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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, 2008oro

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
    incorporation or organization)

(I.R.S. Employer
    Identification No.)821 Fox Lane
    San Jose, California(Address of principal
    executive offices)

95131(Zip Code)   (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
 Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o    Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





MICRUS
    ENDOVASCULAR CORPORATION
  TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


3Item 1A.


Risk Factors


22Item 1B.


Unresolved Staff Comments


37Item 2.


Properties


37Item 3.


Legal Proceedings


37Item 4.


Submission of Matters to a Vote of Security
    Holders


39PART IIItem 5.


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


40Item 6.


Selected Financial Data


43Item 7.


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


44Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


59Item 8.


Financial Statements and Supplementary Data


60Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


97Item 9A.


Controls and Procedures


97Item 9B.


Other Information


97PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


98Item 11.


Executive Compensation


98Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


98Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


98Item 14.


Principal Accountant Fees and Services


98PART IVItem 15.


Exhibits and Financial Statement Schedules


98SIGNATURES


99EXHIBIT 10.29EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1   2




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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 (the Securities Act), and
    Section 21E of the Securities Exchange Act of 1934, as
    amended (the Exchange Act), 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 ® 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 tm tm tm
  tm ® ® tm tm ®
 3




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tm tm
  ®
    tm
    Industry
    Overview
         4




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The
    Lancet The
    Lancet
  Market
    Opportunity
  65-70%
      
    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 be
    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 neurointerventionalist 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
    coils to help reduce recanalization and improve the chances of a
    better clinical outcome. 5




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
    Deployment.  Once embolic coils are placed in
    the aneurysm, the neurointerventionalist 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
    neurointerventionalist withdraws the positioning unit only to
    discover that the coil is still attached. Further, any delay in
    deployment may increase procedure time and its attendant risks.
    Recanalization.  Industry sources estimate that
    recanalization, or the continued or renewed growth of the
    aneurysm, occurs in approximately 15% to 25% of aneurysms
    treated with embolic coiling. Experts believe that one of the
    reasons for recanalization is due to incomplete filling of the
    aneurysm with the embolic coils. Studies have shown that while
    the recanalization rate is higher for patients treated with
    embolic coiling procedures compared to aneurysm clipping,
    embolic coiling has been demonstrated to be a safer treatment
    approach for aneurysms. Therefore, embolic coiling solutions
    that decrease recanalization rates and reduce the need for
    retreatment are highly desirable.
    Risk of Rupture.  Embolic coiling solutions
    that enhance safety and limit the risk of rupture or re-rupture
    in the 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 ®
  Enhanced Coverage of the Neck of the
    Aneurysm. ® tm ® ®
  Unique Framing and Filling Technology. ® ® ® ®
  Deployment Technology.
  Bioactive
    Technology. ® ® tm ® ® ® ® ®
 6




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®
  Stent Platform. tm tm tm tm tm tm
  Improved Access Products. ® tm ® ® ®
  Micrus
    Strategy
    Expand Our Hemorrhagic Market Share through Continued Product
    Innovation. ® tm ® tm
  Increase Our Per-Procedure Revenues.
  Enter the Ischemic Stroke Market. tm tm tm
  Leverage Our Sales and Marketing
    Expansion.
  Continue to Penetrate Asian Market. ®
 7




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License or Acquire Complementary Products and
    Technologies. and/or
  Products
  tm
  Product Line

Sizes

Product Description(product logo)MicruSphere®
    Microcoil

2-18 mm diameter

Three-dimensional framing microcoil; stabilizes the aneurysm.
    Available in bare platinum and
    Cerecyte®.(product logo)Presidio®
    Microcoil

4-20 mm diameter

Framing and filling coil to deliver more neck and wall coverage
    in a single deployment. Available in
    Cerecyte®.Cashmeretm
Complex
Microcoil

2-12 mm diameter

Three-dimensional framing and filling complex coil for aneurysms
    which require a softer coil. Available in
    Cerecyte®
    and stretch resistant platinum. 8




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Product Line

Sizes

Product Description(product logo)UltiPaq®
    Microcoil

2-4 mm diameter

Finishing microcoil; soft, stretch resistant, pliable microcoil
    designed to complete filling of the aneurysm. Available in bare
    platinum and
    Cerecyte®.(product logo)HeliPaq®
    HeliPaq
    SR®
    Microcoil

HeliPaq®2-20 mm
    diameter;
    HeliPaq SR®2-10 mm
    diameter

Filling microcoil; occludes aneurysm following framing.
    Available in bare platinum and
    Cerecyte®.(product logo)InterPaq®
    Microcoil

4 and 6 mm diameter

Filling microcoil; occludes aneurysm following framing.
    Available in bare platinum.(product logo)Cerecyte®
    Microcoil

2-20 mm diameter

Available in
MicruSphere®,
Cashmeretm,
Presidio®,
Ultipaq®
and HeliPaq
SR®.
Includes filaments comprised of PGA, a bioactive material.Courier®
ENZOtm
Microcatheter

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

Unique deflectable device used to deliver embolics into the
    aneurysm(product logo)Courier®
    Microcatheter

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

Device used to deliver embolics into the aneurysm. 9




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Product Line

Sizes

Product Description(product logo)Watusi®
    Guidewire

.014 diameter and 205 cm length

Device used to guide microcatheters and other devices to the
    aneurysm or stenosis site.(product logo)PHAROStmStent System

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.EnPowertmDetachment Control Box
and Connecting Cable



Next-generation control box provides electronic control via a
    lithium ion battery and initiates detachment of our proprietary
    microcoil system.   Microcoil
    Products
  ® tm ® ® ® ®
  
    Frame.  Our
    MicruSphere®,
    Presidio®
    and
    Cashmeretm
    microcoils are typically the first microcoils used by the
    neurointerventionalist 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.
    Frame and Fill.  Our
    Presidio®
    and
    Cashmeretm
    microcoils feature longer lengths and their own unique shapes
    required 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.
    Fill.  The
    Cashmeretm
    microcoil is a stretch resistant complex coil which may also be
    used as a filling coil. The
    Cashmeretm
    combines extra coil softness with a 3 dimensional secondary
    shape in a 14 system coil. Attributes of a 14 system coil help
    deliver more packing density per cm of coil compared with
    smaller system microcoils. 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. 10




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
    Finish.  Our
    UltiPaq®
    microcoil is an extra-soft, stretch-resistant finishing coil,
    used to provide additional aneurysm neck coverage and to fill
    any final gaps in the aneurysm after placement of one or more
    MicruSphere®,
    Presidio®,
    Cashmeretmand/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®,
    Cashmeretm,
    HeliPaq®,
    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 are conducting two
    post-market clearance studies to collect human clinical data for
    the purpose of demonstrating accelerated healing by our
    Cerecyte®
    microcoil product line.  ® ® ® ® ®
  PHAROStmBalloon-Expandable Stent
  tm tm tm tm tm
  Access
    Products
    
    Courier®ENZOtm
    Microcatheter. Introduced to the United States in 2007 and to
    Europe in January 2008, the
    ENZOtm
    deflectable tip microcatheter is designed to offer improved
    maneuverability through the brains tortuous vasculature
    and to enable in vivorepositioning of the microcatheter
    in the aneurysm, allowing physicians to more efficiently fill
    aneurysms, which may lead to improved outcomes. We believe
    ENZOtm
    is the only deflectable tip microcatheter available for use in
    the neurointerventional market.
    Courier®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
    is available in straight and pre-shaped configurations. 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 stability, tip shape
    retention and overall tracking.
    Watusi®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 ability to effectively shape
    and re-shape the guidewire tip. 11




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Microcoil
    Delivery System and Deployment Mechanism
    Sales and
    Marketing
          ®
   12




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Research
    and Development
        Biotronik
    Collaboration
    tm tm tm
  ReVasc
    Acquisition
     13




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Genesis
    Collaboration
    Disposition
    of Cardiac and Peripheral Catheter Platform Assets
      and/or
    Chemence
    Collaboration
   14




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Physician
    Advisors
    and/or
  Manufacturing
  and/or
         15




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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.       16




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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;
    sales and marketing capability; and
    brand recognition and reputation.   17




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Government
    Regulation
  United
    States
    FDAs
    Premarket Clearance and Approval Requirements
    510(k)
    Clearance
    and/or
 18




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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.    International
     19




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12-15 months
      Third-Party
    Reimbursement
   20




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Product
    Liability and Insurance
    Environmental
    Employees
    Seasonality
    Available
    Information
  1-800-SEC-0330. http://www.sec.gov
  Form 10-K, Form 10-Q, Form 8-K Form 10-K.
 21




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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.   22




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We are
    currently involved in a patent litigation action involving
    Boston Scientific 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 United
    States or exporting from the United States, our microcoils, our
    primary product line.
                granted-in-part Boston denied-in-part Boston
 23




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ex parte
    
    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 United States or exporting
    from the United States of our embolic coil products, which
    currently represent virtually all of our revenues, found to
    infringe the patent claims asserted by Boston Scientific;
    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.
   24




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
    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.    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 and other
    domestic and foreign regulatory approval or clearance for our
    products;
    inventory adjustments we may have to make in any quarter; 25




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
    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.    We may
    not be able to develop new products or product enhancements that
    will be accepted by the market.
    
    properly identify and anticipate neurointerventionalist 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
    United States and international regulations.
       26




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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-United
    States jurisdictions;
    greater resources for product research and development;
    greater experience in, and resources for, launching, marketing,
    distributing and selling products; and
    broader product lines.     27




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Our
    sales in international markets subject us to foreign currency
    exchange and other risks and costs that could harm our
    business.
      
    unexpected delays or changes in regulatory requirements;
    local economic and political instability or other potentially
    adverse conditions;
    lack of experience in certain geographical markets;
    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.
   28




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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.
      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 and other domestic and
    foreign approval or clearance of our products and products in
    development;
    costs associated with our litigation with Boston Scientific and
    our securities litigation; 29




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
    the expenses we incur related to compliance with the United
    States FCPA and laws and regulations in
    non-United
    States jurisdictions;
    costs associated with compliance with the Sarbanes-Oxley Act of
    2002 and rules and regulations affecting public companies
    promulgated by the SEC 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.
   30




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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.
   31




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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.
    and/or
  Our
    ability to protect our intellectual property and proprietary
    technology through patents and other means is
    uncertain.
     32




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##### 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
 33




---



##### 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
    neurointerventionalists are unable to obtain sufficient
    reimbursement for procedures performed with our products, it is
    unlikely that our products will be widely used.
  and/or
        Changes
    to existing accounting pronouncements or taxation rules or
    practices may affect how we conduct our business and affect our
    reported results of operations.
   34




---



##### 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;
    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 revenues or 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.   35




---



##### Table of Contents



Because
    of their significant stock ownership, our executive officers,
    directors and principal stockholders may 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 do
    not intend to pay cash dividends.
    We may
    become involved in securities class action litigation that could
    divert managements attention and harm our
    business.
   36




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##### Table of Contents



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.    Item 2.
    Properties.            Item 3.
    Legal
    Proceedings.  FCPA
    Investigation
   37




---



##### Table of Contents



Patent
    Litigation
       38




---



##### Table of Contents



granted-in-part Boston denied-in-part Boston
  ex parte
  Securities
    Litigation
  and/or
    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   39




---



##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.    Fiscal Year Ended March 31, 2008

High


LowFirst Quarter

$
25.45


$
20.06Second Quarter

$
26.00


$
15.88Third Quarter

$
21.45


$
16.87Fourth Quarter

$
20.55


$
10.70   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     Dividend
    Policy
    Unregistered
    Securities Sold in Fiscal 2008
    Issuer
    Purchases of Equity Securities
    Securities
    Authorized for Issuance Under Equity Compensation
    Plans
  Number ofSecuritiesRemaining AvailableNumber of





for Future IssuanceSecurities to be





Under EquityIssued Upon


Weighted Average


Compensation PlansExercise of


Exercise Price of


(ExcludingOutstanding


Outstanding


SecuritiesOptions, Warrants


Options, Warrants


Reflected in ColumPlan Category

and Rights


and Rights


(a))Equity compensation plans approved by security holders


3,663,358
(1)

$
13.02



1,520,767
(2)Equity compensation plans not approved by security holders










Total


3,663,358
(1)

$
13.02



1,520,767
(2)  40




---



##### Table of Contents



(1)
    
    Includes 1,083,967 shares subject to options outstanding
    under our 1998 Plan and 2,579,391 shares subject to options
    and restricted stock units outstanding under our 2005 Plan.(2)
    
    Includes 1,064,417 shares of common stock reserved for
    future issuance under our 2005 Plan and 456,350 shares of
    common stock reserved for future issuance under our Purchase
    Plan. As of April 1, 2008, the number of shares available
    for issuance under the foregoing plans automatically increased
    to 1,731,083 shares available for issuance under the 2005
    Plan and 678,572 shares available for issuance under the
    Purchase Plan. 41




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##### Table of Contents



Stock
    Performance Graph
      COMPARISON
    OF 33 MONTH CUMULATIVE TOTAL RETURN* Among
    Micrus Endovascular Corporation, The NASDAQ Composite Index,
    The Russell 2000 Index And The NASDAQ Medical Equipment Index
  
  index-including
 42




---



##### Table of Contents



Item 6.
    Selected
    Financial Data.  1-for-2.25
  Consolidated
    Statements of Operations
  Years Ended March 31,2008(2)


2007(2)(3)


2006(4)


2005(5)


2004(In thousands, except per share amounts)Revenues

$
69,213


$
58,795


$
32,781


$
24,012


$
15,700Cost of goods sold(1)


17,301



15,361



9,710



8,003



5,725Gross profit


51,912



43,434



23,071



16,009



9,975Operating expenses:Research and development(1)


13,718



7,904



6,589



2,360



2,927Sales and marketing(1)


30,237



24,121



15,171



8,781



6,012General and administrative(1)


26,119



19,308



10,307



11,884



3,511Total operating expenses


70,074



51,333



32,067



23,025



12,450Loss from operations


(18,162
)


(7,899
)


(8,996
)


(7,016
)


(2,475
)Interest and investment income


1,223



1,618



1,295



177



153Interest expense


(3
)


(14
)


(12
)


(29
)


(20
)Other income (expense), net


488



565



(632
)


164



328Loss before income taxes


(16,454
)


(5,730
)


(8,345
)


(6,704
)


(2,014
)Income tax benefit


(194
)


(247
)


(84
)






Net loss


(16,260
)


(5,483
)


(8,261
)


(6,704
)


(2,014
)Accretion of redeemable convertible preferred stock to
    redemption value including beneficial conversion feature










(659
)


(588
)


(530
)Net loss attributable to common stockholders

$
(16,260
)

$
(5,483
)

$
(8,920
)

$
(7,292
)

$
(2,544
)Net loss per share attributable to common stockholders basic and
    diluted

$
(1.05
)

$
(0.38
)

$
(0.79
)

$
(5.22
)

$
(2.02
)Weighted-average number of shares used in per share calculation
    basic and diluted


15,438



14,621



11,240



1,397



1,257     (1)
    
    Includes stock-based compensation of the following:  Years Ended March 31,2008


2007


2006


2005


2004(In thousands)Cost of goods sold

$
471


$
218


$
26


$
26


$
11Research and development

$
533


$
222


$
22


$
69


$
207Sales and marketing

$
1,325


$
802


$
169


$
134


$
162General and administrative

$
2,629


$
1,332


$
172


$
3,210


$
174   43




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##### Table of Contents



March 31,2008


2007(3)


2006(4)


2005


2004(In thousands)Consolidated Balance Sheet Data:Total assets

$
72,332


$
73,097


$
62,114


$
29,774


$
17,878Mandatorily redeemable convertible preferred stock

$



$



$



$
58,442


$
49,479Total stockholders equity (deficit)

$
48,180


$
56,294


$
51,316


$
(37,561
)

$
(34,193
)Accumulated deficit

$
(71,362
)

$
(55,102
)

$
(49,619
)

$
(40,975
)

$
(34,271
)    (2)
    
    In fiscal 2008 and 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 MDT, 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 UK Limited (Neurologic). The results of
    operations of Micrus UK, 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 a stock-based
    compensation charge of $3.0 million related to option
    modification of the former CEOs options.  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
   44




---



##### Table of Contents



® tm tm tm tm
  ®
       45




---



##### Table of Contents



Recent
    Developments
              and/or
   46




---



##### Table of Contents



and/or
    Results
    of Operations
    Years Ended March 31,2008


2007


2006%


%


%Consolidated Statements of Operations Data:Revenues


100
%


100
%


100
%Cost of goods sold


25
%


26
%


30
%Gross profit


75
%


74
%


70
%Operating expenses:Research and development


20
%


13
%


20
%Sales and marketing


43
%


41
%


46
%General and administrative


38
%


33
%


31
%Total operating expenses


101
%


87
%


97
%Loss from operations


(26
)%


(13
)%


(27
)%Interest and investment income


2
%


3
%


4
%Interest expense


0
%


0
%


0
%Other income (expense), net


1
%


1
%


(2
)%Loss before income taxes


(23
)%


(9
)%


(25
)%Income tax benefit


0
%


0
%


0
%Net loss


(23
)%


(9
)%


(25
)%Accretion of redeemable convertible preferred stock to
    redemption value including beneficial conversion feature


0
%


0
%


(2
)%Net loss attributable to common stockholders


(23
)%


(9
)%


(27
)%
  47




---



##### Table of Contents



Fiscal
    Years Ended March 31, 2008 and 2007
  Revenues
  Years Ended March 31,


Change2008


2007


$


%(Dollars in thousands)Americas

$
37,565


$
31,618


$
5,947



19
%Europe (excluding the United Kingdom)


15,095



11,226



3,869



34
%United Kingdom


9,100



6,448



2,652



41
%Asia Pacific


7,453



9,503



(2,050
)


(22
)%Total Revenues

$
69,213


$
58,795


$
10,418



18
%
     tm ® tm ®
  ®
    Gross
    Profit
  Years Ended March 31,


Change2008


2007


$


%(Dollars in thousands)Cost of goods sold

$
17,301


$
15,361


$
1,940



13
%Gross profit

$
51,912


$
43,434


$
8,478



20
%
   tm
 48




---



##### Table of Contents



Operating
    Expenses
  Research
    and Development
  Years Ended March 31,

Change2008

2007

$

%(Dollars in thousands)Research and development

$
13,718


$
7,904


$
5,814



74
%
       Sales and
    Marketing
  Years Ended March 31,

Change2008

2007

$

%(Dollars in thousands)Sales and marketing

$
30,237


$
24,121


$
6,116



25
%
    49




---



##### Table of Contents



General
    and Administrative
  Years Ended March 31,

Change2008

2007

$

%(Dollars in thousands)General and administrative

$
26,119


$
19,308


$
6,811



35
%
     Other
    Income, Net
  Years Ended March 31,


Change2008


2007


$


%(Dollars in thousands)Interest and investment income

$
1,223


$
1,618


$
(395
)


(24
)%Interest expense


(3
)


(14
)


11



(79
)%Other income, net


488



565



(77
)


(14
)%Total other income, net

$
1,708


$
2,169


$
(461
)


(21
)%
     Income
    Taxes
   50




---



##### Table of Contents



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 (excluding the United Kingdom)


11,226



8,034



3,192



40
%United Kingdom


6,448



4,498



1,950



43
%Asia Pacific


9,503



2,868



6,635



231
%Total Revenues

$
58,795


$
32,781


$
26,014



79
%
   ®
  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
%
   tm No. 123-revised
 51




---



##### Table of Contents



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
%
     General
    and Administrative
  Years Ended March 31,

Change2007

2006

$

%(Dollars in thousands)General and administrative

$
19,308


$
10,307


$
9,001



87
%
    52




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##### Table of Contents



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
%
     Accretion
    of Redeemable Convertible Preferred Stock to
    Redemption Value
    Beneficial
    Conversion Feature
  paid-in-capital.
  Liquidity
    and Capital Resources
  Years Ended March 31,2008


2007


2006Cash flow activities:Net cash used in operating activities

$
(7,524
)

$
(556
)

$
(9,055
)Net cash used in investing activities

$
(3,437
)

$
(5,451
)

$
(5,940
)Net cash provided by financing activities

$
3,165


$
5,098


$
35,666
    53




---



##### Table of Contents



54




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
      Revenue Recognition.
   55




---



##### Table of Contents



Allowance for Doubtful Accounts.
  Excess and Obsolete Inventory.
  Valuation of Goodwill and Intangibles.
  Accounting for Income Taxes.
  Stock-based Compensation.
   56




---



##### Table of Contents



Recent
    Accounting Pronouncements
      No. 07-03 (EITF 07-03), EITF 07-03 EITF 07-03 EITF 07-03
 57




---



##### Table of Contents



EITF 07-03 EITF 07-03
    SFAS 157-2, SFAS 157-2
  Off-Balance
    Sheet Arrangements
    Contractual
    Obligations
      Payments Due by PeriodLess than


1-3


3-5


BeyondTotal


1 Year


Years


Years


5 YearsContractual obligations:Non-cancelable operating lease obligations

$
7,697


$
1,022


$
3,131


$
1,504


$
2,040Purchase obligations


4,218



4,218











Minimum milestone payments to The Cleveland Clinic


1,500



500



1,000







Milestone payment to Genesis


150



150











Total

$
13,565


$
5,890


$
4,131


$
1,504


$
2,040
        58




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.  Foreign Currency Exchange Risks.
  non-United
  Interest Rate Risk.
 59




---



##### 



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


61Consolidated Balance Sheets


62Consolidated Statements of Operations


63Consolidated Statements of Changes in
    Stockholders Equity (Deficit)


64Consolidated Statements of Cash Flows


65Notes to Consolidated Financial Statements


66Supplementary DataSchedule II  Valuation and
    Qualifying Accounts


101   60




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
  Internal Control 
    Integrated Framework
        
  
 61




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  Consolidated
    Balance Sheets
  March 31,2008


2007(In thousands, except share and per share amounts)ASSETSCurrent Assets:Cash and cash equivalents

$
25,526


$
34,536Accounts receivable, net of allowance for doubtful accounts of
    $95 and $234 at March 31, 2008 and 2007, respectively


11,297



8,168Inventories


11,495



9,049Prepaid expenses and other current assets


1,570



1,340Deferred tax assets






102Total current assets


49,888



53,195Property and equipment, net


5,285



4,648Goodwill


8,549



5,552Intangible assets, net


7,153



9,405Deferred tax assets


9



Other assets


1,448



297Total assets

$
72,332


$
73,097LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable

$
3,680


$
1,660Accrued payroll and other related expenses


7,930



6,145Deferred tax liabilities


43



75Accrued liabilities


9,431



6,213Total current liabilities


21,084



14,093Deferred tax liabilities


314



570Other non-current liabilities


2,754



2,140Total liabilities


24,152



16,803Commitments 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 shares
    Issued and outstanding:15,614,760 shares and
    15,249,057 shares at March 31, 2008 and 2007,
    respectively


156



152Additional paid-in capital


119,897



111,920Deferred stock-based compensation






(164
)Accumulated other comprehensive loss


(511
)


(512
)Accumulated deficit


(71,362
)


(55,102
)Total stockholders equity


48,180



56,294Total liabilities and stockholders equity

$
72,332


$
73,097    62




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  Consolidated
    Statements of Operations
  Years Ended March 31,2008


2007


2006(In thousands, except per share amounts)Revenues

$
69,213


$
58,795


$
32,781Cost of goods sold


17,301



15,361



9,710Gross profit


51,912



43,434



23,071Operating expenses:Research and development


13,718



7,904



6,589Sales and marketing


30,237



24,121



15,171General and administrative


26,119



19,308



10,307Total operating expenses


70,074



51,333



32,067Loss from operations


(18,162
)


(7,899
)


(8,996
)Interest and investment income


1,223



1,618



1,295Interest expense


(3
)


(14
)


(12
)Other income (expense), net


488



565



(632
)Loss before income taxes


(16,454
)


(5,730
)


(8,345
)Income tax benefit


(194
)


(247
)


(84
)Net loss


(16,260
)


(5,483
)


(8,261
)Accretion of redeemable convertible preferred stock to
    redemption value including beneficial conversion feature










(659
)Net loss attributable to common stockholders

$
(16,260
)

$
(5,483
)

$
(8,920
)Net loss per share attributable to common stockholders:Basic and diluted

$
(1.05
)

$
(0.38
)

$
(0.79
)Weighted-average number of shares used in per share calculations:Basic and diluted


15,438



14,621



11,240    63




---



##### 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, 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
)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
)


56,294Comprehensive loss:Net loss






















(16,260
)


(16,260
)Translation adjustments


















1







1Total comprehensive loss


























(16,259
)Exercise of stock options


270



3



2,152















2,155Issuance of common stock under employee stock purchase plan


93



1



1,009















1,010Restricted stock awards issued


1







21















21Restricted stock units released


3























Restricted stock withheld for minimum taxes


(1
)






(29
)














(29
)Stock-based compensation under SFAS 123R
    (including amount capitalized in inventory of $51)










4,821















4,821Amortization of deferred stock-based compensation














163











163Deferred stock-based compensation associated with stock options
    forfeited










(1
)


1











Non-employee stock-based compensation










4















4Balance at March 31, 2008


15,615


$
156


$
119,897


$



$
(511
)

$
(71,362
)

$
48,180    64




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  Consolidated
    Statement of Cash Flows
  Years Ended March 31,2008


2007


2006(In thousands)Cash flows from operating activities:Net loss

$
(16,260
)

$
(5,483
)

$
(8,261
)Adjustments to reconcile net loss to net cash used in operating
    activities:Depreciation and amortization


3,178



2,143



989Provision for doubtful accounts


(145
)


(84
)


102Loss on disposal of equipment


35



4



1Provision for excess and obsolete inventories


240



279



264Increase in fair value of 2005 common stock warrants










158Realized (gain) loss on investments






(4
)


5Stock-based compensation


4,958



2,574



389Deferred income taxes


(209
)


(329
)


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


(2,115
)


601



(4,005
)Inventories


(2,786
)


(3,810
)


(239
)Prepaid expenses and other current assets


(156
)


(545
)


(134
)Other assets


(148
)


19



(208
)Accounts payable


1,920



(437
)


(938
)Accrued payroll and other related expenses


1,582



2,936



1,507Accrued liabilities


1,403



1,818



826Other non-current liabilities


979



(238
)


489Net cash used in operating activities


(7,524
)


(556
)


(9,055
)Cash flows from investing activities:Proceeds from maturities of available-for-sale securities






1,000



2,000Acquisition of property and equipment


(2,013
)


(1,343
)


(2,070
)Advance payments for leasehold improvements at new Florida
    facility


(802
)






Proceeds from sale of property and equipment


110







Purchase of VasCon, LLC, net of cash acquired






(2,860
)


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






(11
)


(5,139
)Payment to Biotronik AG for developed technology






(834
)


(731
)Proceeds from sale of assets and technologies


1,500







Earn-out payment in connection with acquisition of Neurologic UK
    Ltd.


(2,232
)


(1,403
)


Net cash used in investing activities


(3,437
)


(5,451
)


(5,940
)Cash flows from financing activities:Costs of issuance of convertible preferred stock and warrants










(11
)Proceeds from issuance of common stock, net of issuance costs






2,039



33,872Proceeds from exercise of preferred and common stock warrants










1,007Proceeds from exercise of stock options


2,155



2,304



465Proceeds from employee stock purchase plan


1,010



755



333Net cash provided by financing activities


3,165



5,098



35,666Effect of foreign exchange rate changes on cash


(1,214
)


(659
)


416Net increase (decrease) in cash and cash equivalents


(7,796
)


(909
)


20,671Cash and cash equivalents at beginning of year


34,536



36,104



15,017Cash and cash equivalents at end of year

$
25,526


$
34,536


$
36,104Supplemental disclosure of cash flow information:Interest paid

$
3


$
14


$
12Income taxes paid  liability assumed in Neurologic UK
    Ltd. acquisition

$



$



$
192Supplemental 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

$



$



$
59,227Accretion to redemption value of redeemable convertible
    preferred stock including beneficial conversion feature

$



$



$
659Reclassification of 2005 common stock warrants to equity in
    connection with IPO

$



$



$
3,358Accrued earn-out payment associated with the purchase of
    Neurologic UK Ltd.

$
2,997


$
2,232


$
1,403Accrued earn-out payment associated with the purchase of VasCon,
    LLC

$
378


$



$
Accrued milestone payment associated with the Biotronik AG
    transaction

$



$



$
732    65




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Formation
    and Business of the Company    Liquidity
    Note 2 
    Summary
    of Significant Accounting Policies  Principles
    of consolidation
      Use of
    estimates
    Revenue
    recognition and product warranty
         66




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              Cost
    of goods sold
    Concentration
    of credit risk
       67




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Certain
    significant risks and uncertainties
        Cash
    and cash equivalents
    Fair
    value of financial instruments
    Allowance
    for doubtful accounts
    Inventories
  work-in-progress first-in,
   68




---



##### 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
   69




---



##### 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
    Anti-dilutive
    securities
    Years Ended March 31,2008


2007


2006Shares issuable upon exercise of common stock options


3,656



3,182



2,804Shares issuable upon settlement of restricted stock units


7



10



3,663



3,192



2,804
  70




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Stock-based
    compensation
        Recent
    accounting pronouncements
     71




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    No. 07-03 (EITF 07-03), EITF 07-03 EITF 07-03 EITF 07-03 EITF 07-03 EITF 07-03
    SFAS 157-2, SFAS 157-2
  Note 3 
    Business
    Combinations, Assets Disposition and Technology Acquisition and
    License Agreements  Fiscal
    2007 Business Combination
  VasCon
     72




---



##### Table of Contents



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

$
2,500Accrued earn-out payment


378Issuance of shares of common stock


2,972Acquisition-related closing costs


404Total purchase price

$
6,254
       Inventories

$
592Fixed assets


1,654Other acquired net assets


76Intangible assets


5,150Contingent purchase price


(1,218
)Total purchase price

$
6,254
       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
)
  73




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fiscal
    2006 Business Combination
  Neurologic
                Total cash payments

$
4,840Earn-out payments (paid and accrued)


6,632Forgiven intercompany payables


611Direct acquisition related costs


316Total consideration

$
12,399
  74




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Acquired net assets

$
664Deferred tax liability


(714
)Goodwill


8,549Other intangible assets consisting of:Customer relationships


900Distribution agreements


2,300Non-compete agreements


700Total purchase price

$
12,399
         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
     2006Revenues

$
33,560Net loss attributable to common stockholders

$
(9,220
)Net loss per share attributable to common
    stockholders  basic and diluted

$
(0.82
)
   Assets
    Disposition
  Merit
   75




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      and/or
    Technology
    Acquisition and License Agreements
  Genesis
    ReVasc
     76




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Biotronik
    AG
    tm tm tm tm
  Vascular
    FX
   77




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 4 
    Balance
    Sheet Components  Inventories
    March 31,2008


2007Raw materials

$
2,154


$
1,862Work-in-progress


1,667



1,413Finished goods


3,002



3,005Consigned inventory


4,331



2,622Inventory held by Latin American distributors


341



147$
11,495


$
9,049
       Property
    and equipment
    March 31,2008


2007Computer equipment and software

$
1,728


$
1,210Furniture, fixtures and equipment


5,403



4,701Leasehold improvements


1,010



936Construction in progress


447



148Total cost


8,588



6,995Less accumulated depreciation and amortization


(3,303
)


(2,347
)$
5,285


$
4,648
    78




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Goodwill
    Years Ended March 31,2008


2007Balance beginning of year

$
5,552


$
3,309Addition related to Neurologic earn-out payment


2,997



2,243Balance end of year

$
8,549


$
5,552
     Intangible
    assets
    Useful


Gross Carrying Amount


Accumulated Amortization


NetLife


March 31,








March 31,


March 31,








March 31,


March 31,


March 31,(Years)


2007


Additions


Dispositions


2008


2007


(Additions)


Dispositions


2008


2008


2007Existing process technology


7


$
4,590


$



$



$
4,590


$
(219
)

$
(655
)

$



$
(874
)

$
3,716


$
4,371Distribution agreements


5



2,300











2,300



(704
)


(460
)






(1,164
)


1,136



1,596Capitalized license fee


7



1,565











1,565



(112
)


(224
)






(336
)


1,229



1,453Patents  microcoil


10



1,100











1,100



(770
)


(110
)






(880
)


220



330Non-compete agreements


6



700











700



(177
)


(117
)






(294
)


406



523Customer relationships


5



900











900



(274
)


(180
)






(454
)


446



626Patents  catheter


7



300







(300
)






(14
)


(25
)


39











286Existing product technology


2



260







(260
)






(40
)


(70
)


110











220$
11,715


$



$
(560
)

$
11,155


$
(2,310
)

$
(1,841
)

$
149


$
(4,002
)

$
7,153


$
9,405
       Years Ended March 31,2008


2007


2006Cost of goods sold

$
974


$
385


$
Operating expenses


867



879



496Total

$
1,841


$
1,264


$
496
      79




---



##### Table of Contents



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

Amortization2009

$
1,7462010


1,7462011


1,2982012


9352013


879Thereafter


549Total

$
7,153
   Accruals
    March 31,2008


2007Accrued bonuses

$
2,642


$
2,646Accrued salaries


1,071



702Accrued vacation


1,750



1,333Accrued commissions


1,660



725Accrued payroll taxes


807



739$
7,930


$
6,145
     March 31,2008


2007Earn-out payment in connection with Neurologic acquisition

$
2,997


$
2,232Professional fees


1,715



1,069VAT payable


560



438Milestone fee to The Cleveland Clinic


500



Accrued travel and entertainment


492



218Biotronik development costs


443



163Earn-out payment in connection with VasCon


378



Development costs


288



559Milestone fee to Genesis


150



Deferred revenue from Japan distribution agreement


113



150Other


1,795



1,384$
9,431


$
6,213
  80




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other
    non-current liabilities
    March 31,2008


2007Contingent purchase price (Note 3)

$
1,218


$
1,596Milestone fee to The Cleveland Clinic


1,000



Deferred revenue from Japan distribution agreement


281



375Pension plan obligation


82



Other non-current liabilities


173



169$
2,754


$
2,140
     Note 5 
    Income
    Taxes         81




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended March 31,2008


2007


2006CurrentFederal

$



$



$
State










Foreign






(63
)


(11
)Total current income tax benefit






(63
)


(11
)DeferredFederal










State










Foreign


(194
)


(184
)


(73
)Total deferred income tax benefit


(194
)


(184
)


(73
)Total income tax benefit

$
(194
)

$
(247
)

$
(84
)
       March 31,2008


2007Deferred tax assets:Net operating loss carryforwards

$
13,099


$
11,511Basis difference in fixed assets


2,850



2,117Accruals deductible in different periods


3,973



2,529Credit carryforwards


1,755



1,620Total deferred tax assets


21,677



17,777Less valuation allowance


(21,419
)


(17,750
)Net deferred tax asset


258



27Deferred tax liabilities:Accruals deductible in different periods


(125
)


Basis difference in fixed and intangible assets


(481
)


570Total deferred tax liabilities


(606
)


(570
)Net deferred tax liability

$
(348
)

$
(543
)
    82




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended March 31,2008


2007


2006Income tax benefit at statutory rate


(35
)%


(35
)%


(35
)%State taxes, net of federal benefit


(4
)%


(4
)%


(3
)%In process R&D write-off


7
%






Technology acquisition


2
%






Non-US income taxed at different rates


1
%


(14
)%


11
%Change in valuation allowance


24
%


40
%


23
%Nondeductible deferred compensation


6
%


12
%


1
%Other


(2
)%


(3
)%


2
%Effective income tax rate


(1
)%


(4
)%


(1
)%
     Years Ended March 31,2008


2007


2006Domestic

$
(15,474
)

$
(7,168
)

$
(5,709
)Foreign


(980
)


1,438



(2,636
)Loss before income taxes

$
(16,454
)

$
(5,730
)

$
(8,345
)
       AmountUnrecognized tax benefits  April 1, 2007

$
192Gross increases  prior year tax positions


Gross increases  current year tax positions


40Settlements with taxing authorities


Expiration of statute of limitations


Unrecognized tax benefits  March 31, 2008

$
232
  83




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 6 
    Commitments
    and Contingencies  Lease
    commitments
                MinimumFor Years Ended March 31,

Lease Payments2009

$
1,0222010


1,0552011


1,0492012


1,0272013


954Thereafter


2,590Total minimum lease payments

$
7,697
    84




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Indemnification
    Litigation
    FCPA
    investigation
      Patent
    litigation
   85




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                granted-in-part Boston denied-in-part Boston
  ex parte
 86




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Securities
    litigation
  and/or
    Note 7 
    Preferred
    Stock    Conversion
    Redemption
    Preferred
    Stock Warrants
  Series D-1
   87




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 8 
    Common
    Stock    one-for-2.25
      2003
    Common Stock Warrants
  Series D-3 Series D-3
      2005
    Common Stock Warrants
   88




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        paid-in-capital.
  Note 9 
    Stock
    Option Plans and Other Employee Benefits  Stock
    Option Plans
    1996
    Stock Option Plan
   89




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  1998
    Stock Plan
    2005
    Equity Incentive Plan
    Acceleration
    Agreements
  and/or
  2005
    Employee Stock Purchase Plan
         90




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock-Based
    Compensation
               91




---



##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended March 31,2008


2007


2006Employee Stock Option PlansExpected term (in years)


6



6



4Volatility


42
%


44
%


44
%Risk-free interest rate


4.0
%


4.7
%


4.3
%Expected dividend yield


0
%


0
%


0
%Weighted average fair value at date of grant

$
9.13


$
8.30


$
3.69Employee Stock Purchase PlanExpected term (in years)


0.5



0.5



0.5Volatility


43
%


45
%


44
%Risk-free interest rate


3.9
%


5.1
%


4.2
%Expected dividend yield


0
%


0
%


0
%
       Years Ended March 31,2008


2007Cost of goods sold

$
457


$
193Research and development


533



203Sales and marketing


1,312



684General and administrative


2,489



1,124Total

$
4,791


$
2,204
          92




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##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended March 31,2008


2007


2006Expected term (in years)


5



5



6Volatility


40
%


42
%


45
%Risk-free interest rate


4.8
%


4.7
%


4.4
%Expected dividend yield


0
%


0
%


0
%
       Years Ended March 31,2008


2007


2006Cost of goods sold

$
471


$
218


$
26Research and development


533



222



22Sales and marketing


1,325



802



169General and administrative


2,629



1,332



172Total

$
4,958


$
2,574


$
389
   Periods
    prior to the adoption of SFAS 123R
      Years EndedMarch 31, 2006Net loss attributable to common stockholders (as reported)

$
(8,920
)Add: Stock-based employee compensation expenses included in
    reported net loss


229Deduct: Total stock-based employee compensation expenses
    determined under fair value based method for all awards


(829
)Adjusted net loss attributable to common stockholders

$
(9,520
)Net loss per common share attributable to common stockholders,
    basic and diluted:As reported

$
(0.79
)Adjusted

$
(0.85
)
    93




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##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-Weighted-


AverageAverage


RemainingExercise


Contractual


AggregateShares


Price


Term


Intrinsic Value(In years)


(In thousands)Options outstanding at March 31, 2007


3,182


$
10.71Options granted


989


$
19.59Options exercised


(270
)

$
7.98Options forfeited


(211
)

$
15.86Options expired


(34
)

$
11.16Options outstanding at March 31, 2008


3,656


$
13.02



8.0


$
9,028Options exercisable at March 31, 2008


1,674


$
9.15



7.1


$
7,254
       Weighted-Weighted-


AverageAverage


RemainingPurchase


Contractual


AggregateShares


Price


Term


Intrinsic Value(In years)


(In thousands)Non-vested restricted stock units at March 31, 2007


10


$
Awarded





$
Released


(3
)

$
Forfeited





$
Non-vested restricted stock units at March 31, 2008


7


$




0.8


$
82
   401(k)
    Savings Plan
    Defined
    Benefit Plan
     94




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##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 10 
    Segments    Years Ended March 31,2008


2007


2006United States

$
33,753


$
28,868


$
15,531Japan


6,250



8,661



2,228United Kingdom


9,100



6,448



4,498Rest of the world


20,110



14,818



10,524Total revenues

$
69,213


$
58,795


$
32,781
     March 31,2008


2007United States

$
4,907


$
4,342United Kingdom


124



120Rest of the world


254



186$
5,285


$
4,648
       Years Ended March 31,2008


2007


2006Revenues:Americas

$
37,565


$
31,618


$
17,381Europe (excluding the United Kingdom)


15,095



11,226



8,034United Kingdom


9,100



6,448



4,498Asia Pacific


7,453



9,503



2,868Total

$
69,213


$
58,795


$
32,781Gross Profit:Americas

$
29,621


$
25,426


$
13,123Europe (excluding the United Kingdom)


10,552



7,310



5,167United Kingdom


7,012



4,638



3,069Asia Pacific


4,727



6,060



1,712Total

$
51,912


$
43,434


$
23,071
  95




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##### Table of Contents



MICRUS
    ENDOVASCULAR CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    March 31,2008


2007Americas

$
52,043


$
56,507Europe (excluding the United Kingdom)


7,265



5,479United Kingdom


13,024



11,111$
72,332


$
73,097
   Note 11 
    Subsequent
    Events    Note 12 
    Quarterly
    Financial Information (unaudited)    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter(In thousands, except per share amounts)2008:Revenues

$
16,790


$
14,362


$
18,343


$
19,718Gross profit

$
13,055


$
11,211


$
13,294


$
14,352Net loss attributable to common stockholders

$
(1,393
)

$
(3,012
)

$
(5,704
)

$
(6,151
)Net loss per share attributable to common stockholders basic and
    diluted

$
(0.09
)

$
(0.20
)

$
(0.37
)

$
(0.40
)2007: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 per share 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 per share attributable to common stockholders basic and
    diluted

$
(0.70
)

$
(0.20
)

$
(0.12
)

$
(0.18
)
  96




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  (a)
    Evaluation
    of disclosure controls and procedures.  Rule 13a-15(e) 15d-15(e)
  (b)
    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.
  (c)
    Changes
    in internal control over financial reporting.  Rule 13a-15(f) 15d-15(f)
  Item 9B.
    Other
    Information.   97




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##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.    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, and Director
    Independence.    Item 14.
    Principal
    Accountant Fees and Services.   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules.  Form 10-K:
  Financial Statements.
  Financial Statement Schedules.
      Exhibits.
 98




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##### Table of Contents



SIGNATURES    MICRUS ENDOVASCULAR CORPORATION
  By:
    /s/  JOHN
    T. KILCOYNE       POWERS OF
    ATTORNEY
  Form 10-K
  Form 10-K
  Signatures

Title

Date/s/  JOHN
    T. KILCOYNEJohn
    T. Kilcoyne

Chairman and Chief Executive Officer (Principal Executive
    Officer)

June 12, 2008/s/  GORDON
    T. SANGSTERGordon
    T. Sangster

Chief Financial Officer (Principal Financial and Accounting
    Officer)

June 12, 2008/s/  MICHAEL
    R. HENSONMichael
    R. Henson

Director

June 12, 2008/s/  MICHAEL
    EAGLEMichael
    Eagle

Director

June 12, 2008/s/  L.
    NELSON HOPKINSL.
    Nelson Hopkins, M.D.

Director

June 12, 2008/s/  FRED
    HOLUBOWFred
    Holubow

Director

June 12, 2008/s/  FRANCIS
    J. SHAMMOFrancis
    J. Shammo

Director

June 12, 2008 99




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##### Table of Contents



Signatures

Title

Date/s/  JEFFREY
    H. THIELJeffrey
    H. Thiel

Director

June 12, 2008/s/  GREGORY
    H. WOLFGregory
    H. Wolf

Director

June 12, 2008  100




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##### Table of Contents



Schedule II 
    Valuation and Qualifying Accounts  Balance at


Additions/Beginning


Charged to





Balance atof Year


Expenses


Deduction


End of Year(In thousands)Allowance for Doubtful AccountsYear Ended March 31, 2008

$
234


$
(145
)

$
6


$
95Year Ended March 31, 2007

$
317


$
(84
)

$
1


$
234Year Ended March 31, 2006

$
230


$
102


$
(15
)

$
317Valuation allowance  deferred tax assetsYear Ended March 31, 2008

$
17,750


$
3,669


$



$
21,419Year Ended March 31, 2007

$
16,078


$
1,936


$
(264
)

$
17,750Year Ended March 31, 2006

$
16,731


$



$
(653
)

$
16,078  101




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##### 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*

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
.7*

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
.8*

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
.9*

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
.10*

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
.11*

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
.12*

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
.13

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)10
.14

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
.15

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) 102




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##### Table of Contents



ExhibitNumber

Description10
.16

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
.17

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
.18

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
.19

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
.20

Technology Transfer Agreement, effective July 28, 2005,
    between Micrus Endovascular Corporation and Vascular FX (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
.21

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
.22

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)10
.23*

Amended and Restated Employee Cash Bonus Plan with respect to
    Executive Officers (Filed as Exhibit 10.26 to the
    Companys Quarterly Report on
    Form 10-Q
    filed on August 8, 2007)10
.24

Amendment No. 1 to Distribution Agreement, dated
    September 20, 2007, between Micrus Endovascular Corporation
    and Goodman Co., Ltd. (Filed as Exhibit 10.27 to the
    Companys Quarterly Report on
    Form 10-Q
    filed on November 9, 2007)10
.25

Distribution Agreement, dated July 31, 2007, between Micrus
    Endovascular Corporation and Beijing Tianxinfu Medical Appliance
    Co. Ltd. (Filed as Exhibit 10.28 to the Companys
    Quarterly Report on
    Form 10-Q
    filed on November 9, 2007)10
.26

Stock Purchase Agreement, dated October 26, 2007, between
    Micrus Endovascular Corporation, ReVasc Technologies, Inc. and
    The Cleveland Clinic Foundation which includes as an exhibit
    thereto the Amended and Restated License Agreement, dated
    October 26, 2007, between ReVasc Technologies, Inc. and The
    Cleveland Clinic Foundation (Filed as Exhibit 10.29 to the
    Companys Quarterly Report on
    Form 10-Q
    filed on February 11, 2008)10
.27*

Letter Agreement dated November 12, 2007 with Gordon
    Sangster (Filed as Exhibit 10.30 to the Companys
    Quarterly Report on
    Form 10-Q
    filed on February 11, 2008)10
.28*

Form of Acceleration Agreement (Filed as Exhibit 99.1 to
    the Companys Current Report on
    Form 8-K
    filed on January 29, 2008, and incorporated herein by
    reference)10
.29#*

New Product Bonus Incentive Program with respect to Executive
    Officers21
.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. 103