##### Table of Contents



U.S. 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 April 4, 2009
 or
 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: 000-49798
 THORATEC CORPORATION
 (Exact name of registrant as specified in its charter)
 California
    
    94-2340464(State or other jurisdiction of incorporation
    
    (I.R.S. Employer Identification No.)or organization)6035 Stoneridge Drive, Pleasanton, California
    
    94588(Address of principal executive offices)
    
    (Zip Code)
 (925) 847-8600
(Registrants telephone number, including area code)
 Indicate by check mark whether the registrant: þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



THORATEC CORPORATION
 TABLE OF CONTENTS
 Part I. Financial Information
    
    
    3Item 1. Condensed Consolidated Financial Statements (unaudited)
    
    
    3Condensed Consolidated Balance Sheets as of April 4, 2009 and January 3, 2009
    
    
    3Condensed Consolidated Statements of Operations for the Three Months Ended April 4, 2009 and March 29, 2008
    
    
    4Condensed Consolidated Statements of Shareholders Equity for the Three Months Ended April 4, 2009 and
March 29, 2008
    
    
    5Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 4, 2009 and March 29, 2008
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 3. Quantitative and Qualitative Disclosure of Market Risk
    
    
    40Item 4. Controls and Procedures
    
    
    41Part II. Other Information
    
    
    42Item 1A. Risk Factors
    
    
    42Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
    
    
    42Item 6. Exhibits
    
    
    43Signatures
    
    
    44ExhibitsEX-10.34EX-10.35EX-31.1EX-31.2EX-32.1EX-32.2
     2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 THORATEC CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (unaudited)
(in thousands)
 April 4, 2009
    
    
    January 3, 2009As adjusted (1)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    115,374
    
    
    $
    107,053Restricted cash and cash equivalents
    
    
    20,000
    
    
    
    Short-term available-for-sale investments
    
    
    109,505
    
    
    
    141,598Receivables, net of allowances of $1,054 and $947, respectively
    
    
    59,476
    
    
    
    55,065Inventories
    
    
    65,644
    
    
    
    61,373Deferred tax assets
    
    
    8,397
    
    
    
    8,397Prepaid expenses and other assets
    
    
    8,051
    
    
    
    6,917Total current assets
    
    
    386,447
    
    
    
    380,403Property, plant and equipment, net
    
    
    51,244
    
    
    
    50,138Goodwill
    
    
    99,287
    
    
    
    99,287Purchased intangible assets, net
    
    
    105,652
    
    
    
    108,584Long-term available-for-sale investments
    
    
    29,928
    
    
    
    29,959Other long-term assets
    
    
    16,045
    
    
    
    15,716Total Assets
    
    $
    688,603
    
    
    $
    684,087LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    14,580
    
    
    $
    10,563Accrued compensation
    
    
    12,639
    
    
    
    25,550Other accrued liabilities
    
    
    15,982
    
    
    
    12,410Total current liabilities
    
    
    43,201
    
    
    
    48,523Senior subordinated convertible notes
    
    
    126,025
    
    
    
    124,115Long-term deferred tax liability
    
    
    37,127
    
    
    
    38,842Other
    
    
    7,092
    
    
    
    6,328Total Liabilities
    
    
    213,445
    
    
    
    217,808Shareholders equity:Common shares: no par, authorized 100,000; issued and
outstanding 56,367 and 56,395 as of April 4, 2009 and January
3, 2009, respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    533,832
    
    
    
    528,657Accumulated deficit
    
    
    (52,881
    )
    
    
    (56,634
    )Accumulated other comprehensive income (loss):Unrealized gain (loss) on investments
    
    
    (3,433
    )
    
    
    (3,337
    )Cumulative translation adjustments
    
    
    (2,360
    )
    
    
    (2,407
    )Total accumulated other comprehensive income (loss)
    
    
    (5,793
    )
    
    
    (5,744
    )Total Shareholders Equity
    
    
    475,158
    
    
    
    466,279Total Liabilities and Shareholders Equity
    
    $
    688,603
    
    
    $
    684,087
  
 (1)
    
    Adjusted for the retrospective adoption of Financial Accounting Standards Board (FASB)
Staff Position (FSP) No. APB 14-1, Accounting for Convertible Debt Instruments That May Be
Settled in Cash Upon Conversion (Including Partial Cash Settlement).See Note 13 Long-Term
Debt. 3




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##### Table of Contents



THORATEC CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited)
(in thousands, except per share data)
 Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008As adjusted(1)Product sales
    
    $
    89,466
    
    
    $
    64,427Cost of product sales
    
    
    35,439
    
    
    
    28,590Gross profit
    
    
    54,027
    
    
    
    35,837Operating expenses:Selling, general and administrative
    
    
    27,455
    
    
    
    20,636Research and development
    
    
    14,086
    
    
    
    12,519Amortization of purchased intangible assets
    
    
    2,931
    
    
    
    3,296Total operating expenses
    
    
    44,472
    
    
    
    36,451Income (loss) from operations
    
    
    9,555
    
    
    
    (614
    )Other income and (expense):Interest expense and other
    
    
    (2,866
    )
    
    
    (2,587
    )Interest income and other
    
    
    988
    
    
    
    2,178Income (loss) before income taxes
    
    
    7,677
    
    
    
    (1,023
    )Income tax (expense) benefit
    
    
    (2,050
    )
    
    
    345Net income (loss)
    
    $
    5,627
    
    
    $
    (678
    )Net income (loss) per share:Basic
    
    $
    0.10
    
    
    $
    (0.01
    )Diluted
    
    $
    0.10
    
    
    $
    (0.01
    )Shares used to compute net income (loss) per share:Basic
    
    
    56,384
    
    
    
    54,222Diluted
    
    
    57,738
    
    
    
    54,222
  
 (1)
    
    Adjusted for the retrospective adoption of FSP APB 14-1. See Note 13, Long-Term Debt. 4




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THORATEC CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 AccumulatedOther
    
    
    Total
    
    
    TotalCommon
    
    
    Additional
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Shareholders
    
    
    ComprehensiveShares
    
    
    Paid-in Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    Equity
    
    
    Income (loss)(in thousands)BALANCE, DECEMBER 29, 2007, as
previously reported
    
    
    54,108
    
    
    $
    458,383
    
    
    $
    (61,577
    )
    
    $
    1,223
    
    
    $
    398,029Retrospective application of FSP APB
14-1, net of taxes
    
    
    
    
    
    
    28,462
    
    
    
    (12,682
    )
    
    
    
    
    
    
    15,780BALANCE, DECEMBER 29, 2007, as
adjusted (1)
    
    
    54,108
    
    
    
    486,845
    
    
    
    (74,259
    )
    
    
    1,223
    
    
    
    413,809Exercise of common stock options for
cash
    
    
    15
    
    
    
    147
    
    
    
    
    
    
    
    
    
    
    
    147Excess income tax deficiency on stock
option exercises
    
    
    (18
    )
    
    
    (180
    )
    
    
    
    
    
    
    
    
    
    
    (180
    )Repurchase and retirement of common
shares, net
    
    
    358
    
    
    
    (534
    )
    
    
    (434
    )
    
    
    
    
    
    
    (968
    )Share-based compensation
    
    
    
    
    
    
    2,760
    
    
    
    
    
    
    
    
    
    
    
    2,760Comprehensive income (loss):Unrealized loss on available-for-sale
investments (net of taxes of $1,835)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,752
    )
    
    
    (2,752
    )
    
    
    (2,752
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    168
    
    
    
    168
    
    
    
    168Net loss (1)
    
    
    
    
    
    
    
    
    
    
    (678
    )
    
    
    
    
    
    
    (678
    )
    
    
    (678
    )Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (3,262
    )BALANCE, MARCH 29, 2008 (1)
    
    
    54,463
    
    
    $
    489,038
    
    
    $
    (75,371
    )
    
    $
    (1,361
    )
    
    $
    412,306BALANCE, JANUARY 3, 2009, as
previously reported
    
    
    56,395
    
    
    $
    500,195
    
    
    $
    (39,751
    )
    
    $
    (5,744
    )
    
    $
    454,700Retrospective application of FSP APB
14-1, net of taxes
    
    
    
    
    
    
    28,462
    
    
    
    (16,883
    )
    
    
    
    
    
    
    11,579BALANCE, JANUARY 3, 2009, as adjusted
(1)
    
    
    56,395
    
    
    
    528,657
    
    
    
    (56,634
    )
    
    
    (5,744
    )
    
    
    466,279Exercise of common stock options for
cash
    
    
    73
    
    
    
    1,033
    
    
    
    
    
    
    
    
    
    
    
    1,033Tax deduction related to employees
and directors stock plans
    
    
    
    
    
    
    1,119
    
    
    
    
    
    
    
    
    
    
    
    1,119Repurchase and retirement of common
shares, net
    
    
    (101
    )
    
    
    (1,020
    )
    
    
    (1,874
    )
    
    
    
    
    
    
    (2,894
    )Share-based compensation
    
    
    
    
    
    
    4,043
    
    
    
    
    
    
    
    
    
    
    
    4,043Comprehensive income (loss):Unrealized loss on available-for-sale
investments (net of taxes of $64)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (96
    )
    
    
    (96
    )
    
    
    (96
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47
    
    
    
    47
    
    
    
    47Net income
    
    
    
    
    
    
    
    
    
    
    5,627
    
    
    
    
    
    
    
    5,627
    
    
    
    5,627Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,578BALANCE, APRIL 4, 2009
    
    
    56,367
    
    
    $
    533,832
    
    
    $
    (52,881
    )
    
    $
    (5,793
    )
    
    $
    475,158
  
 (1)
    
    Adjusted for the retrospective adoption of FSP APB 14-1. See Note 13, Long-Term Debt. 5




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THORATEC CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
(in thousands)
 Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008As adjusted (1)Cash flows from operating activities:Net income (loss)
    
    $
    5,627
    
    
    $
    (678
    )Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    5,537
    
    
    
    5,715Investment premium amortization, net
    
    
    691
    
    
    
    290Non-cash expenses, net
    
    
    (47
    )
    
    
    289Non-cash interest on convertible subordinated debt
    
    
    2,763
    
    
    
    2,603Tax benefit related to stock options
    
    
    1,119
    
    
    
    Share-based compensation expense
    
    
    4,036
    
    
    
    2,657Excess tax benefits from share-based compensation
    
    
    (1,041
    )
    
    
    (28
    )Change in net deferred tax liability
    
    
    (2,801
    )
    
    
    (1,844
    )Changes in assets and liabilities:Receivables
    
    
    (4,552
    )
    
    
    2,607Inventories
    
    
    (4,264
    )
    
    
    993Prepaid expenses and other assets
    
    
    (110
    )
    
    
    (806
    )Accounts payable and other liabilities
    
    
    (7,103
    )
    
    
    (1,829
    )Accrued income taxes, net
    
    
    1,501
    
    
    
    (253
    )Net cash provided by operating activities
    
    
    1,356
    
    
    
    9,716Cash flows from investing activities:Purchases of available-for-sale investments
    
    
    
    
    
    
    (42,120
    )Sales of available-for-sale investments
    
    
    20,808
    
    
    
    69,820Maturities of available-for-sale investments
    
    
    10,460
    
    
    
    24,536Restricted cash and equivalents
    
    
    (20,000
    )
    
    
    Purchases of property, plant and equipment
    
    
    (3,646
    )
    
    
    (1,583
    )Net cash provided by investing activities
    
    
    7,622
    
    
    
    50,653Cash flows from financing activities:Excess income tax deficiency on stock option exercises
    
    
    
    
    
    
    (180
    )Excess tax benefits from share-based compensation
    
    
    1,041
    
    
    
    28Proceeds from stock option exercises
    
    
    1,033
    
    
    
    147Repurchase and retirement of common shares
    
    
    (2,894
    )
    
    
    (966
    )Net cash (used in) financing activities
    
    
    (820
    )
    
    
    (971
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    163
    
    
    
    47Net increase in cash and cash equivalents
    
    
    8,321
    
    
    
    59,445Cash and cash equivalents at beginning of period
    
    
    107,053
    
    
    
    20,689Cash and cash equivalents at end of period
    
    $
    115,374
    
    
    $
    80,134Supplemental disclosure of cash flow information:Cash paid for taxes
    
    $
    2,180
    
    
    $
    1,933Supplemental disclosure of non-cash investing and financing activities:Transfers of equipment from inventory
    
    $
    41
    
    
    $
    763
  
 (1)
    
    Adjusted for the retrospective adoption of FSP APB 14-1. See Note 13, Long-Term Debt. 6




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THORATEC CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
 1. Operations and Significant Accounting Policies
 Basis of Presentation
   Revenue Recognition and Product Warranty
 Revenue Recognition when Right of Return Exists
  7




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Balance
    
    
    Cost of
    
    
    Accruals of
    
    
    BalanceBeginning
    
    
    Warranty
    
    
    Product
    
    
    Endof Period
    
    
    Claims
    
    
    Warranties
    
    
    of Period(in thousands)Three months ended April 4, 2009
    
    $
    1,071
    
    
    $
    (882
    )
    
    $
    1,072
    
    
    $
    1,261Three months ended March 29, 2008
    
    $
    1,006
    
    
    $
    (589
    )
    
    $
    549
    
    
    $
    966
 2. Business Combination
   3. Accounting Standards
 Recently Issued Accounting Standards
 Recognition and Presentation
of Other-Than-Temporary Impairment,
 Determining Fair Value When the Volume and Level
of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly,
 8




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Interim Disclosures about Fair Value of Financial Instruments
  Disclosures about Derivative Instruments and
Hedging Activities
 Effective Date of FASB Statement No.
157 Fair Value Measurements
 Business Combinations Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies, Accounting for Contingencies Reasonable Estimation of the
Amount of a Loss
 4. Cash and cash equivalents
  5. Restricted cash and cash equivalents
  9




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##### Table of Contents



6. Investments in Available-for-Sale Securities
     GrossAmortized
    
    
    unrealized
    
    
    Faircost
    
    
    gains (losses)
    
    
    value(in thousands)April 4, 2009:Short-term investments:Municipal bonds
    
    $
    108,072
    
    
    $
    1,433
    
    
    $
    109,505Long-term investments:Auction rate securities
    
    $
    37,100
    
    
    $
    (7,172
    )
    
    $
    29,928January 3, 2009:Short-term investments:Municipal bonds
    
    $
    139,931
    
    
    $
    1,667
    
    
    $
    141,598Long-term investments:Auction rate securities
    
    $
    37,200
    
    
    $
    (7,241
    )
    
    $
    29,959
   10




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The Meaning of
Other-Than-Temporary-Impairment and Its Application to Certain Investments
 7. Fair Value Measurements
  Level 1:
    
    Quoted prices (unadjusted) in active markets for identical assets or liabilities.
 Level 2:
    
    Directly or indirectly observable market based inputs used in models or other valuation methodologies.
 Level 3:
    
    Unobservable inputs that are not corroborated by market data which require significant management
judgment or estimation.
 11




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April 4, 2009Assets and
    
    
    
    
    
    
    
    
    
    Significantliabilities
    
    
    
    
    
    Quoted prices in
    
    other
    
    Significantat carrying
    
    Total
    
    active markets for
    
    observable
    
    unobservablevalue
    
    fair value
    
    identical assets
    
    inputs
    
    inputs(Level 1)
    
    (Level 2)
    
    (Level 3)(in thousands)AssetsShort-term investments  municipal bonds
    
    $
    109,505
    
    
    $
    109,505
    
    
    $
    
    
    
    $
    109,505
    
    
    $
    Long-term investments  auction rate securities
    
    
    29,928
    
    
    
    29,928
    
    
    
    
    
    
    
    
    
    
    
    29,928Convertible debenture with Levitronix LLC
    
    
    5,792
    
    
    
    4,200
    
    
    
    
    
    
    
    
    
    
    
    4,200LiabilitiesMark to market on foreign exchange instruments
(Note 8)
    
    
    66
    
    
    
    66
    
    
    
    
    
    
    
    66
    
    
    
    Make-whole provision (Note 13)
    
    
    71
    
    
    
    71
    
    
    
    
    
    
    
    
    
    
    
    71Senior subordinated convertible notes (fair
value for purposes of disclosure in Note 13)
    
    
    126,025
    
    
    
    205,612
    
    
    
    
    
    
    
    205,612
    
    
    
    
 January 3, 2009Assets and
    
    
    
    
    
    
    
    
    
    Significantliabilities at
    
    
    
    
    
    Quoted prices in
    
    other
    
    Significantcarrying
    
    Total
    
    active markets for
    
    observable
    
    unobservablevalue
    
    fair value
    
    identical assets
    
    inputs
    
    inputs(Level 1)
    
    (Level 2)
    
    (Level 3)(in thousands)AssetsShort term investments  municipal bonds
    
    $
    141,598
    
    
    $
    141,598
    
    
    $
    
    
    
    $
    141,598
    
    
    $
    Long term investments  auction rate securities
    
    
    29,959
    
    
    
    29,959
    
    
    
    
    
    
    
    
    
    
    
    29,959Convertible debenture with Levitronix LLC
    
    
    5,711
    
    
    
    4,200
    
    
    
    
    
    
    
    
    
    
    
    4,200LiabilitiesMark to market on foreign exchange instruments
(Note 8)
    
    
    73
    
    
    
    73
    
    
    
    
    
    
    
    73
    
    
    
    Make-whole provision (Note 13)
    
    
    46
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    46Senior subordinated convertible notes (fair
value for purposes of disclosure in Note 13)
    
    
    124,115
    
    
    
    215,880
    
    
    
    
    
    
    
    215,880
    
    
    
    
  12




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Fair Value Measurement Using SignificantUnobservable Inputs (Level 3)AuctionRate
    
    
    Other Long
    
    
    Other LongSecurities
    
    
    Term Assets
    
    
    Term Liabilities(in thousands)Balance at January 3, 2009
    
    $
    29,959
    
    
    $
    4,200
    
    
    $
    46Settlement at par
    
    
    (100
    )Unrealized holding loss, included in interest income and other
    
    
    
    
    
    
    
    
    
    
    25Unrealized holding gain, included in other comprehensive income
    
    
    69
    
    
    
    
    
    
    
    Balance at April 4, 2009
    
    $
    29,928
    
    
    $
    4,200
    
    
    $
    71
  8. Foreign Exchange Instruments
  Accounting for Derivative Instrument and Hedging Activities,
 Notional AmountThree Months EndedApril 4,
    
    March 29,2009
    
    2008(in thousands)Purchase
    
    $
    9,231
    
    
    $
    6,510Sales
    
    
    11,342
    
    
    
    12,587
  
 13




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##### Table of Contents



Three Months EndedApril 4,
    
    March 29,2009
    
    2008(in thousands)Foreign currency exchange gain (loss) on foreign currency contracts
    
    $
    448
    
    
    $
    (1,040
    )Foreign currency exchange (loss) gain on foreign translation adjustments
    
    
    (311
    )
    
    
    1,108
 9. Inventories
  April 4,
    
    
    January 3,2009
    
    
    2009(in thousands)Finished goods
    
    $
    22,368
    
    
    $
    24,373Work in process
    
    
    11,022
    
    
    
    9,174Raw materials
    
    
    32,254
    
    
    
    27,826Total
    
    $
    65,644
    
    
    $
    61,373
 10. Property, Plant and Equipment, net
  April 4,
    
    
    January 3,2009
    
    
    2009(in thousands)Land, building and improvements
    
    $
    16,135
    
    
    $
    16,135Equipment and capitalized software
    
    
    69,126
    
    
    
    68,029Furniture and leasehold improvements
    
    
    29,381
    
    
    
    27,424Total
    
    
    114,642
    
    
    
    111,588Less accumulated depreciation
    
    
    (63,398
    )
    
    
    (61,450
    )Total
    
    $
    51,244
    
    
    $
    50,138
  11. Goodwill and Purchased Intangible Assets
   April 4, 2009
    
    
    January 3, 2009(in thousands)Balance at the beginning of the fiscal period
    
    $
    99,287
    
    
    $
    98,368Adjustment for the acquisition related to the Cardiovascular division
    
    
    
    
    
    
    919Balance as of the end of the fiscal period
    
    $
    99,287
    
    
    $
    99,287
 14




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##### Table of Contents



April 4, 2009Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Amount(in thousands)Patents and trademarks
    
    $
    38,515
    
    
    $
    (29,369
    )
    
    $
    9,146Core technology
    
    
    37,485
    
    
    
    (14,258
    )
    
    
    23,227Developed technology
    
    
    125,742
    
    
    
    (52,935
    )
    
    
    72,807Customer and distributor relationships and other
    
    
    897
    
    
    
    (425
    )
    
    
    472Total purchased intangible assets
    
    $
    202,639
    
    
    $
    (96,987
    )
    
    $
    105,652
 January 3, 2009Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Amount(in thousands)Patents and trademarks
    
    $
    38,515
    
    
    $
    (28,803
    )
    
    $
    9,712Core technology
    
    
    37,485
    
    
    
    (13,765
    )
    
    
    23,720Developed technology
    
    
    125,742
    
    
    
    (51,098
    )
    
    
    74,644Customer and distributor relationships and other
    
    
    897
    
    
    
    (389
    )
    
    
    508Total purchased intangible assets
    
    $
    202,639
    
    
    $
    (94,055
    )
    
    $
    108,584
  12. Other Assets
   13. Long-Term Debt
  15




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##### Table of Contents




    
    The Companys estimated non-convertible borrowing rate as of May 16,
2004  the date the senior subordinated convertible notes were issued;
    
    The amount and timing of cash flows; and
    
    The expected life.
   Three Months Ended April 4, 2009Incremental impactExcluding impact of
    
    
    of adoption ofFSP APB 14-1
    
    
    FSP APB 14-1
    
    
    As reported(in thousands, except per share amounts)Net income (loss) before interest and amortization expense (net of tax)
    
    $
    7,361
    
    
    
    
    
    
    $
    7,361Interest and amortization expense (net of tax):Interest expense
    
    
    (853
    )
    
    $
    (1,910
    )
    
    
    (2,763
    )Amortization of debt issuance costs
    
    
    (155
    )
    
    
    52
    
    
    
    (103
    )Income tax benefit
    
    
    398
    
    
    
    734
    
    
    
    1,132Impact on
net income
    
    
    (610
    )
    
    $
    (1,124
    )
    
    
    (1,734
    )Net income
    
    $
    6,751
    
    
    
    
    
    
    $
    5,627Net income per share:Basic and diluted
    
    $
    0.11
    
    
    
    
    
    
    $
    0.10
 16




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##### Table of Contents



Three Months Ended March 29, 2008Incremental impactExcluding impact
    
    
    of adoption ofof
FSP APB 14-1
    
    
    FSP APB 14-1
    
    
    As adjusted(in thousands, except per share amounts)Net income (loss) before interest and amortization expense (net of tax)
    
    $
    959
    
    
    
    
    
    
    $
    959Interest and amortization expense (net of tax):Interest expense
    
    
    (853
    )
    
    $
    (1,750
    )
    
    
    (2,603
    )Amortization of debt issuance costs
    
    
    (155
    )
    
    
    52
    
    
    
    (103
    )Income tax benefit
    
    
    398
    
    
    
    671
    
    
    
    1,069Impact on net income (loss)
    
    
    (610
    )
    
    $
    (1,027
    )
    
    
    (1,637
    )Net income (loss)
    
    $
    349
    
    
    
    
    
    
    $
    (678
    )Net income (loss) per share:Basic and diluted
    
    $
    0.01
    
    
    
    
    
    
    $
    (0.01
    )
  Net Increase (Decrease)AdditionalLong-term
    
    
    Debt issuance
    
    
    Deferred tax
    
    
    paid-indebt
    
    
    costs
    
    
    liability
    
    
    capital
    
    
    Deficit(in thousands)Allocation of long-term debt proceeds
and issuance costs
to equity component on issuance date
    
    $
    (48,508
    )
    
    $
    (1,462
    )
    
    $
    18,584
    
    
    $
    28,462
    
    
    $
    Cumulative retrospective impact from
amortization of discount on liability
component and debt issuance costs
    
    
    21,718
    
    
    
    754
    
    
    
    (8,282
    )
    
    
    
    
    
    
    12,682Cumulative retrospective impact as of
December 29, 2007
    
    
    (26,790
    )
    
    
    (708
    )
    
    
    10,302
    
    
    
    28,462
    
    
    
    12,682Retrospective impact from
amortization of discount on liability
component and debt issuance costs
during the period
    
    
    7,155
    
    
    
    209
    
    
    
    (2,745
    )
    
    
    
    
    
    
    4,201Cumulative retrospective impact as of
January 3, 2009
    
    $
    (19,635
    )
    
    $
    (499
    )
    
    $
    7,557
    
    
    $
    28,462
    
    
    $
    16,883
 AdditionalLong-term
    
    
    Debt issuance
    
    
    Deferred tax
    
    
    paid-indebt
    
    
    costs
    
    
    liability
    
    
    capital
    
    
    Deficit(in thousands)January 3, 2009, balance as previously reported
    
    $
    143,750
    
    
    $
    1,475
    
    
    $
    31,285
    
    
    $
    500,195
    
    
    $
    39,751Cumulative retrospective impact as of January
3, 2009
    
    
    (19,635
    )
    
    
    (499
    )
    
    
    7,557
    
    
    
    28,462
    
    
    
    16,883January 3, 2009, as adjusted
    
    $
    124,115
    
    
    $
    976
    
    
    $
    38,842
    
    
    $
    528,657
    
    
    $
    56,634
  April 4, 2009
    
    
    January 3, 2009(in thousands)Long-term debtPrincipal amount
    
    $
    143,750
    
    
    $
    143,750Unamortized discount
    
    
    (17,725
    )
    
    
    (19,635
    )Net carrying amount
    
    $
    126,025
    
    
    $
    124,115Equity component, net of income tax benefit
    
    $
    28,462
    
    
    $
    28,462
  17




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18




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##### Table of Contents



14. Share-Based Compensation
   Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008(in thousands)Cost of Goods Sold
    
    $
    511
    
    
    $
    442Selling, general and administrative
    
    
    2,406
    
    
    
    1,674Research and development
    
    
    1,119
    
    
    
    747Total share based compensation expense before taxes
    
    
    4,036
    
    
    
    2,863Tax benefit for share-based compensation expense
    
    
    1,122
    
    
    
    632Total share-based compensation (net of taxes)
    
    $
    2,914
    
    
    $
    2,231
  Share-Based Payment
  Equity Plan
  19




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##### Table of Contents



Stock Options
   Three Months EndedApril 4, 2009
    
    March 29, 2008Risk-free interest rate
    
    
    2.30
    %
    
    
    3.25
    %Expected volatility
    
    
    53
    %
    
    
    40
    %Expected option life
    
    
    4.91 to 6.02 years
    
    
    
    5.09 to 6.07 yearsDividends
    
    None
        
    None
    Number of
    
    
    Weighted
    
    
    Weighted AverageOptions
    
    
    Average Exercise
    
    
    Remaining Contract(in thousands)
    
    
    Price Per Share
    
    
    Life (years)Outstanding options at January 3, 2009
    
    
    4,259
    
    
    $
    16.37
    
    
    
    5.98Granted
    
    
    326
    
    
    
    23.92Exercised
    
    
    (73
    )
    
    
    14.12Forfeited or expired
    
    
    (16
    )
    
    
    31.63Outstanding options at April 4, 2009
    
    
    4,496
    
    
    $
    16.94
    
    
    
    6.05Outstanding options exercisable at April 4, 2009
    
    
    3,203
    
    
    $
    15.92
    
    
    
    5.14Outstanding options vested at April 4, 2009 and expected to vest
    
    
    4,323
    
    
    $
    16.83
    
    
    
    5.94
  20




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##### Table of Contents



Restricted Stock
    Number of
    
    
    Weighted AverageShares
    
    
    Grant Date Fair(in thousands)
    
    
    ValueOutstanding unvested restricted stock at January 3, 2009
    
    
    983
    
    
    $
    16.83Granted
    
    
    
    
    
    
    Vested
    
    
    (258
    )
    
    
    17.05Forfeited or expired
    
    
    (11
    )
    
    
    16.69Outstanding unvested restricted stock at April 4, 2009
    
    
    714
    
    
    $
    16.76
 Restricted Stock Units
   Number of
    
    
    Weighted Average
    
    
    Weighted AverageUnits
    
    
    Grant Date Fair
    
    
    Remaining Contract(in thousands)
    
    
    Value
    
    
    Life (in years)Outstanding units at January 3, 2009
    
    
    28
    
    
    $
    16.66
    
    
    
    2.46Granted
    
    
    408
    
    
    
    24.01Released
    
    
    (25
    )
    
    
    22.65Forfeited or expired
    
    
    (3
    )
    
    
    23.93Outstanding units at April 4, 2009
    
    
    408
    
    
    $
    23.59
    
    
    
    3.81
 21




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##### Table of Contents



Employee Stock Purchase Plan
   Risk-free interest rate
    
    
    1.07
    %Expected volatility
    
    
    60
    %Expected option life
    
    0.50 yearsDividends
    
    None
  15. Income Taxes
     Accounting for Uncertainty in Income Taxes, an interpretation of
SFAS No. 109
 22




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##### Table of Contents



16. Net Income (Loss) Per Share
  Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008As adjusted (1)(in thousands, except per share data)Net income (loss)
    
    $
    5,627
    
    
    $
    (678
    )Weighted average number of common shares-basic
    
    
    56,384
    
    
    
    54,222Dilutive effect of stock-based compensation plans
    
    
    1,354
    
    
    
    Weighted average number of common shares-diluted
    
    
    57,738
    
    
    
    54,222Net income (loss) per common shareBasic
    
    $
    0.10
    
    
    $
    (0.01
    )Diluted
    
    $
    0.10
    
    
    $
    (0.01
    )
 
 (1)
    
    Adjusted for the retrospective adoption of FSP APB 14-1. See Note 13, Long-Term Debt.  Three Months EndedApril 4,
    
    March 29,2009
    
    2008(in thousands)Options to purchase shares not included in the
computation of diluted income (loss) per share
because their inclusion would be antidilutive
    
    
    164
    
    
    
    3,067
  23




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##### Table of Contents



17. Enterprise and Related Geographic Information
   Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008As adjusted (1)(in thousands)Product sales:Cardiovascular
    
    $
    64,629
    
    
    $
    40,221ITC
    
    
    24,837
    
    
    
    24,206Total product sales
    
    $
    89,466
    
    
    $
    64,427Income (loss) before income taxes:Cardiovascular (a)(c)
    
    $
    18,526
    
    
    $
    1,826ITC (a)(c)
    
    
    (1,065
    )
    
    
    805Corporate (b)(c)
    
    
    (7,906
    )
    
    
    (3,245
    )Total operating income (loss)
    
    
    9,555
    
    
    
    (614
    )Other income and (expense):Interest expense and other
    
    
    (2,866
    )
    
    
    (2,587
    )Interest income and other
    
    
    988
    
    
    
    2,178Income (loss) before income tax (expense) benefit
    
    $
    7,677
    
    
    $
    (1,023
    )
 April 4,
    
    
    January 3,2009
    
    
    2009As adjusted (1)(in thousands)Total assets:Cardiovascular
    
    $
    328,404
    
    
    $
    321,605ITC
    
    
    60,937
    
    
    
    61,552Corporate (b)
    
    
    299,262
    
    
    
    300,930Total assets
    
    $
    688,603
    
    
    $
    684,087
 
 (1)    Adjusted for the retrospective adoption of FSP APB 14-1. See Note 13, Long-Term Debt.(a)
    
    Includes amortization expense of $2.7 million for the three months ended April 4, 2009 and
$3.1 million for the three months ended March 29, 2008, related to the Cardiovascular segment.
The ITC segment also includes amortization expense of $0.2 million for each of the three
months ended April 4, 2009 and March 29, 2008.(b)
    
    Represents unallocated costs or assets, not specifically identified to any particular
business segment.(c)
    
    Includes share-based compensation expense of $2.3 million, $1.1 million and $0.6 million for
Cardiovascular, ITC and Corporate, respectively, for the three months ended April 4, 2009 and
$1.3 million, $0.8 million and $0.8 million for Cardiovascular, ITC and Corporate,
respectively, for the three months ended March 29, 2008. 24




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##### Table of Contents



Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008(in thousands)Domestic
    
    $
    67,425
    
    
    $
    45,374International
    
    
    22,041
    
    
    
    19,053Total product sales
    
    $
    89,466
    
    
    $
    64,427
 25




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
 This Quarterly Report on Form 10-Q includes 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. These statements can be identified by the words expects, projects,
hopes, believes, intends, should, estimate, will, would, may, anticipates,
plans, could and other similar words. Actual results, events or performance could differ
materially from these forward-looking statements based on a variety of factors, many of which are
beyond our control. Therefore, readers are cautioned not to put undue reliance on these statements.
Factors that could cause actual results or conditions to differ from those anticipated by these and
other forward-looking statements include those more fully described in the Risk Factors section
of our 2008 Annual Report on Form 10-K (the 2008 Annual Report) and in other documents we file
with the Securities and Exchange Commission (SEC). These forward-looking statements speak only as
of the date hereof. We are not under any obligation, and we expressly disclaim any obligation, to
publicly release any revisions or updates to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof, or to reflect the occurrence of
unanticipated events.
 The following presentation of managements discussion and analysis of our financial condition
and results of operations should be read together with our condensed consolidated financial
statements included in this Quarterly Report on Form 10-Q .
 OVERVIEW
     26




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##### Table of Contents



Our Business Model
   
    
    Circulatory Support Products.Our mechanical circulatory support products include the
PVAD, IVAD, HeartMate XVE, HeartMate II and CentriMag for acute, intermediate and long-term
mechanical circulatory support for patients with advanced HF. We also manufacture and sell
small diameter grafts using our proprietary materials to address the vascular access market
for hemodialysis.
  
    
    Point-of-Care Diagnostics.Our point-of-care products include diagnostic test systems
that monitor blood coagulation while a patient is being administered certain anticoagulants,
as well as monitor blood gas/electrolytes, oxygenation and chemistry status.
 
    
    Incision. Our incision products include devices used to obtain a patients blood sample
for diagnostic testing and screening for platelet function.
 Cardiovascular Division
     The Paracorporeal Ventricular Assist Device
   27




---



##### Table of Contents



The Implantable Ventricular Assist Device
   The HeartMate XVE
   The HeartMate II
  The CentriMag
  28




---



##### Table of Contents



Vascular Graft Products
  Acquisition of HeartWare International Inc.
   ITC Division
  Hospital point-of-care
 The HEMOCHRON Whole Blood Coagulation System
  The IRMA TRUpoint Blood Analysis System
  29




---



##### Table of Contents



The AVOXimeter Whole Blood Co-Oximeter/Oximeter System
   Alternate site point-of-care
 The ProTime Microcoagulation System
  The Hgb Pro Professional Hemoglobin Testing System
   Incision Products
   Critical Accounting Policies and Estimates
  30




---



##### Table of Contents



Revenue Recognition
    Reserves
   Balance
    
    Cost of
    
    Accruals of
    
    BalanceBeginning
    
    Warranty
    
    Product
    
    Endof Period
    

Claims
    
    Warranties
    
    of Period(in thousands)Three months ended April 4, 2009
    
    $
    1,071
    
    
    $
    (882
    )
    
    $
    1,072
    
    
    $
    1,261Three months ended March 29, 2008
    
    $
    1,006
    
    
    $
    (589
    )
    
    $
    549
    
    
    $
    966
   31




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##### Table of Contents



Income Taxes
    Evaluation of Purchased Intangibles and Goodwill for Impairment
 Accounting
for the Impairment or Disposal of Long-Lived Assets
 Goodwill and Other Intangible Assets
 Valuation of Share-Based Awards
 Share-Based Payment
 32




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##### Table of Contents



Fair Value Measurements
 Fair Value Measurements,
  
    
    Level 1-Valuations based on quoted prices in active markets for identical assets or
liabilities that we have the ability to access. Assets and liabilities utilizing Level 1
inputs include broker-dealer quote securities that can be traded in an active market. We
used Level 1 assumptions for cash and cash equivalents. Since valuations are based on quoted
prices that are readily and regularly available in an active market, a significant degree of
judgment is not required.
    
    Level 2-Valuations based on quoted prices of similar investments in active markets, of
similar or identical investments in markets that are not active or model based valuations
for which all significant inputs and value drivers are observable, directly or indirectly.
Assets and liabilities utilizing Level 2 inputs primarily include municipal bonds and our
senior subordinated convertible notes, except the make-whole provision, which uses Level 3
inputs, described below.
    
    Level 3-Valuations based on inputs that are unobservable and significant to the overall
fair value measurement. Assets and liabilities utilizing Level 3 inputs include certain
auction rate securities, our Levitronix convertible debenture and the make-whole feature of
our senior subordinated convertible notes. Given the current credit market illiquidity for
auction rate securities, our estimates are subject to significant judgment by management.
   33




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##### Table of Contents



Results of Operations
  Three Months Ended(in thousand, except for percentage data)April 4,
    
    
    
    
    
    
    March 29,2009
    
    
    %
    
    
    2008
    
    
    %As adjusted (1)Product sales
    
    $
    89,466
    
    
    
    100
    %
    
    $
    64,427
    
    
    
    100
    %Cost of product sales
    
    
    35,439
    
    
    
    40
    
    
    
    28,590
    
    
    
    44Gross profit
    
    
    54,027
    
    
    
    60
    
    
    
    35,837
    
    
    
    56Operating expenses:Selling, general and administrative
    
    
    27,455
    
    
    
    31
    
    
    
    20,636
    
    
    
    32Research and development
    
    
    14,086
    
    
    
    16
    
    
    
    12,519
    
    
    
    19Amortization of purchased intangible assets
    
    
    2,931
    
    
    
    3
    
    
    
    3,296
    
    
    
    6Total operating expenses
    
    
    44,472
    
    
    
    50
    
    
    
    36,451
    
    
    
    57Income (loss) from operations
    
    
    9,555
    
    
    
    10
    
    
    
    (614
    )
    
    
    (1
    )Other income and (expense):Interest expense and other
    
    
    (2,866
    )
    
    
    (3
    )
    
    
    (2,587
    )
    
    
    (4
    )Interest income and other
    
    
    988
    
    
    
    1
    
    
    
    2,178
    
    
    
    3Loss before income tax benefit (expense)
    
    
    7,677
    
    
    
    8
    
    
    
    (1,023
    )
    
    
    (2
    )Income tax benefit (expense)
    
    
    (2,050
    )
    
    
    (2
    )
    
    
    345
    
    
    
    1Net income (loss)
    
    $
    5,627
    
    
    
    6
    
    
    $
    (678
    )
    
    
    (1
    )
 
 (1)
    
    Adjusted for the retrospective adoption of Financial Accounting Standards Board (FASB)
Staff Position (FSP) APB 14-1, Accounting for Convertible Debt Instruments That May Be
Settled in Cash Upon Conversion (Including Partial Cash Settlement).See Note 13 Long-Term
Debt.  Three months ended April 4, 2009 and March 29, 2008
 Product Sales
  Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008
    
    
    % Change(in thousands)Cardiovascular
    
    $
    64,629
    
    
    $
    40,221
    
    
    
    61
    %ITC
    
    
    24,837
    
    
    
    24,206
    
    
    
    3Total product sales
    
    $
    89,466
    
    
    $
    64,427
    
    
    
    39
    %
   34




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##### Table of Contents



Gross Profit
  Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008(in thousands, except percentages)Total gross profit
    
    $
    54,027
    
    
    $
    35,837Total gross margin
    
    
    60.4
    %
    
    
    55.6
    %
  Selling, General and Administrative
  Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008
    
    
    % Change(in thousands)Total selling, general and administration
    
    $
    27,455
    
    
    $
    20,636
    
    
    
    33
    %
  Research and Development
  Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008
    
    
    % Change(in thousands)Total research and development costs
    
    $
    14,086
    
    
    $
    12,519
    
    
    
    13
    %
   35




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##### Table of Contents



Amortization of Purchased Intangible Assets
  Interest Expense
  Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008
    
    
    % Change(in thousands)Interest expense
    
    $
    2,763
    
    
    $
    2,484
    
    
    
    11
    %Amortization of debt issuance
costs related to senior
subordinated convertible
notes
    
    
    103
    
    
    
    103
    
    
    
    Total interest expense
    
    $
    2,866
    
    
    $
    2,587
  Interest Income and Other
  Three Months EndedApril 4,
    
    
    March 29,2009
    
    
    2008
    
    
    % Change(in thousands)Interest income
    
    $
    1,304
    
    
    $
    2,141
    
    
    
    (39
    )%Foreign currency, net
    
    
    (502
    )
    
    
    68
    
    
    
(838
    )%Other
    
    
    186
    
    
    
    (31
    )
    
    
(684
    )%Total interest income and other
    
    $
    988
    
    
    $
    2,178
  Income Taxes
  36




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##### Table of Contents



Liquidity and Capital Resources
 Cash, Cash Equivalents and Investments
     April 4,
    
    
    March 29,2009
    
    
    2008(in thousands)Cash and cash equivalents
    
    $
    115,374
    
    
    $
    80,134Restricted cash and cash equivalents
    
    
    20,000
    
    
    
    Short-term investments
    
    
    109,505
    
    
    
    108,397Long-term investments
    
    
    29,928
    
    
    
    32,151Total cash, cash equivalents and investments
    
    $
    274,807
    
    
    $
    220,682
   37




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##### Table of Contents



Auction RateSecurities(in thousands)Balance at January 3, 2009
    
    $
    29,959Settlement at par
    
    
    (100
    )Unrealized holding loss, included in other comprehensive loss
    
    
    69Balance at April 4, 2009
    
    $
    29,928
   Long-term obligation
  38




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##### Table of Contents



Cash Flow Activities
  April 4,
    
    
    March 29,2009
    
    
    2008(in thousands)Net cash provided by operating activities
    
    $
    1,356
    
    
    $
    9,716Net cash provided by investing activities
    
    
    7,622
    
    
    
    50,653Net cash used in financing activities
    
    
    (820
    )
    
    
    (971
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    163
    
    
    
    47Net increase in cash and cash equivalents
    
    $
    8,321
    
    
    $
    59,445
 Cash Provided by Operating Activities
  Cash Provided by Investing Activities
  Cash Used In Financing Activities
  Cash Intended for Potential Acquisitions
  Off Balance Sheet Arrangements
  39




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##### Table of Contents



Contractual Obligations
   
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
 Interest Rate Risk
  Foreign Currency Rate Fluctuations
  Accounting
for Derivative Instrument and Hedging Activities
 Three Months EndedApril 4,
    
    March 29,2009
    
    2008(in thousands)Foreign currency exchange gain (loss) on foreign currency contracts
    
    $
    448
    
    
    $
    (1,040
    )Foreign currency exchange (loss) gain on foreign translation adjustments
    
    
    (311
    )
    
    
    1,108
  
 40




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
  Disclosure Controls and Procedures
   Changes to Internal Controls
  Inherent Limitations on Controls and Procedures
  41




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
   Since our physician and hospital customers depend on third party reimbursement, if third party
payors fail to provide appropriate levels of coverage and reimbursement for our products, our
results of operations will be harmed.
   
 ITEM 2: UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
   Total number
    
    
    Approximateof shares
    
    
    value of sharesTotal
    
    
    
    
    
    
    purchased
    
    
    authorized to benumber
    
    
    
    
    
    
    under
    
    
    purchased underof shares
    
    
    Average
    
    
    publicly
    
    
    publiclypurchased
    
    
    price paid
    
    
    announced
    
    
    announced(2)
    
    
    per share
    
    
    programs (1)
    
    
    programs(in thousands, except per share data)January 4, 2009 through January 31, 2009
    
    
    6.4
    
    
    $
    29.35
    
    
    
    
    
    
    $
    February 1, 2009 through February 28, 2009
    
    
    102.3
    
    
    
    25.01
    
    
    
    
    
    
    
    March 1, 2009 through April 4, 2009
    
    
    6.3
    
    
    
    23.14
    
    
    
    
    
    
    
    Total
    
    
    115.0
    
    
    $
    25.15
    
    
    
    
    
    
    $
    
 
 (1)
    
    Our share repurchase programs, which authorized us to repurchase up to a total of $130
million of the Companys common shares, were announced on February 11, 2004 as a $25 million
program, on May 12, 2004 as a $60 million program, on July 29, 2004 as a $25 million program
and on February 2, 2006 as a $20 million program. These programs authorize us to acquire
shares in the open market or in privately negotiated transactions and do not have an
expiration date. No shares were repurchased under these programs during the three months ended
April 4, 2009. As April 4, 2009, we have $10.1 million remaining under our share repurchase
programs.(2)
    
    Shares purchased that were not part of our publicly announced repurchase programs represent
the surrender value of shares of restricted stock used to pay income taxes due upon vesting,
and do not reduce the dollar value that may yet be purchased under our publicly announced
repurchase programs. 42




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##### Table of Contents



ITEM 6. EXHIBITS
 10.34
    
    Thoratec Corporation Corporate Executive Incentive Plan FY 2009,
effective for certain executive officer of the Company.10.35
    
    International Technidyne Corporation Executive Incentive Plan FY
2009, effective for certain executive officers of the Company.31.1
    
    Section 302 Certification of Chief Executive Officer.31.2
    
    Section 302 Certification of Chief Financial Officer.32.1
    
    Section 906 Certification of Chief Executive Officer.32.2
    
    Section 906 Certification of Chief Financial Officer.
 43




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##### Table of Contents



SIGNATURES
  THORATEC CORPORATIONDate: May 14, 2009
    /s/ Gerhard F. BurbachGerhard F. BurbachChief Executive Officer Date: May 14, 2009
    /s/ David V. SmithDavid V. SmithChief Financial Officer 44