10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2008

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

Commission file number: 000-51348

ev3 Inc.

(Exact name of registrant as specified in its charter)

Delaware	32-0138874
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9600 54^th Avenue North, Suite 100
Plymouth, Minnesota 55442
(Address of principal executive offices)

(763) 398-7000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act). (Check one):

Large accelerated filer o  Accelerated filer þ  Non-accelerated filer   o
(Do not check if a smaller reporting company) Smaller reporting company o 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ

As of November 1, 2008, there were 105,911,315 shares of common stock, par value $0.01 per share, of the registrant outstanding.

ev3 Inc.
FORM 10-Q
For the Quarterly Period Ended September 28, 2008

TABLE OF CONTENTS

Description		Page
PART I.	FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Consolidated Balance Sheets as of September 28, 2008 (unaudited) and December 31, 2007	1
	Consolidated Statements of Operations for the three and nine months ended September 28, 2008 and September 30, 2007 (unaudited)	2
	Consolidated Statements of Cash Flows for the nine months ended September 28, 2008 and September 30, 2007 (unaudited)	3
	Notes to the Consolidated Financial Statements	4
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	31
ITEM 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION
ITEM 1.	Legal Proceedings	33
ITEM 1A.	Risk Factors	33
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
ITEM 3.	Defaults Upon Senior Securities	34
ITEM 4.	Submission of Matters to a Vote of Security Holders	35
ITEM 5.	Other Information	35
ITEM 6.	Exhibits	35
SIGNATURE PAGE		36
Exhibit Index		37
EXHIBIT 10.4
EXHIBIT 10.5
EXHIBIT 10.6
EXHIBIT 10.7
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

This report contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by those sections. We refer you to the information under the heading “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Forward-Looking Statements.”

In this report, references to “ev3,” the “company,” “we,” “our” or “us” in this report, unless the context otherwise requires, refer to ev3 Inc. and its subsidiaries.

All trademarks or trade names referred to in this report are the property of their respective owners.

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

ev3 Inc.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

	September 28,			December 31,
	2008			2007
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	45,947		$	81,060
Short-term investments		—			9,744
Accounts receivable, less allowances of $7,536 and $6,783, respectively		73,593			66,170
Inventories, net		56,269			64,044
Prepaid expenses and other assets		6,773			6,371
Other receivables		695			981
Total current assets		183,277			228,370
Restricted cash		1,442			2,204
Property and equipment, net		33,643			37,985
Goodwill		598,448			586,648
Other intangible assets, net		198,506			231,000
Other assets		467			899
Total assets	$	1,015,783		$	1,087,106
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	18,366		$	21,511
Accrued compensation and benefits		28,388			35,301
Accrued liabilities		25,455			49,429
Deferred revenue		—			9,347
Current portion of long-term debt		2,500			3,571
Total current liabilities		74,709			119,159
Long-term debt		7,083			6,429
Other long-term liabilities		5,381			3,037
Total liabilities		87,173			128,625
Stockholders’ equity
Common stock, $0.01 par value, 300,000,000 shares authorized, shares issued and outstanding: 105,896,421 shares at September 28, 2008 and 105,078,769 at December 31, 2007		1,059			1,051
Additional paid in capital		1,753,572			1,739,064
Accumulated deficit		(825,541	)		(781,039	)
Accumulated other comprehensive loss		(480	)		(595	)
Total stockholders’ equity		928,610			958,481
Total liabilities and stockholders’ equity	$	1,015,783		$	1,087,106

The accompanying notes are an integral part of these consolidated financial statements.

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ev3 Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 28,			September 30,			September 28,			September 30,
	2008			2007			2008			2007
Sales
Product sales	$	100,018		$	65,060		$	296,577		$	191,955
Research collaboration		7,011			—			19,426			—
Net sales		107,029			65,060			316,003			191,955
Operating expenses:
Product cost of goods sold		36,182			23,097			102,442			65,916
Research collaboration		2,100			—			5,647			—
Sales, general and administrative		53,005			45,353			178,769			125,372
Research and development		12,133			10,708			37,913			29,464
Amortization of intangible assets		8,101			3,952			24,285			11,916
Intangible asset impairment		—			—			10,459			—
Loss (gain) on sale or disposal of assets, net		116			—			116			(988	)
Special charges		—			20,183			—			20,183
Total operating expenses		111,637			103,293			359,631			251,863
Loss from operations		(4,608	)		(38,233	)		(43,628	)		(59,908	)
Other (income) expense:
Realized and unrealized gains on investments, net		(142	)		—			(542	)		—
Interest (income) expense, net		49			(417	)		(307	)		(823	)
Other (income) expense, net		2,279			(1,554	)		192			(2,066	)
Loss before income taxes		(6,794	)		(36,262	)		(42,971	)		(57,019	)
Income tax expense		516			250			1,531			858
Net loss	$	(7,310	)	$	(36,512	)	$	(44,502	)	$	(57,877	)
Earnings per share:
Net loss per common share (basic and diluted)	$	(0.07	)	$	(0.60	)	$	(0.43	)	$	(0.98	)
Weighted average shares outstanding (basic and diluted)		104,474,600			60,365,027			104,276,029			59,141,035

The accompanying notes are an integral part of these consolidated financial statements.

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ev3 Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands, except per share amounts)

(unaudited)

	Nine Months Ended
	September 28,			September 30,
	2008			2007
Operating activities
Net loss	$	(44,502	)	$	(57,877	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		33,016			17,403
Provision for bad debts and sales returns		1,840			1,005
Provision for inventory obsolescence		7,304			3,072
Loss (gain) on sale or disposal of assets		116			(988	)
Gain on sale of investment		(542	)		—
Stock compensation expense		11,682			7,329
Intangible asset impairment		10,459			—
Change in operating assets and liabilities:
Accounts receivable		(8,550	)		(14,330	)
Inventories		(832	)		(5,372	)
Prepaid expenses and other assets		(194	)		(312	)
Accounts payable		(3,431	)		2,010
Accrued expenses and other liabilities		(27,822	)		27,729
Deferred revenue		(9,043	)		—
Net cash used in operating activities		(30,499	)		(20,331	)
Investing activities
Proceeds from sale of short-term investments		9,744			6,900
Purchase of property and equipment		(9,032	)		(6,518	)
Purchase of patents and licenses		(2,250	)		(1,866	)
Purchase of distribution rights		—			(6,500	)
Proceeds from sale of assets		1,061			2,005
Acquisitions, net of cash acquired		(7,500	)		—
Payments for the acquisition of FoxHollow, net of cash acquired		(127	)		(2,793	)
Change in restricted cash		771			687
Net cash used in investing activities		(7,333	)		(8,085	)
Financing activities
Proceeds from issuance of common stock		—			44,542
Proceeds from issuance of debt		10,000			5,000
Payments on long-term debt		(10,417	)		(1,607	)
Payments on capital lease obligations		(117	)		(103	)
Debt issuance costs		180			—
Proceeds from exercise of stock options		1,272			4,831
Proceeds from employee stock purchase plan		1,903			869
Other		(341	)		(14	)
Net cash provided by financing activities		2,480			53,518
Effect of exchange rate changes on cash		237			181
Net (decrease) increase in cash and cash equivalents		(35,113	)		25,283
Cash and cash equivalents, beginning of period		81,060			24,053
Cash and cash equivalents, end of period	$	45,947		$	49,336

The accompanying notes are an integral part of these consolidated financial statements.

3

ev3 Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business

ev3 Inc. (“we,” “our” or “us”) is a global medical device company focused on catheter-based technologies for the endovascular treatment of vascular diseases and disorders. We develop, manufacture and/or market a wide range of products that include stents, atherectomy and thrombectomy products, balloon angioplasty catheters, microcatheters and occlusion balloon systems, embolic protection devices, infusion catheters/wires, embolic coils and liquid embolics. We market our products in the United States, Europe, Canada and other countries through a direct sales force and through distributors in certain other international markets and in the United States. As a result of our acquisition of FoxHollow Technologies, Inc. (“FoxHollow”) in October 2007 (see Notes 2 and 5), we develop, manufacture and market atherectomy and thrombectomy products and until recently were engaged in a research collaboration with Merck & Co., Inc. for the analysis of atherosclerotic plaque removed from patient arteries with the goal of identifying new biomarkers for atherosclerotic disease progression and new therapies for atherosclerotic disease (see Note 10).

2. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by us in accordance with accounting principles generally accepted in the United States of America (U.S.) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for any interim period may not be indicative of results for the full year. These unaudited consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2007.

We operate on a manufacturing calendar with our fiscal year ending on December 31. Each quarter is 13 weeks, consisting of one five-week and two four-week periods. Accordingly, the third fiscal quarters of 2008 and 2007 ended on September 28 and September 30, respectively.

FoxHollow

The acquisition of FoxHollow was completed on October 4, 2007. The consolidated interim financial statements for the three and nine months ended September 28, 2008 included herein include results from our FoxHollow subsidiary. The consolidated interim financial statements for the three and nine months ended September 30, 2007 included herein do not include results from FoxHollow since the acquisition occurred after the end of the third fiscal quarter 2007.

Accounting Changes

On January 1, 2008, we adopted Statement Financial Accounting Standard (SFAS) No. 157, “Fair Value Measurements,” (“SFAS 157”) for financial assets and liabilities. See Note 3 for further discussion of the impact the adoption of SFAS 157 had on our results of operations and financial condition for the three and nine months ended September 28, 2008. The implementation of SFAS 157 did not have a material impact on our consolidated financial statements.

In February 2008, FASB issued Staff Position (FSP) No. FAS 157-2, “Effective Date of FASB Statement No. 157,” which delays the effective date of SFAS 157 for certain non-financial assets and liabilities to fiscal years beginning after November 15, 2008. The adoption of FAS 157-2 is not expected to have an impact on our consolidated financial statements.

In October 2008, the FASB issued Staff Position (FSP) No. FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” which clarifies the application of SFAS. 157 in an inactive market and illustrates how an entity would determine fair value when the market for a financial asset is not active. The Staff Position

4

is effective immediately and applies to prior periods for which financial statements have not been issued, including interim or annual periods ending on or before September 28, 2008. The implementation of FAS 157-3 did not have a material impact on our consolidated financial statements.

Other Recently Issued Accounting Principles

In December 2007, the FASB issued SFAS No. 141 (Revised 2007) “Business Combinations” (SFAS No. 141(R)) and SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements,” which are effective for fiscal years beginning after December 15, 2008. These new standards represent the completion of the FASB’s first major joint project with the International Accounting Standards Board (IASB) and are intended to improve, simplify and converge internationally the accounting for business combinations and the reporting of noncontrolling interests (formerly minority interests) in consolidated financial statements. We will adopt these standards at the beginning of our 2009 fiscal year. The effect of adoption will generally be prospectively applied to transactions completed after the end of our 2008 fiscal year, although the new presentation and disclosure requirements for pre-existing non-controlling interests will be retrospectively applied to all prior-period financial information presented.

SFAS No. 141(R) retains the underlying fair value concepts of its predecessor (SFAS No. 141), but changes the method for applying the acquisition method in a number of significant respects, including the requirement to expense transaction fees and expected restructuring costs as incurred, rather than including these amounts in the allocated purchase price; the requirement to recognize the fair value of contingent consideration at the acquisition date, rather than the expected amount when the contingency is resolved; the requirement to recognize the fair value of acquired in-process research and development assets at the acquisition date, rather than immediately expensing; and the requirement to recognize a gain in relation to a bargain purchase price, rather than reducing the allocated basis of long-lived assets. Because this standard is generally applied prospectively, except as it relates to acquired income tax contingencies, the effect of adoption on our financial statements will depend primarily on specific transactions, if any, completed after 2008.

On February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115” (SFAS No. 159). SFAS No. 159 creates a “fair value option” under which an entity may elect to record certain financial assets or liabilities at fair value upon their initial recognition. Subsequent changes in fair value would be recognized in earnings as those changes occur. The election of the fair value option would be made on a contract-by-contract basis and would need to be supported by concurrent documentation or a preexisting documented policy. SFAS No. 159 requires an entity to separately disclose the fair value of these items on the balance sheet or in the footnotes to the financial statements and to provide information that would allow the financial statement user to understand the impact on earnings from changes in the fair value. SFAS No. 159 was effective for us beginning in 2008. Based upon our assessment of our financial assets and liabilities, we did not elect to implement the provisions of SFAS 159 and therefore the adoption of SFAS 159 did not have an impact on our results of operations and financial condition.

3. Fair Value Measurements

SFAS 157, “Fair Value Measurement,” defines the meaning of the term “fair value” and provides a consistent framework that will reduce inconsistency and increase comparability in fair value measurements for many different types of assets or liabilities. Generally, the new framework for measuring requires fair value to be determined on the exchange price which would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. SFAS 157 requires disclosure by each major asset and liability category measured at fair value on either a recurring or nonrecurring basis and establishes a three-tier fair value hierarchy which prioritizes the inputs used in fair value measurements. The three-tier hierarchy for inputs used in measuring fair value is as follows:

• Level 1. Observable inputs such as quoted prices in active markets;

• Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

• Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

5

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of September 28, 2008, we did not hold any short-term investments measured at fair value on a recurring basis. As of December 31, 2007, our short-term investments consisted of U.S. Government securities as well as floating rate taxable municipal and corporate bonds. We had the option to put the bonds to the remarketing agent who was obligated to repurchase the bonds at par. The guaranteed put option was equivalent to a level two input as the remarketing agent was required to repurchase the bonds at par and as such par represented the exit price in the principal market in which we would transact. The remarketing agent was a leading, international middle-market investment bank and institutional securities firm with demonstrated credit worthiness and as such we believed the remarketing agent would have had the ability to repurchase the bonds if and when we would have elected to exercise our put option. In addition, as of September 28, 2008, we held approximately $27.1 million in money market accounts measured at fair value on a recurring basis using level one inputs. The adoption of SFAS 157 resulted in no impact to any of our financial assets or liabilities which were previously measured at fair value.

4. Stock-Based Compensation

The following table presents the stock-based compensation (in thousands) recorded in our unaudited consolidated statements of operations for the periods presented:

	Three Months Ended				Nine Months Ended
	September 28,		September 30,		September 28,		September 30,
Stock-Based Compensation Charges:	2008		2007		2008		2007
Product cost of goods sold	$	121	$	101	$	596	$	446
Sales, general and administrative		2,572		2,100		9,608		6,166
Research and development		366		269		1,478		717
	$	3,059	$	2,470	$	11,682	$	7,329

In the nine months ended September 28, 2008, we granted options to purchase an aggregate of approximately 2.0 million shares of our common stock, an aggregate of approximately 693,000 shares of restricted stock and an aggregate of approximately 140,000 restricted stock units at a weighted average fair value of $3.43, $8.92 and $9.77 per share, respectively, which will be recognized on a straight-line basis over the requisite service period, which, for the substantial majority of these grants, is four years. As of September 28, 2008, we had options outstanding to purchase an aggregate of 10.4 million shares of our common stock, of which options to purchase an aggregate of 6.2 million shares were exercisable as of such date. In addition, we have 1.4 million shares of restricted stock and 308,000 restricted stock units.

We had $30.5 million of total unrecognized compensation cost related to unvested stock-based compensation arrangements granted to employees as of September 28, 2008. That cost is expected to be recognized over a weighted-average period of 2.4 years.

5. FoxHollow Acquisition

On October 4, 2007, we acquired FoxHollow Technologies, Inc., a medical device company that designs, develops, manufacturers and sells medical devices primarily for the treatment of peripheral artery disease. FoxHollow was also engaged in a collaborative research project with Merck & Co., Inc. for the analysis of atherosclerotic plaque removed from patient arteries with the goal of identifying new biomarkers for atherosclerotic disease progression and new therapies for atherosclerotic disease (see Note 10).

We paid $857.0 million to acquire FoxHollow through a combination of common stock, cash and fully vested and partially vested stock options and stock based awards. Changes to goodwill during the third quarter 2008 were based upon receiving the updated information necessary to finalize our estimates of the costs to complete our plan to consolidate our Redwood City, California facilities, acquired in the acquisition of FoxHollow, into our existing facilities located in Irvine, California and Plymouth, Minnesota, as discussed in Note 6. We finalized the purchase price allocation during the third quarter 2008.

6

The following table summarizes the fair value (in thousands) of the identifiable intangibles assets, goodwill and tangible assets, net of liabilities assumed, that were acquired as part of our acquisition of FoxHollow:

	October 4,
	2007
Intangible assets	$	199,500
Acquired in-process research and development		70,700
Tangible assets acquired, net of liabilities assumed		144,956
Goodwill		441,887
Estimated fair value of identifiable tangible and intangible assets and goodwill, net of cash acquired and liabilities assumed	$	857,043

Pro Forma Results of Operations

The unaudited pro forma combined consolidated statements of operations for the three and nine months ended September 30, 2007 set forth below combines the unaudited historical results of ev3 for the three and nine months ended September 30, 2007, respectively, and the unaudited pro forma results of ev3 and FoxHollow for the three and nine months ended September 30, 2007 and gives effect to the acquisition as if it occurred on January 1, 2007. Pro forma adjustments have been made related to amortization of identified intangible assets and interest income to reflect the use of acquired cash at the time of the acquisition. The pro forma consolidated results do not purport to be indicative of results that would have occurred had the acquisition been in effect for the periods presented, nor do they claim to be indicative of the results that will be obtained in the future, and do not include any adjustments for cost savings or other synergies. The pro forma financial results below include the results of continuing operations of FoxHollow in its entirety during the periods presented.

The following table contains unaudited pro forma results (in thousands except per share data) for the three and nine months ended September 30, 2007, as if the acquisition had occurred at January 1, 2007:

	Three Months Ended						Nine Months Ended
	September 30, 2007						September 30, 2007
	Reported			Pro forma			Reported			Pro forma
Net sales	$	65,060		$	117,057		$	191,955		$	343,789
Net loss	$	(36,512	)	$	(53,221	)	$	(57,877	)	$	(83,641	)
Net loss per common share:
Basic and diluted	$	(0.60	)	$	(0.51	)	$	(0.98	)	$	( 0.82	)

6. Restructuring

In conjunction with the acquisition of FoxHollow, our management began to assess and formulate a plan to restructure certain activities of FoxHollow and to terminate certain contractual agreements assumed in the acquisition. A significant portion of these costs were related to management’s plan to reduce the workforce and included costs for severance and change of control provisions provided for under certain FoxHollow employment contracts. We reduced the FoxHollow workforce by approximately 130 employees during the fourth quarter 2007 and we have completed the planned reductions by the end of the third quarter 2008. The unpaid portion of the workforce reductions represents salary continuance which will be paid over future periods. Total purchase price adjustments related to restructuring activities were $7.9 million for the nine months ended September 28, 2008. We finalized our restructuring costs in conjunction with our plans to consolidate our manufacturing and other operations including the closure of our facilities located in Redwood City, California, which we acquired in connection with our acquisition of FoxHollow. We have completed the relocation of the sales, manufacturing and research and development activities performed in our Redwood City, California facilities to our existing facilities located in Irvine, California and Plymouth, Minnesota. Provisions with respect to the restructuring activities of FoxHollow are recognized under EITF 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination”. For additional discussion of the purchase price allocation, see Note 5.

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The following table represents a summary of activity (in thousands) associated with the FoxHollow restructuring accruals that occurred during the nine months ended September 28, 2008. The unpaid portions of these costs are included in accrued compensation and benefits, accrued liabilities, and other long-term liabilities for the periods presented:

	Purchase Price Adjustments (EITF 95-3)
			Adjustments to
	Balance at		Purchase Price					Balance at
	December 31, 2007		Allocation		Amounts Paid			September 28, 2008
Workforce reductions	$	7,605	$	1,574	$	(7,048	)	$	2,131
Termination of contractual commitments		2,476		6,294		(712	)		8,058
Total	$	10,081	$	7,868	$	(7,760	)	$	10,189

As part of our restructuring plan, we have also incurred costs related to workforce reductions of the ev3 pre-acquisition workforce of approximately 40 employees in the fourth quarter 2007, which are accounted for under FASB Statement 112, “Employers’ Accounting for Postemployment Benefits,” and were recognized in the fourth quarter 2007 when the amounts became probable and estimable.

The following table represents a summary of activity (in thousands) associated with the ev3 pre-acquisition workforce restructuring accruals that occurred during the nine months ended September 28, 2008. The unpaid portions of these costs are included in accrued compensation and benefits for the periods presented:

	Expensed (FAS 112)
			Amounts
	Balance at		Charged to						Balance at
	December 31, 2007		Expense			Amounts Paid			September 28, 2008
Workforce reductions	$	999	$	(120	)	$	(879	)	$	—
Total	$	999	$	(120	)	$	(879	)	$	—

7. Inventories

Inventories consist of the following (in thousands):

	September 28, 2008			December 31, 2007
Raw materials	$	11,781		$	18,003
Work in-progress		6,453			3,946
Finished goods		49,724			53,063
		67,958			75,012
Inventory reserve		(11,689	)		(10,968	)
Inventory, net	$	56,269		$	64,044

8. Property and Equipment, Net

Property and equipment, net consist of the following (in thousands):

	September 28, 2008			December 31, 2007
Machinery and equipment	$	28,646		$	27,405
Office furniture and equipment		18,456			16,897
Leasehold improvements		16,293			14,656
Construction in progress		5,540			6,957
		68,935			65,915
Less:
Accumulated depreciation and amortization		(35,292	)		(27,930	)
Property and equipment, net	$	33,643		$	37,985

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Total depreciation expense for property and equipment was $2.8 million and $8.7 million for the three and nine months ended September 28, 2008, respectively, and $1.9 million and $5.5 million for the three and nine months ended September 30, 2007, respectively.

9. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by operating segment for the nine months ended September 28, 2008 are as follows (in thousands):

	Peripheral
	Vascular		Neurovascular		Total
Balance as of December 31, 2007	$	501,394	$	85,254	$	586,648
Adjustment to goodwill related to acquisition of FoxHollow		11,800		—		11,800
Balance as of September 28, 2008	$	513,194	$	85,254	$	598,448

The changes in the carrying amount of goodwill in the nine months ended September 28, 2008 were primarily a result of finalizing the costs associated with our plan to rationalize our acquired FoxHollow workforce (see Note 6) and increases in the reserves for the abandonment of property and equipment and leasehold improvements, and the termination of certain leases as a result of the consolidation of the FoxHollow operations. During the third quarter 2008, we received updated estimated costs necessary to finalize the purchase price allocation and the resulting goodwill.

Other intangible assets consist of the following (in thousands):

	Weighted		September 28, 2008							December 31, 2007
	Average		Gross					Net		Gross					Net
	Useful Life		Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	(in years)		Amount		Amortization			Amount		Amount		Amortization			Amount
Patents and licenses		5.0	$	13,989	$	(5,905	)	$	8,084	$	13,802	$	(4,890	)	$	8,912
Developed technology		10.0		203,416		(63,137	)		140,279		202,416		(50,213	)		152,203
Trademarks and tradenames		9.0		12,222		(4,206	)		8,016		12,222		(3,454	)		8,768
Customer relationships		10.0		56,094		(16,749	)		39,345		56,094		(13,094	)		43,000
Distribution rights		2.5		9,274		(6,492	)		2,782		9,274		(3,710	)		5,564
Merck exclusivity (see Note 10)		3.3		—		—			—		13,600		(1,047	)		12,553
Other intangible assets			$	294,995	$	(96,489	)	$	198,506	$	307,408	$	(76,408	)	$	231,000

Total amortization of other intangible assets was $8.2 million and $24.3 million for the three and nine months ended September 28, 2008, respectively, and $4.0 million and $11.9 million for the three and nine months ended September 30, 2007, respectively. The estimated amortization expense (inclusive of amortization expense already recorded for the nine months ended September 28, 2008) for the next five years ending December 31 is as follows (in thousands):

2008	$	29,196
2009		22,516
2010		19,518
2011		18,104
2012		18,047

10. Intangible Asset Impairment

Merck & Co., Inc. notified us that it was exercising its right to terminate the amended and restated collaboration and license agreement, dated September 26, 2006, between Merck and FoxHollow, effective July 22, 2008. Under the terms of the agreement, which was amended in July 2007 in connection with our acquisition of FoxHollow, Merck had the right to terminate the agreement if FoxHollow’s founder and former chief executive officer, was no longer a director of our company other than in the event of his death or disability. As a result of this individual’s resignation from our board of directors in February 2008, Merck had the right to terminate the agreement at any time during the six-month period thereafter. Based upon the status of the ongoing negotiations with Merck, an impairment indicator existed at June 29, 2008. As a result of the termination of the Merck collaboration and license agreement, we recorded an asset

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impairment charge of $10.5 million during the second quarter 2008 to write-off the remaining carrying value of the related Merck intangible asset that was established at the time of our acquisition of FoxHollow.

During the third quarter 2008, we recognized $7.0 million in research collaboration revenue. Of this amount, $2.0 million was a result of our agreement to accomplish an orderly wind-down of our research collaboration activities.

11. Long-Term Debt

Long-term debt consists of the following (in thousands):

	September 28, 2008			December 31, 2007
Term loan	$	9,583		$	10,000
Less: current portion		(2,500	)		(3,571	)
Total long-term debt	$	7,083		$	6,429

On June 24, 2008, our operating subsidiaries, ev3 Endovascular, Inc., ev3 International, Inc., Micro Therapeutics, Inc. and FoxHollow Technologies, Inc. (collectively, the “Borrowers”), entered into an amendment (“Amended Facility”) to the existing Loan and Security Agreement (as amended, the “Loan Agreement”) with Silicon Valley Bank (“SVB”). The Amended Facility consists of a revolving line of credit of $50.0 million with a maturity date of June 25, 2010. In addition, amounts outstanding under the equipment financing line were refinanced into a $10.0 million term loan with a maturity date of June 23, 2012. We incurred $150,000 of debt issuance costs which are being amortized over the term of the revolving line of credit.

Pursuant to the terms of the Loan Agreement, we may borrow under the revolving line of credit subject to specified reserves, up to $12.0 million without any borrowing base limitations. Aggregate borrowings under the revolving line of credit that exceed $12.0 million will subject the revolving line to borrowing base limitations. These limitations allow us to borrow, subject to specified reserves, up to 80% of eligible domestic and foreign accounts receivables plus up to 30% of eligible inventory. Additionally, borrowings against the eligible inventory may not exceed the lesser of 33% of the amount advanced against accounts receivable or $10.0 million. As of September 28, 2008, we had approximately $9.6 million in outstanding borrowings under the term loan and no outstanding borrowings under the revolving line of credit.

Borrowings under the revolving line bear interest at a variable rate equal to SVB’s prime rate. Borrowings under the term loan bear interest at a variable rate equal to SVB’s prime rate plus 0.5%. SVB’s prime rate at September 28, 2008 was 5.0%. Accrued interest on any outstanding balance under the revolving line and the term loan is payable monthly in arrears. Principal amounts outstanding under the term loan are payable in 48 consecutive equal monthly installments on the last day of each month, commencing August 31, 2008.

Both the revolving line of credit and term loan are secured by a first priority security interest in substantially all of our assets, excluding intellectual property, which is subject to a negative pledge, and are guaranteed by ev3 Inc. and all of our domestic direct and indirect subsidiaries. When and if borrowings under the revolving line of credit exceed $25.0 million, we are required to move our primary domestic operating accounts, including any lockbox accounts, to SVB. The Loan Agreement requires us to maintain a specified liquidity ratio, a tangible net worth level (through December 31, 2008) and an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) level (after December 31, 2008). The Loan Agreement contains customary covenants which impose certain limitations on the Borrowers, their subsidiaries and ev3 Inc., including limitations on their ability to: (i) transfer business or properties; (ii) permit or suffer a change in control; (iii) merge or consolidate, or acquire any entity; (iv) engage in any material new line of business; (v) incur additional indebtedness or liens; (vi) pay dividends or make any other distribution on or purchase of any of their capital stock; (vii) make investments in other companies; or (viii) engage in related party transactions, subject in each case to certain exceptions and limitations. The Borrowers are required to pay customary fees with respect to the facility, including a fee on the average unused portion of the revolving line of credit.

The loan agreement requires us to maintain a specified liquidity ratio, a tangible net worth level (through November 30, 2008) and an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) level (after November 30, 2008). The Loan Agreement contains customary events of default, including, among others, the failure to comply with certain covenants or other agreements. Upon the occurrence and during the continuation of an event of default, amounts due under the Loan Agreement may be accelerated by SVB. Although we were in compliance with the covenants at September 28, 2008, toward the end of October 2008, we determined that it was possible that we may not be in compliance with the monthly liquidity ratio covenant at the end of October, which under the terms of the Loan Agreement

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increased in October from a 0.75 to 1.00 ratio to a 1.00 to 1.00 ratio. We received a written waiver of the monthly liquidity ratio covenant measured as of October 31, 2008. The waiver does not extend beyond October 31, 2008.

Annual maturities of our long-term debt are as follows (in thousands):

Remaining 2008	$	625
2009		2,500
2010		2,500
2011		2,500
2012		1,458
Total	$	9,583

12. Other Comprehensive Loss

The following table provides a reconciliation of net loss to comprehensive loss (in thousands):

	Three Months Ended						Nine Months Ended
	September 28, 2008			September 30, 2007			September 28, 2008			September 30, 2007
Net loss	$	(7,310	)	$	(36,512	)	$	(44,502	)	$	(57,877	)
Changes in foreign currency translation		137			(213	)		115			(334	)
Total comprehensive loss	$	(7,173	)	$	(36,725	)	$	(44,387	)	$	(58,211	)

13. Commitments and Contingencies

Letters of Credit

As of September 28, 2008, we had $5.0 million of outstanding letters of credit and other financial guarantees, of which approximately $1.4 million was collateralized by restricted cash and $3.6 million was backed by our revolving line of credit. The letters of credit and other financial guarantees support various obligations, such as operating leases, tender arrangements with customers and automobile leases.

Contingencies

We are from time to time subject to, and are presently involved in, various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of our business. Such matters are subject to many uncertainties and to outcomes that are not predictable with assurance and that may not be known for extended periods of time. We record a liability in our consolidated financial statements for costs related to claims, including future legal costs, settlements and judgments, where we have assessed that a loss is probable and an amount can be reasonably estimated. Our significant legal proceedings are discussed below. While it is not possible to predict the outcome for most of the legal proceedings discussed below, the costs associated with such proceedings could have a material adverse effect on our consolidated results of operations, financial position or cash flows of a future period.

Appriva Medical, Inc. Acquisition Litigation

The acquisition agreement relating to our acquisition of Appriva Medical, Inc. contains four milestones to which payments relate. The first milestone was required by its terms to be achieved by January 1, 2005 in order to trigger a payment equal to $50 million. We have determined that the first milestone was not achieved by January 1, 2005 and that the first milestone is not payable. On May 20, 2005, Michael Lesh, as an individual seller of Appriva stock and purporting to represent certain other sellers of Appriva stock, filed a complaint in the Superior Court of the State of Delaware with individually specified damages aggregating $70 million and other unspecified damages for several allegations, including that we, along with other defendants, breached the acquisition agreement and an implied covenant of good faith and fair

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dealing by willfully failing to take the steps necessary to meet the first milestone under the agreement, and thereby also failing to meet certain other milestones, and further that one milestone was actually met. The complaint also alleges fraud, negligent misrepresentation and violation of state securities laws in connection with the negotiation of the acquisition agreement. We believe these allegations are without merit and intend to vigorously defend this action. We filed a motion to dismiss the complaint, which the court granted in June 2006 on standing grounds. The plaintiff filed a petition for re-argument, which was denied on October 31, 2006. On November 29, 2006, the plaintiff appealed the trial court’s decision granting our motion to dismiss. By decision dated November 1, 2007, the Delaware Supreme Court reversed and remanded the trial court’s ruling. The Delaware Supreme Court held, among other things, that Lesh was entitled to submit extrinsic evidence in support of his position on standing, and that the trial court on remand should allow the submission of such evidence, if any exist.

On or about November 21, 2005, a second lawsuit was filed in Delaware Superior Court relating to the acquisition of Appriva Medical, Inc. The named plaintiff is Appriva Shareholder Litigation Company, LLC, which according to the complaint was formed for the purpose of pursuing claims against us. The complaint alleges that Erik van der Burg and three unidentified institutional investors have assigned their claims as former shareholders of Appriva to Appriva Shareholder Litigation Company, LLC. The complaint alleges specified damages in the form of the second milestone payment ($25 million), which is claimed to be due and payable, and further alleges unspecified damages to be proven at trial. The complaint alleges the following claims: misrepresentation, breach of contract, breach of the implied covenant of good faith and fair dealing and declaratory relief. We believe these allegations and claims are without merit and intend to vigorously defend this action. We filed a motion to dismiss the complaint. On August 24, 2006, the trial court converted our motion to dismiss into a motion for summary judgment, which motion was granted. The trial court ruled that Appriva Shareholder Litigation Company, LLC did not have standing. The trial court did not address the merits of the claims. Appriva Shareholder Litigation Company, LLC has appealed the trial court’s ruling. The Lesh appeal and the Appriva Shareholder Litigation Company, LLC appeal were consolidated for purposes of appeal. By decision dated November 1, 2007, the Delaware Supreme Court reversed and remanded the trial court’s ruling. The Delaware Supreme Court held, among other things, that Appriva Shareholder Litigation Company was entitled to submit extrinsic evidence in support of its position on standing, and that the trial court on remand should allow the submission of such evidence, if any exist. Subsequently, the parties have completed limited discovery regarding the existence of extrinsic evidence on the standing issue and have submitted supplemental briefs to the trial court limited to that issue. The trial court has yet to issue a ruling on the standing issue. Because both of these Appriva acquisition related matters are in early stages, we cannot estimate the possible loss or range of loss, if any, associated with their resolution. However, there can be no assurance that the ultimate resolution of these matters will not result in a material adverse effect on our business, financial condition or results of operations.

FoxHollow Litigation

As a result of our acquisition of FoxHollow, we assumed the following material legal proceedings and contingencies from FoxHollow and its subsidiaries.

In July 2006, August 2006 and February 2007, three separate shareholder class action complaints were filed against FoxHollow and two of its officers in the U.S. District Court for the Northern District of California. These cases were subsequently consolidated into a single matter. The plaintiffs are seeking to represent a class of purchasers of FoxHollow’s common stock from May 13, 2005 to January 26, 2006. The complaints generally allege that false or misleading statements were made concerning FoxHollow’s management and seek unspecified monetary damages. A motion to dismiss was granted with leave to amend on September 5, 2007, and the plaintiffs filed an amended complaint on October 19, 2007. On May 27, 2008, the U.S. District Court dismissed this case without leave to amend the complaint and judgment was enforced that day against the plaintiffs. The plaintiffs subsequently filed a notice of appeal to the United States Court of Appeals for the Ninth Circuit on June 20, 2008. Because these matters are in early stages and because of the complexity of the cases, we cannot estimate the possible loss or range of loss, if any, associated with their resolution. However, there can be no assurance that the ultimate resolution of these matters will not result in a material adverse effect on our business, financial condition or results of operations.

In July 2006, a shareholder derivative complaint was filed against FoxHollow’s directors and certain of its officers in the Superior Court of the State of California, San Mateo County. The complaint is based on substantially similar facts and circumstances as the class action complaints described above and generally alleges that the named individuals breached their fiduciary duties to FoxHollow. The original complaint sought unspecified monetary damages. A demurrer was sustained with leave to amend on May 31, 2007. This case was dismissed by the Superior Court on May 12, 2008.

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In August 2006, a shareholder derivative complaint was filed against FoxHollow’s directors and certain of its officers in the U.S. District Court for the Northern District of California, San Jose division. In January 2007, the plaintiffs filed an amended complaint adding a former executive and directors as defendants. The complaint is based on substantially similar facts and circumstances as the class action complaints described above and generally alleges that the named individuals breached their fiduciary duties to the company. The complaint sought unspecified monetary damages. This case was dismissed by the U.S. District Court on May 14, 2008.

In February 2007, David Martin, FoxHollow’s former chief operating officer, filed a wrongful termination and defamation suit against FoxHollow and one of its officers in the Superior Court of the State of California, San Mateo County. In March 2007, the Superior Court granted Martin’s petition to compel arbitration of his claims and arbitration is currently in its initial stages. The complaint is based on substantially similar facts and circumstances as the class action complaints and derivative actions described above. Martin generally alleges that he was terminated from his employment in violation of the covenant of good faith and fair dealing and in retaliation for actions he had the legal right to take. Martin seeks economic damages in excess of $10 million, plus non-economic and exemplary damages. On May 1, 2007, the Court granted Martin’s petition to compel arbitration. Because this matter is in an early stage and because of the complexity of the case, we cannot estimate the possible loss or range of loss, if any, associated with its resolution. However, there can be no assurance that the ultimate resolution of this matter will not result in a material adverse effect on our business, financial condition or results of operations.

14. Segment and Geographic Information

Our management, including our chief executive officer who is our chief operating decision maker, report and manage our operations in two reportable business segments based on similarities in the products sold, customer base and distribution system. Our peripheral vascular operating segment contains products that are used primarily in peripheral vascular and cardiovascular procedures by radiologists, vascular surgeons and cardiologists. Our neurovascular operating segment contains products that are used primarily by neuroradiologists and neurosurgeons.

Management measures segment profitability on the basis of gross profit calculated as net sales less cost of goods sold excluding amortization of intangible assets. Other operating expenses are not allocated to individual operating segments for internal decision making activities.

We sell our products through a direct sales force in the United States, Canada, Europe and other countries as well as through distributors in other international markets and in the United States. Our customers include a broad physician base consisting of vascular surgeons, neuro surgeons, other endovascular specialists, radiologists, neuroradiologists and cardiologists.

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The following is segment information (in thousands):

	Three Months Ended						Nine Months Ended
	September 28,			September 30,			September 28,			September 30,
	2008			2007			2008			2007
Net sales
Net product sales:
Peripheral vascular:
Atherectomy	$	20,992		$	—		$	68,624		$	—
Stents		26,772			23,105			77,932			65,064
Thrombectomy and embolic protection		6,938			5,368			19,990			20,029
Procedural support and other		12,184			10,240			35,243			30,742
Total peripheral vascular		66,886			38,713			201,789			115,835
Neurovascular:
Embolic products		18,174			14,698			53,469			40,451
Neuro access and delivery products and other		14,958			11,649			41,319			35,669
Total neurovascular		33,132			26,347			94,788			76,120
Total net product sales		100,018			65,060			296,577			191,955
Research collaboration:		7,011			—			19,426			—
Total net sales	$	107,029		$	65,060		$	316,003		$	191,955
Gross profit
Peripheral vascular	$	39,480		$	23,421		$	124,442		$	69,502
Neurovascular		24,356			18,542			69,693			56,537
Research collaboration		4,911			—			13,779			—
Total	$	68,747		$	41,963		$	207,914		$	126,039
Operating expense		73,355			80,196			251,542			185,947
Loss from operations	$	(4,608	)	$	(38,233	)	$	(43,628	)	$	(59,908	)

	September 28,		December 31,
	2008		2007
Total assets
Peripheral vascular	$	879,114	$	936,348
Neurovascular		136,669		150,758
Total	$	1,015,783	$	1,087,106

The following table presents net sales and long-lived assets by geographic area (in thousands):

	Three Months Ended				Nine Months Ended
	September 28,		September 30,		September 28,		September 30,
	2008		2007		2008		2007
Geographic Data
Net Sales
United States	$	70,452	$	38,312	$	208,773	$	113,028
International		36,577		26,748		107,230		78,927
Total net sales	$	107,029	$	65,060	$	316,003	$	191,955

	September 28,		December 31,
	2008		2007
Long-lived Assets
United States	$	32,503	$	37,015
International		1,140		970
Total long-lived assets	$	33,643	$	37,985

15. Related Party Transaction

During the second quarter 2007, we entered into a distribution agreement with Beijing Lepu Medical Device, Inc. (“Lepu”), a Chinese domiciled manufacturer and distributor of interventional cardiology and peripheral products. The two-year agreement allows Lepu to sell certain of our embolic protection devices and stents in China. We believe that

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having access to Lepu and their sub-distributor network is a strategic way for us to quickly gain access and market share in these strategic markets. Warburg Pincus Equity Partners, L.P. and certain of its affiliates (“Warburg Pincus”) owns an approximate 20% ownership interest in Lepu and has a designee on Lepu’s board of directors. Warburg Pincus collectively owned over 50% of our outstanding common stock at the time we entered into the distribution agreement with Lepu and Warburg Pincus, together with Vertical Group, L.P. (“Vertical”), have two designees on our board of directors. During the three and nine months ended September 28, 2008, Lepu purchased peripheral vascular products from us totaling approximately $260,000 and $1.7 million, respectively. As of September 28, 2008, Lepu owed us approximately $182,000 that is included in accounts receivable.

16. Loss Per Common Share

Basic and diluted net loss per common share is computed by dividing net loss by the weighted average number of outstanding common shares. In addition, in periods of net loss, all potentially dilutive common shares are excluded from our computation of diluted weighted average shares outstanding.

Outstanding options of 10.4 million and 5.6 million were excluded from the computation of basic and diluted net loss per common share for the three and nine months ended September 28, 2008 and September 30, 2007, respectively, as they had an antidilutive effect.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis provides material historical and prospective disclosures intended to enable investors and other users to assess our financial condition and results of operations. Statements that are not historical are forward-looking and involve risks and uncertainties discussed under the heading “Forward-Looking Statements” below. The following discussion of our results of operations and financial condition should be read in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this report.

Business Overview

We are a leading global medical device company focused on catheter-based technologies for the endovascular treatment of vascular diseases and disorders. Within the endovascular market, we have targeted our business strategy efforts on the peripheral vascular and neurovascular markets, which we believe offer higher growth potential with fewer entrenched competitors than other markets. We are focused on emerging and under-innovated opportunities which treat peripheral and neurovascular patients around the world, a strategy that we believe allows us to compete with smaller companies that have narrow product lines and lack an international sales force and infrastructure, yet also compete with larger companies that do not have our focus and agility.

We believe the overall market for endovascular devices will, in the long term, grow as the demand for minimally invasive treatment of vascular diseases and disorders continues to increase. We intend to capitalize on this market opportunity by the continued introduction of new products. We expect to originate these new products primarily through our internal research and development and clinical efforts, but we may supplement them with acquisitions or other external collaborations. In October 2007, we acquired FoxHollow Technologies, Inc. FoxHollow’s principal product is the SilverHawk Plaque Excision System, which is a minimally invasive catheter system that treats peripheral artery disease by removing plaque in order to reopen narrowed or blocked arteries. Additionally, our growth has been, and will continue to be, impacted by our expansion into new geographic markets, the expansion of our direct sales organization in existing geographic markets and increased efficiency of our existing direct sales organization.

Our product portfolio includes a broad spectrum of over 100 products consisting of over 1,500 SKUs to treat vascular disease in both the peripheral vascular and neurovascular markets, including stents, atherectomy and thrombectomy products, PTA balloons, embolic protection devices, infusion catheters/wires, embolic coils and liquid embolics. As a result of our FoxHollow acquisition, until recently, we also were engaged in a research collaboration with Merck & Co., Inc. (Merck) for the analysis of atherosclerotic plaque removed from patient arteries with the goal of identifying new biomarkers for atherosclerotic disease progression and new therapies for atherosclerotic disease. Dr. Simpson’s resignation from our board of directors in February 2008 gave rise to a right of termination by Merck at any time during the six-month period thereafter. Merck exercised the termination right and our amended and restated collaboration and license agreement terminated effective July 22, 2008. During the third quarter 2008, we negotiated an agreement with Merck to accomplish an orderly wind-down of activities. Under the agreement Merck will reimburse us for costs directly associated with the wind-down of our research collaboration activities, plus an agreed upon markup.

Our management, including our chief executive officer who is our chief operating decision maker, report and manage our operations in two reportable business segments based on similarities in the products sold, customer base and distribution system. Our peripheral vascular segment, which was formerly referred to as our cardio peripheral segment, contains products that are used primarily in peripheral vascular procedures by radiologists, vascular surgeons and cardiologists and in targeted endovascular procedures. Our neurovascular segment contains products that are used primarily by neuroradiologists and neurosurgeons. Our sales activities and operations are aligned closely with our business segments. We generally have dedicated peripheral vascular sales teams in the United States, Canada, Europe and other international countries that target customers who perform primarily peripheral vascular procedures and separate, dedicated neurovascular sales teams in such countries that are specifically focused on our neurovascular business customer base.

We have corporate infrastructure and direct sales capabilities in the United States, Canada, Europe and other countries and have established distribution relationships primarily in selected international markets. Our corporate headquarters and our principal manufacturing, research and development, and U.S. sales operations for our peripheral vascular product line are located in Plymouth, Minnesota. Our manufacturing, research and development, and U.S. sales operations for our neurovascular product lines are located in Irvine, California. Our FoxHollow atherectomy and thrombectomy products were manufactured in Redwood City, California. However, in order to streamline our operations and improve efficiencies, we have relocated the sales, manufacturing and research and development activities performed in Redwood City, facility

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to our existing facilities located in Plymouth, Minnesota and Irvine, California. Outside of the United States, our primary office is in Paris, France.

We sell our products through a direct sales force and independent distributors in more than 60 countries. Our direct sales and marketing infrastructure includes a worldwide sales force of approximately 385 sales professionals as of September 28, 2008 in the United States, Canada and Europe. Our direct sales representatives accounted for approximately 86% and 87% of our net sales during the three and nine months ended September 28, 2008, respectively, with the balance generated by independent distributors.

Since our acquisition of FoxHollow, we have spent considerable time and resources integrating our two operations, including in particular, our U.S. peripheral vascular sales force, and training our combined sales force on our combined product offering and cross-selling opportunities. We reduced the number of our U.S. peripheral vascular sales representatives from approximately 328 at the time of our acquisition of FoxHollow to approximately 175 as of September 28, 2008. We have continued to strive to increase productivity from our U.S. peripheral vascular sales representatives.

We also have focused on our international strategy for SilverHawk by training physicians, establishing key opinion leaders, conducting European clinical research and developing specific product and procedure reimbursement strategies to support the broad dissemination of the atherectomy procedure and our products.

In order to drive sales growth, we have invested heavily throughout our history in not only the expansion of our global distribution system, but also new product development and clinical trials to obtain regulatory approvals. A significant portion of our net sales has historically been, and we expect to continue to be, attributable to new and enhanced products. During 2007, we launched our Protégé RX Carotid Stents, additional lengths in our EverFlex family of stents and our SilverHawk LS-M and MS-M products in the United States for the peripheral vascular market and our Axium coil for the neurovascular market, all of which have contributed to our net sales in the first nine months of 2008. To date, in 2008, we have launched the SilverHawk LX-M device in the United States and received FDA clearance for our RockHawk Atherectomy System for surgical use and the 5mm diameter Protégé EverFlex Self-Expanding Stent System for use in the biliary. We expect to continue our focus to further validate the clinical and competitive benefits of our technology platforms to drive new and enhanced products. During third quarter 2008, we reported positive 12-month follow-up results for our European DURABILITY I clinical study, a peripheral stent study covering long lesion lengths in a challenging patient population, and we announced our DEFINITIVE clinical trial series to expand the clinical evidence supporting the value of our SilverHawk and RockHawk Plaque Excision Systems to drive increased procedure adoption, expand clinical indications and support the use of atherectomy as a front-line therapy. We also recently enrolled our first patient in DEFINITIVE Ca++ U.S. investigational device exemption (IDE) trial to evaluate RockHawk Plaque Excision System when used in conjunction with the SpiderFX Embolic Protection Device in the treatment of moderate to heavily calcified peripheral artery lesions.

Since our distribution agreement with Invatec expires on December 31, 2008, we have been working during 2008 to launch our own PTA balloon catheters in the beginning of 2009. The Invatec products we distribute include the Sailor Plus, Submarine Plus, Admiral Xtreme and Amphirion Deep PTA catheters and the Diver C.E. Thrombus Aspiration Catheter. Under the distribution agreement, we are permitted to continue to sell our inventory of Invatec products for a period of up to six months after the expiration of the distribution agreement. During third quarter 2008, we submitted 510(k) applications to the FDA for our EverCross and NanoCross PTA balloons.

It is our understanding that certain biliary stent manufacturers recently have received subpoenas from the United States Department of Justice. Based on publicly available information, we believe that these subpoenas requested information regarding the sales and marketing activities of these manufacturers’ biliary stent products and that the Department of Justice is seeking to determine whether any of these activities violated civil and /or criminal laws, including the Federal False Claims Act, the Food and Drug Cosmetic Act and the Anti-Kickback Statute in connection with Medicare and/or Medicaid reimbursement paid to third parties. As of the date of this report, we have not received a subpoena from the Department of Justice relating to this investigation. No assurance can be provided, however, that we will not receive such a subpoena or become the subject of such an investigation, which could adversely affect our business and stock price.

Summary of Third Fiscal Quarter 2008 Financial Results and Outlook

Our net sales increased 65% in third quarter 2008 compared to third quarter 2007. We attribute this increase primarily to the addition of atherectomy product sales as a result of our acquisition of FoxHollow, expansion in our neurovascular and international businesses and increased sales of our other peripheral vascular products. Third quarter 2008 sales included

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$21.0 million of atherectomy product sales, which we believe were hampered due to heightened competitive pressures and the related physician trialing of competitive devices.

During the remainder of 2008, we intend to remain focused on expanding our global position in the peripheral vascular and neurovascular markets by increasing procedural penetration, driving growth and expansion in international markets, investing in the development of our next generation of products and advancing our clinical trial programs. We also intend to remain focused on improving sales execution and operational efficiency. We are mindful, however, of general worldwide economic conditions, to which our business is not immune. We believe the current worldwide economic crisis has resulted and may continue to result in reduced procedures using our products. Many of the procedures that use our products are, to some extent, elective and therefore can be deferred by patients. In light of the current economic conditions, patients may not be as willing to take time off from work or spend their money on deductibles and co-payments often required in connection with the procedures that use our products. In particular, patients that have high-deductible health plans and health savings accounts and thus require the patients to incur significant out-of-pocket costs are especially more apt to defer procedures at time when cash is tight. The worldwide economic crisis also may have other adverse implications on our business, operating results and financial position as described in more detail under the heading “Part II. Item 1.A. Risk Factors.”

Our third fiscal quarter 2008 results and financial condition included the following items of significance, some of which we expect may also affect our results and financial condition during the remainder of 2008:

• Our net sales of $107.0 million for the third quarter 2008 included product net sales of $66.9 million in our peripheral vascular segment, $33.1 million in our neurovascular segment and $7.0 million of research collaboration revenue. Our atherectomy business is still under some pressure due to heightened competitive pressures and the related physician trialing of competitive devices. We expect our peripheral vascular net sales to increase during the remainder of 2008 as compared to the same period in 2007 due to market growth, specifically in our international markets, including the continued penetration of our atherectomy products into international markets, and increased market penetration of the EverFlex family of stents. We expect our neurovascular net sales to increase during the remainder of 2008 as compared to the same period in 2007 due to continued penetration of our Axium coil and neuro access and delivery products, and increased market growth internationally.

• On a geographic basis, 66% of our net sales for the third quarter 2008 were generated in the United States and 34% were generated outside the United States. Changes in foreign currency rates had a positive impact of approximately $1.7 million on third quarter 2008 net sales compared to third quarter 2007, principally resulting from the strength of the U.S. dollar as compared to the Euro. We expect our international net sales to increase during the remainder of 2008 as compared to the same period last year primarily as a result of increased market penetration of the Axium coil and the EverFlex family of stents and the continued penetration of atherectomy products into international markets.

• During the third quarter 2008, we recognized $7.0 million in research collaboration revenue. Of this amount, $2.0 million was a result of our agreement to accomplish an orderly wind-down of our research collaboration activities. We expect to recognize additional revenue of approximately $800,000 from wind-down activities in the fourth quarter 2008.

• Our operating expenses were $111.6 million in the third quarter 2008. Although our sales, general and administrative expenses and research and development expenses each increased in absolute dollars in the third quarter 2008 compared to third quarter 2007, each decreased as a percentage of net sales. We expect our sales, general and administrative expenses, research and development expense and amortization of intangible assets to decrease in absolute dollars in the remainder of 2008 as compared to the same period in 2007. We expect sales, general and administrative expenses and research and development expense each to continue to decline as a percentage of net sales.

• Other (income) expense, net was an expense of $2.3 million in the third quarter 2008 compared to income of $1.6 million in the same period of 2007. The stronger U.S. dollar compared to the Euro negatively impacted our Euro designated accounts receivable in the third quarter 2008 and the continued volatility of foreign currency exchange rates may continue to impact our operating results in future periods.

• Our net loss for the third quarter 2008 was $7.3 million, or $0.07 per common share. Our focus for the remainder of 2008 is to improve our profitability.

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• Our cash and cash equivalents were $45.9 million at September 28, 2008, an increase of $7.2 million compared to the end of the second quarter 2008. This increase was primarily due to cash provided by operating activities during the third quarter 2008. We believe our cash and cash equivalents and current financing arrangements will be sufficient to meet our liquidity requirements through at least the next 12 months. We will continue to focus our efforts on improving our cash position during the remainder of 2008 however, the strength of the U.S. Dollar against various foreign currencies and the general downtown of worldwide economic conditions may place pressure on certain of our international customers and distributors which could delay cash flows corresponding to those accounts receivable.

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Results of Operations

The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts (dollars in thousands, except per share amounts), and the changes between the specified periods expressed as percent increases or decreases or “NM” if such increases or decreases are not material or applicable:

	Three Months Ended									Nine Months Ended
	September 28,			September 30,			Percent			September 28,			September 30,			Percent
	2008			2007			Change			2008			2007			Change
Results of Operations:
Sales
Product sales	$	100,018		$	65,060			53.7	%	$	296,577		$	191,955			54.5	%
Research collaboration		7,011			—		NM				19,426			—		NM
Net sales	$	107,029		$	65,060			64.5	%	$	316,003		$	191,955			64.6	%
Operating expenses:
Product cost of goods sold (a)		36,182			23,097			56.7	%		102,442			65,916			55.4	%
Research collaboration		2,100			—		NM				5,647			—		NM
Sales, general and administrative (a)		53,005			45,353			16.9	%		178,769			125,372			42.6	%
Research and development (a)		12,133			10,708			13.3	%		37,913			29,464			28.7	%
Amortization of intangible assets		8,101			3,952			105.0	%		24,285			11,916			103.8	%
Intangible asset impairment		—			—		NM				10,459			—		NM
Loss (gain) on sale or disposal of assets, net		116			—		NM				116			(988	)	NM
Special charges		—			20,183		NM				—			20,183		NM
Total operating expenses		111,637			103,293			8.1	%		359,631			251,863			42.8	%
Loss from operations		(4,608	)		(38,233	)		(87.9	)%		(43,628	)		(59,908	)		(27.2	)%
Other (income) expense:
Realized and unrealized gains on investments, net		(142	)		—		NM				(542	)		—		NM
Interest (income) expense, net		49			(417	)	NM				(307	)		(823	)	NM
Other (income) expense, net		2,279			(1,554	)	NM				192			(2,066	)	NM
Loss before income taxes		(6,794	)		(36,262	)		(81.3	)%		(42,971	)		(57,019	)		(24.6	)%
Income tax expense		516			250		NM				1,531			858		NM
Net loss	$	(7,310	)	$	(36,512	)		(80.0	)%	$	(44,502	)	$	(57,877	)		(23.1	)%
Net loss per common share (basic and diluted)	$	(0.07	)	$	(0.60	)				$	(0.43	)	$	(0.98	)
Weighted average shares outstanding (basic and diluted)		104,474,600			60,365,027						104,276,029			59,141,035

(a) Includes stock-based compensation charges of:

Product cost of goods sold	$	121	$	101	$	596	$	446
Sales, general and administrative		2,572		2,100		9,608		6,166
Research and development		366		269		1,478		717
	$	3,059	$	2,470	$	11,682	$	7,329

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The following tables set forth, for the periods indicated, our net sales by segment and geography expressed as dollar amounts (in thousands) and the changes in net sales between the specified periods expressed as percentages or “NM” if such increases or decreases are not material or applicable:

	Three Months Ended							Nine Months Ended
	September 28,		September 30,		Percent			September 28,		September 30,		Percent
	2008		2007		Change			2008		2007		Change
NET SALES BY SEGMENT:
Net product sales:
Peripheral vascular:
Atherectomy	$	20,992	$	—	NM			$	68,624	$	—	NM
Stents		26,772		23,105		15.9	%		77,932		65,064		19.8	%
Thrombectomy and embolic protection		6,938		5,368		29.2	%		19,990		20,029		(0.2	)%
Procedural support and other		12,184		10,240		19.0	%		35,243		30,742		14.6	%
Total peripheral vascular		66,886		38,713		72.8	%		201,789		115,835		74.2	%
Neurovascular:
Embolic products		18,174		14,698		23.6	%		53,469		40,451		32.2	%
Neuro access and delivery products and other		14,958		11,649		28.4	%		41,319		35,669		15.8	%
Total neurovascular		33,132		26,347		25.8	%		94,788		76,120		24.5	%
Total net product sales		100,018		65,060		53.7	%		296,577		191,955		54.5	%
Research collaboration:		7,011		—	NM				19,426		—	NM
Total net sales	$	107,029	$	65,060		64.5	%	$	316,003	$	191,955		64.6	%

	Three Months Ended							Nine Months Ended
	September 28,		September 30,		Percent			September 28,		September 30,		Percent
	2008		2007		Change			2008		2007		Change
NET SALES BY GEOGRAPHY:
United States	$	70,452	$	38,312		83.9	%	$	208,773	$	113,028		84.7	%
International
Before foreign exchange impact		34,842		26,748		30.3	%		99,496		78,927		26.1	%
Foreign exchange impact		1,735		—		—			7,734		—		—
Total		36,577		26,748		36.7	%		107,230		78,927		35.9	%
Total net sales	$	107,029	$	65,060		64.5	%	$	316,003	$	191,955		64.6	%

Comparison of the Three Months Ended September 28, 2008 to the Three Months Ended September 30, 2007

Net sales. Net sales increased 65% to $107.0 million in the three months ended September 28, 2008 compared to $65.1 million in the three months ended September 30, 2007, reflecting sales growth in each of our reportable business segments and geographic markets. In particular, our sales growth was positively affected by our FoxHollow acquisition, the launch of our Axium coil during the fourth quarter 2007 and continued market penetration of the EverFlex family of stents and the Onyx Liquid Embolic System. Our net sales in the three months ended September 28, 2008 included $21.0 million of net sales from our atherectomy products and $7.0 million in research collaboration revenue.

Net sales of peripheral vascular products. Net sales of our peripheral vascular products increased 73% to $66.9 million in the three months ended September 28, 2008 compared to $38.7 million in the three months ended September 30, 2007. This sales growth was primarily the result of our FoxHollow acquisition and increased market penetration of our EverFlex family of stents. Third fiscal quarter 2008 net sales included $21.0 million of atherectomy product sales. Net sales in our stent product line increased 16% to $26.8 million in the three months ended September 28, 2008 compared to $23.1 million in the three months ended September 30, 2007. This increase was attributable to increased market penetration of our EverFlex family of stents. Net sales of our thrombectomy and embolic protection devices increased 29% to $6.9 million in the three months ended September 28, 2008 compared to $5.4 million in the same period of 2007. Net sales of our procedural support and other products increased 19% to $12.2 million in the three months ended September 28, 2008 compared to $10.2 million in the three months ended September 30, 2007 largely due to the increased market penetration of PTA balloon catheters in the United States.

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Net sales of neurovascular products. Net sales of our neurovascular products increased 26% to $33.1 million in the three months ended September 28, 2008 compared to $26.4 million in the three months ended September 30, 2007 due to increases in both our embolic and neuro access and delivery product lines. Net sales of our embolic products increased 24% to $18.2 million in the three months ended September 28, 2008 compared to $14.7 million in the same period of 2007 primarily due to the launch of the Axium coil and increased market penetration of the Onyx Liquid Embolic System, partially offset by sales declines in older generation products. Sales of our neuro access and delivery products and other increased 28% to $14.9 million in the three months ended September 28, 2008 compared to $11.7 million in the same period in 2007 largely as a result of volume increases across multiple product lines including our catheters and neuro balloons.

Research collaboration (revenue). Revenue from our research collaboration with Merck was $7.0 million for the three months ended September 28, 2008, which included $2.0 million for wind-down activities as negotiated with Merck.

Net sales by geography. Net sales in the United States increased 84% to $70.4 million in the three months ended September 28, 2008 compared to $38.3 million in the three months ended September 30, 2007 and was driven mainly by the acquisition of FoxHollow. International net sales increased 37% to $36.6 million in the three months ended September 28, 2008 compared to $26.8 million in the three months ended September 30, 2007 and represented 34% and 41% of our total net sales during the three months ended September 28, 2008 and September 30, 2007, respectively. International growth was primarily due to the launch of the Axium coil, further market penetration of the EverFlex family of stents and the Onyx Liquid Embolic System and increased penetration of our atherectomy products into international markets. Our international net sales in the three months ended September 28, 2008 included a favorable foreign currency exchange rate impact of approximately $1.7 million, principally resulting from the relationship of the Euro to the U.S. dollar.

Product cost of goods sold. As a percentage of product sales, product cost of goods sold was 36% of product sales in the three months ended September 28, 2008 and September 30, 2007. In our peripheral vascular segment, product cost of goods sold as a percent of product sales increased to 41% in the three months ended September 28, 2008 compared to 40% in the three months ended September 30, 2007 primarily attributable to costs associated with the consolidation of our Redwood City manufacturing operations into our Irvine and Plymouth facilities and additional excess and obsolete inventory reserves related to our planned product transitions to next generation devices, offset by manufacturing efficiencies and increased sales volume. In our neurovascular segment, product cost of goods sold as a percent of product sales decreased to 26% in the three months ended September 28, 2008 compared to 30% in the three months ended September 30, 2007 primarily attributable to lower manufacturing costs partially offset by excess and obsolete inventory reserves related to our planned product transitions to next generation devices.

Sales, general and administrative. Sales, general and administrative expenses increased 17% to $53.0 million in the three months ended September 28, 2008 compared to $45.4 million in the three months ended September 30, 2007 primarily as a result of our acquisition of FoxHollow. Included in the increase were higher personnel costs of $7.6 million due to increases in overall staffing levels including the consolidated sales force as a result of our acquisition of FoxHollow, an additional $1.2 million of other costs related to FoxHollow not present in the same quarter of prior year, and a $472,000 increase in non-cash stock-based compensation costs. The increase was offset by $4.6 million of expenses incurred in preparation for the FoxHollow integration in the three months ended September 30, 2007 and not incurred in the third quarter 2008. Sales, general and administrative expenses as a percentage of net sales declined to 50% of net sales in the three months ended September 28, 2008 compared to 70% of net sales in the three months ended September 30, 2007 as a result of cost synergies implemented in the fourth quarter 2007 and increased net sales.

Research and development. Research and development expense increased 13% to $12.2 million in the three months ended September 28, 2008 compared to $10.7 million in the three months ended September 30, 2007. This increase was primarily due to the acquisition of FoxHollow and to a lesser extent, increases in personnel costs to support higher levels of research and development and clinical study activities. Research and development expense decreased to 11% of net sales in the three months ended September 28, 2008 compared to 16% of net sales in the three months ended September 30, 2007.

Amortization of intangible assets. Amortization of intangible assets increased to $8.1 million in the three months ended September 28, 2008 compared to $4.0 million in the three months ended September 30, 2007 primarily as a result of the amortization of intangible assets purchased in connection with our acquisition of FoxHollow. In the third quarter 2008, we incurred a charge of approximately $468,000 related to patent impairments. See Note 9 to our consolidated financial statements contained elsewhere in this report for further information regarding intangible assets.

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Special charges. Special charges of $20.2 million were recorded in third quarter 2007 as a result of agreements in principle to settle certain patent infringement and other litigation between ev3 and its subsidiaries, The Regents of the University of California and Boston Scientific Corporation. The $20.2 million special charge consisted of amounts then expected to be paid by ev3 to the parties and legal fees and expenses associated with the litigation.

Realized and unrealized gains on investments, net. Net realized and unrealized gains on investments totaled $142,000 for the three months ended September 28, 2008. We recorded a gain of $179,000 on the final settlement of escrow related to the 2002 sale of our investment in Enteric Medical Technologies, Inc.

Interest (income) expense, net. Interest (income) expense, net was an expense of $49,000 in the three months ended September 28, 2008 compared to income of $307,000 in the three months ended September 30, 2007. This decrease was due primarily to lower average cash balances and declining interest rates in the third quarter 2008 compared to the third quarter 2007. We expect interest income to decline over the remainder of 2008 as a result of declining interest rates and a decrease in interest expense associated with our Silicon Valley Bank term loan.

Other (income) expense, net. Other (income) expense, net was an expense of $2.3 million in the three months ended September 28, 2008 compared to income of $1.6 million in the three months ended September 30, 2007. The other (income) expense, net in each of the three months ended September 28, 2008 and September 30, 2007 was primarily due to net foreign currency exchange rates. The stronger U.S. dollar compared to the Euro negatively impacted our Euro designated accounts receivable in the third quarter 2008.

Income tax expense. We incurred modest levels of income tax expense in each of the three months ended September 28, 2008 and September 30, 2007 related to certain of our European sales offices. We recorded no provision or benefit for U.S. income taxes in either of the three months ended September 28, 2008 or September 30, 2007 due to our history of operating losses.

Comparison of the Nine Months Ended September 28, 2008 to the Nine Months Ended September 30, 2007

Net sales. Net sales increased 65% to $316.0 million in the nine months ended September 28, 2008 compared to $192.0 million in the nine months ended September 30, 2007, reflecting sales growth in each of our reportable business segments and geographic markets. In particular, our sales growth was positively affected by our FoxHollow acquisition, the launch of our Axium coil during the fourth quarter 2007 and continued market penetration of the EverFlex family of stents and the Onyx Liquid Embolic System. Our net sales in the nine months ended September 28, 2008 included $68.6 million of net sales from our atherectomy products and $19.4 million from research collaboration activities with Merck.

Net sales of peripheral vascular products. Net sales of our peripheral vascular products increased 74% to $201.8 million in the nine months ended September 28, 2008 compared to $115.8 million in the nine months ended September 30, 2007. This sales growth was primarily the result of our FoxHollow acquisition and increased market penetration of our EverFlex family of stents. Net sales in our atherectomy product line were $68.6 million for the nine months ended September 28, 2008. Net sales in our stent product line increased 20% to $77.9 million in the nine months ended September 28, 2008 compared to $65.1 million in the nine months ended September 30, 2007. This increase was attributable to increased market penetration of our EverFlex stents, partially offset by sales declines in older generation products. Net sales of our thrombectomy and embolic protection devices were $20.0 million in the nine months ended September 28, 2008 and 2007. Net sales of our procedural support and other products increased 15% to $35.3 million in the nine months ended September 28, 2008 compared to $30.7 million in the nine months ended September 30, 2007 largely due to the increased market penetration of PTA balloon catheters in the United States.

Net sales of neurovascular products. Net sales of our neurovascular products increased 25% to $94.8 million in the nine months ended September 28, 2008 compared to $76.2 million in the nine months ended September 30, 2007 as a result of increased penetration of new and existing products and sales growth in virtually all of our neurovascular access and delivery products. Net sales of our embolic products increased 32% to $53.5 million in the nine months ended September 28, 2008 compared to $40.4 million in the same period of 2007 primarily due to the launch of the Axium coil and increased market penetration of the Onyx Liquid Embolic System, partially offset by sales declines in older generation products. Sales of our neuro access and delivery products and other increased 16% to $41.3 million in the nine months ended September 28, 2008 compared to $35.8 million in the same period in 2007 largely as a result of volume increases across virtually all neuro access and delivery product lines.

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Research collaboration (revenue). Research collaboration revenue was $19.4 million for the nine months ended September 28, 2008.

Net sales by geography. Net sales in the United States increased 85% to $208.7 million in the nine months ended September 28, 2008 compared to $113.0 million in the nine months ended September 30, 2007 and was driven mainly by the acquisition of FoxHollow. International net sales increased 36% to $107.3 million in the nine months ended September 28, 2008 compared to $79.0 million in the nine months ended September 30, 2007 and represented 34% and 41% of our total net sales during the nine months ended September 28, 2008 and September 30, 2007, respectively. International growth was primarily due to the launch of the Axium coil, further market penetration of the EverFlex family of stents and the Onyx Liquid Embolic System, and the continued penetration of our atherectomy products into international markets. Our international net sales in the nine months ended September 28, 2008 included a favorable foreign currency exchange rate impact of approximately $7.7 million, principally resulting from the relationship of the Euro to the U.S. dollar.

Product cost of goods sold. As a percentage of product sales, product cost of goods sold was 35% of product sales in the nine months ended September 28, 2008 compared to 34% in the nine months ended September 30, 2007. In our peripheral vascular segment, product cost of goods sold as a percent of product sales decreased to 38% in the nine months ended September 28, 2008 compared to 40% in the nine months ended September 30, 2007 primarily attributable to costs associated with the consolidation of our Redwood City manufacturing operations into our Irvine and Plymouth facilities and additional excess and obsolete inventory reserves related to our planned product transitions to next generation devices, offset by manufacturing efficiencies and increased sales volume. In our neurovascular segment, product cost of goods sold as a percent of product sales was 26% in the nine months ended September 28, 2008 and September 30, 2007.

Sales, general and administrative. Sales, general and administrative expenses increased 43% to $178.8 million in the nine months ended September 28, 2008 compared to $125.4 million in the nine months ended September 30, 2007 primarily as a result of the acquisition of FoxHollow. Included in the increase were higher personnel costs of $31.2 million due to increases in overall staffing levels including the consolidated sales force as a result of our acquisition of FoxHollow, an additional $10.3 million of other costs related to FoxHollow not present in the same period of prior year, and a $3.4 million increase in non-cash stock-based compensation costs. Although sales, general and administrative expenses increased in absolute dollars, as a percentage of net sales, sales, general and administrative expenses decreased to 57% of net sales in the nine months ended September 28, 2008 compared to 65% of net sales in the nine months ended September 30, 2007 as a result of cost synergies implemented in the fourth quarter 2007 and increased net sales.

Research and development. Research and development expense increased 29% to $37.9 million in the nine months ended September 28, 2008 compared to $29.5 million in the nine months ended September 30, 2007. This increase was primarily due to the acquisition of FoxHollow and to a lesser extent, increases in personnel costs to support higher levels of research and development and clinical study activities. Research and development expense decreased to 12% of net sales in the nine months ended September 28, 2008 compared to 15% of net sales in the nine months ended September 30, 2007.

Amortization of intangible assets. Amortization of intangible assets increased to $24.3 million in the nine months ended September 28, 2008 compared to $11.9 million in the nine months ended September 30, 2007 primarily as a result of the amortization of intangible assets purchased in connection with our acquisition of FoxHollow and the amortization of our Invatec distribution rights. For the nine months ended September 28, 2008, we incurred a charge of approximately $1.1 million related to patent impairments. See Note 9 to our consolidated financial statements contained elsewhere in this report.

Intangible asset impairment. Intangible asset impairment was $10.5 million in the nine months ended September 28, 2008 and was a result of the termination of the Merck collaboration and license agreement. See Note 10 to our consolidated financial statements contained elsewhere in this report.

Realized and unrealized gains on investments, net. Net realized and unrealized gains on investments totaled $542,000 for the nine months ended September 28, 2008. We recorded a gain of $830,000 as a result of the sale of an investment which had no carrying value at the time of sale and a gain of $179,000 on the final settlement of escrow related to the 2002 sale of our investment in Enteric Medical Technologies, Inc. This gain is offset by a $518,000 charge related to the other-than-temporary impairment of an investment to reflect the fair market value as of September 28, 2008.

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Interest (income) expense, net. Interest (income) expense, net was income of $307,000 in the nine months ended September 28, 2008 compared to income of $823,000 in the nine months ended September 30, 2007. This decrease was due primarily to lower average cash balances and declining interest rates in the year to date 2008 period compared to the same period last year.

Other (income) expense, net. Other (income) expense, net was an expense of $192,000 in the nine months ended September 28, 2008 compared to income of $2.1 million in the nine months ended September 30, 2007. The other (income) expense, net in each of the nine months ended September 28, 2008 and September 30, 2007 was primarily due to foreign currency exchange rate gains and losses. The stronger U.S. dollar compared to the Euro negatively impacted our Euro designated accounts receivable in the third quarter 2008.

Income tax expense. We incurred modest levels of income tax expense in each of the nine months ended September 28, 2008 and September 30, 2007 related to certain of our European sales offices. We recorded no provision or benefit for U.S. income taxes in either of the nine month periods ended September 28, 2008 or September 30, 2007 due to our history of operating losses.

Liquidity and Capital Resources

	September 30,		December 31,
Balance Sheet Data	2008		2007
	(in thousands)
Cash and cash equivalents	$	45,947	$	81,060
Short-term investments		—		9,744
Total current assets		183,277		228,370
Total assets		1,015,783		1,087,106
Total current liabilities		74,709		119,159
Total liabilities		87,173		128,625
Total stockholders’ equity		928,610		958,481

Cash, cash equivalents and short-term investments. Our cash, cash equivalents and short-term investments available to fund our current operations were $45.9 million and $90.8 million at September 28, 2008 and December 31, 2007, respectively. We believe our cash, cash equivalents, short-term investments and current financing arrangements will be sufficient to meet our liquidity requirements through at least the next 12 months. Our cash is primarily invested in highly liquid prime or treasury money market funds which we believe are not subject to the risks inherent in the capital markets.

Operating activities. Cash used in operations during the nine months ended September 28, 2008 was $30.5 million compared to $20.3 million during the nine months ended September 30, 2007, reflecting primarily our net loss in each of the periods and our increased working capital requirements. Increased working capital requirements during the current year were primarily a result of payments made during the second quarter 2008 of approximately $15.4 million for the coil litigation settlements. Additionally, we experienced increased levels of inventory and accounts receivable as a result of higher sales levels as compared to the comparable nine month period ended September 28, 2007. During the nine months ended September 28, 2008, our net loss included approximately $44.7 million of non-cash charges for depreciation and amortization and non-cash stock-based compensation expense compared with $24.7 million during the nine months ended September 30, 2007. As a result of our acquisition of FoxHollow, non-cash charges increased $13.8 million and $2.5 million related to the amortization of acquired intangible assets and non-cash stock-based compensation expense, respectively, and $10.5 million related to the Merck asset impairment.

Investing activities. Cash used in investing activities was $7.3 million during the nine months ended September 28, 2008, primarily due to 9.0 million in purchases of property and equipment, approximately $7.5 million of payments related to the Dendron earn-out contingency and $2.3 million in purchases of patents and licenses, partially offset by $9.7 million in proceeds from the sale of short-term investments. Cash used in investing activities was $8.1 million during the nine months ended September 30, 2007 reflecting primarily purchases of $6.5 million of property and equipment and $6.5 million of distribution rights related to our agreement with Invatec, partially offset by the receipt of $6.9 million in proceeds from the sale of short-term investments. Historically, our capital expenditures have consisted of purchased manufacturing equipment, research and testing equipment, computer systems and office furniture and equipment. We expect to continue to make investments in property and equipment during the balance of 2008.

Financing activities. Cash provided by financing activities was $2.5 million during the nine months ended September 28, 2008, reflecting net proceeds used to refinance our equipment term loan with Silicon Valley Bank and proceeds from stock

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option exercises and employee stock purchase plan purchases. Cash provided by financing activities was $53.5 million during the nine months ended September 30, 2007 and was generated primarily from proceeds from the issuance of our common stock in our April 2007 secondary public offering, borrowings under our equipment term loan with Silicon Valley Bank and from stock option exercises.

Contractual cash obligations. Our contractual cash obligations as of December 31, 2007 are set forth in our annual report on Form 10-K for the year ended December 31, 2007. There were no material changes in our contractual cash obligations since that date through September 28, 2008.

Financing history. We have generated significant operating losses since our inception. These operating losses, including cumulative non-cash charges for acquired in-process research and development of $199.4 million, have resulted in an accumulated deficit of $825.5 million as of September 28, 2008. Historically, our liquidity needs have been met through a series of preferred investments, demand notes payable issued to two of our principal shareholders, our June 2005 initial public offering, our April 2007 secondary public offering and our bank financing with Silicon Valley Bank.

Credit facility. Our operating subsidiaries, ev3 Endovascular, Inc., ev3 International, Inc., Micro Therapeutics, Inc. and FoxHollow Technologies, Inc., are parties to a loan and security agreement with Silicon Valley Bank (“SVB”), which was amended most recently in June 2008. The amended facility consists of a $50.0 million revolving line of credit and a $10.0 million term loan. The revolving line of credit expires June 25, 2010 and the term loan matures on June 23, 2010. Pursuant to the terms of the loan agreement, and subject to specified reserves, we may borrow under the revolving line of credit up to $12.0 million without any borrowing base limitations. Aggregate borrowings under the revolving line of credit that exceed $12.0 million will be subject the revolving line to borrowing base limitations. These limitations allow us to borrow, subject to specified reserves, up to 80% of eligible domestic and foreign accounts receivables plus up to 30% of eligible inventory. Additionally, borrowings against the eligible inventory may not exceed the lesser of 33% of the amount advanced against accounts receivable or $10.0 million. As of September 28, 2008, we had $9.6 million in outstanding borrowings under the term loan and no outstanding borrowings under the revolving line of credit; however, we had approximately $3.6 million of outstanding letters of credit issued by Silicon Valley Bank, which reduced the maximum amount available under our revolving line of credit as of September 28, 2008 to approximately $46.4 million.

Borrowings under the revolving line bear interest at a variable rate equal to SVB’s prime rate. Borrowings under the term loan bear interest at a variable rate equal to SVB’s prime rate plus 0.5%. SVB’s prime rate at September 28, 2008 was 5.0%. Accrued interest on any outstanding balance under the revolving line and the term loan is payable monthly in arrears. Principal amounts outstanding under the term loan are payable in 48 consecutive equal monthly installments on the last day of each month, commencing August 31, 2008.

Both the revolving line of credit and term loan are secured by a first priority security interest in substantially all of our assets, excluding intellectual property, which is subject to a negative pledge, and are guaranteed by ev3 Inc. and all of our domestic direct and indirect subsidiaries. The loan agreement requires us to maintain a specified liquidity ratio, a tangible net worth level (through November 30, 2008) and an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) level (after November 30, 2008). The loan agreement contains customary events of default, including, among others, the failure to comply with certain covenants or other agreements. Upon the occurrence and during the continuation of an event of default, amounts due under the loan agreement may be accelerated by SVB. Although we were in compliance with the covenants at September 28, 2008, toward the end of October 2008, we determined that it was possible that we may not be in compliance with the monthly liquidity ratio covenant at the end of October, which under the terms of the loan agreement increased in October from a 0.75 to 1.00 ratio to a 1.00 to 1.00 ratio. We received a written waiver of the monthly liquidity ratio covenant measured as of October 31, 2008. The waiver does not extend beyond October 31, 2008. We refer you to the information contained in Note 11 to our consolidated financial statements for further discussion of our existing financing arrangements.

Other liquidity information. We refer you to the information contained in our annual report on Form 10-K for the fiscal year ended December 31, 2007 under “Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Other Liquidity Information” for a discussion of our earnout contingencies as a result of our acquisitions of Appriva Medical, Inc. and Dendron GmbH and FoxHollow’s acquisition of Kerberos Proximal Solutions, Inc. We also refer you to the information contained in Note 13 to our consolidated financial statements for further discussion of certain litigation matters relating to these earnout contingencies. The outcome of such litigation may materially affect our future liquidity.

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Our future liquidity and capital requirements will be influenced by numerous factors, including the extent and duration of future operating losses, the level and timing of future sales and expenditures, the results and scope of ongoing research and product development programs, working capital to support our sales growth, receipt of and time required to obtain regulatory clearances and approvals, sales and marketing programs, continuing acceptance of our products in the marketplace, competing technologies, market and regulatory developments, acquisitions and the future course of pending and threatened litigation. We believe that our cash, cash equivalents, short-term investments and current financing arrangements will be sufficient to meet our liquidity requirements through at least the next 12 months. However, there is no assurance that additional funding will not be needed prior to such time. In the event that we require additional working capital to fund our future operations and any future acquisitions, we may sell shares of our common stock or other equity securities, sell debt securities or enter into additional credit and financing arrangements with one or more independent institutional lenders. There is no assurance that any financing transaction will be available on terms acceptable to us, or at all, or that any financing transaction will not be dilutive to our current stockholders. If we require additional working capital, but are not able to raise additional funds, we may be required to significantly curtail or cease ongoing operations. From time to time, we may also sell a given technology or intellectual property having a development timeline or development cost that is inconsistent with our investment horizon or which does not adequately within our then business strategy.

Credit risk. At September 28, 2008, our accounts receivable balance was $73.6 million, compared to $66.2 million at December 31, 2007. We monitor the creditworthiness of our customers to which we grant credit terms in the normal course of business. We believe that concentrations of credit risk with respect to our accounts receivable are limited due to the large number of customers and their dispersion across many geographic areas. However, a significant amount of our accounts receivable are with national healthcare systems in many countries. Although we do not currently foresee a credit risk associated with these receivables, repayment depends upon the financial stability of the economies of those countries. As of September 28, 2008, no customer represented more than 10% of our outstanding accounts receivable. From time to time, we offer certain distributors in foreign markets who meet our credit standards extended payment terms, which may result in a longer collection period and reduce our cash flow from operations. Subsequent to our initial public offering in June 2005, we have not experienced significant losses with respect to the collection of accounts receivable from groups of customers or any particular geographic area nor experienced any material cash flow reductions as a result of offering extended payment terms.

Related Party Transactions

We refer you to the information contained in Note 15 to our consolidated financial statements.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our annual report on Form 10-K for the year ended December 31, 2007.

Seasonality and Quarterly Fluctuations

Our business is seasonal in nature. Historically, demand for our products has been the highest in our fourth fiscal quarter. We traditionally experience lower sales volumes in our third fiscal quarter than throughout the rest of the year as a result of the European holiday schedule during the summer months.

We have experienced and expect to continue to experience meaningful variability in our net sales and gross profit among quarters as a result of a number of factors, including, among other things, the timing and extent of promotional pricing or volume discounts; the timing of larger orders by customers and the timing of shipment of such orders; changes in average selling prices; the number and mix of products sold in the quarter; the availability and cost of components and materials; and costs, benefits and timing of new product introductions.   

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined by the rules and regulations of the Securities and Exchange Commission, that have or are reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. As a result, we

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are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these arrangements.

Recently Issued Accounting Pronouncements

On January 1, 2008, we adopted Statement Financial Accounting Standard (SFAS) No. 157, “Fair Value Measurements,” (“SFAS 157”) for financial assets and liabilities. See Note 3 for further discussion of the impact the adoption of SFAS 157 had on our results of operations and financial condition for the three and nine months ended September 28, 2008. The implementation of SFAS 157 did not have a material impact on our consolidated financial statements.

In February 2008, FASB issued Staff Position (FSP) No. FAS 157-2, “Effective Date of FASB Statement No. 157,” which delays the effective date of SFAS 157 for certain non-financial assets and liabilities to fiscal years beginning after November 15, 2008. The adoption of FAS 157-2 is not expected to have an impact on our consolidated financial statements.

In October 2008, the FASB issued Staff Position (FSP) No. FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” which clarifies the application of SFAS. 157 in an inactive market and illustrates how an entity would determine fair value when the market for a financial asset is not active. The Staff Position is effective immediately and applies to prior periods for which financial statements have not been issued, including interim or annual periods ending on or before September 28, 2008. The implementation of FAS 157-3 did not have a material impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007) “Business Combinations” (SFAS No. 141(R)) and SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements,” which are effective for fiscal years beginning after December 15, 2008. These new standards represent the completion of the FASB’s first major joint project with the International Accounting Standards Board (IASB) and are intended to improve, simplify and converge internationally the accounting for business combinations and the reporting of noncontrolling interests (formerly minority interests) in consolidated financial statements. We will adopt these standards at the beginning of our 2009 fiscal year. The effect of adoption will generally be prospectively applied to transactions completed after the end of our 2008 fiscal year, although the new presentation and disclosure requirements for pre-existing non-controlling interests will be retrospectively applied to all prior-period financial information presented. We do not anticipate this statement to have an impact on our results of operations and financial condition.

SFAS No. 141(R) retains the underlying fair value concepts of its predecessor (SFAS No. 141), but changes the method for applying the acquisition method in a number of significant respects, including the requirement to expense transaction fees and expected restructuring costs as incurred, rather than including these amounts in the allocated purchase price; the requirement to recognize the fair value of contingent consideration at the acquisition date, rather than the expected amount when the contingency is resolved; the requirement to recognize the fair value of acquired in-process research and development assets at the acquisition date, rather than immediately expensing; and the requirement to recognize a gain in relation to a bargain purchase price, rather than reducing the allocated basis of long-lived assets. Because this standard is generally applied prospectively, except as it relates to acquired income tax contingencies, the effect of adoption on our financial statements will depend primarily on specific transactions, if any, completed after 2008.

On February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115” (SFAS No. 159). SFAS No. 159 creates a “fair value option” under which an entity may elect to record certain financial assets or liabilities at fair value upon their initial recognition. Subsequent changes in fair value would be recognized in earnings as those changes occur. The election of the fair value option would be made on a contract-by-contract basis and would need to be supported by concurrent documentation or a preexisting documented policy. SFAS No. 159 requires an entity to separately disclose the fair value of these items on the balance sheet or in the footnotes to the financial statements and to provide information that would allow the financial statement user to understand the impact on earnings from changes in the fair value. SFAS No. 159 was effective for us beginning in 2008. Based upon our assessment of our financial assets and liabilities, we did not elect to implement the provisions of SFAS 159 and therefore the adoption of SFAS 159 did not have an impact on our results of operations and financial condition.

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Forward-Looking Statements

This quarterly report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor created by those sections. In addition, we or others on our behalf may make forward-looking statements from time to time in oral presentations, including telephone conferences and/or web casts open to the public, in press releases or reports, on our Internet web site or otherwise. All statements other than statements of historical facts included in this report or expressed by us orally from time to time that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements about our plans, objectives, strategies, the outcome of contingencies such as legal proceedings, and prospects regarding, among other things, our financial condition, results of operations and business. We have identified some of these forward-looking statements in this report with words like “believe,” “may,” “could,” “would,” “might,” “forecast,” “possible,” “potential,” “project,” “will,” “should,” “expect,” “intend,” “plan,” “predict,” “anticipate,” “estimate,” “approximate” “outlook” or “continue” or the negative of these words or other words and terms of similar meaning. These forward-looking statements may be contained in the notes to our consolidated financial statements and elsewhere in this report, including under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Forward-looking statements are based on current expectations about future events affecting us and are subject to uncertainties and factors that affect all businesses operating in a global market as well as matters specific to us. These uncertainties and factors are difficult to predict and many of them are beyond our control. The following are some of the uncertainties and factors known to us that could cause our actual results to differ materially from what we have anticipated in our forward-looking statements:

• History of operating losses, negative cash flow and failure to achieve future profitability;

• Continued difficulties in integrating FoxHollow’s operations and failure to realize anticipated cost savings, net sales and other potential benefits of the acquisition in a timely manner or at all;

• The failure of our atherectomy products to achieve future revenues in amounts historically experienced by FoxHollow prior to our acquisition of FoxHollow;

• Changes in and failure to retain or replace senior management or other key employees and the avoidance of business disruption and employee distraction as we execute our restructuring activities, including the closing of our Redwood City, California facility and our recent previous reductions in sales personnel and as we implement reorganization efforts;

• Ability to implement, fund and achieve sustainable cost savings measures that will better align our operating expenses with our anticipated net sales levels and reallocate resources to better support growth initiatives;

• Failure to obtain additional capital when needed or on acceptable terms;

• Failure of our business strategy, which relies on assumptions about the market for our products;

• Lack of market acceptance of new products;

• Decreased demand for our SilverHawk product;

• Fluctuations in foreign currency exchange rates, especially the effect of a stronger U.S. dollar against the Euro, and interest rates;

• Delays in product introduction;

• Risks inherent in operating internationally and selling and shipping our products and purchasing our products and components internationally;

• Exposure to assertions of intellectual property claims and failure to protect our intellectual property;

• Disruption in our ability to manufacture our products, especially as we transition manufacturing capabilities from our Redwood City, California facility to our Plymouth, Minnesota and Irvine, California facilities;

• Ability of our key suppliers to provide us products or components or raw materials for products resulting in our inability to supply market demand for our products;

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• Increases in prices for raw materials;

• Significant and unexpected claims under our EverFlex self-expanding stent worldwide fracture-free guarantee program in excess of our reserves;

• Incurrence of additional debt, contingent liabilities and expenses in connection with future acquisitions;

• Failure of our customers or patients to obtain third party reimbursement for their purchases of our products;

• Consolidation in the healthcare industry, which could lead to demands for price concessions or to the exclusion of some suppliers from certain of our markets;

• Failure to comply with applicable laws and regulations, to obtain and maintain required regulatory approvals for our products in a cost-effective manner or at all and to market our products in an appropriate manner, including without limitation failure to comply with the Federal Anti-Kickback Statute and similar healthcare fraud and abuse laws and the Foreign Corrupt Practices Act;

• Adverse changes in applicable laws or regulations;

• Exposure to adverse side effects from our products and product liability claims;

• Fluctuations in quarterly operating results as a result of seasonality and other items, such as the timing and extent of promotional pricing or volume discounts; the timing of larger orders by customers and the timing of shipment of such orders; changes in average selling prices; the number and mix of products sold in the quarter; the availability and cost of components and materials; and costs, benefits and timing of new product introductions;

• Obligation to make significant milestone payments not currently reflected in our financial statements;

• Reliance on independent sales distributors and sales associates to market and sell our products in certain countries;

• Loss of customers;

• Expiration or termination of our distribution agreement with Invatec S.r.l. and our inability to commercially launch on a timely basis our own products to replace the Invatec products we distribute or any disruption in the supply of products of Invatec S.r.l. that we distribute or our relationship with Invatec;

• Dependence upon a few of our products to generate a large portion of our net sales and exposure if drug-eluting stents become a dominant therapy in the peripheral vascular stent market and we are not able to develop or acquire a drug-eluting stent to market and sell;

• Failure to develop innovative and successful new products and technologies;

• Highly competitive nature of the markets in which we sell our products and the introduction of competing products;

• Inability to meet performance enhancement objectives, including efficiency and cost reduction strategies;

• Reliance on our management information systems for inventory management, distribution and other functions and to maintain our research and development and clinical data;

• Failure to comply with our covenants under our loan and security agreement with Silicon Valley Bank or inability to access funds under our revolving line of credit due to borrowing base limitations;

• Inability to use net operating losses to reduce tax liability if we become profitable;

• Absence of expected returns from the amount of intangible assets we have recorded and the possibility of recording an impairment charge in the value of our goodwill and other intangible assets due to the recent substantial decline in our market capitalization;

• Changes in generally accepted accounting principles and changes resulting from the application of the purchase method of accounting relating to our acquisition of FoxHollow;

• Volatility and uncertainty in the capital markets and the availability of credit to our distributors, customers and suppliers;

• Effects of pending and threatened litigation;

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• Conditions and changes in medical device industry or in general economic and business conditions, including the effect of current worldwide economic conditions on the number of elective healthcare procedures;

• Conflicts of interests due to our ownership structure; or

• Ineffectiveness of our internal controls.

For more information regarding these and other uncertainties and factors that could cause our actual results to differ materially from what we have anticipated in our forward-looking statements or otherwise could materially adversely affect our business, financial condition or operating results, see our annual report on Form 10-K for the fiscal year ended December 31, 2007 under the heading “Part I – Item 1A. Risk Factors” on pages 31 through 55 of such report and “Part II – Item 1A. Risk Factors” contained in our subsequent quarterly reports on Form 10-Q, including this report.

All forward-looking statements included in this report are expressly qualified in their entirety by the foregoing cautionary statements. We wish to caution readers not to place undue reliance on any forward-looking statement that speaks only as of the date made and to recognize that forward-looking statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the uncertainties and factors described above, as well as others that we may consider immaterial or do not anticipate at this time. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. Our expectations reflected in our forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown uncertainties and factors, including those described above. The risks and uncertainties described above are not exclusive and further information concerning us and our business, including factors that potentially could materially affect our financial results or condition, may emerge from time to time. We assume no obligation to update, amend or clarify forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. We advise you, however, to consult any further disclosures we make on related subjects in our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K we file with or furnish to the Securities and Exchange Commission.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, which are potential losses arising from adverse changes in market rates and prices, such as interest rates and foreign currency exchange rate fluctuations. We may enter into derivatives or other financial instruments for trading or speculative purposes; however, our policy is to only enter into contracts that can be designated as normal purchases or sales. We believe we are not exposed to a material market risk with respect to our invested cash and cash equivalents.

Interest Rate Risk

Borrowings under our revolving line of credit bear interest at a variable rate equal to Silicon Valley Bank’s prime rate. Borrowings under the term loan bear interest at a variable rate equal to Silicon Valley Bank’s prime rate plus 0.5%. We currently do not use interest rate swaps to mitigate the impact of fluctuations in interest rates. As of September 28, 2008, we had no borrowings under our revolving line of credit and had $9.6 million in borrowings under the term loan. Based upon this debt level, a 10% increase in the interest rate on such borrowings would cause us to incur an increase in interest expense of approximately $53,000 on an annual basis.

At September 28, 2008, our cash and cash equivalent balance was $45.9 million. Based on our annualized average interest rate, a 10% decrease in the interest rate on such balances would result in a reduction in interest income of approximately $108,000 on an annual basis.

Foreign Currency Exchange Rate Risk

Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies in which we transact business could adversely affect our financial results. Approximately 23% and 24% of our net sales were denominated in foreign currencies in the three and nine months ended September 28, 2008, respectively. Selling, marketing and administrative costs related to these sales are largely denominated in the same respective currency, thereby limiting our transaction risk exposure. However, for sales not denominated in U.S. dollars, if there is an increase in the rate at which a foreign currency is exchanged for U.S. dollars, it will require more of the foreign currency to equal a specified amount of U.S. dollars than

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before the rate increase. In such cases and when we price our products in the foreign currency, we will receive less in U.S. dollars than we did before the rate increase went into effect. If we price our products in U.S. dollars and competitors price their products in local currency, an increase in the relative strength of the U.S. dollar could result in our price not being competitive in a market where business is transacted in the local currency.

Approximately 78% and 77% of our net sales denominated in foreign currencies in the three and nine months ended September 28, 2008, respectively, were derived from European Union countries and were denominated in the Euro. Our principal foreign currency exchange rate risks exist between the U.S. dollar and the Euro and between the U.S. dollar and the Yen. Fluctuations from the beginning to the end of any given reporting period result in the remeasurement of our foreign currency-denominated receivables and payables, generating currency transaction gains or losses that impact our non-operating income/expense levels in the respective period and are reported in other (income) expense, net in our consolidated financial statements. We recorded foreign currency transaction losses of $2.3 million and $193,000 in the three and nine months ended September 28, 2008, respectively, compared to foreign currency transaction gains of $1.6 million and $2.1 million in the three and nine months ended September 30, 2007, respectively, primarily related to the translation of our foreign denominated net receivables into U.S. dollars. We do not currently hedge our exposure to foreign currency exchange rate fluctuations. We may, however, hedge such exposure to foreign currency exchange rates in the future.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to reasonably ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives.

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered in this quarterly report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of such period to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that material information relating to our company and our consolidated subsidiaries is made known to management, including our Chief Executive Officer and Chief Financial Officer, particularly during the period when our periodic reports are being prepared.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during our quarter ended September 28, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

A description of our legal proceedings in Note 13 of our consolidated financial statements included within this report is incorporated herein by reference.

ITEM 1A. RISK FACTORS

We are affected by risks specific to us as well as factors that affect all businesses operating in a global market. In addition to the other information set forth in this report, careful consideration should be taken of the factors described in our annual report on Form 10-K for the fiscal year ended December 31, 2007 under the heading “Part I – Item 1A. Risk Factors” and “Part II – Item 1A. Risk Factors” contained in our subsequent quarterly reports on Form 10-Q, which could materially adversely affect our business, financial condition or operating results. There has been no material change in those risk factors, except as described below:

Current worldwide economic conditions may adversely affect our business, operating results and financial condition, as well as further decrease our stock price.

General worldwide economic conditions have experienced a downturn due to the effects of the subprime lending crisis, general credit market crisis, collateral effects on the finance and banking industries, concerns about inflation, slower economic activity, decreased consumer confidence, reduced corporate profits and capital spending, adverse business conditions and liquidity concerns. Our business is not immune. We believe the current worldwide economic crisis has resulted and may continue to result in reduced procedures using our products. Many of the procedures that use our products are, to some extent, elective and therefore can be deferred by patients. In light of the current economic conditions, patients may not be as willing to take time off from work or spend their money on deductibles and co-payments often required in connection with the procedures that use our products. In particular, patients that have high-deductible health plans and health savings accounts and thus require the patients to incur significant out-of-pocket costs are especially more apt to defer procedures at time when cash is tight.

The worldwide economic crisis also may have other adverse implications on our business. For example, our customer’s and distributors’ ability to borrow money from their existing lenders or to obtain credit from other sources to purchase our products may be impaired. Although we maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments and such losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same loss rates that we have in the past, especially given the current turmoil in the worldwide economy. A significant change in the liquidity or financial condition of our customers could cause unfavorable trends in our receivable collections and additional allowances may be required, which could adversely affect our operating results. In addition, the worldwide economic crisis may adversely impact our suppliers’ ability to provide us with materials and components, which could adversely affect our business and operating results. Like many other stocks, our stock price has decreased substantially recently and if investors have concerns that our business, operating results and financial condition will be negatively impacted by a worldwide economic downturn, our stock price could further decrease.

A substantial portion of our assets consist of goodwill and other intangible assets and an impairment in the value of our goodwill and other intangible assets would have the effect of decreasing our earnings or increasing our losses.

As of September 28, 2008, goodwill represented $598.4 million, or 59%, of our total assets and other net intangible assets represented an additional $198.5 million, or 20%, of our total assets. If we are required to record an impairment charge to earnings relating to goodwill or our other intangible assets, it will have the effect of decreasing our earnings or increasing our losses. The accounting standards on goodwill and other intangible assets require goodwill to be reviewed at least annually for impairment, and do not permit amortization. In the event that impairment is identified, a charge to earnings will be recorded and our stock price may decline as a result. We evaluate the carrying value of our goodwill during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that indicate that the carrying amount of goodwill may be impaired. We do not believe a triggering event requiring us to conduct an interim impairment test had occurred as of September 28, 2008 and will perform the annual test during the fourth quarter. We are required to assess goodwill for impairment using a two-step process that begins with an estimation of the fair value of our reporting units. The first step determines whether or not impairment has occurred by estimating the fair value of our reporting units using the present value of future cash flows approach, subject to a comparison for reasonableness to our

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market capitalization at the date of valuation. The second step measures the amount of any impairment. We review our other intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss on other intangible assets is recognized when future undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying amount. Due to a recent substantial decline in our market capitalization subsequent to September 28, 2008, we believe it is reasonably possible that we may incur a non-cash impairment charge to both our goodwill and other intangible assets in our fourth quarter 2008. If we are required to record an impairment charge to earnings relating to goodwill or our other intangible assets, it will have the effect of decreasing our earnings or increasing our losses and may result in a breach of our financial covenants under our loan agreement with Silicon Valley Bank.

We face a risk of non-compliance with certain financial covenants in our loan agreement with Silicon Valley Bank. If we are unable to meet the financial or other covenants under the agreement or negotiate future waivers or amendments of the covenants, we could be in default under the agreement, which would give SVB a range of remedies, including declaring all outstanding debt to be due and payable, foreclosing on the assets securing the loan agreement and/or ceasing to provide additional revolving loans or letters of credit, which could have a material adverse effect on us.

Our operating subsidiaries, ev3 Endovascular, Inc., ev3 International, Inc., Micro Therapeutics, Inc. and FoxHollow Technologies, Inc., are parties to a loan and security agreement with Silicon Valley Bank (“SVB”). The facility consists of a $50.0 million revolving line of credit and a $10.0 million term loan. As of September 28, 2008, we had approximately $9.6 million in outstanding borrowings under the term loan and no outstanding borrowings under the revolving line of credit; however, we had approximately $3.6 million of outstanding letters of credit issued by Silicon Valley Bank. The loan agreement requires us to maintain a specified liquidity ratio, a tangible net worth level (through November 30, 2008) and an adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) level (after November 30, 2008). The loan agreement contains customary events of default, including, among others, the failure to comply with certain covenants or other agreements. Upon the occurrence and during the continuation of an event of default, amounts due under the loan agreement may be accelerated by SVB. Although we were in compliance with the covenants at September 28, 2008, toward the end of October 2008, we determined that it was possible that we may not be in compliance with the monthly liquidity ratio covenant at the end of October, which under the terms of the loan agreement increased in October from a 0.75 to 1.00 ratio to a 1.00 to 1.00 ratio. We received a written waiver of the monthly liquidity ratio covenant measured as of October 31, 2008. The waiver does not extend beyond October 31, 2008. If we are unable to meet the financial or other covenants under the loan agreement or negotiate future waivers or amendments of such covenants, an event of default could occur under the loan agreement. Upon the occurrence and during the continuance of an event of default under the loan agreement, SVB has available a range of remedies customary in these circumstances, including declaring all outstanding debt, together with accrued and unpaid interest thereon, to be due and payable, foreclosing on the assets securing the loan agreement and/or ceasing to provide additional revolving loans or letters of credit, which could have a material adverse effect on us.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Equity Securities

During the three months ended September 28, 2008, we did not issue any shares of our common stock or other equity securities of ours that were not registered under the Securities Act of 1933, as amended.

Issuer Purchases of Equity Securities

We did not purchase any shares of our common stock or other equity securities of ours registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, during the three months ended September 28, 2008.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

34

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

The following exhibits are being filed or furnished with this quarterly report on Form 10-Q:

Exhibit No.	Description
10.1	Offer Letter effective July 18, 2008 between ev3 Inc. and Pascal E.R. Girin (Incorporated by reference to Exhibit 10.1 to ev3 Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 21, 2008 (File No. 000-51348))
10.2	Separation Agreement and Release of Claims dated as of July 18, 2008 between ev3 Endovascular, Inc. and Matthew Jenusaitis (Incorporated by reference to Exhibit 10.2 to ev3 Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 21, 2008 (File No. 000-51348))
10.3	Consulting Agreement dated as of July 18, 2008 between ev3 Endovascular, Inc. and Matthew Jenusaitis (Incorporated by reference to Exhibit 10.3 to ev3 Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 21, 2008 (File No. 000-51348))
10.4	ev3 Inc. Performance Incentive Compensation Plan (Filed herewith)
10.5	Form of Option Certificate under the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan (Filed herewith)
10.6	Form of Restricted Stock Grant Certificate under the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan (Filed herewith)
10.7	Form of Stock Grant Certificate applicable to French Participants under the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan (Filed herewith)
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and SEC Rule 13a-14(a) (Filed herewith)
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and SEC Rule 13a-14(a) (Filed herewith)
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith)
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith)

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

November 6, 2008	ev3 Inc.
	By:	/s/ Robert J. Palmisano
		Robert J. Palmisano
		President and Chief Executive Officer (principal executive officer)

By:	/s/ Patrick D. Spangler
	Patrick D. Spangler
	Senior Vice President and Chief Financial Officer (principal financial and accounting officer)

36

ev3 Inc.

QUARTERLY REPORT ON FORM 10-Q

EXHIBIT INDEX

Exhibit No.	Description	Method of Filing
10.1	Offer Letter effective July 18, 2008 between ev3 Inc. and Pascal E.R. Girin	Incorporated by reference to Exhibit 10.1 to ev3 Inc.’s Current Report on Form 8-K (filed with the Securities and Exchange Commission on July 21, 2008 (File No. 000-51348)
10.2	Separation Agreement and Release of Claims dated as of July 18, 2008 between ev3 Endovascular, Inc. and Matthew Jenusaitis	Incorporated by reference to Exhibit 10.2 to ev3 Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 21, 2008 (File No. 000-51348)
10.3	Consulting Agreement dated as of July 18, 2008 between ev3 Endovascular, Inc. and Matthew Jenusaitis	Incorporated by reference to Exhibit 10.3 to ev3 Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 21, 2008 (File No. 000-51348)
10.4	ev3 Inc. Performance Incentive Compensation Plan	Filed herewith
10.5	Form of Option Certificate under the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan	Filed herewith
10.6	Form of Restricted Stock Grant Certificate under the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan	Filed herewith
10.7	Form of Stock Grant Certificate applicable to French Participants under the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan	Filed herewith
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and SEC Rule 13a- 14(a)	Filed herewith
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and SEC Rule 13a- 14(a)	Filed herewith
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith

37

EX-10.4

Exhibit 10.4

Employee Performance Incentive
Compensation Plan

(2008 Revised)

Effective January 1, 2008

Performance Period: January 1 — December 31, 2008

Employee Performance Incentive Comp Plan
Effective January 1, 2008
Performance Period
January 1 — December 31, 2008

I.	Philosophy/Purpose of the Plan
	The purpose of the ev3, Inc. Performance Incentive Compensation Plan (the “Plan”) is to provide financial reward in addition to base salary, based on achievement of specific performance, to those who significantly impact the growth and success of the company. The plan is designed to reward employees for achieving stretch annual goals and to closely align their accomplishments with the interests of the company’s shareholders. This is done by providing annual incentives for the achievement of key business and individual performance measures that are critical to the success of the Company while linking a significant portion of an employee’s annual compensation to the achievement of such measures.
II.	Eligible Participants
	The Company will determine eligibility criteria for the Plan on an annual basis and in its sole discretion. For 2008, the Plan covers the following: (i) all regular, salaried, exempt United States employees in Levels 2 and above, inclusive, and (ii) international and expatriate/inpatriate employees who are determined by the Company to be eligible for participation. Notwithstanding the foregoing, employees in positions covered by sales compensation plans are not eligible participants in the Plan.
	The Plan year runs from January 1 — December 31 of each year (the “Plan Year”). Payouts will be made on an annual basis during the period beginning on the first day of the calendar year following the performance year and ending on March 15th of such calendar year. Participants with less than a full year of service or whose incentive target percent has changed during a Plan Year may be eligible to participate in the plan on a prorated basis, determined by the percentage of time they were eligible to participate during that Plan Year under applicable criteria. Plan Participants with less than four (4) full months of eligible service on December 31 of a particular Plan Year will not be eligible to receive an award under the Plan for that Plan Year.
	To be eligible, employees must have established and approved annual individual performance goals by the end of the first quarter of each Plan Year (or, for new employees, within two (2) months of the employee’s start date). Managers are responsible for meeting this deadline. Employees and Managers who do not complete the annual individual performance goal setting process by such deadlines may become ineligible to participate in the Plan for that Plan Year.
III.	Administration of the Plan
	The Compensation Committee of the Board of Directors of the Company will administer the Plan. The Compensation Committee, in its sole discretion, may delegate to the Company’s Chief Executive Officer activities relating to Plan administration that are not required to be exercised by the Compensation Committee under applicable laws, rules, regulations and the Compensation Committee Charter. Delegable activities include, but are not limited to, establishing any policies under the Plan, interpreting provisions of the Plan, determining eligibility to participate in the Plan, and approving any final payouts under the Plan that do not affect Executive Officer level employees. All decisions of the Compensation Committee and the Chief Executive Officer will be final and binding upon all parties, including the Company and Plan participants.

2

Employee Performance Incentive Comp Plan
Effective January 1, 2008
Performance Period
January 1 — December 31, 2008

IV.	Incentive Targets
	Incentive targets have been approved by the Compensation Committee for all eligible Plan participants based upon their level of responsibility within the Company and impact on the business. These incentive targets represent the incentive (as a percent of a Plan participant’s base salary) that a Plan Participant is eligible to receive under the Plan. It is the Company’s intention to provide significant incentive and reward opportunities to its employees for world-class performance achievement.
	Each position level (2-11) has an established target bonus, expressed as a percentage of base salary, as illustrated below and in the attached Target Bonus Table.

	Salary Level	Standard % of Base Salary Earned
CEO	11	100%
WW President	10	65%
Business Unit President	9	60%
CFO	9	60%
OC Members	8	50%
VP	7	40%
Director	6	30%
Managers, Principals	5	25%
Supervisors/Sr. Level Contributors	4	15%
Intermediate level	3	10%
Entry Level Individuals Contributors	2	8%
Non-exempt	1	Not eligible

	The actual incentive is capped at 150% standard, or may result in 0 bonus based on achievement. In unusual circumstances, modifications may be made if, in the Compensation Committee’s final judgment the calculations does not accurately reflect performance.
V.	Individual Performance Measures
	Individual performance measures for a Plan Year are established during the annual goal setting process. Each Plan Year, all Plan participants are required to develop three to five written, measurable and specific Management By Objectives (MBO’s), which must be agreed to and approved by each participant’s direct manager by the end of the first quarter. up. For Executives in Grade Level 8 and up, each MBO and targeted achievement levels must be approved by the President and CEO and the Compensation Committee. All objectives are weighted by agreement, with areas of critical importance or critical focus weighted most heavily. A rating of 1 to 5 is agreed upon, providing specific achievement levels for each rating. A rating of 3 will always equal “on plan” performance.
VI.	Company Performance Measures
	For each Plan Year, the Compensation Committee, together with input from the Company’s Chief Executive Officer, will identify critical Company performance measures. The 2008 Company performance measures are:

• Worldwide Revenue

• Operating Profit

3

Employee Performance Incentive Comp Plan
Effective January 1, 2008
Performance Period
January 1 — December 31, 2008

• Daily Sales Outstanding — “DSO”

• Days on Hand “Inventory DOH”

	The finance team will work with each operating unit to establish specific financial objectives for the Incentive Plan Company performance measures, which will be tied to the company’s approved operating plan. All objectives are weighted by agreement, with areas of critical importance or critical focus weighted most heavily. In addition, for each performance measure, targets have been established for each rating level 1 to 5. A rating of 3 will always equal “on plan” performance.
VII.	Bonus Calculation
	An aggregate average for the corporate, divisions and individuals goals must meet at least a 2.0 to meet the minimum 75% payout threshold. There are no awards if final overall rating is below a 2.0. A scale for calculating actual achievement percentage will be used as follows:

Overall Rating	Percentage Achievement
5	150%
4	125%
3	100%
2	75%
1	0%

	All Plan performance measures and objectives are rated (based on the achievement grid) and weighted based on relative importance in order to obtain a weighted performance rating for each objective.
	All weighted performance ratings are then added together to obtain an overall rating for each participant.
	Increments between rating levels will be interpolated as closely as possible to determine an actual incentive percentage, e.g. an overall rating of 3.5 equals a 112.5% incentive percentage.
	For each participant the actual incentive percentage is multiplied by the target bonus percentage to calculate the award, e.g. 112.5% actual incentive percentage times 20% target bonus equals an award of 28% of earned base salary.
	For new or newly eligible participants who join the plan during the plan year, the award may be calculated either by using base salary or pro-rated salary depending on the terms and conditions of the job offer, as documented in the offer letter and approved in advance by the Compensation Committee.
VIII.	Individual Incentive Payment Criteria, Calculation, and Payout
	A Plan participant must remain actively employed by the Company past December 31st of the Plan Year to be eligible for an incentive payment under the Plan for that Plan Year.

The incentive payment under the Plan for any eligible Plan participant for a particular Plan Year will vary depending upon the approved individual objectives and company performance measures, the Plan participant’s base salary as of November 1 of that Plan Year, and the Plan participant’s incentive target for that Plan Year..

4

Employee Performance Incentive Comp Plan
Effective January 1, 2008
Performance Period
January 1 — December 31, 2008

	In the following cases, the final incentive payout will be prorated. If the Plan participant was on a Leave of Absence for part of the Plan Year, their bonus will be pro-rated based upon the number of days they were actively working within the year. If the Plan participant works less than a full-time schedule (40 hours/week), the incentive payout will be prorated for the hours worked or if the Plan participant has a change to their full-time status throughout the year, their incentive payout will likewise be prorated for the portion of the year in which they worked a part time schedule. If the Plan participant received a promotion during the year prior to November 1 with a change in target incentive, the final payout will be prorated for the time spent at each incentive target.
	At the end of the plan year, each participant will review their MBO’s and results with their direct manager to determine the rating earned for each MBO objective. Each MBO objective rating will be combined to calculate an overall rating for the individual objectives. In addition, as soon as practicable after the appropriate financial and other data has been compiled, the finance department will calculate the ratings for the overall ev3 and each business unit financial goals. These ratings will be combined together per the applicable weighting factors to determine the final payout for each individual Plan participant. Individual incentive payments under the Plan will be made in a lump sum, less applicable withholding taxes, as soon as reasonably practicable after the determination of such payments, during the period beginning on the first day of the calendar year following the performance year and ending on March 15 of such calendar year.
	In all cases, recommendations for final incentive awards are submitted to the Chief Executive Officer for approval, with final approval by the Compensation Committee.
	The CEO and/or the Compensation Committee may make a recommendation to modify an award by plus/minus 20% if, in its subjective judgment, the participant has not been equitably treated by the mechanics of the incentive plan. Such modifications of awards should only be used in truly exceptional cases.
IX.	Plan Discretion
	All benefits payable under the Plan are discretionary and no Plan participant shall have any right to payment under the Plan until actually paid.
	To the extent necessary with respect to any Plan Year, in order to avoid any undue windfall or hardship due to external causes, the Compensation Committee may without the consent of any affected Plan participant, revise one or more of the Company performance measures, or otherwise make adjustments to payouts under the Plan to take into account any acquisition or disposition by the Company not planned for at the time the Company performance measures were established, any change in accounting principles or standards, or any extraordinary or non-recurring event or item, so as equitably to reflect such event or events, such that the criteria for evaluating whether a Company performance measure has been achieved will be substantially the same (as determined by the Compensation Committee) following such event as prior to such event.
X.	Termination, Suspension, or Modification
	The Company may terminate, suspend, modify and if suspended, may reinstate or modify, all or part of the Plan at any time, with or without notice to the Plan participants. Exceptions to the eligibility of, or the extent to which the Plan applies to, any particular Plan participant must be approved, on a case-by-case basis, by the Compensation Committee

5

Employee Performance Incentive Comp Plan
Effective January 1, 2008
Performance Period
January 1 — December 31, 2008

XI.	Limitation of Liability
	No member of the Company’s Board of Directors, the Compensation Committee, any officer, employee, or agent of the Company, or any other person participating in any determination of any question under the Plan, or in the interpretation, administration, or application of the Plan, shall have any liability to any party for any action taken, or not taken, in good faith under the Plan.
XII.	No Right to Employment
	This document sets forth the terms of the Plan and it is not intended to be a contract or employment agreement between any Plan participant and the Company. Nothing contained in the Plan (or in any other documents related to the Plan) shall confer upon any employee or Plan participant any right to continue in the employ or other service of the Company or constitute any contract or limit in any way the right of the Company to change such person’s compensation or other benefits or to terminate the employment or other service of such person with or without cause or notice.
XIII.	Non-Assignability
	Except for the designation of a beneficiary(ies) to receive payments of benefits for a particular Plan year following a Plan participant’s death after the completion of such Plan Year, no amount payable at any time under the Plan shall be subject to sale, transfer, assignment, pledge, attachment, or other encumbrance of any kind. Any attempt to sell, transfer, assign, pledge, attach, or otherwise encumber any such benefits, whether currently or thereafter payable, shall be void.
XIV.	Withholding Taxes
	The Company is entitled to withhold and deduct from any payments made pursuant to the Plan or from future wages of a Plan participant (or from other amounts that may be due and owing to the Plan participant from the Company), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and all federal, state, and local withholding and employment-related tax requirements attributable to any payment made pursuant to the Plan.
XV.	Unfunded Status of Plan
	The Plan shall be unfunded. No provisions of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets. Plan participants shall have no rights under the Plan other than as unsecured general creditors of the Company.
XVI.	Other
	Except to the extent in connection with other matters of corporate governance and authority (all of which shall be governed by the laws of the Company’s jurisdiction of incorporation), the validity, construction, interpretation, administration and effect of the Plan and any rules, regulations, and actions relating to the Plan will be governed by and construed exclusively in accordance with the internal, substantive laws of the State of Minnesota, without regard to the conflict of law rules of the State of Minnesota or any other jurisdiction.

6

EX-10.5

Exhibit 10.5

STANDARD NON-ISO GRANT

FORM OF
ev3 INC. SECOND AMENDED AND RESTATED
2005 INCENTIVE STOCK PLAN
OPTION CERTIFICATE

ev3 Inc., a Delaware corporation, in accordance with the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan (the “Plan”), hereby grants an Option to                                         , who shall be referred to as “Optionee”, to purchase from the Company                      shares of Stock at an Option Price per share equal to $                    , which grant shall be subject to all of the terms and conditions set forth in this Option Certificate and in the Plan. This grant has been made as of                                         , 200[ ], which shall be referred to as the “Grant Date”. This Option is not intended to satisfy the requirements of § 422 of the Code and thus shall be a Non-ISO as that term is defined in the Plan.

ev3 INC.
By:
	Name:
	Title:

TERMS AND CONDITIONS

          § 1. Plan. This Option grant is subject to all the terms and conditions set forth in the Plan and this Option Certificate, and all the terms in this Option Certificate which begin with a capital letter are either defined in this Option Certificate or in the Plan. If a determination is made that any term or condition set forth in this Option Certificate is inconsistent with the Plan, the Plan shall control. A copy of the Plan has been made available to Optionee as further described in § 12 .

§ 2. Vesting and Option Expiration.

(a)

General Rule. Subject to § 2(b) and § 2(c), Optionee’s right under this Option Certificate to exercise this Option shall vest with respect to: (1) 25% of the shares of Stock which may be purchased under this Option Certificate (rounding down to the nearest whole number of shares of Stock) on [Date], such date being approximately twelve (12) months from the Grant Date, provided he or she remains continuously employed by the Company or continues to provide services to the Company through such date, and (2) with respect to the remaining 75% of such shares of Stock, in as nearly equal amounts as possible, on the [Xth] day of each of the next thirty-six (36) months thereafter, beginning on [Date] provided he or she remains continuously employed by the Company or continues to provide services to the Company through each such date.

(b)

Option Expiration Rules.

(1)

Non-Vested Shares. If Optionee’s employment or service with the Company terminates for any reason whatsoever, including death, Disability or retirement, while there are any non-vested shares of Stock subject to this Option under § 2(a), this Option immediately upon such termination of employment or service shall expire and shall have no further force or effect and be null and void with respect to such non-vested shares of Stock.

(2)

Vested Shares. Optionee’s right to exercise all or any part of this Option which has vested under § 2(a) shall expire no later than the tenth anniversary of the Grant Date. However, if Optionee’s employment or service relationship with the Company terminates before the tenth anniversary of the Grant Date, Optionee’s right to exercise this Option which has vested under § 2(a) shall expire and shall have no further force or effect and shall be null and void:

(A)	on the date his or her employment or service relationship terminates if his or her employment or service relationship terminates for Cause,
(B)	on the first anniversary of the date his or her employment or service relationship terminates if his or her employment or service relationship terminates as

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	a result of his or her death or Disability, or
(C)	at the end of the 90 day period which starts on the date his or her employment or service relationship terminates if his or her employment or service relationship terminates other than (1) for Cause or (2) as a result of his or her death or Disability.

(c) Special Rules.

(1) Sale of Business Unit. The Committee, in connection with the sale of any Subsidiary, Affiliate, division or other business unit of the Company, may, within the Committee’s sole discretion, take any or all of the following actions if this Option or the rights under this Option will be adversely affected by such transaction:

(A)	accelerate the time Optionee’s right to exercise this Option will vest under § 2(a),
(B)	provide for vesting after such sale or other disposition, or
(C)	extend the time at which this Option will expire (but not beyond the tenth anniversary of the Grant Date).

(2)	Change in Control. If there is a Change in Control of the Company, this Option shall be subject to the provisions of § 14 of the Plan with respect to such Change in Control.
(3)	Affiliates. For purposes of this Option Certificate, any reference to the Company shall include any Affiliate, Parent or Subsidiary of the Company, and a transfer of employment or service relationship between the Company and any Affiliate, Parent or Subsidiary of the Company or between any Affiliate, Parent or Subsidiary of the Company shall not be treated as a termination of employment or service relationship under the Plan or this Option Certificate.
(4)	Termination of Employment or Service Relationship. For purposes of this Option Certificate, if the Optionee’s employment with the Company terminates while there are any non-vested shares of Stock subject to this Option under

-3-

§ 2(a) but the Optionee at such time then becomes an independent consultant to the Company, the Optionee’s right under this Option Certificate to exercise this Option shall continue to vest so long as the Optionee continues to provide services to the Company in accordance with § 2(a). For purposes of this Option Certificate, except as otherwise provided below, if the Optionee’s employment with the Company terminates but the Optionee at such time then becomes an independent consultant to the Company, the termination of the Optionee’s employment shall not result in the expiration of the Option under § 2(b)(1) or 2(b)(2). Notwithstanding the foregoing, the Optionee’s right to exercise all or any part of this Option which has vested under § 2(a) shall expire no later than the tenth anniversary of the Grant Date.

(5)

Fractional Shares. Optionee’s right to exercise this Option shall not include a right to exercise this Option to purchase a fractional share of Stock. If Optionee exercises this Option on any date when this Option includes a fractional share of Stock, his or her exercise right shall be rounded down to the nearest whole share of Stock and the fractional share shall be carried forward until that fractional share together with any other fractional shares can be combined to equal a whole share of Stock or this Option expires.

(a) Definitions.

(1) Cause. For purposes of this Certificate, “Cause” shall exist if (A) Optionee has engaged in conduct that in the judgment of the Committee constitutes gross negligence, misconduct or gross neglect in the performance of Optionee’s duties and responsibilities, including conduct resulting or intending to result directly or indirectly in gain or personal enrichment for Optionee at the Company’s expense, (B) Optionee has been convicted of or has pled guilty to a felony for fraud, embezzlement or theft, (C) Optionee has engaged in a breach of any policy of the Company for which termination of employment or service is a permissible consequence or Optionee has not immediately cured any performance or other issues raised by Optionee’s supervisor, (D) Optionee had knowledge of (and did not disclose to the Company in writing) any condition that could potentially impair Optionee’s ability to

-4-

perform the functions of his or her job or service relationship fully, completely and successfully, or (E) Optionee has engaged in any conduct that would constitute “cause” under the terms of his or her employment or consulting agreement, if any.

(2)

Disability. For purposes of this Certificate, “Disability” means any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months and which renders Optionee unable to engage in any substantial gainful activity. The Committee shall determine whether Optionee has a Disability. If Optionee disputes such determination, the issue shall be submitted to a competent licensed physician appointed by the Board, and the physician’s determination as to whether Optionee has a Disability shall be binding on the Company and on Optionee.

          § 3. Method of Exercise of Option. Optionee may exercise this Option in whole or in part (to the extent this Option is otherwise exercisable under § 2 with respect to vested shares of Stock) only in accordance with the rules and procedures established from time to time by the Company for the exercise of an Option. The Option Price shall be paid at exercise either in cash (including check, bank draft or money order); provided, however, that the Committee, in its sole discretion, may allow such payments to be made, in whole or in part, by (i) by tender, or attestation as to ownership, of Shares that are already owned by the Optionee that are acceptable to the Committee (“Previously Acquired Shares”); (ii) by a “net exercise” of the Option (as further described below); (iii) through cashless exercise procedure which is effected by an unrelated broker through a sale of Stock in the open market; or (iv) by a combination of such methods. In the case of a “net exercise” of an Option, the Company will not require a payment of the exercise price of the Option from the Optionee but will reduce the number of shares of Common Stock issued upon the exercise by the largest number of whole shares that has a Fair Market Value that does not exceed the aggregate exercise price for the Shares exercised under this method. Shares of Common Stock will no longer be outstanding under this Option (and will therefore not thereafter be exercisable) following the exercise of this Option to the extent of (i) shares used to pay the exercise price of this Option under the “net exercise,” and (ii) shares actually delivered to the Optionee as a result of such exercise. Previously Acquired Shares tendered or covered by an attestation as payment of an Option exercise price will be valued at their Fair Market Value on the exercise date.

          § 4. Delivery and Other Laws. The Company shall deliver appropriate and proper evidence of ownership of any Stock purchased pursuant to the exercise of

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this Option as soon as practicable after such exercise to the extent such delivery is then permissible under applicable law or rule or regulation, and such delivery shall discharge the Company of all of its duties and responsibilities with respect to this Option.

          § 5. Non-transferable. No rights granted under this Option shall be transferable by Optionee other than (a) by will or by the laws of descent and distribution or (b) to a “family member” as provided in § 10.2 of the Plan. The person or persons, if any, to whom this Option is transferred shall be treated after Optionee’s death the same as Optionee under this Option Certificate.

          § 6. No Right to Continue Service. Neither the Plan, this Option, nor any related material shall give Optionee the right to continue in employment by or perform services to the Company or shall adversely affect the right of the Company to terminate Optionee’s employment or service relationship with the Company with or without Cause at any time.

          § 7. Stockholder Status. Optionee shall have no rights as a stockholder with respect to any shares of Stock under this Option until such shares have been duly issued and delivered to Optionee, and no adjustment shall be made for dividends of any kind or description whatsoever or for distributions of rights of any kind or description whatsoever respecting such Stock except as expressly set forth in the Plan.

          § 8. Governing Law. The Plan and this Option Certificate shall be governed by the laws of the State of Delaware.

          § 9. Binding Effect. This Option Certificate shall be binding upon the Company and Optionee and their respective heirs, executors, administrators and successors.

          § 10. Tax Withholding. This Option has been granted subject to the condition that Optionee consents to whatever action the Committee directs to satisfy the minimum statutory federal and state withholding requirements, if any, which the Company determines are applicable upon the exercise of this Option.

          § 11. References. Any references to sections (§) in this Option Certificate shall be to sections (§) of this Option Certificate unless otherwise expressly stated as part of such reference.

          § 12. Availability of Copy of Plan and Plan Prospectus. A copy of the plan document and prospectus for the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan are available on the Company’s intranet portal under the “Employee Tools” section, which can be accessed by opening your web browser from your Company desktop or laptop computer. If you like to receive a paper copy of the

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plan document and/or plan prospectus, please contact:

Kevin M. Klemz
Senior Vice President, Secretary and Chief Legal Officer
ev3 Inc.
9600 54^th Avenue North
Plymouth, Minnesota 55442
(763) 398-7000
KKlemz@ev3.net

          § 13. Availability of Annual Report to Stockholders and Other SEC Filings. A copy of the Company’s most recent annual report to stockholders and other filings made with the Securities and Exchange Commission are available on the Company’s internet website, www.ev3.net, under the Investors Relations—SEC Filings section. If you like to receive a paper copy of the Company’s most recent annual report to stockholders and other filings made by the Company with the Securities and Exchange Commission, please contact Kevin M. Klemz at the address, telephone number or e-mail address above.

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EX-10.6

Exhibit 10.6

FORM OF
ev3 INC. SECOND AMENDED AND RESTATED
2005 INCENTIVE STOCK PLAN
STOCK GRANT CERTIFICATE

(Talent Acquisition, Special Recognition or Performance Recognition Grant)
(Grade 6 or Higher)

This Stock Grant Certificate evidences a Stock Grant made pursuant to the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan (the “Plan”) of [                    ] shares of restricted Stock to [                    ], who shall be referred to as “Grantee”. This Stock Grant is granted effective as of [                    ], which shall be referred to as the “Grant Date.”

ev3 INC.
By:
	Name:
	Title:

TERMS AND CONDITIONS

     § 1. Plan and Stock Grant Certificate. This Stock Grant is subject to all of the terms and conditions set forth in this Stock Grant Certificate and in the Plan. If a determination is made that any term or condition set forth in this Stock Grant Certificate is inconsistent with the Plan, the Plan shall control. All of the capitalized terms not otherwise defined in this Stock Grant Certificate shall have the same meaning in this Stock Grant Certificate as in the Plan. A copy of the Plan will be made available to Grantee upon written request to the corporate Secretary of the Company, as further described in § 12.

     § 2. Stockholder Status. Grantee shall have the right under this Stock Grant to receive cash dividends on all of the shares of Stock subject to this Stock Grant and to vote such shares until Grantee’s right to such shares is forfeited. If Grantee forfeits any shares under § 3, Grantee shall at the same time forfeit Grantee’s right to vote such shares and to receive cash dividends paid with respect to such shares. Any Stock dividends or other distributions of property made with respect to shares that remain subject to forfeiture under § 3 shall be held by the Company, and Grantee’s rights to receive such dividends or other property shall be forfeited or shall be nonforfeitable at the same time the shares of Stock with respect to which the dividends or other property are attributable are forfeited or become nonforfeitable. Except for the rights to receive cash dividends and vote the shares of Stock subject to this Stock Grant

which are described in this § 2, Grantee shall have no rights as a Stockholder with respect to such shares of Stock until Grantee’s interest in such shares has become nonforfeitable.

     § 3. Vesting and Forfeiture.

(a) Vesting. Subject to § 3(b), Grantee’s interest in the Stock subject to this Stock Grant shall become nonforfeitable as follows:

(1)	Grantee’s interest in [                    ] of the shares of Stock subject to this Stock Grant shall become nonforfeitable on November 15, 20___, so long as Grantee continuously provides services to the Company or its Affiliates (whether as an employee or as a consultant) through such date;
(2)	Grantee’s interest in an additional [                    ] of the shares of Stock subject to this Stock Grant shall become nonforfeitable on November 15, 20___, so long as Grantee continuously provides services to the Company or its Affiliates (whether as an employee or as a consultant) through such date;
(3)	Grantee’s interest in an additional [                    ] of the shares of Stock subject to this Stock Grant shall become nonforfeitable on November 15, 20___, so long as Grantee continuously provides services to the Company or its Affiliates (whether as an employee or as a consultant) through such date; and
(4)	Grantee’s interest in all remaining shares of Stock subject to this Stock Grant shall become nonforfeitable on November 15, 20___, so long as Grantee continuously provides services to the Company or its Affiliates (whether as an employee or as a consultant) through such date.

(b) Forfeiture. If Grantee’s continuous service relationship (including service as an employee and as a consultant) with the Company and its Affiliates terminates for any reason whatsoever before his or her interest in all of the shares of Stock subject to this Stock Grant have become nonforfeitable under § 3(a), then he or she shall (except as provided in § 14 of the Plan) forfeit all of the shares of Stock subject to this Stock Grant except those shares in which he or she has (pursuant to § 3(a)) a nonforfeitable interest on the date Grantee’s service relationship with the Company and its Affiliates so terminates.

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     § 4. Issuance of Shares. The Company shall issue the shares of Stock subject to this Stock Grant in book entry. The Secretary of the Company shall direct the Company’s transfer agent not to honor any requests by the Grantee to transfer the shares of Stock subject to this Stock Grant or to issue a physical stock certificate representing such shares and any distributions made with respect to such shares (other than ordinary cash dividends) until such time as Grantee’s interest in such shares has become nonforfeitable. As soon as practicable after each date as of which Grantee’s interest in any shares becomes nonforfeitable under § 3(a), the Company shall direct the Company’s transfer agent to honor any requests thereafter by the Grantee to transfer the shares in which his or her interest has become nonforfeitable on such date (together with any distributions made with respect to such shares that have been held by the Company) or to issue a physical stock certificate representing such shares. If shares are forfeited under § 3(a), the shares (together with any distributions made with respect to the shares that have been held by the Company) automatically shall revert back to the Company.

     § 5. Nontransferable. No rights granted under this Stock Grant Certificate shall be transferable by Grantee other than by will or by the laws of descent and distribution.

     § 6. Other Laws. The Company shall have the right to refuse to transfer shares of Stock subject to this Stock Grant to Grantee if the Company acting in its absolute discretion determines that the transfer of such shares might violate any applicable law or regulation.

     § 7. Taxes.

(a)

Generally. Grantee is ultimately liable and responsible for all U.S. federal income and other taxes, including any state, local or non-U.S. income or employment tax obligation, that may be owed by Grantee in connection with this Stock Grant and the underlying shares of Stock, regardless of any action the Company or any of its Subsidiaries takes or any transaction pursuant to this § 7 with respect to any tax withholding obligations that arise in connection with this Stock Grant. As a condition and term of this Stock Grant, no election under Section 83(b) of the Code may be made by Grantee or any other person with respect to all or any portion of this Stock Grant. The Company makes no representation or undertaking regarding the treatment of any tax withholding in connection with the grant, issuance and vesting of this Stock Grant or the subsequent sale of any of the shares of Stock underlying this Stock Grant that vest. The Company does not commit and is under no obligation to structure this Stock Grant to reduce or eliminate Grantee’s tax liability.

(b)

Payment of Withholding Taxes. Grantee will be subject to U.S. federal and state income and other tax withholding requirements on

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one or more dates (generally, the date or dates that shares of Stock underlying this Stock Grant vest or become nonforfeitable pursuant to § 3(a) of this Stock Grant) determined by applicable law (any such date, the “Taxable Date”). Grantee will be solely responsible for the payment of all U.S. federal income and other taxes, including any state, local or non-U.S. income or employment tax obligation that may be related to this Stock Grant and the underlying shares of Stock, including any such taxes that are required to be withheld and paid over to the applicable tax authorities (each such instance, a “Tax Withholding Obligation”). Grantee will be responsible for the satisfaction of each such Tax Withholding Obligation in a manner acceptable to the Company in its sole discretion. [Note: If date of grant of this Stock Grant is during a quarterly or other blackout period or if Grantee is in possession of material nonpublic information at time of grant, delete clauses (1) through (3) below and insert the following language. Otherwise, delete the following bracketed sentence] [Grantee’s acceptance of this Stock Grant constitutes Grantee’s agreement to execute and deliver to the Company a Tax Withholding Payment Authorization in substantially the form attached as Exhibit A to this Stock Grant. In the event Grantee has not executed and delivered to the Company the Tax Withholding Payment Authorization prior a Taxable Date, Grantee by acceptance of this Stock Grant authorizes the Company to withhold from the shares of Stock underlying this Stock Grant the whole number of shares of Stock with a value equal to the Fair Market Value of the shares of Stock on such Taxable Date or the first trading day before the Taxable Date, sufficient to satisfy the applicable Tax Withholding Obligation. Grantee acknowledges by acceptance of this Stock Grant that the withheld shares of Stock may not be sufficient to satisfy Grantee’s Tax Withholding Obligation. Accordingly, Grantee agrees by acceptance of this Stock Grant to pay to the Company as soon as practicable (immediately, if the Grantee is an executive officer of the Company), including through payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the withholding of shares of Stock described above.]

(1) By Sale of Shares. Grantee’s acceptance of this Stock Grant constitutes Grantee’s instructions and authorization to the Company and any brokerage firm determined acceptable to the Company for such purpose to sell on Grantee’s behalf a whole number of shares of Stock from those shares of Stock underlying the Stock Grant as indicated below in clauses (a) through (d) or as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy each applicable Tax Withholding Obligation, and to transfer that

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amount of proceeds from the sale of such shares of Stock as is sufficient to satisfy each applicable Tax Withholding Obligation from Grantee’s securities account established with the Company’s designated brokerage service provider for its Stock Grants to any account held in the name of the Company. Prior to any such sales of Stock by the brokerage firm on behalf of Grantee, the Company will communicate to such brokerage firm the amount of cash proceeds that must be generated by such sales of Stock to satisfy the applicable Tax Withholding Obligation. Such shares of Stock (and any additional shares as indicated in clauses (a) through (d) below), will be sold automatically by the brokerage firm on behalf of Grantee on each Taxable Date or as soon thereafter as practicable in accordance with Grantee’s instructions hereby to sell such shares. Grantee will be responsible for all brokers’ fees and other costs of sale, which fees and costs may be deducted from the proceeds of such sales of shares of Stock, and Grantee agrees to indemnify and hold the Company and any brokerage firm selling such shares of Stock harmless from any losses, costs, damages or expenses relating to such sales. Grantee covenants to execute any such documents as are requested by any brokerage firm selling such shares and payment of the tax obligations to the Company. To the extent the proceeds of such sales exceed Grantee’s Tax Withholding Obligation at any given time, such excess cash will be deposited into Grantee’s securities account established with the Company’s designated brokerage firm. Such shares of Stock will be sold through the Company’s designated brokerage firm at market prices; however the price Grantee receives will reflect a weighted average sales price based on the sales price of shares of Stock on behalf of Grantee and others for whom the designated brokerage firm may be selling shares on the relevant day(s), and Grantee acknowledges that the Company or its designee is under no obligation to arrange for such sales at any particular price, and that the proceeds of such sales may not be sufficient to satisfy Grantee’s Tax Withholding Obligation. Accordingly, Grantee agrees to pay to the Company as soon as practicable (immediately, if the Grantee is an executive officer of the Company), including through payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the sales of shares of Stock described below. Unless otherwise authorized by the Company in its sole discretion, the sales of shares of Stock on behalf of Grantee and in accordance with Grantee’s instructions

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hereby will be the primary method used by the Company to satisfy each applicable Tax Withholding Obligation. By acceptance of this Stock Grant, Grantee:

(a)	hereby instructs the Company’s designated brokerage firm to sell on Grantee’s behalf on                      [Insert first vesting date] (or as soon thereafter as reasonably practicable):
	Instructions to Grantee: Check one of the three boxes below and insert either a percentage or a fixed number of shares if you check one of the first two boxes below.
	Percentage of Underlying Vested Shares:
	o ___% of the shares of Stock underlying the Stock Grant and vesting as of the vesting date indicated above (rounded up to a whole number of shares); provided, however, that if such percentage represents less than that number of shares as the Company determines to be appropriate to generate sufficient cash proceeds to satisfy the applicable Tax Withholding Obligation, the Company’s designated brokerage firm shall sell such higher number of shares as determined by the Company to be appropriate.
	Fixed Number of Underlying Vested Shares:
	o                      of the shares of Stock underlying the Stock Grant and vesting as of the vesting date indicated above; provided, however, that if such number of shares represents less than that number of shares as the Company determines to be appropriate to generate sufficient cash proceeds to satisfy the applicable Tax Withholding Obligation, the Company’s designated brokerage firm shall sell such higher number of shares as determined by the Company to be appropriate.
	Minimum Number of Underlying Vested Shares As Determined by the Company:
	o That number of whole number of shares of Stock from those shares of Stock underlying the Stock Grant as the Company determines to be

6

	appropriate as evident by the Company’s instructions to the brokerage firm of the amount of cash proceeds that must be generated by such sales of Stock to satisfy the applicable Tax Withholding Obligation.
(b)	hereby instructs the Company’s designated brokerage firm to sell on Grantee’s behalf on                      [Insert second vesting date] (or as soon thereafter as reasonably practicable):
	Instructions to Grantee: Check one of the three boxes below and insert either a percentage or a fixed number of shares if you check one of the first two boxes below.
	Percentage of Underlying Vested Shares:
	o ___% of the shares of Stock underlying the Stock Grant and vesting as of the vesting date indicated above (rounded up to a whole number of shares); provided, however, that if such percentage represents less than that number of shares as the Company determines to be appropriate to generate sufficient cash proceeds to satisfy the applicable Tax Withholding Obligation, the Company’s designated brokerage firm shall sell such higher number of shares as determined by the Company to be appropriate.
	Fixed Number of Underlying Vested Shares:
	o                      of the shares of Stock underlying the Stock Grant and vesting as of the vesting date indicated above; provided, however, that if such number of shares represents less than that number of shares as the Company determines to be appropriate to generate sufficient cash proceeds to satisfy the applicable Tax Withholding Obligation, the Company’s designated brokerage firm shall sell such higher number of shares as determined by the Company to be appropriate.
	Minimum Number of Underlying Vested Shares As Determined by the Company:
	o That number of whole number of shares of Stock from those shares of Stock underlying the

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	Stock Grant as the Company determines to be appropriate as evident by the Company’s instructions to the brokerage firm of the amount of cash proceeds that must be generated by such sales of Stock to satisfy the applicable Tax Withholding Obligation.
(c)	hereby instructs the Company’s designated brokerage firm to sell on Grantee’s behalf on                      [Insert third vesting date] (or as soon thereafter as reasonably practicable):
	Instructions to Grantee: Check one of the three boxes below and insert either a percentage or a fixed number of shares if you check one of the first two boxes below.
	Percentage of Underlying Vested Shares:
	o ___% of the shares of Stock underlying the Stock Grant and vesting as of the vesting date indicated above (rounded up to a whole number of shares); provided, however, that if such percentage represents less than that number of shares as the Company determines to be appropriate to generate sufficient cash proceeds to satisfy the applicable Tax Withholding Obligation, the Company’s designated brokerage firm shall sell such higher number of shares as determined by the Company to be appropriate.
	Fixed Number of Underlying Vested Shares:
	o                      of the shares of Stock underlying the Stock Grant and vesting as of the vesting date indicated above; provided, however, that if such number of shares represents less than that number of shares as the Company determines to be appropriate to generate sufficient cash proceeds to satisfy the applicable Tax Withholding Obligation, the Company’s designated brokerage firm shall sell such higher number of shares as determined by the Company to be appropriate.
	Minimum Number of Underlying Vested Shares As Determined by the Company:

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	o That number of whole number of shares of Stock from those shares of Stock underlying the Stock Grant as the Company determines to be appropriate as evident by the Company’s instructions to the brokerage firm of the amount of cash proceeds that must be generated by such sales of Stock to satisfy the applicable Tax Withholding Obligation.
(d)	hereby instructs the Company’s designated brokerage firm to sell on Grantee’s behalf on                      [Insert fourth vesting date] (or as soon thereafter as reasonably practicable):
	Instructions to Grantee: Check one of the three boxes below and insert either a percentage or a fixed number of shares if you check one of the first two boxes below.
	Percentage of Underlying Vested Shares:
	o ___% of the shares of Stock underlying the Stock Grant and vesting as of the vesting date indicated above (rounded up to a whole number of shares); provided, however, that if such percentage represents less than that number of shares as the Company determines to be appropriate to generate sufficient cash proceeds to satisfy the applicable Tax Withholding Obligation, the Company’s designated brokerage firm shall sell such higher number of shares as determined by the Company to be appropriate.
	Fixed Number of Underlying Vested Shares:
	o                      of the shares of Stock underlying the Stock Grant and vesting as of the vesting date indicated above; provided, however, that if such number of shares represents less than that number of shares as the Company determines to be appropriate to generate sufficient cash proceeds to satisfy the applicable Tax Withholding Obligation, the Company’s designated brokerage firm shall sell such higher number of shares as determined by the Company to be appropriate.

9

Minimum Number of Underlying Vested Shares As Determined by the Company:

o That number of whole number of shares of Stock from those shares of Stock underlying the Stock Grant as the Company determines to be appropriate as evident by the Company’s instructions to the brokerage firm of the amount of cash proceeds that must be generated by such sales of Stock to satisfy the applicable Tax Withholding Obligation.

	Grantee acknowledges by acceptance of this Stock Grant that its instructions pursuant to this § 7(b)(1) to sell shares of Stock underlying this Stock Grant to satisfy each and every applicable Tax Withholding Obligation are intended to and shall constitute that number of separate trading instructions in compliance with the requirements of Rule 10b5-1(c)(1)(i)(A)(2) under the Securities Exchange Act of 1934, as amended, as the number of separate applicable Tax Withholding Obligations hereunder, and shall be interpreted to comply with the requirements of Rule 10b5-1(c).
	Grantee acknowledges by acceptance of this Stock Grant that Grantee is not aware of any material nonpublic information with respect to the Company or any securities of the Company as of the date of Grantee’s acceptance of this Stock Grant and as of Grantee’s instructions hereby to sell shares of Stock underlying this Stock Grant to satisfy each and every applicable Tax Withholding Obligation pursuant to Rule 10b5-1(c)(1)(i)(A)(2).
(2)	By Share Withholding. If so elected in the sole discretion of the Company, then in lieu of any market sale pursuant to § 7(b)(1) Grantee by acceptance of this Stock Grant authorizes the Company to withhold from the shares of Stock underlying this Stock Grant the whole number of shares of Stock with a value equal to the Fair Market Value of the shares of Stock on the Taxable Date or the first trading day before the Taxable Date, sufficient to satisfy the applicable Tax Withholding Obligation. Grantee acknowledges that if the Company elects to withhold shares pursuant to this § 7(b)(2) in lieu of any market sale pursuant to § 7(b)(1)(a), (b), (c) or (d), as the case may be, the maximum number of shares to be withheld by the Company will be that number of whole shares of Stock with a value equal to the Fair Market Value of the shares of Stock on the

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taxable Date or the first trading day before the Taxable Date sufficient to satisfy the applicable Tax Withholding Obligation and that any additional shares Grantee may have previously instructed the Company’s designated brokerage firm to sell pursuant to § 7(b)(1)(a), (b), (c) or (d), as the case may be, will not be sold or withheld by the Company. Grantee acknowledges by acceptance of this Stock Grant that any withheld shares of Stock pursuant to this § 7(b)(2) may not be sufficient to satisfy Grantee’s Tax Withholding Obligation. Accordingly, Grantee agrees by acceptance of this Stock Grant to pay to the Company as soon as practicable (immediately, if the Grantee is an executive officer of the Company), including through payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the withholding of shares of Stock described above.

(3)

By Check, Wire Transfer or Other Means. At any time not more than twenty (20) business days and not less than five (5) business days before any Tax Withholding Obligation arises, Grantee may elect to terminate one or more of Grantee’s instructions pursuant to § 7(b)(1)(a), (b), (c) and/or (d) to sell shares of Stock to satisfy such Tax Withholding Obligation and to satisfy such Tax Withholding Obligation by delivering to the Company an amount the Company determines is sufficient to satisfy such Tax Withholding Obligation by wire transfer to such account as the Company may direct, delivery of a check payable to the Company at the Company’s principal executive officers (Attention: Stock Administration) or such other means as the Company may establish or permit. Any such election by Grantee to satisfy any Tax Withholding Obligation by wire transfer, delivery of a check or such other means will constitute a termination of Grantee’s instruction pursuant to § 7(b)(1)(a), (b), (c) or (d) above with respect to that particular Tax Withholding Obligation only and will not affect Grantee’s instructions pursuant to § 7(b)(1)(a), (b), (c) or (d), as the case may be, above with respect to future Tax Withholding Obligations. If Grantee does not satisfy such Tax Withholding Obligation by delivering to the Company an amount the Company determines is sufficient to satisfy such Tax Withholding Obligation by wire transfer, delivery of a check or such other means as the Company has permitted, the Company in its sole discretion may withhold pursuant to § 7(b)(2) above from the shares of Stock underlying this Stock Grant such number of whole shares of Stock with a value equal to the Fair Market Value of the shares of Stock on the Taxable Date or the first trading day before the Taxable Date

11

sufficient to satisfy the applicable Tax Withholding Obligation, or may withhold an amount of the Grantee’s current or future compensation in an amount that satisfies such Tax Withholding Obligation.

(c) Estimated Tax Withholding. Grantee by acceptance of this Stock Grant understands and acknowledges that the withholding taxes to be collected by the Company from Grantee in connection with this Stock Grant pursuant to § 7(b) above are only an estimate of Grantee’s ultimate tax liability in connection with this Stock Grant and that Grantee may be required to pay additional income tax upon filing his or her annual tax return. Grantee by acceptance of this Stock Grant understands that the Company cannot provide Grantee tax advice and that Grantee should consult with his or her tax advisor on such issues.

     § 8. No Right to Continue Service. None of the Plan, this Stock Grant Certificate, or any related material shall give Grantee the right to remain employed by the Company or its Affiliates or to continue in the service of the Company or its Affiliates in any other capacity.

     § 9. Governing Law. The Plan and this Stock Grant Certificate shall be governed by the laws of the State of Delaware.

     § 10. Binding Effect. This Stock Grant Certificate shall be binding upon the Company and Grantee and their respective heirs, executors, administrators and successors.

     § 11. Headings and Sections. The headings contained in this Stock Grant Certificate are for reference purposes only and shall not affect in any way the meaning or interpretation of this Stock Grant Certificate. All references to sections in this Stock Grant Certificate shall be to sections of this Stock Grant Certificate unless otherwise expressly stated as part of such reference.

     § 12. Availability of Copy of Plan and Plan Prospectus. A copy of the plan document and prospectus for the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan are available on the Company’s intranet portal under the “Employee Tools” section, which can be accessed by opening your web browser from your Company desktop or laptop computer. If you like to receive a paper copy of the plan document and/or plan prospectus, please contact:

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Kevin M. Klemz
Senior Vice President, Secretary and Chief Legal Officer
ev3 Inc.
9600 54^th Avenue North
Plymouth, Minnesota 55442
(763) 398-7000
KKlemz@ev3.net

     § 13. Availability of Annual Report to Stockholders and Other SEC Filings. A copy of the Company’s most recent annual report to stockholders and other filings made with the Securities and Exchange Commission are available on the Company’s internet website, www.ev3.net, under the Investors Relations—SEC Filings section. If you like to receive a paper copy of the Company’s most recent annual report to stockholders and other filings made by the Company with the Securities and Exchange Commission, please contact Kevin M. Klemz at the address, telephone number or e-mail address above.

Grantee acknowledges receipt of a copy of the Plan, represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Stock Grant subject to all of the terms and provisions hereof and thereof. Grantee has reviewed this Stock Grant Certificate and the Plan in their entirety, has had an opportunity to obtain the advice of counsel and fully understands all provisions of this Stock Grant Certificate and the Plan.

DATED:	SIGNED
		Grantee
	Address:

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EX-10.7

Exhibit 10.7

ev3 INC.
SECOND AMENDED AND RESTATED 2005 INCENTIVE STOCK PLAN

ADDENDUM
Terms and Conditions for French Stock Grants
The following terms and conditions will apply in the case of
Stock Grants under the ev3 Inc. Second Amended and Restated 2005 Incentive
Stock Plan to French residents and to those individuals who
are otherwise subject to the laws of France.

As a matter of principle, any provision included in the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan (the “Plan”) or any other document evidencing the terms and conditions of the Plan or a stock grant under the Plan that would contravene any substantive principle set out in Articles L.225-197-1 to L.225-197-5 of the French Code de Commerce shall not be applicable to participants who are residents of France.

ev3 INC. SECOND AMENDED AND RESTATED
2005 INCENTIVE STOCK PLAN
STOCK GRANT CERTIFICATE

This Stock Grant Certificate evidences a Stock Grant made pursuant to the ev3 Inc. Second Amended and Restated 2005 Incentive Stock Plan (the “Plan”) of [                    ] shares of restricted Stock to [                    ], who shall be referred to as “Grantee”. This Stock Grant is granted effective as of [                    ], which shall be referred to as the “Grant Date.”

ev3 INC.
By:
	Name:
	Title:

§1. Plan and Stock Grant. This Stock Grant is subject to all of the terms and conditions set forth in i) this Stock Grant Certificate including the Addendum or “sub-plan” covering stock grants to residents of France ii) in the Plan. In the event of any inconsistency between the Plan and the sub-plan, the sub-plan shall control. All of the capitalized terms not otherwise defined in this Stock Grant Certificate shall have the same meaning in this Stock Grant Certificate as in the Plan.

§2. Stockholder Status. Grantee shall have no rights as a Stockholder with respect to the shares of Stock subject to this Stock Grant until such shares have been issued pursuant to § 4 of this Stock Grant Certificate. Notwithstanding the generality of the foregoing, Grantee shall not be entitled to vote any of the shares of Stock subject to this Stock Grant until such shares have been issued pursuant to § 4 of this Stock Grant Certificate or receive any dividends declared prior to the issuance of such shares or otherwise exercise any incidents of ownership with respect to such shares of Stock until such shares have been issued pursuant to § 4 of this Stock Grant Certificate.

§3. Stock Ownership Limitation

(a) No share of Stock may be issued under this Stock Grant Certificate if Grantee owns 10% or more of the voting power of all classes of stock of the Company at the time of issuance of such share.

(b) The number of shares of Stock that may be issued to the Grantee under this Stock Grant Certificate, on a cumulative basis, shall not exceed 10% of the total number of shares of Stock of the Company.

(c) Any share of Stock issued to Grantee in violation of this § 3 shall not be deemed to have been issued to Grantee.

§4. Conditions to Issuance of Shares.

(a) Conditions to Issuance of Shares. Subject to § 3 above and §4(b) and §4(c) below, the shares of Stock subject to this Stock Grant shall be issued in such increments and at such times as follows:

(1)	50% of the shares of Stock subject to this Stock Grant (rounding down to the nearest whole number of shares of Stock) shall be issued on [                    ], which date shall not be before the expiration of a two (2) year period from the Grant Date; provided, however, that the Grantee continuously provides services to the Company or its Affiliates through such date,
(2)	An additional 25% of the shares of Stock subject to this Stock Grant (rounding down to the nearest whole number of shares of Stock) shall be issued on [                    ], which date shall not be before the expiration of a three (3) year period from the Grant Date; provided, however, that the Grantee continuously provides services to the Company or its Affiliates through such date, and
(3)	The remaining 25% of the shares of Stock subject to this Stock Grant (rounding down to the nearest whole number of shares of Stock) shall be issued on [                    ], which date shall not be before the expiration of a three (3) year period from the Grant Date;

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provided, however, that the Grantee continuously provides services to the Company or its Affiliates through such date.

(b) Forfeiture of Rights to Receive Unissued Shares. If Grantee’s continuous service relationship with the Company and its Affiliates terminates for any reason whatsoever, other than Grantee’s death, before all of the shares of Stock subject to this Stock Grant are issued pursuant to § 4(a), then he or she shall (except as provided in § 14 of the Plan) forfeit his or her rights to receive all of the remaining shares of Stock subject to this Stock Grant that have not been issued as of the date Grantee’s service relationship with the Company and its Affiliates so terminates.

(c) Issuance of Shares Upon Death of Grantee. If Grantee’s continuous service relationship with the Company and its Affiliates terminates as a result of Grantee’s death before all of the shares of Stock subject to this Stock Grant are issued pursuant to § 4(a), then all of the remaining shares of Stock subject to this Stock Grant that have not been issued as of the date Grantee’s service relationship with the Company and its Affiliates so terminates will be issued to Grantee’s heirs upon their request as provided under applicable law. The shares of Stock may be issued at any time within six (6) months following the date of death by the Grantee’s estate or by a person who acquired the right to receive the shares by bequest or inheritance.

§5. Mandatory Holding Period. If Grantee (or Grantee’s heirs if required by the French Law) is issued shares of Stock pursuant to § 4, Grantee (or Grantee’s heirs) must hold such shares of Stock for a minimum period of two (2) years from the date of issuance of such shares of Stock.

§6. Changes in Shares. The tax and social security treatment of any adjustment provided for in Section 13 of the Plan to the number of shares to be issued shall have to be appreciated in consideration of the applicable provisions of the French Code of Commerce.

§7. Book Entry; Stock Certificates. As soon as practicable after each date as of which shares of Stock subject to this Stock Grant are issued pursuant to § 4, the Company shall direct its transfer agent to issue such number of shares of Stock issued pursuant to § 4 in the name of Grantee (or Grantee’s heirs) in book entry or to issue one or more physical stock certificates representing such shares in the name of Grantee provided, however, that such book entry notations and/or stock certificate(s) shall contain a restrictive legend regarding the mandatory holding period as provided in § 5.

§8. Nontransferable. No rights granted under this Stock Grant Certificate shall be transferable by Grantee other than by will or by the laws of descent and distribution.

§9. Other Laws. The Company shall have the right to refuse to issue or transfer shares of Stock subject to this Stock Grant to Grantee (or Grantee’s heirs) if the

3 

Company acting in its absolute discretion determines that the issuance or transfer of such shares might violate any applicable law or regulation.

§10. No Right to Continue Service. None of the Plan (including the sub-plan), this Stock Grant Certificate, or any related material shall give Grantee the right to remain employed by the Company or its Affiliates or to continue in the service of the Company or its Affiliates in any other capacity.

§11. Governing Law. The Plan (including the sub-plan) and this Stock Grant Certificate shall be governed by the laws of the State of Delaware of the United States of America.

§12. Binding Effect. This Stock Grant Certificate shall be binding upon the Company and Grantee and their respective heirs, executors, administrators and successors.

§13. Headings and Sections. The headings contained in this Stock Grant Certificate are for reference purposes only and shall not affect in any way the meaning or interpretation of this Stock Grant Certificate. All references to sections in this Stock Grant Certificate shall be to sections of this Stock Grant Certificate unless otherwise expressly stated as part of such reference.

Granted acknowledges receipt of a copy of the Plan, represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Stock Grant subject to all of the terms and provisions hereof and thereof. Granted has reviewed this Stock Grant Certificate and the Plan in their entirety, has had an opportunity to obtain the advice of counsel and fully understands all provisions of this Stock Grant Certificate and the Plan.

DATED:	SIGNED
		Beneficiary
	Address:

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EX-31.1

Exhibit 31.1

Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 and SEC Rule 13a-14(a)

I, Robert J. Palmisano, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ev3 Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2008	/s/ Robert J. Palmisano
	Robert J. Palmisano
	President and Chief Executive Officer (principal executive officer)

EX-31.2

Exhibit 31.2

Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 and SEC Rule 13a-14(a)

I, Patrick D. Spangler, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ev3 Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2008	/s/ Patrick D. Spangler
	Patrick D. Spangler
	Senior Vice President and Chief Financial Officer (principal financial officer)

EX-32.1

Exhibit 32.1

Certification of CEO Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of ev3 Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 28, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert J. Palmisano, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2008	/s/ Robert J. Palmisano
	Robert J. Palmisano
	President and Chief Executive Officer (principal executive officer)

EX-32.2

Exhibit 32.2

Certification of CFO Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of ev3 Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 28, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Patrick D. Spangler, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 6, 2008	/s/ Patrick D. Spangler
	Patrick D. Spangler
	Senior Vice President and Chief Financial Officer (principal financial officer)