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U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A Amendment No. 1 (Mark one) [X]
    
    Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
 For the quarterly period ended April 3, 2004 or [   ]
    
    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: 1-8145 THORATEC CORPORATION (Exact name of registrant as specified in its charter)
 California(State or other jurisdiction of
    
    94-2340464incorporation or organization)
    
    (I.R.S. Employer Identification No.)6035 Stoneridge Drive, Pleasanton, California
    
    94588(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (925) 847-8600 Indicate by check mark whether the registrant:(1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [   ] Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act):Yes [X] No [   ] As of May 7, 2004 registrant had 55,897,252 shares of common stock
outstanding. Explanatory Note This
Amendment No. 1 to the Quarterly Report on Form 10-Q of Thoratec
Corporation for the quarter ended April 3, 2004 is being filed
for the purpose of amending and revising Items 1 and 2 of
Part I. This Form 10-Q/A is being filed in order to classify the
Companys available-for-sale investments balance at
January 3, 2004 as long-term, rather than short-term, on the
Condensed Consolidated Balance Sheet. This classification is consistent with that shown on our Consolidated Balance Sheet as of January 3, 2004 on
Form 10-K for the fiscal year ended January 3, 2004. As a
result of this revision, we have deleted the reference to this
reclassification of prior year amount in Note 1 to the
Condensed Consolidated Financial Statements and revised the
January 3, 2004 working capital and cash and cash equivalents
and short-term available-for-sale investments amounts under the
Liquidity and Capital Resources caption of Item 2. Except
as described above, no other significant amendments are being made to the Form
10-Q. This Form 10-Q/A does not reflect events occurring after
April 3, 2004 or modify or update the disclosures contained in
Form 10-Q other than as required to reflect the amendments discussed above.




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THORATEC CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS Part I. Financial Information
    
    
    3Item 1. Condensed Consolidated Financial Statements (unaudited)
    
    
    3Condensed Consolidated Balance Sheets as of April 3, 2004 and January 3, 2004
    
    
    3Condensed Consolidated Statements of Operations for the Three Months Ended April 3, 2004 and March 29, 2003
    
    
    4Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 3, 2004 and March 29, 2003
    
    
    5Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended April 3, 2004 and March 29, 2003
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosure of Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    21Part II. Other Information
    
    
    22Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
    
    
    22Item 6. Exhibits and Reports on Form 8-K
    
    
    22Signatures
    
    
    23Exhibits
    
    
    24EXHIBIT 31.1EXHIBIT 32.1
  2




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PART I. FINANCIAL INFORMATION 
 ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THORATEC CORPORATION AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands) April 3,
    
    January 3,2004
    
    2004AssetsCurrent Assets:Cash and cash equivalents
    
    $
    48,022
    
    
    $
    62,020Short-term available-for-sale investments
    
    
    45,828
    
    
    
    Receivables, net of allowances of $409 in 2004 and $486 in 2003
    
    
    28,851
    
    
    
    27,969Inventories
    
    
    36,830
    
    
    
    36,417Deferred tax asset and other prepaid assets
    
    
    13,193
    
    
    
    12,796Total Current Assets
    
    
    172,724
    
    
    
    139,202Property, plant and equipment, net
    
    
    28,948
    
    
    
    28,492Goodwill
    
    
    95,116
    
    
    
    96,065Purchased intangible assets, net
    
    
    161,934
    
    
    
    164,865Long-term available-for-sale investments
    
    
    
    
    
    
    41,179Long-term deferred tax asset and other assets
    
    
    6,965
    
    
    
    6,328Total Assets
    
    $
    465,687
    
    
    $
    476,131Liabilities and Shareholders EquityCurrent Liabilities:Accounts payable and accrued expenses
    
    $
    18,175
    
    
    $
    22,772Total Current Liabilities
    
    
    18,175
    
    
    
    22,772Long-term deferred tax liability and other liabilities
    
    
    65,600
    
    
    
    67,123Total Liabilities
    
    
    83,775
    
    
    
    89,895Shareholders Equity:Common shares; 100,000 authorized; issued and outstanding
55,812 in 2004 and 56,242 in 2003
    
    
    420,053
    
    
    
    423,045Deferred compensation
    
    
    (2,403
    )
    
    
    (2,630
    )Accumulated deficit
    
    
    (36,193
    )
    
    
    (34,594
    )Accumulated other comprehensive income:Unrealized gain on investments
    
    
    20
    
    
    
    51Cumulative translation adjustments
    
    
    435
    
    
    
    364Total accumulated other comprehensive income
    
    
    455
    
    
    
    415Total Shareholders Equity
    
    
    381,912
    
    
    
    386,236Total Liabilities and Shareholders Equity
    
    $
    465,687
    
    
    $
    476,131
 See notes to condensed consolidated financial statements. 3




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THORATEC CORPORATION AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data) Three Months EndedApril 3, 2004
    
    March 29, 2003Product sales
    
    $
    42,792
    
    
    $
    36,062Cost of product sales
    
    
    17,721
    
    
    
    14,891Gross profit
    
    
    25,071
    
    
    
    21,171Operating expenses:Selling, general and administrative
    
    
    13,013
    
    
    
    10,060Research and development
    
    
    7,338
    
    
    
    6,260Amortization of purchased intangible assets
    
    
    2,931
    
    
    
    3,096Legal settlement and restructuring costs
    
    
    133
    
    
    
    (57
    )Total operating expenses
    
    
    23,415
    
    
    
    19,359Income from operations
    
    
    1,656
    
    
    
    1,812Interest and other income  net
    
    
    465
    
    
    
    512Income before income tax expense
    
    
    2,121
    
    
    
    2,324Income tax expense
    
    
    827
    
    
    
    906Net income
    
    $
    1,294
    
    
    $
    1,418Net income per share:Basic and diluted
    
    $
    0.02
    
    
    $
    0.03Shares used to compute net income per share:Basic
    
    
    56,106
    
    
    
    55,057Diluted
    
    
    57,458
    
    
    
    55,534
 See notes to condensed consolidated financial statements. 4




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THORATEC CORPORATION AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in thousands) Three Months EndedApril 3,
    
    March 29,2004
    
    2003Cash flows from operating activities:Net income
    
    $
    1,294
    
    
    $
    1,418Adjustments to reconcile net income to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    4,641
    
    
    
    4,351Amortization of deferred compensation
    
    
    227
    
    
    
    300Investment premium amortization
    
    
    282
    
    
    
    275Income tax expense
    
    
    827
    
    
    
    906Changes in assets and liabilities:Receivables
    
    
    (882
    )
    
    
    3,003Inventories
    
    
    (413
    )
    
    
    (344
    )Prepaid expenses and other assets
    
    
    (787
    )
    
    
    (957
    )Accounts payable and other liabilities
    
    
    (5,294
    )
    
    
    (3,205
    )Other
    
    
    (303
    )
    
    
    437Net cash provided by (used in) operating activities
    
    
    (408
    )
    
    
    6,184Cash flows from investing activities:Purchases of available-for-sale and other investments
    
    
    (11,325
    )
    
    
    (4,439
    )Sales of available-for-sale investments
    
    
    5,844
    
    
    
    5,709Purchases of property, plant and equipment
    
    
    (2,165
    )
    
    
    (1,317
    )Net cash used in investing activities
    
    
    (7,646
    )
    
    
    (47
    )Cash flows from financing activities:Proceeds from stock option exercises
    
    
    715
    
    
    
    622Repurchase of common stock
    
    
    (6,730
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    (6,015
    )
    
    
    622Effect of exchange rate changes on cash
    
    
    71
    
    
    
    (56
    )Net increase (decrease) in cash and cash equivalents
    
    
    (13,998
    )
    
    
    6,703Cash and cash equivalents at beginning of period
    
    
    62,020
    
    
    
    42,044Cash and cash equivalents at end of period
    
    $
    48,022
    
    
    $
    48,747Supplemental Cash Flow Disclosure:Cash paid for taxes
    
    $
    48
    
    
    $
    260Cash paid for interest
    
    $
    
    
    
    $
    
 See notes to condensed consolidated financial statements. 5




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THORATEC CORPORATION AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
(in thousands) Three Months EndedApril 3,
    
    March 29,2004
    
    2003Net income
    
    $
    1,294
    
    
    $
    1,418Other net comprehensive income (loss):Unrealized gain (loss) on investments
(net of taxes of $(20) and $14 in 2004
and 2003, respectively)
    
    
    (31
    )
    
    
    22Foreign currency translation adjustments
    
    
    71
    
    
    
    (28
    )Comprehensive income
    
    $
    1,334
    
    
    $
    1,412
 See notes to condensed consolidated financial statements. 6




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THORATEC CORPORATION AND SUBSIDIARIES 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, unless otherwise stated) 1. Basis of Presentation The interim condensed consolidated financial statements of Thoratec
Corporation, referred to as we, our, Thoratec, or the Company, have
been prepared and presented in accordance with accounting principles generally
accepted in the United States of America and the rules and regulations of the
Securities and Exchange Commission, or the SEC, without audit and reflect all
adjustments necessary (consisting only of normal recurring adjustments) to
present fairly our financial position at April 3, 2004 and January 3, 2004, our
results of operations for the three-month periods ended April 3, 2004 and March
29, 2003 and cash flows for the three-month periods ended April 3, 2004 and
March 29, 2003. Certain information and footnote disclosures normally included
in our annual financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted. The accompanying financial statements should be read in
conjunction with our fiscal 2003 consolidated financial statements filed with
the SEC in our Annual Report on Form 10-K. The operating results for any
interim period are not necessarily indicative of the results that may be
expected for any future period. The preparation of our condensed consolidated financial statements
included herein necessarily requires us to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the consolidated balance sheet dates and
the reported amounts of revenues and expenses for the periods presented. We have made certain reclassifications of 2003 amounts to conform to the
current presentation. Stock Based Compensation We account for stock-based compensation to employees using the intrinsic
value method in accordance with APB No. 25, Accounting for Stock Issued to
Employees. Accordingly, no accounting recognition is given to stock options
granted at fair market value until they are exercised. Upon exercise, net
proceeds, including tax benefits realized, are recorded in shareholders
equity. Similarly, no accounting recognition is given to our employee stock purchase plan until a purchase occurs. Upon
purchase, net proceeds are recorded in common stock. Under fair value
recognition provisions of SFAS No. 123, the fair value of each option granted
as a stock option or as an option to purchase shares under the employee stock
purchase plan is estimated using the Black-Scholes option-pricing model. If
compensation cost for our stock-based plans had been determined based on the
fair value at the grant dates for awards under those plans, consistent with the
method of SFAS No. 123, our reported net income would have been adversely
affected, as shown in the following table (in thousands, except per share
data): 7




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Three Months EndedApril 3,
    
    March 29,2004
    
    2003Net income:As reported
    
    $
    1,294
    
    
    $
    1,418Add: Stock-based compensation expense
included in reported net income, net of
related tax effects
    
    
    139
    
    
    
    185Deduct: Total stock-based employee
compensation expense determined under fair
value based method
for all awards, net of related tax effects
    
    
    (2,043
    )
    
    
    (2,029
    )Pro forma
    
    $
    (610
    )
    
    $
    (426
    )Basic and diluted earnings (loss) per share:As reported
    
    $
    0.02
    
    
    $
    0.03Pro forma loss
    
    $
    (0.01
    )
    
    $
    (0.01
    )
 2. New Accounting Pronouncements In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure which amends FASB Statement
No. 123, Accounting for Stock-Based Compensation, to provide alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements of the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. We adopted the disclosure provisions of SFAS No. 148
at the beginning of fiscal 2002. On March 31, 2004, the FASB issued an exposure
draft, Share-Based Payment, an Amendment of FASB Statements No. 123 and 95.
This proposed statement would require that stock-based compensation be
recognized as a cost in the financial statements and that such cost be measured
based on the fair value of the stock-based compensation. If issued in final
form as proposed by the FASB, our adoption of this proposed statement would
have a material, although non-cash, impact on our consolidated statement of
operations. 3. Cash and Investments We consider highly liquid investments with maturities of three months or
less at the date of purchase to be cash equivalents. Short-term investments
consist of available-for-sale debt securities that are carried at fair value
and generally mature between three months and two years from the purchase date.
Investments with maturities beyond one year may be classified as short-term
based on their highly liquid nature and to reflect managements
intent that these investments be considered available for current
operations. As a result of its reassessment during the quarter ended
April 3, 2004, the Company has classified its investments as
short-term at April 3, 2004. We
include any unrealized gains and losses on short-term investments, net of tax,
in shareholders equity as a component of other comprehensive income. 4. Financial Instruments We have a foreign currency exchange risk management program principally
designed to mitigate the change in value of assets and liabilities that are
denominated in non-functional currencies. Forward exchange contracts that
generally have terms of three months or less are used to hedge these
non-functional currency exposures on the Companys books. The derivatives used
in the foreign currency exchange risk management program are not designated as
cash flow or fair value hedges under SFAS 133. These contracts are recorded on
the balance sheet at fair value in Deferred Tax Asset and Other current
assets. Changes in the fair value of the contracts and the underlying exposures
being hedged are included concurrently in Interest and Other Income  Net. At
April 3, 2004, the notional value of outstanding contracts approximated $10.3
million with a fair value of approximately $0.1 million. 8




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5. Inventories Inventories consist of the following: As ofApril 3,
    
    January 3,2004
    
    2004Finished goods
    
    $
    17,660
    
    
    $
    15,504Work in process
    
    
    5,893
    
    
    
    9,089Raw materials
    
    
    13,277
    
    
    
    11,824Total
    
    $
    36,830
    
    
    $
    36,417
 6. Property, Plant and Equipment Property, plant and equipment consist of the following: As ofApril 3,
    
    January 3,2004
    
    2004Property, plant and equipment, at cost
    
    $
    60,183
    
    
    $
    58,023Less accumulated depreciation
    
    
    (31,235
    )
    
    
    (29,531
    )Total
    
    $
    28,948
    
    
    $
    28,492
 7. Goodwill and Other Intangible Assets The change in the carrying amount of goodwill, which is attributable to
our Cardiovascular business segment, for the three-month periods ended April 3,
2004 and March 29, 2003 was as follows: Three Months EndedApril 3,
    
    March 29,2004
    
    2003Beginning balance
    
    $
    96,065
    
    
    $
    96,492Realization of acquired foreign deferred tax asset
    
    
    (134
    )
    
    
    Reversal of accrual for securities registration costs
    
    
    (815
    )
    
    
    Ending balance
    
    $
    95,116
    
    
    $
    96,492
 In the first quarter of 2004, goodwill related to the 2001 merger of
Thoratec and Thermo Cardiosystems, Inc. (TCA) was adjusted to reflect the
utilization of tax net operating loss benefits related to our subsidiary in the
United Kingdom. At the time of the merger, a deferred tax asset related to
these tax benefits was established with a corresponding valuation allowance for
the full amount. As our UK subsidiary more likely than not will begin
utilizing a portion of this benefit, a portion of the original valuation
allowance has been reversed against goodwill. Goodwill was also adjusted in the first quarter of 2004 to reflect the
reversal of an accrual, established at the time of the merger with TCA, for
securities registration costs. Under the terms of the merger agreement, the
Company committed to pay for securities registration related costs should
Thermo Electron Corporation (TCI) (the majority shareholder in TCA prior to
the merger) decide to sell their shares of the Company via a public offering.
This commitment was enforceable until TCIs holdings in Thoratec fell below
10%, which occurred in the first quarter of 2004. The components of identifiable intangible assets, consisting primarily of
patents and trademarks, core technology and developed technology, which are
included in purchased intangible assets on the consolidated balance sheets, are
as follows: 9




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As of April 3, 2004Gross Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Net Carrying AmountPatents and Trademarks
    
    $
    37,815
    
    
    $
    (11,326
    )
    
    $
    26,489Core Technology
    
    
    37,485
    
    
    
    (5,826
    )
    
    
    31,659Developed Technology
    
    
    122,782
    
    
    
    (19,079
    )
    
    
    103,703Non-compete Agreement
    
    
    90
    
    
    
    (7
    )
    
    
    83Total Purchased Intangible Assets
    
    $
    198,172
    
    
    $
    (36,238
    )
    
    $
    161,934
 As of January 3, 2004Gross Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Net Carrying AmountPatents and Trademarks
    
    $
    37,815
    
    
    $
    (10,416
    )
    
    $
    27,399Core Technology
    
    
    37,485
    
    
    
    (5,353
    )
    
    
    32,132Developed Technology
    
    
    122,782
    
    
    
    (17,535
    )
    
    
    105,247Non-compete Agreement
    
    
    90
    
    
    
    (3
    )
    
    
    87Total Purchased Intangible Assets
    
    $
    198,172
    
    
    $
    (33,307
    )
    
    $
    164,865
 Subsequent to fiscal 2003 year-end, the Company completed its assessment
of the final results from its feasibility clinical trial for the Aria CABG
graft which was ongoing through fiscal 2003. Based on the clinical trial
results, the Company determined that it would not devote additional resources
to the development of the Aria graft. Upon the decision to discontinue product
development, the Company recorded an impairment charge of $8,987 in the fourth
quarter of 2003 to write off purchased intangible assets related to the Aria
graft, which were recorded as a result of the merger with TCA in 2001. On September 30, 2003, we completed our previously announced asset
purchase agreement to acquire the Immediate Response Mobile Analysis, or IRMA,
point-of-care blood analysis system product line from Diametrics Medical, Inc.
(Diametrics). We paid approximately $5.2 million in cash and assumed trade
payables. Approximately $1.8 million of the total purchase price was allocated
to purchased intangible assets. Amortization expense related to identifiable intangible assets for the
three month periods ended April 3, 2004 and March 29, 2003 was $2,931 and
$3,096, respectively. Amortization expense is expected to be approximately
$11.7 million for each of the next five years. The purchased intangible assets
have estimated useful lives of seven to twenty years. 8. Common Stock In February 2004, the Board of Directors authorized a stock repurchase
program under which up to $25.0 million of our common stock could be acquired
in the open market or in privately negotiated transactions. The number of
shares to be purchased and the timing of purchases were based on several
conditions, including the price of our stock, general market conditions and
other factors. As of April 3, 2004, we have repurchased and retired 510
thousand shares with an aggregate purchase price of $6,730 under this
program. For each share repurchased, we reduced the common stock
account by the average value per share reflected in the account prior
to the repurchase with the excess allocated to accumulated deficit.
As of April 3, 2004 the reduction to common stock and the excess
allocated to accumulated deficit was $3,837 and $2,893, respectively. 9. Legal Settlement and Restructuring Costs Legal
settlement and restructuring costs were recorded in
the condensed consolidated statements of operations as follows: Three Months EndedApril 3,
    
    March 29,2004
    
    2003Legal Settlement
    
    $
    133
    
    
    $
    Restructuring
    
    
    
    
    
    
    (57
    )Total
    
    $
    133
    
    
    $
    (57
    )
 10




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Legal Settlement In April 2003, a patent infringement claim was filed against the Company
by Bodycote Materials Testing Canada, Inc. and David C. MacGregor, M.D. related

to materials used in the HeartMate LVAS. On February 3, 2004, the Company
settled the claim and recorded a charge of $2,256 in the fourth quarter of 2003
for the settlement and related legal costs. The expense recorded in the first
quarter of 2004 is primarily composed of additional legal expenses related to
the settlement. Restructuring Costs All restructuring activities and related expenses were completed in the
second quarter of 2003. From the inception of our plan to consolidate all of
our ventricular assist device, or VAD, manufacturing operations, which we call
the Restructuring Plan, through the completion date in April 2003, we recorded
$1,495 of restructuring charges. These charges represented employee severance
costs and stock option acceleration charges. Total severance payments under
the Restructuring Plan were $1,297 paid to 78 employees. Following is a
summary of our accrued restructuring costs activity: Three MonthsEndedMarch 29,2003Accrued Restructuring Costs:Beginning balance
    
    $
    679Reduction of severance accrual
    
    
    (61
    )Payments of employee severance
    
    
    (521
    )Ending balance
    
    $
    97
 10. Income Taxes Our effective tax rate was 39% for both the three-month periods ending
April 3, 2004 and March 29, 2003. The effective income tax expense rate for
both quarters differed from the statutory federal income tax rate primarily
due to the impact of state taxes. At April 3, 2004 and January 3, 2004, we reported a net deferred tax
liability of approximately $51,263 and $51,332, respectively, comprised
principally of temporary differences between the financial statement and income
tax bases of intangible assets. 11. Net Income Per Share Basic and diluted net income per share were calculated as follows: Three Months EndedApril 3,
    
    March 29,2004
    
    2003Net income
    
    $
    1,294
    
    
    $
    1,418Weighted average number of common shares-basic
    
    
    56,106
    
    
    
    55,057Dilutive effect of stock options
    
    
    1,352
    
    
    
    477Weighted average number of common shares-diluted
    
    
    57,458
    
    
    
    55,534Net income per common share-basic and diluted
    
    $
    0.02
    
    
    $
    0.03
 Basic income per share is computed by dividing net income by the weighted
average number of common shares outstanding during the period. Diluted income
per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common
stock. Of the options to purchase shares of common stock outstanding as of
April 3, 2004 and March 29, 2003, 3,675 and 5,531 shares of common stock,
respectively, were not included in the computation of the diluted income per
share as their inclusion would be antidilutive. 11




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12. Business Segment and Geographical Data We organize and manage our business by functional operating entities. Our
functional entities operate in two segments: (1) Cardiovascular and (2) ITC.
The Cardiovascular segment develops, manufactures and markets proprietary
medical devices used for circulatory support and vascular graft applications.
The ITC segment develops, manufactures and markets point-of-care diagnostic
test systems. Business Segments: Three Months EndedApril 3,
    
    March 29,2004
    
    2003Product sales:Cardiovascular
    
    $
    26,553
    
    
    $
    23,908ITC
    
    
    16,239
    
    
    
    12,154Total product sales
    
    $
    42,792
    
    
    $
    36,062Income before income taxes:Cardiovascular
    
    $
    4,028
    
    
    $
    3,788ITC
    
    
    2,332
    
    
    
    2,349Corporate (a)
    
    
    (1,640
    )
    
    
    (1,286
    )Amortization of purchased intangibles (b)
    
    
    (2,931
    )
    
    
    (3,096
    )Legal settlement and restructuring costs (b)
    
    
    (133
    )
    
    
    57Total operating income
    
    
    1,656
    
    
    
    1,812Interest and other income, net
    
    
    465
    
    
    
    512Income before income taxes
    
    $
    2,121
    
    
    $
    2,324
   (a)
    
    Represents primarily general and administrative expenses not specifically
identified to any particular business segment.(b)
    
    Related to the Cardiovascular segment. Geographic Areas: Three Months EndedApril 3,
    
    March 29,2004
    
    2003Product sales:Domestic
    
    $
    33,781
    
    
    $
    30,028International
    
    
    9,011
    
    
    
    6,034Total
    
    $
    42,792
    
    
    $
    36,062
 12




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward-Looking Statements With the exception of historical facts, the statements contained in this
Form 10-Q/A are forward-looking statements, within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. These forward-looking statements generally can be identified by use of
statements that include phrases such as believe, expect, anticipate,
intend, plan, foresee, may, hope, will, estimates, potential,
continue or other similar words or phrases. Similarly, statements that
describe our objectives, plans or goals also are forward-looking statements.
All of these forward-looking statements are subject to risks and uncertainties
that could cause our actual results to differ materially from those
contemplated by the relevant forward-looking statement. The principal risk
factors that could cause actual performance and future actions to differ
materially from the forward-looking statements include, but are not limited to,
the ability to achieve and maintain profitability; the ability of third party
payors to cover and provide appropriate levels of reimbursement for our
products; the ability to receive Food and Drug Administration, or FDA, and
foreign regulatory authorities approval to manufacture, market and sell our
products; the ability to direct and manage current and future growth, including
the growth of the number of Destination Therapy, or DT, procedures performed
and the integration of any current and future acquisitions of companies or
technologies; new product development and introduction, including FDA approval
and market receptiveness; the ability to realize the full value of our
intangible assets; the reliance on specialized suppliers; competition from
other products; the ability to manufacture products on an efficient and timely
basis and at a reasonable cost and in sufficient volume, including the ability
to obtain timely deliveries of parts from suppliers; the dependence upon
distributors and any changes made to our method of distribution; the ability to
protect our proprietary technologies or an infringement of others patents;
product liability or other claims; our ability to identify and correct quality
issues in a timely manner and at a reasonable cost; the ability to maintain
compliance with changing federal and state regulations; the long and variable
sales and deployment cycle of our ventricular assist device (VAD) products;
worldwide demand for circulatory support and graft products and blood
coagulation testing and skin incision devices and the management of risks
inherent in selling in foreign countries; claims relating to the handling,
storage or disposal of hazardous chemicals and biomaterials; stock price
volatility due to general economic conditions or future issuances and sales of
our stock; the occurrence of natural catastrophic disasters; foreign currency
fluctuations; the ability to attract and retain talented employees; and other
factors identified in our Annual Report onForm 10-Kfor 2003 which we filed
with the Securities and Exchange Commission, or the SEC. Readers are urged to
consider these factors carefully in evaluating the forward-looking statements.
The forward-looking statements included in thisForm 10-Q/Aare made only as of
the date of this report and we undertake no obligation to publicly update these
forward-looking statements to reflect subsequent events or circumstances. The following presentation of managements discussion and analysis of our
financial condition and results of operations should be read together with our
consolidated financial statements included in thisForm 10-Q/A, and our Annual
Report onForm 10-Kfor 2003 filed with the SEC. 13




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Overview We are a leading manufacturer of circulatory support products for use by
patients with congestive heart failure, or CHF. According to the American Heart
Association, 4.9 million patients in the United States suffer from CHF and an
additional 550,000 patients are diagnosed with this disease annually. We were
the first company to receive approval from the United States Food and Drug
Administration, or FDA, to commercially market a ventricular assist device to
treat patients with late-stage heart failure, which comprises approximately 5%
to 10% of the CHF patient population. Our VADs are used primarily by these CHF
patients to perform some or all of the pumping function of the heart and we
currently offer the widest range of products to serve this market. We believe
that our long-standing reputation for quality and innovation and our excellent
relationships with leading cardiovascular surgeons worldwide position us to
capture growth opportunities in the expanding congestive heart failure market.
Through our ITC subsidiary we design, develop, manufacture and market
point-of-care diagnostic test systems that provide fast, accurate blood test
results to improve patient management, reduce healthcare costs and improve
patient outcomes. Our Business Model The two product lines that represent the majority of our revenues are
Ventricular Assist Devices and point-of-care diagnostic test systems and
services. Historical revenue mix has been as follows: VAD pumps including associated products and services
    
    
    60-62
    %Point-of-care diagnostic test systems
    
    
    34-38
    %Grafts/Other
    
    
    2-4
    %
 Ventricular Assist Devices The VAD is a mechanical device to assist a failing heart pump blood, both
as a temporary measure until a failing heart recovers or is replaced in a
heart transplant (Bridge to Transplant  BTT), and as a permanent implant to
supplement the efforts of the heart to pump blood (Destination Therapy  DT).
We derive the majority of our VAD revenue from two different VAD products as
follows:  
    
    The HeartMate VAD was acquired in our 2001 merger with Thermo
Cardiosystems, Inc. a subsidiary of Thermo Electron Corporation. This
VAD is made of titanium, contains an electrically powered pump, provides
a safe interface with blood through a sintering process applied to the
titanium, and has an average selling price that is typically
approximately $65 thousand per unit. The HeartMate VAD is only approved
to assist the left ventricle, and is implanted inside the body cavity.
It is currently approved for use in BTT and DT.
    
    The Thoratec VAD is made of polymers, is powered pneumatically,
provides a safe interface with blood through our proprietary Thoralon
coating, and has an average selling price that is approximately $35
thousand per unit. The Thoratec VAD is approved to assist the left and
the right ventricle, and is worn outside the body cavity. It is
currently approved for use in BTT. VAD revenue historically has been split approximately equally between the
HeartMate and the Thoratec VAD, while unit sales volume has historically been
weighted around 2:1 in favor of the Thoratec VAD. As DT becomes a more
significant element of our business, we expect unit shipments and revenue for
the HeartMate VAD to grow to exceed that of the Thoratec VAD. We estimate we have in excess of 90% of the VAD market domestically and
more than 50% internationally. Domestic revenue growth will come from expanding
the market through new indications for our current products, in particular the
recent approval of Destination Therapy, and from the development and approval
of new, generally smaller and longer lasting products, that can be used in a
broader range of patients. Internationally we expect growth to come by taking
market share from our competitors and from expanding the market. 14




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We believe that potential competitors are at least 3 years away from
completion of DT clinical trials required before their products will become
commercially available and compete with our products in the United States. In
addition, unless our competitors products result in significantly better
outcomes than our products, we believe that absent any compelling reasons,
cardiac centers will not generally change suppliers. The use of our VADs for Destination Therapy in patients who are not
candidates for heart transplantation was approved by the FDA in 2002, and was
approved for reimbursement by CMS in late 2003. We estimate that there are
approximately 100,000 people who could be candidates for Destination Therapy,
of which we believe between 5,000 and 15,000 are treatable using current
technologies. Our future revenue growth is dependent in large part on the
successful adoption and sale of our products for Destination Therapy. Point-Of-Care Diagnostic Test Systems Business Through our ITC subsidiary, we design, develop, manufacture and market
point-of-care diagnostic test systems that provide fast, accurate blood test
results, to monitor a patients coagulation while they are being administered
anticoagulants, and to monitor a patients blood gas/electrolyte and chemistry
status. These products are sold into Hospitals, Physicians offices, long-term
care facilities, clinics, visiting nurse associations, and home healthcare
companies. Large medical device companies dominate these markets and we estimate our
products hold anywhere from 2% to 20% market share. Growth in this market will
come from taking market share away from other companies, and from the shifting
of diagnostic testing from the central laboratory to the point-of-care.
However, this market segment is very competitive, and includes the following
potential drivers:  
    
    New drug therapies under development may not require the intense
monitoring of a patients coagulation that the current anti-coagulation
drug of choice requires.
    
    New competitors that might enter the market with broader test menus.
To address this risk, in late 2003 we acquired the IRMA (Immediate
Response Mobile Analysis) product line of blood gas/electrolyte and
chemistry tests, which has significantly increased our test menu
offering, and also offers us the opportunity to develop the next
generation system that combines coagulation, blood gas and electrolyte
testing in one machine. Overall, we are planning for sales of our point-of-care diagnostic test
systems to grow at an annual growth rate of up to 10% for the next several
years. This growth assumes increased patient testing, better patient outcomes,
and increased decentralization of testing from central laboratories to
point-of-care. We expect our international sales to increase from 26% currently
and could range up to 30% of ITCs total annual sales by 2007. Vascular Graft Products The Vectravascular access graft was approved for sale in the United
States in December 2000 and in Europe in January 1998. It is designed for use
as a shunt between an artery and a vein, primarily to provide access to the
bloodstream for renal hemodialysis patients requiring frequent needle punctures
during treatment. Other currently available vascular access grafts are commonly
made out of ePTFE, which can lose integrity after repeated punctures and
require a three to six week healing period between implantation and the
initiation of dialysis treatment. We believe that the Vectramay provide
significant advantages over existing synthetic vascular access grafts that may
encourage its use by surgeons who are currently using natural vessels for
vascular access. We currently sell Vectrathrough the Bard Peripheral Vascular
division of C.R. Bard Corporation in the United States, Europe and selected
countries in Scandinavia, the Middle East and Northern Africa and through
Goodman Co. Ltd. in Japan. 15




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##### Table of Contents



Acquisition On September 30, 2003, we completed an asset purchase of the Immediate
Response Mobile Analysis, or IRMA, point-of-care blood analysis system product
line from Diametrics Medical, Inc. (Diametrics). We paid approximately $5.2
million in cash and assumed trade payables. The purchase price was allocated
based on the fair value of assets acquired as determined by an independent
valuation firm. There was no goodwill recorded with the transaction. As a result of the
acquisition, $220 relating to in-process research and development was expensed
in the fourth quarter of 2003. Restructuring Plan In June 2001, following the merger with Thermo Cardiosystems, Inc., we
initiated a restructuring plan to consolidate all of our VAD manufacturing
operations to our facilities in Pleasanton, California. Through April 2003, the
completion date of the restructuring plan, we have recorded a total of $1.5
million of restructuring charges. These charges represent estimated employee
severance costs and stock option acceleration charges. Recent Events On March 30, 2004, we made a small equity investment in BioCardia, Inc.
Under the terms of the investment documents, we will partner with BioCardia to
explore opportunities for developing devices for the surgical delivery of
biotherapeutics, have limited exclusive rights to negotiate the distribution,
licensing or purchase of surgical delivery technology developed by BioCardia
and, through an observational board seat, be able to review relevant clinical
data accumulated by BioCardia through their multiple trials. We have accounted
for this investment on the cost basis as we do not have the ability to exercise
significant influence over BioCardias operating and financial policies. This
investment is included in other long-term assets. On February 11, 2004 we announced that the board of directors authorized a
stock repurchase program under which Thoratec common stock with a market value
of up to $25 million may be acquired in the open market or in privately
negotiated transactions. The number of shares to be purchased and the timing of
such activity is dependent on several conditions, including the price of
Thoratec stock, general market conditions and other factors. As of the end of
our fiscal first quarter, we had approximately 56 million shares outstanding.
The purchases are funded from available cash and cash equivalents. Purchases
may continue until the authorized limit is reached or the Company discontinues
the program. 16




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Results of Operations The following table sets forth selected consolidated statements of
operations data for the periods indicated as a percentage of total product
sales: Three Months EndedApril 3,
    
    March 29,2004
    
    2003Sales
    
    
    100
    %
    
    
    100
    %Cost of sales
    
    
    41
    
    
    
    41Gross profit
    
    
    59
    
    
    
    59Operating expenses:Selling, general & administrative
    
    
    31
    
    
    
    28Research & development
    
    
    17
    
    
    
    17Amortization of purchased intangible assets
    
    
    7
    
    
    
    9Legal settlement, merger, restructuring and other costs
    
    
    
    
    
    
    Total operating expenses
    
    
    55
    
    
    
    54Income from operations
    

    
    4
    
    
    
    5Interest and other income  net
    
    
    1
    
    
    
    1Income before income taxes
    
    
    5
    
    
    
    6Income tax expense
    
    
    2
    
    
    
    2Net income
    
    
    3
    %
    
    
    4
    %
 Three months ended April 3, 2004 and March 29, 2003 Product Sales Product sales in the first quarter of 2004 were $42.8 million compared to
$36.1 million in the first quarter of 2003. The primary components of the $6.7
million increase in revenues were as follows:  
    
    Higher VAD sales ($2.2 million). This increase resulted from higher sales of the HeartMate VAD.
    
    Higher revenue from sales of point-of-care diagnostic test systems at our ITC subsidiary ($2.4 million).
    
    Revenue from IRMA product line acquired by ITC in the fourth quarter of 2003 ($1.7 million). We are currently planning 2004 revenue in the range of $190-200 million.
This is highly dependent upon the success of our Destination Therapy activities
in generating significant revenues. We anticipate the majority of these
revenues in the second half of 2004. Gross Profit Gross profit as a percentage of sales in the first quarter of 2004 was
58.6% compared to 58.7% in 2003. Within these essentially flat margins were the
following fluctuations:  
    
    A decrease in margins, driven by a shift in the mix of revenue from higher
margin domestic pumps to lower margin product lines and geographies,
including the lower margin IRMA product line, which we acquired in the
fourth quarter of 2003, offset by
    
    Lower manufacturing costs, and higher absorption of costs not
variable with manufacturing activities. As we recognize higher revenues for our current Destination Therapy
initiatives, we anticipate that margins will trend upwards into the mid 60%
range as the higher margin VAD products represent a larger portion of our
overall revenues. 17




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Selling, General and Administrative Selling, general and administrative (SG&A) expenses in the first
quarter of 2004 were $13.0 million, or 31% of product sales, compared to $10.1
million, or 28% of product sales, in the first quarter of 2003. Underlying the
$2.9 million increase in spending were the following drivers:  
    
    Increased SG&A headcount from 138 at the end of the first quarter of
2003 to 191 at the end of the first quarter of 2004, together with
annual salary increases aggregating 4.5% effective January 2004.
    
    Higher spending on marketing and related activities, primarily
associated with Destination Therapy, and costs associated with the IRMA
product line acquired in the fourth quarter of 2003.
    
    Higher professional fees.
    
    Higher facilities costs related to higher headcount. We anticipate that selling, general and administrative costs will
generally increase each year as our business grows, with some quarterly and
annual spending around events such as product introductions. Spending as a
percentage of revenue is expected to trend downward as revenues from current
products increase, in particular as we realize revenue associated with
Destination Therapy. Research and Development Research and development expenses in the first quarter of 2004 were $7.3
million compared to $6.3 million in the first quarter of 2003, both
representing 17% of product sales. Research and development costs are largely
project driven, and the level of spending depends on the level of project
activity planned and subsequently approved and conducted. Projects typically
include efforts to develop new products such as the HeartMate II and HeartMate
III, efforts to improve the operation and performance of current products such
as efforts to improve the life of various components of the HeartMate and the
Thoratec VAD products. Research and development costs also include regulatory
and clinical costs associated with our compliance with FDA regulations. We
anticipate that Research and Development costs will generally increase modestly
each year as our business grows, with some quarterly and annual spikes in
spending around events such as product introductions and regulatory approvals,
and with spending as a percentage of revenue trending downward as revenues from
current products increase, in particular as we realize revenue associated with
Destination Therapy. Amortization of Purchased Intangible Assets Amortization of purchased intangible assets in the first quarter of 2004
was $2.9 million compared to $3.1 million in the first quarter of 2003. The
decrease of $0.2 million is primarily due to the write-off of the purchased
intangible assets related to Aria CABG graft in the fourth quarter of 2003. Income Taxes Our effective tax rate was 39% in both the first quarter of 2004 and the
first quarter of 2003. The effective income tax expense rate for both quarters
differed from the statutory federal income tax rate primarily due to the impact
of state taxes. Liquidity and Capital Resources At April 3, 2004, we had working capital of $154.5 million compared with
$116.4 million at January 3, 2004, Cash and cash equivalents and short-term
available-for-sale investments at April 3, 2004 were $93.9 million compared to
$62 million at January 3, 2004, an increase of
$31.9 million resulting primarily from our classification of
investments as short-term at April 3, 2004, as compared to
long-term at January 3, 2004 to reflect managementss intent that these investments be considered available for current operations. 18




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##### Table of Contents



Cash used in operating activities was $0.4 million which was after
payments for legal settlement and annual bonuses, accrued at January 3, 2004,
totaling $5.2 million. In addition, we paid $2.2 million to acquire property,
plant and equipment, mainly equipment of $1.7 million and leasehold
improvements of $0.5 million. Cash used in financing activities was $6.0
million, as we paid $6.7 million during the first quarter of 2004 to repurchase
510,000 shares of stock under our stock repurchase program. This was partially
offset by $0.7 million of proceeds received from stock option exercises during
the quarter. We believe that cash and cash equivalents and short-term
available-for-sale investments on hand and expected cash flows from operations,
will be sufficient to fund our operations, capital requirements and stock
repurchase program for the foreseeable future. The impact of inflation on our financial position and the results of
operations was not significant during any of the periods presented. Critical Accounting Policies We have identified certain accounting policies as critical to our business
operations and the understanding of our results of operations. The impact and
associated risks related to those policies on our business operations is
discussed in our fiscal 2003 consolidated financial statements filed with the
SEC in our annual report on Form 10-K. In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure which amends FASB Statement
No. 123, Accounting for Stock-Based Compensation, to provide alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements of the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. We adopted the disclosure provisions of SFAS No. 148
at the beginning of fiscal 2002. On March 31, 2004, the FASB issued an exposure
draft, Share-Based Payment, an Amendment of FASB Statements No. 123 and 95.
This proposed statement would require that stock-based compensation be
recognized as a cost in the financial statements and that such cost be measured
based on the fair value of the stock-based compensation. If issued in final
form as proposed by the FASB, our adoption of this proposed statement would
have a material, although non-cash, impact on our consolidated statement of
operations. 19




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK Interest Rate Risk Our investment portfolio is made up of cash equivalent and marketable
security investments in money market funds and debt instruments of government
agencies and high quality corporate issuers. All investments are carried at
market value and are treated as available-for-sale. All investments mature
within two years or less from the date of purchase. The holdings of any one
issuer, except government agencies, do not exceed 10% of the portfolio. If
interest rates rise, the market value of our investments may decline which
could result in a loss if we are forced to sell an investment before the
scheduled maturity. We do not utilize derivative financial instruments to
manage interest rate risks. Foreign Currency Rate Fluctuations We conduct business in foreign countries. Our international operations
consist primarily of sales and service personnel for our ventricular assist
products, who report into our U.S. sales and marketing group and are internally
reported as part of that group. All assets and liabilities of our non-U.S.
operations are translated into U.S. dollars at the period-end exchange rates
and the resulting translation adjustments are included in comprehensive income.
The period-end translation of the non-functional currency assets and
liabilities (primarily assets and liabilities on our UK subsidiary consolidated
balance sheet that are not denominated in UK Pounds) at the period-end exchange
rates result in foreign currency gains and losses, which are included in
Interest and Other Income-Net. We use forward foreign currency contracts to hedge the gains and losses
generated by the revaluation of these non-functional currency assets and
liabilities. These derivatives are not designated as cash flow or fair value
hedges under SFAS No. 133. As a result, changes in the fair value of the
forward foreign currency contracts are included as incurred in Interest and
Other IncomeNet. The change in the fair value of the forward foreign
currency contracts typically offsets the change value from revaluation of the
non-functional currency assets and liabilities. These contracts typically have
maturities of three months or less. At April 3, 2004, the Company had forward
foreign currency contracts in Pounds Sterling and Euros with a nominal value of
$10.3 million with a fair value of approximately $0.1 million. There were no
such contracts outstanding at March 29, 2003. The impact of the foreign
currency revaluation, net of forward foreign currency contracts, was negligible
for the periods ending April 3, 2004 and March 29, 2003. 20




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ITEM 4. CONTROLS AND PROCEDURES An evaluation was performed under the supervision and with the
participation of our management, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures as of April 3, 2004. Based on that
evaluation, our management, including the Chief Executive Officer and Chief
Financial Officer, concluded that as of April 3, 2004 the Companys disclosure
controls and procedures were effective in providing reasonable assurance that
information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms. There
have been no changes in our internal controls during the fiscal quarter ended
April 3, 2004 that have materially affected or are reasonably likely to
materially affect the Companys internal control over financial reporting. Our management, including the Chief Executive Officer and the Chief
Financial Officer, do not expect that the disclosure controls and procedures or
internal controls will prevent all error and all fraud. A control system, no
matter how well conceived and operated, can only provide reasonable assurances
that the objectives of the control system are met. The design of a control
system reflects resource constraints; the benefits of controls must be
considered relative to their costs. Because there are inherent limitations in
all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within the Company have
been or will be detected. These inherent limitations include the realities that
judgments in decision-making can be faulty and that breakdowns occur because of
simple error or mistake. Controls can be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management override of
the control. The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events. There can be no assurance
that any design will succeed in achieving its stated goals under all future
conditions; over time, controls may become inadequate because of changes in
conditions or deterioration in the degree of compliance with the policies or
procedures. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected. We intend to review and evaluate the design and effectiveness of our
disclosure controls and procedures on an ongoing basis and to improve our
controls and procedures over time and to correct any deficiencies that we may
discover in the future. Our senior management has timely access to all material
financial and non-financial information concerning our business. While we
believe the present design of our disclosure controls and procedures is
effective, future events affecting our business may cause us to significantly
modify our disclosure controls and procedures. 21




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PART II. OTHER INFORMATION 
 ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES Maximum Dollar ValueTotal Number of
    
    Of Shares That May YetTotal Number
    
    Average
    
    Shares Purchased as
    
    Be Purchased UnderOf Shares
    
    Price Paid
    
    Part Of Publicly
    
    The ProgramPurchased
    
    Per Share
    
    Announced Program
    
    (in millions)January 4, 2004 to
January 31, 2004
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    25.0February 1, 2004 to
February 28, 2004
    
    
    185,000
    
    
    $
    13.59
    
    
    
    185,000
    
    
    $
    25.0February 29, 2004 to
April 3, 2004
    
    
    325,000
    (2)
    
    $
    12.97
    
    
    
    325,000
    
    
    $
    18.3Total
    
    
    510,000
    
    
    $
    13.20
    
    
    
    510,000
  (1)
    
    Our stock repurchase program, which authorizes the Company to repurchase
up to $25.0 million of shares, was announced on February 11, 2004. This
program does not have an expiration date.(2)
    
    Includes 250,000 shares which were purchased from Thermo Electron
Corporation in a privately arranged transaction executed through a third
party broker at the then current market price. 
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K  (a)
    
    Exhibits:  31.1
    
    Section 302 Certifications of Chief Executive Officer and Chief
Financial Officer32.1
    
    Section 906 Certifications of Chief Executive Officer and Chief
Financial Officer  (b)
    
    Reports on Form 8-K:On February 11, 2004, the Company filed a Current Report on Form 8-K,
reporting under items 5 and 7, announcing a program to repurchase up to
$25 million in shares of its common stock.On February 3, 2004, the Company filed a Current Report on Form 8-K,
reporting under items 9 and 12, announcing the Companys results for the
first fiscal quarter and fiscal year ended January 3, 2004. 22




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SIGNATURES In accordance with the requirements of the Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized. THORATEC CORPORATIONDate: August 16, 2004
    
    /s/ D. Keith GrossmanD. Keith Grossman,Chief Executive OfficerDate: August 16, 2004
    
    /s/ M. Wayne BoylstonM. Wayne Boylston,Senior Vice President,Chief Financial Officer and Secretary(Principal Financial and Accounting Officer)
 23