##### 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 1934
 For The Fiscal Year Ended December 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 COMMISSION FILE NUMBER: 001-34256
 HEARTWARE INTERNATIONAL, INC.
  Delaware
    
    26-3636023(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 
 
 
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on which RegisteredCommon Stock, $0.001 Par Value Per Share
    
    The NASDAQ Stock Market LLC
 Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)
 
 Yes o No þ
 Yes o No þ
 Yes þ No o
 Yes o No
o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ
   Documents Incorporated By Reference




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##### 



PART I
    
    
    3Item 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    17Item 1B. Unresolved Staff Comments
    
    
    34Item 2. Properties
    
    
    34Item 3. Legal Proceedings
    
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    
    34Part II
    
    
    36Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    36Item 6. Selected Financial Data
    
    
    37Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    38Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    48Item 8. 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
    
    
    76Part III
    
    
    77Item 10. Directors, Executive Officers and Corporate Governance
    
    
    77Item 11. Executive Compensation
    
    
    79Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    79Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    89Item 14. Principal Accounting Fees and Services
    
    
    89Part IV.
    
    
    90Item 15. Exhibits, Financial Statement Schedules
    
    
    90Exhibit 10.05Exhibit 10.06Exhibit 10.27Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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References
  
    
    HeartWare, the Company, HeartWare Group, we, us and our refer to HeartWare
International, Inc. and its consolidated subsidiaries, HeartWare Pty. Limited and
HeartWare, Inc.
 
    
    HeartWare International, Inc. refers to HeartWare International, Inc., a Delaware
corporation incorporated on July 29, 2008.
 
    
    HeartWare Pty. Limited refers to HeartWare Pty. Limited (formerly known as HeartWare
Limited), an Australian proprietary corporation originally incorporated on November 26,
2004.
 
    
    HeartWare Limited is the entity that was renamed HeartWare Pty. Limited and which was,
as stated above, originally incorporated on November 26, 2004.
 
    
    HeartWare, Inc. refers to HeartWare, Inc., a Delaware corporation incorporated on
April 3, 2003. HeartWare, Inc. was acquired by HeartWare Pty. Limited on January 24, 2005.
 Forward-Looking Statements
  
    
    our expectations with respect to regulatory submissions and approvals;
 
    
    our expectations with respect to our clinical trials, including enrollment in or
completion of our clinical trials;
 
    
    our expectations with respect to the integrity or capabilities of our
intellectual property position;
 
    
    our ability to commercialize our existing products;
 
    
    our ability to develop and commercialize new products; and
 
    
    our estimates regarding our capital requirements and financial performance,
including profitability.
   1




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Corporate Information
    www.heartware.com
 Currency
 
 Trademarks
   2




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##### Table of Contents



PART I
 
 Item 1.
    
    Business
 Overview
           3




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Market Opportunity
 Heart Failure
   Our Target MarketsClass III and Class IV Patients
   4




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CHF Treatment Options
   LVAD Treatment for Advanced Heart Failure
 The New England Journal of Medicine The Journal of Thoracic and Cardiovascular Surgery.
  Bridge-to-transplant therapy
  5




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Bridge-to-decision therapy
 Destination therapy
 Bridge-to-recovery therapy New England Journal of Medicine
 Our Solution and Products
 Proprietary Pump Technology
    6




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The HeartWare System
    ® ® ®
  The HeartWare MVAD
    7




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
    
    finalization of surgical implantation techniques and procedures, including
identification of necessary surgical implant tools;
 
    
    completion of pump and system designs;
 
    
    completion of confirmatory in-vivo (animal) studies;
 
    
    development and verification of system peripherals (e.g., controller, batteries,
power adapters) utilizing the HeartWare System components;
 
    
    approval of and successful completion of a clinical trial; and
 
    
    receipt of regulatory approvals for commercialization.
 Enhanced Quality of Life with Smaller Peripherals and Implantable Devices
       8




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Our Business Strategy
   Expand the European and Australian Commercial Markets 
 Obtain regulatory approval in the United States 
 Focus on continuous product development 
 Partner with leading professionals in the fields of cardiovascular surgery around the world 
 Sales and Marketing
   9




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Intellectual Property
    
    
    use of dual stators in a blood pump;
 
    
    the combination of passive magnetic bearings and hydrodynamic thrust bearings;
 
    
    channels or wide-bladed impellers in a blood pump;
 
    
    the use of ceramic between an impeller and motor stator;
 
    
    flow estimation based on impeller speed and viscosity; and
 
    
    use of platinum alloy for blood pump impellers.
    10




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Government Regulation
 United States
  
    
    product design and development;
 
    
    product testing;
 
    
    product manufacturing;
 
    
    product safety and effectiveness;
 
    
    product labeling;
 
    
    product storage;
 
    
    record keeping;
 
    
    pre-market approval;
 
    
    advertising and promotion;
 
    
    distribution;
  11




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
    
    product sales and post-market activities;
 
    
    import and export;
 
    
    medical device (adverse event) reporting; and
 
    
    field corrective actions (e.g., recalls).
  Premarket Approval
    Clinical Trials
   12




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Pervasive and Continuing FDA Regulation
  
    
    quality system regulation, which requires manufacturers to follow design,
testing, control, documentation and other quality assurance procedures during the design
and manufacturing processes;
 
    
    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
 
    
    notices of correction or removal and recall regulations.
   
    
    warning letters or untitled letters;
 
    
    fines, injunction 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 or
clinical trials;
 
    
    refusing our request for pre-market approval of new products;
 
    
    withdrawing pre-market approvals that are already granted; and
 
    
    criminal prosecution.
 European Union
   13




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Australia
    Other Regulations
  Third Party Reimbursement
      14




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Competition
    
    
    small device size which allows for routine implantation in the space immediately
surrounding the heart in all patients unlike other full-output LVADs that are currently
available;
 
    
    our proprietary, hybrid technology system for suspending the pump impellers,
providing a wearless pumping system; and
 
    
    a design that includes a wide-bladed impeller and integrated inflow cannula,
which helps optimize blood flow characteristics.
  
    
    our products are in the early stages of development, we have limited implantation
experience, and our success is dependent on our clinical trials proving the safety and
efficacy of our products;
 
    
    a number of our competitors have significantly greater financial and human
resources than we do and have established reputations, as well as worldwide distribution
channels and sales and marketing capabilities that are significantly larger and more
established than ours; and
 
    
    our market is an emerging market and is reliant upon acceptance of LVAD
technology.
  Research and Development
   15




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Manufacturing and Assembly
 ,
    Employees
  Legal Proceedings
  Corporate History
    16




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Item 1A.
    
    Risk Factors
  Risks Related to Our Business and Industry
 We have incurred operating losses since our inception and anticipate that we will continue to incur
operating losses for the foreseeable future.
  
    
    manufacturing product,
 
    
    continuing to conduct one or more clinical trials,
 
    
    further product research and development,
 
    
    growing, maintaining and protecting our intellectual property,
 
    
    seeking regulatory approvals,
 
    
    expanding our sales and marketing capabilities on a global basis,
 
    
    increasing our manufacturing operations,
 
    
    broadening our infrastructure in order to meet the needs of our operations, and
 
    
    complying with the requirements related to being a public company in both the United
States and Australia.
  17




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We currently rely entirely on sales of our sole product, the HeartWare System, to generate
revenues. Our products may never achieve market acceptance. In addition, any factors that
negatively impact sales of this product will adversely affect our business, financial condition and
results of operations.
   
    
    the perceived effectiveness of the product;
 
    
    the prevalence and severity of any adverse events or side effects especially as it
relates to survival, quality of life, stroke and bleeding;
 
    
    potential advantages over alternative treatments or competitive products;
 
    
    the strength of marketing and distribution support; and
 
    
    sufficient third party coverage or reimbursement.
  Our ability to achieve profitability from a current net loss level will depend on our ability
to reduce the per unit cost of producing the HeartWare System by increasing our customer orders and
manufacturing volume.
   18




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We have limited sales, marketing and distribution experience.
  
    
    we may not be able to attract and build a significant, successful or qualified
marketing or sales force;
    
    the cost of establishing, training and providing regulatory oversight for a
marketing or sales force may be substantial; and
 
    
    there are significant legal and regulatory risks in medical device marketing and
sales, and any failure to comply with all legal and regulatory requirements for sales,
marketing and distribution could result in enforcement action by the FDA or other
authorities that could jeopardize our ability to market the product or could subject us
to substantial liability.
 We have limited capabilities and manufacturing personnel, and if our manufacturing facilities are
unable to provide an adequate supply of products, our growth could be limited and our business
could be harmed.
     Fluctuations in foreign currency exchange rates could adversely affect our financial results.
   We may need substantial additional funding and may be unable to raise capital when needed, which
would force us to delay, reduce or eliminate our product development programs or commercialization
efforts.
   19




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Our products have not yet been approved for commercial sale within the United States, and our
success will depend heavily on the success of our clinical trial program for our lead device, the
HeartWare System. If we are unable to complete, or experience significant delays of, our U.S.
trial, our ability to obtain regulatory approval to commercialize our products within the United
States, the largest medical device market in the world, and our ability to generate revenues will
be materially adversely affected.
      
    
    slower than expected rates of patient recruitment and enrollment, including as a
result of our competitors undertaking similar clinical trials or having functionally
comparable products that have received approval for sale;
 
    
    failure of patients to complete the clinical trial;
 
    
    patients preferring to use approved devices or other experimental treatments or
devices rather than our HeartWare System;
  20




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
    
    unforeseen safety issues;
 
    
    perceived lack of product efficacy during clinical trials;
 
    
    inability or unwillingness of patients or medical investigators to follow our
clinical trial protocols;
 
    
    inability to monitor patients adequately during or after treatment;
 
    
    risks associated with trial design, which may result in a failure of the trial to
show statistically significant results even if the product is effective;
 
    
    governmental and regulatory delays or changes in regulatory requirements,
policies or guidelines;
 
    
    varying interpretation of data by regulatory agencies; and
 
    
    perceived lack of product efficacy during clinical trials;
  
    
    take a significant period of time;
 
    
    require the expenditure of substantial resources;
 
    
    involve rigorous pre-clinical and clinical testing;
 
    
    require changes to our products; and
 
    
    result in limitations on the indicated uses of the products.
 ,
 We may not meet regulatory quality standards applicable to our manufacturing and quality processes,
which could have an adverse effect on our business, financial condition or results of operations.
   21




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Product issues could result in substantial costs and write-downs leading to delay or termination of
our trials.
  We plan to operate in multiple regulatory environments that require costly and time consuming
approvals.
  If we fail to obtain and maintain adequate level of reimbursement for our products by third party
payers, there may be no commercially viable markets for our products or the markets may be much
smaller than expected.
     22




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If hospitals do not conduct or encourage the conduct of destination therapy procedures using the
HeartWare System, market opportunities for our product will be diminished.
  
    
    the number of sites approved for destination therapy by relevant regulatory
agencies;
 
    
    the clinical outcomes of destination therapy procedures;
 
    
    cardiology and referring physician education, and their commitment to destination
therapy;
 
    
    the economics of the destination therapy procedure for individual hospitals,
which includes the costs of the LVAD and related pre- and post-operative procedures and
their reimbursement; and
 
    
    the economics of hospitals not conducting a destination therapy procedure,
including the costs and related reimbursements of long-term hospitalization.
  Adverse changes in general economic conditions in the United States could adversely affect us.
   23




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Healthcare reform legislation could adversely affect our revenue and financial condition.
   Our manufacturing facilities and the manufacturing facilities of our suppliers must comply with
applicable regulatory requirements. If we fail to achieve regulatory approval for these
manufacturing facilities, our business and our results of operations would be harmed.
  We rely on specialized suppliers for certain components and materials.
   
    
    we are not a major customer of many of our suppliers, and these suppliers may
therefore give other customers needs higher priority than ours;
 
    
    we may not be able to obtain adequate supply in a timely manner or on commercially
reasonable terms;
  24




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
    
    some of our components are extraordinarily complex and must be manufactured to
extremely tight tolerances and specifications with the result that our suppliers,
especially new suppliers, may make errors in manufacturing that could negatively affect
the efficacy or safety of our products or cause our components not to be delivered on
time or at all or to be delivered outside of specifications;
 
    
    the availability of second-source suppliers may be extremely limited or their
implementation as a supplier may be lengthy due to the tight tolerances and
specifications in which we typically operate;
 
    
    switching components or changes to our components, specifications or designs may
require product redesign and submission to the FDA or a PMA supplement;
 
    
    our suppliers manufacture products for a range of customers, and fluctuations in
demand for the products these suppliers manufacture for others may affect their ability
to deliver products to us in a timely manner; and
 
    
    our suppliers may encounter financial hardships unrelated to our demand, which could
inhibit their ability to fulfill our orders and meet our requirements.
     We may not be able to effectively protect our intellectual property rights which could have an
adverse effect on our business, financial condition or results of operations.
   25




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##### Table of Contents



Claims that our current or future products infringe or misappropriate the proprietary rights of
others could adversely affect our ability to sell those products and cause us to incur additional
costs.
    26




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We may need to initiate lawsuits to protect or enforce our patents and other intellectual property
rights, which could be expensive and, if we lose, could cause us to lose some of our intellectual
property rights, which would harm our ability to compete in the market.
  
    
    assert claims of infringement;
 
    
    enforce our patents;
 
    
    protect our trade secrets or know-how; or
 
    
    determine the enforceability, scope and validity of the proprietary rights of others.
  If we are unable to protect the confidentiality of our proprietary information and know-how, the
value of our technology and products could be adversely affected.
   27




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We may be subject to claims that our employees or we have inadvertently or otherwise used or
disclosed alleged trade secrets or other proprietary information of former employers of our
employees.
  We are subject to federal and state laws prohibiting kickbacks and false or fraudulent claims,
which, if violated, could subject us to substantial penalties. Additionally, any challenge to or
investigation into our practices under these laws could cause adverse publicity and be costly to
respond to, and thus could harm our business.
  If we are found to have violated laws protecting the confidentiality of patient health information,
we could be subject to civil or criminal penalties, which could increase our liabilities and harm
our reputation or our business.
  If we are unable to manage our expected growth, we may not be able to commercialize our product
candidates.
   28




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If we choose to acquire or invest in new businesses, products or technologies, instead of
developing them ourselves, these acquisitions or investments could disrupt our business and could
result in the use of significant amounts of equity, cash or a combination of both.
  
    
    the inability to complete the acquisition or investment;
 
    
    disruption of our ongoing businesses and diversion of management attention;
 
    
    difficulties in integrating the acquired entities, products or technologies;
 
    
    risks associated with acquiring intellectual property;
 
    
    difficulties in operating the acquired business profitably;
 
    
    the inability to achieve anticipated synergies, cost savings or growth;
 
    
    potential loss of key employees, particularly those of the acquired business;
 
    
    difficulties in transitioning and maintaining key customer, distributor and supplier
relationships;
 
    
    risks associated with entering markets in which we have no or limited prior
experience; and
 
    
    unanticipated costs.
  
    
    dilutive issuances of equity securities, which may be sold at a discount to market
price;
 
    
    the use of significant amounts of cash;
 
    
    the incurrence of debt;
 
    
    the assumption of significant liabilities;
 
    
    increased operating costs or reduced earnings;
 
    
    financing obtained on unfavorable terms;
 
    
    large one-time expenses; and
 
    
    the creation of certain intangible assets, including goodwill, the write-down of
which in future periods may result in significant charges to earnings.
  If we expand, or attempt to expand, into additional foreign markets, we will be subject to new
business risks that may adversely impact our business, financial condition and results of
operations.
  
    
    failure to fulfill foreign regulatory requirements on a timely basis or at all to
market the HeartWare System or other future products;
 
    
    availability of, and changes in, reimbursement within prevailing foreign health care
payment systems;
  29




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##### Table of Contents




    
    adapting to the differing laws and regulations, business and clinical practices, and
patient preferences in foreign countries;
 
    
    difficulties in managing foreign relationships and operations, including any
relationships that we establish with foreign partners, distributors or sales or marketing
agents;
 
    
    limited protection for intellectual property rights in some countries;
 
    
    difficulty in collecting accounts receivable and longer collection periods;
 
    
    costs of enforcing contractual obligations in foreign jurisdictions;
 
    
    recessions in economies outside of the United States;
 
    
    political instability and unexpected changes in diplomatic and trade relationships;
 
    
    currency exchange rate fluctuations; and
 
    
    potentially adverse tax consequences.
  We compete against companies that have longer operating histories, more established or approved
products and greater resources than we do, which may prevent us from achieving further market
penetration or improving operating results.
    
    
    the availability of other products and procedures, such as heart transplants;
 
    
    product performance and design;
  30




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
    
    product safety;
 
    
    sales, marketing and distribution capabilities;
 
    
    comparable clinical outcomes;
 
    
    success and timing of new product development and introductions; and
 
    
    intellectual property protection.
 The competition for qualified personnel is particularly intense in our industry. If we are unable
to retain or hire key personnel, we may not be able to sustain or grow our business.
  Product liability claims could damage our reputation or adversely affect our business.
  Investors could lose confidence in our financial reports, and the value of our shares may be
adversely affected, if our internal controls over financial reporting are found not to be effective
by management or by an independent registered public accounting firm or if we make disclosure of
existing or potential significant deficiencies or material weaknesses in those controls.
   31




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Risk Factors Related to Our Common Stock
 The price of our common stock may fluctuate significantly.
  
    
    future announcements concerning us or our competitors;
 
    
    regulatory developments, enforcement actions bearing on advertising, marketing or
sales, and disclosure regarding completed, ongoing or future clinical trials;
 
    
    quarterly variations in operating results, which we have experienced in the past
and expect to experience in the future;
 
    
    introduction of new products or changes in product pricing policies by us or our
competitors;
 
    
    acquisition or loss of significant customers, distributors or suppliers;
 
    
    business acquisitions or divestitures;
 
    
    changes in third party reimbursement practices;
 
    
    fluctuations of investor interest in the medical device sector; and
 
    
    fluctuations in the economy, world political events or general market conditions.
  32




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Your interests may differ or conflict with those of the Companys largest shareholder.
  If there are substantial sales of common stock, our share price could decline.
  We do not intend to pay cash dividends on our common stock in the foreseeable future.
  Anti-takeover provisions in our charter documents and Delaware law may discourage a third party
from acquiring us, which could limit our stockholders opportunities to sell their shares at a
premium.
  We may be subject to arbitrage risks.
   33




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Item 1B.
    
    Unresolved Staff Comments
  
 Item 2.
    
    Properties
       
 Item 3.
    
    Legal Proceedings
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
 Results of Special Meeting of Stockholders
   (a)
    
    Proposal No. 1  Ratification of issuance of common stock in connection with a private
placement transaction
 (b)
    
    Proposal No. 2  Approval of issuance of additional common stock in connection with a
private placement transaction
 (c)
    
    Proposal No. 3  Grant of discretionary authorization to the board of directors to
adjourn the special meeting
  34




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35




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Part II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
   High
    
    
    LowPeriod
    
    (U.S.$)
    
    
    (U.S.$)Fiscal Year 2008:First Quarter
    
    $
    17.85
    
    
    $
    11.20Second Quarter
    
    
    22.05
    
    
    
    11.90Third Quarter
    
    
    17.85
    
    
    
    11.20Fourth Quarter
    
    
    17.50
    
    
    
    9.80Fiscal Year 2009:First Quarter
    
    $
    30.00
    
    
    $
    22.80Second Quarter
    
    
    29.70
    
    
    
    23.54Third Quarter
    
    
    30.27
    
    
    
    21.65Fourth Quarter
    
    
    36.80
    
    
    
    29.61
   Equity Compensation Plans
  Number of securities to be issued upon exercise of outstanding options, warrants and rights
    
    
    Weighted average exercise price of outstanding options, warrants and rights
    
    
    Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation plans approved by security holders:HeartWare International, Inc. Employee Stock Option Plan
    
    
    460,986
    
    
    $
    28.05
    
    
    
    372,508
    (1)HeartWare International, Inc. Restricted Stock Unit Plan
    
    
    117,850
    
    
    $
    0.00
    
    
    
    11,083
    (1)HeartWare
International, Inc. 2008 Stock Incentive Plan (2)
    
    
    345,135
    
    
    $
    4.04
    
    
    
    106,806
    (1)Equity compensation plans not approved by security holders:Non-Plan options
    
    
    9,999
    
    
    $
    23.55
    
    
    
    N/A
 (1)
    
    Future issuances to employees and directors are expected to be made solely under the 2008
Stock Incentive Plan as any grants under the other plans reduce the availability of grants under the 2008 Stock Incentive Plan.(2)
    
    Outstanding awards under the 2008 Stock Incentive Plan
include stock options granted with exercise prices equal to the fair
value of our common stock on the date of grant and restricted stock
units granted with exercise prices of $0.  36




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Item 6.
    
    Selected Financial Data
   Years Ended December 31,(In thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Consolidated Statement of Operations Data:Revenues
    
    $
    24,172
    
    
    $
    332
    
    
    $
    
    
    
    $
    
    
    
    $
    Cost of revenues
    
    
    13,211
    
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    Selling, general and administrative
expenses
    
    
    16,444
    
    
    
    10,981
    
    
    
    7,303
    
    
    
    6,024
    
    
    
    4,312Research and development expenses
    
    
    15,067
    
    
    
    18,644
    
    
    
    14,636
    
    
    
    11,650
    
    
    
    10,732Other income (expense), net
    
    
    (359
    )
    
    
    5,607
    
    
    
    
    
    
    
    248
    
    
    
    1,211Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    (20,909
    )
    
    
    (23,764
    )
    
    
    (21,939
    )
    
    
    (17,427
    )
    
    
    (13,833
    )Basic and diluted net loss per share
    
    
    (2.15
    )
    
    
    (3.00
    )
    
    
    (3.60
    )
    
    
    (3.49
    )
    
    
    (3.67
    )
 As of December 31,(In thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Consolidated Balance Sheet Data:Cash and cash equivalents
    
    $
    50,835
    
    
    $
    20,804
    
    
    $
    28,276
    
    
    $
    16,698
    
    
    $
    10,037Total assets
    
    
    77,953
    
    
    
    30,338
    
    
    
    32,355
    
    
    
    20,243
    
    
    
    11,970Total liabilities
    
    
    6,970
    
    
    
    3,583
    
    
    
    3,083
    
    
    
    2,779
    
    
    
    2,245Total stockholders equity
    
    
    70,983
    
    
    
    26,756
    
    
    
    29,272
    
    
    
    17,464
    
    
    
    9,725
  37




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis of our financial condition and results of operations
should be read together with our consolidated financial statements and related notes appearing
elsewhere in this Annual Report on Form 10-K . This discussion and analysis contains forward-looking
statements that involve risks, uncertainties, judgment and assumptions. You should review the Risk
Factors section of this Annual Report on Form 10-K for a discussion of important factors that
could cause actual results to differ materially from the results described in or implied by the
forward-looking statements contained in the following discussion and analysis.
 Overview
          38




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##### Table of Contents



Critical Accounting Policies and Estimates
  Revenue recognition
 Revenue Recognition
  39




---



##### Table of Contents



Inventory Capitalization
      Share-Based Compensation
     40




---



##### Table of Contents



Fair Value Measurements
 Fair Value Measurements and Disclosures
     .
  Income Taxes
  Income Taxes
  41




---



##### Table of Contents



Fiscal Years 2009 and 2008
 Revenue, net
   Cost of Revenues
   Years EndedDecember 31,2009
    
    
    2008Gross profit (in thousands)
    
    $
    10,961
    
    
    $
    254Gross margin %
    
    
    45
    %
    
    
    77
    %
   42




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##### Table of Contents



Selling, General and Administrative
     Research and Development
      43




---



##### Table of Contents



Foreign Exchange
   Interest Expense
   Interest Income
  Change in Fair Value of Derivative Instrument
  Gain on Early Extinguishment of Debt
   44




---



##### Table of Contents



Other, net
  Income Taxes
   Fiscal Years 2008 and 2007
 Revenues, net
  Cost of Revenues
  Selling, General and Administrative
   Research and Development
   45




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##### Table of Contents



Foreign Exchange
  Interest Expense
  Interest Income
  Other, net
  Income Taxes
  Liquidity and Capital Resources
     46




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##### Table of Contents



Contractual Obligations
  Payments due by period(in thousands of dollars)Lessthan 1Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 yearsOperating lease obligations
    
    $
    1,544
    
    
    $
    891
    
    
    $
    646
    
    
    $
    7Purchase obligations
    
    
    12,694
    
    
    
    12,694
    
    
    
    
    
    
    
    Total
    
    $
    14,238
    
    
    $
    13,585
    
    
    $
    646
    
    
    $
    7
 Off-Balance Sheet Arrangements
   47




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##### Table of Contents



Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
  Foreign Currency Rate Fluctuations
     48




---



##### Table of Contents



Item 8.
    
    Financial Statements and Supplementary Data
 HEARTWARE INTERNATIONAL, INC.
  PageFinancial Statements:Report of Independent Registered Public Accounting Firm
    
    
    50Consolidated Balance Sheets
    
    
    51Consolidated Statements of Operations
    
    
    52Consolidated Statements of Comprehensive Loss
    
    
    53Consolidated Statement of Stockholders Equity
    
    
    54Consolidated Statements of Cash Flows
    
    
    55Notes to Consolidated Financial Statements
    
    
    56
  49




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##### Table of Contents



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




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    50,834,714
    
    
    $
    20,803,656Accounts receivable
    
    
    11,384,647
    
    
    
    244,198Inventories, net
    
    
    8,870,903
    
    
    
    3,508,065Prepaid expenses and other current assets
    
    
    1,663,157
    
    
    
    1,061,737Total current assets
    
    
    72,753,421
    
    
    
    25,617,656Property, plant and equipment, net
    
    
    3,719,415
    
    
    
    3,608,626Other intangible assets, net
    
    
    1,191,917
    
    
    
    823,495Restricted cash
    
    
    288,429
    
    
    
    288,429Total assets
    
    $
    77,953,182
    
    
    $
    30,338,206LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,122,131
    
    
    $
    699,064Accrued expenses and other current liabilities
    
    
    3,848,086
    
    
    
    2,883,587Total current liabilities
    
    
    6,970,217
    
    
    
    3,582,651Commitments and contingenciesStockholders equity:Preferred stock  $.001 par value; 5,000,000
shares authorized; no shares issued and
outstanding at December 31, 2009 and 2008,
respectively
    
    
    
    
    
    
    Common stock  $.001 par value; 25,000,000
shares authorized; 11,786,173 and 8,866,702
shares issued and outstanding at December 31,
2009 and 2008, respectively
    
    
    11,786
    
    
    
    8,867Additional paid-in capital
    
    
    176,698,329
    
    
    
    112,400,642Accumulated deficit
    
    
    (97,871,645
    )
    
    
    (76,962,787
    )Accumulated other comprehensive loss:Cumulative translation adjustments
    
    
    (7,855,505
    )
    
    
    (8,691,167
    )Total stockholders equity
    
    
    70,982,965
    
    
    
    26,755,555Total liabilities and stockholders equity
    
    $
    77,953,182
    
    
    $
    30,338,206
   51




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended December 31,2009
    
    
    2008
    
    
    2007Revenues, net
    
    $
    24,171,783
    
    
    $
    331,799
    
    
    $
    Cost of revenues
    
    
    13,210,742
    
    
    
    77,632
    
    
    
    Gross profit
    
    
    10,961,041
    
    
    
    254,167
    
    
    
    Operating expenses:Selling, general and administrative
    
    
    16,444,202
    
    
    
    10,981,131
    
    
    
    7,303,145Research and development
    
    
    15,067,033
    
    
    
    18,643,557
    
    
    
    14,636,198Total operating expenses
    
    
    31,511,235
    
    
    
    29,624,688
    
    
    
    21,939,343Loss from operations
    
    
    (20,550,194
    )
    
    
    (29,370,521
    )
    
    
    (21,939,343
    )Other income (expense):Foreign exchange gain (loss)
    
    
    (284,985
    )
    
    
    4,550,193
    
    
    
    (851,032
    )Interest expense
    
    
    (819,944
    )
    
    
    (17,555
    )
    
    
    (25,568
    )Interest income
    
    
    100,549
    
    
    
    1,262,695
    
    
    
    976,243Change in fair value of derivative instrument
    
    
    (3,934,710
    )
    
    
    
    
    
    
    Gain on early extinguishment of debt, net
    
    
    4,605,613
    
    
    
    
    
    
    
    Other, net
    
    
    (25,187
    )
    
    
    (188,433
    )
    
    
    (99,299
    )Loss before income taxes
    
    
    (20,908,858
    )
    
    
    (23,763,621
    )
    
    
    (21,938,999
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (20,908,858
    )
    
    $
    (23,763,621
    )
    
    $
    (21,938,999
    )Net loss per common share  basic and diluted
    
    $
    (2.15
    )
    
    $
    (3.00
    )
    
    $
    (3.60
    )Weighted average shares outstanding  basic and diluted
    
    
    9,713,925
    
    
    
    7,929,054
    
    
    
    6,086,542
   52




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
 Years Ended December 31,2009
    
    
    2008
    
    
    2007Net loss
    
    $
    (20,908,858
    )
    
    $
    (23,763,621
    )
    
    $
    (21,938,999
    )Foreign currency translation adjustments
    
    
    835,662
    
    
    
    (9,302,940
    )
    
    
    542,148Comprehensive loss
    
    $
    (20,073,196
    )
    
    $
    (33,066,561
    )
    
    $
    (21,396,851
    )
   53




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 AccumulatedCommon Shares,
    
    
    
    
    
    
    
    
    
    
    Other$.001 Par Value Per Share
    
    
    Additional
    
    
    
    
    
    
    ComprehensiveShares
    
    
    
    
    
    
    Paid-In
    
    
    Accumulated
    
    
    IncomeIssued
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    (Loss)
    
    
    TotalBalance, December 31, 2006
    
    
    5,321,783
    
    
    $
    5,322
    
    
    $
    48,648,976
    
    
    $
    (31,260,167
    )
    
    $
    69,625
    
    
    $
    17,463,756Issuance of shares
pursuant to shareholder
purchase plan
    
    
    57,226
    
    
    
    57
    
    
    
    1,062,901
    
    
    
    
    
    
    
    
    
    
    
    1,062,958Issuance of shares
pursuant to share option
exercise
    
    
    3,656
    
    
    
    4
    
    
    
    21,698
    
    
    
    
    
    
    
    
    
    
    
    21,702Issuance of shares
pursuant to capital
raise, net of offering
costs
    
    
    1,705,907
    
    
    
    1,706
    
    
    
    29,853,944
    
    
    
    
    
    
    
    
    
    
    
    29,855,650Share-based compensation
    
    
    
    
    
    
    
    
    
    
    2,264,655
    
    
    
    
    
    
    
    
    
    
    
    2,264,655Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,938,999
    )
    
    
    
    
    
    
    (21,938,999
    )Accumulated other
comprehensive income:Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    542,148
    
    
    
    542,148Balance, December 31, 2007
    
    
    7,088,572
    
    
    
    7,089
    
    
    
    81,852,174
    
    
    
    (53,199,166
    )
    
    
    611,773
    
    
    
    29,271,870Issuance of shares
pursuant to capital
raise, net of offering
costs
    
    
    1,778,130
    
    
    
    1,778
    
    
    
    29,396,849
    
    
    
    
    
    
    
    
    
    
    
    29,398,627Share-based compensation
    
    
    
    
    
    
    
    
    
    
    1,151,619
    
    
    
    
    
    
    
    
    
    
    
    1,151,619Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,763,621
    )
    
    
    
    
    
    
    (23,763,621
    )Accumulated other
comprehensive loss:Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,302,940
    )
    
    
    (9,302,940
    )Balance, December 31, 2008
    
    
    8,866,702
    
    
    
    8,867
    
    
    
    112,400,642
    
    
    
    (76,962,787
    )
    
    
    (8,691,167
    )
    
    
    26,755,555Issuance of common stock
pursuant to private
placement, net of
offering costs
    
    
    2,737,273
    
    
    
    2,737
    
    
    
    58,619,272
    
    
    
    
    
    
    
    
    
    
    
    58,622,009Issuance of common stock
pursuant to share-based
awards
    
    
    182,198
    
    
    
    182
    
    
    
    1,546,267
    
    
    
    
    
    
    
    
    
    
    
    1,546,449Share-based compensation
    
    
    
    
    
    
    
    
    
    
    4,132,148
    
    
    
    
    
    
    
    
    
    
    
    4,132,148Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,908,858
    )
    
    
    
    
    
    
    (20,908,858
    )Accumulated other
comprehensive loss:Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    835,662
    
    
    
    835,662Balance, December 31, 2009
    
    
    11,786,173
    
    
    $
    11,786
    
    
    $
    176,698,329
    
    
    $
    (97,871,645
    )
    
    $
    (7,855,505
    )
    
    $
    70,982,965
   54




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,2009
    
    
    2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (20,908,858
    )
    
    $
    (23,763,621
    )
    
    $
    (21,938,999
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation of property, plant and equipment
    
    
    894,928
    
    
    
    663,894
    
    
    
    518,367Amortization of intangible assets
    
    
    75,871
    
    
    
    41,187
    
    
    
    20,679Share-based compensation expense
    
    
    4,132,148
    
    
    
    1,151,619
    
    
    
    2,264,655Loss on disposal of assets
    
    
    25,187
    
    
    
    189,380
    
    
    
    100,739Amortization of deferred financing costs
    
    
    670,903
    
    
    
    
    
    
    
    Change in fair value of derivative instrument
    
    
    3,934,710
    
    
    
    
    
    
    
    Gain on early extinguishment of debt, net
    
    
    (4,605,613
    )
    
    
    
    
    
    
    Accrued interest on convertible note
    
    
    
    
    
    
    (81,633
    )
    
    
    26,254Change in operating assets and liabilities:Accounts receivable
    
    
    (11,140,449
    )
    
    
    (244,198
    )
    
    
    Inventories, net
    
    
    (5,362,838
    )
    
    
    (3,508,065
    )
    
    
    Prepaid expenses and other current assets
    
    
    (643,939
    )
    
    
    (229,815
    )
    
    
    (129,688
    )Accounts payable
    
    
    2,523,508
    
    
    
    59,906
    
    
    
    196,681Accrued expenses and other current liabilities
    
    
    862,533
    
    
    
    1,660,070
    
    
    
    (78,567
    )Net cash used in operating activities
    
    
    (29,541,909
    )
    
    
    (24,061,276
    )
    
    
    (19,019,879
    )CASH FLOWS FROM INVESTING ACTIVITIESAdditions to property, plant and equipment
    
    
    (1,030,945
    )
    
    
    (1,490,248
    )
    
    
    (880,446
    )Additions to patents
    
    
    (444,294
    )
    
    
    (546,471
    )
    
    
    (121,693
    )Cash paid for security deposits
    
    
    
    
    
    
    (288,429
    )
    
    
    Proceeds from dispositions of assets
    
    
    1,973
    
    
    
    
    
    
    
    8,435Net cash used in investing activities
    
    
    (1,473,266
    )
    
    
    (2,325,148
    )
    
    
    (993,704
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from private placements of common stock
    
    
    60,220,006
    
    
    
    30,239,247
    
    
    
    32,817,746Payment of offering costs
    
    
    (1,509,675
    )
    
    
    (840,620
    )
    
    
    (1,899,138
    )Proceeds from issuance of convertible debt
    
    
    20,000,000
    
    
    
    
    
    
    
    Repayment of convertible debt
    
    
    (20,000,000
    )
    
    
    (1,360,929
    )
    
    
    Proceeds from exercise of stock options
    
    
    1,546,449
    
    
    
    
    
    
    
    21,702Net cash provided by financing activities
    
    
    60,256,780
    
    
    
    28,037,698
    
    
    
    30,940,310Effect of exchange rate changes on cash
    
    
    789,453
    
    
    
    (9,124,006
    )
    
    
    651,892CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    30,031,058
    
    
    
    (7,472,732
    )
    
    
    11,578,619CASH AND CASH EQUIVALENTS  BEGINNING OF PERIOD
    
    
    20,803,656
    
    
    
    28,276,388
    
    
    
    16,697,769CASH AND CASH EQUIVALENTS  END OF PERIOD
    
    $
    50,834,714
    
    
    $
    20,803,656
    
    
    $
    28,276,388Supplemental disclosure of cash flow information:Interest paid
    
    $
    149,041
    
    
    $
    88,870
    
    
    $
    Supplemental disclosure of non-cash financing activities:Recognition of fair value of derivative instrument
    
    $
    3,891,109
    
    
    $
    
    
    
    $
    
   55




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 Note 1. Description of Business
          Development Stage
 Development Stage Entities,
  56




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 Basis of Presentation
  th
 Note 2. Liquidity
    Note 3. Significant Accounting Policies
 Principles of Consolidation
  Accounting Estimates
  Cash and Cash Equivalents
   57




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 Receivables
  Inventories, net
  December 31,2009
    
    
    2008Inventories, netRaw material
    
    $
    2,984,486
    
    
    $
    813,276Work-in-process
    
    
    1,497,591
    
    
    
    1,690,852Finished goods
    
    
    4,388,826
    
    
    
    1,003,937$
    8,870,903
    
    
    $
    3,508,065
    Property, Plant and Equipment, net
  Other Intangible Assets, net
  2009
    
    
    2008Weighted Average Life
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedAmortizable Intangible Assets
    
    (Years)
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationPatents
    
    
    15
    
    
    $
    1,356,645
    
    
    $
    (164,728
    )
    
    $
    912,351
    
    
    $
    (88,856
    )
  58




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
   Revenue Recognition
 Revenue Recognition
 Product Warranty
  (In thousands)
    
    2009Beginning balance
    
    $
    Accrual for warranties
    
    
    99,169Warranty costs incurred during the period
    
    
    Ending balance
    
    $
    99,169
 Share-Based Payments
    59




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
  Impairment of Long-Lived Assets
  Income Taxes
  Income Taxes  Income Taxes
  Translation of Foreign Currency
      60




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 Research and Development
  Vendor Concentration
  Concentration of Credit Risk
  Marketing and Advertising Costs
  Fair Value Measurements
 Fair Value Measurements and Disclosures,
      61




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##### Table of Contents



HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 .
  New Accounting Standards
  Subsequent Events Subsequent Events
 
 
 
   Note 4. Other Balance Sheet Information
  December 31,Estimated Useful Lives
    
    2009
    
    
    2008Property, plant and equipmentMachinery and equipment
    
    5 to 7 years
    
    $
    5,295,217
    
    
    $
    4,428,452Leasehold improvements
    
    3 to 7 years
    
    
    210,570
    
    
    
    212,891Office equipment, furniture and fixtures
    
    5 to 7 years
    
    
    278,587
    
    
    
    271,275Purchased software
    
    5 to 7 years
    
    
    487,388
    
    
    
    406,9836,271,762
    
    
    
    5,319,601Less: accumulated depreciation
    
    
    
    
    (2,552,347
    )
    
    
    (1,710,975
    )$
    3,719,415
    
    
    $
    3,608,626
  62




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HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
  December 31,2009
    
    
    2008Accrued expenses and other current liabilitiesAccrued payroll and other employee costs
    
    $
    2,487,066
    
    
    $
    1,721,506Accrued material purchases
    
    
    370,226
    
    
    
    417,344Accrued research and development costs
    
    
    344,256
    
    
    
    494,997Accrued professional fees
    
    
    347,063
    
    
    
    149,146Other accrued expenses
    
    
    299,475
    
    
    
    100,594$
    3,848,086
    
    
    $
    2,883,587
  Note 5. Exchange of Equity Interests Among Entities Under Common Control
  Note 6. Borrowings and Credit Facilities
 Thoratec Loan Agreement
     63




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HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
    Convertible Note  Related Party
   Note 7. Leases
   64




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HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
  OperatingLeasesYear Ending December 31,2010
    
    $
    891,1892011
    
    
    480,7312012
    
    
    165,2932013
    
    
    6,893Total minimum lease payments
    
    $
    1,544,106
 Note 8. Stockholders Equity
 Preferred Stock
  Common Stock
   2009 Private Placement
   Subsequent Event
   65




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HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 Note 9. Stock-Based Compensation
   (in thousands)
    
    2009
    
    
    2008
    
    
    2007Cost of revenues
    
    $
    805
    
    
    $
    37
    
    
    $
    General and administrative
    
    
    2,007
    
    
    
    1,026
    
    
    
    1,365Research and development
    
    
    1,320
    
    
    
    89
    
    
    
    900$
    4,132
    
    
    $
    1,152
    
    
    $
    2,265
  Equity Plans
      66




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HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 HeartWare International, Inc. 2008 Stock Incentive Plan
  HeartWare International, Inc. Employee Stock Option Plan (formerly HeartWare Limited Employee
Share Option Plan)
  HeartWare International, Inc. Restricted Stock Unit Plan (formerly HeartWare Limited
Performance Rights Plan)
  Non-Plan Options
  Stock Options
    Years EndedDecember 31,2009
    
    
    2008
    
    
    2007Dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    60.50
    %
    
    
    58.23
    %
    
    
    52.70
    %Risk-free interest rate
    
    
    2.80
    %
    
    
    6.22
    %
    
    
    5.96
    %Estimated holding period (years)
    
    
    6.25
    
    
    
    6.22
    
    
    
    7.66
  67




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HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
  WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual Life
    
    
    AggregateShares
    
    
    Price
    
    
    (Years)
    
    
    Intrinsic ValueOutstanding at December 31, 2008
    
    
    698,374
    
    
    $
    18.56Granted
    
    
    49,850
    
    
    
    28.00Exercised
    
    
    (162,559
    )
    
    
    9.75Forfeited
    
    
    (18,322
    )
    
    
    20.75Expired
    
    
    (46,508
    )
    
    
    35.50Outstanding at December 31, 2009
    
    
    520,835
    
    
    $
    27.96
    
    
    
    7.12
    
    
    $
    3,913,512Exercisable at December 31, 2009
    
    
    281,888
    
    
    $
    29.85
    
    
    
    6.24
    
    
    $
    1,584,825
      Restricted Stock Units
   WeightedAverageRemainingContractualNumber of
    
    
    Life
    
    
    AggregateUnits
    
    
    (Years)
    
    
    Intrinsic ValueOutstanding at December 31, 2008
    
    
    142,846Granted
    
    
    295,285Exercised
    
    
    (19,639
    )Forfeited
    
    
    (5,357
    )Expired
    
    
    Outstanding at December 31, 2009
    
    
    413,135
    
    
    
    9.25
    
    
    $
    14,653,898Exercisable at December 31, 2009
    
    
    
    
    
    
    
    
    
    $
    
  68




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HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
      Note 10. Income Taxes
   Income Taxes
  Years Ended December 31,2009
    
    
    2008
    
    
    2007United States
    
    $
    (20,204,552
    )
    
    $
    (24,679,024
    )
    
    $
    (17,354,330
    )Non-U.S.
    
    
    (704,306
    )
    
    
    915,403
    
    
    
    (4,584,669
    )$
    (20,908,858
    )
    
    $
    (23,763,621
    )
    
    $
    (21,938,999
    )
   69




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HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
  At December 31,2009
    
    
    2008Net operating loss and other
    
    $
    32,834,964
    
    
    $
    26,418,604Total deferred tax assets
    
    
    32,834,964
    
    
    
    26,418,604Valuation allowance
    
    
    (32,834,964
    )
    
    
    (26,418,604
    )Net deferred tax assets
    
    $
    
    
    
    $
    
  YearYear of Expiration
    
    Generated
    
    
    U.S. Losses
    
    
    Foreign LossesUnlimited
    
    
    2006
    
    
    
    
    
    
    $
    (3,560,528
    )Unlimited
    
    
    2007
    
    
    
    
    
    
    
    (3,324,315
    )Unlimited
    
    
    2009
    
    
    
    
    
    
    
    (704,306
    )2025
    
    
    2005
    
    
    
    (9,415,763
    )
    
    
    2026
    
    
    2006
    
    
    
    (13,460,082
    )
    
    
    2027
    
    
    2007
    
    
    
    (17,344,349
    )
    
    
    2028
    
    
    2008
    
    
    
    (23,928,792
    )
    
    
    2029
    
    
    2009
    
    
    
    (20,123,925
    )
    
    
    $
    (84,272,911
    )
    
    $
    (7,589,149
    )
 Uncertain tax positions
  Note 11. Net Loss Per Common Share
  Common shares issuable upon:
    
    2009
    
    
    2008
    
    
    2007Exercise of share-based awards
    
    
    933,970
    
    
    
    841,220
    
    
    
    766,563Conversion of convertible note
    
    
    
    
    
    
    
    
    
    
    43,005
  70




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HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
  Note 12. Business Segment, Geographic Areas and Major Customers
   Years EndedDecember 31,(In thousands)
    
    2009
    
    
    2008Domestic
    
    $
    9,967
    
    
    $
    332International
    
    
    14,205
    
    
    
    $
    24,172
    
    
    $
    332
  Note 13. Commitments and Contingencies
  
    
    a milestone payment of $1,250,000 due within 6 months of the date when the first
circulatory assist device is approved for sale in the United States, provided that we
have at least $25,000,000 in cash on hand and, if we do not have $25,000,000 at that
time, then the payment is deferred until such time that we have $25,000,000 in cash on
hand; and
 
    
    a special payment of up to $500,000 upon a sale of HeartWare, Inc. if such sale
generates proceeds in excess of the aggregate liquidation preferences of all of
HeartWare, Inc.s then outstanding preferred stock.
      71




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HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
   Note 14. Guarantees
  Note 15. Retirement Savings Plan
  Note 16. Quarterly Financial Information (Unaudited)
  Three Months Ended(In thousands, except per share data)
    
    March 31
    
    
    June 30
    
    
    September 30
    
    
    December 312009Revenues, net
    
    $
    1,478
    
    
    $
    2,968
    
    
    $
    7,506
    
    
    $
    12,220Gross profit
    
    
    759
    
    
    
    1,389
    
    
    
    3,403
    
    
    
    5,410Net loss
    
    
    (6,233
    )
    
    
    (6,891
    )
    
    
    (5,874
    )
    
    
    (1,911
    )Net loss per common
share  basic and
diluted
    
    $
    (0.70
    )
    
    $
    (0.78
    )
    
    $
    (0.60
    )
    
    $
    (0.17
    )Weighted average
shares outstanding
 basic and diluted
    
    
    8,867
    
    
    
    8,876
    
    
    
    9,716
    
    
    
    11,3692008Revenues, net
    
    $
    
    
    
    $
    
    
    
    $
    88
    
    
    $
    244Gross profit
    
    
    
    
    
    
    
    
    
    
    88
    
    
    
    166Net loss
    
    
    (6,840
    )
    
    
    (8,096
    )
    
    
    (4,902
    )
    
    
    (3,926
    )Net loss per common
share  basic and
diluted
    
    $
    (0.96
    )
    
    $
    (1.14
    )
    
    $
    (0.57
    )
    
    $
    (0.44
    )Weighted average
shares outstanding
 basic and diluted
    
    
    7,089
    
    
    
    7,089
    
    
    
    8,655
    
    
    
    8,867
  72




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HEARTWARE INTERNATIONAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
  
    
    $750,000 related to the commitment discussed in Note 13 above and approximately
$693,000 of foreign currency exchange gains arising from the appreciation in value of
our cash holdings, which were denominated in foreign currencies, namely Australian
dollars in the quarter ended March 31, 2009.
 
    
    $1.1 million of foreign currency exchange losses arising from the depreciation in
value of our cash holdings, which were denominated in foreign currencies, namely
Australian dollars, in the quarter ended June 30, 2009.
 
    
    $1.9 million and $2.4 million of expenses related to the proposed acquisition by
Thoratec in the quarters ended March 31, 2009 and June 30, 2009, respectively.
 
    
    $2.2 million related to the change in fair value of a derivative instrument in the
quarter ended September 30, 2009.
 
    
    $4.6 million related to the net gain on the early extinguishment of debt related to
the borrowing and repayment of all amounts under the Thoratec Loan Agreement in the
quarter ended December 31, 2009.
 
    
    $3.2 million and $2.5 million of foreign currency exchange gains arising from the
appreciation in the value of our cash holdings, which were denominated in foreign
currencies, namely Australian dollars, in the quarters ended September 30, 2008 and
December 31, 2008, respectively.
 Note 17. Subsequent Events
   73




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Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Managements Annual Report on Internal Control over Financial Reporting
  Internal Control 
Integrated Framework
   74




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Attestation Report of Independent Registered Public Accounting Firm
    Internal
Control-Integrated Framework
    Internal
Control-Integrated Framework
   
  75




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Changes in Internal Control over Financial Reporting
  Inherent Limitations on Controls and Procedures
  
 Item 9B.
    
    Other Information
   76




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Part III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
  Name
    
    Age
    
    PositionDouglas Godshall
    
    
    45
    
    
    Managing Director
(1),
President and Chief Executive OfficerDavid McIntyre
    
    
    39
    
    
    Executive Vice President, Chief Financial Officer and Chief
Operating Officer, Company SecretaryJeffrey LaRose
    
    
    48
    
    
    Executive Vice President and Chief Scientific OfficerDavid Hathaway
    
    
    62
    
    
    Chief Medical OfficerLauren Farrell
    
    
    42
    
    
    Vice President, FinanceRamon Paz
    
    
    52
    
    
    Senior Vice President, Quality AssuranceJames Schuermann
    
    
    42
    
    
    Senior Vice President, Sales and Marketing
 
 (1)
    
    The term Managing Director with respect to Mr. Godshall is a job title given to him by
the Company. Biographical Summaries
 Douglas
Godshall
 David McIntyre
 Jeffrey LaRose
  77




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##### Table of Contents



Dr. David Hathaway.
 Lauren Farrell.
 Ramon Augusto Paz.
 James Schuermann.
 Other Information
    78




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##### Table of Contents



Item 11.
    
    Executive Compensation
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  Australian Disclosure Requirements
   79




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##### Table of Contents



Substantial Shareholders
  Number of
    
    
    PercentageOrdinary CDIs
    
    
    %Apple Tree Partners
    
    
    93,588,670
    
    
    
    19.7Mr. Muneer A. Satter
    
    
    48,405,155
    
    
    
    10.1FMR LLC and FIL Limited
    
    
    40,303,130
    
    
    
    8.5Adage Capital Partners, L.P.
    
    
    34,670,195
    
    
    
    7.3
 Shareholder Information as at 5 February 2010.
 Distribution of equity security holders
 CDIs
    
    
    Options (unlisted)Number of
    
    
    Number of
    
    
    Number of
    
    
    Number ofholders
    
    
    CDIs
    
    
    holders
    
    
    options1  1,000
    
    
    101
    
    
    
    73,414
    
    
    
    
    
    
    
    1,001  5,000
    
    
    201
    
    
    
    646,161
    
    
    
    
    
    
    
    5,001  10,000
    
    
    175
    
    
    
    1,520,141
    
    
    
    9
    
    
    
    89,77510,001  100,000
    
    
    300
    
    
    
    10,578,011
    
    
    
    34
    
    
    
    1,600,025100,001  and over
    
    
    77
    
    
    
    85,156,863
    
    
    
    43
    
    
    
    30,617,090854
    
    
    
    97,974,590
    
    
    
    86
    
    
    
    32,306,890
  Number of
    
    
    % of CDIsNo.
    
    Holder
    
    CDIs held
    
    
    Outstanding1.
    
    J P Morgan Nominees Australia Limited
    
    
    18,993,337
    
    
    
    19.392.
    
    HSBC Custody Nominees (Australia) Limited
    
    
    13,765,151
    
    
    
    14.053.
    
    Phillip Asset Management Ltd. <IB AUS Bioscience Fund I A/C>
    
    
    8,119,625
    
    
    
    8.294.
    
    National Nominees Limited
    
    
    6,067,152
    
    
    
    6.195.
    
    Warman Investments Pty. Ltd.
    
    
    4,749,990
    
    
    
    4.856.
    
    Citicorp Nominees Pty. Limited
    
    
    2,601,192
    
    
    
    2.657.
    
    Mr. Matthew Rosenthal
    
    
    2,247,945
    
    
    
    2.298.
    
    Mr. Robert Thomas and Mrs. Kyrenia Thomas <Rob Thomas Super Fund
A/C>
    
    
    2,147,950
    
    
    
    2.199.
    
    Mr. Seth Harrison <Apple Tree Partner I LP A/C>
    
    
    1,999,970
    
    
    
    2.0410.
    
    Warman Investments Pty. Ltd.
    
    
    1,649,970
    
    
    
    1.6811.
    
    Nickeli Holdings Pty. Limited <Wade Family S/Fund A/C>
    
    
    1,451,310
    
    
    
    1.4812.
    
    Mr. Peter Vial and Mrs. Amanda Vial <Vial Super Fund A/C>
    
    
    1,210,853
    
    
    
    1.2413.
    
    Moore Family Nominee Pty. Ltd. <Moore Family Super Fund A/C>
    
    
    1,199,975
    
    
    
    1.2214.
    
    National Australia Trustees Limited <Hayberry Investments P/L A/C>
    
    
    1,097,538
    
    
    
    1.1215.
    
    ANZ Nominees Limited <Cash Income A/C>
    
    
    1,090,308
    
    
    
    1.1116.
    
    MAN Holdings Pty. Limited <Nelson Hybrid A/C>
    
    
    816,655
    
    
    
    0.8317.
    
    Mr. Stan Siejka
    
    
    814,800
    
    
    
    0.8318.
    
    PBC Investments Pty. Limited <PBC Super Fund A/C>
    
    
    799,995
    
    
    
    0.8219.
    
    Viking Management Services Pty. Ltd. <VHK Superannuation Fund A/C>
    
    
    727,265
    
    
    
    0.7420.
    
    Mrs. Kyrenia Thomas
    
    
    599,970
    
    
    
    0.61Total CDIs held by top 20 shareholders
    
    
    72,150,951
    
    
    
    73.64Total CDIs held by all other shareholders
    
    
    25,823,639
    
    
    
    26.36
  80




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##### Table of Contents



Options Unlisted
  Voting Rights
    (a)
    
    instructing CDN, as the legal owner, to vote the HeartWare International Shares underlying
their CDIs in a particular manner. The instruction form must be completed and returned to
HeartWare Internationals share registry prior to the meeting;
 (b)
    
    informing HeartWare International that they wish to nominate themselves or another person to
be appointed as CDNs proxy for the purposes of attending and voting at the general meeting;
 (c)
    
    converting their CDIs into a holding of HeartWare International Shares and voting these at
the meeting (however, if thereafter the former CDI holder wishes to sell their investment on
ASX, it would be necessary to convert HeartWare International Shares back to CDIs). This must
be done prior to the record date for the meeting. See section 7 below for further information
regarding the conversion process.
    Required Statements
  (a)
    
    There is no current on-market buy-back of the Companys securities.
 (b)
    
    HeartWare International, Inc. was incorporated in the state of Delaware in the United States
of America.
 (c)
    
    The Company is not subject to Chapters 6, 6A, 6B or 6C of the Corporations Act dealing with
the acquisitions of shares (ie, substantial shareholdings and takeovers).
 (d)
    
    Under the Delaware General Corporation Law, shares are generally freely transferable subject
to restrictions imposed by U.S. federal or state securities laws, by the certificate of
incorporation or by-laws of
the Company or by an agreement signed with the holders of the shares at issue. The Companys
certificate of incorporation and by-laws do not impose any specific restrictions on
transfer.
  81




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##### Table of Contents



General Information
     Australian Corporate Governance Statement
  nd
 www.heartware.com
  Principle 1  Lay solid foundations for management and oversight
 Recommendation 1.1  Establish the functions reserved to the Board of Directors and those delegated
to senior executives and disclose those functions
  (a)
    
    the Board of Directors is to provide effective governance over the business and affairs of
HeartWare and its controlled entities (the HeartWare Group) so that the interests of all
stakeholders are protected; and
 (b)
    
    the Chief Executive Officer is to oversee the day-to-day performance of the HeartWare Group
(pursuant to Board delegated powers).
   (a)
    
    decisions about corporate strategy and policies as well as commitments over
prescribed limits;
 (b)
    
    setting major capital expenditure, acquisitions, divestments and funding
arrangements;
  82




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##### Table of Contents



(c)
    
    setting the various internal controls and reporting framework for the
management of the risks inherent in the operations of the HeartWare Group;
 (d)
    
    setting of discretionary financial and related operating limits for management;
and
 (e)
    
    establishing and determining the powers and functions of the committees of the
Board.
 Recommendation 1.2  Disclose the process for evaluating the performance of senior executives
  Recommendation 1.3  Disclosure of information under Principle 1of the ASX Governance
Recommendations
 Reporting Requirement
  Principle 2  Structure the Board to add value
 Recommendation 2.1  A majority of the Board of Directors should be independent
 Recommendation 2.2  The Chair should be an independent director
 Recommendation 2.3  The roles of Chairman and Chief Executive Officer should not be exercised by
the same individual
   Name
    
    Position
    
    Date Appointed
    
    Tenure*
    
    IndependentRob Thomas
    
    Non-executive
Chairman
    
    26 Nov 2004
    
    5.1 years
    
    YesSeth Harrison
    
    Non-executive
Deputy Chairman
    
    26 Nov 2004
    
    5.1 years
    
    NoDenis Wade
    
    Non-executive director
    
    15 Dec 2004
    
    5.0 years
    
    YesChristine Bennett
    
    Non-executive director
    
    15 Dec 2004
    
    5.0 years
    
    YesBob Stockman
    
    Non-executive director
    
    11 Dec 2006
    
    3.1 years
    
    YesRay Larkin Jr
    
    Non-executive director
    
    3 Oct 2008
    
    1.2 years
    
    YesTim Barberich
    
    Non-executive director
    
    29 Apr 2008
    
    1.7 years
    
    YesDoug Godshall
    
    Chief Executive
Officer /President / Executive Director
    
    28 Oct 2006
    
    3.2 years
    
    No
 *
    
    Calculated as at 31 December 2009.  83




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##### Table of Contents



Independent advice
   Recommendation 2.4  The Board should establish a Nomination Committee
  Reporting Requirement
  Recommendation 2.5  Disclose the process for evaluating the performance of the Board, its
committees and individual directors
 Reporting Requirement
  Recommendation 2.6  Disclosure of information under Principle 2 of the ASX Governance
Recommendations
 Reporting Requirement
    84




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Principle 3  Promote ethical and responsible decision-making
 Recommendation 3.1  Establish a Code of Conduct and disclose it
  Recommendation 3.2  Establish a policy concerning trading in Company securities by directors,
senior executives and employees and disclose it
  Recommendation 3.3  Disclosure of information under Principle 3 of the ASX Governance
Recommendations
 Reporting Requirement
  Principle 4  Safeguard integrity in financial reporting
 Recommendation 4.1  The Board should establish an Audit Committee
 Recommendation 4.2  The Audit Committee should: (a) consist of non-executive directors only; (b)
consist of a majority of independent directors; (c) be chaired by an independent chair who is
not chair of the Board; and (d) have at least three members
 Recommendation 4.3  The Audit Committee should have a formal charter
   Reporting Requirement
  Recommendation 4.4  Disclosure of information under Principle 4 of the ASX Governance
Recommendations
 Reporting Requirement
    85




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Principle 5  Make timely and balanced disclosure
 Recommendation 5.1  Establish written policies designed to ensure compliance with ASX Listing Rule
disclosure requirements and to ensure accountability at a senior executive level for that
compliance and disclose those policies
 Recommendation 5.2  Disclosure of information under Principle 5 of the ASX Governance
Recommendations
    Reporting Requirement
  Principle 6  Respect the rights of shareholders
 Recommendation 6.1  Design a communications policy for promoting effective communication with
shareholders and encourage their participation at general meetings and disclose those policies
 Recommendation 6.2  Disclosure of information under Principle 6 of the ASX Governance
Recommendations
   Reporting requirement
   86




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Principle 7  Recognise and manage risk
 Recommendation 7.1  Establish policies for the oversight and management of material business risks
and disclose it
      Reporting requirement
  Recommendation 7.2  Require management to design and implement the risk management and internal
control system to manage the Companys material business risks and report to it whether those
risks are being managed effectively (and makes disclosures therein); Disclose that management
has reported to the Board as to the effectiveness of the Companys management of its material
business risks
    Recommendation 7.3  Disclose whether the Board has received assurance from the Chief Executive
Officer and the Chief Financial Officer that the declaration under Section 295A of the
Corporations Act is founded on a sound system of risk management and internal control and is
operating effectively in all material respects in relation to financial reporting risks
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Reporting requirement
    Recommendation 7.4  Disclosure of information under Principle 7of the ASX Governance
Recommendations
 Reporting requirement
  Principle 8  Remunerate fairly and responsibly
 Recommendation 8.1  Establish a Remuneration Committee
  Recommendation 8.2  Clearly distinguish the structure of non-executive directors remuneration
from that of executive directors and senior executives
  Reporting requirement
  Recommendation 8.3  Disclosure of information under Principle 8 of the ASX Governance
Recommendations
  88




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Reporting requirement
   
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
  
 Item 14.
    
    Principal Accounting Fees and Services
   89




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##### Table of Contents



Part IV.
 
 Item 15.
    
    Exhibits, Financial Statement Schedules
  1.
    
    Financial Statements:Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Loss
Consolidated Statement of Stockholders Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements2.
    
    Financial Statement Schedules:Required schedule information is included in the Notes to Consolidated
Financial Statements or is omitted because it is either not required
or not applicable.3.
    
    Exhibits:See Exhibit Index
  90




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HeartWare International, Inc.Date: February 23, 2010
    By:
    /s/ Douglas GodshallName:
    Douglas GodshallTitle:
    President and Chief Executive Officer  Name
    
    Title
    
    Date/s/ Douglas Godshall

Douglas Godshall
    
    President, Chief Executive Officer
and Director (Principal
Executive Officer)
    
    February 23, 2010/s/ David McIntyre

David McIntyre
    
    Chief Financial Officer,
Chief Operating Officer
and Secretary (Principal
Financial and Accounting
Officer)
    
    February 23, 2010/s/ Robert Thomas

Robert Thomas
    
    Chairman
and Director
    
    February 23, 2010/s/ Seth Harrison

Seth Harrison
    
    Director
    
    February 23, 2010/s/ Christine Bennett

Christine Bennett
    
    Director
    
    February 23, 2010/s/ Denis Wade

Denis Wade
    
    Director
    
    February 23, 2010/s/ Robert Stockman

Robert Stockman
    
    Director
    
    February 23, 2010/s/ Timothy J. Barberich

Timothy J. Barberich
    
    Director
    
    February 23, 2010/s/ C. Raymond Larkin, Jr.

C. Raymond Larkin, Jr.
    
    Director
    
    February 23, 2010
  91




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##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Description2.1
    
    
    Implementation Agreement, dated as of August 5, 2008, between HeartWare International, Inc. and HeartWare
Limited. (13)2.2
    
    
    Agreement and Plan of Merger, dated as of February 12, 2009, among HeartWare International, Inc., Thoratec
Corporation, Thomas Merger Sub I, Inc. and Thomas Merger Sub II, Inc. (14)3.1
    
    
    Certificate of Incorporation of HeartWare International, Inc.(4)3.2
    
    
    Bylaws of HeartWare International, Inc. (4)10.01
    
    
    Securities Exchange Agreement between Apple Tree Partners I, L.P., Anthony Low-Beer, Edward Nerssissian,
Garrett and Carol Thunen, HeartWare, Inc. and HeartWare Limited dated December 13, 2004 (1)10.02
    
    
    Lease Agreement, dated as of April 17, 2008, between JDRP Associates No. 1, Ltd. and HeartWare, Inc. (10)10.03
    
    
    Form of Securities Purchase Agreement between HeartWare International and the selling stockholders (the
Company entered into separate Securities Purchase Agreements with the investors in substantially the same
form set forth in Exhibit 10.03) (18)10.04
    
    
    Amended and Restated Employment Agreement, dated as of December 16, 2009, by and between HeartWare
International, Inc. and Douglas Godshall (11) +10.05
    
    
    Amended and Restated Employment Agreement, dated as of December 16, 2009, by and between HeartWare
International, Inc and David McIntyre * +10.06
    
    
    Amended and Restated Employment Agreement, dated as of December 16, 2009, by and between HeartWare
International, Inc. and Jeffrey LaRose * +10.07
    
    
    Employment Agreement, dated as of December 5, 2008, between HeartWare International, Inc. and James
Schuermann (5) +10.08
    
    
    Employment Agreement, dated as of December 5, 2008, between HeartWare International, Inc. and Ramon Paz (5) +10.09
    
    
    Employment Agreement, dated as of December 5, 2008 between HeartWare Inc. and David R. Hathaway, M.D. (12) +10.10
    
    
    Production Services Agreement, dated August 17, 2006, between Minnetronix, Inc. and HeartWare, Inc. (2)10.11
    
    
    Servicing Agreement, dated August 17, 2006, between Minnetronix, Inc. and HeartWare, Inc. (1)10.12
    
    
    Sustaining Services and Clinical Support Agreement, dated August 17, 2006, between Minnetronix, Inc. and
HeartWare, Inc. (1)10.13
    
    
    Form of Deed of Indemnity, Access and Insurance Agreement for directors and executive
officers (1) +10.14
    
    
    Letter of Appointment as a Director of the Company dated December 1, 2006 between HeartWare Limited and
Robert Stockman (1) +10.15
    
    
    Letter of Appointment as a Director of the Company dated December 15, 2004 between HeartWare Limited and
Robert Thomas (1) +10.16
    
    
    Letter of Appointment as a Director of the Company dated December 15, 2004 between HeartWare Limited and
Christine Bennett (1) +10.17
    
    
    Letter of Appointment as a Director of the Company dated December 15, 2004 between HeartWare Limited and
Denis Wade (1) +10.18
    
    
    Letter of Appointment as a Director of the Company dated September 3, 2008 between HeartWare International,
Inc. and Ray Larkin (15) +10.19
    
    
    Letter of Appointment as a Director of the Company dated April 16, 2008 between HeartWare International,
Inc. and Timothy J. Barberich (16) +10.20
    
    
    HeartWare Limited Employee Share Option Plan Rules (1) +10.21
    
    
    HeartWare Limited Share Performance Rights Plan  Plan Rules (3) +10.22
    
    
    HeartWare International, Inc. 2008 Stock Incentive Plan (6)10.23
    
    
    HeartWare International, Inc. Employee Stock Option Plan (7)
  92




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Exhibit No.
    
    Description10.24
    
    
    HeartWare International, Inc. Restricted Stock Unit Plan (8)10.25
    
    
    Form of HeartWare International, Inc. Incentive Option Terms (9)10.26
    
    
    Business Lease, dated December 27, 2006, between HeartWare, Inc. and Atlantic-Philadelphia Realty
LLC (17)10.27
    
    
    First Amendment to Business Lease, dated August 19, 2008, between HeartWare, Inc. and Atlantic-Philadelphia
Realty LLC*10.28
    
    
    Loan Agreement, dated as of February 12, 2009, among HeartWare International, Inc., the Guarantors thereto
and Thoratec Corporation (14)10.29
    
    
    Investors Rights Agreement, dated as of February 12, 2009, between HeartWare International, Inc. and
Thoratec Corporation (14)21.1
    
    
    List of Subsidiaries *23.1
    
    
    Consent of Independent Registered Public Accounting Firm *31.1
    
    
    Certificate pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of Chief
Executive Officer *31.2
    
    
    Certificate pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of Chief
Financial Officer *32.1
    
    
    Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, of Chief Executive Officer **32.2
    
    
    Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, of Chief Financial Officer **
 
 (1)
    
    Incorporated by reference to the respective exhibits filed with the Companys Registration
Statement on Form 10 (File No. 000-52595) filed with the Securities and Exchange Commission on
April 30, 2007.(2)
    
    Incorporated by reference to Exhibit 10.22 filed with Amendment No. 2 to the Companys
Registration Statement on Form 10 (File No. 000-52595) filed with the Securities and Exchange
Commission on July 13, 2007.(3)
    
    Incorporated by reference to Exhibit 99.1 to the Companys Registration Statement on Form S-8
(File No. 333-147506) filed with the Securities and Exchange Commission on November 19, 2007.(4)
    
    Incorporated by reference to the respective exhibits filed with the Companys Current Report
on Form 8-K filed with the Securities and Exchange Commission on November 13, 2008.  93




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(5)
    
    Incorporated by reference to Exhibit 99 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 5, 2008.(6)
    
    Incorporated by reference to Appendix 12 to the Information Memorandum contained in the
Companys Proxy Statement on Form DEF 14A filed with the Securities and Exchange Commission on
September 22, 2008.(7)
    
    Incorporated by reference to Appendix 9 to the Information Memorandum contained in the
Companys Proxy Statement on Form DEF 14A filed with the Securities and Exchange Commission on
September 22, 2008.(8)
    
    Incorporated by reference to Appendix 10 to the Information Memorandum contained in the
Companys Proxy Statement on Form DEF 14A filed with the Securities and Exchange Commission on
September 22, 2008.(9)
    
    Incorporated by reference to Exhibit 99.4 to the Companys Registration Statement on Form S-8
(File No. 333-155359) filed with the Securities and Exchange Commission on November 13, 2008.(10)
    
    Incorporated by reference to Exhibit 10.01 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on April 18, 2008.(11)
    
    Incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 18, 2009.(12)
    
    Incorporated by reference to Exhibit 10.13 to the Companys Annual Report on Form 10-K filed
with the Securities and Exchange Commission on February 26, 2009.(13)
    
    Incorporated by reference to Appendix 1 to the Information Memorandum contained in the
Companys Proxy Statement on Form DEF 14A filed with the Securities and Exchange Commission on
September 22, 2008.(14)
    
    Incorporated by reference to Exhibit 2.1 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on February 13, 2009.(15)
    
    Incorporated by reference to Exhibit 10.27 to the Companys Annual Report on Form 10-K filed
with the Securities and Exchange Commission on February 26, 2009.(16)
    
    Incorporated by reference to Exhibit 10.28 to the Companys Annual Report on Form 10-K filed
with the Securities and Exchange Commission on February 26, 2009.(17)
    
    Incorporated by reference to Exhibit 10.40 to the Companys Annual Report on Form 10-K filed
with the Securities and Exchange Commission on February 28, 2008.(18)
    
    Incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed
with the Securities and Exchange Commission on August 10, 2009.*
    
    Filed herewith**
    
    Furnished herewith+
    
    Management contract or compensatory plan or arrangement.  94