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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-KANNUAL REPORT PURSUANT TO
    SECTIONS 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
  (Mark One)þ

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

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to          .   Commission file number:
    000-50988
      VNUS Medical Technologies,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

94-3216535(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)5799 Fontanoso Way, San Jose, California(Address of principal
    executive offices)

95138(Zip Code)   Registrants telephone number, including area code:
 (408) 360-7200
  Securities registered pursuant to Section 12(b) of the
    Act:
    Common Stock, $0.001 par value per share
    Name of Each Exchange on which Registered:
    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(Do not check if a smaller
    reporting company)   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





VNUS
    MEDICAL TECHNOLOGIES, INC.
  TABLE OF
    CONTENTS
  PagePART IFORWARD LOOKING STATEMENTS


2Item 1.

Business


2Item 1A.

Risk Factors


18Item 1B.

Unresolved Staff Comments


32Item 2.

Properties


32Item 3.

Legal Proceedings


32Item 4.

Submission of Matters to a Vote of Security
    Holders


32PART IIItem 5.

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


33Item 6.

Selected Consolidated Financial Data


35Item 7.

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


36Item 7A.

Quantitative and Qualitative Disclosures about
    Market Risk


48Item 8.

Consolidated Financial Statements and
    Supplementary Data


49Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


74Item 9A.

Controls and Procedures


74Item 9B.

Other Information


75PART IIIItem 10.

Directors and Executive Officers of the
    Registrant


75Item 11.

Executive Compensation


75Item 12.

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


75Item 13.

Certain Relationships and Related Transactions


75Item 14.

Principal Accountant Fees and Services


75PART IVItem 15.

Exhibits and Financial Statement Schedules


76EXHIBIT 21EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32   1




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PART I FORWARD-LOOKING
    STATEMENTS  Certain statements contained in or incorporated by reference
    into this report are forward-looking statements within the
    meaning of Section 2E of the Securities Exchange Act of
    1934, as amended. Forward-looking statements include statements
    that are predictive in nature and depend upon or refer to future
    events or conditions, which include words such as
    believes, plans,
    anticipates, projects,
    estimates, expects, may,
    will, should, could,
    potential, or similar expressions. In addition, any
    statements concerning future financial performance,
    reimbursement rates, ongoing business strategies or prospects,
    and possible future actions are also forward-looking statements.
    Forward-looking statements are based on current expectations and
    projections about future events and are subject to risks,
    uncertainties, and assumptions about our company, economic and
    market factors and the industry in which we do business, among
    other things. We discuss such risks, uncertainties and other
    factors throughout this report and specifically under the
    caption Risk Factors in Part I, Item 1A
    below. Our actual results may differ materially from expected
    results based on a number of factors affecting our business,
    including, among other things, changing competitive markets,
    clinical trial data and regulatory conditions; and continued
    market acceptance of the ClosureFAST catheter; customer and
    physician preferences; changes in reimbursement levels
    established by governmental and third-party payors; the ability
    of the Company to protect its patent position; the effectiveness
    of advertising and other promotional campaigns; and overall
    economic and market conditions. The reader is cautioned not to
    unduly rely on these forward-looking statements. We expressly
    disclaim any intent or obligation to update these
    forward-looking statements except as required by law.
  Item 1:
    Business  Overview
  ® ®
       2




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follow-up
  tm tm
    Corporate
    Background
  (408) 360-7200. Form 10-K, Form 10-Q, Form 8-K
  ® ® ® tm tm tm tm ®
  Venous
    Reflux Disease
       3




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
    leg pain and swelling;
    leg heaviness and fatigue;
    painful varicose veins;
    skin changes such as discoloration or inflammation; and
    open skin ulcers.    Venous
    Reflux Market
        Current
    Treatment Alternatives
    Conventional Vein Stripping and Ligation
    Surgery.
    Endovenous Laser Ablation, or EVL.
 4




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follow-up
    The VNUS
    Closure Procedure
        
    Minimally Invasive Outpatient Procedure.  Our
    Closure procedure can be performed using local anesthesia in a
    physicians office, as well as in an outpatient hospital
    setting or surgicenter.
    Less Post-Operative Pain.  Independent
    comparative studies have shown that patients receiving our
    Closure procedure return to work and normal activity
    significantly faster than those receiving vein stripping. In a
    comparative trial of our ClosureFAST catheter versus EVL,
    patients treated using our Closure system exhibited less pain,
    tenderness, and bruising.
    Excellent Clinical Outcomes.  In a randomized
    comparative trial of our Closure procedure and vein stripping
    conducted in 2000, our Closure procedure was found to be as
    effective as vein stripping at two years following treatment,
    with fewer side effects and faster recovery. Another comparative
    trial of our ClosureFAST catheter and EVL showed our Closure
    procedure exhibited fewer complications than EVL. Our
    multi-center clinical trial of our new ClosureFAST catheter
    showed a 96.2% accumulative vein occlusion rate at one year
    using ultrasound imaging. By comparison, earlier studies of the
    previous generations of the Closure catheter produced a vein
    occlusion rate of 87% at one year
    follow-up in
    our multi-center clinical registry. 5




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
    Long-Lasting Results.  Our published
    multi-center registry data shows our Closure procedure
    eliminated venous reflux in 87% of 119 limbs evaluated at four
    years and 84% of 117 limbs evaluated at five years.
    Safe and Controlled Procedure.  Our Closure
    system includes a number of safety features designed to ensure
    precise delivery of RF energy. Our system continuously monitors
    the treatment temperature of the vein wall and adjusts energy
    delivery throughout the procedure to provide a high level of
    effectiveness and a low incidence of adverse events during
    recovery.
    Cosmetically Appealing.  We believe that our
    Closure system results in less bruising, pain and skin
    discoloration than both vein stripping and EVL. Additionally,
    because our Closure procedure is minimally invasive, it results
    in little or no scarring compared to vein stripping.    Clinical
    Results
    Prospective
    Clinical Trial of our ClosureFAST catheter
    ClosureFAST
    Procedure Versus Endovenous Laser Treatment
  catheter-in-to-catheter-out
  Randomized
    Trials of our Closure Procedure Versus Vein
    Stripping
   6




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% of Limbs Free of Adverse FindingsClosure Procedure


Vein Stripping72 Hours


43%



17%3 Weeks


71%



39%       Clinical
    Registry of the Closure Procedure
    Elimination ofTime of Follow Up

# of Limbs


Reflux1 Year


473



88%2 Years


263



88%3 Years


133



88%4 Years


119



87%5 Years


117



84%     Single-Center
    Studies of Our Closure Procedure
   7




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Products
    Disposable
    Endovenous Catheters
  ClosureFAST
    Catheter
        ClosurePLUS
    Catheter
   8




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ClosureRFS tm Device for Treatment of Perforator and Tributary Veins
    RFGPlus
    Generator
  tm
  Accessories
    and Other Products
    Seasonality
    Sales and
    Marketing
     9




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market-by-market
    
    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, large 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 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 the single-source supplier
    for a physicians vein treatment needs.    Reimbursement
     10




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Research
    and Development
      Business
    Development
      Manufacturing
       11




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90-day
      Patents
    and Proprietary Technology
       12




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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;
    approval of reimbursement by healthcare payors;
    patent protection.  Government
    Regulation
    United
    States
   13




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510(k) Clearance Pathway.
  and/or
  Premarket Approval Pathway.
  Clinical Trials.
  Continuing FDA Regulation.
  
    Quality System Regulations, which require manufacturers to
    follow design, testing, control, documentation and other quality
    assurance procedures during the manufacturing process; 14




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
    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, or MDR, 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.          
    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) clearance(s) or pre-market
    approvals of new products; 15




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
    withdrawing 510(k) clearances that are already granted; and/or
    criminal prosecution.    Current 501(k) Clearances.
  European
    Union
  (93/42/EEC),
    Rest
    of the World
    Fraud and
    Abuse Laws
  Anti-Kickback
    Statute
     16




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Stark
    Law
        False
    Claims Laws
    Fraud
    on a Health Benefit Plan and False Statements
   17




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Privacy
    and Security
    Employees
    Financial
    Information
    Item 1A:
    Risk
    Factors  We
    expect to derive substantially all of our future revenues from
    sales of our Closure system. If our Closure system does not
    continue to achieve market acceptance, we may not generate
    sufficient revenues to continue our operations.
    
    if reimbursement from U.S. healthcare payors for our
    Closure system is reduced, inadequate or discontinued.
    the discovery of design or manufacturing defects in our Closure
    system, including in the systems software component;
    the failure of our Closure system to meet physicians
    expectations;
    the availability of alternative treatments or procedures that
    may be, or may be perceived as, more effective, safer, faster,
    easier to use or less costly than our Closure system; and
    price reductions of our Closure catheters due to market pressure. 18




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If
    physicians do not adopt and utilize our Closure system, we will
    not achieve greater, or maintain our current, revenues or be
    profitable.
    follow-up
    Competition
    from existing and new products and procedures may decrease our
    market share and cause our revenues to decline.
      
    products and procedures that are less expensive and take less
    time to perform;
    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.
   19




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
    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;
    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;
    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 the international markets where we sell our
    products.      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.
   20




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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.
         21




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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.      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.
    
    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; 22




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
    investor perceptions of us and our business, including changes
    in market valuations of medical device companies;
    our results of operations and financial performance; and
    general economic, industry and market conditions.    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.
    To
    successfully grow our business, we will need to attract
    additional qualified personnel and retain key
    personnel.
   23




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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.
  non-U.S. currency,
  
    export restrictions and controls relating to technology;
    the availability and level of reimbursement within prevailing
    foreign healthcare payment systems;
    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;
    difficulties in enforcing agreements and collecting receivables
    through foreign legal systems;
    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 currency exchange rates; and
    difficulties in enforcing intellectual property rights.   24




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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.
     25




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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;
    pre-market clearance or approval;
    record keeping procedures;
    advertising and promotion;
    post-market surveillance and reporting of deaths, serious
    injuries or malfunctions; and
    export.     26




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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.
    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.
   27




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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;
    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.   28




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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.
   29




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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;
    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
    the cost of litigation and other legal actions.   30




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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;
    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.   31




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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
    Item 4:
    Submission
    of Matters to a Vote of Security Holders   32




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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, 2007First Quarter

$
10.71


$
8.38Second Quarter

$
15.54


$
9.92Third Quarter

$
16.03


$
12.24Fourth Quarter

$
16.19


$
12.90Year Ended December 31, 2006First Quarter

$
9.09


$
7.33Second Quarter

$
8.38


$
6.98Third Quarter

$
8.20


$
5.97Fourth Quarter

$
8.96


$
6.46     Dividend
    Policy
    Securities
    Authorized for Issuance Under Equity Compensation
    Plans
    Issuer
    Purchases of Equity Securities
    Use of
    Proceeds
  Form S-1 No. 333-117640)
   33




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##### Table of Contents



Stock
    Price Performance Graph
  Comparison of 38 Month Cumulative Total Return*
 Among VNUS Medical Technologies, Inc.,
 the NASDAQ Composite Index
 and the NASDAQ Medical Equipment Index
  
    *
    $100 invested on 10/20/04 in stock or on 9/30/04 in
    index-including reinvestment of dividends. Fiscal year ending
    December 31. 34




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Item 6:
    Selected
    Consolidated Financial Data  Form 10-K. Form 10-K. Form 10-K.
  Years Ended December 31,2007


2006


2005


2004


2003(In thousands, except per share data)Consolidated Statements of Operations Data:Net revenues

$
70,904


$
51,681


$
49,170


$
38,166


$
21,838Cost of revenues


25,706



17,284



12,311



9,542



6,311Gross profit


45,198



34,397



36,859



28,624



15,527Operating expenses:Sales and marketing


25,311



22,343



20,173



16,235



11,997Research and development


9,444



7,422



3,815



4,540



3,513General and administrative


19,340



15,402



9,025



5,200



2,772Total operating expenses


54,095



45,167



33,013



25,975



18,282(Loss) income from operations


(8,897
)


(10,770
)


3,846



2,649



(2,755
)Interest income and other, net


3,451



3,471



1,779



439



171(Loss) income before provision for income taxes


(5,446
)


(7,299
)


5,625



3,088



(2,584
)Provision for income taxes


78



33



275



222



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


(5,524
)


(7,332
)


5,350



2,866



(2,584
)Cumulative effect of change in accounting principle, net of tax






73











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

$
(5,524
)

$
(7,259
)

$
5,350


$
2,866


$
(2,584
)Basic net (loss) income per share

$
(0.36
)

$
(0.48
)

$
0.37


$
0.73


$
(1.97
)Diluted net (loss) income per share

$
(0.36
)

$
(0.48
)

$
0.35


$
0.23


$
(1.97
)Shares used in computing basic net (loss) income per share


15,390



15,047



14,652



3,946



1,309Shares used in computing diluted net (loss) income per share


15,390



15,047



15,466



12,368



1,309   December 31,2007


2006


2005


2004


2003(In thousands)Consolidated Balance Sheet Data:Cash and cash equivalents

$
39,269


$
38,917


$
46,797


$
68,566


$
11,711Short-term investments

$
24,067


$
28,996


$
25,718







Working capital

$
71,001


$
70,859


$
77,362


$
70,681


$
12,713Total assets

$
86,490


$
85,833


$
85,339


$
77,972


$
17,789Total liabilities

$
13,001


$
11,085


$
5,817


$
5,664


$
3,548Total accumulated deficit

$
(48,533
)

$
(43,082
)

$
(35,823
)

$
(41,173
)

$
(44,039
)Total stockholders equity

$
73,489


$
74,748


$
79,522


$
72,308


$
14,241  35




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##### Table of Contents



Item 7:
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  This financial review presents our operating results for each
    of the three years in the period ended December 31, 2007,
    and our financial condition at December 31, 2007 and 2006.
    You should read the following discussion of our financial
    condition and results of our operations in conjunction with the
    information presented in our consolidated financial statements
    and the related notes to our consolidated financial statements.
    Except for the historical information contained herein, this
    discussion contains forward-looking statements that involve
    risks and uncertainties, such as statements of our plans,
    objectives, expectations and intentions. Factors that could
    cause or contribute to these differences include those discussed
    in Risk Factors Part 1, Item 1A, as well
    as those discussed elsewhere. Our actual results may differ
    materially from expected results based on a number of factors
    affecting our business, including, among other things, changing
    competitive markets, clinical trial data and regulatory
    conditions; continued market acceptance of the Closure system;
    customer and physician preferences; changes in reimbursement
    levels established by governmental and third-party payors; the
    ability of the Company to protect its patent position; the
    effectiveness of advertising and other promotional campaigns;
    and overall economic and market conditions. The reader is
    cautioned not to unduly rely on these forward-looking
    statements. The cautionary statements made in Part 1,
    Forward-Looking Statements should be read as
    applying to all related forward-looking statements wherever they
    appear in this report.
  Business
    Overview
    start-up
         36




---



##### 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.
  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
  SOP No. 97-2, Software Revenue Recognition SOP No. 98-9,
 37




---



##### Table of Contents



Valuation of Inventory.
  Warranty.
  Allowance for Doubtful Accounts.
    Income Taxes. Accounting for Uncertainty in Income
 38




---



##### Table of Contents



Taxes-an interpretation of FASB Statement No. 109 Accounting for Income
    Taxes.
      Share-Based Compensation Expense.
  Recent
    Accounting Pronouncements
  The Fair Value
    Option for Financial Assets and Financial
    Liabilities  Including an Amendment of FASB Statement
    No. 115
  Fair Value Measurements
  Business Combinations
 39




---



##### Table of Contents



Noncontrolling Interests in Consolidated Financial
    Statements  An Amendment of ARB No. 51
  Results
    of Operations
    Years Ended December 31,2007


2006


2005Net revenues


100.0
%


100.0
%


100.0
%Cost of revenues


36.3



33.4



25.0Gross profit


63.7



66.6



75.0Operating expenses:Sales and marketing


35.7



43.2



41.0Research and development


13.3



14.4



7.8General and administrative


27.3



29.8



18.3Total operating expenses


76.3



87.4



67.1(Loss) income from operations


(12.6
)


(20.8
)


7.9Interest income and other, net


4.9



6.7



3.6(Loss) income before provision for income taxes


(7.7
)


(14.1
)


11.5Provision for income taxes


0.1







0.6Net (loss) income before cumulative effect of change in
    accounting principle


(7.8
)


(14.1
)


10.9Cumulative effect of change in accounting principle, net of tax






0.1



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


(7.8
)%


(14.0
)%


10.9
%   Net
    Revenues by Period
    Years Ended December 31,2007


2006


% Change


2006


2005


% Change(Dollars in thousands)Net Revenues

$
70,904


$
51,681



37%


$
51,681


$
49,170



5%     
    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 in deferred revenue relating to the software
    upgrade promoted at the end of 2006 with delivery commencing at
    the end of the first quarter 2007; and
    increased accessory sales in both dollars and units. 40




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##### Table of Contents




    increased unit sales of catheters and generators partially
    offset by reduced average sales price for both and the deferral
    of $1.9 million of generator sales due to the undelivered
    software upgrade; and
    increased accessory sales coupled with the limited launch of the
    ClosureRFS product line.    Net
    Revenues by Product
    Years Ended December 31,2007


2006


2005Catheters and devices


73
%


81
%


76
%RF generators


14
%


8
%


18
%Accessories


13
%


11
%


6
%100
%


100
%


100
%     Net
    Revenues by Geographic Region as a Percentage of Net
    Revenues
    Years Ended December 31,2007


2006


2005United States


93
%


96
%


96
%Europe & Other


7
%


4
%


4
%100
%


100
%


100
%    41




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##### Table of Contents



Gross
    Profit by Period
    Years Ended December 31,2007


2006


% Change


2006


2005


% Change(Dollars in thousands)Gross Profit

$
45,198


$
34,397



31%


$
34,397


$
36,859



−7%       
    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.    
    lower sales of higher margin RF generators, due in part to the
    deferral of $1.9 million of RF generators sales in 2006
    related to the software upgrade promoted at the end of 2006 and
    delivered in 2007;
    increases in manufacturing overhead in 2006 due to costs of our
    new facility; and
    increases in compensation costs in 2006 related to the adoption
    of SFAS No. 123R.    Operating
    Expenses by Period
  Years Ended December 31,2007


2006


% Change


2006


2005


% Change(Dollars in thousands)Sales and marketing

$
25,311


$
22,343



13%


$
22,343


$
20,173



11%Research and development


9,444



7,422



27%



7,422



3,815



95%General and administrative


19,340



15,402



26%



15,402



9,025



71%$
54,095


$
45,167



20%


$
45,167


$
33,013



37%   Operating
    Expense Summary
    
    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;
    an increase of $225,000 in spending on clinical studies
    expenses; partially offset by 42




---



##### Table of Contents




    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.    
    an increase of $7.0 million due to increased headcount and
    related expense (including share-based compensation);
    an increase of $2.7 million in legal expense related to our
    ongoing patent litigation;
    an increase of $2.0 million in consulting, materials and
    clinical trial costs related to new products, including our
    ClosureFAST catheter;
    an increase of $1.1 million in facility costs for our new
    corporate headquarters;
    an increase of $847,000 of restructuring charges from the
    relocation of our corporate headquarters;
    an increase of $414,000 in trade show and travel related
    expenses; partially offset by
    a decrease of $1.0 million in consulting and professional
    services primarily related to the initial implementation of SOX
    404 requirements in 2005;
    a decrease of $338,000 in training and literature costs; and
    a decrease of $189,000 expenses that were charged to product
    cost to support improvement in the manufacturability of existing
    products.  Sales
    and Marketing Expenses
    
    an increase of $2.1 million due to increased commissions
    from higher sales, increases in 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.    
    an increase of $2.1 million due to increased headcount and
    related expense (including share-based compensation);
    an increase of $419,000 in facility costs for our new corporate
    headquarters allocated to sales and marketing; partially offset
    by
    a decrease of $338,000 in training and literature costs.    Research
    and Development Expenses
    
    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. 43




---



##### Table of Contents




    an increase of $2.0 million in consulting, materials and
    clinical trial costs related to new products, including our
    ClosureFAST catheter;
    an increase of $1.4 million due to increased headcount and
    related expense (including share-based compensation); and
    an increase of $398,000 in facility costs for our new corporate
    headquarters allocated to research and development; partially
    offset by
    a decrease of $189,000 expenses that were charged to product
    cost to support improvement in the manufacturability of existing
    products.    General
    and Administrative Expenses
    
    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 our
    on-going patent litigation;
    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.    
    an increase of $3.5 million due to increased headcount and
    related expense (including share-based compensation);
    an increase of $2.7 million in legal and other professional
    fees, primarily associated with the Companys on-going
    patent litigation;
    an increase of $847,000 of restructuring charges from the
    relocation of our corporate headquarters;
    an increase of $331,000 in facility costs for our new corporate
    headquarters allocated to general and administrative; partially
    offset by
    a decrease of $1.0 million in consulting and professional
    services primarily related to the initial implementation of SOX
    404 requirements in 2005.    Interest
    Income and Other Income (Expense), Net
    
    a decrease of $208,000 in interest and other 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 transaction gains
    primarily due to the weakening dollar against the Euro and the
    British Pound. 44




---



##### Table of Contents




    an increase of $1.3 million in interest and other
    income; and
    an increase of $355,000 in currency related transaction gains.    Provision
    for Income Taxes
      Liquidity
    and Capital Resources
  December 31,2007


2006


$ Change


2006


2005


$ ChangeCash and cash equivalents

$
39,269


$
38,917


$
352


$
38,917


$
46,797


$
(7,880
)Short-term investments

$
24,067


$
28,996


$
(4,929
)

$
28,996


$
25,718


$
3,278Working capital

$
71,001


$
70,859


$
142


$
70,859


$
77,362


$
(6,503
)Net cash (used in) provided by operating activities

$
(5,727
)

$
(165
)

$
(5,562
)

$
(165
)

$
3,750


$
(3,915
)Net cash provided by (used in) investing activities

$
3,940


$
(7,912
)

$
11,852


$
(7,912
)

$
(26,669
)

$
18,757Net cash provided by financing activities

$
2,156


$
197


$
1,959


$
197


$
1,150


$
(953
)    45




---



##### Table of Contents



Cash
    flows from operating activities
    
    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.    
    an increase of $12.6 million in net loss; partially offset
    by
    an increase of $1.8 million in deferred share-based
    compensation;
    a decrease of $1.3 million in inventory;
    an increase of $2.2 million in deferred revenue;
    an increase of $1.7 million in other long term
    liabilities; and
    an increase of $1.1 million in prepaids, other assets,
    accounts payable and other accrued liabilities.  Cash
    flows from investing activities
    
    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.    
    an increase of $21.8 million in cash used to purchase of
    short-term investments;
    an increase of $44.3 million in proceeds from the sale of
    short-term investments; and
    an increase of $3.8 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.   46




---



##### Table of Contents



Other
    Factors Affecting Liquidity and Capital Resources
      Off-Balance
    Sheet Arrangements
    Contractual
    Obligations and Capital Expenditure Requirements
    Payments due by PeriodContractual Obligations and




Less than


1-3


3-5


More thanCapital Expenditure Requirements

Total


1 Year


Years


Years


5 Years(In thousands)Operating lease obligations

$
6,997


$
941


$
2,255


$
2,361


$
1,440Inventory purchase commitments


2,809



2,809











Other purchase commitments


608



608











Total

$
10,414


$
4,358


$
2,255


$
2,361


$
1,440    47




---



##### Table of Contents



Item 7A:
    Quantitative
    and Qualitative Disclosures about Market Risk       48




---



##### 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


50Consolidated Balance Sheets at December 31,
    2007 and 2006


51Consolidated Statements of Operations for each of
    the years in the three year period ended December 31,
    2007


52Consolidated Statements of Stockholders
    Equity and Comprehensive Income (Loss) for each of the years in
    the three year period ended December 31, 2007


53Consolidated Statements of Cash Flows for each of
    the years in the three year period ended December 31,
    2007


54Notes to Consolidated Financial Statements


55  49




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm     Internal Control  Integrated
    Framework
         
  50




---



##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  CONSOLIDATED
    BALANCE SHEETS  December 31,2007


2006(In thousands,except share data)ASSETSCurrent assets:Cash and cash equivalents

$
39,269


$
38,917Short-term investments


24,067



28,996Accounts receivable, net of allowance for doubtful accounts of
    $355 and $284, respectively


11,456



8,246Inventories


5,793



2,798Prepaid expenses and other current assets


1,421



1,443Total current assets


82,006



80,400Property and equipment, net


4,354



4,651Other assets


130



782Total assets

$
86,490


$
85,833LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
2,366


$
1,340Accrued compensation and benefits


6,040



2,708Other accrued liabilities


1,571



2,979Deferred revenue


1,028



2,514Total current liabilities


11,005



9,541Other long-term liabilities


1,996



1,544Total liabilities


13,001



11,085Commitments and contingencies (Note 6)Stockholders equity:Convertible preferred stock: $0.001 par value; 10,000,000
    authorized; none issued and outstanding at December 31,
    2007 and December 31, 2006, respectively






Common stock: $0.001 par value; 56,666,666 authorized,
    15,702,880 and 15,130,598 issued and outstanding at
    December 31, 2007 and 2006, respectively


15



15Additional paid-in capital


122,009



117,964Deferred share-based compensation


(23
)


(144
)Accumulated other comprehensive income (loss)


21



(5
)Accumulated deficit


(48,533
)


(43,082
)Total stockholders equity


73,489



74,748Total liabilities and stockholders equity

$
86,490


$
85,833    51




---



##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS  Years Ended December 31,2007


2006


2005(In thousands, except per share data)Net revenues

$
70,904


$
51,681


$
49,170Cost of revenues


25,706



17,284



12,311Gross profit


45,198



34,397



36,859Operating expenses:Sales and marketing


25,311



22,343



20,173Research and development


9,444



7,422



3,815General and administrative


19,340



15,402



9,025Total operating expenses


54,095



45,167



33,013(Loss) income from operations


(8,897
)


(10,770
)


3,846Interest income


3,061



3,148



1,852Other income (expense), net


390



323



(73
)(Loss) income before provision for income taxes


(5,446
)


(7,299
)


5,625Provision for income taxes


78



33



275Net (loss) income before cumulative effect of change in
    accounting principle


(5,524
)


(7,332
)


5,350Cumulative effect of change in accounting principle, net of tax






73



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

$
(5,524
)

$
(7,259
)

$
5,350Net (loss) income per share (see Note 2):Basic(Loss) income per share before cumulative change in accounting
    principle

$
(0.36
)

$
(0.49
)

$
0.37Cumulative effect of change in accounting principle, net of tax






0.01



Basic net (loss) income per share

$
(0.36
)

$
(0.48
)

$
0.37Diluted(Loss) income per share before cumulative change in accounting
    principle

$
(0.36
)

$
(0.49
)

$
0.35Cumulative effect of change in accounting principle, net of tax






0.01



Diluted net (loss) income per share

$
(0.36
)

$
(0.48
)

$
0.35Shares used in computing basic net (loss) income per share


15,390



15,047



14,652Shares used in computing diluted net (loss) income per share


15,390



15,047



15,466    52




---



##### Table of Contents





VNUS
    MEDICAL TECHNOLOGIES, INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
    (LOSS)  AccumulatedAdditional


Deferred


Other





TotalPaid-In


Share-Based


Comprehensive


Accumulated


StockholdersShares


Amount


Capital


Compensation


Income (Loss)


Deficit


Equity(In thousands, except share and per share data)Balances at December 31, 2004


14,371,439


$
14


$
114,698


$
(1,231
)

$



$
(41,173
)

$
72,308Exercise of stock options


528,550



1



1,149















1,150Deferred share-based compensation for stock option grants










10



(10
)










Deferred share-based compensation for restricted stock units
    (RSUs)










2,264



(2,264
)










Fair value of options issued for services










62















62Cancellation of options










(284
)


284











Cancellation of RSUs










(63
)


63











Amortization of deferred share-based compensation














614











614Tax benefit on exercise of employee stock options










88















88Components of other comprehensive income (loss) Unrealized loss
    on short-term investments


















(50
)






(50
)Net income






















5,350



5,350Total comprehensive income


























5,300Balances at December 31, 2005


14,899,989



15



117,924



(2,544
)


(50
)


(35,823
)


79,522Exercise of stock options


164,883







197















197Exercise of stock warrants


21,928























Common stock issued for restricted stock units (RSUs)


43,798







(127
)














(127
)Deferred share compensation for RSUs










(2,005
)


2,005











Fair value of options issued for services










10















10Cancellation of options










(43
)


43











Share-based compensation for stock options










1,400



244











1,644Share-based compensation for RSUs










608



181











789Cumulative effect of change in accounting principle














(73
)










(73
)Components of other comprehensive income (loss) Unrealized gain
    on short-term Investments


















45







45Net loss






















(7,259
)


(7,259
)Total comprehensive loss


























(7,214
)Balances at December 31, 2006


15,130,598



15



117,964



(144
)


(5
)


(43,082
)


74,748Cumulative adjustment for FIN 48






















73



73Exercise of stock options


484,029







2,628















2,628Common stock issued for restricted stock units


88,253







(472
)














(472
)Cancellation of options










(41
)


41











Share-based compensation for stock options










1,100



80











1,180Share-based compensation for RSUs










830















830Components of other comprehensive income (loss) Unrealized gain
    on short-term investments


















43







43Cumulative translation adjustment


















(17
)






(17
)Net loss






















(5,524
)


(5,524
)Total comprehensive loss


























(5,499
)Balances at December 31, 2007


15,702,880


$
15


$
122,009


$
(23
)

$
21


$
(48,533
)

$
73,489    53




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##### Table of Contents





VNUS
    MEDICAL TECHNOLOGIES, INC.
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Years Ended December 31,2007


2006


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

$
(5,524
)

$
(7,259
)

$
5,350Adjustments to reconcile net (loss) income to net cash (used in)
    provided by operating activities:Depreciation and amortization


1,199



1,103



634Provision for excess and obsolete inventory


565



298



174Impairment of long-lived assets






181



Share-based compensation and amortization


2,010



2,443



676Tax benefit on exercise of employee stock options










88Cumulative effect of change in accounting principle






(73
)


Allowance for doubtful accounts


205



44



216Warranty reserve


3



283



35Change in operating assets and liabilities:Accounts receivable


(3,414
)


(1,672
)


(1,317
)Inventories


(3,560
)


(132
)


(1,445
)Prepaid expenses and other current assets


22



(209
)


(588
)Other long-term assets


652



51



(191
)Accounts payable


1,026



107



(9
)Accrued compensation and benefits


3,804



(112
)


(389
)Other accrued liabilities


(1,810
)


875



514Deferred revenue


(1,486
)


2,292



77Other long-term liabilities


581



1,615



(75
)Net cash (used in) provided by operating activities


(5,727
)


(165
)


3,750Cash flows from investing activities:Purchase of short-term investments


(52,101
)


(56,261
)


(34,468
)Sale of short-term investments


57,073



53,028



8,700Purchase of property and equipment


(1,032
)


(4,679
)


(901
)Net cash provided by (used in) investing activities


3,940



(7,912
)


(26,669
)Cash flows from financing activities:Proceeds from the exercise of stock options for common stock


2,628



324



1,150Employees taxes withheld and paid for restricted stock


(472
)


(127
)


Net cash provided by financing activities


2,156



197



1,150Net increase (decrease) in cash and cash equivalents


369



(7,880
)


(21,769
)Effect of foreign exchange rates


(17
)






Cash and cash equivalents at the beginning of the year


38,917



46,797



68,566Cash and cash equivalents at the end of the period

$
39,269


$
38,917


$
46,797    54




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
  Note 1 
    The
    Company  ® tm tm
    Note 2 
    Summary
    of Significant Accounting Policies  Principles of consolidation and basis of
    presentation.
  Foreign Currency Translation.
    Use of Estimates.
  Reclassifications.
  Net Income (Loss) Per Share.
 55




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended December 31,2007


2006


2005Numerator:Net (loss) income available to common stockholders

$
(5,524
)

$
(7,259
)

$
5,350Denominator:Weighted average common shares outstanding used in computing
    basic net (loss) income per share


15,390



15,047



14,652Effect of dilutive securities:Stock options, restricted stock units, and deferred share-based
    compensation










814Total shares, diluted


15,390



15,047



15,466Net (loss) income per common share:Basic

$
(0.36
)

$
(0.48
)

$
0.37Diluted

$
(0.36
)

$
(0.48
)

$
0.35     Year Ended December 31,2007


2006


2005Stock options


1,179



1,634



214Restricted stock units


538



398



Total


1,717



2,032



214   Cash and Cash Equivalents.
  Short-Term Investments.
 56




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair Value of Financial Instruments.
  Inventories. first-in,
  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 yearsPurchased software

3 to 5 years     Long-Lived Assets.
  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.
  (SOP) No. 97-2, Software Revenue Recognition SOP No. 98-9, Software Revenue Recognition with Respect to Certain
    Agreements
 57




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Warranty.
  Research and Development Costs.
  Advertising Expenses.
  Cumulative Effect of a Change in Accounting
    Principle. Share-Based Payment Accounting for Stock-Based
    Compensation,
    Comprehensive Income (Loss).
  Income Taxes.
  Recent
    Accounting Pronouncements
  The Fair Value
    Option for Financial Assets and Financial
    Liabilities  Including an Amendment of FASB Statement
    No. 115
  Fair Value Measurements
 58




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements  An Amendment of ARB No. 51
  Note 3 
    Concentration of Credit Risk
     59




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 4 
    Short-Term
    Investments    December 31, 2007Gross


Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair ValueCorporate debt securities

$
8,704


$
1


$



$
8,705Commercial paper


15,325



37







15,362Total short-term investments

$
24,029


$
38


$



$
24,067   December 31, 2006Gross


Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair ValueCorporate debt securities

$
8,504


$



$
(14
)

$
8,490Asset backed securities


1,997










$
1,997Commercial paper


18,500



9






$
18,509Total short-term investments

$
29,001


$
9


$
(14
)

$
28,996    60




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 5 
    Balance
    Sheet Components  December 31,2007


2006(In thousands)InventoriesRaw material and sub-assemblies

$
3,007


$
1,212Finished goods


2,254



1,344Radio-frequency generators


532



242$
5,793


$
2,798Property and equipment, net(1)Furniture and fixtures

$
390


$
367Computer and office equipment


1,427



1,274Software


1,036



906Laboratory equipment


1,934



1,181Leasehold improvements


2,999



2,884Assets not ready to be placed in service


150



2967,936



6,908Less accumulated depreciation and amortization


(3,582
)


(2,257
)Property and equipment, net

$
4,354


$
4,651Other accrued liabilitiesAccrued expenses

$
520


$
1,524Accrued taxes


392



585Accrued warranty


72



204Accrued restructuring






352Other accrued liabilities


587



314$
1,571


$
2,979     (1)
    
    All long-lived assets are located in the United States of
    America.  Note 6 
    Commitments
    and Contingencies  Product Warranty Commitment.
 61




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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


Reserve


End ofPeriod


Reserve


Utilized


PeriodYear ended December 31, 2007

$
204


$
3


$
(135
)

$
72Year ended December 31, 2006

$
34


$
283


$
(113
)

$
204Year ended December 31, 2005

$
43


$
35


$
(44
)

$
34   Legal Proceedings. VNUS Medical
    Technologies, Inc. v. Diomed Holdings, Inc., et al., No. C05-02972 MMC
    Leases.
 62




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##### Table of Contents



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

Operating Leases2008

$
9412009


1,1152010


1,1402011


1,1632012


1,1982013 and thereafter


1,440$
6,997         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

$



$



$



$
     Indemnifications.
  Purchase Commitments.
 63




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 7 
    Share-Based
    Compensation  Share-Based Payment. Accounting for Shares Issued to Employees, Accounting
    for Share-Based Compensation.
  No. 96-18, Accounting for Equity Investments that are Issued to
    Non-Employees for Acquiring, or in Conjunction with Selling,
    Goods or Services.
  Prior
    to the adoption of SFAS No. 123R
  Accounting for
    Share-Based Compensation  Transition and
    Disclosures.
    Year Ended2005Net income, as reported

$
5,350Deduct: Share-based compensation expense determined under fair
    value based method, net of tax


(1,938
)Pro forma net income

$
3,412Weighted average number of shares used in per share calculation:Basic


14,652Diluted


15,218Pro forma net income per share:Basic

$
0.23Diluted

$
0.22  64




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Impact
    of the adoption of SFAS No. 123R
    Transition Election
    Related to Accounting for Tax Effects of Share-Based Payment
    Awards.
      Years Ended December 31,2007


2006Cost of revenues

$
124


$
182Sales and marketing


467



886Research and development


336



276General and administrative


1,083



1,099Total share-based compensation

$
2,010


$
2,443    65




---



##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Valuation
    Assumptions
      Years Ended2007

2006

2005Risk free interest rates

3.52% - 4.84%

4.55% - 5.00%

3.71% - 4.45%Expected life in years

4.85-5.25

5.25-6.25

3.7Dividend yield





Volatility

79.7%-86.9%

63.8%-96.2%

51.59%            66




---



##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Equity
    Incentive Program
          and/or
 67




---



##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     68




---



##### Table of Contents



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


Options Outstanding


RSUs Outstandingfor Future


Number of


Weighted Average


Number ofGrant


Options


Exercise Price per Share


RSUsBalances at December 31, 2004


887,684



1,679,722


$
2.86



Authorized


595,999











Expired


(273
)










Granted


(1,021,218
)


771,939



11.38



249,279Options exercised






(528,550
)


2.18



Terminated/cancelled


210,486



(203,466
)


5.36



(7,020
)Balances at December 31, 2005


672,678



1,719,645



6.60



242,259Authorized


605,223











Expired


(3,118
)










Granted


(539,843
)


228,666



7.52



311,177Options exercised






(164,883
)


1.19



Restricted stock unit releases














(43,798
)RSU releases surrendered for taxes


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


628,033











Expired


(3,431
)










Granted


(778,157
)


278,017



12.27



500,140Options exercised






(484,029
)


5.44



Restricted stock unit releases














(88,253
)RSU releases surrendered for taxes


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



538,059    69




---



##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Options OutstandingWeighted Average


Options ExercisableNumber of


Remaining


Number of


Weighted AverageExercise Prices

Outstanding


Contractual Life


Options


Exercise Price(In years)$ 0.608- 0.714


15,296



1.51



15,296


$
0.656$ 1.500- 1.500


218,648



4.61



218,648


$
1.500$ 3.000- 6.960


124,462



6.43



109,832


$
3.226$ 7.020- 7.170


139,711



7.08



106,335


$
7.157$ 7.230-10.000


126,723



8.15



56,893


$
8.357$10.080-10.860


179,288



7.26



137,948


$
10.734$10.900-12.210


152,994



8.86



55,742


$
11.738$12.250-13.800


127,024



7.86



73,034


$
12.879$14.080-15.000


88,500



9.25



24,313


$
14.915$15.500-15.500


6,500



9.75



63


$
15.5001,179,146



7.12



798,104


$
6.726       Restricted
    Stock Units
      Note 8 
    Income
    Taxes   70




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##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Years Ended December 31,2007


2006


2005U.S. federal statutory tax rate


(35.00
)%


(35.00
)%


35.00
%State income taxes, net of federal benefit


(5.20
)%


(5.09
)%


5.58
%Meals/entertainment and other permanent adjustments


1.27
%


0.88
%


1.57
%Change in valuation allowance


33.61
%


33.30
%


(47.35
)%Amortization of book share-based compensation


5.85
%


6.37
%


4.77
%AMT tax credit not benefited










2.69
%Other


0.91
%






2.64
%1.44
%


0.46
%


4.90
%     December 31,2007


2006Net operating loss carryovers

$
13,128


$
12,313Tax credits


1,740



2,569Accruals, allowances and reserves


1,951



415Capitalization & cost recovery


742



996Share-based compensation


129



279Other


(114
)


(4
)Net deferred tax assets


17,576



16,568Valuation allowance


(17,576
)


(16,568
)Net deferred tax assets

$



$
       Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement
    No. 109
 71




---



##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007Balance at January 1, 2007

$
969Additions for tax positions related to 2007


278Balance at December 31, 2007

$
1,247         Note 9 
    Operating
    Segment and Geographic Information  Disclosures About Segments of an Enterprise and Related
    Information
    Year Ended December 31,2007


2006


2005United States


93
%


96
%


96
%Europe and Other


7
%


4
%


4
%100
%


100
%


100
%   Year Ended December 31,2007


2006


2005Catheters and devices


73
%


81
%


76
%RF generators


14
%


8
%


18
%Accessories


13
%


11
%


6
%100
%


100
%


100
%   Note 10 
    Employee
    Benefit Plans   72




---



##### Table of Contents



VNUS
    MEDICAL TECHNOLOGIES, INC.
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 11 
    Selected
    Quarterly Financial Data (unaudited)    Dec. 07


Sept. 07


June 07


Mar. 07


Dec. 06


Sept. 06


June 06


Mar. 06(In thousands except per share data)(Unaudited)Net revenues

$
20,571


$
17,495


$
17,189


$
15,649


$
13,322


$
11,919


$
13,089


$
13,351Gross profit

$
13,530


$
10,754


$
10,359


$
10,555


$
8,562


$
7,574


$
8,827


$
9,434Income (loss) from operations

$
67


$
(3,092
)

$
(3,055
)

$
(2,817
)

$
(2,963
)

$
(3,437
)

$
(3,071
)

$
(1,299
)Net (loss) income before cumulative effect of change in
    accounting principle

$
908


$
(2,166
)

$
(2,312
)

$
(1,954
)

$
(2,010
)

$
(2,524
)

$
(2,214
)

$
(584
)Net (loss) income after cumulative effect of change in
    accounting principle

$
908


$
(2,166
)

$
(2,312
)

$
(1,954
)

$
(2,010
)

$
(2,524
)

$
(2,214
)

$
(511
)Net income (loss) per share:Basic

$
0.06


$
(0.14
)

$
(0.15
)

$
(0.13
)

$
(0.13
)

$
(0.17
)

$
(0.15
)

$
(0.03
)Diluted

$
0.05


$
(0.14
)

$
(0.15
)

$
(0.13
)

$
(0.13
)

$
(0.17
)

$
(0.15
)

$
(0.03
)  73




---



##### 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.
  CHANGES
    IN INTERNAL CONTROL OVER FINANCIAL REPORTING
  Rule 13a-15(f) Form 10-K
 74




---



##### Table of Contents



Form 10-Q
  Form 10-Q
  Expense Cut-off and Proper Statement of Accrued
    Liabilities 
  Item 9B.
    Other
    Information   PART III  Item 10:
    Directors
    and Executive Officers of the Registrant    Item 11:
    Executive
    Compensation    Item 12:
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13:
    Certain
    Relationships and Related Transactions    Item 14:
    Principal
    Accountant Fees and Services   75




---



##### 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


50Consolidated Balance Sheets at December 31,
    2007 and December 31, 2006


51Consolidated Statements of Operations for Each of
    the Years in the Three Year Period Ended December 31,
    2007


52Consolidated Statements of Stockholders
    Equity and Comprehensive Income (Loss) for Each of the Years in
    the Three Year Period Ended December 31, 2007


53Consolidated Statements of Cash Flows for Each of
    the Years in the Three Year Period Ended December 31,
    2007


54Notes to Consolidated Financial Statements


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


793. 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 (incorporated by
    reference to Exhibit 10.1 to the Companys Report on
    Form 8-K
    dated March 21, 2007).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 (incorporated by reference to Exhibit 10.1 to the
    Companys Report on
    Form 8-K
    dated November 8, 2005).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). 76




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##### Table of Contents



ExhibitNumber

Description10.8

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).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.#
    
    Management compensation or arrangement.  Exhibits.
  Regulation S-K
 77




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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, 2008/s/  PETER
    OSBORNEPeter
    Osborne

Vice President and Chief Financial Officer (Principal Financial
    Officer)

Date: March 13, 2008/s/  W.
    JAMES FITZSIMMONSW.
    James Fitzsimmons

Director

Date: March 13, 2008/s/  KATHLEEN
    D. LAPORTEKathleen
    D. Laporte

Director

Date: March 13, 2008/s/  EDWARD
    W. UNKARTEdward
    W. Unkart

Director

Date: March 13, 2008/s/  LORI
    M. ROBSON, PH.D.Lori
    M. Robson, Ph.D.

Director

Date: March 13, 2008/s/  MICHAEL
    J. COYLEMichael
    J. Coyle

Director

Date: March 13, 2008/s/  GREGORY
    T. SCHIFFMANGregory
    T. Schiffman

Director

Date: March 13, 2008  78




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##### Table of Contents



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








Balance atBeginning








Endof Period


Additions


Write-offs


of Period(In thousands)Allowance for Doubtful Accounts Year Ended:December 31, 2005

$
195



216



(103
)

$
308December 31, 2006


308



44



(68
)


284December 31, 2007


284



205



(134
)


355Allowance for Excess and Obsolete Inventory Year Ended:December 31, 2005

$
31



174



(50
)

$
155December 31, 2006


155



298



(63
)


390December 31, 2007


390



565



(39
)


916Allowance for Deferred Tax Assets Year Ended:December 31, 2005

$
15,323







(938
)

$
14,385December 31, 2006


14,385



2,183







16,568December 31, 2007


16,568



1,008







17,576  79




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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 Registration Statement on
    Form S-1/A
    No. 333-117640,
    filed on September 28, 2004).4.1

Specimen Stock Certificate (incorporated by reference to
    Exhibit 4.1 to the Companys Report on
    Form 8-K
    dated March 3, 2008).10.1#

Amended and Restated 2000 Equity Incentive Plan (incorporated by
    reference to Exhibit 10.1 to the Companys Report on
    Form 8-K
    dated March 21, 2007).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 (incorporated by reference to Exhibit 10.1 to the
    Companys Report on
    Form 8-K
    dated November 8, 2005).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).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.




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##### Table of Contents



ExhibitNumber

Description31.2*

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.#
    
    Management compensation or arrangement.