##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    March 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    000-51323
 Micrus Endovascular
    Corporation
 (Exact name of registrant as
    specified in its charter)
  Delaware

23-2853441(State or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization)

Identification No.)821 Fox Lane

95131San Jose,
    California

(Zip Code)(Address of principal executive
    offices)   (408) 433-1400
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value
    per share

The NASDAQ Stock Market, LLC  Securities registered pursuant to Section 12(g) of the
    Act:
    None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 



MICRUS
    ENDOVASCULAR CORPORATION
  TABLE OF
    CONTENTS
  
  PagePART IItem 1.


Business


1Item 1A.


Risk
    Factors


18Item 1B.


Unresolved Staff
    Comments


33Item 2.


Properties


34Item 3.


Legal
    Proceedings


34Item 4.


Submission of
    Matters to a Vote of Security Holders


35PART IIItem 5.


Market for
    Registrants Common Equity, Related Stockholder Matters,
    and Issuer Purchases of Equity Securities


35Item 6.


Selected Financial
    Data


39Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


40Item 7A.


Quantitative and
    Qualitative Disclosures about Market Risk


53Item 8.


Financial
    Statements and Supplementary Data


54Item 9.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


91Item 9A.


Controls and
    Procedures


91Item 9B.


Other
    Information


92PART IIIItem 10.


Directors and
    Executive Officers of the Registrant


92Item 11.


Executive
    Compensation


92Item 12.


Security Ownership
    of Certain Beneficial Owners and Management


92Item 13.


Certain
    Relationships and Related Transactions


92Item 14.


Principal
    Accountant Fees and Services


92PART IVItem 15.


Exhibits and
    Financial Statement Schedules


92SIGNATURES


93EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




---



##### Table of Contents



FORWARD-LOOKING
    STATEMENTS
  Certain information contained in or incorporated by reference
    in this Report contains forward-looking statements that involve
    risks and uncertainties. The statements contained in this Report
    that are not purely historical are 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, including statements regarding
    our expectations, beliefs, intentions or strategies regarding
    the future. All forward-looking statements included in this
    Report are based on information available to us on the date
    hereof, and we assume no obligation to update any such
    forward-looking statements. Our actual results could differ
    materially from those discussed herein. Factors that could cause
    or contribute to such differences include, but are not limited
    to, those discussed in Item 1A, Risk Factors, and elsewhere
    in this Report. References herein to Micrus,
    the Company, we, our,
    us and similar words or phrases are references to
    Micrus Endovascular Corporation and its subsidiaries, unless the
    context otherwise requires. Unless otherwise provided in this
    Report, trademarks identified by (R) and
    tm
    are registered trademarks or trademarks, respectively, of Micrus
    Endovascular Corporation or its subsidiaries. All other
    trademarks are the properties of their respective owners.
 PART I  Item 1.
    Business.  The
    Company
      tm
     1




---



##### Table of Contents



Industry
    Overview
         2




---



##### Table of Contents



The
    Lancet The
    Lancet
  Market
    Opportunity
  60-65%
      
    Access to the Aneurysm Site.  Specialized
    products are required to access the complex vasculature of the
    brain, properly access the aneurysm site and perform a coiling
    procedure. These access products include microcatheters and
    guidewires. In order to navigate the complex vascular anatomy of
    the brain, access products must have enough column strength to
    be pushed significant distances through this vasculature, yet
    flexible enough to travel to distal portions of the brain
    without injuring blood vessels.
    Framing and Filling the Aneurysm.  In order to
    effectively treat an aneurysm, the interventionalist must fill
    the aneurysm with a sufficient volume of coils to disrupt blood
    flow and occlude the aneurysm. Aneurysms vary in shape and size
    and, consequently, neurointerventionalists seek an embolic
    coiling solution that enables coils to conform to the
    aneurysms shape without requiring extensive manipulation
    of the coil. Coils that frame, or conform to, the aneurysm wall
    reduce the risk of rupture and facilitate the retention of
    additional coils in the aneurysm.
    Coverage of the Neck of the Aneurysm.  It is
    important to effectively cover the neck of the aneurysm with
    platinum coils to help reduce recanalization and ensure a better
    clinical outcome. Embolic coils that deploy in a random manner
    are less likely to adequately cover the neck of the aneurysm.
    Deployment.  Once embolic coils are placed in
    the aneurysm, the interventionalist must be able to quickly and
    reliably deploy the coils from the device positioning unit
    within the microcatheter. Unreliable detachment mechanisms can
    lead to inadvertent retraction of the embolic coil as the
    interventionalist withdraws the positioning unit only to
    discover that the coil is still attached. Further, any delay in
    deployment may increases procedure time and its attendant risks.
    Recanalization.  Industry sources estimate that
    recanalization, or the continued or renewed growth of the
    aneurysm, occurs in approximately 20 to 35% of aneurysms treated
    with embolic coiling. Experts believe that recanalization occurs
    due to incomplete filling of the aneurysm or disruption of the
    blood clot that fills the aneurysm following an embolic coiling
    procedure. Studies have shown that the recanalization rate is 3




---



##### Table of Contents



higher for patients treated with embolic coiling procedures
    compared to aneurysm clipping. Therefore, embolic coiling
    solutions that decrease recanalization rates are highly
    desirable.  
    Risk of Rupture.  Embolic coiling solutions
    that enhance safety and limit the risk of rupture or re-rupture
    in treatment of aneurysms are also essential. Successful framing
    and filling of the aneurysm requires precise placement of the
    embolic coil. Neurointerventionalists seek embolic coiling
    solutions that minimize stress on the aneurysm wall in the
    course of placing or repositioning the coil in order to reduce
    the risk of rupture.  The
    Micrus Solution
      Self-Deploying Anatomically Conforming
    Coils. tm tm
  Enhanced Coverage of the Neck of the
    Aneurysm.
  Unique Framing and Filling Technology.
  Deployment Technology.
  Bioactive Technology.
  Stent Platform. tm tm tm
 4




---



##### Table of Contents



Improved Access Products.
  Micrus
    Strategy
    Expand Market Share of Our Microcoils through Continued
    Product Innovation.
  Increase Our Per-Procedure Revenues.
  Leverage Our Sales and Marketing
    Expansion.
  Continue to Penetrate Asian Market.
  License or Acquire Complementary Products and
    Technologies. and/or
  Enter the Ischemic Stroke Market.
 5




---



##### Table of Contents



Products
    Product Line

Sizes

Product Description(MICRUSPHERE MICROCOIL GRAPHIC)

2-18 mm diameter

Three-dimensional framing
    microcoil; stabilizes the aneurysm. Available in bare platinum
    and Cerecyte.MicruSphere®
    Microcoil(HELIPAQ <DATA,ampersand> HELIPAQ
    SR MICROCOIL GRAPHIC)

HeliPaq: 2-20 mm diameter HeliPaq
    SR: 2-10 mm diameter

Filling microcoil; occludes
    aneurysm following framing. Available in bare platinum and
    Cerecyte.HeliPaq®
    & HeliPaq
    SR®
    Microcoil(INTERPAQ MICROCOIL GRAPHIC)

4 and 6 mm diameter

Filling microcoil; occludes
    aneurysm following framing. Available in bare platinum.InterPaq®
    Microcoil(PRESIDIO MICROCOIL GRAPHIC)

4-20 mm diameter

Framing and filling coil to
    deliver more neck and wall coverage in a single deployment.
    Available in Cerecyte.PresidiotmMicrocoil(CASHMERE MICROCOIL GRAPHIC)

5-12 mm diameter

Three-dimensional framing and
    filling complex coil  for aneurysms which require a softer coil.
    Available in stretch resistant  bare platinumCashmeretmComplex Microcoil(ULTIPAQ MICROCOIL GRAPHIC)

2-4 mm diameter

Finishing microcoil; soft, stretch
    resistant, pliable microcoil designed to complete filling of the
    aneurysm. Available in bare platinum and Cerecyte.UltiPaq®
    Microcoil 6




---



##### Table of Contents



Product Line

Sizes

Product Description(CERECYTE MICROCOIL GRAPHIC)

2-18 mm diameter

Available in MicruSphere, HeliPaq
    SR, UltiPaq and Presidio. Includes filaments comprised of PGA, a
    bioactive material.Cerecyte®
    Microcoil(COURIER MICROCATHETER GRAPHIC)

.0170 and .0190 inner
    diameter and 150 cm length

Device used to deliver microcoils
    into the aneurysm.CouriertmMicrocatheter(WATUSI GUIDEWIRE GRAPHIC)

.014 diameter and 205 cm
    length

Device used to guide
    microcatheters and other devices to the aneurysm or stenosis
    site.WatusitmGuidewire(PHAROS STENT SYSTEM GRAPHIC)

2.5 mm - 4.0 mm outer
    diameter and 8 mm - 20 mm length

For use as scaffolding of
    wide-neck aneurysms to ensure that the microcoil is not
    dislodged and for use in opening intracranial arteries that have
    narrowed.PharostmStent System(DEVICE CONTROL BOX AND CONNECTING CABLE GRAPHIC)



Electronic control that activates
    our proprietary microcoil deployment mechanism.Device Control Box and
    Connecting Cable   Microcoil
    Products
  ® ® ® ® tm
  
    Frame.  Our MicruSphere and Cashmere microcoils
    are typically the first microcoils used by the interventionalist
    to frame the aneurysm. The MicruSphere microcoil folds
    automatically into a spherical three- dimensional shape that
    conforms to the shape of the aneurysm. This conforming shape
    reduces the need for the clinician to manipulate and reposition
    the coil multiple times, shortens procedure time, and reduces
    the potential for complications. Additional microcoils may then
    be placed within the first microcoil in smaller sizes in an
    approach known as the Russian doll technique,
    sequentially filling the aneurysm. 7




---



##### Table of Contents




    Frame and Fill.  Our Presidio and Cashmere
    Microcoils features longer lengths and the unique shapes to
    frame and fill the aneurysm. This can allow for more platinum to
    be deployed at the neck of the aneurysm, as well as greater
    packing density to be achieved with a single coil.
    Fill.  Our proprietary HeliPaq and HeliPaq SR
    products are filling microcoils used to fill gaps which may
    remain in the center of the aneurysm after placement of one or
    more of our MicruSphere microcoils. Both the HeliPaq and the
    HeliPaq SR automatically form a helical shape upon deployment,
    which allows filling of complex gaps in the aneurysm. The
    HeliPaq SR employs a stretch-resistant system designed to
    prevent the microcoil from stretching in an unwanted manner
    while being positioned in the aneurysm. InterPaq microcoils are
    filling coils used in larger size aneurysms requiring a greater
    volume of coil mass in order to be adequately filled. The
    Cashmere microcoil is a soft and conformable stretch resistant
    complex coil which may also be used as a framing and filling
    coil,
    Finish.  Our UltiPaq microcoil is an
    extra-soft, stretch-resistant finishing coil, used to fill any
    final gaps in the aneurysm after placement of one or more
    MicruSphere, Presidio
    and/or
    HeliPaq microcoils.
    Cerecyte.  Our proprietary Cerecyte microcoil
    product line incorporates filaments comprised of PGA into most
    of our current line of microcoils  MicruSphere,
    Presidio, HeliPaq, SR and UltiPaq. Because the PGA filaments run
    through the center of our microcoils, our Cerecyte microcoils
    possess the same handling characteristics as our standard
    platinum microcoils. Initial data from single center studies
    presented at major scientific meetings suggest that Cerecyte may
    improve clinical outcomes compared to bare platinum coils. We
    have initiated two post-market clearance studies in order to
    collect human clinical data for the purpose of demonstrating
    accelerated healing by our Cerecyte microcoil product line.    Pharos
    Balloon-Expandable Stent
    Access
    Products
    
    Couriertm
    Microcatheter.  Our Courier Microcatheter is a
    device used to deliver microcoils to the aneurysm. Our Courier
    microcatheter features our proprietary
    Endurancetm
    technology designed to enhance both tip shaping and tip shape
    retention, both of which are vital to optimal coil delivery. It
    will be available in straight and pre-shaped models. Our Courier
    Microcatheter has been designed to provide the
    neurointerventionalist with the ability to navigate the tortuous
    vasculature of the brain. The microcatheters design and
    hydrophilic coating enable a high level of pushability, tip
    shape retention and overall tracking. 8




---



##### Table of Contents




    Watusitm
    Guidewire.  Our Watusi Guidewire is used to
    guide the microcatheter or other delivery system to the
    aneurysm. Our Watusi Guidewire features excellent visualization
    as well as our proprietary Response
    Tiptm
    technology, which results in the unique ability to effectively
    shape and re-shape the guidewire tip.  Microcoil
    Delivery System and Deployment Mechanism
    Products
    Under Development
  and/or
  Sales and
    Marketing
           9




---



##### Table of Contents



Research
    and Development
  and/or and/or
      Biotronik
    Collaboration
     10




---



##### Table of Contents



Physician
    Advisors
      
    L. Nelson Hopkins, M.D., Professor and Chair, Department of
    Neurosurgery/Professor, Department of Radiology, State
    University of New York, Buffalo, member of the Micrus Board of
    Directors.
    Joseph Horton, M.D., Professor and Chief, Interventional
    Neuroradiology, Department of Radiology, University of Alabama
    at Birmingham, Micrus co-founder.
    Andrew Molyneux, M.D., Frenchay Hospital, North Bristol NHS
    Trust, United Kingdom, Micrus Medical Director.  and/or
  Manufacturing
  and/or
       11




---



##### Table of Contents



Patents
    and Proprietary Rights
      
    vasoocclusive microcoils and devices and methods for
    manufacturing such coils and devices;
    microcoil deployment systems;
    bioactive microcoils;
    intracranial vascular stents;
    catheters for neurovascular intervention;
    embolic clot retrieval devices; and
    bioactive material placement systems and methods.       12




---



##### Table of Contents



Competition
    ®
      
    improved patient outcomes as a result of physician use of the
    device;
    access to and acceptance by leading physicians;
    depth of product line;
    product quality and reliability;
    ease of use for physicians; 13




---



##### Table of Contents




    sales and marketing capability; and
    brand recognition and reputation.      Government
    Regulation
  United
    States
    FDAs
    Premarket Clearance and Approval Requirements
    510(k)
    Clearance
     14




---



##### Table of Contents



and/or
  Premarket
    Approval
      Continuing
    FDA Regulation
    
    quality system regulation (QSR), which requires manufacturers to
    follow design, testing, control, documentation and other quality
    assurance procedures during the manufacturing process (otherwise
    known as Good Manufacturing Practices or GMPs);
    labeling regulations, which prohibit the promotion of products
    for unapproved or off-label uses and impose other
    restrictions on labeling; and
    medical device reporting regulations, which require that
    manufacturers report to the FDA if their device may have caused
    or contributed to a death or serious injury or malfunctioned in
    a way that would likely cause or contribute to a death or
    serious injury if it were to recur.    
    fines, injunctions, and civil penalties;
    recall or seizure of our products;
    operating restrictions, partial suspension or total shutdown of
    production;
    refusing our request for 510(k) clearance or premarket approval
    of new products;
    withdrawing 510(k) clearance or premarket approvals that are
    already granted; and
    criminal prosecution.   15




---



##### Table of Contents



International
      12-15 months
      Third-Party
    Reimbursement
   16




---



##### Table of Contents



Product
    Liability and Insurance
    Employees
    Seasonality
    Available
    Information
  1-800-SEC-0330.
  Form 10-K, Form 10-Q, Form 8-K Form 10-K.
 17




---



##### Table of Contents



Item 1A.
    Risk
    Factors.  Certain
    Factors that May Affect Our Business and Future
    Results
    Our
    future success is dependent on the continued growth in embolic
    coiling procedures and our ability to convince a concentrated
    customer base of neurointerventionalists to use our products as
    an alternative to other available products.
      
    extent of clinical evidence supporting patient benefits;
    their level of experience with the alternative product;
    perceived liability risks generally associated with the use of
    new products and procedures;
    availability of reimbursement within healthcare payment
    systems; and
    costs associated with the purchase of new products and equipment.   18




---



##### Table of Contents



We are
    currently involved in a patent litigation action involving
    Boston Scientific Corporation and, if we do not prevail in this
    action, we could be liable for past damages and be prevented
    from making, using, selling, offering to sell, importing into
    the U.S. or exporting from the U.S., our microcoils, our
    primary product line.
      ex parte
  patents-in-suit.
    
    pay damages, including up to treble damages and Boston
    Scientifics attorneys fees and costs, which may be
    substantial;
    cease, because of an injunction, the making, using, selling,
    offering to sell, importing into the U.S. or exporting from
    the U.S. of our embolic coil products, which currently
    represent virtually all of our revenues, found to infringe the
    patent claims asserted by Boston Scientific; 19




---



##### Table of Contents




    expend significant resources to redesign our technology so that
    it does not infringe the patent claims asserted by Boston
    Scientific, which may not be possible;
    discontinue manufacturing or other processes that incorporate
    technology that infringes the patent claims asserted by Boston
    Scientific;
    become subject to a compulsory license order under which we
    would be required to pay Boston Scientific a royalty on future
    sales of our products; and/or
    obtain a license from Boston Scientific to use the relevant
    patents, which may not be available to us on acceptable terms,
    or at all.    patents-in-suit,
    We
    have a limited operating history, have incurred significant
    operating losses since inception, and expect to continue to
    incur losses, and we cannot assure you that we will achieve
    profitability.
    
    grow our internal and third-party sales and marketing forces to
    expand the sales of our products in the United States and
    internationally;
    increase our research and development efforts to improve upon
    our existing products and develop new products;
    perform clinical research and trials on our existing products
    and product candidates;
    expand our regulatory resources in order to obtain governmental
    approvals for our existing product enhancements and new products;
    acquire
    and/or
    license new technologies; and
    expand manufacturing.   20




---



##### Table of Contents



Our
    quarterly operating and financial results and our gross margins
    are likely to fluctuate significantly in future
    periods.
    
    neurointerventionalist and patient acceptance of our products;
    changes in the number of embolic coiling procedures performed to
    treat cerebral aneurysms;
    the seasonality of our product sales;
    the mix of our products sold;
    stocking patterns for distributors;
    the development of new procedures to treat cerebral aneurysms;
    results of clinical research and trials on our existing products
    and products in development;
    demand for, and pricing of, our products;
    levels of third-party reimbursement for our products;
    timing of new product offerings, acquisitions, licenses or other
    significant events involving us or our competitors;
    increases in the costs of manufacturing and selling our products;
    the amount and timing of our operating expenses;
    litigation expenses;
    fluctuations in foreign currency exchange rates;
    regulatory approvals and legislative changes affecting the
    products we may offer or those of our competitors;
    the effect of competing technological and market developments;
    changes in our ability to obtain and maintain FDA approval or
    clearance for our products;
    inventory adjustments we may have to make in any quarter;
    interruption in the manufacturing or distribution of our
    products;
    our ability to maintain and expand our sales force and
    operational personnel;
    the ability of our suppliers to timely provide us with an
    adequate supply of materials and components; and
    amount and timing of capital expenditures and other costs
    relating to any potential expansion of our operations.   21




---



##### Table of Contents



We may
    not be able to develop new products or product enhancements that
    will be accepted by the market.
    
    properly identify and anticipate interventionalist and patient
    needs;
    develop new products or enhancements in a timely manner;
    obtain the necessary regulatory approvals for new products or
    product enhancements;
    provide adequate training to potential users of our products;
    receive adequate reimbursement for our procedures; and
    develop an effective marketing and distribution network.    Our
    international operations and our relationships with physicians
    and other consultants require us to comply with a number of U.S.
    and international regulations.
           22




---



##### Table of Contents



and/or
  We are
    in a highly competitive market segment, face competition from
    large, well-established medical device manufacturers with
    significant resources, and may not be able to increase
    penetration in our markets or otherwise compete
    effectively.
      
    greater financial and personnel resources;
    significantly greater name recognition;
    established relationships with neurointerventionalists;
    established distribution networks;
    greater experience in obtaining and maintaining FDA, and other
    regulatory approvals for products and product enhancements, and
    greater experience in developing compliance programs for
    compliance with numerous federal, state, local and similar laws
    in
    non-U.S. jurisdictions;
    greater resources for product research and development;
    greater experience in, and resources for, launching, marketing,
    distributing and selling products; and
    broader product lines.      Our
    sales in international markets subject us to foreign currency
    exchange and other risks and costs that could harm our
    business.
   23




---



##### Table of Contents




    local economic and political instability or other potentially
    adverse conditions;
    lack of experience in certain geographical markets;
    unexpected delays or changes in regulatory requirements;
    increased difficulty in collecting accounts receivables in
    certain foreign countries;
    delays and expenses associated with tariffs and other trade
    barriers;
    difficulties and costs associated with attracting and
    maintaining third party distributors;
    compliance with foreign laws and regulations; and
    adverse tax consequences or overlapping tax structures.  If we
    fail to increase our direct sales force in a timely manner, our
    business could suffer.
    If we
    fail to properly manage our anticipated growth, our business
    could suffer.
       24




---



##### Table of Contents



We are
    required to evaluate our internal control over financial
    reporting under Section 404 of the Sarbanes-Oxley Act of
    2002 and are exposed to future risks of non
    compliance.
  Form 10-K.
  
    about managements responsibility for establishing and
    maintaining adequate internal controls over financial reporting;
    identifying the framework used by management to conduct the
    required evaluation of the effectiveness of our internal control
    over financial reporting;
    concerning managements assessment of the effectiveness of
    our internal control over financial reporting as of the period
    covered by the Annual Report, including a statement as to
    whether or not internal control over financial reporting is
    effective; and
    that our independent registered public accounting firm has
    issued an attestation report on managements assessment and
    the effectiveness of internal control over financial reporting.    Our
    future capital needs are uncertain and we may need to raise
    additional funds in the future, and such funds may not be
    available on acceptable terms or at all.
    
    the revenues generated by sales of our products;
    the costs associated with expanding our sales and marketing
    efforts;
    the expenses we incur in manufacturing and selling our products;
    the costs of developing and or acquiring new products or
    technologies;
    the cost of obtaining and maintaining FDA approval or clearance
    of our products and products in development;
    costs associated with our litigation with Boston Scientific;
    the expenses we incur related to compliance with the
    U.S. FCPA and laws and regulations in
    non-U.S. jurisdictions; 25




---



##### Table of Contents




    costs associated with compliance with the Sarbanes-Oxley Act of
    2002 and rules and regulations affecting public companies
    recently promulgated by the Securities and Exchange Commission
    and The NASDAQ Stock Market;
    the costs associated with our facilities expansion, if
    any; and
    the costs associated with increased capital expenditures.    If we
    choose to acquire new and complementary businesses, products or
    technologies instead of developing them ourselves, we may be
    unable to complete these acquisitions or to successfully
    integrate them in a cost effective and non-disruptive
    manner.
    We are
    dependent on single source suppliers for components and
    materials used in our devices, and the loss of any of these
    suppliers, or their inability to supply us with an adequate
    supply of materials, could harm our business.
   26




---



##### Table of Contents



Our
    operations are currently conducted at several locations that may
    be at risk from earthquakes or other natural
    disasters.
    If we
    are unable to effectively manage our inventory held on
    consignment by our intended customers, we will not achieve our
    expected results.
    We are
    dependent on our senior management team, key clinical advisors
    and scientific personnel, and the loss of any of them could harm
    our business.
    The
    medical device industry is characterized by patent litigation,
    which could be costly, result in the diversion of
    managements time and efforts and require us to pay
    damages.
   27




---



##### Table of Contents



and/or
  Our
    ability to protect our intellectual property and proprietary
    technology through patents and other means is
    uncertain.
     28




---



##### Table of Contents



If we
    fail to obtain, or experience significant delays in obtaining,
    FDA clearances or approvals for our future products or product
    enhancements, or to comply with similar regulatory requirements
    in other countries where we market our products, our ability to
    commercially distribute and market our products could
    suffer.
      Modifications
    to our marketed products may require new 510(k) clearances or
    pre-market approvals, or may require us to cease marketing or
    recall the modified products until clearances are
    obtained.
  and/or
 29




---



##### Table of Contents



If we
    or our suppliers fail to comply with the FDAs quality
    system regulations, the manufacture of our products could be
    delayed.
    If
    interventionalists are unable to obtain sufficient reimbursement
    for procedures performed with our products, it is unlikely that
    our products will be widely used.
  and/or
        The
    adoption of Statement of Financial Accounting Standard
    No. 123R and changes to existing accounting pronouncements
    or taxation rules or practices may affect how we conduct our
    business and affect our reported results of
    operations.
  No. 123-revised
 30




---



##### Table of Contents



We may
    become subject to product liability claims which could require
    us to pay damages that exceed our insurance
    coverage.
    We may
    be subject to damages resulting from claims that we or our
    employees have wrongfully used or disclosed alleged trade
    secrets of their former employers.
    The
    price of our common stock has fluctuated and we expect will
    continue to fluctuate substantially and you may not be able to
    sell your shares at or above your purchase price.
    
    volume and timing of orders for our products;
    the introduction of new products or product enhancements by us
    or our competitors;
    disputes or other developments with respect to intellectual
    property rights;
    our ability to develop, obtain regulatory clearance for, and
    market, new and enhanced products on a timely basis;
    product liability claims or other litigation;
    quarterly variations in our or our competitors results of
    operations;
    sales of large blocks of our common stock, including sales by
    our executive officers and directors; 31




---



##### Table of Contents




    changes in governmental regulations or in the status of our
    regulatory approvals or applications;
    changes in the availability of third-party reimbursement in the
    United States or other countries;
    changes in earnings estimates or recommendations by securities
    analysts; and
    general market conditions and other factors, including factors
    unrelated to our operating performance or the operating
    performance of our competitors.    Because
    of their significant stock ownership, our executive officers,
    directors and principal stockholders will be able to exert
    control over us and our significant corporate
    decisions.
    
    delaying, deferring or preventing a change in control of our
    company;
    impeding a merger, consolidation, takeover or other business
    combination involving our company; or
    causing us to enter into transactions or agreements that are not
    in the best interests of all stockholders.  Future
    sales of our common stock may depress our stock
    price.
      We may
    incur increased costs as a result of recently enacted and
    proposed changes in laws and regulations.
   32




---



##### Table of Contents



We may
    become involved in securities class action litigation that could
    divert managements attention and harm our
    business.
    We do
    not intend to pay cash dividends.
    Anti-takeover
    provisions in our organizational documents and Delaware law may
    discourage or prevent a change of control, even an acquisition
    which would be beneficial to our stockholders, and thereby
    affect our stock price adversely and prevent attempts by our
    stockholders to replace or remove our current
    management.
    
    authorize the issuance of preferred stock which can be created
    and issued by the board of directors without prior stockholder
    approval, with rights senior to those of the common stock;
    provide for a classified board of directors, with each director
    serving a staggered three-year term;
    prohibit our stockholders from filling board vacancies, calling
    special stockholder meetings, or taking action by written
    consent;
    prohibit our stockholders from making certain changes to our
    amended and restated certificate of incorporation or bylaws
    except with
    662/3%
    stockholder approval; and
    require advance written notice of stockholder proposals and
    director nominations.    Item 1B.
    Unresolved
    Staff Comments.   33




---



##### Table of Contents



Item 2.
    Properties.    Item 3.
    Legal
    Proceedings.  FCPA
    Investigation
          Patent
    Litigation
   34




---



##### Table of Contents



ex parte
  patents-in-suit.
    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.    Fiscal Year Ended March 31, 2007

High


LowFirst Quarter

$
15.00


$
11.57Second Quarter

$
15.00


$
11.11Third Quarter

$
20.50


$
11.62Fourth Quarter

$
25.00


$
18.75   35




---



##### Table of Contents



Fiscal Year Ended March 31, 2006

High


LowFirst Quarter (from June 16,
    2005)

$
11.40


$
10.75Second Quarter

$
12.80


$
9.65Third Quarter

$
10.25


$
6.34Fourth Quarter

$
14.40


$
8.40     Dividend
    Policy
    Unregistered
    Securities Sold in Fiscal 2007
      Use of
    Proceeds
  Form S-1 No. 333-123154)
      Issuer
    Purchases of Equity Securities
   36




---



##### Table of Contents



Securities
    Authorized for Issuance Under Equity Compensation
    Plans
  Number of SecuritiesRemaining Available forNumber of Securities





Future Issuance Underto be Issued Upon


Weighted Avearge


Equity CompensationExercise of


Exercise Price of


Plans (ExcludingOutstanding


Outstanding Options


Securities Reflected inPlan Category

Options and Rights


and Rights


Colum(a))Equity compensation plans approved
    by security holders


3,191,556
(1)

$
10.71



1,469,384
(2)Equity compensation plans not
    approved by security holders










Total


3,191,556
(1)

$
10.71



1,469,384
(2)     (1)
    
    Includes 1,244,273 shares subject to options outstanding
    under our 1998 Plan and 1,947,283 shares subject to option
    outstanding under our 2005 Plan.(2)
    
    Includes 1,142,658 shares of common stock reserved for
    future issuance under our 2005 Plan and 326,726 shares of
    common stock reserved for future issuance under our Purchase
    Plan. As of April 1, 2007, the number of shares available
    for issuance under the foregoing plans automatically increased
    to 1,809,324 shares available for issuance under the 2005
    Plan and 548,948 shares available for issuance under the
    Purchase Plan. 37




---



##### Table of Contents



Stock
    Performance Graph
      
 38




---



##### Table of Contents



Item 6.
    Selected
    Financial Data.  1-for-2.25
  Consolidated
    Statements of Operations
  Years Ended March 31,2007(2)(3)


2006(4)


2005(5)


2004


2003(In thousands, except per share data)Revenues

$
58,795


$
32,781


$
24,012


$
15,700


$
8,287Cost of goods sold(1)


15,361



9,710



8,003



5,725



3,629Gross profit


43,434



23,071



16,009



9,975



4,658Operating expenses:Research and development(1)


7,904



6,589



2,360



2,927



1,763Sales and marketing(1)


24,121



15,171



8,781



6,012



4,367General and administrative(1)


19,308



10,307



11,884



3,511



3,080Total operating expenses


51,333



32,067



23,025



12,450



9,210Loss from operations


(7,899
)


(8,996
)


(7,016
)


(2,475
)


(4,552
)Interest and investment income


1,618



1,295



177



153



95Interest expense


(14
)


(12
)


(29
)


(20
)


(11
)Other income (expense), net


565



(632
)


164



328



287Loss before income taxes


(5,730
)


(8,345
)


(6,704
)


(2,014
)


(4,181
)Income tax benefit


(247
)


(84
)










Net loss


(5,483
)


(8,261
)


(6,704
)


(2,014
)


(4,181
)Accretion of redeemable
    convertible preferred stock to redemption value including
    beneficial conversion feature






(659
)


(588
)


(530
)


(476
)Net loss attributable to common
    stockholders

$
(5,483
)

$
(8,920
)

$
(7,292
)

$
(2,544
)

$
(4,657
)Net loss per share attributable to
    common stockholders basic and diluted

$
(0.38
)

$
(0.79
)

$
(5.22
)

$
(2.02
)

$
(3.82
)Weighted-average number of shares
    used in per share calculation basic and diluted


14,621



11,240



1,397



1,257



1,220  39




---



##### Table of Contents



(1)
    
    Includes non-cash stock-based compensation of the following:  Years Ended March 31,2007


2006


2005


2004


2003Cost of goods sold

$
218


$
26


$
26


$
11


$
Research and development

$
222


$
22


$
69


$
207


$
19Sales and marketing

$
802


$
169


$
134


$
162


$
13General and administrative

$
1,332


$
172


$
3,210


$
174


$
16   March 31,2007(3)


2006(4)


2005


2004


2003(In thousands)Consolidated Balance Sheet
    Data:Total assets

$
73,097


$
62,114


$
29,774


$
17,878


$
8,864Mandatorily redeemable convertible
    preferred stock

$



$



$
58,442


$
49,479


$
39,305Total stockholders equity
    (deficit)

$
56,294


$
51,316


$
(37,561
)

$
(34,193
)

$
(32,475
)Accumulated deficit

$
(55,102
)

$
(49,619
)

$
(40,975
)

$
(34,271
)

$
(32,257
)   (2)
    
    In fiscal 2007, loss from operations, net loss and basic and
    diluted net loss per share include the impact of SFAS 123R,
    which were not present in prior years. Refer to Notes 2 and
    9 of our Notes to Consolidated Financial Statements.(3)
    
    On November 30, 2006, we completed our acquisition of
    VasCon. The results of operations of Micrus Design Technology, a
    newly formed subsidiary, are included in the accompanying
    consolidated statements of operations for all periods or partial
    periods subsequent to the acquisition date. Additionally, the
    acquired assets and liabilities assumed in the acquisition are
    included in the consolidated balance sheet subsequent to the
    acquisition date. See Note 3 of Notes to Consolidated
    Financial Statements for further details regarding the
    transaction.(4)
    
    On September 20, 2005, we completed our acquisition of
    Neurologic. The results of operations of Micrus Endovascular UK
    Limited, a newly formed subsidiary, are included in the
    accompanying consolidated statements of operations for all
    periods or partial periods subsequent to the acquisition date.
    Additionally, the acquired assets and liabilities assumed in the
    acquisition are included in the consolidated balance sheet
    subsequent to the acquisition date. See Note 3 of
    Notes to Consolidated Financial Statements for
    further details regarding the transaction(5)
    
    In fiscal 2005, loss from operations, net loss and basic and
    diluted net loss per share include the impact of charges related
    to option modification of the former CEOs options. Refer
    to Note 9 of our Notes to Consolidated Financial Statements.  Item 7.
    Managements
    Discussion and Analysis of Financial Conditions and Results of
    Operations.  The following discussion and analysis of the financial
    condition and results of operations of the Company should be
    read in conjunction with the consolidated financial statements
    and the related notes included elsewhere in this report, and
    with other factors described from time to time in our other
    filings with the Securities and Exchange Commission. This Annual
    Report on
    Form 10-K
    contains forward-looking statements that involve risks and
    uncertainties. Actual results and the timing of events may
    differ materially from those contained in the forward-looking
    statements due to a number of factors, including those discussed
    in Part I, Item 1A Risk Factors above and
    elsewhere in this Annual Report on
    Form 10-K.
  Overview
   40




---



##### Table of Contents



Recent
    Developments
  VasCon Acquisition.
 41




---



##### Table of Contents



Secondary Public Offering.
  Adoption of SFAS 123R.
   42




---



##### Table of Contents



Results
    of Operations
    Years Ended March 31,2007


2006


2005%


%


%Consolidated Statement of
    Operations Data:Revenues


100
%


100
%


100
%Cost of goods sold


26
%


30
%


33
%Gross profit


74
%


70
%


67
%Operating expenses:Research and development


13
%


20
%


10
%Sales and marketing


41
%


46
%


36
%General and administrative


33
%


31
%


50
%Total operating expenses


87
%


97
%


96
%Loss from operations


(13
)%


(27
)%


(29
)%Interest and investment income


3
%


4
%


1
%Interest expense


0
%


0
%


0
%Other income (expense), net


1
%


(2
)%


0
%Loss before income taxes


(9
)%


(25
)%


(28
)%Income tax benefit


0
%


0
%


0
%Net loss


(9
)%


(25
)%


(28
)%Accretion of redeemable
    convertible preferred stock to redemption value including
    beneficial conversion feature


0
%


(2
)%


(2
)%Net loss attributable to common
    stockholders


(9
)%


(27
)%


(30
)%   Fiscal
    Years Ended March 31, 2007 and 2006
  Revenues
  Years Ended March 31,


Change2007


2006


$


%(Dollars in thousands)Americas

$
31,618


$
17,381


$
14,237



82
%Europe


17,674



12,532



5,142



41
%Asia Pacific


9,503



2,868



6,635



231
%Total Revenues

$
58,795


$
32,781


$
26,014



79
%    43




---



##### Table of Contents



Gross
    Profit
  Years Ended March 31,


Change2007


2006


$


%(Dollars in thousands)Cost of goods sold

$
15,361


$
9,710


$
5,651



58
%Gross profit


43,434



23,071



20,363



88
%       Operating
    Expenses
  Research
    and Development
  Years Ended March 31,


Change2007


2006


$


%(Dollars in thousands)Research and
    development

$
7,904


$
6,589


$
1,315



20
%     Sales and
    Marketing
  Years Ended March 31,


Change2007


2006


$


%(Dollars in thousands)Sales and marketing

$
24,121


$
15,171


$
8,950



59
%  44




---



##### Table of Contents



General
    and Administrative
  Years Ended March 31,


Change2007


2006


$


%(Dollars in thousands)General and
    administrative

$
19,308


$
10,307


$
9,001



87
%     Other
    Income, Net
  Years Ended March 31,


Change2007


2006


$


%(Dollars in thousands)Interest and investment income

$
1,618


$
1,295


$
323



25
%Interest expense


(14
)


(12
)


(2
)


17
%Other income (expense), net


565



(632
)


1,197



(189
)%Total other income,
    net

$
2,169


$
651


$
1,518



233
%    45




---



##### Table of Contents



Income
    Taxes
    Fiscal
    Years Ended March 31, 2006 and 2005
  Revenues
  Years Ended March 31,


Change2006


2005


$


%(Dollars in thousands)Americas

$
17,381


$
13,266


$
4,115



31
%Europe


12,532



10,226



2,306



23
%Asia Pacific


2,868



520



2,348



452
%Total Revenues

$
32,781


$
24,012


$
8,769



37
%     Gross
    Profit
  Years Ended March 31,


Change2006


2005


$


%(Dollars in thousands)Cost of goods sold

$
9,710


$
8,003


$
1,707



21
%Gross profit


23,071



16,009



7,062



44
%    46




---



##### Table of Contents



Operating
    Expenses
  Research
    and Development
  Years Ended March 31,


Change2006


2005


$


%(Dollars in thousands)Research and
    development

$
6,589


$
2,360


$
4,229



179
%     Sales
    and Marketing
  Years Ended March 31,


Change2006


2005


$


%(Dollars in thousands)Sales and marketing

$
15,171


$
8,781


$
6,390



73
%     General
    and Administrative
  Years EndedMarch 31,


Change2006


2005


$


%(Dollars in thousands)General and
    administrative

$
10,307


$
11,884


$
(1,577
)


(13
)%    47




---



##### Table of Contents



Other
    Income, Net
  Years Ended March 31,


Change2006


2005


$


%(Dollars in thousands)Interest and investment income

$
1,295


$
177


$
1,118



632
%Interest expense


(12
)


(29
)


17



(59
)%Other income (expense), net


(632
)


164



(796
)


(485
)%Total other income,
    net

$
651


$
312


$
339



109
%     Accretion
    of Redeemable Convertible Preferred Stock to
    Redemption Value
    Beneficial
    Conversion Feature
  paid-in-capital.
  Liquidity
    and Capital Resources
  Years Ended March 31,2007


2006


2005Cash flow activities:Net cash used in operating
    activities

$
(556
)

$
(9,055
)

$
(3,402
)Net cash (used in) provided by
    investing activities

$
(5,451
)

$
(5,940
)

$
2,462Net cash provided by financing
    activities

$
5,098


$
35,666


$
11,255    48




---



##### Table of Contents



49




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
      Revenue Recognition.
    Allowance for Doubtful Accounts.
 50




---



##### Table of Contents



Excess and Obsolete Inventory.
  Accounting for Income Taxes.
  Stock-based Compensation.
         51




---



##### Table of Contents



Recent
    Accounting Pronouncements
  Recognition Measurement
     52




---



##### Table of Contents



Contractual
    Obligations
      Payments Due by PeriodLess Than


1-3


3-5


BeyondContractual obligations:

Total


1 Year


Years


Years


5 YearsNon-cancelable operating lease
    obligations

$
3,521


$
738


$
1,871


$
912


$
Purchase commitments


2,508



2,508











Total

$
6,029


$
3,246


$
1,871


$
912


$
       Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.  Foreign Currency Market Risks.
  non-U.S. currency
  Interest Rate Market Risk.
 53




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data.  Index to
    Consolidated Financial Statements
  PageReport of
    Independent Registered Public Accounting Firm


55Consolidated
    Balance Sheets


57Consolidated
    Statements of Operations


58Consolidated
    Statements of Changes in Stockholders Equity
    (Deficit)


59Consolidated
    Statements of Cash Flows


61Notes to
    Consolidated Financial Statements


62Supplementary
    DataSchedule II 
    Valuation and Qualifying Accounts


95  54




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM       Consolidated
    financial statements and financial statement
    schedule
      Internal
    control over financial reporting
  Internal Control  Integrated Framework Internal Control 
    Integrated Framework
   55




---



##### Table of Contents



56




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  Consolidated
    Balance Sheets
   March 31,2007


2006(In thousands, except share and per share amounts)ASSETSCurrent Assets:Cash and cash equivalents

$
34,536


$
36,104Short-term investments






984Accounts receivable, net of
    allowance for doubtful accounts of $234 and $317 at
    March 31, 2007 and 2006, respectively


8,168



8,267Inventories


9,049



4,479Prepaid expenses and other current
    assets


1,442



766Total current assets


53,195



50,600Property and equipment, net


4,648



2,488Goodwill


5,552



3,309Intangible assets, net


9,405



5,417Other assets


297



300Total assets

$
73,097


$
62,114LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable

$
1,660


$
2,088Accrued payroll and other related
    expenses


6,145



3,147Accrued liabilities


6,288



4,308Total current liabilities


14,093



9,543Other non-current liabilities


2,710



1,255Total liabilities


16,803



10,798Commitments and contingencies
    (Note 6)Stockholders equity:Preferred stock, $0.01 par
    value;Authorized: 1,000,000 shares;
    none issued and outstanding






Common stock, $0.01 par value;Authorized: 50,000,000 sharesIssued and
    outstanding:15,249,057 shares and 14,190,287 shares at
    March 31, 2007 and 2006, respectively


152



142Additional paid-in capital


111,920



101,430Deferred stock-based compensation


(164
)


(397
)Accumulated other comprehensive
    loss


(512
)


(240
)Accumulated deficit


(55,102
)


(49,619
)Total stockholders equity


56,294



51,316Total liabilities and
    stockholders equity

$
73,097


$
62,114    57




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  Consolidated
    Statements of Operations
   Years Ended March 31,2007


2006


2005(In thousands, exceptper share amounts)Revenues

$
58,795


$
32,781


$
24,012Cost of goods sold


15,361



9,710



8,003Gross profit


43,434



23,071



16,009Operating expenses:Research and development


7,904



6,589



2,360Sales and marketing


24,121



15,171



8,781General and administrative


19,308



10,307



11,884Total operating expenses


51,333



32,067



23,025Loss from operations


(7,899
)


(8,996
)


(7,016
)Interest and investment income


1,618



1,295



177Interest expense


(14
)


(12
)


(29
)Other income (expense), net


565



(632
)


164Loss before income taxes


(5,730
)


(8,345
)


(6,704
)Income tax benefit


(247
)


(84
)


Net loss


(5,483
)


(8,261
)


(6,704
)Accretion of redeemable
    convertible preferred stock to redemption value including
    beneficial conversion feature






(659
)


(588
)Net loss attributable to common
    stockholders

$
(5,483
)

$
(8,920
)

$
(7,292
)Net loss per share attributable to
    common stockholders:Basic and diluted

$
(0.38
)

$
(0.79
)

$
(5.22
)Weighted-average number of shares
    used in per share calculations:Basic and diluted


14,621



11,240



1,397    58




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION



Consolidated
    Statements of Changes in Stockholders Equity (Deficit)  Accumulated





TotalAdditional


Deferred


Other





StockholdersCommon Stock


Paid-in


Stock-Based


Comprehensive


Accumulated


EquityShares


Amount


Capital


Compensation


Loss


Deficit


(Deficit)(In thousands)Balance at March 31, 2004


1,261


$
13


$
1,365


$
(1,032
)

$
(268
)

$
(34,271
)

$
(34,193
)Comprehensive loss:Net loss






















(6,704
)


(6,704
)Translation adjustments


















(56
)






(56
)Change in unrealized loss on
    available-for-sale
    investments


















(44
)






(44
)Total comprehensive loss


























(6,804
)Issuance of common stock in
    exchange for in-process technology


4







25















25Accretion of redeemable convertible
    preferred stock to redemption value










(588
)














(588
)Beneficial conversion feature
    related to issuance of Series E preferred stock










383















383Exercise of stock options


203



2



175















177Amortization of deferred
    stock-based compensation














265











265Deferred stock-based compensation
    associated with stock options forfeited










(137
)


137











Non-employee stock-based
    compensation










189















189Stock-based compensation related to
    option modification










2,985















2,985Balance at March 31, 2005


1,468



15



4,397



(630
)


(368
)


(40,975
)


(37,561
)Comprehensive loss:Net loss






















(8,261
)


(8,261
)Translation adjustments


















92







92Change in unrealized loss on
    available-for-sale
    investments


















36







36Total comprehensive loss


























(8,133
)Issuance of common stock in
    connection with the initial public offering (IPO),
    net of issuance costs


3,250



33



30,439















30,472Conversion of preferred stock to
    common stock in connection with the IPO


7,920



79



59,148















59,227Exercise of over-allotment by
    underwriters


250



3



2,555















2,558Reclassification of liability for
    Series E preferred stock warrants upon IPO










3,358















3,358Beneficial conversion feature
    related to issuance of Series E preferred stock






















(383
)


(383
)Accretion of preferred stock










(276
)














(276
) 59




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  Consolidated
    Statements of Changes in Stockholders Equity
    (Deficit)  (Continued)
  Accumulated





TotalAdditional


Deferred


Other





StockholdersCommon Stock


Paid-in


Stock-Based


Comprehensive


Accumulated


EquityShares


Amount


Capital


Compensation


Loss


Deficit


(Deficit)(In thousands)Exercise of common stock warrants


699



6



863















869Exercise of stock options


563



6



459















465Issuance of common stock under
    employee stock purchase plan


40







333















333Amortization of deferred
    stock-based compensation














229











229Deferred stock-based compensation
    associated with stock options forfeited










(4
)


4











Non-employee stock-based
    compensation










160















160Payment for fractional shares on
    stock split










(2
)














(2
)Balance at March 31, 2006


14,190



142



101,430



(397
)


(240
)


(49,619
)


51,316Comprehensive loss:Net loss






















(5,483
)


(5,483
)Translation adjustments


















(283
)






(283
)Change in unrealized loss on
    available-for-sale
    investments


















11







11Total comprehensive loss


























(5,755
)Exercise of over-allotment by
    underwriters


190



2



2,037















2,039Issuance of common stock in
    connection with VasCon acquisition


157



2



2,970















2,972Exercise of common stock warrants


15























Exercise of stock options


619



6



2,298















2,304Issuance of common stock under
    employee stock purchase plan


78







755















755Stock-based compensation under
    SFAS 123R (including amount capitalized in inventory of $89)










2,293















2,293Amortization of deferred
    stock-based compensation














213











213Deferred stock-based compensation
    associated with stock options forfeited










(20
)


20











Non-employee stock-based
    compensation










157















157Balance at March 31, 2007


15,249


$
152


$
111,920


$
(164
)

$
(512
)

$
(55,102
)

$
56,294    60




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  Consolidated
    Statement of Cash Flows
  Years Ended March 31,2007


2006


2005(In thousands)Cash flows from operating
    activities:Net loss

$
(5,483
)

$
(8,261
)

$
(6,704
)Adjustments to reconcile net loss
    to net cash used in operating activities:Depreciation and amortization


2,143



989



505Provision for doubtful accounts


(84
)


102



11Loss on disposal of equipment


4



1



2Provision for excess and obsolete
    inventories


279



264



734Increase in fair value of 2005
    common stock warrants






158



Realized (gain) loss on investments


(4
)


5



16Stock-based compensation


2,574



389



3,439Changes in operating assets and
    liabilities, net of effect of acquisitions:Accounts receivable


601



(4,005
)


(1,385
)Inventories


(3,810
)


(239
)


(2,470
)Prepaid expenses and other current
    assets


(645
)


(134
)


(159
)Other assets


19



(208
)


(28
)Accounts payable


(437
)


(938
)


1,522Accrued payroll and other related
    expenses


2,936



1,507



583Accrued liabilities


1,744



826



549Other non-current liabilties


(393
)


489



(17
)Net cash used in operating
    activities


(556
)


(9,055
)


(3,402
)Cash flows from investing
    activities:Proceeds from maturities of
    available-for-sale
    securities


1,000



2,000



3,074Acquisition of property and
    equipment


(1,343
)


(2,070
)


(612
)Purchase of VasCon, LLC, net of
    cash acquired


(2,860
)






Purchase of Neurologic UK Ltd., net
    of cash acquired


(1,414
)


(5,139
)


Payment to Biotronik AG for
    developed technology


(834
)


(731
)


Net cash (used in) provided by
    investing activities


(5,451
)


(5,940
)


2,462Cash flows from financing
    activities:Proceeds from (costs of) issuance
    of convertible preferred stock and warrants






(11
)


11,861Proceeds from issuance of common
    stock, net of issuance costs


2,039



33,872



(844
)Proceeds from exercise of preferred
    and common stock warrants






1,007



61Proceeds from exercise of stock
    options


2,304



465



177Proceeds from employee stock
    purchase plan


755



333



Net cash provided by financing
    activities


5,098



35,666



11,255Effect of foreign exchange rate
    changes on cash


(659
)


416



(225
)Net increase (decrease) in cash and
    cash equivalents


(909
)


20,671



10,315Cash and cash equivalents at
    beginning of year


36,104



15,017



4,927Cash and cash equivalents at end of
    year

$
34,536


$
36,104


$
15,017Supplemental disclosure of cash
    flow information:Interest paid

$
14


$
12


$
29Income taxes paid 
    liability assumed in Neurologic UK Ltd. acquisition

$



$
192


$
Supplemental schedule of
    non-cash investing and financing activities:Issuance of common stock for
    purchase of VasCon, LLC

$
2,972


$



$
Conversion of preferred stock to
    common stock in connection with IPO

$



$
59,227


$
Accretion to redemption value of
    redeemable convertible preferred stock including beneficial
    conversion feature

$



$
659


$
588Reclassification of 2005 common
    stock warrants to equity in connection with IPO

$



$
3,358


$
Accrued earn-out payment associated
    with the purchase of Neurologic UK Ltd.

$
2,232


$
1,403


$
Accrued milestone payment
    associated with the Biotronik AG transaction

$



$
732


$
Accrued offering costs for issuance
    of common stock

$



$



$
450    61




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Formation and Business of the Company
    Note 2 
    Summary of Significant Accounting Policies
  Principles
    of consolidation
      Use of
    estimates
    Revenue
    recognition and product warranty
               62




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         Cost
    of goods sold
    Concentration
    of credit risk
        Certain
    significant risks and uncertainties
   63




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Cash
    and cash equivalents and short-term investments
    Available-for-sale
    securities
  available-for-sale. other-than-temporary available-for-sale other-than-temporary
  Fair
    value of financial instruments
    Allowance
    for doubtful accounts
    Inventories
  work-in-progress first-in,
   64




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Property
    and equipment
    Impairment
    of long-lived assets
    Goodwill
    and intangible assets
          Comprehensive
    loss
  available-for-sale
 65




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Research
    and development
    Advertising
    costs
    Shipping
    and handling of products
    Foreign
    currency transactions
    Income
    taxes
    Net
    loss per share
   66




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Anti-dilutive
    securities
    Years Ended March 31,2007


2006


2005Redeemable convertible preferred
    stock (as if converted)










7,901Shares issuable upon exercise of
    common stock options


3,182



2,804



2,447Shares issuable upon settlement of
    restricted stock units


10







Warrants to purchase common stock










834Warrants to purchase redeemable
    convertible preferred stock (as if converted)










4053,192



2,804



11,587   Stock-based
    compensation
       67




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Recent
    accounting pronouncements
  Recognition Measurement
      Note 3 
    Business Combination and Technology Agreements
  Fiscal
    2007 Business Combination
  VasCon
   68




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Initial cash payment

$
2,500Issuance of shares of common stock


2,972Acquistion-related closing costs


404Total purchase price

$
5,876     Inventories

$
592Fixed assets


1,654Other acquired net assets


76Intangible assets


5,150Contingent purchase price


(1,596
)Total purchase price

$
5,876    69




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Years Ended March 31,2007


2006Revenues

$
59,587


$
37,032Net loss attributable to common
    stockholders

$
(7,220
)

$
(9,751
)Net loss per share attributable to
    common stockholders  basic and diluted

$
(0.49
)

$
(0.86
)   Fiscal
    2006 Business Combination
  Neurologic
               70




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Total cash payments and accrued
    second year earn-out payment

$
8,475Forgiven intercompany payables


611Direct acquisition related costs


316Total consideration

$
9,402     Acquired net assets

$
664Deferred tax liability


(714
)Goodwill


5,552Other intangible assets consisting
    of:Customer relationships


900Distribution agreements


2,300Non-compete agreements


700Total purchase price

$
9,402         Cash

$
6Accounts receivable


760Inventories


690Prepaid expenses and other current
    assets


143Total current assets acquired


1,599Accounts payable


(612
)Accrued and other liabilities


(323
)Total current liabilities assumed


(935
)Net assets acquired

$
664     Years Ended March 31,2006


2005Revenues

$
33,560


$
25,356Net loss attributable to common
    stockholders

$
(9,220
)

$
(7,706
)Net loss per share attributable to
    common stockholders  basic and diluted

$
(0.82
)

$
(5.52
)  71




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Technology
    Agreements
  Vascular
    FX
    Biotronik
    AG
      Note 4 
    Balance Sheet Components
  Available-for-sale
    securities
  Available-for-sale
  March 31,2006Government
    Securities:Fair market value

$
984Amortized cost basis


995Unrealized gain (loss)

$
(11
)  72




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Inventories
    March 31,2007


2006Raw materials

$
1,862


$
507Work-in-progress


1,413



462Finished goods


3,005



1,197Consigned inventory


2,622



2,082Inventory held by Latin American
    distributors


147



231$
9,049


$
4,479     Property
    and equipment
    March 31,2007


2006Computer equipment and software

$
1,210


$
1,093Furniture, fixtures and equipment


4,701



2,419Leasehold improvements


936



1,040Construction in progress


148



Total cost


6,995



4,552Less accumulated depreciation and
    amortization


(2,347
)


(2,064
)$
4,648


$
2,488     Goodwill
    Years Ended March 31,2007


2006Balance beginning of year

$
3,309


$
Addition related to acquisition of
    Neurologic






3,309Addition related to Neurologic
    earn-out payment


2,243



Balance end of year

$
5,552


$
3,309    73




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Intangible
    assets
    Useful


Gross Carrying Amount


Accumulated Amortization


NetLife


March 31,





March 31,


March 31,





March 31,


March 31,


March 31,(Years)


2006


Additions


2007


2006


Additions


2007


2007


2006Existing process technology


7


$



$
4,590


$
4,590


$



$
(219
)

$
(219
)

$
4,371


$
Distribution agreements


5



2,300







2,300



(234
)


(470
)


(704
)


1,596



2,066Capitalized license fee


7



1,463



102



1,565







(112
)


(112
)


1,453



1,463Patents  microcoil


10



1,100







1,100



(660
)


(110
)


(770
)


330



440Non-compete agreements


6



700







700



(60
)


(117
)


(177
)


523



640Customer relationships


5



900







900



(92
)


(182
)


(274
)


626



808Patents  catheter


7







300



300







(14
)


(14
)


286



Existing product technology


2







260



260







(40
)


(40
)


220



$
6,463


$
5,252


$
11,715


$
(1,046
)

$
(1,264
)

$
(2,310
)

$
9,405


$
5,417     Years Ended March 31,2007


2006


2005Cost of goods sold

$
385


$



$
Operating expenses


879



496



110Total

$
1,264


$
496


$
110         For Years Ended March 31,

Amortization2008

$
1,9082009


1,8702010


1,7932011


1,3452012


982Thereafter


1,507Total

$
9,405  74




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accruals
    March 31,2007


2006Accrued bonuses

$
2,646


$
1,157Accrued salaries


702



478Accrued vacation


1,333



804Accrued commissions


725



392Accrued payroll taxes


739



316$
6,145


$
3,147     March 31,2007


2006Earn-out payment in connection
    with Neurologic acquistion

$
2,232


$
1,403Professional fees


1,069



709Development costs


559



28VAT payable


438



78Marketing related programs


254



144Biotronik milestone payment






732Deferred revenue from Japan
    distribution agreement


150



150Other


1,586



1,064$
6,288


$
4,308   Other
    non-current liabilities
    March 31,2007


2006Contingent purchase price
    (Note 3)

$
1,596


$
Deferred tax liability


570



641Deferred revenue from Japan
    distribution agreement


375



525Other non-current liabilities


169



89$
2,710


$
1,255    75




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Accumulated
    Other Comprehensive Income (Loss)
    March 31,2007


2006Translation Adjustment

$
(512
)

$
(229
)Unrealized gain (loss) on
    available-for-sale
    securities






(11
)$
(512
)

$
(240
)   Note 5 
    Income Taxes
            Years Ended March 31,2007


2006


2005CurrentFederal

$



$



$
State










Foreign


(63
)


(11
)


Total current income tax benefit


(63
)


(11
)


DeferredFederal










State










Foreign


(184
)


(73
)


Total deferred income tax benefit


(184
)


(73
)


Total income tax benefit

$
(247
)

$
(84
)

$
  76




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      March 31,2007


2006Deferred tax assets:Net operating loss carryforwards

$
11,511


$
11,992Basis difference in fixed assets


2,117



326Accruals deductible in different
    periods


2,529



2,324Credit carryforwards


1,620



1,436Total deferred tax assets


17,777



16,078Less valuation allowance


(17,750
)


(16,078
)Net deferred tax asset


27



Deferred tax liabilities:Basis difference in fixed and
    intangible assets


570



641Total deferred tax liabilities


(570
)


(641
)Net deferred tax liability

$
(543
)

$
(641
)         Years Ended March 31,2007


2006


2005Income tax benefit at statutory
    rate


(35
)%


(35
)%


(35
)%State taxes, net of federal benefit


(4
)%


(3
)%


(6
)%Non-US income taxed at different
    rates


(14
)%


11
%


Change in valuation allowance


40
%


23
%


26
%Nondeductible deferred compensation


12
%


1
%


15
%Other


(3
)%


2
%


0
%Effective income tax rate


(4
)%


(1
)%


0
%  77




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended March 31,2007


2006


2005Domestic

$
(7,168
)

$
(5,709
)

$
(9,083
)Foreign


1,438



(2,636
)


2,379Loss before income taxes

$
(5,730
)

$
(8,345
)

$
(6,704
)   Note 6 
    Commitments and Contingencies
  Lease
    commitments
  7-year
        MinimumFor Years Ended March 31,

Lease Payments2008

$
7382009


6542010


6262011


5912012


4972013


415Total minimum lease payments

$
3,521     Indemnification
   78




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Litigation
    FCPA
    Investigation
      Patent
    Litigation
   79




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      ex parte
  patents-in-suit.
    Note 7 
    Preferred Stock
    Conversion
    Redemption
   80




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Preferred
    Stock Warrants
  Series D-1
      Note 8 
    Common Stock
    one-for-2.25
      2000
    Common Stock Warrants
   81




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   2003
    Common Stock Warrants
  Series D-3 Series D-3
      2005
    Common Stock Warrants
        paid-in-capital.
 82




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 9 
    Stock Option Plans and Other Employee Benefits
  Stock
    options
  10-year
  1996
    Stock Option Plan
    1998
    Stock Plan
    2005
    Equity Incentive Plan
    2005
    Employee Stock Purchase Plan
     83




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Stock-Based
    Compensation
         84




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             Years Ended March 31,2007


2006


2005Employee Stock Option
    PlansExpected term (in years)


6



4



4Volatility


44
%


44
%


0
%Risk-free interest rate


4.7
%


4.3
%


3.5
%Expected dividend yield


0
%


0
%


0
%Weighted average fair value at
    date of grant

$
8.30


$
3.69


$
0.74Employee Stock Purchase
    PlanExpected term (in years)


0.5



0.5



Volatility


45
%


44
%


Risk-free interest rate


5.1
%


4.2
%


Expected dividend yield


0
%


0
%


       Years Ended March 31,2007


2006


2005Cost of goods sold

$
218


$
26


$
26Research and development


222



22



69Sales and marketing


802



169



134General and administrative


1,332



172



3,210Total

$
2,574


$
389


$
3,439    85




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Year EndedMarch 31, 2007Cost of goods sold

$
193Research and development


203Sales and marketing


684General and administrative


1,124Total

$
2,204         Years Ended March 31,2007


2006


2005Expected term (in years)


5



6



7Volatility


42
%


45
%


51
%Risk-free interest rate


4.7
%


4.4
%


4.6
%Expected dividend yield


0
%


0
%


0
%       Periods
    prior to the adoption of SFAS 123R
   86




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Years Ended March 31,2006


2005Net loss attributable to common
    stockholders (as reported)

$
(8,920
)

$
(7,292
)Add: Stock-based employee
    compensation expenses included in reported net loss


229



3,250Deduct: Total stock-based employee
    compensation expenses determined under fair value based method
    for all awards


(829
)


(4,300
)Adjusted net loss attributable to
    common stockholders

$
(9,520
)

$
(8,342
)Net loss per common share
    attributable to common stockholders, basic and diluted:As reported

$
(0.79
)

$
(5.22
)Adjusted

$
(0.85
)

$
(5.97
)   General
    stock option information
    Weighted-AverageWeighted-


RemainingAverage


ContractualExercise


Term


AggregateShares


Price


(In Years)


Intrinsic Value(In thousands)Options outstanding at
    March 31, 2006


2,804


$
6.54Options granted


1,257


$
16.49Restricted stock units awarded


10


$
Options exercised


(619
)

$
3.72Options forfeited


(254
)

$
10.16Options expired


(6
)

$
11.78Options and restricted stock units
    outstanding at March 31, 2007


3,192


$
10.71



8.5


$
41,773Options exercisable at
    March 31, 2007


1,135


$
6.70



7.5


$
19,449    87




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Options Outstanding


Options ExercisableWeightedAverage


Weighted





WeightedRemaining


Average





AverageNumber


Contractual Life


Exercise


Number


ExerciseRange of Exercise Prices

Outstanding


(Years)


Price


Exercisable


Price$ 0.68 - $ 1.01


160



5.2


$
0.81



157


$
0.81$ 1.01 - $ 1.15


106



6.8


$
1.15



86


$
1.15$ 5.63 - $ 5.63


751



7.7


$
5.63



467


$
5.63$ 6.51 - $ 9.50


461



8.7


$
8.67



128


$
8.69$ 9.64 - $12.52


468



8.8


$
10.85



139


$
10.48$12.53 - $13.75


484



8.6


$
13.19



136


$
13.12$13.83 - $19.50


464



9.5


$
17.25



22


$
17.68$19.58 - $24.05


288



9.8


$
21.36






$
$ 0.68 - $24.05


3,182



8.5


$
10.71



1,135


$
6.70   401(k)
    Savings Plan
    Note 10 
    Segments
    Years Ended March 31,2007


2006


2005United States

$
28,868


$
15,531


$
12,516Japan


8,661



2,228



United Kingdom


6,448



4,498



3,327Rest of the world


14,818



10,524



8,169Total revenues

$
58,795


$
32,781


$
24,012     March 31,2007


2006United States

$
4,342


$
2,246United Kingdom


120



54Rest of the world


186



188$
4,648


$
2,488  88




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended March 31,2007


2006


2005Revenues:Americas

$
31,618


$
17,381


$
13,266Europe


17,674



12,532



10,226Asia Pacific


9,503



2,868



520Total

$
58,795


$
32,781


$
24,012Gross Profit:Americas

$
25,426


$
13,123


$
9,068Europe


11,948



8,236



6,595Asia Pacific


6,060



1,712



346Total

$
43,434


$
23,071


$
16,009     March 31,2007


2006Americas

$
56,507


$
47,954Europe


16,590



14,160$
73,097


$
62,114  89




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 11 
    Quarterly Financial Information (unaudited)
    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter2007:Revenues

$
12,683


$
14,527


$
15,544


$
16,041Gross profit


9,421



10,633



11,352



12,028Net loss attributable to common
    stockholders

$
(2,959
)

$
(151
)

$
(1,002
)

$
(1,371
)Net loss attributable to common
    stockholders basic and diluted:

$
(0.21
)

$
(0.01
)

$
(0.07
)

$
(0.09
)2006:Revenues

$
7,112


$
6,130


$
8,092


$
11,447Gross profit


4,993



4,401



5,676



8,001Net loss attributable to common
    stockholders

$
(1,897
)

$
(2,831
)

$
(1,652
)

$
(2,540
)Net loss attributable to common
    stockholders basic and diluted:

$
(0.70
)

$
(0.20
)

$
(0.12
)

$
(0.18
)  90




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Evaluation of disclosure controls and procedures.
  Rule 13a-15(e) 15d-15(e)
  Managements report on internal control over
    financial reporting.
  Rules 13a-15(f) 15d-15(f), Internal Control 
    Integrated Framework
    Internal Control  Integrated Framework issued by
    COSO, Form 10-K.
  Changes in internal control over financial
    reporting.
  Rule 13a-15(f) 15d-15(f)
 91




---



##### Table of Contents



Item 9B.
    Other
    Information.   PART III  Item 10.
    Directors
    and Executive Officers of the Registrant.    Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions.    Item 14.
    Principal
    Accountant Fees and Services.   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules.  Form 10-K:
  Financial Statements.
  Statement Schedules.
      Exhibits.
 92




---



##### Table of Contents



SIGNATURE    MICRUS ENDOVASCULAR CORPORATION
  By:
    /s/  JOHN
    T. KILCOYNE       POWERS OF
    ATTORNEY
  attorneys-in-fact Form 10-K attorneys-in-fact,
  Form 10-K
  Signatures

Title

Date/s/  JOHN
    T. KILCOYNEJohn
    T. Kilcoyne

President and Chief Executive
    Officer (Principal Executive Officer)

June 7, 2007/s/  ROBERT
    A. STERNRobert
    A. Stern

Executive Vice President, Chief
    
    Financial Officer and Secretary
    (Principal Financial and Accounting Officer)

June 7, 2007/s/  MICHAEL
    R. HENSONMichael
    R. Henson

Chairman of the Board of Directors
    
    and Director

June 7, 2007/s/  MICHAEL
    EAGLEMichael
    Eagle

Director

June 7, 2007/s/  L.
    NELSON
    HOPKINSL.
    Nelson Hopkins, M.D.

Director

June 7, 2007/s/  FRED
    HOLUBOWFred
    Holubow

Director

June 7, 2007/s/  FRANCIS
    J. SHAMMOFrancis
    J. Shammo

Director

June 7, 2007 93




---



##### Table of Contents



Signatures

Title

Date/s/  JEFFREY
    H. THIELJeffrey
    H. Thiel

Director

June 7, 2007/s/  GREGORY
    H. WOLFGregory
    H. Wolf

Director

June 7, 2007  94




---



##### Table of Contents



Schedule II 
    Valuation and Qualifying Accounts  Balance at


Additions/Beginning


Charged to





Balance atof Year


Expenses


Deduction


End of YearAllowance for Doubtful
    AccountsYear Ended March 31, 2007

$
317


$
(84
)

$
1


$
234Year Ended March 31, 2006


230



102



(15
)


317Year Ended March 31, 2005


267



11



(48
)


230Valuation allowance 
    deferred tax assetsYear Ended March 31, 2007


16,078



1,936



(264
)


17,750Year Ended March 31, 2006


16,731







(653
)


16,078Year Ended March 31, 2005


15,000



1,731







16,731  95




---



##### Table of Contents



INDEX TO
    EXHIBITS
  ExhibitNumber

Description3
.1

Certificate of Incorporation
    (Filed as Exhibit 3.2 of Amendment No. 3 to the
    Companys Registration Statement on
    Form S-1
    filed on May 17, 2005 (Registration
    No. 333-123154)
    (Amendment No. 3), and incorporated herein by
    reference)3
.2

Bylaws (Filed as Exhibit 3.4
    of Amendment No. 3, and incorporated herein by reference)4
.1

Specimen Stock Certificate (Filed
    as Exhibit 4.1 of the Companys Registration Statement
    on
    Form S-1
    filed on March 4, 2005 (Registration
    No. 333-123154)
    (Form S-1),
    and incorporated herein by reference)4
.2

Warrant dated as of
    December 11, 2000 among the Registrant and Roberts Mitani
    Capital, LLC (Filed as Exhibit 4.2 of
    Form S-1,
    and incorporated herein by reference)4
.3

Amended and Restated
    Stockholders Rights Agreement dated as of
    February 21, 2005 among the Registrant and the parties
    listed therein (Filed as Exhibit 4.3 of
    Form S-1,
    and incorporated herein by reference)4
.4

Form of Common Stock Warrant
    issued in connection with the Series E Preferred Stock and
    Warrant Purchase Agreement dated February 21, 2005, among
    the Company and the purchasers of the Companys
    Series E Preferred Stock (Filed as Exhibit 4.4 to the
    Companys Quarterly Report on
    Form 10-Q
    filed on February 14, 2006, and incorporated herein by
    reference)10
.1*

1996 Stock Option Plan (Filed as
    Exhibit 10.1 of
    Form S-1,
    and incorporated herein by reference)10
.2*

1998 Stock Plan (Filed as
    Exhibit 10.2 of
    Form S-1,
    and incorporated herein by reference)10
.3*

2005 Equity Incentive Plan (Filed
    as Exhibit 10.3 of Amendment No. 4 to the
    Companys Registration Statement on
    Form S-1
    filed on May 23, 2005 (Registration
    No. 333-123154)
    (Amendment No. 4), and incorporated herein by
    reference)10
.4*

2005 Equity Incentive
    Plan  Form of Incentive Stock Option Agreement for
    Executive Officers and Directors (Filed as Exhibit 10.2 to
    the Companys Quarterly Report on
    Form 10-Q
    filed on August 15, 2005, and incorporated herein by
    reference)10
.5*

2005 Equity Incentive
    Plan  Form of Nonstatutory Stock Option Agreement for
    Executive Officers and Directors (Filed as Exhibit 10.3 to
    the Companys Quarterly Report on
    Form 10-Q
    filed on August 15, 2005, and incorporated herein by
    reference)10
.6*

Employee Cash Bonus Plan with
    respect to Executive Officers (Filed as Exhibit 99.1 to the
    Companys Current Report on
    Form 8-K
    filed on July 19, 2005, and incorporated herein by
    reference)10
.7*

2005 Employee Stock Purchase Plan,
    as amended (Filed as Exhibit 10.4 of Amendment No. 6
    to the Companys Registration Statement on
    Form S-1
    filed on June 13, 2005 (Registration
    No. 333-123154)
    (Amendment No. 6), and incorporated herein by
    reference)10
.8*

Letter Agreement dated
    November 15, 2004 with John R. Kilcoyne (Filed as
    Exhibit 10.7 of
    Form S-1,
    and incorporated herein by reference)10
.9*

Letter Agreement dated
    November 5, 2003 with Robert A. Stern (Filed as
    Exhibit 10.8 of
    Form S-1,
    and incorporated herein by reference)10
.10*

Letter Agreement dated
    June 12, 1998 with Tom M. Holdych (Filed as
    Exhibit 10.9 of
    Form S-1,
    and incorporated herein by reference)10
.11*

Letter Agreement dated
    May 23, 2003 with Edward F. Ruppel, Jr. (Filed as
    Exhibit 10.10 of
    Form S-1,
    and incorporated herein by reference)10
.12*

Letter Agreement dated
    October 25, 2004 with Eckhard H. Reitz (Filed as
    Exhibit 10.13 of
    Form S-1,
    and incorporated herein by reference)10
.13*

Letter Agreement dated
    February 16, 2005 with Robert C. Colloton (Filed as
    Exhibit 10.23 of Amendment No. 6, and incorporated
    herein by reference)10
.15

Office Lease dated June 6,
    2005 between the Registrant and WW/LJ GATEWAYS LTD., a
    California limited partnership, for office space located at 821
    Fox Lane in San Jose, California (Filed as
    Exhibit 99.1 to the Companys Current Report on
    Form 8-K
    filed on July 5, 2005, and incorporated herein by
    reference) 96




---



##### Table of Contents



ExhibitNumber

Description10
.16**

Distribution Agreement, dated
    September 30, 2005, between Micrus Endovascular Corporation
    and Goodman CO., Ltd. (Filed as Exhibit 10.3 to the
    Companys Quarterly Report on
    Form 10-Q
    filed on November 14, 2005, and incorporated herein by
    reference)10
.17

Share Purchase Agreement, dated
    September 20, 2005, between Mark Ellis and James Mackenzie
    and Micrus Endovascular Corporation (Filed as Exhibit 2.1
    to the Companys Current Report on
    Form 8-K
    filed on September 26, 2005, and incorporated herein by
    reference)10
.18**

License Agreement, effective
    July 1, 2005, between Micrus Endovascular Corporation and
    Micrus Endovascular SA (Filed as Exhibit 10.5 to the
    Companys Quarterly Report on
    Form 10-Q
    filed on November 14, 2005, and incorporated herein by
    reference)10
.19**

Contract Manufacturing Agreement,
    effective July 1, 2005, between Micrus Endovascular
    Corporation and Micrus Endovascular SA (Filed as
    Exhibit 10.6 to the Companys Quarterly Report on
    Form 10-Q
    filed on November 14, 2005, and incorporated herein by
    reference)10
.20**

Agreement for Sharing Development
    Costs, effective July 1, 2005, between Micrus Endovascular
    Corporation and Micrus Endovascular SA (Filed as
    Exhibit 10.7 to the Companys Quarterly Report on
    Form 10-Q
    filed on November 14, 2005, and incorporated herein by
    reference)10
.21**

Support Services Agreement,
    effective July 1, 2005, between Micrus Endovascular
    Corporation and Micrus Endovascular SA (Filed as
    Exhibit 10.8 to the Companys Quarterly Report on
    Form 10-Q
    filed on November 14, 2005, and incorporated herein by
    reference)10
.22**

Technology Transfer Agreement,
    effective July 28, 2005, between Micrus Endovascular
    Corporation and VascularFX (Filed as Exhibit 10.9 to the
    Companys Quarterly Report on
    Form 10-Q
    filed on November 14, 2005, and incorporated herein by
    reference)10
.23**

License, Development and
    Distribution Agreement, effective January 6, 2006, between
    Micrus Endovascular Corporation and Biotronik AG (Filed as
    Exhibit 10.23 to the Companys Annual Report on
    Form 10-K
    filed on June 16, 2006 and incorporated herein by reference)10
.24**

Asset Purchase Agreement dated
    November 30, 2006 by and among the Registrant, Micrus
    Design Technology, Inc. , VasCon, LLC and the members of VasCon,
    LLC (Filed as Exhibit 10.1 to the Companys Quarterly
    Report on
    Form 10-Q
    filed on February 14, 2007 and incorporated herein by
    reference)10
.25

Form of Director and Executive
    Officer Indemnification Agreement (Filed as Exhibit 10.2 to
    the Companys Quarterly Report on
    Form 10-Q
    filed on February 14, 2007)21
.1#

List of Subsidiaries23
.1#

Consent of PricewaterhouseCoopers
    LLP, Independent Registered Public Accounting Firm24
.1#

Powers of Attorney (appears on the
    signature page of this form)31
.1#

Certification of Chief Executive
    Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200231
.2#

Certification of Chief Financial
    Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200232
.1#

Certifications Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     #
    
    Filed herewith.*
    
    Indicates a management contract or compensatory plan or
    arrangement, as required by Item 15(a)3.**
    
    Confidential treatment requested for certain portions of this
    Exhibit pursuant to Rule 24b-2 promulgated under the Securities
    Exchange Act, which portions are omitted and filed separately
    with the Securities and Exchange Commission. 97