##### Table of Contents





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

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL YEAR ENDED
    December 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
    000-50988
  VNUS MEDICAL TECHNOLOGIES,
    INC.
  Delaware

94-3216535(State of
    incorporation)

(I.R.S. ID.)   5799 FONTANOSO WAY, SAN JOSE, CALIFORNIA 95138
 (408) 360-7200
  Securities registered pursuant to Section 12(b) of the
    Act:
 COMMON STOCK NASDAQ
 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(Do not check if a smaller reporting company)   Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 





VNUS
    MEDICAL TECHNOLOGIES, INC.FORM 10-K
 For The Fiscal Year Ended December 31, 2008
  INDEX
   
  PagePART IFORWARD LOOKING STATEMENTS


1Item 1.

Business


1Item 1A.

Risk Factors


12Item 1B.

Unresolved Staff Comments


26Item 2.

Properties


26Item 3.

Legal Proceedings


26Item 4.

Submission of Matters to a Vote of Security
    Holders


28PART IIItem 5.

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


28Item 6.

Selected Consolidated Financial Data


29Item 7.

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


29Item 7A.

Quantitative and Qualitative Disclosures about
    Market Risk


40Item 8.

Consolidated Financial Statements and
    Supplementary Data


41Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


66Item 9A.

Controls and Procedures


66Item 9B.

Other Information


66PART IIIItem 10.

Directors and Executive Officers of the
    Registrant


67Item 11.

Executive Compensation


67Item 12.

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


67Item 13.

Certain Relationships and Related Transactions


67Item 14.

Principal Accountant Fees and Services


67PART IVItem 15.

Exhibits and Financial Statement Schedules


68EX-10.1EX-10.6EX-10.17EX-21EX-23.1EX-31.1EX-31.2EX-32




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##### Table of Contents



PART I NOTE ABOUT
    FORWARD-LOOKING STATEMENTS    ITEM 1:
    BUSINESS  GENERAL
      Corporate
    Background
  (408) 360-7200. Form 10-K, Form 10-Q, Form 8-K
 1




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##### Table of Contents



OPERATING
    SEGMENT INFORMATION
    Years Ended December 31,2008


2007


2006United States


90
%


93
%


96
%Europe and other


10



7



4100
%


100
%


100
%Catheters and devices


68
%


73
%


81
%RF generators


8



14



8Accessories


11



13



11Royalty revenues


13







100
%


100
%


100
%   Venous
    Reflux Market
    Current
    Treatment Alternatives
  ®
  VNUS Closure ProcedureUsing ClosureFAST

EVL

Vein Stripping SurgeryTypical anesthesia

Local

Local

GeneralTypical total procedure time per limb

40-50 minutes

40-50 minutes

60 minutesMethod of treating reflux

Delivery of RF energy to the vein wall

Laser heating and perforating of the vein or boiling blood in
    the vein

Surgical removal of the saphenous veinWhere performed

Outpatient/hospital, surgery center, or physicians office

Outpatient/hospital, surgery center, or physicians office

Outpatient hospital or surgery centerTypical time to return to regular activities

1 day

1-3 days

3 days to several weeks  2




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The
    VNUS Closure Procedure
  follow-up
      
    Minimally Invasive Outpatient Procedure.  The
    Closure procedure can be performed in the convenient setting of
    the physicians office, or in an outpatient hospital or
    surgical center, using local anesthesia.
    Less Post-Operative Pain.  Independent
    comparative studies of patients treated with the Closure
    procedure to those treated with vein stripping procedures
    revealed that the Closure patients returned to work and normal
    activities significantly faster than those treated by
    traditional vein stripping. In another trial comparing patients
    treated with the Closure procedure using the ClosureFAST
    catheter to those treated with EVL, patients exhibited less
    pain, tenderness, and bruising when treated with the Closure
    procedure.
    Excellent Clinical Outcomes.  Results from a
    randomized comparative trial of the Closure procedure and vein
    stripping conducted in 2000 demonstrated the Closure procedure
    to be as effective as vein stripping at two years following
    treatment, with fewer side effects and faster recovery. Another
    comparative trial between our Closure procedure using the
    ClosureFAST catheter and EVL showed the Closure procedure
    exhibited fewer complications. More clinical outcomes are
    provided in the following Clinical Results section.
    Long-Lasting Results.  Recent reporting of
    results from an ongoing international multicenter study show
    vein occlusion rates of 97% at one-year
    follow-up
    and 94% at two-year
    follow-up in
    a total of 396 treated limbs from 326 patients. A separate
    reporting of long-term data from the European cohort shows even
    better vein occlusion rates of 97% in 288 limbs at one year and
    96% in 142 limbs at two years
    follow-up.
    Safe and Controlled Procedure.  The Closure
    system includes a number of safety features designed to ensure
    precise delivery of RF energy. The
    RFGplus generator
    continuously monitors the treatment temperature delivered to the
    vein wall and adjusts energy delivery throughout the procedure
    to provide a high level of safety and effectiveness, while
    minimizing the chances of adverse effects.
    Cosmetically Appealing.  The Closure procedure
    results in less bruising, pain and skin discoloration than both
    vein stripping and EVL. Additionally, because the Closure
    procedure is minimally invasive, it results in little or no
    scarring compared to vein stripping  Clinical
    Results
    Prospective
    Clinical Trial of our Closure Procedure using the
    ClosureFASTtm catheter
  follow-up follow-up
 3




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##### Table of Contents



th follow-up follow-up follow-up.
  follow-up, follow-up. follow-up
  Complications

3 Day Follow-Up


3 Month Follow-Up


12 Month Follow-UpEcchymosis


5.8
%


0.0
%


0.0
%Paresthesia


3.4
%


2.0
%


0.0
%Pigmentation


2.7
%


1.4
%


1.0
%Erythema


2.0
%


0.0
%


0.0
%Hematoma


1.4
%


0.0
%


0.0
%Phlebitis


1.0
%


0.0
%


0.0
%Skin Burn


0.0
%


0.0
%


0.0
%DVT


0.0
%


0.0
%


0.0
%   Closure
    procedure using the ClosureFAST catheter versus EVL
      Products
   4




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##### Table of Contents



ClosureFAST
    Catheter
        ClosurePLUS
    Catheter
      ClosureRFStmDevice
    RFGplusTMGenerator
  plus plus
 5




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##### Table of Contents



Accessories
    and Other Products
    Patent
    Licensing
    Seasonality
    Sales
    and Marketing
        
    We educate and train physicians interested in performing our
    Closure procedure. We also educate experienced physicians in the
    use of our Closure procedure for treatments in perforator veins,
    tributary veins, venous ulcer patients and small saphenous veins
    through workshops and
    one-on-one
    training sessions.
    We assist physicians in educating their current and potential
    patients about our Closure procedure. We create and make
    available an expansive array of support tools for physician use
    such as patient videos, advertising materials, brochures and
    patient testimonials designed to help physicians grow their
    practices and educate both patients and referring physicians on
    the many benefits of our Closure procedure.
    We assist physicians by communicating with insurance companies
    to expand coverage and by providing our clinical data to counter
    any procedure authorization denials by payors.
    We seek to add and promote products to leverage our position as
    the leader in vein treatments and as a single-source supplier
    for a physicians vein treatment needs.   6




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Reimbursement
      YearLocation

Procedure

2007


2008


2009Closure

$
2,135


$
2,714


$
2,893Hospital outpatient

EVL


1,529



1,646



1,807Difference

$
606


$
1,068


$
1,086Closure

$
2,071


$
1,900


$
1,699Office procedure

EVL


1,849



1,645



1,400Difference

$
222


$
255


$
299Closure

$
1,339


$
1,445


$
1,537Ambulatory surgery center

EVL


1,339



1,272



1,205Difference

$



$
173


$
332      7




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Research
    and Development
        Manufacturing
        90-day
  Patents
    and Proprietary Technology
   8




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##### Table of Contents



Competition
            
    improved patient outcomes;
    cost effectiveness;
    ease-of-use and speed of procedure for physicians;
    product quality;
    sales and marketing capability;
    acceptance by leading physicians;
    the publication of peer-reviewed clinical studies;
    reimbursement by healthcare payors;
    patent protection. 9




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Government
    Regulation
          and/or
    
    Quality System Regulations, which require manufacturers to
    follow design, testing, control, documentation and other quality
    assurance procedures during the manufacturing process;
    labeling regulations, which govern product labels and labeling,
    prohibit the promotion of products for unapproved or
    off-label uses and impose other restrictions on
    labeling and promotional activities;
    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; and
    FDA notification of product corrections or removal and recalls.   10




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
    warning letters or untitled letters;
    fines, injunctions, and civil penalties;
    recall or seizure of our products;
    customer notification, or orders for repair, replacement or
    refund;
    operating restrictions, partial suspension or total shutdown of
    production;
    refusing our request for 510(k) clearances or premarket
    approvals of new products;
    withdrawing 510(k) clearances that are already granted; and/or
    criminal prosecution.  (93/42/EEC),
    and/or
   11




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Privacy
    and Security
    Employees
    Financial
    Information
    Item 1A:
    Risk
    Factors  If
    physicians do not adopt and utilize our Closure system, we will
    not achieve greater revenue, may not maintain our current
    revenue, and we may not be profitable.
    follow-up
    Competition
    from existing and new products and procedures may decrease our
    market share and cause our revenues to decline.
   12




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
    products and procedures that are less expensive;
    perceived benefits in product performance and clinical outcomes;
    established distribution networks;
    greater experience in launching, marketing, distributing and
    selling products;
    established relationships with physicians, healthcare providers
    and payors; and
    greater financial and other resources for product development or
    sales and marketing.    We may
    experience significant fluctuations in our quarterly and annual
    results.
    
    physician and patient acceptance of our products and procedures;
    cost of manufacturing our Closure system;
    the effect of competition from existing and new products and
    procedures;
    fluctuations in the demand for our products, including seasonal
    demand, the timing of orders received and the timing of new
    product introductions;
    fluctuations in demand in the United States market for our
    products and those competitor products subject to royalty
    payments under our licensing agreements as a result of weak
    market and economic conditions, which may result in decreased
    revenue, earnings or growth rates and problems with our ability
    to manage inventory levels and collect customer receivables;
    our ability to recognize revenue from the sales of our products;
    our ability to protect our intellectual property rights and
    defend against third party challenges;
    our ability to hire and train key personnel, including
    management, sales and technical personnel;
    practices of insurance companies and Medicare with respect to
    reimbursement for our procedure and our products;
    delays or interruptions in manufacturing and shipping of our
    products, which may result from our dependence on third-party
    suppliers;
    the results of future clinical trial data, including long-term
    randomized trial data; 13




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
    litigation, including patent litigation, product liability
    claims and securities litigation;
    the quality of products we sell;
    failure to comply with current government regulations and
    announcements of changes in government regulations affecting us
    or our competitors;
    failure to obtain or maintain regulatory approvals and
    clearances to market our products;
    our ability to train physicians in performing our Closure
    procedure; and
    fluctuations in demand in the international markets where we
    sell our products.      Recent
    adverse changes in US, global, or regional economic conditions
    could have an adverse effect on our business.
    and/or
  Our
    intellectual property rights may not provide meaningful
    commercial protection for our products, which could enable third
    parties to use our technology or methods, or very similar
    technology or methods, and could reduce our ability to
    compete.
   14




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Inadequate
    levels of reimbursement for our Closure procedure from
    governmental or other third-party payors could affect the
    adoption or use of our Closure system and may cause our revenues
    to decline.
       15




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Our
    manufacturing operations are dependent upon third-party
    suppliers, some of whom are sole-source, making us vulnerable to
    supply problems and price fluctuations, which could harm our
    business.
    
    our suppliers may make errors in manufacturing components that
    could negatively affect the efficacy or safety of our products
    or cause delays in shipment or recalls of our products;
    we may not be able to obtain adequate supply in a timely manner
    or on commercially reasonable terms;
    we may have difficulty locating and qualifying alternative
    suppliers for our disposable catheter components or RF
    generators;
    our suppliers may encounter financial hardships unrelated to our
    demand for components, which could inhibit their ability to
    fulfill our orders and meet our requirements;
    switching components may require product redesign and submission
    to the FDA which could significantly delay production; and
    our suppliers manufacture products for a range of customers, and
    fluctuations in demand for the products those suppliers
    manufacture for others may affect their ability to deliver
    components for us in a timely manner.     16




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Our
    stock price may be volatile, which may cause the value of our
    stock to decline or subject us to a securities class action
    litigation.
    
    general economic, industry and market conditions;
    actions by institutional or other large stockholders;
    the depth and liquidity of the market for our common stock;
    volume and timing of orders for our products;
    developments generally affecting medical device companies;
    the announcement of new products or product enhancements by us
    or our competitors;
    changes in earnings estimates or recommendations by securities
    analysts;
    investor perceptions of us and our business, including changes
    in market valuations of medical device companies;
    our results of operations and financial performance.    If we
    fail to achieve and maintain effective disclosure controls and
    procedures and internal control over financial reporting on a
    consolidated basis, our ability to provide accurate financial
    reports could be impaired and our stock price and investor
    confidence in our company could be materially and adversely
    affected.
   17




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To
    successfully grow our business, we will need to attract
    additional qualified personnel and retain key
    personnel.
    We
    lack published long-term randomized trial data comparing the
    efficacy of our Closure procedure with vein stripping and EVL.
    If future data proves to be inconsistent with our clinical
    results, our revenues may decline.
  follow-up
  We
    sell our products internationally and are subject to various
    risks relating to such international activities, which could
    harm our international sales and profitability.
    
    export restrictions and controls relating to technology;
    the availability and level of reimbursement within prevailing
    foreign healthcare payment systems;
    difficulties in enforcing single use device labeling;
    pricing pressure that we may experience internationally;
    required compliance with existing and new foreign regulatory
    requirements and laws;
    laws and business practices favoring local companies;
    longer payment cycles; 18




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##### Table of Contents




    difficulties in enforcing agreements and collecting receivables
    through foreign legal systems;
    international political and economic instability;
    potentially adverse tax consequences, tariffs and other trade
    barriers;
    international terrorism and
    anti-American
    sentiment;
    difficulties and costs of staffing and managing foreign
    operations;
    changes in foreign currency exchange rates; and
    difficulties in enforcing intellectual property rights.    If we
    become subject to product liability claims and our product
    liability insurance coverage is inadequate or inapplicable, we
    may be required to engage in costly litigation or pay
    significant damages, and our business may be
    harmed.
      The
    medical device industry is characterized by patent litigation,
    and we could become subject to litigation that could be costly,
    result in the diversion of managements attention and
    require us to pay damages and discontinue selling our
    products.
   19




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If we
    are unable to manufacture an adequate supply of our products, we
    could lose customers and revenues and our growth could be
    limited or halted.
    If we
    fail to comply with the extensive government regulations
    relating to our business, we may be subject to fines,
    injunctions and penalties.
    
    design, development and manufacturing;
    testing;
    clinical trials in humans;
    electronic product safety;
    labeling;
    storage;
    marketing;
    premarket clearance or approval;
    record keeping procedures;
    advertising and promotion;
    post-market surveillance and reporting of deaths, serious
    injuries or malfunctions; and
    export.   20




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We
    depend on our officers, and if we are not able to retain them or
    recruit additional qualified personnel, our business will
    suffer.
    If we
    fail to manage our exposure to global financial and securities
    market risk successfully, our operating results and financial
    statements could be materially impacted.
   21




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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.
    Any
    failure in our efforts to train physicians could reduce the
    market acceptance of our products and reduce our
    revenues.
    We
    spend considerable time and money complying with federal, state
    and foreign regulations and, if we are unable to fully comply
    with such regulations, we could face substantial
    penalties.
    
    the Federal Food, Drug, and Cosmetic Act, which regulates the
    design, testing, manufacture, labeling, marketing, distribution
    and sale of prescription drugs and medical devices;
    state food and drug laws;
    the Sarbanes-Oxley Act of 2002;
    the federal Anti-Kickback Law, which prohibits persons from
    knowingly and willfully soliciting, offering, receiving or
    providing remuneration, directly or indirectly, in cash or in
    kind, to induce either the referral of an individual, or
    furnishing or arranging for a good or service, for which payment
    may be made under federal healthcare programs such as the
    Medicare and Medicaid Programs;
    Medicare laws and regulations that prescribe the requirements
    for coverage and payment, including the amount of such payment,
    and laws prohibiting false claims for reimbursement under
    Medicare and Medicaid;
    the federal physician self-referral prohibition, commonly known
    as the Stark Law, which, in the absence of a statutory or
    regulatory exception, prohibits the referral of Medicare
    patients by a physician to an entity for the provision of
    designated healthcare services, if the physician or a member of
    the physicians immediate family has a direct or indirect
    financial relationship, including an ownership interest in, or a
    compensation arrangement with, the entity and also prohibits
    that entity from submitting a bill to a federal payor for
    services rendered pursuant to a prohibited referral; 22




---



##### Table of Contents




    state laws that prohibit the practice of medicine by
    non-physicians and fee-splitting arrangements between physicians
    and non-physicians, as well as state law equivalents to the
    Anti-Kickback Law and the Stark Law, which may not be limited to
    government reimbursed items; and
    the Federal Trade Commission Act and similar laws regulating
    advertising and consumer protection.    Product
    sales or introductions may be delayed or canceled as a result of
    the FDAs regulatory process, which could cause our sales
    or profitability to decline.
      
    delay or eliminate commercialization of products we develop;
    require us to perform costly procedures;
    diminish any competitive advantages that we may attain; and
    reduce our ability to collect revenues or royalties.    Modifications
    to our products may require new marketing clearances or
    approvals or require us to cease marketing or recall the
    modified products until such clearance or approvals are
    obtained.
   23




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We may
    be subject to fines, penalties or injunctions if we are
    determined to be promoting the use of our products for
    unapproved or off-label uses.
    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.
    Our
    business may be harmed by a natural disaster, terrorist attacks
    or other unanticipated problems.
    Our
    future capital needs are uncertain; we may need to raise
    additional funds in the future and such funds may not be
    available on acceptable terms, if at all.
    
    the revenues generated by sales of our products and licensing;
    the number and timing of acquisitions and other strategic
    transactions;
    the costs associated with expanding our manufacturing,
    marketing, sales and distribution efforts;
    the rate of progress and cost of our research and development
    activities;
    the costs of obtaining and maintaining FDA and other regulatory
    clearance of our products and products in development; and 24




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
    the cost of litigation and other legal actions.    Concentration
    of ownership among our existing directors, executive officers
    and principal stockholders may prevent new investors from
    influencing significant corporate decisions.
    Anti-takeover
    provisions in our organizational documents and Delaware law may
    discourage or prevent a change of control, even if an
    acquisition would be beneficial to our stockholders, which could
    cause our stock price to decline and prevent attempts by our
    stockholders to replace or remove our current
    management.
    
    our board of directors is authorized, without prior stockholder
    approval, to create and issue preferred stock, commonly referred
    to as blank check preferred stock, with rights
    senior to those of common stock;
    advance notice requirements for stockholders to nominate
    individuals to serve on our board of directors or for
    stockholders to submit proposals that can be acted upon at
    stockholder meetings;
    our board of directors is classified so that not all members of
    our board of directors are elected at one time, which may make
    it more difficult for a person who acquires control of a
    majority of our outstanding voting stock to replace our
    directors;
    stockholder action by written consent is prohibited;
    special meetings of our stockholders are permitted to be called
    only by a majority of our board of directors, the chairman of
    our board of directors or our president;
    stockholders are not permitted to cumulate their votes for the
    election of directors; 25




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##### Table of Contents




    newly created directorships resulting from an increase in the
    authorized number of directors or vacancies on our board of
    directors are to be filled only by majority vote of the
    remaining directors, even though less than a quorum is then in
    office;
    our board of directors is expressly authorized to modify, alter
    or repeal our bylaws; and
    stockholders are permitted to amend our bylaws only upon
    receiving at least 75% of the votes entitled to be cast by
    holders of all outstanding shares then entitled to vote
    generally in the election of directors, voting together as a
    single class.    Item 1B:
    Unresolved
    Staff Comments    Item 2:
    Properties    Item 3:
    Legal
    Proceedings  VNUS Medical Technologies, Inc. v.
    Diomed Holdings, Inc., et al. No. C05-02972 MMC.
  patents-in-suit
   26




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##### Table of Contents



VNUS Medical Technologies, Inc. v.
    Biolitec, Inc. et al No. C08-03129 MMC.
    VNUS Medical Technologies, Inc. v. Total Vein
    Solutions, LLC d/b/a Total Vein Systems No. C08-04234 MMC.
           27




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##### Table of Contents



Item 4:
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5:
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
  intra-day
  High


LowYear Ended December 31, 2008First Quarter

$
19.49


$
12.60Second Quarter

$
21.50


$
15.06Third Quarter

$
24.44


$
18.30Fourth Quarter

$
20.99


$
10.81Year Ended December 31, 2007First Quarter

$
10.71


$
8.38Second Quarter

$
15.54


$
9.92Third Quarter

$
16.03


$
12.24Fourth Quarter

$
16.19


$
12.90     Dividend
    Policy
    Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Issuer
    Purchases of Equity Securities
   28




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Item 6:
    Selected
    Consolidated Financial Data  Form 10-K. Form 10-K. Form 10-K.
  Years Ended December 31,2008


2007


2006


2005


2004(In thousands, except per share data)Consolidated Statements of Operations Data:Net revenues

$
101,151


$
70,904


$
51,681


$
49,170


$
38,166Gross profit

$
71,823


$
45,198


$
34,397


$
36,859


$
28,624Total operating expenses

$
58,484


$
54,095


$
45,167


$
33,013


$
25,975Income (Loss) from operations

$
13,339


$
(8,897
)

$
(10,770
)

$
3,846


$
2,649Basic net income (loss) per share

$
0.85


$
(0.36
)

$
(0.48
)

$
0.37


$
0.73Diluted net income (loss) per share

$
0.81


$
(0.36
)

$
(0.48
)

$
0.35


$
0.23   December 31,2008


2007


2006


2005


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

$
108,437


$
86,182


$
85,833


$
85,339


$
77,972Other long term liabilities

$
1,868


$
1,996


$
1,544


$
36


$
111   Item 7:
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following Managements Discussion and Analysis
    (MD&A) is intended to help the reader
    understand the results of operations and financial condition of
    VNUS Medical Technologies, Inc. MD&A is provided as a
    supplement to, and should be read in conjunction with, our
    consolidated financial statements and the accompanying notes to
    the consolidated financial statements (Notes).
  Business
    Overview
       29




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##### Table of Contents



Financial
    Operations Overview
  Net Revenues.
  Cost of Revenues.
  Sales and Marketing Expenses.
  Research and Development Expenses.
  General and Administrative Expenses.
  Critical
    Accounting Policies and Estimates
      
    Revenue recognition;
    Valuation of inventory;
    Allowance for doubtful accounts;
    Income taxes; and
    Share-based compensation expense. 30




---



##### Table of Contents



Revenue Recognition.
  Revenue
    Recognition No. 00-21, Revenue Arrangements with Multiple Deliverables No. 03-05, Applicability of AICPA Statement of Position
    97-2 to
    Non-Software Deliverables in an Arrangement Containing
    More-Than-Incidental Software
      ,
  Valuation of Inventory.
  Allowance for Doubtful Accounts.
  Income Taxes. Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement
    No. 109 Accounting for Income Taxes.
 31




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##### Table of Contents



Share-Based Compensation Expense.
  Recent
    Accounting Pronouncements
    
    SFAS No. 157, Fair Value Measurements
    SFAS No. 159, The Fair Value Option for Financial
    Assets and Financial Liabilities
    SFAS No. 161, Disclosures about Derivative
    Instruments and Hedging Activities
    SFAS No. 162, The Hierarchy of Generally Accepted
    Accounting Principles 32




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##### Table of Contents



Results
    of Operations
    Years Ended December 31,2008


2007


2006Net revenues


100
%


100.0
%


100.0
%Cost of revenues


29



36



33Gross profit


71



64



67Operating expenses:Sales and marketing


28



36



43Research and development


10



13



14General and administrative


20



27



30Total operating expenses


58



76



87Income (loss) from operations


13



(12
)


(20
)Interest income and other, net


1



5



7Income (loss) before provision for income taxes


14



(7
)


(13
)Provision for income taxes


1



1



0Net income (loss) before cumulative effect of change in
    accounting principle


13



(8
)


(13
)Cumulative effect of change in accounting principle, net of tax










1Net income (loss) after cumulative effect of change in
    accounting principle


13
%


(8
)%


(14
)%   Known Trends and Uncertainties Impacting Future Results of
    Operations: Global Market and Economic
    Conditions.
  Net
    Revenues by Period
    Years Ended December 31,2008


2007


% Change


2007


2006


% Change(In thousands except percentages)Net Revenues

$
101,151


$
70,904



43
%

$
70,904


$
51,681



37
%     
    increased catheter sales in both units and dollars due to
    increased demand for the ClosureFAST catheter, offset by a lower
    average sales price; 33




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##### Table of Contents




    increased accessory product sales in both dollars and units
    directly related to products used in the performance of our
    Closure procedure; and
    royalty revenues of $12.9 million dollars of which
    $8.7 million relates to periods prior to 2008.    
    increased catheter sales in both units and dollars due to
    increased demand for the ClosureFAST catheter, offset by a lower
    average sales price;
    increased RF generator sales in both units and dollars,
    primarily due to international expansion and recognition of
    $1.9 million of generator sales due to the undelivered
    software upgrade promoted in 2006 and delivered in 2007; and
    increased accessory sales in both units and dollars.    Net
    Product Revenues by Product
    Years Ended December 31,2008


2007


2006Catheters and devices


78
%


73
%


81
%RF generators


8



14



8Accessories


14



13



11100
%


100
%


100
%     Net
    Revenues by Geographic Region as a Percentage of Net
    Revenues
    Years Ended December 31,2008


2007


2006United States


90
%


93
%


96
%Europe and other


10



7



4100
%


100
%


100
%    34




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##### Table of Contents



Gross
    Profit by Period
    Years Ended December 31,2008


2007


% Change


2007


2006


% Change(In thousands except percentages)Gross profit

$
71,823


$
45,198



59
%

$
45,198


$
34,397



31
%Gross profit margin


71
%


64
%






64
%


67
%     
    the recognition of $12.9 million of royalty revenues with
    no associated cost of revenues increased gross profit margin by
    4.3%; and
    higher margin of ClosureFAST catheters in 2008 as compared to
    2007. This is the result of reductions in the initial
    manufacturing inefficiencies in 2007 associated with launching a
    new product.    
    lower margin of ClosureFAST catheters, which were introduced by
    the Company in the first quarter of 2007, as compared to
    ClosurePLUS catheters, due to initial manufacturing
    inefficiencies associated with launching a new product; and
    increases in inventory reserves primarily related to inventory
    balances on hand in excess of forecasted demand.    Operating
    Expenses by Period
  Years Ended December 31,2008


2007


% Change


2007


2006


% Change(In thousands except percentages)Sales and marketing

$
28,369


$
25,311



12
%

$
25,311


$
22,343



13
%Research and development


10,443



9,444



11
%


9,444



7,422



27
%General and administrative


19,672



19,340



2
%


19,340



15,402



26
%$
58,484


$
54,095



8
%

$
54,095


$
45,167



20
%   Operating
    Expense Summary
    
    an increase of $4.5 million due to increased headcount;
    an increase of $3.0 million due to increased share-based
    compensation expense;
    an increase of $471,000 in trade show and travel related
    expenses;
    an increase of $308,000 in international expenditures related to
    our international expansion, and;
    an increase of $307,000 in general business expenses; partially
    offset by
    a decrease of $2.5 million in legal fees, primarily
    associated with resolution of certain on-going patent litigation;
    a decrease of $834,000 in clinical studies and consulting
    fees; and
    a decrease of $325,000 in advertising relating to our direct
    marketing and advertising expenses. 35




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##### Table of Contents




    an increase of $6.2 million due to increased headcount and
    related expense (including share-based compensation);
    an increase of $2.5 million in legal expense related to our
    on-going patent litigation;
    an increase of $476,000 in trade show and travel related
    expenses;
    an increase of $400,000 in direct marketing and advertising
    expenses, and;
    an increase of $225,000 in spending on clinical studies
    expenses; partially offset by
    a decrease of $861,000 in facility-related expenses due to the
    termination of the lease agreement for our previous facility in
    the second quarter of 2007; and
    a decrease of $300,000 in legal and other professional fees,
    primarily associated with filings, patent and trademark
    registration.  Sales
    and Marketing Expenses
    
    an increase of $3.0 million due to increased commissions
    from higher sales and increased headcount and related expense
    (including share-based compensation);
    an increase of $471,000 in trade show and travel related
    expenses; and
    an increase of $308,000 in international expenditures; partially
    offset by
    a decrease of $325,000 in advertising expenditures.    
    an increase of $2.1 million due to increased commissions
    from higher sales and increased headcount and related expense
    (including share-based compensation);
    an increase of $476,000 in trade show and travel related
    expenses; and
    an increase of $400,000 in direct marketing and advertising
    expenses.    Research
    and Development Expenses
    
    an increase of $2.3 million due to increased headcount and
    related expense (including share-based compensation); partially
    offset by,
    a decrease of $575,000 in spending on consultants; and
    a decrease of $477,000 in spending on clinical studies.    
    an increase of $1.8 million due to increased headcount and
    related expense (including share-based compensation); and
    an increase of $225,000 in spending on clinical studies.   36




---



##### Table of Contents



General
    and Administrative Expenses
    
    an increase of $2.2 million due to increased headcount and
    related expense (including share-based compensation);
    an increase of $307,000 million in general business
    expenses, and;
    an increase of $218,000 in consulting fees related to software
    upgrades; partially offset by
    a decrease of $2.5 million in legal and other professional
    fees, primarily associated with the resolution of certain
    on-going patent litigation.    
    an increase of $2.3 million due to increased headcount and
    related expense (including share-based compensation);
    an increase of $2.5 million in legal expense related to
    on-going patent litigation, and;
    an increase of $378,000 in bank fees and bad debt expenses;
    partially offset by
    a decrease of $861,000 in facility related expenses due to the
    termination of the lease agreement for our previous facility in
    the second quarter of 2006; and
    a decrease of $300,000 in legal and other professional fees,
    primarily associated with filing patent and trademark
    registration.    Interest
    Income and Other, Net
    
    a decrease of $1.2 million in interest income primarily
    related to declining cash and investment interest rates; coupled
    with,
    a decrease of $971,000 in currency losses primarily due to the
    strengthening dollar against the Euro and the British Pound.    
    a decrease of $208,000 in interest income primarily related to
    lower cash and short-term investment balances and declining
    interest rates; partially offset by
    an increase of $168,000 in currency related gains primarily due
    to the weakening dollar against the Euro and the British Pound.    Provision
    for Income Taxes
   37




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##### Table of Contents



Liquidity
    and Capital Resources
  December 31,2008


2007


$ Change


2007


2006


$ Change(In thousands)Cash and cash equivalents

$
34,898


$
39,269


$
(4,371
)

$
39,269


$
38,917


$
352Short-term investments

$
40,927


$
24,067


$
16,860


$
24,067


$
28,996


$
(4,929
)Long-term investments

$
9,294






$
9,294











Working capital

$
81,426


$
71,001


$
10,425


$
71,001


$
70,859


$
142Net cash provided by (used in) operating activities

$
22,106


$
(5,727
)

$
27,833


$
(5,727
)

$
(165
)

$
(5,562
)Net cash (used in) provided by investing activities

$
(27,319
)

$
3,940


$
(31,259
)

$
3,940


$
(7,912
)

$
11,852Net cash provided by financing activities

$
1,013


$
2,156


$
(1,143
)

$
2,156


$
197


$
1,959    38




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##### Table of Contents



Cash
    flows from operating activities
    
    cash received for royalty revenues during the year of
    $12.3 million;
    a decrease in days sales outstanding as compared to 2007 of
    8 days combined with an increase in net product revenues of
    $17.4 million;    
    an increase of $3.4 million in inventories, as the Company
    continues to build inventory in response to increased customer
    demand;
    an increase of $1.7 million in accounts receivable
    primarily due to increased sales offset by improved customer
    collections;
    a decrease of $3.8 million in deferred revenue primarily
    due to deferral of RF generators sales in 2006 relating to the
    software upgrade promoted at the end of 2006, but not delivered
    until 2007; and
    a decrease of $433,000 in deferred share-based compensation;
    partially offset by
    an increase of $3.9 million in accrued compensation and
    benefits.  Cash
    flows from investing activities
    
    an increase of cash placed in short term investments of
    $23.2 million as compared to the 2007 balance
    sheet; and
    placement of $9.3 million in long-term investments.    
    a decrease of $4.2 million in cash used to purchase of
    short-term investments;
    an increase of $4.0 million in proceeds from the sale of
    short-term investments; and
    a decrease of $3.6 million from the purchase of property
    and equipment.  Cash
    flows from financing activities
      
    an increase of $2.3 million in the proceeds from the
    exercise of stock options; and
    an increase of $345,000 in the amount of employee payroll taxes
    withheld and paid on behalf of employees related to the release
    of restricted stock units on a net issuance basis.  Other
    Factors Affecting Liquidity and Capital Resources
   39




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Contractual
    Obligations and Capital Expenditure Requirements
    Payments Due by PeriodContractual Obligations and Capital




Less Than


2 - 3


4 - 5


More ThanExpenditure Requirements

Total


1 Year


Years


Years


5 Years(In thousands)Operating lease obligations

$
6,325


$
1,196


$
2,483


$
2,439


$
207Inventory purchase commitments


3,806



3,806











Other purchase commitments


806



806











Total

$
10,937


$
5,808


$
2,483


$
2,439


$
207   Item 7A:
    Quantitative
    and Qualitative Disclosures about Market Risk       40




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##### Table of Contents



Item 8:
    Consolidated
    Financial Statements and Supplementary Data  VNUS
    MEDICAL TECHNOLOGIES, INC.
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of Independent Registered Public
    Accounting Firm


42Consolidated Balance Sheets at December 31,
    2008 and 2007


43Consolidated Statements of Operations for each of
    the years in the three year period ended December 31,
    2008


44Consolidated Statements of Stockholders
    Equity and Comprehensive Income (Loss) for each of the years in
    the three year period ended December 31, 2008


45Consolidated Statements of Cash Flows for each of
    the years in the three year period ended December 31,
    2008


46Notes to Consolidated Financial Statements


47  41




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm    Internal Control  Integrated Framework
      
    42




---



##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2008


2007(In thousands, except share and per share data)ASSETSCurrent assets:Cash and cash equivalents

$
34,898


$
39,269Short-term investments


40,927



24,067Accounts receivable, net of allowance for doubtful accounts of
    $470 and $355


12,152



11,456Inventories


4,506



5,485Prepaid expenses and other current assets


2,073



1,421Total current assets


94,556



81,698Property and equipment, net


4,457



4,354Long-term investments


9,294



Other assets


130



130Total assets

$
108,437


$
86,182LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
2,926


$
2,366Accrued compensation and benefits


8,016



6,040Other accrued liabilities


1,362



1,571Deferred revenue, net


826



720Total current liabilities


13,130



10,697Other long term liabilities


1,868



1,996Total liabilities


14,998



12,693Commitments and contingencies (Note 7)Stockholders equity:Common stock, $0.001 par value; 56,666,666 authorized,
    16,074,895 and 15,702,880 issued and outstanding at
    December 31, 2008 and 2007, respectively


16



15Additional paid-in capital


128,284



122,009Deferred share-based compensation






(23
)Accumulated other comprehensive income


163



21Accumulated deficit


(35,024
)


(48,533
)Total stockholders equity


93,439



73,489Total liabilities and stockholders equity

$
108,437


$
86,182    43




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended December 31,2008


2007


2006(In thousands, except per share data)Net product revenues

$
88,283


$
70,904


$
51,681Royalty revenues


12,868







Net revenues


101,151



70,904



51,681Cost of revenues


29,328



25,706



17,284Gross profit


71,823



45,198



34,397Operating expenses:Sales and marketing


28,369



25,311



22,343Research and development


10,443



9,444



7,422General and administrative


19,672



19,340



15,402Total operating expenses


58,484



54,095



45,167Income (loss) from operations


13,339



(8,897
)


(10,770
)Interest and other income, net


1,238



3,451



3,471Income (loss) before provision for income taxes


14,577



(5,446
)


(7,299
)Provision for income taxes


1,068



78



33Net income (loss) before cumulative effect of change in
    accounting principle


13,509



(5,524
)


(7,332
)Cumulative effect of change in accounting principle, net of tax










73Net income (loss) after cumulative effect of change in
    accounting principle

$
13,509


$
(5,524
)

$
(7,259
)Net income (loss) per share (see Note 2)Basic net income (loss) per share

$
0.85


$
(0.36
)

$
(0.48
)Diluted net income (loss) per share

$
0.81


$
(0.36
)

$
(0.48
)Basic weighted average number of shares


15,897



15,390



15,047Diluted weighted average number of shares


16,595



15,390



15,047    44




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY AND
 COMPREHENSIVE INCOME (LOSS)
  Years Ended, December 31,2008


2007


2006(In thousands except share data)Common stock and additional paid in capitalBalance, beginning of period

$
122,024


$
117,979


$
117,939Common stock issued


1,013



2,156



70Share-based compensation expense


4,983



1,930



2,008Deferred share-based compensation


(11
)


(41
)


(2,038
)Stock option income tax benefits


291







Balance, end of period

$
128,300


$
122,024


$
117,979Deferred share-based compensationBalance, beginning of period

$
(23
)

$
(144
)

$
(2,544
)Deferred share-based compensation


7



41



2,048Amortization of deferred share-based compensation


16



80



425Cumulative effect of change in accounting principle










(73
)Balance, end of period

$



$
(23
)

$
(144
)Accumulated deficitBalance, beginning of period

$
(48,512
)

$
(43,087
)

$
(35,873
)Cumulative adjustment for FIN 48






73



Net income (loss)


13,509



(5,524
)


(7,259
)Components of other comprehensive income (loss)Net unrealized gains on investments


313



43



45Translation adjustments and other


(171
)


(17
)


Other comprehensive income (loss)


13,651



(5,498
)


(7,214
)Balance, end of period

$
(34,861
)

$
(48,512
)

$
(43,087
)Total stockholders equity

$
93,439


$
73,489


$
74,748Common stock outstandingBalance, beginning of period


15,702,880



15,130,598



14,899,989Exercise of stock options


233,700



484,029



164,883Exercise of warrants










21,928Restricted stock units issued


138,315



88,253



43,798Balance, end of period


16,074,895



15,702,880



15,130,598    45




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 31,2008


2007


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

$
13,509


$
(5,524
)

$
(7,259
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


1,504



1,199



1,103Provision for excess & obsolete inventory


191



565



298Impairment of long-lived assets










181Tax benefit related to share-based compensation


291







Stock-based compensation and amortization of deferred
    stock-based compensation


4,995



2,010



2,443Cumulative effect of change in accounting principle










(73
)Allowance for doubtful accounts


245



205



44Change in operating assets and liabilities:Accounts receivable


(941
)


(3,414
)


(1,672
)Inventories


788



(3,594
)


(132
)Prepaid expenses and other current assets


(652
)


22



(209
)Other long-term assets






652



51Accounts payable


560



1,026



107Accrued compensation and benefits


1,976



3,804



(112
)Other accrued liabilities


(270
)


(1,810
)


875Warranty reserve


61



3



283Deferred revenue


106



(1,452
)


2,292Other long-term liabilities


(257
)


581



1,615Net cash provided by (used in) operating activities


22,106



(5,727
)


(165
)Cash flows from investing activities:Purchases of short-term investments


(75,274
)


(52,101
)


(56,261
)Purchases of long-term investments


(9,294
)






Proceeds from maturities of short-term investments


58,727



57,073



53,028Purchases of property and equipment


(1,478
)


(1,032
)


(4,679
)Net cash (used in) provided by investing activities


(27,319
)


3,940



(7,912
)Cash flows from financing activities:Proceeds from the exercise of stock options for common stock


1,921



2,628



324Employees taxes withheld and paid for restricted stock and
    options


(908
)


(472
)


(127
)Net cash provided by financing activities


1,013



2,156



197Net (decrease) increase in cash and cash equivalents


(4,200
)


369



(7,880
)Effect of foreign exchange rates


(171
)


(17
)


Cash and cash equivalents at the beginning of the period


39,269



38,917



46,797Cash and cash equivalents at the end of the period

$
34,898


$
39,269


$
38,917    46




---



##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Summary
    of Significant Accounting Policies    Principles of consolidation and basis of
    presentation.
  Foreign Currency Translation.
  Use of Estimates.
  Reclassifications.
  Cash and Cash Equivalents.
  Short-term and Long-term
    Investments.
  Fair Value of Financial Instruments.
  Inventories. first-in,
 47




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Shipping and Handling Costs. 00-10, Accounting for Shipping and Handling Fees and Costs
  Property and Equipment.
    Furniture and fixtures


3 yearsComputer and office equipment


3 yearsLaboratory equipment


5 yearsSoftware


3 to 5 years     Revenue Recognition.
  Revenue Recognition
    (SAB 104) No. 00-21, Revenue Arrangements with Multiple Deliverables No. 03-05, Applicability of AICPA Statement of Position
    97-2 to
    Non-Software Deliverables in an Arrangement Containing
    More-Than-Incidental Software.
       48




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Deferred revenue, net.
  Warranty.
  Research and Development Costs.
  Advertising Expenses.
  Cumulative Effect of a Change in Accounting
    Principle. Accounting for Stock-Based
    Compensation
    Comprehensive Income (Loss).
  Income Taxes.
  Recent
    Accounting Pronouncements
  Fair
    Value Measurements FAS 157-2  FAS 157-2),
 49




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an Amendment of FASB Statement
    No. 115
  Disclosures about Derivative Instruments and Hedging
    Activities
  The
    Hierarchy of Generally Accepted Accounting Principles The Meaning of
    Present Fairly in Conformity With Generally Accepted Accounting
    Principles
    Note 2 
    Net
    Income (Loss) Per Share   50




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2008


2007


2006Net Income (loss)

$
13,509


$
(5,524
)

$
(7,259
)Denominator:Basic weighted average number of shares


15,897



15,390



15,047Effect of dilutive securities:Stock options and restricted stock units


698







Diluted weighted average number of shares


16,595



15,390



15,047Net income (loss) per share:Basic net income (loss) per share

$
0.85


$
(0.36
)

$
(0.48
)Diluted net income (loss) per share

$
0.81


$
(0.36
)

$
(0.48
)     Years Ended December 31,2008


2007


2006Stock Options


262



1,179



1,634RSUs


35



538



398Total


297



1,717



2,032   Note 3 
    Concentration
    of Credit Risk        Note 4 
    Patent
    Litigation Settlement   51




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 5 
    Fair
    Value Measurements        Level 1:  Quoted prices are available in
    active markets for identical assets or liabilities as of the
    reporting date. Active markets are those in which transactions
    for the asset or liability occur in sufficient frequency and
    volume to provide the most reliable pricing information and
    evidence of fair value on an ongoing basis.
  Level 2:  Pricing inputs are other than quoted
    prices in active markets included in Level 1, which are
    either directly or indirectly observable as of the reporting
    date. Level 2 includes those financial instruments that are
    valued using models or other valuation methodologies. These
    models are primarily industry-standard models that consider
    various assumptions, including quoted forward prices for
    commodities, time value, volatility factors, and current market
    and contractual prices for the underlying instruments, as well
    as other relevant economic measures. Substantially all of these
    assumptions are observable in the marketplace throughout the
    full term of the instrument, can be derived from observable data
    or are supported by observable levels at which transactions are
    executed in the marketplace.
  Level 3:  Pricing inputs include significant
    inputs that are generally less observable from objective
    sources. These inputs may be used with internally developed
    methodologies that result in managements best estimate of
    fair value from the perspective of a market participant.
    Instruments subject to Level 3 measurements include those
    that may be more structured or otherwise tailored to
    customers needs. At each balance sheet date, the Company
    performs an analysis of all instruments subject to
    SFAS No. 157 and includes in Level 3 all of those
    whose fair value is based on significant unobservable inputs.
    The market approach uses prices and other relevant information
    generated by market transactions involving identical or
    comparable assets.
 52




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Fair
    Value Measurements at December 31, 2008 using
  Quoted Prices inActive Markets for


Significant OtherDecember 31,


Identical Assets


Observable Inputs2008


(Level 1)


(Level 2)(In thousands)Assets:Cash equivalents

$
21,750


$
21,350


$
400Available for sale investments


40,927



26,083



14,844Long-term investments


9,294



9,294



$
71,971


$
56,727


$
15,244       December 31, 2008Gross


Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair Value(In thousands)Short-term investments:Corporate debt securities

$
25,958


$
144






$
26,102Certificates of deposit


5,873



19







5,892Commercial paper


8,899



34







8,933Total

$
40,730


$
197


$



$
40,927Long-term investments:Corporate debt securities

$
9,140



154






$
9,294   December 31, 2007Gross


Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair Value(In thousands)Short-term investments:Corporate debt securities


8,704



1






$
8,705Commercial paper


15,325



37






$
15,362Total

$
24,029


$
38


$



$
24,067    53




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 6 
    Balance
    Sheet Components  December 31,2008


2007(In thousands)InventoriesRaw material and sub-assemblies

$
2,652


$
3,007Finished goods and other


1,854



2,478$
4,506


$
5,485Property and equipment, net(1)Leasehold improvements

$
3,140


$
2,999Laboratory equipment


2,510



1,934Computer and office equipment


1,854



1,427Software


1,219



1,036Furniture and fixtures


402



390Assets not ready to be placed in service


289



1509,414



7,936Less accumulated depreciation and amortization


(4,957
)


(3,582
)Total property and equipment, net

$
4,457


$
4,354Other accrued liabilitiesAccrued expenses

$
561


$
520Accrued taxes


305



392Accrued warranty


73



72Other accrued liabilities


423



587$
1,362


$
1,571Other long term liabilitiesAccrued rent

$
1,797


$
1,905Other long term liabilities


71



91$
1,868


$
1,996     (1)
    
    Substantially all long-lived assets are located in the United
    States of America.  Note 7 
    Commitments
    and Contingencies  Product Warranty Commitment.
 54




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Balance at


Additions


Warranty


Balance atBeginning of


to Warranty


Liability


End ofPeriod


Liability


Utilized


Period(In thousands)Year ended December 31, 2008

$
72


$
61


$
(60
)

$
73Year ended December 31, 2007

$
204


$
3


$
(135
)

$
72Year ended December 31, 2006

$
34


$
283


$
(113
)

$
204   Legal Proceedings. VNUS Medical Technologies, Inc. v. Diomed
    Holdings, Inc., et al. No. C05-02972 MMC.
  patents-in-suit
      VNUS Medical Technologies, Inc. v.
    Biolitec, Inc. et al No. C08-03129 MMC.
 55




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    VNUS Medical Technologies, Inc. v. Total Vein
    Solutions, LLC d/b/a Total Vein Systems No. C08-04234 MMC.
            Leases.
 56




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    OperatingYears Ending December 31,

Leases2009

$
1,1962010


1,2302011


1,2532012


1,2052013


1,2342014


207$
6,325         Write-offs ofAccrued Lease


Accrued


Impaired LeaseholdPayments, Net of


Realtor


Improvements and


Total FacilityRent Deferral


Commission


Other Fixed Assets


Exit ChargeFacility exit charge recorded in 2006

$
650


$
18


$
179


$
847Payments


(298
)


(18
)


(179
)


(495
)Balance, December 31, 2006


352











352Payments


(352
)










(352
)Balance, December 31, 2007

$



$



$



$
     Purchase Commitments.
   57




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Indemnifications.
  Note 8 
    Share-Based
    Compensation  Accounting for Shares Issued to Employees
  EITF 96-18, Accounting for Equity Investments that are Issued to
    Non-Employees for Acquiring, or in Conjunction with Selling,
    Goods or Services
  Impact
    of the adoption of SFAS No. 123R
    No. FAS No. 123R-C, Transition Election Related to Accounting for Tax Effects of
    Share-Based Payment Awards.
   58




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2008


2007


2006(In thousands)Cost of revenues

$
364


$
124


$
182Sales and marketing


1,284



467



886Research and development


965



336



276General and administrative


2,382



1,083



1,099Total

$
4,995


$
2,010


$
2,443     Valuation
    Assumptions
      Years Ended December 31,2008

2007

2006Risk free interest rates

1.73%-3.02%

3.52%-4.84%

4.55%-5.00%Expected life in years

4.85-5.6

4.85-5.25

5.25-6.25Dividend yield





Volatility

76.7%-79.0%

79.7%-86.9%

63.8%-96.2%          59




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Equity
    Incentive Program
     60




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted





WeightedShares





Weighted


Average





AverageAvailable


Number of


Average


Grant-Date





Grant-datefor Future


Options


Exercise Price


Fair Value


Number of


Fair ValueGrant


Outstanding


per Share


per Share


RSUs


per ShareBalances at December 31, 2005


672,678



1,719,645


$
6.60







242,259Authorized


605,223Expired


(3,118
)Granted


(539,843
)


228,666


$
7.52


$
5.06



311,177


$
7.98Options Exercised






(164,883
)

$
1.19Restricted Stock Unit Releases


















(43,798
)RSU Release surrendered for tax


18,098















(18,098
)Terminated/cancelled


242,758



(149,336
)

$
10.19







(93,422
)Balances at December 31, 2006


995,796



1,634,092


$
6.94







398,118Authorized


628,033Expired


(3,431
)Granted


(778,157
)


278,017


$
12.27


$
8.48



500,140


$
12.18Options Exercised






(484,029
)

$
5.44Restricted Stock Unit Releases


















(88,253
)RSU Release surrendered for tax


37,963















(37,963
)Terminated/cancelled


482,917



(248,934
)

$
9.89







(233,983
)Balances at December 31, 2007


1,363,121



1,179,146


$
8.20







538,059Authorized


648,421Expired


(701
)Granted


(597,120
)


231,160


$
17.02


$
10.89



365,960


$
17.83Options Exercised






(233,700
)

$
8.18Restricted Stock Unit Releases


















(138,315
)RSU Release surrendered for tax


49,886















(49,886
)Terminated/cancelled


88,852



(48,833
)

$
12.14







(40,019
)Balances at Dec 31, 2008


1,552,459



1,127,773


$
9.84







675,799    61




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedAverage


Weighted





WeightedNumber


Remaining


Average


Number


AverageExercise Prices


Outstanding


Contractual Term


Exercise Price


Exercisable


Exercise Price(In years)$
0.608


$
0.714



14,595



0.57


$
0.658



14,595


$
0.658$
1.500


$
1.500



182,676



3.51


$
1.500



182,676


$
1.500$
3.000


$
7.143



128,733



4.74


$
4.218



123,786


$
4.106$
7.160


$
9.000



113,499



7.33


$
7.565



79,745


$
7.516$
9.290


$
10.860



176,483



6.32


$
10.575



157,016


$
10.643$
10.900


$
12.210



120,802



7.86


$
11.998



82,995


$
11.929$
12.250


$
14.080



147,568



7.86


$
13.470



76,664


$
13.110$
14.180


$
16.350



128,417



9.02


$
15.773



25,199


$
14.914$
17.050


$
18.620



55,000



9.36


$
17.335



22,500


$
17.050$
18.800


$
18.800



60,000



9.17


$
18.800



0


$
0.000$
0.608


$
18.800



1,127,773



6.69


$
9.838



765,176


$
7.602       Years Ended December 31,2008


2007


2006(In thousands)Total intrinsic value of stock options exercised

$
2,640


$
3,800


$
1,100Total intrinsic value of RSUs released

$
3,322


$
1,597


$
442Total fair value of stock options vested

$
7,289


$
7,253


$
4,807     Restricted
    Stock Units
   62




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 9 
    Income
    Taxes    2008


2007


2006(In thousands)CurrentFederal

$
322


$
(1
)

$
13State


722



44



Foreign


24



35



20Total

$
1,068


$
78


$
33       Years Ended December 31,2008


2007


2006United States federal statutory tax rate


35
%


(35
)%


(35
)%State income taxes, net of federal benefit


6



(5
)


(5
)Permanent adjustments


5



1



1Change in valuation allowance


(39
)


34



33Share-based compensation


3



6



6Other


(2
)






Effective tax rate


8
%


1
%



%     Years Ended December 31,2008


2007(In thousands)Net operating loss carryovers

$
7,148


$
13,128Tax credits


2,059



1,740Accruals, allowances and reserves


2,004



1,951Capitalization and cost recovery


1,070



742Share-based compensation


395



129Other


99



(114
)Net deferred tax assets


12,775



17,576Valuation allowance


(12,775
)


(17,576
)Net deferred tax assets reflected in balance sheet

$



$
  63




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Accounting for Uncertainty in
    Income Taxes Accounting for Income Taxes
  2008


2007(In thousands)Balance, beginning of period

$
1,247


$
969Additions for tax positions of current year


305



278Balance, end of period

$
1,552


$
1,247         Note 10 
    Operating
    Segment and Geographic Information  Disclosures About Segments of an
    Enterprise and Related Information
    (SFAS 131)
 64




---



##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Years Ended December 31,2008


2007


2006United States


90
%


93
%


96
%Europe and other


10



7



4100
%


100
%


100
%Catheters and devices


68
%


73
%


81
%RF generators


8



14



8Accessories


11



13



11Royalty revenues


13







100
%


100
%


100
%   Note 11 
    Employee
    Benefit Plans    Note 12 
    Selected
    Quarterly Financial Data (unaudited)    Dec. 08


Sept. 08


June 08


Mar. 08


Dec. 07


Sept. 07


June 07


Mar. 07(In thousands except per share data)(Unaudited)Net revenues

$
27,221


$
23,136


$
31,918


$
18,876


$
20,571


$
17,495


$
17,189


$
15,649Gross profit

$
18,758


$
16,110


$
24,469


$
12,486


$
13,530


$
10,754


$
10,359


$
10,555Income (loss) from operations

$
3,719


$
1,917


$
9,092


$
(1,389
)

$
67


$
(3,092
)

$
(3,055
)

$
(2,817
)Basic net income (loss) per share

$
0.22


$
0.10


$
0.56


$
(0.03
)

$
0.06


$
(0.14
)

$
(0.15
)

$
(0.13
)Diluted net income (loss) per share

$
0.21


$
0.10


$
0.53


$
(0.03
)

$
0.05


$
(0.14
)

$
(0.15
)

$
(0.13
)  65




---



##### Table of Contents



Item 9:
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Rules 13a-15(e) 15d-15(e),
  MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Rule 13a-15(f)
    Internal
    Control  Integrated Framework
  Form 10-K.
  Item 9B.
    Other
    Information   66




---



##### Table of Contents



PART III  Item 10:
    Directors,
    Executive Officers and Corporate Governance of the
    Registrant    Item 11:
    Executive
    Compensation    Item 12:
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13:
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14:
    Principal
    Accountant Fees and Services   67




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##### Table of Contents



PART IV  Item 15:
    Exhibits
    and Financial Statement Schedules  Consolidated Financial Statements and
    Supplementary Data:
    PageNumberReport of Independent Registered Public
    Accounting Firm


42Consolidated Balance Sheets at December 31, 2008
    and December 31, 2007


43Consolidated Statements of Operations for Each of
    the Years in the Three Year Period Ended December 31, 2008


44Consolidated Statements of Stockholders
    Equity and Comprehensive Income (Loss) for Each of the Years in
    the Three Year Period Ended December 31, 2008


45Consolidated Statements of Cash Flows for Each of
    the Years in the Three Year Period Ended December 31, 2008


46Notes to Consolidated Financial Statements


472.  Financial
    Statement Schedule:Schedule II  Valuation and
    Qualifying Accounts


713.  Exhibit Index   INDEX OF
    EXHIBITS
  ExhibitNumber

Description3
.1

Amended and Restated Certificate of Incorporation (incorporated
    by reference to Exhibit 3.1 to the Companys
    Registration Statement on
    Form S-1/A
    No. 333-117640,
    filed on September 28, 2004).3
.2

Amended and Restated Bylaws (incorporated by reference to
    Exhibit 3.1 to the Companys Report on
    Form 8-K
    dated March 3, 2008).4
.1

Specimen Stock Certificate (incorporated by reference to
    Exhibit 4.1 to the Companys Registration Statement on
    Form No. S-1/A
    333-117640,
    filed on October 15, 2004).10
.1*#

Amended and Restated 2000 Equity Incentive Plan.10
.2#

Form of Restricted Stock Unit Award Grant Notice and Restricted
    Stock Unit Award Agreement Under the VNUS Medical Technologies,
    Inc. Amended and Restated 2000 Equity Incentive Plan
    (incorporated by reference to Exhibit 10.1 to the
    Companys Report on
    Form 8-K
    dated September 8, 2005).10
.3#

VNUS Medical Technologies, Inc. 1995 Stock Plan (incorporated by
    reference to Exhibit 10.4 to the Companys
    Registration Statement on
    Form S-1
    No. 333-117640,
    filed on July 23, 2004).10
.4#

First Amendment to the VNUS Medical Technologies, Inc. 1995
    Stock Plan (incorporated by reference to Exhibit 10.5 to
    the Companys Registration Statement on
    Form S-1
    No. 333-117640,
    filed on July 23, 2004).10
.5#

Second Amendment to the VNUS Medical Technologies, Inc. 1995
    Stock Plan (incorporated by reference to Exhibit 10.6 to
    the Companys Registration Statement on
    Form S-1
    No. 333-117640,
    filed on July 23, 2004).10
.6*#

Amended and Restated VNUS Severance Plan for Management and Key
    Employees.10
.7#

Form of Indemnity Agreement for Directors and Officers
    (incorporated by reference to Exhibit 10.8 to the
    Companys Registration Statement on
    Form S-1/A
    No. 333-117640,
    filed on September 28, 2004).10
.8

Service and Supply Agreement by and between VNUS Medical
    Technologies, Inc. and Byers Peak, Inc., dated February 20,
    2004 (incorporated by reference to Exhibit 10.10 to the
    Companys Registration Statement on
    Form S-1/A
    No. 333-117640,
    filed on September 28, 2004). 68




---



##### Table of Contents



ExhibitNumber

Description10
.9

Lease Agreement by and between Legacy Partners I SJ Fontanoso,
    LLC and VNUS Medical Technologies, Inc., dated November 15,
    2005 (incorporated by reference to Exhibit 10.19 to the
    Companys Annual Report on
    Form 10-K,
    dated March 14, 2006).10
.10#

Form of Stock Option Award Grant Notice and Option Award
    Agreement under the VNUS Medical Technologies, Inc. Amended and
    Restated 2000 Equity Incentive Plan (incorporated by reference
    to Exhibit 10.10 to the Companys Annual Report on
    Form 10-K
    dated March 30, 2007).10
.11#

Offer Letter, dated as of October 10, 2007, by and between
    VNUS Medical Technologies, Inc. and Kirti Kamdar (incorporated
    by reference to Exhibit 10.2 to the Companys Current
    Report on
    Form 8-K
    dated December 4, 2007).10
.12#

Separation Agreement and Release, dated as of April 3,
    2007, by and between VNUS Medical Technologies, Inc. and Scott
    Cramer (incorporated by reference to Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    dated April 6, 2007).10
.13#

Offer Letter, dated as of March 19, 2007, by and between
    VNUS Medical Technologies, Inc. and William A. Franklin
    (incorporated by reference to Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K
    dated April 6, 2007).10
.14#

Offer Letter, dated as of January 15, 2008, by and between
    VNUS Medical Technologies, Inc. and Peter Osborne (incorporated
    by reference to Exhibit 10.1 to the Companys Current
    Report on
    Form 8-K
    dated January 18, 2008).10
.15#

Offer Letter, dated as of April 8, 2008, by and between
    VNUS Medical Technologies, Inc. and Donald J. Todd (incorporated
    by reference to Exhibit 10.1 to the Companys Current
    Report on
    Form 10-Q
    dated August 18, 2008).10
.16+

Settlement Agreement, dated as of June 2, 2008, by and
    between VNUS Medical Technologies, Inc. and AngioDynamics, Inc.,
    and Vascular Solutions, Inc. (incorporated by reference to
    Exhibit 10.2 to the Companys Current Report on
    Form 10-Q
    dated August 18, 2008).10
.17#*

Offer Letter, dated as of October 16, 2008, by and between
    VNUS Medical Technologies, Inc. and Guido E. Smeets M.D.21*


List of Subsidiaries of VNUS Medical Technologies, Inc.23
.1*

Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm.31
.1*

Certification of Chief Executive Officer Required Under
    Rule 13a-14(a)
    of the Securities Exchange Act of 1934, as amended.31
.2*

Certification of Principal Financial Officer Required Under
    Rule 13a-14(a)
    of the Securities Exchange Act of 1934, as amended.32*


Certification of Chief Executive Officer and Principal Financial
    Officer Required Under
    Rule 13a-14(b)
    of the Securities Exchange Act of 1934, as amended, and
    18 U.S.C. Section 1350.     *
    
    Filed herewith.+
    
    Confidential treatment requested and granted for certain
    portions of this document.#
    
    Management compensation or arrangement.  Exhibits.
  Regulation S-K
 69




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##### Table of Contents



SIGNATURES
      By
    /s/  BRIAN
    E. FARLEY   President, Chief Executive Officer and Director
      /s/  BRIAN
    E. FARLEYBrian
    E. Farley

President, Chief Executive Officer and Director (Principal
    Executive Officer)

Date: March 13, 2009/s/  PETER
    OSBORNEPeter
    Osborne

Vice President and Chief Financial Officer (Principal Financial
    Officer)

Date: March 13, 2009/s/  W.
    JAMES FITZSIMMONSW.
    James Fitzsimmons

Director

Date: March 13, 2009/s/  EDWARD
    W. UNKARTEdward
    W. Unkart

Director

Date: March 13, 2009/s/  LORI
    M. ROBSON, PH.D.Lori
    M. Robson, Ph.D.

Director

Date: March 13, 2009/s/  MICHAEL
    J. COYLEMichael
    J. Coyle

Director

Date: March 13, 2009/s/  GREGORY
    T. SCHIFFMANGregory
    T. Schiffman

Director

Date: March 13, 2009  70




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##### Table of Contents



FINANCIAL
    STATEMENT SCHEDULE
  SCHEDULE II
    VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
  Balance at








Balance atBeginning of








End ofPeriod


Additions


Utilized


Period(In thousands)Allowance for Doubtful Accounts Year Ended:December 31, 2006

$
308



44



(68
)

$
284December 31, 2007

$
284



205



(134
)

$
355December 31, 2008

$
355



245



(130
)

$
470Allowance for Excess and Obsolete Inventory Year Ended:December 31, 2006

$
155



298



(63
)

$
390December 31, 2007

$
390



565



(39
)

$
916December 31, 2008

$
916



191



(595
)

$
512Allowance for Deferred Tax Assets Year Ended:December 31, 2006

$
14,385



2,183






$
16,568December 31, 2007

$
16,568



1,008






$
17,576December 31, 2008

$
17,576







(4,801
)

$
12,775  71




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##### Table of Contents



INDEX OF
    EXHIBITS  ExhibitNumber

Description3
.1

Amended and Restated Certificate of Incorporation (incorporated
    by reference to Exhibit 3.1 to the Companys
    Registration Statement on
    Form S-1/A
    No. 333-117640,
    filed on September 28, 2004).3
.2

Amended and Restated Bylaws (incorporated by reference to
    Exhibit 3.1 to the Companys Report on
    Form 8-K
    dated March 3, 2008).4
.1

Specimen Stock Certificate (incorporated by reference to
    Exhibit 4.1 to the Companys Registration Statement on
    Form No. S-1/A
    333-117640,
    filed on October 15, 2004).10
.1*#

Amended and Restated 2000 Equity Incentive Plan.10
.2#

Form of Restricted Stock Unit Award Grant Notice and Restricted
    Stock Unit Award Agreement Under the VNUS Medical Technologies,
    Inc. Amended and Restated 2000 Equity Incentive Plan
    (incorporated by reference to Exhibit 10.1 to the
    Companys Report on
    Form 8-K
    dated September 8, 2005).10
.3#

VNUS Medical Technologies, Inc. 1995 Stock Plan (incorporated by
    reference to Exhibit 10.4 to the Companys
    Registration Statement on
    Form S-1
    No. 333-117640,
    filed on July 23, 2004).10
.4#

First Amendment to the VNUS Medical Technologies, Inc. 1995
    Stock Plan (incorporated by reference to Exhibit 10.5 to
    the Companys Registration Statement on
    Form S-1
    No. 333-117640,
    filed on July 23, 2004).10
.5#

Second Amendment to the VNUS Medical Technologies, Inc. 1995
    Stock Plan (incorporated by reference to Exhibit 10.6 to
    the Companys Registration Statement on
    Form S-1
    No. 333-117640,
    filed on July 23, 2004).10
.6*#

Amended and Restated VNUS Severance Plan for Management and Key
    Employees.10
.7#

Form of Indemnity Agreement for Directors and Officers
    (incorporated by reference to Exhibit 10.8 to the
    Companys Registration Statement on
    Form S-1/A
    No. 333-117640,
    filed on September 28, 2004).10
.8

Service and Supply Agreement by and between VNUS Medical
    Technologies, Inc. and Byers Peak, Inc., dated February 20,
    2004 (incorporated by reference to Exhibit 10.10 to the
    Companys Registration Statement on
    Form S-1/A
    No. 333-117640,
    filed on September 28, 2004).10
.9

Lease Agreement by and between Legacy Partners I SJ Fontanoso,
    LLC and VNUS Medical Technologies, Inc., dated November 15,
    2005 (incorporated by reference to Exhibit 10.19 to the
    Companys Annual Report on
    Form 10-K,
    dated March 14, 2006).10
.10#

Form of Stock Option Award Grant Notice and Option Award
    Agreement under the VNUS Medical Technologies, Inc. Amended and
    Restated 2000 Equity Incentive Plan (incorporated by reference
    to Exhibit 10.10 to the Companys Annual Report on
    Form 10-K
    dated March 30, 2007).10
.11#

Offer Letter, dated as of October 10, 2007, by and between
    VNUS Medical Technologies, Inc. and Kirti Kamdar (incorporated
    by reference to Exhibit 10.2 to the Companys Current
    Report on
    Form 8-K
    dated December 4, 2007).10
.12#

Separation Agreement and Release, dated as of April 3,
    2007, by and between VNUS Medical Technologies, Inc. and Scott
    Cramer (incorporated by reference to Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    dated April 6, 2007).10
.13#

Offer Letter, dated as of March 19, 2007, by and between
    VNUS Medical Technologies, Inc. and William A. Franklin
    (incorporated by reference to Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K
    dated April 6, 2007).10
.14#

Offer Letter, dated as of January 15, 2008, by and between
    VNUS Medical Technologies, Inc. and Peter Osborne (incorporated
    by reference to Exhibit 10.1 to the Companys Current
    Report on
    Form 8-K
    dated January 18, 2008).10
.15#

Offer Letter, dated as of April 8, 2008, by and between
    VNUS Medical Technologies, Inc. and Donald J. Todd (incorporated
    by reference to Exhibit 10.1 to the Companys Current
    Report on
    Form 10-Q
    dated August 18, 2008).10
.16+

Settlement Agreement, dated as of June 2, 2008, by and
    between VNUS Medical Technologies, Inc. and AngioDynamics, Inc.,
    and Vasculare Solutions, Inc. (incorporated by reference to
    Exhibit 10.2 to the Companys Current Report on
    Form 10-Q
    dated August 18, 2008). 72




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##### Table of Contents



ExhibitNumber

Description10
.17#*

Offer Letter, dated as of October 16, 2008, by and between
    VNUS Medical Technologies, Inc. and Guido E. Smeets M.D.21*


List of Subsidiaries of VNUS Medical Technologies, Inc.23
.1*

Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm.31
.1*

Certification of Chief Executive Officer Required Under
    Rule 13a-14(a)
    of the Securities Exchange Act of 1934, as amended.31
.2*

Certification of Principal Financial Officer Required Under
    Rule 13a-14(a)
    of the Securities Exchange Act of 1934, as amended.32*


Certification of Chief Executive Officer and Principal Financial
    Officer Required Under
    Rule 13a-14(b)
    of the Securities Exchange Act of 1934, as amended, and
    18 U.S.C. Section 1350.     *
    
    Filed herewith.+
    
    Confidential treatment requested and granted for certain
    portions of this document.#
    
    Management compensation or arrangement. 73