the property of their respective
owners.




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM I. FINANCIAL STATEMENTS
 ev3 Inc.
 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands, except per share amounts)
 June 29,
    
    
    December 31,2008
    
    
    2007(unaudited)AssetsCurrent assetsCash and cash equivalents
    
    $
    38,749
    
    
    $
    81,060Short-term investments
    
    
    
    
    
    
    9,744Accounts
receivable, less allowances of $7,826 and $6,783, respectively
    
    
    73,726
    
    
    
    66,170Inventories, net
    
    
    65,356
    
    
    
    64,044Prepaid expenses and other assets
    
    
    4,096
    
    
    
    6,371Other receivables
    
    
    1,726
    
    
    
    981Total current assets
    
    
    183,653
    
    
    
    228,370Restricted cash
    
    
    1,736
    
    
    
    2,204Property and equipment, net
    
    
    34,840
    
    
    
    37,985Goodwill
    
    
    594,238
    
    
    
    586,648Other intangible assets, net
    
    
    205,616
    
    
    
    231,000Other assets
    
    
    536
    
    
    
    899Total assets
    
    $
    1,020,619
    
    
    $
    1,087,106Liabilities and stockholders equityCurrent liabilitiesAccounts payable
    
    $
    18,214
    
    
    $
    21,511Accrued compensation and benefits
    
    
    30,704
    
    
    
    35,301Accrued liabilities
    
    
    23,752
    
    
    
    49,429Deferred revenue
    
    
    4,128
    
    
    
    9,347Current portion of long-term debt
    
    
    3,571
    
    
    
    3,571Total current liabilities
    
    
    80,369
    
    
    
    119,159Long-term debt
    
    
    4,643
    
    
    
    6,429Other long-term liabilities
    
    
    4,488
    
    
    
    3,037Total liabilities
    
    
    89,500
    
    
    
    128,625Stockholders equityCommon stock, $0.01 par value, 300,000,000 shares authorized, shares
issued and outstanding: 105,633,613 shares at June 29, 2008 and
105,078,769 at December 31, 2007
    
    
    1,056
    
    
    
    1,051Additional paid in capital
    
    
    1,748,911
    
    
    
    1,739,064Accumulated deficit
    
    
    (818,231
    )
    
    
    (781,039
    )Accumulated other comprehensive loss
    
    
    (617
    )
    
    
    (595
    )Total stockholders equity
    
    
    931,119
    
    
    
    958,481Total liabilities and stockholders equity
    
    $
    1,020,619
    
    
    $
    1,087,106
  1




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##### Table of Contents



ev3 Inc.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Dollars in thousands, except per share amounts)
 (unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 29, 2008
    
    
    July 1, 2007
    
    
    June 29, 2008
    
    
    July 1, 2007SalesProduct sales
    
    $
    101,509
    
    
    $
    65,396
    
    
    $
    196,559
    
    
    $
    126,895Research collaboration
    
    
    6,208
    
    
    
    
    
    
    
    12,415
    
    
    
    Net sales
    
    
    107,717
    
    
    
    65,396
    
    
    
    208,974
    
    
    
    126,895Operating expenses:Product cost of goods sold
    
    
    34,290
    
    
    
    22,362
    
    
    
    66,260
    
    
    
    42,819Research collaboration
    
    
    1,899
    
    
    
    
    
    
    
    3,547
    
    
    
    Sales, general and administrative
    
    
    65,936
    
    
    
    40,882
    
    
    
    125,764
    
    
    
    80,019Research and development
    
    
    14,054
    
    
    
    11,323
    
    
    
    25,780
    
    
    
    18,756Amortization of intangible assets
    
    
    7,941
    
    
    
    3,864
    
    
    
    16,184
    
    
    
    7,964Intangible asset impairment
    
    
    10,459
    
    
    
    
    
    
    
    10,459
    
    
    
    Gain on sale or disposal of assets, net
    
    
    
    
    
    
    (1,004
    )
    
    
    
    
    
    
    (988
    )Total operating expenses
    
    
    134,579
    
    
    
    77,427
    
    
    
    247,994
    
    
    
    148,570Loss from operations
    
    
    (26,862
    )
    
    
    (12,031
    )
    
    
    (39,020
    )
    
    
    (21,675
    )Other (income) expense:Realized and unrealized gains on investments, net
    
    
    (400
    )
    
    
    
    
    
    
    (400
    )
    
    
    Interest (income) expense, net
    
    
    85
    
    
    
    (297
    )
    
    
    (356
    )
    
    
    (406
    )Other (income) expense, net
    
    
    345
    
    
    
    (195
    )
    
    
    (2,087
    )
    
    
    (512
    )Loss before income taxes
    
    
    (26,892
    )
    
    
    (11,539
    )
    
    
    (36,177
    )
    
    
    (20,757
    )Income tax expense
    
    
    530
    
    
    
    332
    
    
    
    1,015
    
    
    
    608Net loss
    
    $
    (27,422
    )
    
    $
    (11,871
    )
    
    $
    (37,192
    )
    
    $
    (21,365
    )Earnings per share:Net loss per common share (basic and diluted)
    
    $
    (0.26
    )
    
    $
    (0.20
    )
    
    $
    (0.36
    )
    
    $
    (0.37
    )Weighted average shares outstanding (basic and diluted)
    
    
    104,247,782
    
    
    
    59,543,827
    
    
    
    104,176,206
    
    
    
    58,529,041
  2




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##### Table of Contents



ev3 Inc.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands, except per share amounts)
 (unaudited)
 Six Months EndedJune 29, 2008
    
    
    July 1, 2007Operating activitiesNet loss
    
    $
    (37,192
    )
    
    $
    (21,365
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    22,044
    
    
    
    11,574Provision for bad debts and sales returns
    
    
    2,304
    
    
    
    661Provision for inventory obsolescence
    
    
    5,367
    
    
    
    2,175Patent rights impairment charge
    
    
    595
    
    
    
    Gain on disposal of assets
    
    
    (49
    )
    
    
    (988
    )Gain on sale of investment
    
    
    (351
    )
    
    
    Stock compensation expense
    
    
    8,623
    
    
    
    4,859Intangible asset impairment
    
    
    10,459
    
    
    
    Change in operating assets and liabilities:Accounts receivable
    
    
    (9,064
    )
    
    
    (11,587
    )Inventories
    
    
    (7,798
    )
    
    
    (4,349
    )Prepaid expenses and other assets
    
    
    2,380
    
    
    
    646Accounts payable
    
    
    (3,714
    )
    
    
    (2,365
    )Accrued expenses and other liabilities
    
    
    (32,975
    )
    
    
    3,520Deferred revenue
    
    
    (4,915
    )
    
    
    Net cash used in operating activities
    
    
    (44,286
    )
    
    
    (17,219
    )Investing activitiesProceeds from sale of short-term investments
    
    
    9,744
    
    
    
    6,900Purchase of property and equipment
    
    
    (6,443
    )
    
    
    (3,519
    )Purchase of patents and licenses
    
    
    (1,853
    )
    
    
    (1,079
    )Purchase of distribution rights
    
    
    
    
    
    
    (6,500
    )Proceeds from sale of assets
    
    
    49
    
    
    
    2,005Payments for acquisition of FoxHollow, net of cash acquired
    
    
    (127
    )
    
    
    Change in restricted cash
    
    
    524
    
    
    
    722Net cash provided by (used in) investing activities
    
    
    1,894
    
    
    
    (1,471
    )Financing activitiesProceeds from issuance of common stock
    
    
    
    
    
    
    44,653Proceeds from issuance of debt
    
    
    
    
    
    
    5,000Payments on long-term debt
    
    
    (1,786
    )
    
    
    (1,072
    )Payments on capital lease obligations
    
    
    (77
    )
    
    
    (68
    )Debt issuance costs
    
    
    203
    
    
    
    Proceeds from exercise of stock options
    
    
    682
    
    
    
    4,043Proceeds from employee stock purchase plan
    
    
    859
    
    
    
    Other
    
    
    (312
    )
    
    
    Net cash provided by (used in ) financing activities
    
    
    (431
    )
    
    
    52,556Effect of exchange rate changes on cash
    
    
    512
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    (42,311
    )
    
    
    33,866Cash and cash equivalents, beginning of period
    
    
    81,060
    
    
    
    24,053Cash and cash equivalents, end of period
    
    $
    38,749
    
    
    $
    57,919
  3




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##### Table of Contents



ev3 Inc.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Description of Business
  2. Basis of Presentation
   FoxHollow
  Accounting Changes
   4




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##### Table of Contents



3. Fair Value Measurements
  
    
    Level 1. Observable inputs such as quoted prices in active markets;
    
    Level 2. Inputs, other than the quoted prices in active markets, that are observable
either directly or indirectly; and
    
    Level 3. Unobservable inputs in which there is little or no market data, which require
the reporting entity to develop its own assumptions.
 Assets and Liabilities Measured at Fair Value on a Recurring Basis
  4. Stock-Based Compensation
  Three Months Ended
    
    
    Six Months EndedJune
29, 2008
    
    
    July 1, 2007
    
    

June
29, 2008
    
    
    July 1, 2007Stock-Based Compensation Charges:Product cost of goods sold
    
    $
    179
    
    
    $
    187
    
    
    $
    476
    
    
    $
    345Sales, general and administrative
    
    
    3,443
    
    
    
    2,207
    
    
    
    7,036
    
    
    
    4,066Research and development
    
    
    270
    
    
    
    266
    
    
    
    1,111
    
    
    
    448$
    3,892
    
    
    $
    2,660
    
    
    $
    8,623
    
    
    $
    4,859
   5




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##### Table of Contents



5. FoxHollow Acquisition
    October 4,2007Intangible assets
    
    $
    199,500Acquired in-process research and development
    
    
    70,700Tangible assets acquired, net of liabilities assumed
    
    
    149,166Goodwill
    
    
    437,677Estimated fair value of identifiable tangible and intangible assets and goodwill,
net of cash acquired and liabilities assumed
    
    $
    857,043
 Pro Forma Results of Operations
   Three Months Ended
    
    Six Months EndedJuly 1, 2007
    
    July 1, 2007Reported
    
    Pro forma
    
    Reported
    
    Pro formaNet sales
    
    $
    65,396
    
    
    $
    116,016
    
    
    $
    126,895
    
    
    $
    226,732Net loss
    
    $
    (11,871
    )
    
    $
    (14,434
    )
    
    $
    (21,365
    )
    
    $
    (30,420
    )Net loss per share:Basic and diluted
    
    $
    (0.20
    )
    
    $
    (0.14
    )
    
    $
    (0.37
    )
    
    $
    (0.30
    )
 6




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##### Table of Contents



6. Restructuring
   Purchase Price Adjustments (EITF 95-3)Adjustments toBalance at
    
    
    Purchase Price
    
    
    
    
    
    
    Balance atDecember 31, 2007
    
    
    Allocation
    
    
    Amounts Paid
    
    
    June 29, 2008Workforce reductions
    
    $
    7,605
    
    
    $
    1,825
    
    
    $
    (5,322
    )
    
    $
    4,108Termination of contractual commitments
    
    
    2,476
    
    
    
    1,777
    
    
    
    (60
    )
    
    
    4,193Total
    
    $
    10,081
    
    
    $
    3,602
    
    
    $
    (5,382
    )
    
    $
    8,301
   ev3 Legacy Expensed (FAS 112)AmountsBalance at
    
    
    Charged to
    
    
    
    
    
    
    Balance atDecember 31, 2007
    
    
    Expense
    
    
    Amounts Paid
    
    
    June 29, 2008Workforce reductions
    
    $
    999
    
    
    $
    
    
    
    $
    (800
    )
    
    $
    199Total
    
    $
    999
    
    
    $
    
    
    
    $
    (800
    )
    
    $
    199
 7. Inventories
  June 29, 2008
    
    
    December 31, 2007Raw materials
    
    $
    13,309
    
    
    $
    18,003Work in-progress
    
    
    5,717
    
    
    
    3,946Finished goods
    
    
    59,359
    
    
    
    53,06378,385
    
    
    
    75,012Inventory reserve
    
    
    (13,029
    )
    
    
    (10,968
    )Inventory, net
    
    $
    65,356
    
    
    $
    64,044
 7




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##### Table of Contents



8. Property and Equipment, Net
  June 29, 2008
    
    
    December 31, 2007Machinery and equipment
    
    $
    29,006
    
    
    $
    27,405Office furniture and equipment
    
    
    17,649
    
    
    
    16,897Leasehold improvements
    
    
    13,828
    
    
    
    14,656Construction in progress
    
    
    7,389
    
    
    
    6,95767,872
    
    
    
    65,915Less:Accumulated depreciation and amortization
    
    
    (33,032
    )
    
    
    (27,930
    )Property and equipment, net
    
    $
    34,840
    
    
    $
    37,985
  9. Goodwill and Other Intangible Assets
  PeripheralVascular
    
    
    Neurovascular
    
    
    TotalBalance as of December 31, 2007
    
    $
    501,394
    
    
    $
    85,254
    
    
    $
    586,648Adjustment to goodwill related
to acquisition of
FoxHollow
    
    
    7,590
    
    
    
    
    
    
    
    7,590Balance as of June 29, 2008
    
    $
    508,984
    
    
    $
    85,254
    
    
    $
    594,238
   Weighted
    
    
    June 29, 2008
    
    
    December 31, 2007Average
    
    
    Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetUseful Life
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying(in years)
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountPatents and licenses
    
    
    5.0
    
    
    $
    14,060
    
    
    $
    (5,559
    )
    
    $
    8,501
    
    
    $
    13,802
    
    
    $
    (4,890
    )
    
    $
    8,912Developed technology
    
    
    10.0
    
    
    
    203,416
    
    
    
    (58,840
    )
    
    
    144,576
    
    
    
    202,416
    
    
    
    (50,213
    )
    
    
    152,203Trademarks and tradenames
    
    
    9.0
    
    
    
    12,222
    
    
    
    (3,956
    )
    
    
    8,266
    
    
    
    12,222
    
    
    
    (3,454
    )
    
    
    8,768Customer relationships
    
    
    10.0
    
    
    
    56,094
    
    
    
    (15,531
    )
    
    
    40,563
    
    
    
    56,094
    
    
    
    (13,094
    )
    
    
    43,000Distribution rights
    
    
    2.5
    
    
    
    9,274
    
    
    
    (5,564
    )
    
    
    3,710
    
    
    
    9,274
    
    
    
    (3,710
    )
    
    
    5,564Merck exclusivity (see Note
10)
    
    
    3.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,600
    
    
    
    (1,047
    )
    
    
    12,553Other intangible assets
    
    
    
    
    
    $
    295,066
    
    
    $
    (89,450
    )
    
    $
    205,616
    
    
    $
    307,408
    
    
    $
    (76,408
    )
    
    $
    231,000
 8




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##### Table of Contents



2008
    
    $
    29,1962009
    
    
    22,5162010
    
    
    19,5182011
    
    
    18,1042012
    
    
    18,047
 10. Intangible Asset Impairment
  11. Long-Term Debt
  June 29, 2008
    
    
    December 31, 2007Term loan
    
    $
    8,214
    
    
    $
    10,000Less: current portion
    
    
    (3,571
    )
    
    
    (3,571
    )Total long-term debt
    
    $
    4,643
    
    
    $
    6,429
    9




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##### Table of Contents



Remaining 2008
    
    $
    1,7862009
    
    
    3,5712010
    
    
    2,5002011
    
    
    357Total
    
    $
    8,214
 12. Other Comprehensive Loss
  Three Months Ended
    
    
    Six Months EndedJune 29, 2008
    
    
    July 1, 2007
    
    
    June 29, 2008
    
    
    July 1, 2007Net loss
    
    $
    (27,422
    )
    
    $
    (11,871
    )
    
    $
    (37,192
    )
    
    $
    (21,365
    )Changes in unrealized losses on investments
    
    
    407
    
    
    
    
    
    
    
    
    
    
    
    Changes in foreign currency translation
    
    
    99
    
    
    
    (48
    )
    
    
    (22
    )
    
    
    (121
    )Total comprehensive loss
    
    $
    (26,916
    )
    
    $
    (11,919
    )
    
    $
    (37,214
    )
    
    $
    (21,486
    )
 13. Commitments and Contingencies
 Letters of Credit
  Earn-Out Contingencies
  10




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Contingencies
  Appriva Medical, Inc. Acquisition Litigation
   FoxHollow Litigation
   11




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##### Table of Contents



14. Segment and Geographic Information
    12




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 29, 2008
    
    
    July 1, 2007
    
    
    June 29, 2008
    
    
    July 1, 2007Net salesPeripheral Vascular:Atherectomy
    
    $
    24,932
    
    
    $
    
    
    
    $
    47,632
    
    
    $
    Stents
    
    
    27,128
    
    
    
    22,153
    
    
    
    51,160
    
    
    
    41,959Thrombectomy and embolic protection
    
    
    7,097
    
    
    
    8,443
    
    
    
    13,052
    
    
    
    14,661Procedural support and other
    
    
    11,633
    
    
    
    10,035
    
    
    
    23,059
    
    
    
    20,502Total peripheral vascular
    
    $
    70,790
    
    
    $
    40,631
    
    
    $
    134,903
    
    
    $
    77,122Neurovascular:Embolic products
    
    
    17,431
    
    
    
    12,827
    
    
    
    35,295
    
    
    
    25,753Neuro access and delivery products and other
    
    
    13,288
    
    
    
    11,938
    
    
    
    26,361
    
    
    
    24,020Total neurovascular
    
    $
    30,719
    
    
    $
    24,765
    
    
    $
    61,656
    
    
    $
    49,773Research collaboration:
    
    $
    6,208
    
    
    $
    
    
    
    $
    12,415
    
    
    $
    Total net sales
    
    $
    107,717
    
    
    $
    65,396
    
    
    $
    208,974
    
    
    $
    126,895Gross profitPeripheral vascular
    
    $
    44,554
    
    
    $
    24,119
    
    
    $
    84,962
    
    
    $
    46,081Neurovascular
    
    
    22,665
    
    
    
    18,915
    
    
    
    45,337
    
    
    
    37,995Research collaboration
    
    
    4,309
    
    
    
    
    
    
    
    8,868
    
    
    
    Total
    
    $
    71,528
    
    
    $
    43,034
    
    
    $
    139,167
    
    
    $
    84,076Operating expense
    
    
    98,390
    
    
    
    55,065
    
    
    
    178,187
    
    
    
    105,751Loss from operations
    
    $
    (26,862
    )
    
    $
    (12,031
    )
    
    $
    (39,020
    )
    
    $
    (21,675
    )
 June 29,
    
    
    December 31,2008
    
    
    2007Total assetsPeripheral vascular
    
    $
    877,777
    
    
    $
    936,348Neurovascular
    
    
    142,842
    
    
    
    150,758Total
    
    $
    1,020,619
    
    
    $
    1,087,106
  Three Months Ended
    
    
    Six Months EndedJune 29, 2008
    
    
    July 1, 2007
    
    
    June 29, 2008
    
    
    July 1, 2007Geographic DataNet SalesUnited States
    
    $
    71,869
    
    
    $
    39,576
    
    
    $
    138,321
    
    
    $
    74,716International
    
    
    35,848
    
    
    
    25,820
    
    
    
    70,653
    
    
    
    52,179Total net sales
    
    $
    107,717
    
    
    $
    65,396
    
    
    $
    208,974
    
    
    $
    126,895
 June 29,
    
    
    December 31,2008
    
    
    2007Long-lived AssetsUnited States
    
    $
    33,667
    
    
    $
    37,015International
    
    
    1,173
    
    
    
    970Total long-lived assets
    
    $
    34,840
    
    
    $
    37,985
 13




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##### Table of Contents



15. Related Party Transaction
  16. Loss Per Share
  Three and Six Months EndedJune 29, 2008
    
    
    July 1, 2007Options
    
    
    10,826,361
    
    
    
    5,653,315
 14




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Business Overview
       15




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##### Table of Contents



Summary of Second Fiscal Quarter 2008 Financial Results and Outlook
   
    
    Our net sales of $107.7 million for the second quarter 2008 included product net
sales of $70.8 million in our peripheral vascular segment, $30.7 million in our
neurovascular segment and $6.2 million of research collaboration revenue. We expect
our peripheral vascular net sales to increase during the remainder of 2008 as compared
to the same period in 2007 primarily as a result of our FoxHollow acquisition,
increased cross-selling opportunities as a result of the FoxHollow acquisition, the
introduction of our atherectomy products into international markets, additional market
penetration of products launched during the past two years and
 16




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##### Table of Contents



new product introductions anticipated in 2008. We expect our neurovascular net sales to
increase during the remainder of 2008 as compared to the same period in 2007 due to
market growth, developing new customer accounts, additional market penetration of
products launched during the past two years and new product introductions anticipated in
2008, including our Solitaire Flow Restoration stent which we have begun to selectively
commercialize in Europe.
 
    
    As a result of Dr. Simpsons resignation from our board of directors in February
2008 Merck became entitled to terminate our collaboration and license agreement within
six months of Dr. Simpsons resignation. Merck exercised its right to terminate our
collaboration and license agreement effective July 22, 2008. We incurred a one-time
asset impairment charge of $10.5 million relating to the contract termination in the
second quarter 2008. We expect that research collaboration revenue will be $4.1
million in the third quarter 2008 and there will be no research collaboration
revenue recognized in the fourth quarter 2008. Additionally, we expect
amortization expense to be reduced for
the last half of 2008 as a result of the one-time asset impairment.
    
    On a geographic basis, 67% of our net sales for the second quarter 2008 were
generated in the United States and 33% were generated outside the United States. Our
international net sales included a favorable foreign currency exchange rate impact of
approximately $3.4 million, principally resulting from the relationship of the Euro to
the U.S. dollar. We expect our international net sales to increase during the
remainder of 2008 as compared to the same period last year primarily as a result of
increased market penetration of the Axium coil and EverFlex family of stents, our
FoxHollow acquisition and introduction of atherectomy products into international
markets, and new product introductions anticipated in 2008.
    
    Our operating expenses were $134.6 million in the second quarter 2008. Although our
sales, general and administrative expenses and research and development expenses each
increased in absolute dollars in the second quarter 2008 compared to second quarter
2007, each decreased as a percentage of net sales. We expect our sales, general and
administrative expenses, research and development expense and amortization of
intangible assets to increase in absolute dollars in the remainder of 2008 as compared
to the same period in 2007. We expect sales, general and administrative expenses and
research and development expense to continue to decline as a percentage of net sales.
    
    Our net loss for the second quarter 2008 was $27.4 million, or $0.26 per share,
reflecting the impact of the asset impairment charge of $10.5 million dollars as a
result of the termination of our Merck agreement, the consolidation of our Redwood City
manufacturing operations into our Irvine and Plymouth facilities and our recent chief
executive officer transition. Our focus for the remainder of 2008 is to improve our
profitability.
    
    Our cash and cash equivalents were $38.7 million at June 29, 2008, reflecting
payments we made during the second quarter 2008 related to the coil litigation
settlements of $15.4 million and the Dendron earn-out contingency of $7.5 million, as
well as improvements in our working capital through a reduction in both of our days
sales outstanding and our inventory days on hand. In June 2008, our operating
subsidiaries, ev3 Endovascular, Inc., ev3 International, Inc., Micro Therapeutics, Inc.
and FoxHollow Technologies, Inc. entered into an amendment to our existing loan and
security agreement with Silicon Valley Bank. The amended facility consists of a
revolving line of credit of $50.0 million with a maturity date in June 2010. In
addition, amounts outstanding under the line of equipment financing were refinanced and
consolidated into a $10.0 million term loan with a maturity date in June 2010. We
believe our cash and cash equivalents and current financing arrangements will be
sufficient to meet our liquidity requirements through at least the next 12 months.
 17




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Results of Operations
  Three Months Ended
    
    
    
    
    
    
    Six Months EndedJune 29,
    
    
    July 1,
    
    
    Percent
    
    
    June 29,
    
    
    July 1,
    
    
    Percent2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeResults of Operations:SalesProduct sales
    
    $
    101,509
    
    
    $
    65,396
    
    
    
    55.2
    %
    
    $
    196,559
    
    
    $
    126,895
    
    
    
    54.9
    %Research collaboration
    
    
    6,208
    
    
    
    
    
    
    NM
    
    
    12,415
    
    
    
    
    
    
    NMNet sales
    
    $
    107,717
    
    
    $
    65,396
    
    
    
    64.7
    %
    
    $
    208,974
    
    
    $
    126,895
    
    
    
    64.7
    %Operating expenses:Product cost of goods sold (a)
    
    
    34,290
    
    
    
    22,362
    
    
    
    53.3
    %
    
    
    66,260
    
    
    
    42,819
    
    
    
    54.7
    %Research collaboration
    
    
    1,899
    
    
    
    
    
    
    NM
    
    
    3,547
    
    
    
    
    
    
    NMSales, general and administrative (a)
    
    
    65,936
    
    
    
    40,882
    
    
    
    61.3
    %
    
    
    125,764
    
    
    
    80,019
    
    
    
    57.2
    %Research and development (a)
    
    
    14,054
    
    
    
    11,323
    
    
    
    24.1
    %
    
    
    25,780
    
    
    
    18,756
    
    
    
    37.4
    %Amortization of intangible assets
    
    
    7,941
    
    
    
    3,864
    
    
    
    105.5
    %
    
    
    16,184
    
    
    
    7,964
    
    
    
    103.2
    %Intangible asset impairment
    
    
    10,459
    
    
    
    
    
    
    NM
    
    
    10,459
    
    
    
    
    
    
    NMGain on sale or disposal of assets, net
    
    
    
    
    
    
    (1,004
    )
    
    NM
    
    
    
    
    
    
    (988
    )
    
    NMTotal operating expenses
    
    
    134,579
    
    
    
    77,427
    
    
    
    73.8
    %
    
    
    247,994
    
    
    
    148,570
    
    
    
    66.9
    %Loss from operations
    
    
    (26,862
    )
    
    
    (12,031
    )
    
    
    123.3
    %
    
    
    (39,020
    )
    
    
    (21,675
    )
    
    
    80.0
    %Other (income) expense:Realized and unrealized gains on
investments, net
    
    
    (400
    )
    
    
    
    
    
    NM
    
    
    (400
    )
    
    
    
    
    
    NMInterest (income) expense, net
    
    
    85
    
    
    
    (297
    )
    
    NM
    
    
    (356
    )
    
    
    (406
    )
    
    NMOther (income) expense, net
    
    
    345
    
    
    
    (195
    )
    
    NM
    
    
    (2,087
    )
    
    
    (512
    )
    
    NMLoss before income taxes
    
    
    (26,892
    )
    
    
    (11,539
    )
    
    
    133.1
    %
    
    
    (36,177
    )
    
    
    (20,757
    )
    
    
    74.3
    %Income tax expense
    
    
    530
    
    
    
    332
    
    
    NM
    
    
    1,015
    
    
    
    608
    
    
    NMNet loss
    
    $
    (27,422
    )
    
    $
    (11,871
    )
    
    
    131.0
    %
    
    $
    (37,192
    )
    
    $
    (21,365
    )
    
    
    74.1
    %Net loss per common share (basic and
diluted)
    
    $
    (0.26
    )
    
    $
    (0.20
    )
    
    
    
    
    
    $
    (0.36
    )
    
    $
    (0.37
    )Weighted average shares outstanding
(basic and diluted)
    
    
    104,247,782
    
    
    
    59,543,827
    
    
    
    
    
    
    
    104,176,206
    
    
    
    58,529,041(a)     Includes stock-based compensation charges of:Product cost of goods sold
    
    $
    179
    
    
    $
    187
    
    
    
    
    
    
    $
    476
    
    
    $
    345Sales, general and administrative
    
    
    3,443
    
    
    
    2,207
    
    
    
    
    
    
    
    7,036
    
    
    
    4,066Research and development
    
    
    270
    
    
    
    266
    
    
    
    
    
    
    
    1,111
    
    
    
    448$
    3,892
    
    
    $
    2,660
    
    
    
    
    
    
    $
    8,623
    
    
    $
    4,859
 18




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##### Table of Contents



Three Months Ended
    
    
    
    
    
    
    Six Months EndedJune 29,
    
    
    July 1,
    
    
    Percent
    
    
    June 29,
    
    
    July 1,
    
    
    Percent2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeNET SALES BY SEGMENT:Peripheral Vascular:Atherectomy
    
    $
    24,932
    
    
    $
    
    
    
    NM
    
    $
    47,632
    
    
    $
    
    
    
    NMStents
    
    
    27,128
    
    
    
    22,153
    
    
    
    22.5
    %
    
    
    51,160
    
    
    
    41,959
    
    
    
    21.9
    %Thrombectomy and embolic
protection
    
    
    7,097
    
    
    
    8,443
    
    
    
    -15.9
    %
    
    
    13,052
    
    
    
    14,661
    
    
    
    -11.0
    %Procedural support and other
    
    
    11,633
    
    
    
    10,035
    
    
    
    15.9
    %
    
    
    23,059
    
    
    
    20,502
    
    
    
    12.5
    %Total peripheral vascular
    
    $
    70,790
    
    
    $
    40,631
    
    
    
    74.2
    %
    
    $
    134,903
    
    
    $
    77,122
    
    
    
    74.9
    %Neurovascular:Embolic products
    
    
    17,431
    
    
    
    12,827
    
    
    
    35.9
    %
    
    
    35,295
    
    
    
    25,753
    
    
    
    37.1
    %Neuro access and delivery
products and other
    
    
    13,288
    
    
    
    11,938
    
    
    
    11.3
    %
    
    
    26,361
    
    
    
    24,020
    
    
    
    9.7
    %Total neurovascular
    
    $
    30,719
    
    
    $
    24,765
    
    
    
    24.0
    %
    
    $
    61,656
    
    
    $
    49,773
    
    
    
    23.9
    %Research collaboration:
    
    $
    6,208
    
    
    $
    
    
    
    NM
    
    $
    12,415
    
    
    $
    
    
    
    NMTotal net sales
    
    $
    107,717
    
    
    $
    65,396
    
    
    
    64.7
    %
    
    $
    208,974
    
    
    $
    126,895
    
    
    
    64.7
    %
 Three Months Ended
    
    
    
    
    
    
    Six Months EndedJune 29,
    
    
    July 1,
    
    
    Percent
    
    
    June 29,
    
    
    July 1,
    
    
    Percent2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeNET SALES BY GEOGRAPHY:United States
    
    $
    71,869
    
    
    $
    39,576
    
    
    
    81.6
    %
    
    $
    138,321
    
    
    $
    74,716
    
    
    
    85.1
    %InternationalBefore foreign exchange impact
    
    
    32,488
    
    
    
    25,820
    
    
    
    25.8
    %
    
    
    64,654
    
    
    
    52,179
    
    
    
    23.9
    %Foreign exchange impact
    
    
    3,360
    
    
    
    
    
    
    
    
    
    
    
    5,999
    
    
    
    
    
    
    
    Total
    
    
    35,848
    
    
    
    25,820
    
    
    
    38.8
    %
    
    
    70,653
    
    
    
    52,179
    
    
    
    35.4
    %Total net sales
    
    $
    107,717
    
    
    $
    65,396
    
    
    
    64.7
    %
    
    $
    208,974
    
    
    $
    126,895
    
    
    
    64.7
    %
 Comparison of the Three Months Ended June 29, 2008 to the Three Months Ended July 1, 2007
 Net sales
 Net sales of peripheral vascular products
 19




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Net sales of neurovascular products
 Research collaboration (revenue).
 Net sales by geography
 Product cost of goods sold
 Sales, general and administrative
 Research and development
 Amortization of intangible assets
 20




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##### Table of Contents



Intangible asset impairment.
 Realized
and unrealized gains on investments, net.
 Interest (income) expense, net
 Other (income) expense, net
 Income tax expense
 Comparison of the Six Months Ended June 29, 2008 to the Six Months Ended July 1, 2007
 Net sales
 Net sales of peripheral vascular products
 Net sales of neurovascular products
 21




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Research collaboration (revenue).
 Net sales by geography
 Product cost of goods sold
 Sales, general and administrative.
 Research and development
 Amortization of intangible assets
 Intangible asset impairment.
 Realized
and unrealized gains on investments, net.
 Interest (income) expense, net
 22




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##### Table of Contents



Other (income) expense, net
 Income tax expense
 Liquidity and Capital Resources
 June 29,
    
    December 31,Balance Sheet Data
    
    2008
    
    2007(in thousands)Cash and cash equivalents
    
    $
    38,749
    
    
    $
    81,060Short-term investments
    
    
    
    
    
    
    9,744Total current assets
    
    
    183,653
    
    
    
    228,370Total assets
    
    
    1,020,619
    
    
    
    1,087,106Total
current liabilities
    
    
    80,369
    
    
    
    119,159Total liabilities
    
    
    89,500
    
    
    
    128,625Total stockholders equity
    
    
    931,119
    
    
    
    958,481
 Cash, cash equivalents and short-term investments.
 Operating activities.
 Investing activities.
 Financing activities.
 Contractual cash obligations.
 23




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##### Table of Contents



Financing history.
 Credit facility.
 Other liquidity information
  Credit risk.
 24




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##### Table of Contents



Related Party Transactions
  Critical Accounting Policies and Estimates
  Seasonality and Quarterly Fluctuations
   Off-Balance Sheet Arrangements
  Recently Issued Accounting Pronouncements
    25




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##### Table of Contents



Forward-Looking Statements
   
    
    History of operating losses, negative cash flow and failure to achieve future
profitability;
    
    Continued difficulties in integrating FoxHollows operations and failure to realize
anticipated cost savings, net sales and other potential benefits of the acquisition in
a timely manner or at all;
    
    Continued elevated customer inventory levels of our SilverHawk product which have
adversely affected our sales;
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##### Table of Contents




    
    Unanticipated costs or adverse effects on our business as a result of the
termination of our collaboration and license agreement with Merck;
    
    Changes in and failure to retain or replace senior management or other key employees
and the avoidance of business disruption and employee distraction as we execute our
restructuring activities, including the closing of our Redwood City, California
facility and our recent previous reductions in sales personnel and as we implement
reorganization efforts;
    
    Ability to implement, fund and achieve sustainable cost savings measures that will
better align our operating expenses with our anticipated net sales levels and
reallocate resources to better support growth initiatives;
    
    The failure of our atherectomy products to achieve future
revenues in amounts historically experienced by FoxHollow prior to our acquisition of FoxHollow;
    
    Failure to obtain additional capital when needed or on acceptable terms;
    
    Failure of our business strategy, which relies on assumptions about the market for
our products;
    
    Lack of market acceptance of new products;
    
    Decreased demand for our SilverHawk product;
    
    Delays in product introduction;
    
    Risks inherent in operating internationally and selling and shipping our products
and purchasing our products and components internationally;
    
    Exposure to assertions of intellectual property claims and failure to protect our
intellectual property;
    
    Disruption in our ability to manufacture our products, especially as we transition
manufacturing capabilities from our Redwood City, California facility to our Plymouth,
Minnesota and Irvine, California facilities;
    
    Ability of our key suppliers to provide us products or components or raw materials
for products resulting in our inability to supply market demand for our products;
    
    Increases in prices for raw materials;
    
    Significant and unexpected claims under our EverFlex self-expanding stent worldwide
fracture-free guarantee program in excess of our reserves;
    
    Failure to integrate effectively newly acquired operations, including FoxHollows
operations;
    
    Incurrence of additional debt, contingent liabilities and expenses in connection
with future acquisitions;
    
    Failure of our customers or patients to obtain third party reimbursement for their
purchases of our products;
    
    Consolidation in the healthcare industry, which could lead to demands for price
concessions or to the exclusion of some suppliers from certain of our markets;
    
    Failure to comply with applicable laws and regulations, to obtain and maintain required
regulatory approvals for our products in a cost-effective manner or at all and to market
our products in an appropriate manner, including without limitation failure to comply
with the Federal Anti-Kickback Statute and similar healthcare fraud and abuse laws
and the Foreign Corrupt Practices Act;
    
    Adverse changes in applicable laws or regulations;
    
    Exposure to adverse side effects from our products and product liability claims;
    
    Fluctuations in foreign currency exchange rates and interest rates;
    
    Fluctuations in quarterly operating results as a result of seasonality and other
items, such as the timing and extent of promotional pricing or volume discounts; the
timing of larger orders by customers and the timing of shipment of such orders; changes
in average selling prices; the number and mix of products sold in the quarter; the
availability and cost of components and materials; and costs, benefits and timing of
new product introductions;
    
    Obligation to make significant milestone payments not currently reflected in our
financial statements;
    
    Reliance on independent sales distributors and sales associates to market and sell
our products in certain countries;
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##### Table of Contents




    
    Loss of customers;
    
    Expiration or termination of our distribution agreement with Invatec S.r.l. and our
inability to commercially launch on a timely basis our own products to replace the
Invatec products we distribute or any disruption in the supply of products of Invatec
S.r.l. that we distribute or our relationship with Invatec;
    
    Dependence upon a few of our products to generate a large portion of our net sales
and exposure if drug-eluting stents become a dominant therapy in the peripheral
vascular stent market and we are not able to develop or acquire a drug-eluting stent to
market and sell;
    
    Failure to develop innovative and successful new products and technologies;
    
    Highly competitive nature of the markets in which we sell our products and the
introduction of competing products;
    
    Inability to meet performance enhancement objectives, including efficiency and cost
reduction strategies;
    
    Reliance on our management information systems for inventory management,
distribution and other functions and to maintain our research and development and
clinical data;
    
    Failure to comply with our covenants under our loan and security agreement with
Silicon Valley Bank;
    
    Inability to use net operating losses to reduce tax liability if we become
profitable;
    
    Absence of expected returns from the amount of intangible assets we have recorded;
    
    Changes in generally accepted accounting principles and changes resulting from the
application of the purchase method of accounting relating to our acquisition of
FoxHollow;
    
    Effects of pending and threatened litigation;
    
    Conditions and changes in medical device industry or in general economic and
business conditions;
    
    Conflicts of interests due to our ownership structure; or
    
    Ineffectiveness of our internal controls.
   
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  28




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Interest Rate Risk
   Foreign Currency Exchange Rate Risk
   
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  29




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Changes in Internal Control Over Financial Reporting
  30




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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  The termination by Merck of the collaboration and license agreement with us will result in a loss
of revenue to us and otherwise could adversely affect our business and operating results.
  We have experienced recently certain changes in our management which could cause certain ev3 key
employees to depart because of difficulties with change or a desire not to remain with our company.
  31




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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Recent Sales of Unregistered Equity Securities
  Issuer Purchases of Equity Securities
  Total Number
    
    
    
    
    
    Total Number of Shares
    
    Maximum Number ofof
    
    Average
    
    Purchased as Part of
    
    Shares that May Yet BeShares
    
    Price Paid
    
    Publicly Announced Plans or
    
    Purchased Under thePeriod
    
    Purchased (1)
    
    Per Share
    
    Programs (2)
    
    Plans or Programs (2)Month # 1
    
    
    33,555
    
    
    $
    8.64
    
    
    
    N/A
    
    
    
    N/A(March 31, 2008 - May 4, 2008)Month # 2
    
    
    934
    
    
    $
    8.55
    
    
    
    N/A
    
    
    
    N/A(May 5, 2008 - June 1, 2008)Month # 3
    
    
    812
    
    
    $
    9.40
    
    
    
    N/A
    
    
    
    N/AJune 2, 2008 - June 29, 2008)Total:
    
    
    35,301
    
    
    $
    8.66
    
    
    
    N/A
    
    
    
    N/A
 
 (1)
    
    Consists of shares repurchased from employees in connection with the required payment of
withholding or employment-related tax obligations due in connection with the vesting of
restricted stock awards.(2)
    
    Our Board of Directors has not authorized any repurchase plan or program for purchase of our
shares of common stock or other equity securities on the open market or otherwise, other than
an indefinite number of shares in connection with the cashless exercise of outstanding stock
options and the surrender of shares of common stock upon the issuance or vesting of stock
grants to satisfy any required withholding or employment-related tax obligations.  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  32




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##### Table of Contents



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   BrokerFor
    
    Against/Withhold
    
    Abstain
    
    Non-Votes1. Election of Directors -
for terms expiring at the
2011 Annual Meeting of
StockholdersRobert J. Palmisano
    
    
    99,307,343
    
    
    
    822,158
    
    
    
    
    
    
    
    Daniel J. Levangie
    
    
    98,226,903
    
    
    
    1,902,598
    
    
    
    
    
    
    
    Elizabeth H. Weatherman
    
    
    88,950,176
    
    
    
    11,179,325
    
    
    
    
    
    
    
    2. Ratification of
Independent Registered
Public Accounting Firm
    
    
    99,887,985
    
    
    
    189,570
    
    
    
    51,946
    
    
    
    
    
 ITEM 5. OTHER INFORMATION
  33




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##### Table of Contents



ITEM 6. EXHIBITS
  Exhibit No.
    
    Description3.1
    
    ev3 Inc. Second Amended and Restated By-laws (Incorporated by
reference to Exhibit 3.1 to ev3 Inc.s Current Report on Form
8-K (Items 1.01, 5.02, 5.03 and 9.01) filed with the
Securities and Exchange Commission on April 7, 2008 (File No.
000-51348))10.1
    
    Employment and Change in Control Agreement, dated as of April
6, 2008, between ev3 Inc. and Robert J. Palmisano
(Incorporated by reference to Exhibit 10.1 to ev3 Inc.s
Current Report on Form 8-K (Items 1.01, 5.02, 5.03 and 9.01)
filed with the Securities and Exchange Commission on April 7,
2008 (File No. 000-51348))10.2
    
    Confidentiality, Non-Competition and Non-Solicitation
Agreement, dated as of April 6, 2008, between ev3 Inc. and
Robert J. Palmisano (Incorporated by reference to Exhibit 10.2
to ev3 Inc.s Current Report on Form 8-K (Items 1.01, 5.02,
5.03 and 9.01) filed with the Securities and Exchange
Commission on April 7, 2008 (File No. 000-51348))10.3
    
    Indemnification Agreement, dated as of April 6, 2008, between
ev3 Inc. and Robert J. Palmisano (Incorporated by reference to
Exhibit 10.3 to ev3 Inc.s Current Report on Form 8-K (Items
1.01, 5.02, 5.03 and 9.01) filed with the Securities and
Exchange Commission on April 7, 2008 (File No. 000-51348))10.4
    
    ev3 Inc. 2005 Incentive Stock Plan Non-Incentive Stock Option
Certificate, dated April 6, 2008, issued to Robert J.
Palmisano (Incorporated by reference to Exhibit 10.4 to ev3
Inc.s Current Report on Form 8-K (Items 1.01, 5.02, 5.03 and
9.01) filed with the Securities and Exchange Commission on
April 7, 2008 (File No. 000-51348))10.5
    
    Robert J. Palmisano Inducement Grant Non-Incentive Stock
Option Certificate, dated April 6, 2008 (Incorporated by
reference to Exhibit 10.5 to ev3 Inc.s Current Report on Form
8-K (Items 1.01, 5.02, 5.03 and 9.01) filed with the
Securities and Exchange Commission on April 7, 2008 (File No.
000-51348))10.6
    
    Separation Agreement and Release of Claims, dated as of April
6, 2008, between ev3 Endovascular, Inc. and James M. Corbett
(Incorporated by reference to Exhibit 10.1 to ev3 Inc.s
Current Report on Form 8-K/A (Items 1.01, 5.02, 5.03 and 9.01)
filed with the Securities and Exchange Commission on April 7,
2008 (File No. 000-51348))10.7
    
    Amendment to Stock Option and Stock Award Agreements, made as
of April 6, 2008 by ev3 Inc. (Incorporated by reference to
Exhibit 10.2 to ev3 Inc.s Current Report on Form 8-K/A (Items
1.01, 5.02, 5.03 and 9.01) filed with the Securities and
Exchange Commission on April 7, 2008 (File No. 000-51348))10.8
    
    Amendment to Stock Option Agreements, made as of April 6, 2008
by ev3 Inc. (Incorporated by reference to Exhibit 10.3 to ev3
Inc.s Current Report on Form 8-K/A (Items 1.01, 5.02, 5.03
and 9.01) filed with the Securities and Exchange Commission on
April 7, 2008 (File No. 000-51348))10.9
    
    Consulting Agreement, dated as of April 6, 2008, between ev3
Endovascular, Inc. and James M. Corbett (Incorporated by
reference to Exhibit 10.4 to ev3 Inc.s Current Report on Form
8-K/A (Items 1.01, 5.02, 5.03 and 9.01) filed with the
Securities and Exchange Commission on April 7, 2008 (File No.
000-51348))10.10
    
    Fifth Amendment to Loan and Security Agreement, dated June 24,
2008, between Silicon Valley Bank and ev3 Endovascular, Inc.,
ev3 International, Inc., Micro Therapeutics, Inc. and
FoxHollow Technologies, Inc. (Incorporated by reference to
Exhibit 10.1 to ev3 Inc.s Current Report on Form 8-K filed
with the Securities and Exchange Commission on June 25, 2008
(File No. 000-51348))31.1
    
    Certification of Chief Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 and SEC Rule 13a-14(a)
(Filed herewith)31.2
    
    Certification of Chief Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 and SEC Rule 13a-14(a)
(Filed herewith)32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (Furnished herewith)32.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (Furnished herewith)
 34




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##### Table of Contents



SIGNATURES
  August  6, 2008
    ev3 Inc.By:
    /s/ Robert J. PalmisanoRobert J. PalmisanoPresident and Chief Executive Officer
(principal executive officer) By:
    /s/ Patrick D. SpanglerPatrick D. SpanglerSenior Vice President and Chief Financial Officer
(principal financial and accounting officer) 35




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##### Table of Contents



ev3 Inc.
QUARTERLY REPORT ON FORM 10-Q
 
 EXHIBIT INDEX
 Exhibit No.
    
    Description
    
    Method of Filing3.1
    
    ev3 Inc. Second Amended and Restated By-laws
    
    Incorporated by
reference to Exhibit
3.1 to ev3 Inc.s
Current Report on Form
8-K (Items 1.01, 5.02,
5.03 and 9.01) filed
with the Securities and
Exchange Commission
on April 7, 2008
(File No. 000-51348)10.1
    
    Employment and Change in Control Agreement,
dated as of April 6, 2008, between ev3 Inc.
and Robert J. Palmisano
    
    Incorporated by
reference to Exhibit
10.1 to ev3 Inc.s
Current Report on Form
8-K (Items 1.01, 5.02,
5.03 and 9.01) filed
with the Securities and
Exchange Commission
on April 7, 2008
(File No. 000-51348)10.2
    
    Confidentiality, Non-Competition and
Non-Solicitation Agreement, dated as of
April 6, 2008, between ev3 Inc. and Robert
J. Palmisano
    
    Incorporated by
reference to Exhibit
10.2 to ev3 Inc.s
Current Report on Form
8-K (Items 1.01, 5.02,
5.03 and 9.01) filed
with the Securities and
Exchange Commission
on April 7, 2008
(File No. 000-51348)10.3
    
    Indemnification Agreement, dated as of
April 6, 2008, between ev3 Inc. and Robert
J. Palmisano
    
    Incorporated by
reference to Exhibit
10.3 to ev3 Inc.s
Current Report on Form
8-K (Items 1.01, 5.02,
5.03 and 9.01) filed
with the Securities and
Exchange Commission
on April 7, 2008
(File No. 000-51348)10.4
    
    ev3 Inc. 2005 Incentive Stock Plan
Non-Incentive Stock Option Certificate,
dated April 6, 2008, issued to Robert J.
Palmisano
    
    Incorporated by
reference to Exhibit
10.4 to ev3 Inc.s
Current Report on Form
8-K (Items 1.01, 5.02,
5.03 and 9.01) filed
with the Securities and
Exchange Commission on
April 7, 2008
(File No. 000-51348)10.5
    
    Robert J. Palmisano Inducement Grant
Non-Incentive Stock Option Certificate,
dated April 6, 2008
    
    Incorporated by
reference to Exhibit
10.5 to ev3 Inc.s
Current Report on Form
8-K (Items 1.01, 5.02,
5.03 and 9.01) filed
with the Securities and
Exchange Commission on
April 7, 2008
(File No. 000-51348)10.6
    
    Separation Agreement and Release of Claims,
dated as of April 6, 2008, between ev3
Endovascular, Inc. and James M. Corbett
    
    Incorporated by
reference to Exhibit
10.1 to ev3 Inc.s
Current Report on Form
8-K/A (Items 1.01,
5.02, 5.03 and 9.01)
filed with the
Securities and Exchange
Commission on
April 7, 2008
(File No. 000-51348)
 36




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##### Table of Contents



Exhibit No.
    
    Description
    
    Method of Filing10.7
    
    Amendment to Stock Option and Stock Award
Agreements, made as of April 6, 2008 by ev3
Inc.
    
    Incorporated by
reference to Exhibit
10.2 to ev3 Inc.s
Current Report on Form
8-K/A (Items 1.01,
5.02, 5.03 and 9.01)
filed with the
Securities and Exchange
Commission on
April 7, 2008
(File No. 000-51348)10.8
    
    Amendment to Stock Option Agreements, made
as of April 6, 2008 by ev3 Inc.
    
    Incorporated by
reference to Exhibit
10.3 to ev3 Inc.s
Current Report on Form
8-K/A (Items 1.01,
5.02, 5.03 and 9.01)
filed with the
Securities and Exchange
Commission on
April 7, 2008
(File No. 000-51348)10.9
    
    Consulting Agreement, dated as of April 6,
2008, between ev3 Endovascular, Inc. and
James M. Corbett
    
    Incorporated by
reference to Exhibit
10.4 to ev3 Inc.s
Current Report on Form
8-K/A (Items 1.01,
5.02, 5.03 and 9.01)
filed with the
Securities and Exchange
Commission on
April 7, 2008
(File No. 000-51348)10.10
    
    Fifth Amendment to Loan and Security
Agreement, dated June 24, 2008, between
Silicon Valley Bank and ev3 Endovascular,
Inc., ev3 International, Inc., Micro
Therapeutics, Inc. and FoxHollow
Technologies, Inc.
    
    Incorporated by
reference to Exhibit
10.1 to ev3 Inc.s
Current Report on Form
8-K as filed with the
Securities and Exchange
Commission on
June 25, 2008
(SEC File No. 000-51348)31.1
    
    Certification of Chief Executive Officer
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 and SEC Rule
13a-14(a)
    
    Filed herewith31.2
    
    Certification of Chief Financial Officer
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 and SEC Rule
13a-14(a)
    
    Filed herewith32.1
    
    Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Furnished herewith32.2
    
    Certification of Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    Furnished herewith
 37