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 30, 2014

OR

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

Commission File Number 000-52045

Volcano Corporation

(Exact name of registrant as specified in its charter)

Delaware	33-0928885
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
3721 Valley Centre Drive, Suite 500 San Diego, CA	92130
(Address of principal executive offices)	(Zip Code)

(800) 228-4728

(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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   þ    No  ¨

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

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

Indicate the number of shares of each of the issuer’s classes of common stock, as of the latest practicable date:

Class	Outstanding at October 31, 2014
Common stock, $0.001 par value	51,603,468

VOLCANO CORPORATION

Quarterly Report on Form 10-Q for the quarter ended September 30, 2014

Index

	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	a. Condensed Consolidated Balance Sheets	1
	b. Condensed Consolidated Statements of Operations	2
	c. Condensed Consolidated Statements of Comprehensive Loss	3
	d. Condensed Consolidated Statements of Stockholders’ Equity	4
	e. Condensed Consolidated Statements of Cash Flows	5
	f. Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	41
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 6.	Exhibits	64
Signatures		66
Exhibit Index		67

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VOLCANO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

	September 30,			December 31,
	2014			2013
Assets
Current assets:
Cash and cash equivalents	$	31,959		$	107,159
Short-term available-for-sale investments	140,894			230,775
Accounts receivable, net	78,755			81,962
Inventories	76,342			60,970
Prepaid expenses and other current assets	34,485			28,525
Total current assets	362,435			509,391
Long-term available-for-sale investments	44,244			34,750
Property and equipment, net	122,077			118,094
Intangible assets, net	124,807			58,108
Goodwill	150,882			55,087
Other non-current assets	60,611			56,489
Total assets	$	865,056		$	831,919
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	11,152		$	19,137
Accrued compensation	28,168			26,918
Accrued expenses and other current liabilities	27,060			28,453
Deferred revenues	11,203			10,652
Current maturities of convertible senior notes	23,882			—
Contingent consideration	365			3,750
Total current liabilities	101,830			88,910
Convertible senior notes	392,045			401,012
Deferred revenues	4,797			5,079
Contingent consideration, non-current portion	53,379			29,888
Other non-current liabilities	7,727			7,228
Total liabilities	559,778			532,117
Commitments and contingencies (Note 4)
Stockholders’ equity:
Preferred stock, par value of $0.001; 10,000 shares authorized; no shares issued and outstanding at September 30, 2014 and December 31, 2013	—			—
Common stock, par value of $0.001; 250,000 shares authorized at September 30, 2014 and December 31, 2013; 51,603 and 51,530 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively	52			52
Additional paid-in capital	443,329			420,234
Accumulated other comprehensive loss	(3,085		)	(4,088		)
Accumulated deficit	(135,018		)	(116,396		)
Total stockholders’ equity	305,278			299,802
Total liabilities and stockholders’ equity	$	865,056		$	831,919

See notes to unaudited condensed consolidated financial statements.

1

VOLCANO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues	$	97,457		$	95,809		$	294,590		$	290,384
Cost of revenues, excluding amortization of intangibles	37,292			33,458			110,086			102,624
Gross profit	60,165			62,351			184,504			187,760
Operating expenses:
Selling, general and administrative	47,400			45,479			147,064			134,784
Research and development	13,508			16,609			41,165			50,214
Amortization of intangibles	2,804			834			6,405			2,488
Acquisition-related items	1,596			1,253			(3,809		)	3,742
Restructuring (benefits) charges	(229		)	4,616			(197		)	4,874
Total operating expenses	65,079			68,791			190,628			196,102
Operating loss	(4,914		)	(6,440		)	(6,124		)	(8,342		)
Interest income	237			327			833			970
Interest expense	(7,370		)	(6,756		)	(21,868		)	(19,908		)
Exchange rate gain (loss)	20			54			91			(1,025		)
Other, net	56			(33		)	180			4,144
Loss before income tax	(11,971		)	(12,848		)	(26,888		)	(24,161		)
Income tax benefit	(3,971		)	(4,392		)	(8,266		)	(10,156		)
Net loss	$	(8,000	)	$	(8,456	)	$	(18,622	)	$	(14,005	)
Net loss per share:
Basic	$	(0.16	)	$	(0.15	)	$	(0.36	)	$	(0.26	)
Diluted	$	(0.16	)	$	(0.15	)	$	(0.36	)	$	(0.26	)
Shares used in calculating net loss per share:
Basic	51,529			54,652			51,596			54,466
Diluted	51,529			54,652			51,596			54,466

See notes to unaudited condensed consolidated financial statements.

2

VOLCANO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net loss	$	(8,000	)	$	(8,456	)	$	(18,622	)	$	(14,005	)
Other comprehensive (loss) income
Foreign currency translation adjustments	(2,797		)	1,522			(1,044		)	1,527
Changes in unrealized (loss) gain on available-for-sale investments, net of tax	(92		)	190			(132		)	(4		)
Changes in unrealized gain (loss) on foreign currency forward exchange contracts, net of tax	2,799			(422		)	2,179			(414		)
Other comprehensive (loss) income	(90		)	1,290			1,003			1,109
Comprehensive loss	$	(8,090	)	$	(7,166	)	$	(17,619	)	$	(12,896	)

See notes to unaudited condensed consolidated financial statements.

3

VOLCANO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount
Balance at December 31, 2013	51,530		$	52		$	420,234		$	(4,088	)	$	(116,396	)	$	299,802
Issuance of common stock under equity compensation plans	1,222		1			12,662			—			—			12,663
Employee stock-based compensation cost	—		—			10,726			—			—			10,726
Common stock repurchase/retirement	(1,149	)	(1		)	2			—			—			1
Tax expense related to stock-based compensation	—		—			(295		)	—			—			(295		)
Net loss	—		—			—			—			(18,622		)	(18,622		)
Other comprehensive income	—		—			—			1,003			—			1,003
Balance at September 30, 2014	51,603		$	52		$	443,329		$	(3,085	)	$	(135,018	)	$	305,278

See notes to unaudited condensed consolidated financial statements.

4

VOLCANO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended September 30,
	2014			2013
Operating activities
Net loss	$	(18,622	)	$	(14,005	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	24,022			18,677
Amortization (accretion) of investment premium (discount), net	2,567			2,305
Accretion of debt discount on convertible senior notes and other liabilities	15,048			14,148
Change in contingent consideration	(4,841		)	2,537
Non-cash stock compensation expense	10,721			12,098
Asset impairment related to restructuring	818			4,616
Gain on sale of other long-term investment	(365		)	(4,153		)
Effect of exchange rate changes and others	682			10,797
Deferred income taxes	2,211			—
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	665			(3,249		)
Inventories	(14,699		)	(15,195		)
Prepaid expenses and other assets	(16,330		)	(16,834		)
Accounts payable	(9,669		)	(2,599		)
Accrued compensation	1,671			(535		)
Accrued expenses and other liabilities	25			983
Deferred revenues	486			(550		)
Net cash (used in) provided by operating activities	(5,610		)	9,041
Investing activities
Purchase of short-term and long-term available-for-sale securities	(161,882		)	(342,715		)
Sale or maturity of short-term and long-term available-for-sale securities	239,499			247,790
Cash paid related to acquisitions, net of cash acquired	(114,791		)	(15,000		)
Capital expenditures	(22,854		)	(26,533		)
Cash paid for intangible assets and other investments	(4,987		)	(2,377		)
Proceeds from sale of other long-term investments	665			5,654
Net cash used in investing activities	(64,350		)	(133,181		)
Financing activities
Repayment of capital lease and other liabilities	(179		)	(22		)
Cash paid for contingent liability related to acquisitions	(16,900		)	—
Proceeds from sale of common stock under employee stock purchase plan	3,140			3,576
Proceeds from exercise of common stock options	9,523			2,203
Net cash (used in) provided by financing activities	(4,416		)	5,757
Effect of exchange rate changes on cash and cash equivalents	(824		)	(846		)
Net decrease in cash and cash equivalents	(75,200		)	(119,229		)
Cash and cash equivalents, beginning of period	107,159			330,635
Cash and cash equivalents, end of period	$	31,959		$	211,406
Supplemental disclosures of cash flow information:
Cash paid for interest	$	4,745		$	4,542
Cash paid for income taxes	$	2,185		$	3,103

See notes to unaudited condensed consolidated financial statements.

5

VOLCANO CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2014

1. Summary of Significant Accounting Policies

Basis of Presentation and Nature of Operations

The unaudited condensed consolidated financial statements of Volcano Corporation (“we,” “us,” “our,” “Volcano” or the “Company”) contained in this quarterly report on Form 10-Q include our financial statements and the financial statements of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. Pursuant to these rules and regulations, the Company has condensed or omitted certain information and footnote disclosures it normally includes in its annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the U.S., or GAAP. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These unaudited condensed consolidated financial statements 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, 2013.

The results of operations for the nine months endedSeptember 30, 2014 are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Reclassification

Certain reclassifications have been made to the prior period condensed consolidated financial statements to conform to the current year presentation.

Net Loss Per Share

Basic net loss per share is computed by dividing consolidated net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing consolidated net loss by the weighted-average number of common shares outstanding and dilutive common stock equivalent shares outstanding during the period. Our potentially dilutive shares include outstanding common stock options, unvested restricted stock units, including those with performance or market conditions, and incremental shares issuable upon the conversion of the Convertible Senior Notes or upon exercise of the warrants relating to the Convertible Senior Notes. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share or increase net income per share as discussed in the following paragraph. For the three months endedSeptember 30, 2014 and 2013, 176,000 and 730,000 in the money option and award shares were dilutive for the period and potentially dilutive shares totaling 49.0 million and 21.5 million have not been included in the computation of diluted net income per share, as the result would be anti-dilutive. For the nine months endedSeptember 30, 2014 and 2013, 571,000 and 872,000 in the money option and award shares were dilutive for the period and potentially dilutive shares totaling 31.7 million and 20.8 million have not been included in the computation of diluted net loss per share, as the result would be anti-dilutive.

Diluted net loss per common share does not include any incremental shares related to the Convertible Senior Notes for the three and nine months endedSeptember 30, 2014 and 2013. Because the principal amount of the Convertible Senior Notes will be settled in cash upon conversion, only the conversion spread relating to the Convertible Senior Notes may be included in our calculation of diluted net loss per common share. As such, the Convertible Senior Notes have no impact on diluted net income (loss) per common share until the price of our common stock exceeds the conversion price (initially $29.64 for the 2.875% Convertible Senior Notes due 2015, or the 2015 Notes, and $32.83 for the 1.75% Convertible Senior Notes due 2017, or the 2017 Notes, or collectively, the Notes, subject to adjustments) of the Notes. In addition, the diluted net loss per common share does not include any incremental shares related to the exercise of the warrants related to the Notes for the three and nine months endedSeptember 30, 2014 and 2013. The warrants will not have an impact on diluted net income (loss) per common share until the price of our common stock exceeds the strike price of the warrants (initially $34.875 for the warrants issued in connection with the 2015 Notes offering and $37.59 for the warrants issued in connection with the 2017 Notes offering, subject to adjustments). When the market price of our stock exceeds the strike price, as applicable, we will include, in the diluted net income (loss) per common share calculation, the effect of the additional shares that may be issued upon exercise of the warrants using the treasury stock method to the extent the effect is not anti-dilutive.

6

The call options to purchase our common stock, which we purchased to hedge against potential dilution upon conversion of the Notes, are not considered for purposes of calculating the total dilutive weighted average shares outstanding, as their effect would be anti-dilutive. Upon exercise, the call options will mitigate the dilutive effect of the Notes.

On December 2, 2013, our board of directors authorized a $200 million share repurchase program. Pursuant to this approval, we entered into a $100 million accelerated share repurchase, or ASR, program with a counterparty, and received a total of 4,705,683 shares of our common stock (see Note 5 "Stockholders' Equity"), of which 3,557,137 shares of our common stock were delivered in December 2013 and 1,148,546 shares of our common stock were delivered in March 2014. The weighted average number of the shares received was removed from the denominator of the basic and diluted net loss per share calculation at the share delivery date.

The basic and diluted net loss per common share calculations for the three and nine months endedSeptember 30, 2014 and 2013 are as follows (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net loss	$	(8,000	)	$	(8,456	)	$	(18,622	)	$	(14,005	)
Weighted average common shares outstanding for basic	51,529			54,652			51,596			54,466
Weighted average common shares outstanding for diluted	51,529			54,652			51,596			54,466
Net loss per share:
Basic	$	(0.16	)	$	(0.15	)	$	(0.36	)	$	(0.26	)
Diluted	$	(0.16	)	$	(0.15	)	$	(0.36	)	$	(0.26	)

Recent Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update, or ASU, 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. The updated guidance is effective for us beginning in fiscal year 2015. The Company is currently evaluating the new standard to determine the effect, if any, on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 outlines a single comprehensive model for accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for us beginning in fiscal year 2017 and early application is not permitted. The Company is currently evaluating the new standard to determine the effect, if any, on our consolidated financial statements.

2. Acquisitions and Acquisition-Related Items

AtheroMed Acquisition

On June 17, 2014, we completed the acquisition of all outstanding equity interests in AtheroMed, Inc., or AtheroMed, a privately-held company engaged in the development of atherectomy technology used in the treatment of peripheral artery disease, or PAD. AtheroMed’s Phoenix® Atherectomy System, or Phoenix, received 510(k) clearance in January 2014, has a CE Mark, and has reimbursement in the U.S. and select countries in Europe. The primary reasons for the acquisition were to diversify our product offerings and to allow us the opportunity to better position ourselves in the peripheral vascular market. The transaction was accounted for as a business combination. The operating results of AtheroMed from the date of acquisition are included in our unaudited condensed consolidated financial statements.

We paid approximately $116.5 million in cash at closing, which amount was partially offset by our acquisition at closing of approximately $1.7 million in cash. In addition, we agreed to pay a cash milestone of $15.0 million if FDA clearance of a premarket 510(k) notification is received on or before November 15, 2014 for AtheroMed's second generation Phoenix Atherectomy System. The fair market value of this contingent consideration was estimated to be $14.0 million at acquisition. The 510(k) notification was submitted and approved by the FDA during the third quarter of 2014, and the $15.0 million cash milestone was paid during the third quarter of 2014.

7

Furthermore, we may be required to make payments upon reaching certain sales milestones. We estimate the contingent sales milestone payments to be approximately $39.4 million and the fair value of this contingent consideration was preliminarily estimated to be $29.0 million at acquisition. We determined the fair value of the contingent consideration relative to the milestone payments based on commercial sales of AtheroMed products using various estimates, including revenue projections, discount rates and amount of time until the conditions of the milestone payments are met. This fair value measurement is based on significant inputs not observable in the market, representing a Level 3 measurement within the fair value hierarchy. At September 30, 2014, for the fair value relative to the milestone payments based on the commercial sales of AtheroMed products, the key assumptions in applying the income approach include an 11% discount rate and probability-weighted expected milestone payment ranges from $32.8 million to $49.2 million based on estimated commercial sales of AtheroMed products ranging from $59.9 million to $89.9 million from 2015 to 2017. Using different valuation assumptions could result in significant differences in the fair value of the contingent consideration and accretion expense in the current or future periods.

The assets acquired, consisting primarily of developed technology valued at $61.9 million and IPR&D valued at $9.0 million, were recorded at their estimated fair values as of the acquisition date. The estimated fair value of the IPR&D was determined using the multi-period excess earnings method, a variation of the income approach. The multi-period excess earnings method estimates the value of an intangible asset equal to the present value of the incremental after tax cash flows attributable to that intangible asset. The fair value using the multi-period excess earnings method was dependent on an estimated weighted average cost of capital for AtheroMed of 11%, which represents a rate of return that a market participant would expect for these assets.

The following table sets forth the changes in the estimated fair value of the Company’s contingent liabilities measured on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	September 30, 2014
	Three months ended			Nine months ended
Fair value measurement at beginning of period / acquisition	$	43,145		$	43,000
Change in fair value measurement included in operating expenses	1,783			1,928
Contingent consideration settled	(15,053		)	(15,053		)
Fair value measurement at end of period	29,875			29,875

The excess of purchase price over the fair value amounts of the assets acquired and liabilities assumed is $95.8 million, which represents the goodwill amount resulting from the acquisition, was allocated to our medical segment and is not deductible for income tax purposes. We expect to benefit from the acquisition by expanding our product offerings to physicians thereby contributing to an expanded revenue base. Further, we expect to realize synergies by offering the products developed from the acquisition utilizing our existing sales force.

As of the date of this Quarterly Report on Form 10-Q, the Company is still finalizing the allocation of the purchase price and the valuation of its contingent consideration. Changes to the current allocation and contingent consideration may occur as additional information becomes available including, but not limited to, the valuation of inventory, fixed assets, intangible assets and deferred taxes, with such changes recorded as an adjustment to goodwill.

The acquisition was not individually or collectively considered material to the overall unaudited condensed consolidated financial statements and results of operations of the Company.

Pioneer Acquisition

On August 30, 2013, we completed the acquisition of the Pioneer Plusre-entry catheter product line, or Pioneer, from Medtronic, Inc. or Medtronic. The product line is an interventional medical device designed to enable the crossing of sub-total, total and chronic total occlusions within the peripheral vasculature, potentially eliminating the need for surgery. The primary reason for the acquisition was to increase our penetration of the peripheral vascular market with a therapeutic product offering and continue to diversify our product offerings beyond coronary applications. The transaction was accounted for as a business combination. The operating results of Pioneer from the date of acquisition were included in our unaudited condensed consolidated financial statements.

The aggregate purchase price was $15.0 million. The assets acquired, primarily $12.7 million of intangible assets, were recorded at their estimated fair values as of the acquisition date. The excess of purchase price over the fair value of the assets acquired and liabilities assumed was $1.5 million, which represented the goodwill amount resulting from the acquisition and was allocated to our medical segment and is not deductible for income tax purposes.

8

The acquisition was not individually or collectively considered material to the overall unaudited condensed consolidated financial statements and the results of the Company’s operations.

Crux Acquisition

On December 12, 2012 we completed the acquisition of all outstanding equity interests in Crux Biomedical, Inc., or Crux, a privately-held company engaged in the development of filter technology for the vascular, cardiovascular and interventional radiology markets. The primary reason for the acquisition was to diversify our product offerings, allow us the opportunity to better position ourselves in the peripheral vascular market and to increase our IVUS product sales. The transaction was accounted for as a business combination. The operating results of Crux from the date of acquisition were included in our unaudited condensed consolidated financial statements.

Under the merger agreement and the amendment to the merger agreement, we agreed to pay a cash milestone payment of $3.0 million following the achievement of written clearance by the U.S. Food and Drug Administration, or FDA, of a 510(k) notification for the commercial sale in the United States of an inferior vena cava filter retrieval device developed by Crux, provided such 510(k) notification was submitted on or before November 30, 2013. The 510(k) notification was submitted on November 30, 2013 and was approved by FDA during the first quarter of 2014. The $3.0 million cash milestone was paid during the first quarter of 2014.

In addition, subject to the terms of the merger agreement, we may be required to make payments upon reaching various sales milestones. We determined the fair value of the contingent consideration relative to the milestone payments based on commercial sales of Crux products using various estimates, including revenue projections, discount rates and amount of time until the conditions of the milestone payments are met. This fair value measurement is based on significant inputs not observable in the market, representing a Level 3 measurement within the fair value hierarchy. At September 30, 2014, for the fair value relative to the milestone payments based on the commercial sales of Crux products, the key assumptions in applying the income approach include a 10% discount rate and probability-weighted expected milestone payment ranges from $23.4 million to $64.3 million based on estimated commercial sales of Crux products ranging from $94.4 million to $204.9 million from 2014 to 2019. During the second quarter of 2014, we reduced the future revenue estimates based on our initial commercial experience. Offsetting the reduction in the liability related to the change in future revenue estimates was a reduction in the discount rate from 14% to 10% to reflect a reduction in the risk premium associated with commercialization now that the product is in full market release. Using different valuation assumptions could result in significant differences in the fair value of the contingent consideration and accretion expense in the current or future periods.

The following table sets forth the changes in the estimated fair value of the Company’s contingent liabilities (net of working capital receivable adjustment) measured on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
Fair value measurement at beginning of period	$	24,290		$	31,687	$	33,638		$	30,231
Change in fair value measurement included in operating expenses	(421		)	881		(6,769		)	2,337
Contingent consideration settled	—			—		(3,000		)	—
Fair value measurement at end of period	23,869			32,568		23,869			32,568

Sync-Rx Acquisition

On November 26, 2012, we acquired all of the outstanding equity interests in Sync-Rx Ltd., or Sync-Rx, a privately-held company, which is engaged in the development of advanced software applications that optimize and facilitate transcatheter cardiovascular interventions using automated online image processing. The Sync-Rx technology will provide us with a platform on which to build a range of advanced software features that will aid clinical decision-making by providing angiography and intra-body image enhancement, measurement and non-invasive imaging and intravascular co-registration capabilities, and future opportunities in physiology and peripheral and minimally invasive structural heart therapy guidance. The transaction was accounted for as a business combination. The operating results of Sync-Rx from the date of acquisition were included in our unaudited condensed consolidated financial statements.

In connection with the acquisition, we recorded a contingent liability of $1.1 million related to a government grant received to develop underlying technologies. The timing of repayment of the grant is contingent upon the generation of revenues derived from the technologies for which grant proceeds were received. We expect to generate revenues sufficient to

9

repay the liability in its entirety. The grant was recorded as other liabilities at its present value using various estimates, including revenue projections, discount rate and estimated years of re-payment. This fair value measurement is based on significant inputs not observable in the market, representing a Level 3 measurement within the fair value hierarchy. At acquisition, for the fair value relative to this liability, the key assumptions in applying the income approach included an 8% discount rate and estimated commercial sales derived from the underlying technology ranging from $256.1 million to $298.3 million over the expected period of re-payment of 10 to 16 years. The long-term liability will be accreted to the re-payment amount of $1.9 million plus interest, with such accretion recorded as interest expense over the expected period of re-payment. As of September 30, 2014, there were no significant changes in the range of outcomes for the contingent liability recognized as a result of the acquisition.

Acquisition-Related Items

During the three months endedSeptember 30, 2014, we recorded expense of $1.6 million from acquisition-related items, including $244,000 of transaction costs primarily associated with the AtheroMed and Sync-Rx acquisitions; and expense of $1.4 million, related to the change in fair value of the contingent consideration associated with the Crux and AtheroMed acquisitions, primarily due to passage of time.

During the nine months endedSeptember 30, 2014, we recorded income of $3.8 million from acquisition-related items, including $1.0 million of transaction costs primarily associated with the AtheroMed and Sync-Rx acquisitions; and income of $4.8 million related to the change in fair value of the contingent consideration associated with the Crux and AtheroMed acquisitions, primarily due to the revised revenue forecasts for Crux, partially offset by a change in the discount factor for Crux and the passage of time for both acquisitions.

During the three and nine months endedSeptember 30, 2013, we recorded charges of $1.3 million and $3.7 million, respectively, in acquisition-related items, including charges of $881,000 and $2.5 million, respectively, related to the change in fair value of the contingent consideration associated with the Crux acquisition, which is primarily due to the passage of time, and $358,000 and $810,000, respectively, in transaction costs primarily associated with the Crux and Pioneer acquisitions.

3. Financial Statement Details

Cash and Cash Equivalents and Available-for-Sale Investments

We invest our excess funds in U.S. government securities, corporate fixed income securities, commercial paper, certificates of deposit and money market funds. As of September 30, 2014, all of these investments were classified as available-for-sale and mature within 22 months. These investments are recorded at their estimated fair value, with unrealized gains or losses reported as a separate component of accumulated other comprehensive income or loss.

At September 30, 2014 and December 31, 2013, available-for-sale investments are detailed as follows (in thousands):

At September 30, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Short-term:
Corporate debt securities	$	140,927	$	29	$	62	$	140,894
Short-term available-for-sale investments	$	140,927	$	29	$	62	$	140,894
Long-term:
Corporate debt securities	$	44,317	$	—	$	73	$	44,244
Long-term available for sale investments	$	44,317	$	—	$	73	$	44,244

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At December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Short-term:
Corporate debt securities	$	164,570	$	72	$	4	$	164,638
U.S. Treasury and agency debt securities	66,153		2		18		66,137
Short-term available-for-sale investments	$	230,723	$	74	$	22	$	230,775
Long-term:
Corporate debt securities	$	11,697	$	30	$	—	$	11,727
U.S. Treasury and agency debt securities	23,008		15		—		23,023
Long-term available for sale investments	$	34,705	$	45	$	—	$	34,750

Available-for-sale investments that are in an unrealized loss position at September 30, 2014 and December 31, 2013 are detailed as follows (in thousands):

	At September 30, 2014
	Estimated Fair Value		Gross Unrealized Losses
Corporate debt securities	$	106,244	$	135

	At December 31, 2013
	Estimated Fair Value		Gross Unrealized Losses
Corporate debt securities	$	21,226	$	4
U.S. Treasury and agency debt securities	40,982		18
	$	62,208	$	22

Derivative Financial Instruments

Foreign Currency Forward Contracts

We are exposed to foreign currency risks through our global operations, primarily in Japan and Europe, and when we enter into transactions in non-functional currencies. Exchange rate fluctuations between the U.S. dollar and foreign currencies, primarily the Japanese yen, or yen, and the euro, could adversely affect our financial results. We use derivative financial instruments to mitigate our foreign currency exposures. We do not enter into derivative instruments for speculative purposes.

We enter into derivative financial instruments, principally forward contracts, to manage a portion of the foreign currency risk related to transactions in non-functional currencies. We record derivative financial instruments as either assets or liabilities in our unaudited condensed consolidated balance sheets and measure them at fair value. Certain of the derivative instruments we use to mitigate this exposure are not designated for hedge accounting treatment, and as a result, changes in their fair values are recorded in exchange rate gain (loss) in the unaudited condensed consolidated statement of operations.

We hedge forecasted intercompany inventory transactions that are denominated in yen and euro. Forward contracts are used to hedge forecasted intercompany inventory transactions over specific time periods. These forward contracts are designated as cash flow hedges and have maturity dates of up to 22 months. Changes in the fair value of cash flow hedges, excluding time value of the hedges which is recorded as interest expense, are reported as a component of accumulated other comprehensive income (loss), or AOCI, within stockholders' equity. Once the underlying hedged transaction occurs, we de-designate the derivative, cease to apply hedge accounting treatment to the transaction, reclassify the gain or loss recorded to date from AOCI into cost of sales, and record any further gains or losses to exchange rate gain (loss). We evaluate hedge effectiveness at the inception of the hedge and on an ongoing basis. To the extent we experience ineffectiveness in our hedges, the gains or losses accumulated in other comprehensive income associated with the ineffective portion of the hedge are reclassified immediately into exchange rate gain (loss). We adjust the level and use of derivatives as soon as practicable after learning that an exposure has changed. We review all exposures on derivative positions on a regular basis.

At September 30, 2014 and December 31, 2013, the notional amount of our outstanding forward contracts was $120.4 million and $97.3 million, respectively, of which $56.4 million and $40.3 million, respectively, were designated as cash flow hedges. At September 30, 2014, our outstanding forward contracts mature through November 2015.

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As of September 30, 2014, the deferred gain, net of tax, for those derivative contracts that qualified for hedge accounting treatment was $2.6 million, all of which will be reclassified from accumulated other comprehensive income (loss) into cost of sales at the then-current values over the next twelve months as the underlying hedged transactions are recognized.

The following tables summarize the location and fair values of derivative instruments on our unaudited condensed consolidated balance sheets (in thousands) at September 30, 2014 and December 31, 2013. The fair value amounts are presented on a gross basis and are segregated between derivatives that are designated and qualify as hedging instruments and those that are not.

	At September 30, 2014
	Asset Derivatives			Liability Derivatives
	Balance sheet location	Fair Value		Balance sheet location	Fair Value
Derivatives Designated as Hedging Instruments
Foreign exchange forward contracts	Other current assets	$	3,685	Other current liabilities	$	1
Foreign exchange forward contracts	Other long-term assets	140		Other long-term liabilities	—
Total Derivatives Designated as Hedging Instruments		3,825			1
Derivatives Not Designated as Hedging Instruments
Foreign exchange forward contracts	Other current assets	4,033		Other current liabilities	26
Total Derivatives Not Designated as Hedging Instruments		4,033			26
Total Derivatives		$	7,858		$	27

	As of December 31, 2013
	Asset Derivatives			Liability Derivatives
	Balance sheet location	Fair Value		Balance sheet location	Fair Value
Derivatives Designated as Hedging Instruments
Foreign exchange forward contracts	Other current assets	$	954	Other current liabilities	$	251
Foreign exchange forward contracts	Other long-term assets	81		Other long-term liabilities	—
Total Derivatives Designated as Hedging Instruments		1,035			251
Derivatives Not Designated as Hedging Instruments
Foreign exchange forward contracts	Other current assets	1,953		Other current liabilities	1,164
Total Derivatives Not Designated as Hedging Instruments		1,953			1,164
Total Derivatives		$	2,988		$	1,415

The Company has elected to present the fair value of derivative assets and liabilities within the unaudited condensed consolidated balance sheets on a gross basis even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation. The following table provides information (in thousands) as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria as stipulated by the terms of the master netting arrangements with each of the counterparties. Derivatives not subject to master netting arrangements are not eligible for net presentation.

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	As of September 30, 2014
				Gross Amount Not Offset on the Balance Sheet
	Gross Amount of Recognized Assets (Liabilities)			Financial Instruments			Cash Collateral (Received) or Pledged	Net Amount
Derivative Assets
Foreign exchange forward contracts	$	7,858		$	(27	)	—	$	7,831
Derivative Liabilities
Foreign exchange forward contracts	(27		)	27			—	—
Total	$	7,831		—			—	7,831

	As of December 31, 2013
				Gross Amount Not Offset on the Balance Sheet
	Gross Amount of Recognized Assets (Liabilities)			Financial Instruments			Cash Collateral (Received) or Pledged	Net Amount
Derivative Assets
Foreign exchange forward contracts	$	2,988		$	(1,415	)	—	$	1,573
Derivative Liabilities
Foreign exchange forward contracts	(1,415		)	1,415			—	—
Total	$	1,573		—			—	1,573

The following table summarizes the effect of our foreign exchange forward contracts on our unaudited Condensed Consolidated Statements of Operations (in thousands).

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Derivatives Designated as Hedging Instruments
Gain (loss) recognized in other comprehensive income on foreign currency forward contracts (effective portion)	$	4,243		$	(727	)	$	3,585		$	(719	)
Gain (loss) reclassified from accumulated other comprehensive income into cost of revenue (effective portion)	16			(44		)	313			(44		)
Gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	(10		)	43			(50		)	11
Derivatives Not Designated as Hedging Instruments
Gain (loss) recognized in exchange rate gain (loss), net	$	4,432		$	(996	)	$	3,490		$	4,880

Options and Warrants Related to Our Convertible Notes

In connection with our convertible debt offering in December 2012, we purchased call options on our common stock. The call options give us the right to purchase up to approximately 14.0 million shares of our common stock at $32.83 per share subject to certain adjustments that generally correspond to the adjustments to the conversion rate for the underlying debt. Additionally, we sold warrants, which give the purchasers of the warrants the right to purchase up to approximately 14.0 million shares of our common stock at $37.59 per share, subject to certain adjustments.

In connection with our convertible debt offering in September 2010 and subsequent partial repurchase in December 2012, we purchased call options on our common stock and sold warrants. The remaining call options give us the right to purchase up to approximately 850,000 shares of our common stock at $29.64 per share, subject to certain adjustments, and the remaining warrants give the counterparty the right to purchase up to approximately 850,000 shares of our common stock at $34.88 per share, subject to certain adjustments.

In accordance with the authoritative guidance, we concluded that these call options and warrants were indexed to our stock. Therefore, the call options and warrants were classified as equity instruments and are not being marked to market prospectively unless certain conditions as described in the 2017 and 2015 Notes occur.

Concentration of Credit Risk

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Financial instruments which subject us to potential credit risk consist of our cash and cash equivalents, short-term and long-term available-for-sale investments, foreign currency derivative contracts, and trade accounts receivable.

We have established guidelines to limit our exposure to credit risk by placing investments with high credit quality financial institutions, diversifying our investment portfolio and holding investments with maturities that maintain safety and liquidity. We place our cash and cash equivalents with high credit quality financial institutions. Deposits with these financial institutions may exceed the amount of insurance provided; however, these deposits typically are redeemable upon demand. Therefore we believe the financial risks associated with these financial instruments are minimal.

Trade accounts receivable are recorded at the net invoice value and are not interest bearing. We consider receivables past due based on the contractual payment terms. We perform ongoing credit evaluations of our customers, and generally we do not require collateral on our accounts receivable. We estimate the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and we record a provision for uncollectible accounts when collection is uncertain. To date, we have not experienced significant credit related losses.

We are exposed to credit losses in the event of nonperformance by the banks with which we transact foreign currency contracts. We currently hold foreign exchange forward contracts with two counterparties. Our overall risk of loss in the event of a counterparty default is limited to the amount of any unrealized gains on outstanding contracts (i.e., those contracts that have a positive fair value) at the date of default. We manage this credit risk by executing foreign currency contracts with major financial institutions with a Moody's and Standard & Poor's long-term debt rating of at least A/A2, and monitoring the credit ratings of our counterparties on a periodic basis.

In connection with the issuance of our 2015 Notes and our 2017 Notes, we purchased call options from counterparties. Non-performance by the counterparties under these call options would potentially expose us to dilution of our common stock to the extent our stock price exceeds the conversion price (in the case of the 2015 Notes and the 2017 Notes).

We purchase integrated circuits and other key components for use in our products. For certain components, which are currently single sourced, there are relatively few sources of supply. Although we believe that other suppliers could provide similar components on comparable terms, establishment of additional or replacement suppliers cannot be accomplished quickly. Any significant supply interruption could have a material adverse effect on our business, financial condition and results of operations. For further discussion, see “Risk Factors—Our manufacturing operations are dependent upon third party suppliers, some of which are sole-sourced, which makes us vulnerable to supply problems, price fluctuations and manufacturing delays.”

Fair Value Measurements

Fair value is defined as an exit price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Authoritative guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.

• Level 1—Valuations based on quoted prices for identical assets or liabilities in active markets at the measurement date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Our Level 1 assets consist of money market funds and U.S. Treasury and agency debt securities.

• Level 2—Valuations based on quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data, such as alternative pricing sources with reasonable levels of price transparency. Our Level 2 assets consist of corporate debt securities including commercial paper, corporate bonds, certificates of deposit and foreign currency forward contracts.

• Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Our Level 3 liability includes the contingent consideration related to the Crux and AtheroMed acquisitions and the other liability related to the Sync-Rx acquisition.

We utilize a third-party pricing service to assist us in obtaining fair value pricing for our investments. Pricing for certain securities is based on proprietary models. Inputs are documented in accordance with the fair value disclosure hierarchy. We also utilize third-party financial institutions to assist us in obtaining fair value pricing for our foreign currency forward contracts.

Contingent consideration arrangements obligate us to pay former shareholders of an acquired entity if specified future events occur or conditions are met such as the achievement of certain technological milestones or the achievement of targeted revenue milestones. We measure such liabilities using Level 3 unobservable inputs, applying the income approach, such as the

14

discounted cash flow technique, or the probability-weighted scenario method. We used various key assumptions, such as the probability of achievement of the agreed milestones and the discount rate, in our determination of the fair value of contingent consideration. We monitor the fair value of the contingent consideration and the subsequent revisions are reflected in our unaudited consolidated statements of operations. For a further discussion on the key assumptions used in determining the fair value and the change in the estimated fair value of the contingent consideration during the three and nine months endedSeptember 30, 2014, refer to Note 2, "Acquisitions and Acquisition-Related Items".

In connection with the Sync-Rx acquisition, we recorded a contingent liability related to a government grant received to develop underlying technologies. The timing of repayment of the grant is contingent upon the generation of revenues derived from the technologies for which grant proceeds were received. We measure such liability using Level 3 unobservable inputs, applying the income approach, such as the discounted cash flow technique, or the probability-weighted scenario method. The grant was recorded as other liabilities at its present value using various estimates, including revenue projections, discount rate and estimated years of re-payment. We monitor the fair value of the contingent liability and the subsequent revisions are reflected in our Statements of Operations. For a further discussion on the key assumptions used in determining the fair value, refer to Note 2, "Acquisitions and Acquisition-Related Items - Sync-Rx Acquisition".

During the three and nine months endedSeptember 30, 2014 and 2013, no transfers were made into or out of the Level 1, 2, or 3 categories.

Financial assets and liabilities measured at fair value on a recurring basis are summarized below at September 30, 2014 and December 31, 2013 (in thousands):

	Fair Value Measurements at September 30, 2014
	Total		Level 1		Level 2		Level 3
Assets:
Current:
Cash	$	19,141	$	19,141	$	—	$	—
Money market funds	12,818		12,818		—		—
Corporate debt securities	140,894		—		140,894		—
Foreign currency forward contracts	7,718		—		7,718		—
Non-current:
Corporate debt securities	44,244		—		44,244		—
Foreign currency forward contracts	140		—		140		—
Total assets measured at fair value	$	224,955	$	31,959	$	192,996	$	—
Liabilities:
Current:
Foreign currency forward contracts	$	27	$	—	$	27	$	—
Other liabilities, current portion	95		—		$	—	95
Contingent consideration, current portion (1)	365		—		—		365
Non-current:
Other liabilities	1,036		—		—		1,036
Contingent consideration	53,379		—		—		53,379
Total liabilities measured at fair value	$	54,902	$	—	$	27	$	54,875

(1) This amount is reflected net of the fair value of the working capital receivable in the amount of $1.3 million at September 30, 2014.

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	Fair Value Measurements at December 31, 2013
	Total		Level 1		Level 2		Level 3
Assets:
Current:
Cash	$	98,436	$	98,436	$	—	$	—
Money market funds	8,723		8,723		—		—
Corporate debt securities	164,638		—		164,638		—
U.S. Treasury and agency debt securities	66,137		66,137		—		—
Foreign currency forward contracts	2,907		—		2,907		—
Non-current:
Corporate debt securities	11,727		—		11,727		—
U.S. Treasury and agency debt securities	23,023		23,023		—		—
Foreign currency forward contracts	81		—		81		—
Total assets measured at fair value	$	375,672	$	196,319	$	179,353	$	—
Liabilities:
Current:
Foreign currency forward contracts	$	1,415	$	—	$	1,415	$	—
Contingent consideration, current portion (1)	3,750		—		—		3,750
Non-current:
Other liabilities	1,249		—		—		1,249
Contingent consideration	29,888		—		—		29,888
Total liabilities measured at fair value	$	36,302	$	—	$	1,415	$	34,887

(1) This amount is reflected net of the fair value of the working capital receivable in the amount of $1.2 million at December 31, 2013.

Inventories

Inventories consist of the following (in thousands):

	September 30, 2014		December 31, 2013
Finished goods (1)	$	37,325	$	27,237
Work-in-process	13,243		12,051
Raw materials	25,774		21,682
	$	76,342	$	60,970

(1) Finished goods inventory includes consigned inventory of $6.1 million and $5.6 million at September 30, 2014 and December 31, 2013, respectively.

Intangible Assets

Intangible assets consisted of the following (in thousands):

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	September 30, 2014
Intangible assets subject to amortization	Cost		Accumulated Amortization		Net		Weighted- Average Life (in years) (1)
Developed technology	$	121,807	$	22,337	$	99,470	12.3
Licenses	7,366		7,125		241		9.0
Customer relationships	4,213		4,066		147		6.2
Patents and trademarks	14,594		3,297		11,297		13.9
Covenant not to compete	600		208		392		3.0
	148,580		37,033		111,547		12.1
Intangible assets not yet subject to amortization
In-process research and development	13,260		—		13,260		n/a
	$	161,840	$	37,033	$	124,807

	December 31, 2013
Intangible assets subject to amortization	Cost		Accumulated Amortization		Net		Weighted- Average Life (in years) (1)
Developed technology	$	57,507	$	16,393	$	41,114	8.6
Licenses	7,441		7,102		339		8.8
Customer relationships	4,441		4,312		129		6.1
Patents and trademarks	13,668		2,894		10,774		13.2
Covenant not to compete	300		108		192		3.0
	83,357		30,809		52,548		9.2
Intangible assets not yet subject to amortization
In-process research and development	5,560		—		5,560		n/a
	$	88,917	$	30,809	$	58,108

(1) Weighted average life of intangible assets is presented excluding fully amortized assets.

At September 30, 2014, future amortization expense related to our intangible assets subject to amortization is expected to be as follows (in thousands):

2014	2,917
2015	11,366
2016	11,141
2017	10,570
2018	10,514
Thereafter	65,039
	$	111,547

Restructuring Activity

Disposables Manufacturing Transition to Costa Rica Initiative

During the second quarter of 2013, our management approved plans to consolidate and transition our manufacturing resources related to the manufacturing of disposables to Costa Rica. Activities under this restructuring plan were initiated in the second quarter of 2013 and are expected to be substantially completed by mid-2015. We estimate that this restructuring plan will result in total pre-tax charges of approximately $2.8 million, all of which are one-time termination benefits, including severance payments and continuing medical benefits.

A summary of the activities related to this initiative is presented below (in thousands):

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	Employee Termination Cost
Balance at 01/01/2013	$	—
Restructuring charges during 2013	333
Payments during 2013	(333		)
Balance at 12/31/2013	$	—
Restructuring charges during nine months ended 9/30/2014	251
Payments during nine months ended 09/30/2014	(251		)
Balance at 9/30/2014	$	—

Strategic Reorganization Initiative

During the third quarter of 2013, our management evaluated various development projects, product lines and functional areas in an effort to reprioritize and reallocate our resources within our distribution, research and development, and clinical programs to focus on development and commercial efforts that we believe better advance our key strategies. The key elements under this restructuring plan include the discontinuation of development programs for our forward-looking IVUS, or FL.IVUS, forward-looking intracardiac echocardiography, or FL.ICE, and optical computed tomography, or OCT, intravascular coronary imaging development programs, the termination of the commercial sale of the ReFLOW product line, and a modest reorganization of several functional areas and business units within the Company.

Activities under this restructuring plan were initiated in the third quarter of 2013 and were substantially completed during the second quarter of 2014. This restructuring resulted in total pre-tax charges of approximately $18.6 million, of which approximately $6.4 million resulted or will result in cash outlay. The following provides a summary of the total costs associated with the plan by major type of cost (in thousands):

Type of Cost	Total Estimated Amount
Employee termination benefits	$	2,659
Asset impairments	12,221
Other associated costs	3,713
Total	$	18,593

A summary of the restructuring charges related to this initiative is presented below (in thousands):

	Employee Termination Benefits			Asset Impairments			Other Associated Costs			Total
Balance at 01/01/2013	$	—		$	—		$	—		$	—
Restructuring charges during 2013	2,867			11,402			4,772			19,041
Payments/impairments during 2013	(797		)	(11,402		)	—			(12,199		)
Balance at 12/31/2013	$	2,070		$	—		$	4,772		$	6,842
Restructuring charges during 2014	$	(210	)	818			(1,056		)	(448		)
Payments/impairments during 2014	$	(1,337	)	(818		)	(3,716		)	(5,871		)
Balance at 09/30/2014	523			—			—			523

The employee termination benefits include severance payments and continuing medical and other benefits. The asset impairments are related to the discontinued programs and include impairment of property, plant and equipment assets, impairment of intangible assets and other tangible asset impairments. The other associated costs include the contract termination costs related to our purchase and lease commitments, and other costs directly related to the restructuring activities. The $1.1 million reduction in other associated costs during the nine months endedSeptember 30, 2014 is primarily from negotiating a favorable settlement on a contract termination. Reductions in employee termination benefits are the result of final severance costs being less than previously estimated.

All charges were recorded in the restructuring charges line item within our unaudited condensed consolidated statement of operations.

Both restructuring initiatives are related to our medical segment.

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Debt

In December 2012, we issued $460 million aggregate principal amount of 1.75% Convertible Senior Notes due 2017, or the 2017 Notes, in an offering registered under the Securities Act of 1933, as amended. Interest is payable semiannually in arrears on June 1 and December 1, commencing on June 1, 2013.

In September 2010, we issued $115 million aggregate principal amount of 2.875% Convertible Senior Notes due 2015, or the 2015 Notes, in an offering registered under the Securities Act of 1933, as amended. Interest is payable semiannually in arrears on March 1 and September 1, commencing on March 1, 2011. In December 2012, in connection with the issuance of the 2017 Notes, we repurchased $90 million of the $115 million in aggregate principal amount of the 2015 Notes.

The carrying values of the liability and equity components of both the 2017 Notes and the 2015 Notes are reflected in our unaudited condensed consolidated balance sheets as follows (in thousands):

	September 30, 2014			December 31, 2013
Debt:
2.875% Convertible Senior Notes due 2015:
Principal amount	$	25,000		$	25,000
Unamortized discount of liability component	(1,006		)	(1,818		)
Unamortized debt issuance costs	(112		)	(204		)
Carrying value of liability component	23,882			22,978
1.75% Convertible Senior Notes due 2017:
Principal amount	460,000			460,000
Unamortized discount of liability component	(60,440		)	(72,902		)
Unamortized debt issuance costs	(7,515		)	(9,064		)
Carrying value of liability component	392,045			378,034
Equity—net carrying value
2.875% Convertible Senior Notes due 2015	$	452		$	452
1.75% Convertible Senior Notes due 2017	89,415			89,415

The fair values of the Notes, which are all Level 2 measurements, are summarized as follows (in thousands):

	September 30, 2014		December 31, 2013
2.875% Convertible Senior Notes due 2015	$	24,885	$	25,950
1.75% Convertible Senior Notes due 2017	399,349		456,320
Total	$	424,234	$	482,270

4. Commitments and Contingencies

St. Jude Medical and LightLab Litigation Settlement

On August 7, 2014, Volcano and its wholly-owned subsidiary, Axsun Technologies, Inc., or Axsun, and together with Volcano, the Volcano Parties, entered into a Settlement, Release, License Agreement, and Covenants Not To Sue, or the Agreement, with St. Jude Medical, Inc., or St. Jude, and its affiliates St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, St. Jude Medical S.C., Inc., and LightLab Imaging, Inc., or LightLab, (collectively, the “St. Jude Parties”), to settle all currently ongoing litigation among the Volcano Parties and the St. Jude Parties. The settlement covers the following civil actions:

• LightLab Imaging, Inc. v. Axsun Technologies, Inc. and Volcano Corporation, in the Massachusetts Superior Court and the Massachusetts Supreme Judicial Court, or the Massachusetts Proceeding;

• Axsun Technologies, Inc. and Volcano Corporation v. LightLab Imaging, Inc., in the Delaware Chancery Court;

• LightLab Imaging, Inc. v. Axsun Technologies, Inc. and Volcano Corporation, in the Delaware Chancery Court;

• St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, and St. Jude Medical S.C., Inc. v. Volcano Corporation, in the United States District Court for the District of Delaware;

• St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, and St. Jude Medical S.C., Inc. v. Volcano Corporation, in the United States District Court for the District of Delaware;

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• Volcano Corporation v. St. Jude Medical, Cardiovascular and Ablation Technologies Division, Inc.; St. Jude Medical, Cardiology Division, Inc.; St. Jude Medical, U.S. Division; St. Jude Medical S.C., Inc.; and St. Jude Medical Systems AB, in the United States District Court for the District of Delaware and the United States Court of Appeals for the Federal Circuit; and

• St. Jude Medical, Cardiology Division, Inc., v. Volcano Corporation, and Michelle K. Lee, Deputy Director, U.S. Patent and Trademark Office, in the United States Patent and Trademark Office and the United States Court of Appeals for the Federal Circuit.

No payments are being made in connection with the Agreement.

Pursuant to the Agreement, the parties agreed to cause each of the Litigations to be dismissed with prejudice and to not seek appellate review of a recent decision issued in the Massachusetts Proceeding.

The Agreement contains mutual releases covering all claims that the Volcano Parties or the St. Jude Parties, or their respective affiliates, have or may have against the other in connection with the Litigations.

The Agreement contains covenants not to sue by each party for (i) infringement of any of the patents that are the subject of any of the Litigations, (ii) infringement of any of the other party’s patents (subject to specified exceptions) by a party’s current products, products in the field of functional measurement for which regulatory approval is submitted before August 7, 2016, or features of those products, (iii) misappropriation of certain claimed trade secrets communicated each way between Axsun and LightLab and (iv) claims of any nature that relate to any of the Litigations. The covenants described in the preceding sentence do not extend to any: (a) patent infringement claims by St. Jude with respect to any (1) wireless communication of physiological pressure sensor data between a sensor and a receiver, or (2) products for intravascular optical coherence tomography (OCT); (b) patent infringement claims by Volcano with respect to any (1) iFR^® patents or (2) products for intravascular ultrasound (i.e., IVUS products); or (c) products of an assignee existing prior to the assignment.

The agreement contains licenses by each party to the other party of the patents that are the subject of the Litigations.

Each party to the Agreement also agreed not to challenge the validity or enforceability of any of the patents that are the subject of any of the Litigations during the term of the Agreement, unless such party is accused of infringing the applicable patent. The Agreement terminates on August 7, 2036.

Litigation-LightLab

On January 7, 2009, LightLab Imaging, Inc., or LightLab, which was acquired by St. Jude Medical, Inc., or St. Jude, in 2010, filed a complaint against us and our wholly owned subsidiary, Axsun, in the Superior Court of Massachusetts, Suffolk County, seeking injunctive relief and unspecified damages, or the Massachusetts Action. The complaint included allegations that Volcano interfered with an agreement between Axsun and LightLab and with LightLab's advantageous business relationship with Axsun, breach of contract by Axsun, that Axsun and Volcano misappropriated LightLab's confidential information and trade secrets, and violated Chapter 93A, a Massachusetts statute that provides for recovery of up to three times damages plus attorney's fees (93A).

On April 7, 2011, the court entered an Amended Final Judgment, in the Massachusetts Action: a) in favor of Volcano and Axsun on LightLab's claims for trade secret misappropriation on items 1-30 on LightLab's list of alleged trade secrets, b) ordered Volcano and Axsun to collectively pay $600,000 in damages and $4.5 million in attorneys' fees, c) in favor of LightLab on its claims against Axsun for breach of contract, breach of implied covenant of good faith and fair dealing, for violation of 93A, and misappropriation of trade secrets for disclosing three particular items to Volcano in December 2008 - the specifications for the two lasers provided by Axsun to LightLab and one Axsun laser prototype made in 2008, d) in favor of LightLab on its claims against Volcano for intentional interference with a contract and advantageous business relationship, unjust enrichment, violation of 93A, and misappropriation of trade secrets for the same three trade secrets described above. In addition, the Court denied a majority of LightLab's requested injunctions, and entered limited injunctive relief, none of which management believes have a material effect upon Volcano.

LightLab appealed various decisions of the Court including, a) the Court's pre-trial rulings excluding certain lost profits damages evidence that LightLab sought to introduce at trial; b) the Court's decisions adverse to LightLab's claims for trade secret misappropriation in items 1-30 of LightLab's alleged list of trade secrets, including various rulings requiring evidence of use or intent to use as a prerequisite for injunctive relief; c) the Court's post-trial decisions denying permanent injunctive relief that LightLab requested as terms of the Final Judgment; and; d) the denial of LightLab's motion to alter or amend the Final Judgment, which motion sought to obtain additional declaratory relief barring Axsun from “supplying” tunable lasers to Volcano. Volcano and Axsun did not cross appeal the Amended Final Judgment in 2011, and Volcano and Axsun satisfied their payment obligations under the Amended Final Judgment by Volcano paying LightLab approximately $5.4 million. The Massachusetts Supreme Judicial Court issued a ruling in Volcano and Axsun's favor on July 28, 2014.

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In February 2010, Volcano and Axsun commenced an action in the Delaware Chancery Court, or the Chancery Court Action, against LightLab seeking a declaration of Volcano and Axsun's rights with respect to certain OCT technology, the High Definition Swept Source. LightLab then filed a counter-claim that included a claim against Axsun and Volcano for violations of 93A. This case has been stayed until such time as Volcano has achieved certain development and regulatory milestones.

Additionally, on May 24, 2011, LightLab commenced a separate action in Delaware Chancery Court, or the Second Chancery Court Action, against Volcano and Axsun alleging that Axsun is inappropriately assisting Volcano in the development of a third-party laser. The complaint seeks injunctive relief and unspecified damages. After Volcano and Axsun moved to dismiss the Second Chancery Court Action, LightLab filed an amended complaint against Volcano and Axsun, adding additional allegations regarding misappropriation of trade secrets. This case has been stayed indefinitely.

In January 2014, Volcano requested the Chancery Court dismiss the Chancery Court Actions. The Chancery Court has not ruled on this motion.

As described above, these actions were settled on August 7, 2014.

Litigation - St. Jude Medical

On July 27, 2010, St. Jude Medical filed a lawsuit against Volcano in federal district court in Delaware (collectively, with the counterclaims described below, the Delaware Patent Action), alleging that our pressure guide wire products infringe five patents owned by St. Jude Medical. St. Jude Medical is seeking injunctive relief and monetary damages. This action does not involve OCT technology and is separate from the Massachusetts Action.

On September 20, 2010, Volcano filed its response, in which we denied the allegations that our PrimeWire^® products infringe any valid claim of St. Jude Medical's asserted patents. In addition, Volcano filed a counterclaim in which we alleged that St. Jude Medical's PressureWire^® products and its RadiAnalyzer^® Xpress product infringe three Volcano patents. In our counterclaim, Volcano sought injunctive relief and monetary damages. Trials on the St. Jude Medical patents and Volcano's patents were held in October 2012.

On October 12, 2012, the court entered summary judgment for Volcano with respect to one of St. Jude Medical's asserted patents. On October 19, 2012, a jury found in favor of Volcano on the remaining four St. Jude Medical patents, finding that two of the patents were invalid and that Volcano did not infringe two of the patents. On October 22, 2012, Volcano voluntarily dismissed its claims against St. Jude Medical with respect to one of Volcano's patents. On October 25, 2012, a jury found in favor of St. Jude Medical with respect to Volcano's asserted patents. In conjunction with the trial, St. Jude Medical agreed that previous versions of its PressureWire^® products infringed Volcano's 6,976,965 patent (a pressure sensing guide wire patent). Post-trial motions are pending or remain available to the parties in the case. Volcano and St. Jude have stipulated to a confidential damages amount.

On April 9, 2012, St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB and St. Jude Medical S.C. filed a sealed complaint in the United States District Court for the District of Delaware alleging that Volcano Corporation infringes United States Patent No. 6,565,514. Trial will be in December 2014 in this case.

On April 16, 2013, Volcano filed suit in Federal District Court in Delaware against St. Jude Medical, Cardiovascular and Ablation Technologies Division, Inc., St. Jude Medical, Cardiology Division, Inc., St. Jude Medical, U.S. Division, St. Jude Medical S.C. Inc., and St. Jude Medical Systems AB, (collectively, “St. Jude”) for infringement of Volcano's recently issued United States Patent Nos. 8,419,647 and 8,419,648 both entitled “Ultra Miniature Pressure Sensor.” Volcano's complaint accuses St. Jude's PressureWire^® Certus and PressureWire^® Aeris cardiac pressure sensing guide wire products (the “Accused Guide Wires”) and St. Jude's RadiAnalyzer^® Xpress Measurement System, Ilumien^® PCI Optimization System and Quantien^® Integrated FFR Platform, which are used with the Accused Guide Wires, of infringing the patented methods of United States Patent No. 8,419,647. Volcano's complaint also accuses the Accused Guide Wires of infringing the patented device claims of United States Patent No. 8,419,648. A claim construction hearing was held in November 2013, and a ruling adverse to Volcano was issued in January 2014. In February 2014, the parties submitted a joint stipulation to the Court agreeing that the Accused Guide Wires do not infringe Volcano’s patents under the Court’s claim construction ruling. The Court entered judgment in March 2014 and Volcano has appealed to the Federal Circuit Court of Appeals, which will likely hear the appeal prior to the end of 2014.

As described above, these actions were settled on August 7, 2014.

Litigation - CardioSpectra

On March 27, 2012, Christopher E. Banas, et al., filed a lawsuit against Volcano in federal district court in the Northern District of California, alleging claims for breach of contract, breach of fiduciary duty, and breach of the implied covenant of good faith and fair dealing based on Volcano's acquisition of CardioSpectra in 2007. Specifically, plaintiffs assert that Volcano

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has failed to comply with the terms and the alleged implied obligations of the Merger Agreement relating to potential milestone payments. CardioSpectra was in the business of developing OCT technology; however, this litigation is separate from the Massachusetts Action.

On May 14, 2012, Volcano moved to dismiss the complaint in its entirety. The motion sought to dismiss the breach of fiduciary duty and implied covenant claims without leave for amendment, and to dismiss the breach of contract claim with leave to amend. By order dated August 6, 2012, the Court granted Volcano's motion as to all issues with leave to amend. The plaintiffs filed a Second Amended Complaint on August 20, 2012, which included a single claim for breach of the Merger Agreement. In addition, the plaintiffs identified in the Second Amended Complaint are listed as Christopher E. Banas and Paul Castella in their respective capacities as Shareholder Representatives under the Merger Agreement. Volcano answered the Second Amended Complaint on September 4, 2012, and in the same document Volcano asserted several affirmative defenses. In March 2014, the Court granted Volcano's motion for summary judgment and entered judgment in favor of Volcano. The plaintiffs have filed a notice of appeal. Volcano filed a petition to recover its attorneys’ fees as the prevailing party pursuant to the Merger Agreement. Volcano is awaiting the Court’s order.

Litigation - Other

In November 2012, we became aware through newspaper reports in the Italian media that a former employee of ours was under criminal investigation for an alleged violation of Italian anti-bribery laws. We also learned that Volcano Europe B.V.B.A., our wholly-owned subsidiary, had temporarily been prohibited from establishing new contractual relationships with hospitals that are part of the Italian national health system. Following a court hearing, the temporary prohibition was lifted. The Italian public prosecutor's request that such prohibition be reinstituted was denied. The Italian public prosecutor is alleging that the approximately €5,000 that we paid to an Italian state-employed physician for conducting a training session was paid in an effort to influence the outcome of a clinical trial.

The Company believes the lawsuits and other matter described above are without merit, and intends to vigorously defend against or prosecute, as applicable, the matters described above.

We may also be a party to various other claims in the normal course of business. Legal fees and other costs associated with such actions are expensed as incurred and were not material in any period reported. Additionally, we assess, in conjunction with our legal counsel, the need to record a liability for litigation and contingencies. Reserve estimates are recorded when and if it is determined that a loss related matter is both probable and reasonably estimable. Any provisions are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information and events pertinent to a particular matter. Based on its experience, the Company also believes that the damage amounts claimed in the lawsuits disclosed above are not a meaningful indicator of the Company's potential liability. At this time, we are not able to predict or estimate the ultimate outcome or range of possible losses relating to the lawsuits, claims or counterclaims described above. However, we believe that the ultimate disposition of these matters, individually and in the aggregate, including the matters discussed above, will not have a material impact on our consolidated results of operations, financial position or cash flows. Our evaluation of the likely impact of these matters could change in the future, as litigation is inherently unpredictable, and unfavorable outcomes and/or defense costs, depending upon the amount and timing, could have a material adverse effect on our results of operations, financial position, or cash flows in future periods.

Operating Leases

Rent expense for our facilities leases is being recognized on a straight-line basis over the respective minimum lease terms.

Commitments

We have obligations under non-cancelable purchase commitments. The majority of these obligations related to inventory, primarily raw materials. At September 30, 2014, the future minimum payments under these non-cancelable purchase commitments totaled $80.3 million. Approximately $76.1 million of these commitments will require payment in 12 months, of which $75.8 million of these commitments will require payment prior to December 31, 2014. The remaining amount will require payments on various dates through 2016.

We have commitments to provide funding for various clinical studies, for which we will be billed as services are performed under these agreements. At September 30, 2014, the remaining obligation under these agreements collectively is insignificant to our financial condition. In addition, we have entered into agreements with other third parties to sponsor clinical studies. Generally, we contract with one or more clinical research sites for a single study and no one agreement is material to our consolidated results of operations or financial condition. We are usually billed as services are performed based on enrollment and are required to make payments over periods ranging from less than one year up to five years. Our actual payments under these agreements will vary based on enrollment.

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At September 30, 2014, we have a commitment to purchase an additional $2.0 million of preferred shares in an existing cost-method investment in a private company. This commitment will expire in February 2015 if the option is not exercised by the private company.

Indemnification

Our supplier, distributor and collaboration agreements generally include certain provisions for indemnification against liabilities if our products are recalled, infringe a third party’s intellectual property rights or cause bodily injury due to alleged defects in our products. Many of our customer agreements also contain indemnification obligations in favor of our customers. In addition, we have agreements with our present and former directors and executive officers indemnifying them against liabilities arising from service in their respective capacities to Volcano. We maintain directors’ and officers’ insurance policies that may limit our exposure to such liabilities. To date, we have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in the accompanying unaudited condensed consolidated financial statements.

Sole source suppliers

We rely on a number of sole source suppliers to supply certain of our products, including our transducers and substrates used in our catheters. We do not carry significant inventory of transducers or substrates. If we had to change suppliers, we expect that it would take 6 to 24 months to identify appropriate suppliers, complete design work and undertake the necessary inspections and testing before the new transducers and substrates would be available. We are not parties to supply agreements with these suppliers but instead use purchase orders as needed.

5. Stockholders’ Equity

Share Repurchase Program

On December 2, 2013, our board of directors authorized a $200 million share repurchase program. Pursuant to this approval, we entered into a $100 million accelerated share repurchase, or ASR, program with a counterparty, and received a total of 4,705,683 shares of our common stock, of which 3,557,137 shares of our common stock were delivered in December 2013 and 1,148,546 shares of our common stock were delivered in March 2014.

All of our repurchases were treated as effective retirements of the purchased shares and therefore reduced reported shares issued and outstanding by the number of shares repurchased. In addition, the Company recorded the excess of the purchase price over the par value of the common stock as a reduction to additional paid-in capital.

Equity Compensation Plans

Our Amended and Restated 2005 Equity Compensation Plan, or the 2005 Amended Plan, provides for an aggregate of 21,572,558 shares of our common stock that may be issued or transferred to our employees, non-employee directors and consultants.

At September 30, 2014, we have granted stock options, time-vested restricted stock units, or RSUs, and performance-based RSUs, or PRSUs, under the 2005 Amended Plan. Stock options previously granted under the 2000 Long Term Incentive Plan that are canceled or expired will increase the shares available for grant under the 2005 Amended Plan. In addition, employees have purchased shares of the Company’s common stock under the 2007 Employee Stock Purchase Plan, or the Purchase Plan. According to the terms of the Purchase Plan, the number of shares of common stock available for issuance under the Purchase Plan was automatically increased by 600,000 shares on January 1, 2014. At September 30, 2014, 6,049,248 shares and 432,288 shares remained available to grant under the 2005 Amended Plan and the Purchase Plan, respectively.

On February 12, 2014, our Compensation Committee adopted, under the terms of the 2005 Amended Plan, the 2014 Long Term Incentive Plan, or LTIP, and granted PRSUs under such LTIP. The PRSUs will vest contingent on the achievement of our revenue goal, our revenue growth and relative total shareholder return, which is measured against the performance of a defined peer group. Half of the PRSUs are earned based on the achievement of our revenue goal and revenue growth, or the performance condition, and the remaining half of the PRSUs are earned based on the achievement of the revenue goal and the relative total shareholder return, or the market condition.

The measurement period for the PRSUs granted under the LTIP with the performance condition is our 2014 and 2015 fiscal years. The performance condition awards can range from 0% to 200% of the number of original shares granted. If the pre-determined performance goal is met, shares of stock subject to the PRSUs with the performance condition granted to the

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recipient will begin to vest, with two-thirds vesting on the date of certification of achievement of the pre-determined performance goal, and the remaining one third vesting on December 31, 2016, subject to continued service.

The measurement period for the PRSUs granted under the LTIP with the market condition is our 2014 and 2015 fiscal years. The market condition awards can range from 0% to 200% of the number of original shares granted. If the pre-determined market goal is met, shares of stock subject to the PRSUs with the market condition granted to the recipient will begin to vest, with two-thirds vesting on the date of certification of achievement of the pre-determined market goal, and the remaining one third vesting on December 31, 2016, subject to continued service.

Fair Value Assumptions

PRSUs with Performance Condition and RSUs

The fair value of the PRSUs with performance condition and the RSUs is estimated using the market price of our common stock on the grant date.

PRSUs with Market Condition

The fair value of the PRSUs that include a market condition is estimated using a Monte Carlo simulation model at the grant date. The Monte Carlo method is a statistical simulation technique used to provide the grant date fair value of an award. The assumptions used in the Monte Carlo simulation to value our PRSUs with market condition are presented below:

	Three and nine months ended September 30, 2014
Risk-free interest rate	0.3%
Expected life / remaining measurement period (years)	1.9
Estimated volatility	30.9%
Expected dividends	None
Weighted-average grant date fair value	$24.90

The risk-free interest rate is based on the implied yield available on U.S. Treasury constant maturity securities with the substantially equivalent period as the market condition measurement period remaining as of the grant date, which is 1.9 years. We utilize the volatility of our own common stock over the remaining measurement period in determining the grant date fair value. We use a zero value of the expected dividend value factor since we have not declared dividends in the past and we do not anticipate declaring dividends in the foreseeable future.

Stock Options

The fair value of each stock option is estimated on the date of grant using the Black-Scholes model utilizing the following weighted-average assumptions:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Risk-free interest rate	1.6%	1.3%	1.6%	0.8%
Expected life (years)	4.6	4.6	4.6	4.2
Estimated volatility	34.8%	41.9%	35.7%	39.3%
Expected dividends	None	None	None	None
Weighted-average grant date fair value	$4.76	$7.34	$5.61	$7.44

The risk-free interest rate for periods within the contractual life of the stock option is based on the implied yield available on U.S. Treasury constant maturity securities with substantially equivalent remaining terms at the time of grant. We use our historical stock option exercise experience to estimate the expected life of our stock options. We utilize the volatility of our own common stock over the expected life in determining the grant date fair value. We use a zero value for the expected dividend value factor since we have not declared dividends in the past and we do not anticipate declaring dividends in the foreseeable future.

Employee Stock Purchase Plan

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The first offering period under the Purchase Plan commenced in September 2007. The fair value of each purchase option under the Purchase Plan is estimated at the beginning of each purchase period using the Black-Scholes model utilizing the following weighted-average assumptions:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Risk-free interest rate	0.1%	0.1%	0.1%	0.1%
Expected life (years)	0.5	0.5	0.5	0.5
Estimated volatility	38.7%	29.6%	35.4%	30.0%
Expected dividends	None	None	None	None
Fair value of purchase right	$4.67	$5.53	$5.03	$5.21

The risk-free interest rate is based on the implied yield available on the U.S. Treasury constant maturity securities for the six-month term of each offering period in effect at the beginning of the offering period. We utilize the volatility of our own common stock over the offering period in determining the purchase rights fair value. We use a zero value for the expected dividend value factor since we have not declared dividends in the past and we do not anticipate declaring dividends in the foreseeable future.

Stock-Based Compensation Expense

With the exception of PRSUs with performance condition, stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the entire award, which is generally the vesting period, net of estimated forfeitures.

We recognize the estimated compensation cost of PRSUs with performance condition on a straight-line basis over the requisite service period for each vesting tranche of the award, net of estimated forfeitures.

The following table sets forth stock-based compensation expense included in our unaudited condensed consolidated statements of operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Cost of revenues	$	144	$	196	$	465	$	583
Selling, general and administrative	2,641		3,592		9,053		10,152
Research and development	420		462		1,203		1,363
	$	3,205	$	4,250	$	10,721	$	12,098

6. Segment and Geographic Information

Our chief operating decision-maker reviews financial information presented on a consolidated basis, accompanied by disaggregated information about segment revenues by product and geographic region for purposes of making operating decisions and assessing financial performance. We have two reporting segments, the first being the medical segment which includes the manufacture, sale, discovery, development and commercialization of products for the diagnosis of atherosclerosis in the coronary arteries and peripheral vascular system. In addition we have an industrial segment which includes the discovery, development, manufacture and sale of micro-optical spectrometers and optical channel monitors to telecommunications and other industrial companies.

We do not assess the performance of our segments on other measures of income or expense, such as depreciation and amortization, operating income or net income. We do not produce reports for, or measure the performance of, our segments on any asset-based metrics. Therefore, segment information is presented only for revenues by product.

The following table sets forth our revenues by segment and product (in thousands):

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Medical segment:
Consoles	$	9,508	$	10,964	$	28,243	$	31,469
Single-procedure disposables:
IVUS	44,909		46,024		139,771		143,869
FM	31,504		27,869		92,421		83,345
Other	9,697		8,809		28,940		25,725
Sub-total medical segment	95,618		93,666		289,375		284,408
Industrial segment	1,839		2,143		5,215		5,976
	$	97,457	$	95,809	$	294,590	$	290,384

The following table sets forth our revenues by geography expressed as dollar amounts (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Revenues (1):
United States	$	49,647	$	46,673	$	145,947	$	139,076
Japan	21,678		26,368		68,964		82,292
Europe, the Middle East and Africa	20,329		17,371		61,941		51,512
Rest of world	5,803		5,397		17,738		17,504
	$	97,457	$	95,809	294,590		$	290,384

(1) Revenues are attributed to geographies based on the location of the customer, except for shipments to original equipment manufacturers, which are attributed to the country of origin of the equipment distributed.

At September 30, 2014, approximately 49% of our long-lived assets, excluding financial assets, are located in the U.S., approximately 38% are located in Costa Rica, approximately 8% are located in Japan, and approximately 5% are located in our remaining geographies. At December 31, 2013, approximately 50% of our long-lived assets, excluding financial assets, were located in the U.S., approximately 38% were located in Costa Rica, approximately 8% were located in Japan, and approximately 4% were located in our remaining geographies.

At September 30, 2014 and December 31, 2013, goodwill of $150.9 million and $55.1 million, respectively, has been allocated entirely to our medical segment.

7. Income Taxes

Income taxes are determined using an estimated annual effective tax rate applied against income, and then adjusted for the tax impacts of certain discrete items. The Company recorded an income tax benefit of $8.3 million during the nine months endedSeptember 30, 2014, resulting in an effective benefit rate of 30.7%. The effective tax rate differs from the Federal statutory rate of 35.0% primarily due to foreign income tax rate differentials and nondeductible expenses such as certain stock compensation and acquisition related items.

We recorded an income tax benefit of $10.2 million during the nine months endedSeptember 30, 2013, resulting in an income tax benefit rate of 42.0%. During the nine months endedSeptember 30, 2013, federal legislation was enacted within the U.S. that retroactively allowed the research and development tax credit for all of 2012 and extended the credit through the twelve months ending December 31, 2013. Because this legislation was enacted in 2013, the full benefit of the credit related to 2012 activities was recognized during the nine months endedSeptember 30, 2013. In the absence of the 2012 federal research and development tax credit, our effective benefit tax rate for the nine months endedSeptember 30, 2013 would have been 38.0%.

Our effective tax benefit rate decreased for the nine months endedSeptember 30, 2014 as compared to the nine months endedSeptember 30, 2013. The decrease was primarily due to the expiration of the federal research and development tax credit in December 2013 and nondeductible expenses related to stock compensation. In addition to the above noted items, the effective tax rate during the nine months endedSeptember 30, 2013 included tax benefits related to the 2012 federal research and development tax credit’s retroactive reinstatement in January 2013.

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During the three months endedSeptember 30, 2014, certain stock options were exercised and certain shares related to restricted stock awards vested at times when the Company’s stock price was substantially lower than the fair value of those shares at the time of grant. As a result, the income tax deduction related to such shares is less than the expense previously recognized for book purposes. Such shortfalls reduce additional paid-in capital to the extent windfall tax benefits have been previously recognized. During the three months endedSeptember 30, 2014, no shortfalls reduced additional paid-in capital and $787,000 of the shortfall was included in income tax expense.

The Company evaluates the realizability of the deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes guidance requires that a valuation allowance be established when it is more-likely-than-not that all or a portion of the deferred tax assets will not be realized. As part of the evaluation, the Company reviews both positive and negative evidence to determine if a valuation allowance is needed.

In 2013, the Company incurred a net loss, and is not projecting a return to profitability in 2014. As of September 30, 2014, management has evaluated the recoverability of its Federal deferred tax assets, including factors such as a consideration of forecasted operating results, in-process changes in its manufacturing processes, potential tax planning strategies, as well as the period of time that will transpire before the underlying deferred tax assets will expire. Based on this evaluation, management has concluded that it is more likely than not that the underlying deferred tax assets will be utilized prior to their expiration, and therefore continues to believe that the Federal deferred tax assets will be recovered.

Further, during the fourth quarter of 2013, we concluded that it was more likely than not that we would not be able to realize our U.S. state and select foreign deferred tax assets. The Company’s continues to maintain the recorded valuation allowance against our U.S. state and select foreign deferred tax assets as of September 30, 2014.

We will continue to assess the need for a valuation allowance on deferred tax assets by evaluating both positive and negative evidence that may exist. To the extent we establish or change the valuation allowance in a period, the tax effect will generally flow through the statement of operations. In the case of an acquired or merged entity, we will record valuation allowance on a deferred tax asset through purchase accounting procedures as an adjustment to goodwill at the acquisition date, if it is more likely than not that all or a portion of the acquired deferred tax assets will not be realized in the future. Any subsequent change to a valuation allowance established during purchase accounting within the measurement period of the acquisition (not to exceed twelve months) will also be recorded as an adjustment to goodwill, provided that such change relates to new information about the facts and circumstances that existed on the acquisition date.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking statements: This quarterly report on Form 10-Q (“Quarterly Report”) contains forward-looking statements regarding future events and our future results that are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. In some cases, you can identify these “forward-looking statements” by words like “may,” “will,” “should,” "could," “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” "intends" or “continues” or the negative of those words and other comparable words. Forward-looking statements include, but are not limited to, statements about:

• our intentions, beliefs and expectations regarding our expenses, sales, operations and future financial performance;

• our operating results;

• our plans for future products and enhancements of existing products;

• anticipated growth and trends in our business;

• the timing of and our ability to maintain and obtain regulatory clearances or approvals;

• our belief that our cash and cash equivalents and short-term available-for-sale investments will be sufficient to satisfy our anticipated cash requirements;

• our expectations regarding our revenues, customers and distributors;

• our beliefs and expectations regarding our market penetration and expansion efforts;

• our expectations regarding the benefits and integration of recently-acquired businesses and our ability to make future acquisitions and successfully integrate any such future-acquired businesses;

• our anticipated trends and challenges in the markets in which we operate; and

• our expectations and beliefs regarding and the impact of investigations, claims and litigation.

These statements are not guarantees of future performance or events. Our actual results may differ materially from those discussed here. For a detailed discussion of the risks and uncertainties that could contribute to such differences see the “Risk Factors” section in Part II, Item 1A of this Quarterly Report. Any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.

Overview

We design, develop, manufacture and commercialize a broad suite of precision guided therapy tools including intravascular ultrasound, or IVUS, and fractional flow reserve, or FFR, products. We believe that these products enhance the diagnosis and treatment of coronary and peripheral vascular disease by improving the efficiency and efficacy of existing diagnostic angiograms and percutaneous coronary interventional, or PCI, and endovascular procedures in the coronary arteries or peripheral arteries and veins. We are facilitating the adoption of functional PCI, in which our FFR technology is used to help determine whether or not a stent is necessary, and IVUS is used as an adjunct to angiography to guide stent placement and optimization. We market our products to physicians, nurses and technicians who perform a variety of endovascular based coronary and peripheral interventional procedures in hospitals and other healthcare settings and to other personnel who make purchasing decisions on behalf of hospitals.

Our platform products consist of consoles that are marketed as stand-alone units or as units that can be integrated into a variety of hospital-based interventional surgical suites called catheterization laboratories, or cath labs. We have developed customized cath lab versions of these consoles and are developing additional functionality options as part of our cath lab integration initiative. Our consoles have been designed to serve as a multi-modality platform for our phased array and rotational IVUS catheters, FFR pressure and flow wires and image-guided therapy catheters, such as the Pioneer Plus reentry device acquired from Medtronic, Inc., or Medtronic, on August 30, 2013.

Our IVUS products include single-procedure disposable phased array and rotational IVUS imaging catheters, and additional functionality options such as ChromaFlo^® stent apposition analysis. Our FFR offerings can be accessed through our multi-modality platforms, and we also provide FFR-only consoles. Our FFR disposables are single-procedure disposable pressure and flow guide wires used to measure the pressure and flow characteristics of blood around plaque enabling physicians to gauge the plaque's physiological impact on blood flow and pressure. We have developed additional offerings for integration into the platform, including adenosine-free Instant Wave-Free Ratio FFR, or iFR^®, which received FDA clearance in March 2014 and SyncVision™ which co-registers IVUS with angiography.

Through Crux Biomedical, Inc., or Crux, one of our wholly-owned subsidiaries, we develop and manufacture our inferior vena cava (IVC) filter technology. Our Crux Vena Cava Filter System is used in the prevention of recurrent pulmonary embolism by means of percutaneous placement in the inferior vena cava, or IVC.

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On June 17, 2014, we acquired AtheroMed, Inc., or AtheroMed, a privately-held company engaged in the development of atherectomy technology used in the treatment of peripheral artery disease, or PAD, with its product Phoenix^® Atherectomy System, or Phoenix. Phoenix is comprised primarily of an atherectomy catheter with a front-cutting element at its tip and does not require consoles or other capital equipment. The first generation Phoenixatherectomy system had received FDA clearance and was CE marked prior to acquisition. The second generation received FDA clearance during the third quarter of 2014. We believe our acquisition of AtheroMed will allow us to further diversify our product offerings and to allow us the opportunity to better position ourselves in the peripheral vascular market.

Through Axsun Technologies, Inc., or Axsun, one of our wholly owned subsidiaries, we also develop and manufacture optical monitors for the telecommunications industry, laser and non-laser light sources, optical engines used in medical optical coherence topography, or OCT, imaging systems and advanced photonic components and sub-systems used in spectroscopy and other industrial applications. On August 7, 2014, we announced our intention to divest Axsun. The divestment could include a sale or winding down of Axsun's operations.

We have infrastructure in the U.S., Europe, Japan and Costa Rica. Our corporate office is located in San Diego, California. Our products are assembled or manufactured in our manufacturing facilities in the United States and Costa Rica. We have research and development facilities in the U.S. and Israel. We have sales offices in the U.S. and Japan; sales and distribution offices in Belgium and South Africa; and third-party distribution facilities in Japan.

We have focused on building our domestic and international sales and marketing infrastructure to market our products to physicians and technicians who perform diagnostic angiography, PCI and endovascular procedures in hospitals and to other personnel who make purchasing decisions on behalf of hospitals. We sell our products directly to customers in the United States, Japan, certain European markets and South Africa. We utilize distributors in other geographic areas, which are also involved in product launch planning, education and training, physician support and clinical study management.

At September 30, 2014, we had a worldwide installed base of over approximately 7,600 consoles, excluding our legacy In-Vision Gold systems. We intend to grow and leverage this installed base to drive recurring sales of our single-procedure disposable catheters and guide wires. In the nine months endedSeptember 30, 2014, the sale of our single-procedure disposable catheters and guide wires accounted for $232.2 million, or 80.2% of our medical segment revenues, a $5.0 million, or 2.2% increase from the nine months endedSeptember 30, 2013, in which the sale of our single-procedure disposable catheters and guide wires accounted for $227.2 million, or 79.9% of our medical segment revenues.

In the nine months endedSeptember 30, 2014 and 2013, 43.4% and 44.8%, respectively, of our revenues and 21.9% and 20.4%, respectively, of our operating expenses were denominated in various non-U.S. dollar currencies, primarily the Japanese yen, or yen, and the euro. We expect that a significant portion of our revenue and operating expenses will continue to be denominated in non-U.S. dollar currencies. As a result, we are subject to risks related to fluctuations in foreign currency exchange rates, which could affect our operating results in the future. If our yen- or euro-denominated sales exceed our yen- or euro-denominated costs, and the U.S. dollar strengthens relative to the yen or the euro, there is an adverse effect on our results of operations. Conversely, if the U.S. dollar weakens relative to the yen or the euro, there is a positive effect on our results of operations. For example, the average exchange rate of one U.S. dollar to yen increased 6.9% from 96.6 in the nine months endedSeptember 30, 2013 to 103.2 in the nine months endedSeptember 30, 2014, which resulted in a net negative impact to our operating results for the nine months endedSeptember 30, 2014 in the amount of approximately $3.3 million as compared to the comparable period in the prior year. On the other hand, the average exchange rate of one euro to U.S. dollar increased 2.3% from 1.32 in the nine months endedSeptember 30, 2013 to 1.35 in the nine months endedSeptember 30, 2014. This resulted in a net positive impact to our operating results for the nine months endedSeptember 30, 2014 in the amount of approximately $1.1 million as compared to the comparable period in the prior year. The overall impact from foreign currency exchange rate fluctuations of both the yen and the euro was a net negative impact of $2.2 million.

We use third-party manufacturing partners in certain areas of our manufacturing processes. We perform incoming inspections on all components manufactured by third parties and test the final products to assure quality control. We do not carry significant inventories of transducers or substrates. If we had to change suppliers, we expect that it would take 6 to 24 months to identify appropriate suppliers, complete design work and undertake the necessary inspections and testing before the new transducers and substrates would be available.

External Factors

In September 2009, published findings from the Fractional Flow Reserve versus Angiography for Multivessel

Evaluation, or FAME, study demonstrated that patients in the study with multi-vessel coronary artery disease who were treated by FFR guidance had a 34% reduction in death and myocardial infarction (heart attack) compared to angiographic guidance alone. In August 2012, the results of the Fractional Flow Reserve-Guided PCI vs. Medical Therapy in Stable Coronary Disease, or FAME 2, study were published in the New England Journal of Medicine. FAME 2 showed that patients receiving PCI with proven ischemia

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by FFR had 66% fewer primary endpoint events including death, myocardial infarction and urgent revascularization's (e.g. coronary bypass) than those patients treated with optimal medical therapy alone. We believe these findings will continue to drive the growth and adoption of our disposable FFR wire products.

With respect to IVUS, two-year data released in 2013 from the ADAPT-DES study (Assessment of Platelet Therapy with Drug-Eluting Stents), the largest study conducted with IVUS guidance to date, indicated IVUS guidance was associated with reductions in certain serious patient events, including stent thrombosis and myocardial infarction, and that IVUS guidance was associated with a change in procedure 74% of the time. This data suggests that IVUS guidance can play an important role in helping to improve patient outcomes.

Regarding our iFR modality, the ADVISE II (Adenosine Vasodilator Independent Stenosis Evaluation) registry, sponsored by us, undertook to assess the clinical value of iFR to characterize, without concomitant administration of hyperemic agents such as adenosine and outside a specified range of iFR values, coronary stenosis severity as determined with FFR. The final ADVISE II data reported that the hybrid iFR/FFR approach correctly matched an FFR-only approach in 94.2 percent of coronary stenosis and successfully avoided use of adenosine in 65.1 percent of patients. These data suggest the clinical value of the hybrid iFR/FFR approach in helping to improve patient outcomes.

The economic conditions in many countries and regions where we generate our revenues remain uncertain. If our customers do not obtain or do not have access to the necessary capital to operate their businesses, or are otherwise adversely affected by any deterioration in national and worldwide economic conditions, this could result in reductions in the sales of our products, longer sales cycles and slower adoption of new technologies by our customers, which would materially and adversely affect our business. In addition, our customers’ and suppliers’ liquidity, capital resources and credit may be adversely affected by their relative ability or inability to obtain capital and credit, which could adversely affect our ability to collect on our outstanding invoices and lengthen our collection cycles, or limit our timely access to important sources of raw materials necessary for the manufacture of our consoles and catheters.

In addition, the political unrest in certain regions of the world may have adverse consequences to the global economy or to our customers in certain regions, which could negatively impact our business. Uncertainty about future economic conditions may make it more difficult for us to forecast operating results and to make decisions about future investments. For further discussion, see “Risk Factors—General national and worldwide economic conditions may materially and adversely affect our financial performance and results of operations.”

Financial Operations Overview

The following is a description of the primary components of our revenue and expenses.

Revenues. We derive our revenues from two reportable segments: medical and industrial. Our medical segment represents our core business, in which we derive revenues primarily from the sale of our consoles and single-procedure disposables. Our industrial segment derives revenues related to the sales of Axsun’s micro-optical spectrometers and optical channel monitors to telecommunication and other industrial companies. In the nine months endedSeptember 30, 2014, we generated $294.6 million of revenues which is comprised of $289.4 million from our medical segment and $5.2 million from our industrial segment. We experienced increases in revenues related to FFR single-procedure disposables and decrease in revenues related to consoles and IVUS single-procedure disposables in the nine months endedSeptember 30, 2014 compared with the same period in the prior year. In the nine months endedSeptember 30, 2014, 9.8% of our medical segment revenues were derived from the sale of our consoles, 48.3% from IVUS single-procedure disposables and 31.9% from FFR single-procedure disposables as compared with 11.1% from consoles, 50.6% from IVUS single-procedure disposables and 29.3% from FFR single-procedure disposables in the same period in the prior year. Other revenues consist primarily of service and maintenance revenues, shipping and handling revenues, sales of distributed products, sales of medical products manufactured by our Axsun subsidiary, spare parts sales, and license fees.

We expect to continue experiencing variability in our quarterly revenues from console sales due in part to the timing of hospital capital equipment purchasing decisions. Further, we expect variability of our revenues based on the timing of our new product introductions, which may cause our customers to delay their purchasing decisions until the new products are commercially available.

Our medical segment sales are generated by our direct sales representatives or through independent distributors and are shipped throughout the world from facilities in the United States, Japan, Belgium and South Africa. Our industrial segment sales are generated by our direct sales representatives or through independent distributors and these products are shipped primarily to telecommunications and industrial companies domestically and abroad from the United States.

Cost of Revenues. Cost of revenues consists primarily of material costs for the products that we sell and other costs associated with our manufacturing process, such as personnel costs, rent, depreciation related to our manufacturing equipment and

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utilities. In addition, cost of revenues includes depreciation of company-owned consoles, royalty expenses for licensed technologies included in our products, service costs, provisions for warranty, distribution, freight and packaging costs, and stock-based compensation expense related to manufacturing employees. We expect a trend of improvement in our gross margin for IVUS and FFR products if we are successful in our ongoing efforts to streamline and improve our manufacturing processes, increase production volumes and transition certain manufacturing operations to Costa Rica.

Selling, General and Administrative. Selling, general and administrative expenses consist primarily of salaries and commissions and other related costs for personnel serving the sales, administrative and marketing functions. Other costs include stock-based compensation expense, professional fees for legal and accounting services, travel and entertainment expenses, facility costs, trade show, training and other promotional expenses. Due to ongoing litigation, legal expenses tend to be somewhat unpredictable in their timing and amount. We expect that our selling, general and administrative expenses will increase as we continue to expand our sales force and marketing efforts and invest in the necessary infrastructure to support our continued growth.

Research and Development. Research and development expenses consist primarily of salaries and related expenses for personnel, consultants, prototype materials, clinical studies, depreciation, regulatory filing fees, certain legal costs related to our intellectual property and stock-based compensation expense. We expense research and development costs as incurred. Due to product development timelines, research and development costs tend to be distributed unevenly between the periods. We expect our research and development expenses to increase as we continue to develop our products and technologies.

Amortization of Intangibles. We amortize intangible assets, consisting of our developed technology, licenses, customer relationships, patents and trademarks, and covenants-not-to-compete, using the straight-line method over their estimated useful lives of up to 20 years. These assets are regularly tested for impairment and abandonment.

Acquisition-Related Items. Acquisition-related items consists of acquisition transaction costs, subsequent accretion of and revision, if any, to the fair value of the contingent consideration related to acquisitions and other expenses directly associated with acquisitions.

Restructuring Charges. Restructuring charges consist of employee termination benefits, asset impairments and other related charges associated with restructuring activities.

Interest Income. Interest income is comprised of interest income earned from our cash and cash equivalents and our short-term and long-term available-for-sale investments.

Interest Expense. Interest expense is comprised of interest expense related to our convertible senior notes, including coupon interest, accretion of debt discount, and amortization of issuance costs, and interest expense related to the long-term debt acquired with Sync-Rx, offset by interest capitalization related to our global Enterprise Resource Planning, or ERP, system implementation, before the ERP system was placed into service in the fourth quarter of 2013.

Exchange Rate Gain (Loss). Exchange rate gain (loss) is comprised of foreign currency transaction and remeasurement gains and losses, and the effect of changes in value and net settlements of our foreign exchange forward contracts.

Provision for Income Taxes. Our effective tax rate is a blended rate resulting from the composition of taxable income in the global jurisdictions in which we conduct business. We apply the “with and without method—direct effects only”, in accordance with authoritative guidance, with respect to recognition of stock option excess tax benefits within stockholders equity (additional paid in capital). Therefore, the provision for domestic income taxes is determined utilizing projected federal and state taxable income before the application of deductible excess tax benefits attributable to stock option exercises.

Results of Operations

The following table sets forth items derived from our unaudited condensed consolidated statements of operations for the three months endedSeptember 30, 2014 and 2013, presented as a percentage of revenues, with the dollar and percentage change year over year (in thousands except for percentages):

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											Changes
	Three Months Ended September 30,										Favorable (Unfavorable)
	2014					2013					$			%
Revenues	$	97,457		100.0	%	$	95,809		100.0	%	$	1,648		1.7	%
Cost of revenues, excluding amortization of intangibles	37,292			38.3		33,458			34.9		(3,834		)	(11.5	)
Gross profit	60,165			61.7		62,351			65.1		(2,186		)	(3.5	)
Operating expenses:
Selling, general and administrative	47,400			48.6		45,479			47.5		(1,921		)	(4.2	)
Research and development	13,508			13.9		16,609			17.3		3,101			18.7
Amortization of intangibles	2,804			2.9		834			0.9		(1,970		)	(236.2	)
Acquisition-related items	1,596			1.6		1,253			1.3		(343		)	(27.4	)
Restructuring charges	(229		)	(0.2	)	4,616			4.8		4,845			105.0
Total operating expenses	65,079			66.8		68,791			71.8		3,712			5.4
Operating loss	(4,914		)	(5.0	)	(6,440		)	(6.7	)	1,526			23.7
Interest income	237			0.2		327			0.3		(90		)	(27.5	)
Interest expense	(7,370		)	(7.6	)	(6,756		)	(7.1	)	(614		)	(9.1	)
Exchange rate gain	20			—		54			0.1		(34		)	63.0
Other, net	56			0.1		(33		)	—		89			(269.7	)
Loss before income tax	(11,971		)	(12.3	)	(12,848		)	(13.4	)	877			6.8
Income tax benefit	(3,971		)	(4.1	)	(4,392		)	(4.6	)	(421		)	(9.6	)
Net loss	$	(8,000	)	(8.2	)%	$	(8,456	)	(8.8	)%	$	456		5.4	%

The following table sets forth items derived from our unaudited condensed consolidated statements of operations for the nine months endedSeptember 30, 2014 and 2013, presented as a percentage of revenues, with the dollar and percentage change year over year (in thousands except for percentages):

											Changes
	Nine Months Ended September 30,										Favorable (Unfavorable)
	2014					2013					$			%
Revenues	$	294,590		100.0	%	$	290,384		100.0	%	$	4,206		1.4	%
Cost of revenues, excluding amortization of intangibles	110,086			37.4		102,624			35.3		(7,462		)	(7.3	)
Gross profit	184,504			62.6		187,760			64.7		(3,256		)	(1.7	)
Operating expenses:
Selling, general and administrative	147,064			49.9		134,784			46.4		(12,280		)	(9.1	)
Research and development	41,165			14.0		50,214			17.3		9,049			18.0
Amortization of intangibles	6,405			2.2		2,488			0.9		(3,917		)	(157.4	)
Acquisition-related items	(3,809		)	(1.3	)	3,742			1.3		7,551			201.8
Restructuring charges	(197		)	(0.1	)	4,874			1.7		5,071			104.0
Total operating expenses	190,628			64.7		196,102			67.5		5,474			2.8
Operating loss	(6,124		)	(2.1	)	(8,342		)	(2.9	)	2,218			(26.6	)
Interest income	833			0.3		970			0.3		(137		)	(14.1	)
Interest expense	(21,868		)	(7.4	)	(19,908		)	(6.9	)	(1,960		)	9.8
Exchange rate gain (loss)	91			—		(1,025		)	(0.4	)	1,116			(108.9	)
Other, net	180			0.1		4,144			1.4		(3,964		)	(95.7	)
Loss before income tax	(26,888		)	(9.1	)	(24,161		)	(8.3	)	(2,727		)	11.3
Income tax benefit	(8,266		)	(2.8	)	(10,156		)	(3.5	)	(1,890		)	18.6
Net loss	$	(18,622	)	(6.3	)%	$	(14,005	)	(4.8	)%	$	(4,617	)	33.0	%

The following table sets forth our revenues by segment and product (in thousands) and the changes in revenues between the specified periods:

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	Three Months Ended September 30,				Changes					Nine Months Ended September 30,				Changes
	2014		2013		$			%		2014		2013		$			%
Medical segment:
Consoles	$	9,508	$	10,964	$	(1,456	)	(13.3	)%	$	28,243	$	31,469	$	(3,226	)	(10.3	)%
Single-procedure disposables:
IVUS	44,909		46,024		(1,115		)	(2.4	)%	139,771		143,869		(4,098		)	(2.8	)%
FFR	31,504		27,869		3,635			13.0	%	92,421		83,345		9,076			10.9	%
Other	9,697		8,809		888			10.1	%	28,940		25,725		3,215			12.5	%
Sub-total medical segment	95,618		93,666		1,952			2.1	%	289,375		284,408		4,967			1.7	%
Industrial segment	1,839		2,143		(304		)	(14.2	)%	5,215		5,976		(761		)	(12.7	)%
	$	97,457	$	95,809	$	1,648		1.7	%	$	294,590	$	290,384	$	4,206		1.4	%

The following table sets forth our revenues by geographic area (in thousands) and the changes in revenues in the specified periods:

	Three Months Ended September 30,				Changes					Nine Months Ended September 30,				Changes
	2014		2013		$			%		2014		2013		$			%
Revenue (1):
United States	$	49,647	$	46,673	$	2,974		6.4	%	$	145,947	$	139,076	$	6,871		4.9	%
Japan	21,678		26,368		(4,690		)	(17.8	)%	68,964		82,292		(13,328		)	(16.2	)%
Europe, the Middle East and Africa	20,329		17,371		2,958			17.0	%	61,941		51,512		10,429			20.2	%
Rest of world	5,803		5,397		406			7.5	%	17,738		17,504		234			1.3	%
	$	97,457	$	95,809	$	1,648		1.7	%	$	294,590	$	290,384	4,206			1.4	%

(1) Revenues are attributed to geographies based on the location of the customer, except for shipments to original equipment manufacturers, which are attributed to the country of origin of the equipment distributed.

Comparison of Three Months Ended September 30, 2014 and 2013

Revenues. Overall, the medical segment revenue in the three months endedSeptember 30, 2014 compared with the three months endedSeptember 30, 2013 increased slightly driven by increased demand for our FFR disposable products and growth in our EMEIA (Europe, Middle East, India & Africa) markets due to increased adoption of the technology. The decrease in IVUS disposable revenues was due to declines in market share in Japan, partially offset by increased revenue from the sale of products from the Pioneer Plus re-entry catheter product line which was acquired from Medtronic in August 2013. The increase in other revenues is primarily due to higher sales of service contracts and third-party products.

We recognized year-over-year increases in revenues across all our key geographic markets except for Japan. The decrease in Japan is partially due to the unfavorable impact of approximately $941,000 of foreign currency exchange rates related to the yen, a decreased reimbursement rate and a decrease in IVUS disposable sales in coronary procedures due to a decline in market share.

Cost of Revenues. The increase in the cost of revenues in the three months endedSeptember 30, 2014 compared with the three months endedSeptember 30, 2013 was due to higher sales volume and the cost of duplicate capacity as we transition certain manufacturing operations to Costa Rica. Gross margin was 61.7% of revenues in three months endedSeptember 30, 2014, decreasing from 65.1% of revenues in the three months endedSeptember 30, 2013. This unfavorable change in gross margin was primarily the result of the cost of duplicate capacity as mentioned, as well as unfavorable production variances related to our newer FM disposable products.

Selling, General and Administrative. The increase in selling, general and administrative expenses in the three months endedSeptember 30, 2014 as compared with the three months endedSeptember 30, 2013 was primarily due to the higher variable costs for U.S. sales driven by higher sales volumes and increased headcount in the sales organization in the U.S. and Europe, and increased marketing expense for promoting our peripheral products, offset by decreased legal expenses due to settled litigation and reduced compliance activities.

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Research and Development. The decrease in research and development expenses in the three months endedSeptember 30, 2014 compared with the three months endedSeptember 30, 2013 was primarily due to the discontinuation of certain research and development projects as part of our restructuring efforts.

Amortization of Intangibles. The increase in amortization of intangibles in the three months endedSeptember 30, 2014 as compared with the three months endedSeptember 30, 2013 was primarily due to the amortization of intangible assets acquired from the Pioneer transaction in August 2013, the commencement of amortization of the Crux intangible asset related to the IVC filter technology in December 2013 and amortization of intangibles acquired with the acquisition of AtheroMed in June 2014.

Acquisition-Related Items. Acquisition-related items during the three months endedSeptember 30, 2014 consisted primarily of the change in fair value of the contingent consideration related to the AtheroMed and Crux acquisitions primarily as a result of meeting the AtheroMed regulatory milestone and passage of time. The acquisition-related items during the three months endedSeptember 30, 2013 consisted primarily of the change in fair value of the contingent consideration related to the Crux acquisition primarily as a result of the passage of time and transaction costs related to the Pioneer acquisition.

Restructuring Charges. Restructuring income during the three months endedSeptember 30, 2014 consisted primarily of a favorable settlement of a previously accrued contract termination cost. Restructuring charges during the three months endedSeptember 30, 2013 consisted of the impairment of intangible assets (in process research and development and developed technology) relating to the discontinuation of an in-process research and development project and termination of a product line.

Interest Income. The interest income for the three months endedSeptember 30, 2014 as compared to the three months endedSeptember 30, 2013 remains consistent.

Interest Expense. Interest expense during the three months endedSeptember 30, 2014 and September 30, 2013 was primarily related to interest and accretion of debt discount incurred on the convertible debt issued in December 2012 ($460 million aggregate principal amount) and the convertible debt issued in September 2010 ($25 million aggregate principal amount). The increase in interest expense is due to the accretion of the debt discount.

Exchange Rate Gain. During the three months endedSeptember 30, 2014 and 2013, the impact of fluctuations in exchange rates was significantly reduced by our hedging practices. Through our hedging program, we are able to reduce the volatility of our exchange rate gains and losses resulting from the remeasurement of our intercompany receivable balances and non-functional currency transactions at current exchange rates.

Other. During the three months endedSeptember 30, 2014 and September 30, 2013, the Company's other income (expense) was minimal.

Income Tax (Benefit) Expense. During the three months endedSeptember 30, 2014, we recognized income tax benefit of $4.0 million compared to an income tax benefit of $4.4 million during the three months endedSeptember 30, 2013. Our effective tax benefit rate decreased for the three months endedSeptember 30, 2014 as compared to the three months endedSeptember 30, 2013. The decrease was primarily due to the expiration of the federal research and development tax credit in December 2013 and nondeductible expenses related to stock compensation. In addition to the above noted items, the effective tax rate during the three months endedSeptember 30, 2013 included tax benefits related to the 2012 federal research and development tax credit’s retroactive reinstatement in January 2013.

Comparison of Nine Months Ended September 30, 2014 and 2013

Revenues. Overall, the increase in medical segment revenue in the nine months endedSeptember 30, 2014 compared with the nine months endedSeptember 30, 2013 was driven by increased demand for our disposable products, largely offset by the net $3.4 million unfavorable impact of foreign currency exchange rates related primarily to the yen. The increases in FFR disposable revenues were primarily due to the increased adoption of the technology based on clinical study data, partially offset by unfavorable impacts of foreign currency exchange rates related primarily to the yen. The decrease in IVUS disposable revenues was due to the unfavorable impact of foreign currency exchange rates related primarily to the yen and a decline in market share in Japan, partially offset by increased revenue from the sale of products from the Pioneer Plus re-entry catheter product line which was acquired from Medtronic in August 2013. The increase in other revenues is primarily due to higher sales of service contracts and third-party products.

We recognized year-over-year increases in revenues across all our key geographic markets except for Japan. The increase in Europe, the Middle East and Africa is driven by increased demand for our FFR disposable products due to increased adoption of the technology. The decrease in Japan is primarily due to the unfavorable impact of approximately $5.5 million of foreign currency exchange rates related to the yen, a decline in the reimbursement rate and a decrease in IVUS disposable sales in coronary procedures due to a decline in market share.

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Cost of Revenues. The increase in the cost of revenues in the nine months endedSeptember 30, 2014 compared with the nine months endedSeptember 30, 2013 was primarily due to higher sales volume and the cost of duplicate capacity as we transition certain manufacturing operations to Costa Rica. Gross margin was 62.6% of revenues in nine months endedSeptember 30, 2014, decreasing from 64.7% of revenues in the nine months endedSeptember 30, 2013. This unfavorable change in gross margin was primarily the result of the unfavorable impacts of foreign exchange rates related to the yen, unfavorable production variances related to our newer FM disposable products, royalties, and the cost of duplicate capacity as mentioned.

Selling, General and Administrative. The increase in selling, general and administrative expenses in the nine months endedSeptember 30, 2014 as compared with the nine months endedSeptember 30, 2013 was primarily due to the higher variable costs for U.S. sales driven by higher sales volumes, increased headcount in the sales organization in the U.S. and Europe, increased marketing expense for promoting our peripheral products, and increased facility expense related to our new corporate headquarters in San Diego, California, that we began to occupy in the third quarter of 2013.

Research and Development. The decrease in research and development expenses in the nine months endedSeptember 30, 2014 compared with the nine months endedSeptember 30, 2013 was primarily due to the discontinuation of certain research and development projects as part of our restructuring efforts.

Amortization of Intangibles. The increase in amortization of intangibles in the nine months endedSeptember 30, 2014 as compared with the nine months endedSeptember 30, 2013 was primarily due to the amortization of intangible assets acquired from the Pioneer transaction in August 2013, the commencement of amortization of the Crux intangible asset related to the IVC filter technology in December 2013 and amortization of developed technology acquired with the June 2014 acquisition of AtheroMed.

Acquisition-Related Items. During the nine months endedSeptember 30, 2014 we recorded income of $3.8 million from acquisition-related items, including $1.0 million of transaction costs primarily associated with the AtheroMed and Sync-Rx acquisitions; and income of $4.8 million related to the change in fair value of the contingent consideration associated with the Crux and AtheroMed acquisitions, primarily due to the revised revenue forecasts for Crux, partially offset by the passage of time and a change in the discount factor for Crux.

The acquisition-related items during the nine months endedSeptember 30, 2013 consist of transaction costs related to the Sync-Rx and Crux acquisitions and the change in fair value of the contingent consideration related to the Crux acquisition primarily as a result of the passage of time.

Restructuring Charges. Restructuring charges during the nine months endedSeptember 30, 2014 consisted primarily of $818,000 of tangible and intangible asset impairments related to the discontinuation of research and development programs offset by a favorable settlement of a previously accrued contract termination cost of approximately $1.0 million. Restructuring charges during the nine months endedSeptember 30, 2013 consisted of $4.6 million for the impairment of certain intangible assets (in process research and development and developed technology) relating to the discontinuation of an in-process research and development project and termination of a product line, and $258,000 of employee termination costs related to the restructuring activities during the second quarter of 2013.

Interest Income. The interest income for the nine months endedSeptember 30, 2014 as compared to the nine months endedSeptember 30, 2013 remains consistent.

Interest Expense. Interest expense during the nine months endedSeptember 30, 2014 and September 30, 2013 was primarily related to interest and accretion of debt discount incurred on the convertible debt issued in December 2012 ($460 million aggregate principal amount) and the convertible debt issued in September 2010 ($25 million aggregate principal amount). The increase in interest expense is due to the accretion of the debt discount.

Exchange Rate Gain (Loss). During the nine months endedSeptember 30, 2014 and 2013, the impact of fluctuations in exchange rates was significantly reduced by our hedging practices. Through our hedging program, we are able to reduce the volatility of our exchange rate gains and losses resulting from the remeasurement of our intercompany receivable balances and non-functional currency transactions at current exchange rates.

Other. During the nine months endedSeptember 30, 2014, the Company's other income (expense) was minimal. During the nine months endedSeptember 30, 2013, we recognized $4.1 million of gains in connection with the sales of other long-term investments, which had been accounted for using the cost method.

Income Tax (Benefit) Expense. During the nine months endedSeptember 30, 2014, we recognized income tax benefit of $8.3 million compared to an income tax benefit of $10.2 million during the nine months endedSeptember 30, 2013. Our effective tax benefit rate decreased for the nine months endedSeptember 30, 2014 as compared to the nine months endedSeptember 30, 2013. The decrease was primarily due to the expiration of the federal research and development tax credit in December 2013 and

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nondeductible expenses related to stock compensation. In addition to the above noted items, the effective tax rate during the nine months endedSeptember 30, 2013 included tax benefits related to the 2012 federal research and development tax credit’s retroactive reinstatement in January 2013.

Liquidity and Capital Resources

Sources of Liquidity

Historically, our sources of cash have included:

• issuance of equity and debt securities, including underwritten public offerings of our common stock and convertible bonds, cash generated from the exercise of stock options and participation in our employee stock purchase plan;

• cash generated from operations, primarily from product sales; and

• interest income.

Our historical cash outflows have primarily been associated with:

• cash used for operating activities such as the purchase and growth of inventory, expansion of our sales and marketing and research and development infrastructure and other working capital needs;

• expenditures related to increasing our manufacturing capacity and improving our manufacturing efficiency;

• capital expenditures related to the acquisition of equipment that we own and place at our customer premises and other fixed assets;

• cash used to repay our debt obligations and related interest expense;

• cash used for acquisitions; and

• cash used to repurchase outstanding common stock.

Fluctuations in our working capital due to timing differences of our cash receipts and cash disbursements also impact our cash inflows and outflows.

On September 20, 2010, we issued $115.0 million principal amount of 2.875% Notes due 2015, or the 2015 Notes, in an offering registered under the Securities Act of 1933, as amended. To hedge against potential dilution upon conversion of the 2015 Notes, we purchased call options on our common stock. In addition, to reduce the cost of the hedge, under separate transactions we sold warrants. We received proceeds of $100.5 million from issuance of the 2015 Notes, net of issuance costs ($4.5 million) and net payments related to our hedge transactions ($10.0 million).

On December 5, 2012, we issued $460.0 million principal amount of 1.75% Notes due 2017, or the 2017 Notes, in an offering registered under the Securities Act of 1933, as amended. To hedge against potential dilution upon conversion of the 2017 Notes, we purchased call options on our common stock. In addition, to reduce the cost of the hedge, under separate transactions we sold warrants. We received proceeds of $409.3 million from the issuance of the 2017 Notes, net of issuance costs ($14.6 million) and net payments related to our hedge transactions ($36.1 million).

Concurrently with the issuance of the 2017 Notes, we retired $90.0 million of the 2015 Notes and retired the proportionate portion of the warrants and call options related to the 2015 Notes. We paid $104.9 million to repurchase the $90.0 million face value of the 2015 Notes and received a net amount of $3.6 million related to the retirement of the proportionate warrants and call options associated with the 2015 Notes.

At September 30, 2014, our cash and cash equivalents and available-for-sale investments totaled $217.1 million. We invest our excess funds in U.S. government securities, corporate fixed income securities, commercial paper, certificates of deposit and money market funds.

At September 30, 2014, our accumulated deficit was $135.0 million. Since inception, we have generated significant operating losses. During the years ended December 31, 2012, 2011 and 2010, we achieved full years of profitability. During the nine months endedSeptember 30, 2014, our business used approximately $5.6 million of cash related to operating activities. During the nine months endedSeptember 30, 2013, our business provided $9.0 million in cash related to operating activities.

Cash Flows (in thousands)

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	Nine Months Ended September 30,
	2014			2013
Net cash (used in) provided by operating activities	$	(5,610	)	$	9,041
Net cash used in investing activities	(64,350		)	(133,181		)
Net cash (used in) provided by financing activities	(4,416		)	5,757
Effect of exchange rate changes on cash and cash equivalents	(824		)	(846		)
Net change in cash and cash equivalents	$	(75,200	)	$	(119,229	)

Cash Flows (used in) provided by Operating Activities. Cash used in operating activities of $5.6 million for the nine months endedSeptember 30, 2014 reflected our net loss of $18.6 million, adjusted for non-cash expenses, consisting primarily of $26.6 million of depreciation and amortization, including amortization or accretion of investment premium or discount, $10.7 million of stock-based compensation expense, $15.0 million of accretion of debt discount on convertible notes and other long term liabilities, $2.2 million of deferred income taxes and $818,000 of asset impairment primarily related to restructuring activities offset by $4.8 million for the net reduction in the contingent consideration liability primarily related to the Crux and AtheroMed acquisitions. An additional source of cash included an increase in accrued expenses including accrued compensation of $1.7 million. Uses of cash included increased inventories of $14.7 million, increases in prepaid expenses and other assets of $16.3 million and decreases in accounts payable of $9.7 million.

Cash provided by operating activities of $9.0 million for the nine months ended September 30, 2013 reflected our net loss of $14.0 million, adjusted for non-cash expenses, consisting primarily of $21.0 million of depreciation and amortization, including amortization or accretion of investment premium or discount, $12.1 million of stock-based compensation expense, $14.1 million of accretion of debt discount on convertible notes and other long term liabilities, $2.5 million for the accretion of the contingent consideration related to the Crux acquisition and $4.6 million of asset impairment related to restructuring activities. Uses of cash included an increase of accounts receivable of $3.2 million, an increase of prepaid expenses and other assets of $16.8 million, an increase in inventories of $15.2 million related to our expected sales demand and a decrease in accounts payable of $2.6 million.

Cash Flows used in Investing Activities. Cash used in investing activities was $64.4 million during the nine months endedSeptember 30, 2014, resulting from cash paid for acquisitions, net of cash acquired, of $114.8 million, approximately $161.9 million used to purchase short-term and long-term available-for-sale investments offset by $239.5 million from the sale or maturity of available-for-sale investments, $22.9 million used for capital expenditures, including purchases of medical diagnostic equipment, manufacturing equipment and information technology systems, and $5.0 million used for other long-term assets and intangible asset purchases.

Cash used in investing activities was $133.2 million in the nine months ended September 30, 2013, resulting from approximately $342.7 million used to purchase short-term and long-term available-for-sale securities, $15 million used for the Pioneer acquisition, and $26.5 million used for capital expenditures, including purchases of medical diagnostic equipment, manufacturing equipment and information technology systems. These purchases were partially offset by $247.8 million from the sale or maturity of investments.

Cash Flows (used in) provided by Financing Activities. Cash used in financing activities in the nine months endedSeptember 30, 2014 of $4.4 million consisted primarily of $16.9 million cash payment for the Crux and AtheroMed milestones, offset by $9.5 million cash received from exercises of common stock options and $3.1 million from the sale of common stock under our employee stock purchase plan.

Cash provided by financing activities in the nine months ended September 30, 2013 consisted primarily of $2.2 million from exercises of common stock options and $3.6 million from the sale of common stock under our employee stock purchase plan.

Future Liquidity Needs

At September 30, 2014, we believe our current cash and cash equivalents and our available-for-sale investments will be sufficient to fund working capital requirements, debt service requirements, capital expenditures and operations for at least the next 12 months, including the $25 million convertible senior notes due in September 2015. We intend to retain any future earnings to support operations and to finance the growth and development of our business, and we do not anticipate paying any dividends in the foreseeable future.

Our future liquidity and capital requirements will be influenced by numerous factors, including the extent and duration of any 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 required to support our sales growth, funds required to service our debt, the

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receipt of and time required to obtain regulatory clearances and approvals, our sales and marketing programs, our need for infrastructure to support our sales growth, the continuing acceptance of our products in the marketplace, competing technologies and changes in the market and regulatory environment and cash that may be required to settle our foreign currency hedges.

Our ability to fund our longer-term cash needs is subject to various risks, many of which are beyond our control—See “Risk Factors—We may require significant additional capital to pursue our growth strategy, and our failure to raise capital when needed could prevent us from executing our growth strategy.” Should we require additional funding, such as additional capital investments, we may need to raise the required additional funds through bank borrowings or public or private sales of debt or equity securities. We cannot assure that such funding will be available in needed quantities or on terms favorable to us, if at all.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Our critical accounting policies and estimates are discussed in our annual report on Form 10-K for the fiscal year ended December 31, 2013.

Off-Balance Sheet Arrangements

In conjunction with the sale of our products in the ordinary course of business, we provide standard indemnification to business partners and customers for losses suffered or incurred for patent, copyright or any other intellectual property infringement claims by any third parties with respect to our products. The term of these indemnification arrangements is generally perpetual. The maximum potential amount of future payments we could be required to make under these agreements is unlimited. At September 30, 2014, we have not incurred any costs to defend lawsuits or settle claims related to these indemnification arrangements.

Contractual Obligations

At September 30, 2014, there were no additional material contractual obligations other than the items detailed in Note 4 - “Commitments and Contingencies–Purchase Commitments” and those disclosed in Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations" of our annual report on Form 10-K for the year ended December 31, 2013.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of changes in the value of market risk sensitive instruments caused by fluctuations in interest rates, foreign exchange rates and commodity prices. Changes in these factors could cause fluctuations in our results of operations and cash flows. In the ordinary course of business, we are exposed to interest rate and foreign exchange risk. Fluctuations in interest rates and the rate of exchange between the U.S. dollar and foreign currencies, primarily the Japanese yen, or yen and the euro, could adversely affect our financial results.

We do not carry significant inventory of transducers or substrates. If we had to change suppliers, we expect that it would take 6 to 24 months to identify appropriate suppliers, complete design work and undertake the necessary inspections and testing before the new transducers and substrates would be available.

Interest Rate Risk

Our exposure to interest rate risk at September 30, 2014 is related to the investment of our excess cash into highly liquid financial investments as well as our convertible debt which has a fixed rate. Fixed rate investments and borrowings may have their fair market value adversely impacted from changes in interest rates.

At September 30, 2014, we held $217.1 million in cash and cash equivalents and available-for-sale investments of which $172.9 million consisted of highly liquid financial investments with original final maturities of one year or less and the remaining amount was long-term available-for-sale investments with original final maturities over one year. If interest rates were to increase instantaneously and uniformly by 10 basis points, compared to interest rates as of September 30, 2014, the fair market value of our investment portfolio would decrease by approximately $109,000.

We invest in cash and cash equivalents and available-for-sale investments in accordance with our investment policy. The primary objectives of our investment policy are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields consistent with our tolerance for investment risk. Our investment policy specifies credit quality standards for our investments. We do not hold mortgage-backed securities.

Foreign Currency Exchange Risk

In the nine months endedSeptember 30, 2014 and 2013, 43.4% and 44.8%, respectively, of our revenues and 21.9% and 20.4%, respectively, of our operating expenses were denominated in various non-U.S. dollar currencies, primarily the Japanese yen, or yen, and the euro. We expect that a significant portion of our revenue and operating expenses will continue to be denominated in non-U.S. dollar currencies. As a result, we are subject to risks related to fluctuations in foreign currency exchange rates, which could affect our operating results in the future. If our yen or euro denominated sales exceed our yen or euro denominated costs, and the U.S. dollar strengthens relative to the yen or the euro, there is an adverse effect on our results of operations. Conversely, if the U.S. dollar weakens relative to the yen or the euro, there is a positive effect on our results of operations. For example, the average exchange rate of one U.S. dollar to yen increased 6.9% from 96.6 in the nine months endedSeptember 30, 2013 to 103.2 in the nine months endedSeptember 30, 2014, which resulted in a net negative impact to our operating results for the nine months endedSeptember 30, 2014 in the amount of approximately $3.3 million as compared to the comparable period in the prior year. On the other hand, the average exchange rate of one euro to U.S. dollar increased 2.3% from 1.32 in the nine months endedSeptember 30, 2013 to 1.35 in the nine months endedSeptember 30, 2014. This resulted in a net positive impact to our operating results for the nine months endedSeptember 30, 2014 in the amount of approximately $1.1 million as compared to the comparable period in the prior year. The overall impact from foreign currency exchange rate fluctuations of both the yen and the euro was a net negative impact of $2.2 million.

We enter into derivative financial instruments, principally forward contracts, to manage a portion of the foreign currency risk related to transactions in non-functional currencies. We record derivative financial instruments as either assets or liabilities in our unaudited condensed consolidated balance sheets and measure them at fair value. Certain of the derivative instruments we use to mitigate this exposure are not designated for hedge accounting treatment, and as a result, changes in their fair values are recorded in exchange rate gain (loss) in the unaudited condensed consolidated statement of operations. These contracts contain net settlement features. If we experience unfavorable changes in foreign exchange rates, we may be required to use significant amounts of cash to settle the transactions which may adversely affect the operating results that we report with respect to the corresponding period.

We hedge forecasted intercompany inventory transactions that are denominated in yen and euro. Forward contracts are used to hedge forecasted intercompany inventory transactions over specific time periods. These forward contracts are designated as cash flow hedges and have maturity dates of up to 22 months. Changes in the fair value of cash flow hedges, excluding time value of the hedges which is recorded as interest expense, are reported as a component of accumulated other comprehensive income (loss), or AOCI, within stockholders' equity. Once the underlying hedged transaction occurs, we de-designate the derivative, cease to apply hedge accounting treatment to the transaction, reclassify the gain or loss recorded to

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date from AOCI into cost of sales, and record any further gains or losses to exchange rate gain (loss). We evaluate effectiveness at the inception of the hedge and on an ongoing basis. To the extent we experience ineffectiveness in our hedges, the gains or losses accumulated in other comprehensive income associated with the ineffective portion of the hedge are reclassified immediately into exchange rate gain (loss). We adjust the level and use of derivatives as soon as practicable after learning that an exposure has changed. We review all exposures on derivative positions on a regular basis.

We are exposed to credit losses in the event of nonperformance by the banks with which we transact foreign currency contracts. We currently hold foreign exchange forward contracts with two counterparties. Our overall risk of loss in the event of a counterparty default is limited to the amount of any unrealized gains on outstanding contracts (i.e., those contracts that have a positive fair value) at the date of default. We manage this credit risk by executing foreign currency contracts with major financial institutions with a Moody's and Standard & Poor's long-term debt rating of at least A/A2, and monitoring the credit ratings of our counterparties on a periodic basis.

Market Price Sensitive Instruments

In order to reduce the potential equity dilution that would result upon conversion of our convertible senior notes, we entered into convertible note hedge transactions, or the Hedge, entitling us to purchase up to 14 million shares of our common stock at an initial strike price of $32.83 per share and 850,000 shares of common stock at an initial strike price of $29.64 per share, subject to adjustments. Upon conversion of the convertible senior notes, the Hedge is expected to reduce the equity dilution if the daily volume-weighted average price per share of our common stock exceeds the strike price of the Hedge. We also entered into warrant transactions with the counterparties of the Hedge entitling them to acquire up to 14 million shares of our common stock at an initial strike price of $37.59 and 850,000 shares of our common stock at an initial strike price of $34.88 per share, subject to adjustments. The warrant transactions could have a dilutive effect on our earnings per share to the extent that the price of our common stock during a given measurement period (the quarter or year to date period) at maturity of the warrants exceeds the strike price of the warrants. In addition, non-performance by the counterparties under the Hedge would potentially expose us to dilution of our common stock to the extent our stock price exceeds the conversion price. See Note 3 “Financial Statement Details—Debt” for additional information.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based on that evaluation, our chief executive officer and our chief financial officer have concluded that, at September 30, 2014, our disclosure controls and procedures were effective.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Changes In Internal Control Over Financial Reporting

Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we carried out an evaluation of any potential changes in our internal control over financial reporting during the fiscal quarter covered by this quarterly report on Form 10-Q.

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2014 that our certifying officers concluded materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth under Note 4 “Commitments and Contingencies – Litigation” to our unaudited condensed consolidated financial statements, included in Part I, Item 1 of this Report, is incorporated herein by reference.

Item 1A. Risk Factors

The risk factors set forth below with an asterisk (*) next to the title contain changes to the description of the risk factors previously disclosed in Item 1A to our annual report on Form 10-K.

Risks Related to Our Business and Industry

*We have only achieved profitability in 2010, 2011 and 2012 and are not projecting a return to profitability in 2014.We cannot assure you that we will achieve and sustain profitability in any future periods.

We were formed in January 2000 and have been profitable, on a full-year basis, only in 2010, 2011 and 2012 and the Company is not projecting a return to profitability in 2014. To the extent that we are able to increase revenues, we expect our operating expenses will also increase as we expand our business to meet anticipated growing demand for our products, devote resources to our sales, marketing and research and development activities and satisfy our debt service obligations. If we are unable to increase our revenues or reduce our cost of revenues and our operating expenses, we may not achieve profitability in the future. We expect to experience quarterly fluctuations in our revenues due to the timing of capital purchases by our customers and to a lesser degree the seasonality of disposable consumption by our customers. Additionally, expenses will fluctuate as we make future investments in research and development, selling and marketing and general and administrative activities, including as a result of new product introductions, transitioning from distributor arrangements to a direct sales force in different markets, satisfying our debt service obligations, and fund our litigation costs. This will cause us to experience variability in our reported earnings and losses in future periods. You should not rely on our operating results for any prior quarterly or annual period as an indication of our future operating performance.

We are dependent on the success of our consoles and catheters and cannot be certain that IVUS and FFR technology or our IVUS and FFR products will achieve the broad acceptance necessary for us to sustain a profitable business.

Our revenues are primarily derived from sales of our IVUS and FFR products, which include our multi-modality consoles and our single-procedure disposable catheters and fractional flow reserve wires. IVUS technology is widely used in Japan for determining the placement of stents in patients with coronary disease but the penetration rate in the United States and Europe for the same type of procedure is relatively low. Our wires are used to measure the pressure and flow characteristics of blood around plaque, enabling physicians to gauge the physiological impact of blood flow and pressure. We expect that sales of our IVUS and FFR products will continue to account for a majority of our revenues for the foreseeable future, however it is difficult to predict the penetration and future growth rate (if any) or size of the market for IVUS and FFR technology. The expansion of the IVUS and FFR markets depends on a number of factors, such as:

• physicians accepting the benefits of the use of IVUS and FFR in conjunction with angiography;

• physician experience with IVUS and FFR products either used alone or jointly used in a single percutaneous coronary intervention, or PCI;

• the availability of training necessary for proficient use of IVUS and FFR products, as well as willingness by physicians to participate in such training;

• the additional procedure time required for use of IVUS and FFR compared to the perceived benefits;

• the perceived risks generally associated with the use of our products and procedures, especially our new products and procedures;

• the placement of our products in treatment guidelines published by leading medical organizations;

• the availability of alternative treatments or procedures that are perceived to be or are more effective, safer, easier to use or less costly than IVUS and FFR technology;

• hospitals' willingness, and having sufficient budgets, to purchase our IVUS and FFR products;

• the size and growth rate of the PCI market in the major geographies in which we operate;

• the availability of adequate reimbursement in the United States and other countries; and

• the success of our marketing efforts and publicity regarding IVUS and FFR technology.

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Even if IVUS and FFR technology gain wide market acceptance, our IVUS and FFR products may not adequately address market requirements and may not continue to gain or maintain market acceptance among physicians, healthcare payors and the medical community due to factors such as:

• the lack of perceived benefit from information related to plaque composition available to the physician through use of our IVUS products, including the ability to identify calcified and other forms of plaque;

• the lack of perceived benefit from information related to pressure and flow characteristics of blood around plaque available to the physician through the use of our FFR products;

• the actual and perceived ease of use of our IVUS and FFR products;

• the quality of the images rendered by our IVUS products;

• the quality of the measurements provided by our FFR products;

• the cost, performance, benefits and reliability of our IVUS and FFR products relative to competing products and services;

• the lack of perceived benefit of integration of our IVUS and FFR products into the cath lab; and

• the extent and timing of technological advances.

If IVUS and FFR technology generally, or our IVUS and FFR products specifically, do not gain or continue to gain wide market acceptance, we may not be able to achieve our anticipated growth, revenues or profitability and our results of operations would suffer.

The risks inherent in our international operations may adversely impact our revenues, results of operations and financial condition.

We derive, and anticipate that we will continue to derive, a significant portion of our revenues from operations in Japan and Europe. As we expand internationally, we will need to hire, train and retain qualified personnel for our manufacturing and direct sales efforts, retain distributors and train their and our manufacturing, sales and other personnel in countries where language, cultural or regulatory impediments may exist. We cannot ensure that distributors, physicians, regulators or other government agencies outside the United States will accept our products, services and business practices. Further, we purchase and manufacture some components in foreign markets. The manufacture, sale and shipment of our products and services across international borders, as well as the purchase of components from non-U.S. sources, subject us to extensive U.S. and foreign governmental trade regulations. Current or future trade, social and environmental regulations or political issues could restrict the supply of resources used in production or increase our costs. Compliance with such regulations is costly. Any failure to comply with applicable legal and regulatory obligations in connection with our international operations could impact us in a variety of ways that include, but are not limited to, significant criminal, civil and administrative penalties, including imprisonment of individuals, fines and penalties, denial of export privileges, seizure of shipments and restrictions on certain business activities. Failure to comply with applicable legal and regulatory obligations in connection with our international operations could result in the disruption of our manufacturing, shipping and sales activities. Our international sales operations expose us and our representatives, agents and distributors to risks inherent in operating in foreign jurisdictions, including:

• our ability to obtain, and the costs associated with obtaining, U.S. export licenses and other required export or import licenses or approvals;

• changes in duties and tariffs, taxes, trade restrictions, license obligations and other non-tariff barriers to trade;

• burdens of complying with a wide variety of foreign laws and regulations related to healthcare products;

• costs of localizing product and service offerings for foreign markets;

• business practices favoring local companies;

• longer payment cycles and difficulties collecting receivables or otherwise exercising remedies (including by foreclosing on the applicable products sold) against defaulting counterparties through foreign legal systems;

• difficulties in enforcing or defending agreements and intellectual property rights;

• differing local product preferences, including as a result of differing reimbursement practices;

• possible failure to comply with anti-bribery laws such as the United States Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions, even though non-compliance could be inadvertent (see, for example, the discussion under “-Risks related to government regulation-We may be subject to federal, state and foreign healthcare fraud and abuse laws and regulations, and a finding of failure to comply with such laws and regulations could have a material adverse effect on our business.”);

• fluctuations in foreign currency exchange rates and their impact on our operating results; and

• changes in foreign political or economic conditions.

In addition, we face risks associated with potential increased costs associated with overlapping tax structures, including the tax costs associated with repatriating cash. For example, President Obama's administration has announced legislative proposals to tax profits of U.S. companies earned abroad. We derive a significant portion of our revenues from our international operations, and while it is impossible for us to predict whether these and other proposals will be implemented, or how they will

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ultimately impact us, they may materially impact our results of operations if, for example, any future potential profits earned abroad are subject to U.S. income tax, or we are otherwise disallowed deductions as a result of any such profits.

We cannot ensure that one or more of these factors will not harm our business. Any material decrease in our international revenues or inability to expand our international operations would adversely impact our revenues, results of operations and financial condition.

Declines in the number of PCI procedures performed for any reason will adversely impact our business.

Our IVUS and FFR products are used in connection with procedures. Physicians may choose to perform fewer PCI procedures. For example, recently the number of PCI procedures declined in the United States and Japan, in part due to concerns regarding the efficacy of therapeutic treatment options, the long-term efficacy of drug-eluting stents, economic constraints, reduced rates of restenosis and concerns by clinicians and payers regarding the appropriateness of conducting PCI procedures. If the number of PCI procedures continues to decline, the need for IVUS and FFR procedures could also decline, which would adversely impact our operating results and our business prospects.

We have a significant amount of indebtedness. We may not be able to generate enough cash flow from our operations to service our indebtedness, and we may incur additional indebtedness in the future, which could adversely affect our business, financial condition and results of operations.

We have a significant amount of indebtedness, including $485.0 million in aggregate principal amount of indebtedness under our 2.875% Convertible Senior Notes due 2015, or the 2015 Notes ($25.0 million), and our 1.75% Convertible Notes due 2017, or the 2017 Notes ($460.0 million). Our ability to make payments on, and to refinance, our indebtedness, including the 2015 Notes and the 2017 Notes, and to fund planned capital expenditures, research and development efforts, working capital, acquisitions and other general corporate purposes depends on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors, some of which are beyond our control. If we do not generate sufficient cash flow from operations or if future borrowings are not available to us in an amount sufficient to pay our indebtedness, including payments of principal upon conversion of the 2015 Notes and the 2017 Notes or on their maturity or in connection with a transaction involving us that constitutes a fundamental change under the indenture governing the 2015 Notes or the 2017 Notes, or to fund our liquidity needs, we may be forced to refinance all or a portion of our indebtedness, including the 2015 Notes and 2017 Notes, on or before the maturity thereof, sell assets, reduce or delay capital expenditures, seek to raise additional capital or take other similar actions. We may not be able to execute any of these actions on commercially reasonable terms or at all. Our ability to refinance our indebtedness will depend on our financial condition at the time, the restrictions in the instruments governing our indebtedness and other factors, including market conditions. In addition, in the event of a default under the 2015 Notes or the 2017 Notes, the holders and/or the trustee under the indenture governing the 2015 Notes or the 2017 Notes, as applicable, may accelerate our payment obligations under the applicable notes, which could have a material adverse effect on our business, financial condition and results of operations. Any such acceleration may also trigger an event of default under the other series of notes. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure our obligations on commercially reasonable terms or at all, would likely have an adverse effect, which could be material, on our business, financial condition and results of operations.

In addition, our significant indebtedness, combined with our other financial obligations and contractual commitments, could have other important consequences. For example, it could:

• make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry and competitive conditions and adverse changes in government regulation;

• limit our flexibility in planning for, or reacting to, changes in our business and our industry;

• place us at a competitive disadvantage compared to our competitors who have less debt; and

• limit our ability to borrow additional amounts for working capital, capital expenditures, research and development efforts, acquisitions, debt service requirements, execution of our business strategy or other purposes.

Any of these factors could materially and adversely affect our business, financial condition and results of operations. In addition, if we incur additional indebtedness, which we are not prohibited from doing under the terms of the indentures governing the 2015 Notes and the 2017 Notes, the risks related to our business and our ability to service our indebtedness would increase.

*Competition from companies, particularly those that have longer operating histories and greater resources than us, may harm our business.

The medical device industry, including the market for IVUS and FFR products, is highly competitive, subject to rapid technological change and significantly affected by new product introductions and market activities of other participants. As a result, even if the size of the IVUS and FFR market increases, we can make no assurance that our revenues will increase. In

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addition, as the markets for medical devices, including IVUS and FFR products, develop, additional competitors could enter the market. To compete effectively, we will need to continue to demonstrate that our products are attractive relative to alternative devices and treatments. We believe that our continued success depends on our ability to:

• innovate and maintain scientifically advanced technology;

• apply our technology across products and markets;

• successfully market our products;

• develop proprietary products;

• successfully conduct clinical studies that expand our markets;

• obtain and maintain patent protection for our products;

• secure and preserve regulatory approvals;

• achieve manufacturing efficiencies;

• attract and retain skilled personnel; and

• successfully add complementary offerings and technology through acquisitions, licensing agreements and strategic partnerships.

With respect to our IVUS products, our primary competitor is Boston Scientific, Inc., though our IVUS products also compete with the OCT products offered by St. Jude Medical, Inc., or St. Jude. Our FFR products compete with the products of St. Jude and ACIST Medical Systems, Inc. We also compete in Japan with respect to IVUS products with Terumo Corporation, or Terumo. Boston Scientific, St. Jude, Terumo and other potential competitors who are or may be substantially larger than us may enjoy competitive advantages, including:

• more established distribution networks;

• entrenched relationships with physicians;

• products and procedures that are less expensive;

• broader ranges of products and services that may be sold in bundled arrangements;

• greater experience in launching, marketing, distributing and selling products;

• greater experience in obtaining and maintaining FDA and other regulatory clearances and approvals;

• established relationships with healthcare providers and payors; and

• greater financial and other resources for product development, sales and marketing, acquisitions of products and companies, and intellectual property protection.

We have encountered and expect to continue to encounter potential physician customers who, due to existing relationships with our competitors, are committed to or prefer the products offered by these competitors.

For these and other reasons, we may not be able to compete successfully against our current or potential future competitors, and sales of our IVUS and FFR products may decline.

Failure to innovate may adversely impact our competitive position and may adversely impact our ability to drive price increases for our products and our product revenues.

Our future success will depend upon our ability to innovate new products and introduce enhancements to our existing products in order to address the changing needs of the marketplace. We also rely on new products and product enhancements to attempt to drive price increases for our products in our markets. Frequently, product development programs require assessments to be made of future clinical need and commercial feasibility, which are difficult to predict. Customers may forego purchases of our products and purchase our competitors' products as a result of delays in introduction of our new products and enhancements, failure to choose correctly among technical alternatives or failure to offer innovative products or enhancements at competitive prices and in a timely manner. In addition, announcements of new products may result in a delay in or cancellation of purchasing decisions in anticipation of such new products. We may not have adequate resources to introduce new products in time to effectively compete in the marketplace. Any delays in product releases may negatively affect our business.

We also compete with new and existing alternative technologies that are being used to penetrate the worldwide vascular imaging market without using IVUS technology. These products, procedures or solutions could prove to be more effective, faster, safer or less costly than our IVUS products. Technologies such as angiography, angioscopy, multi-slice computed tomography, intravascular magnetic resonance imaging, or MRI, electron beam computed tomography, and MRI with contrast agents are being used in lieu of or for imaging the vascular system.

We also develop and manufacture laser and non-laser light sources, optical engines used in OCT imaging systems as well as micro-optical spectrometers and optical channel monitors with applications in telecommunications, pharmaceutical manufacturing, high-speed industrial process control, and chemical and petrochemical processing, medical diagnostics, and scientific discovery. Products developed by competitors based on tunable filter technology could compete on the basis of lower

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cost and other factors. In addition, customers may build similar functionality directly into their products, which in turn could decrease the demand for our products.

The introduction of new products, procedures or clinical solutions by competitors may result in price reductions, reduced margins, loss of market share and may render our products obsolete. We cannot guarantee that these alternative technologies will not be commercialized and become viable alternatives to our products in the future, and we cannot guarantee that we will be able to compete successfully against them if they are commercialized.

The successful continuing development of our existing and new products depends on us maintaining strong relationships with physicians.

The research, development, marketing and sales of our products are dependent upon our maintaining working relationships with physicians. We rely on these professionals to provide us with considerable knowledge and experience regarding the development, marketing and sale of our products. If we are unable to maintain our strong relationships with these professionals and continue to receive their advice and input, our existing and new products may not be developed and marketed in line with the needs and expectations of the professionals who use or would use and support our products and the development and marketing of our products could suffer, which could have a material adverse effect on our business and results of operations.

Delays or failures in planned product introductions may adversely affect our business and negatively impact future revenues.

We are currently developing new products as well as product enhancements with respect to our existing products. We have in the past experienced, and may again in the future experience, delays and failures in various phases of product development and commercial launch, including during research and development, manufacturing, limited release testing, marketing and customer education efforts. In particular, developing and integrating products and technologies of acquired businesses is time consuming and has in the past resulted, and may again in the future result, in longer developmental timelines than we initially anticipated or our discontinuing our development or commercialization efforts with respect to the acquired products and technologies. Any delays in our product launches or our discontinuing our development or commercialization efforts with respect to any product candidates or products may significantly impede our ability to successfully compete in our markets and may reduce our revenues.

We and our present and future collaborators may fail to develop or effectively commercialize products covered by our present and future collaborations if:

• our collaborators become competitors of ours or enter into agreements with our competitors;

• we do not achieve our objectives under our collaboration agreements;

• we are unable to manage multiple simultaneous product discovery and development collaborations;

• we develop products and processes or enter into additional collaborations that conflict with the business objectives of our other collaborators;

• we or our collaborators are unable to obtain patent protection for the products or proprietary technologies we develop in our collaborations; or

• we or our collaborators encounter regulatory hurdles that prevent commercialization of our products.

In addition, conflicts may arise with our collaborators, such as conflicts concerning the interpretation of clinical data, the achievement of milestones, the interpretation of financial provisions or the ownership of intellectual property developed during the collaboration. If any conflicts arise with our existing or future collaborators, they may act in their self-interest, which may be adverse to our best interest.

If we or our collaborators are unable to develop or commercialize products, or if conflicts arise with our collaborators, we will be delayed or prevented from developing and commercializing products, which will harm our business and financial results.

If the clinical studies that we sponsor or co-sponsor are unsuccessful, or clinical data from studies conducted by other industry participants are negative, we may not be able to develop or increase penetration in identified markets and our business prospects may suffer.

We sponsor or co-sponsor several clinical studies to demonstrate the benefits of our products in current markets where we are trying to increase use of our products and in new markets. Implementing a study is time consuming and expensive, and the outcome is uncertain. The completion of any of these studies may be delayed or halted for numerous reasons, including, but not limited to, the following:

• the death of one or more patients during a clinical study for reasons that may or may not be related to our products, including the advanced stage of their disease or other medical problems;

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• regulatory inspections of manufacturing facilities, which may, among other things, require us or a co-sponsor to undertake corrective action or suspend the clinical studies;

• changes in governmental regulations or administrative actions;

• adverse side effects in patients, including adverse side effects from our or a co-sponsor's drug candidate or device;

• the FDA institutional review boards or other regulatory authorities do not approve a clinical study protocol or place a clinical study on hold;

• patients do not enroll in a clinical study or do not follow up at the expected rate;

• our co-sponsors do not perform their obligations in relation to the clinical study or terminate the study;

• third-party clinical investigators do not perform the clinical studies on the anticipated schedule or consistent with the clinical study protocol and good clinical practices, or other third-party organizations do not perform data collection and analysis in a timely or accurate manner; and

• the interim results of the clinical study are inconclusive or negative, and the study design, although approved and completed, is inadequate to demonstrate safety and efficacy of our products.

Some of the studies that we co-sponsor are designed to study the efficacy of a third-party's drug candidate or device. Such studies are designed and controlled by the third party and the results of such studies will largely depend upon the success of the third-party's drug candidate or device. These studies may be terminated before completion for reasons beyond our control such as adverse events associated with a third-party drug candidate or device. A failure in such a study may have an adverse impact on our business by either the attribution of the study's failure to our technology or our inability to leverage publicity for proper functionality of our products as part of a failed study.

Clinical studies may require the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit. Patient enrollment in clinical studies and completion of patient follow-up depend on many factors, including the size of the patient population, the study protocol, the proximity of patients to clinical sites, eligibility criteria for the study and patient compliance. For example, patients may be discouraged from enrolling in our clinical studies if the applicable protocol requires them to undergo extensive post-treatment procedures or if they are persuaded to participate in different contemporaneous studies conducted by other parties. Delays in patient enrollment or failure of patients to continue to participate in a study may result in an increase in costs, delays or the failure of the study. Such events may have a negative impact on our business by making it difficult to penetrate or expand certain identified markets. Further, if we are forced to contribute greater financial and clinical resources to a study, valuable resources will be diverted from other areas of our business.

Negative results from clinical studies conducted by other industry participants could harm our results.

Divestitures of any of our businesses or product lines may materially adversely affect our business, results of operations and financial condition.

We continue to evaluate the performance of all of our businesses and may sell a business or product line. Any divestitures may result in significant write-offs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our business, results of operations and financial condition. Divestitures could involve additional risks, including difficulties in the separation of operations, services, products and personnel, the diversion of management's attention from other business concerns, the disruption of our business and the potential loss of key employees. We may not be successful in managing these or any other significant risks that we encounter in divesting a business or product line.

*In connection with our recent acquisitions we may experience difficulty with integration, and if we choose to acquire any new businesses, products or technologies, we may experience difficulty in the identification or integration of any such acquisition, and our business may suffer.

Our success depends on our ability to continually enhance and broaden our product offerings in response to changing customer demands, competitive pressures and technologies. Accordingly, we have acquired, and may in the future acquire, complementary businesses, products or technologies instead of developing them ourselves. In late 2012, we acquired Sync-Rx, Ltd., or Sync-Rx and Crux Biomedical, Inc., or Crux; in August 2013, we acquired the Pioneer Plus re-entry catheter product line, or Pioneer, from Medtronic, Inc; and in April 2014, we acquired AtheroMed, Inc., or AtheroMed. We can provide no assurance that the expected benefits of the Sync-Rx, Crux, Pioneer or AtheroMed acquisitions will be realized. Furthermore, we have agreed in the merger agreement with Crux that, in the event that we have not achieved the applicable commercial launch for one of the Crux products by June 30, 2016 (which date may be extended upon a specified payment by us to June 30, 2017), we will license back to the former Crux stockholders certain intellectual property rights relating to that product, which could adversely affect our business. We do not know if we will identify or complete any additional acquisitions, or whether we will be able to successfully integrate any acquired business, product or technology or retain key employees, including in connection with our acquisitions of Sync-Rx, Crux, Pioneer or AtheroMed. Integrating any business, product or technology we acquire could be expensive and time consuming, disrupt our ongoing business and distract our management. If we are unable to integrate any acquired businesses, products or technologies effectively, our business will suffer. We have entered, and may in

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the future enter, markets through our acquisitions that we are not familiar with and have no experience managing. If we fail to integrate these operations into our business, our resources may be diverted from our core business and this could have a material adverse effect on our business, financial condition and results of operations.

Our business has become more decentralized geographically through our acquisitions and this may expose us to operating inefficiencies across these diverse locations, including difficulties and unanticipated expenses related to the integration of departments, information technology systems, and accounting records and maintaining uniform standards, such as internal controls, procedures and policies. In addition, we have, and in the future may increase, our exposure to risks related to business operations outside the United States due to our acquisitions.

We may also encounter risks, costs and expenses associated with any undisclosed or other unanticipated liabilities, use more cash and other financial resources on integration and implementation activities than we expect or incur significant costs and expenses related to litigation with counterparties to such transactions, such as the lawsuit filed against us in federal district court on March 27, 2012 alleging claims for breach of contract, breach of fiduciary duty, and breach of the implied covenant of good faith and fair dealing based on our acquisition of CardioSpectra, Inc. in 2007. Though our motion for summary judgment was granted in May 2014, we were still required to divert considerable resources, including management time and attention, to this litigation. In addition, any amortization or other charges resulting from acquisitions, including write-offs relating to goodwill and other intangible assets, could negatively impact our operating results.

If our products and technologies are unable to adequately identify the plaque that is most likely to rupture and cause a coronary event, we may not be able to develop a market for our vulnerable plaque products or expand the market for existing products.

We are utilizing substantial resources in the development of products and technologies to aid in the identification, diagnosis and treatment of the plaque that is most likely to rupture and cause a coronary event, or vulnerable plaque. The Providing Regional Observations to Study Predictors of Events in the Coronary Tree, or PROSPECT, study demonstrated the ability of IVUS and virtual histology, or VH, to stratify lesions according to risk. However, no randomized controlled trial has been performed to assess the benefit of treating or deferring treatment in these stratified lesions. If we are unable to develop products or technologies that can identify vulnerable plaque, a market for products to identify vulnerable plaque may not materialize and our business may suffer.

*Fluctuations in foreign currency exchange rates could result in declines in our reported revenues and earnings.

Even though we engage in foreign currency hedging arrangements for certain of our foreign currency exchange exposures, foreign currency fluctuations may adversely affect our revenues and earnings. During the nine months endedSeptember 30, 2014, 23.2% and 20.2% of our revenues were denominated in Japanese yen, or yen, and the euro, respectively, and 10.5% and 11.4% of our operating expenses were denominated in yen and euro, respectively. We enter into derivative financial instruments, principally forward contracts, to manage a portion of the foreign currency risk related to transactions in non-functional currencies. Commencing in April 2013, we initiated a hedging program that broadened our use of foreign currency forward contracts to manage portions of our foreign currency risk related to certain forecasted intercompany inventory transactions with our foreign subsidiaries and expand the application of forward contracts to additional non-functional currency transactions worldwide. We cannot be assured our hedges will be effective or that the costs of the hedges will not exceed their benefits. Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies, primarily the yen and the euro, could result in material amounts of cash being required to settle the hedge transactions or could adversely affect our financial results. In periods of a strengthening U.S. dollar relative to the yen or the euro, we would record less revenue and our results of operations could be negatively impacted.

General national and worldwide economic conditions may materially and adversely affect our financial performance and results of operations.

Our operations and performance depend significantly on national and worldwide economic conditions and the resulting impact on purchasing decisions and the level of spending on our products by customers in the geographic markets in which our IVUS and FFR and other products are sold or distributed. These economic conditions remain challenging in many countries and regions, including without limitation the United States, Japan, Europe, the Middle East and Africa, where we have generated most of our revenues. In the United States, the recovery from the recent recession has been below historic averages and the unemployment rate is expected to remain high for some time. The challenging global economic conditions have also led to concerns over the solvency of certain European Union member states, including Greece, Ireland, Italy, Portugal and Spain. The political unrest in the Middle East may have adverse consequences to the global economy or to our customers in the Middle East, which could negatively impact our business. In any event, uncertainty about future economic conditions makes it difficult for us to forecast operating results and to make decisions about future investments. If our customers do not obtain or do not have access to the necessary capital to operate their businesses, or are otherwise adversely affected by the deterioration in national and worldwide economic conditions, this could result in reductions in the sales of our products, longer sales cycles

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and slower adoption of new technologies by our customers, which would materially and adversely affect our business. We experienced declines in the number of PCI procedures performed in the U.S. and in sales of our non-medical products to telecommunications and industrial companies during 2013 and 2014 due to, in part, the then-prevailing economic conditions. In addition, our customers', distributors' and suppliers' liquidity, capital resources and credit may be adversely affected by their relative ability or inability to obtain capital and credit, which could adversely affect our ability to collect on our outstanding invoices or lengthen our collection cycles or otherwise exercise remedies (including by foreclosing on the applicable products sold) against a defaulting customer or distributor, adversely affect our ability to distribute our products or limit our timely access to important sources of raw materials necessary for the manufacture of our consoles and catheters.

We have invested a portion of our excess cash in money market funds and corporate debt securities issued by banks and corporations. The interest paid on these types of investments and the value of certain securities may decline. While our investment portfolio has experienced reduced yields, we have not yet experienced a deterioration of the credit quality of our holdings or other material adverse effects. There can be no assurances that our investment portfolio will not experience any such deterioration in credit quality or other material adverse effects in future periods, or that national and worldwide economic conditions will not worsen.

Quality problems with our processes and products could harm our reputation for producing high-quality products and erode our competitive advantage, sales and market share.

The manufacture of our products is a highly exacting and complex process, due in part to strict regulatory requirements. Failure to manufacture our products in accordance with product specifications could result in increased costs, lost revenues, field corrective actions, customer dissatisfaction or voluntary product recalls, any of which could harm our profitability and commercial reputation. Problems may arise during manufacturing for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, problems with raw materials, natural disasters and environmental factors. Quality is extremely important to us and our customers due to the serious and costly consequences of product failure. Our quality certifications are critical to the marketing success of our products. If we fail to meet these standards, our reputation could be damaged, we could lose customers, and our revenue and results of operations could decline. Aside from specific customer standards, our success depends generally on our ability to manufacture to exact tolerances precision-engineered components, subassemblies, and finished devices from multiple materials. If our components fail to meet these standards or fail to adapt to evolving standards, our reputation as a manufacturer of high-quality devices will be harmed, our competitive advantage could be damaged, and we could lose customers and market share.

Our manufacturing operations are dependent upon third-party suppliers, some of which are sole-sourced, which makes us vulnerable to supply problems, price fluctuations and manufacturing delays.

We rely on a number of sole source suppliers to supply transducers and substrates used in our catheters. We do not carry significant inventory of transducers or substrates. If we had to change suppliers, we expect that it would take 6 to 24 months to identify appropriate suppliers, complete design work and undertake the necessary inspections and testing before the new transducers and substrates would be available. We are not parties to supply agreements with these suppliers but instead use purchase orders as needed.

Our reliance on sole source suppliers for these and other materials, components, products and processing subjects us to a number of risks that could impact our ability to manufacture our products and harm our business, including:

• inability to obtain adequate supply in a timely manner or on commercially reasonable terms;

• interruption or delayed delivery of supply resulting from our suppliers' difficulty in accessing financial or credit markets or otherwise securing cash and capital resources;

• interruption of supply resulting from modifications to, or discontinuation of, a supplier's operations;

• delays in product shipments resulting from uncorrected defects, reliability issues or a supplier's variation in a component;

• uncorrected quality and reliability defects that impact performance, efficacy and safety of products from replacement suppliers;

• price fluctuations due to a lack of long-term supply arrangements with our suppliers for key components;

• difficulty identifying and qualifying alternative suppliers for components in a timely manner;

• production delays related to the evaluation and testing of products from alternative suppliers and corresponding regulatory qualifications; and

• delays in delivery by our suppliers due to changes in demand from us or their other customers.

In addition, because we do not have long term supply agreements with some of our suppliers, we are subjected to the following risks:

• unscheduled price increases;

• lack of notice when the materials used to manufacture are not available; and

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• lack of notice of discontinued operations or manufacturing.

We also utilize lean manufacturing processes that attempt to optimize the timing of our inventory purchases and supply levels of our inventories. Any significant delay or interruption in the supply of components or materials, or our inability to obtain substitute components or materials from alternate sources at acceptable prices and in a timely manner or to plan for sufficient inventory, could impair our ability to manufacture our products or meet the demand of our customers and harm our business. Identifying and qualifying additional or replacement suppliers for any of the components or materials used in our products, or obtaining additional inventory, if required, may not be accomplished quickly or at all and could involve significant additional costs. Any supply interruption from our suppliers or failure to obtain additional suppliers for any of the components or materials used to manufacture our products or sufficient inventory would limit our ability to manufacture our products and could therefore have a material adverse effect on our business, financial condition and results of operations.

*We may encounter a number of challenges relating to the management and operation of our newly constructed Costa Rica facilities, and the expansion has and will continue to increase our fixed costs, which may have a negative impact on our financial results and condition.

In 2010, we, through a wholly owned subsidiary, entered into a series of agreements to acquire real property and design and build manufacturing facilities in Costa Rica. Prior to 2012, we had never operated manufacturing facilities outside the United States, and cannot assure you that we will be able to successfully operate these facilities in an efficient or profitable manner. In addition, we are continuing to transfer our manufacturing processes, technology and know-how to our Costa Rica facilities. If we are unable to operate these facilities or successfully transfer our manufacturing processes, technology and know-how in a timely and cost-effective manner, or at all, then we may experience disruptions in our operations, which could negatively impact our business and financial results.

During 2012 we received regulatory approval to ship product from our Costa Rica facility to the United States, Japan and certain countries in Europe. We will need to obtain a number of additional regulatory approvals prior, and subsequent, to shipping products from this facility to other geographies. Our ability to obtain these approvals may be subject to additional costs and possible delays beyond what we initially plan for. In addition, our manufacturing facilities, and those of our suppliers, must comply with applicable regulatory requirements. Failure of our manufacturing facilities to comply with regulatory and quality requirements would harm our business and our results of operations.

Our ability to operate this facility successfully will greatly depend on our ability to hire, train and retain an adequate number of employees, in particular employees with the appropriate level of knowledge, background and skills. We compete with several other medical device companies with manufacturing facilities in Costa Rica to hire these skilled employees. Should we be unable to hire such employees, and an adequate number of them, our business and financial results could be negatively impacted.

The expansion of the manufacturing facilities has and will continue to increase our fixed costs. If we experience a demand in our products that exceeds our manufacturing capacity, we may not have sufficient inventory to meet our customers' demands, which would negatively impact our revenues. If the demand for our products decreases or if we do not produce the output we plan or anticipate after the facilities are operational, we may not be able to spread a significant amount of our fixed costs over the production volume, thereby increasing our per unit fixed cost, which would have a negative impact on our financial condition and results of operations.

We also face particular commercial, jurisdictional and legal risks associated with our operations in Costa Rica. The success of this relationship and our activities in Costa Rica in general are subject to the economic, political and legal conditions or developments in Costa Rica.

Disruptions or other adverse developments during the operations of our Costa Rica facilities could materially adversely affect our business. If our Costa Rica operations are disrupted for any reason, we may be forced to locate alternative manufacturing facilities, including facilities operated by third parties. Disruptions may include, but are not limited to: changes in the legal and regulatory environment in Costa Rica; slowdowns or work stoppages within the Costa Rican customs authorities; acts of God (including but not limited to potential disruptive effects from an active volcano near the facility or earthquakes, hurricanes and other natural disasters); and other issues associated with significant operations that are remote from our headquarters and operations centers. Additionally, continued growth in product sales could outpace the ability of our Costa Rican operation to supply products on a timely basis or cause us to take actions within our manufacturing operations, which increase costs, complexity and timing. Locating alternative facilities would be time-consuming, would disrupt our production and cause shipment delays and could result in damage to our reputation and profitability. Additionally, we cannot assure you that alternative manufacturing facilities would offer the same cost structure as our Costa Rica facility.

If our facilities or systems are damaged or destroyed, we may experience delays that could negatively impact our revenues or have other adverse effects.

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Our facilities may be affected by natural or man-made disasters. If one of our facilities were affected by a disaster, we would be forced to rely on third-party manufacturers or to shift production to another manufacturing facility. In such an event, we would face significant delays in manufacturing which would prevent us from being able to sell our products. In addition, our insurance may not be sufficient to cover all of the potential losses and may not continue to be available to us on acceptable terms, or at all. Furthermore, although our computer and communications systems are protected through physical and software safeguards, they are still vulnerable to fire, storm, flood, power loss, earthquakes, telecommunications failures, physical or software break-ins, software viruses, and similar events, and any failure of these systems to perform for any reason and for any period of time could adversely impact our ability to operate our business.

We may require significant additional capital to pursue our growth strategy, and our failure to raise capital when needed could prevent us from executing our growth strategy.

We believe that our existing cash and cash equivalents and short-term and long-term available-for-sale investments will be sufficient to meet our anticipated cash needs for at least the next 12 months. However, we may need to obtain additional financing to pursue our business strategy, to respond to new competitive pressures or to act on opportunities to acquire or invest in complementary businesses, products or technologies. The timing and amount of our working capital and capital expenditure requirements may vary significantly depending on numerous factors, including:

• market acceptance of our products;

• the revenues generated by our products;

• the need to adapt to changing technologies and technical requirements, and the costs related thereto;

• the costs associated with expanding our manufacturing, marketing, sales and distribution efforts;

• the existence and timing of opportunities for expansion, including acquisitions and strategic transactions; and

• costs and fees associated with defending existing or potential litigation.

In addition, we are required to make periodic interest payments to the holders of the 2015 Notes and the 2017 Notes and to make payments of principal upon conversion or maturity. We may also be required to purchase the 2015 Notes or the 2017 Notes for cash upon the occurrence of a change of control or certain other fundamental changes involving us. If our capital resources are insufficient to satisfy our debt service or liquidity requirements, we may seek to sell additional equity or debt securities or to obtain debt financing. The sale of additional equity or debt securities, or the use of our stock in an acquisition or strategic transaction, would result in additional dilution to our stockholders. Additional debt would result in increased expenses and could result in covenants that would restrict our operations. We have not made arrangements to obtain additional financing and our significant historical losses and the current national and global financial conditions may prevent us from obtaining additional funds on favorable terms, if at all.

We are dependent on our collaborations, and events involving these collaborations or any future collaborations could delay or prevent us from developing or commercializing products.

The success of our current business strategy and our near- and long-term viability will depend on our ability to execute successfully on existing strategic collaborations and to establish new strategic collaborations. Collaborations allow us to leverage our resources and technologies and to access markets that are compatible with our own core areas of expertise. To penetrate our target markets, we may need to enter into additional collaborative agreements to assist in the development and commercialization of future products. Establishing strategic collaborations is difficult and time-consuming. Potential collaborators may reject collaborations based upon their assessment of our financial, regulatory or intellectual property position or our internal capabilities. Our discussions with potential collaborators may not lead to the establishment of new collaborations on favorable terms or at all.

We have collaborations with a number of entities or their affiliates, including The Cleveland Clinic Foundation, Siemens AG, Philips Medical Systems Nederland B.V. and General Electric Company. In each collaboration, we combine our technology or core capabilities with those of the third party to permit either greater penetration into markets or to enhance the functionality of our current and planned products. We have limited control over the amount and timing of resources that our current collaborators or any future collaborators devote to our collaborations or potential products. These collaborators may breach or terminate their agreements with us or otherwise fail to conduct their collaborative activities successfully and in a timely manner. Further, our collaborators may not develop or commercialize products that arise out of our collaborative arrangements or devote sufficient resources to the development, manufacture, marketing or sale of these products. Moreover, in the event of termination of a collaboration agreement, we may not realize the intended benefits or we may not be able to replace the arrangement on comparable terms or at all.

If the third-party distributors that we rely on to market and sell our products are not successful, we may be unable to increase or maintain our level of revenues.

A portion of our revenue is generated by our third-party distributors, especially in international markets. If these distributors cease or limit operations or experience a disruption of their business operations, or are not successful in selling our

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products, we may be unable to increase or maintain our level of revenues, and any such developments could negatively affect our international sales strategy. Over the long term, we intend to grow our business internationally, and to do so we will need to attract additional distributors to expand the territories in which we do not directly sell our products. Our distributors may not commit the necessary resources to market and sell our products. If current or future distributors do not continue to distribute our products or do not perform adequately or if we are unable to locate distributors in particular geographic areas, we may not realize revenue growth internationally.

Our reported or future financial results could be adversely affected by the application of existing or future accounting standards.

U.S. generally accepted accounting principles and related implementation guidelines and interpretations can be highly complex and involve subjective judgments. Changes in these rules or their interpretation, the adoption of new guidance or the application of existing guidance to changes in our business could have a significant adverse effect on our financial results. For example, the accounting for convertible debt securities, and the accounting for the convertible note hedge transactions and the warrant transactions we entered into in connection with the offerings of the 2015 Notes and the 2017 Notes, is subject to frequent scrutiny by the accounting regulatory bodies and is subject to change. We cannot predict if or when any such change could be made, and any such change could have an adverse impact on our reported or future financial results. In addition, in the event the conversion features of the 2015 Notes or the 2017 Notes are triggered, we could be required under applicable accounting standards to reclassify all or a portion of the outstanding principal of the 2015 Notes or the 2017 Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

We cannot assure you that our net operating loss carryforwards will be available to reduce our tax liability.

Our ability to use our net operating loss carryforwards to reduce future income tax obligations may be limited or reduced. Generally, a change of more than 50 percentage points in the ownership of our shares, by value, over the three-year period ending on the date the shares were acquired constitutes an ownership change and may limit our ability to use our net operating loss carryforwards. Should additional ownership changes occur in the future, our ability to utilize our net operating loss carryforwards could be limited. In addition, with respect to any entity that we have acquired or may in the future acquire, the ability of those entities to use net operating loss carryforwards, if any, to reduce future income tax obligations may be limited or reduced due to changes in ownership of such entities occurring prior to or as a result of our acquisition of such entities.

If we fail to properly manage our anticipated growth, our business could suffer.

Rapid growth of our business is likely to continue to place a significant strain on our managerial, operational and financial resources and systems. To execute our anticipated growth successfully, we must attract and retain qualified personnel and manage and train them effectively. We anticipate hiring additional personnel to assist in the commercialization of our current products and in the development of future products. We will be dependent on our personnel and third parties to effectively market and sell our products to an increasing number of customers. We will also depend on our personnel to develop and manufacture in anticipated increased volumes our existing products, as well as new products and product enhancements. Further, our anticipated growth will place additional strain on our suppliers resulting in increased need for us to carefully monitor for quality assurance. Any failure by us to manage our growth effectively could have an adverse effect on our ability to achieve our development and commercialization goals.

Issues arising from the implementation of our new enterprise resource planning system could adversely affect our operating results and ability to manage our business effectively.

We recently completed our company-wide implementation of a new enterprise resource planning, or ERP, system to further enhance operating efficiencies and provide more effective management of our business operations. Implementing a new ERP system is costly and involves risks inherent in the conversion to a new computer system, including loss of information, disruption to our normal operations, changes in accounting procedures and internal control over financial reporting, as well as problems achieving accuracy in the conversion of electronic data. Failure to properly or adequately address these issues could result in increased costs, the diversion of management's and employees' attention and resources and could materially adversely affect our operating results, internal controls over financial reporting and ability to manage our business effectively. While the ERP system is intended to further improve and enhance our information systems, large scale implementation of a new information system exposes us to the risks of starting up the new system and integrating that system with our existing systems and processes, including possible disruption of our financial reporting, which could lead to a failure to make required filings under the federal securities laws on a timely basis.

Any defects or malfunctions in the computer hardware or software we utilize in our products could cause severe performance failures in such products, which would harm our reputation and adversely affect our results of operations and financial condition.

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Our existing and new products depend and will depend on the continuous, effective and reliable operation of computer hardware and software. For example, our IVUS products utilize sophisticated software that analyzes in real-time plaque composition and identifies lumen and vessel borders, which are then displayed in three-dimensional, color-coded images on a computer screen. Although we update the computer software utilized in our products on a regular basis, there can be no guarantee that defects do not or will not in the future exist or that unforeseen malfunctions, whether within our control or otherwise, will not occur. In addition, our devices may be targeted and/or adversely affected by cybersecurity attacks, including malware. Although we have implemented various safeguards to prevent unauthorized access or modification to our products, we cannot assure you that these safeguards are or will continue to be effective. Any defect, malfunction or other failing in the computer hardware or software utilized by our IVUS or other products, including products we develop in the future, could result in inaccurate readings, misinterpretations of data, or other performance failures that could render our products unreliable or ineffective and could lead to decreased confidence in our products, damage to our reputation, reduction in our sales and product liability claims, the occurrence of any of which could have a material adverse effect on our results of operations and financial condition. Furthermore, as a result of cybersecurity vulnerabilities and incidents that could directly impact medical devices, in June 2013 the FDA issued draft guidance which may result in additional regulation in the medical device industry, which could, among other things, impact our ability to obtain regulatory approval of new products.

If we are unable to recruit, hire and retain skilled and experienced personnel, our ability to effectively manage and expand our business will be harmed.

Our success largely depends on the skills, experience and efforts of our officers and other key employees who may terminate their employment at any time. The loss of any of our senior management team, in particular our President and Chief Executive Officer, R. Scott Huennekens, could harm our business. We have employment contracts or similar agreements with R. Scott Huennekens and our Chief Financial Officer, John T. Dahldorf, but these agreements do not guarantee that they will remain employed by us in the future. The announcement of the loss of one of our key employees could negatively affect our stock price. Our ability to retain our skilled workforce and our success in attracting and hiring new skilled employees will be a critical factor in determining whether we will be successful in the future. We face challenges in hiring, training, managing and retaining employees in certain areas including clinical, technical, sales and marketing. This could delay new product development and commercialization, and hinder our marketing and sales efforts, which would adversely impact our competitiveness and financial results.

The expense and potential unavailability of insurance coverage for our company, customers or products may have an adverse effect on our financial position and results of operations.

While we currently have insurance for our business, property, directors and officers, and product liability, insurance is increasingly costly and the scope of coverage is narrower, and we may be required to assume more risk in the future. If we are subject to claims or suffer a loss or damage in excess of our insurance coverage, we will be required to cover the amounts outside of or in excess of our insurance limits. If we are subject to claims or suffer a loss or damage that is outside of our insurance coverage, we may incur significant costs associated with loss or damage that could have an adverse effect on our financial position and results of operations. Furthermore, any claims made on our insurance policies may impact our ability to obtain or maintain insurance coverage at reasonable costs or at all. We do not have the financial resources to self-insure, and it is unlikely that we will have these financial resources in the foreseeable future.

Our product liability insurance covers our products and business operations, but we may need to increase and expand this coverage commensurate with our expanding business. Any product liability claims brought against us, with or without merit, could result in:

• substantial costs of related litigation or regulatory action;

• substantial monetary penalties or awards;

• decreased demand for our products;

• reduced revenue or market penetration;

• injury to our reputation;

• withdrawal of clinical study participants;

• an inability to establish new strategic relationships;

• increased product liability insurance rates; and

• an inability to secure continuing coverage.

Some of our customers and prospective customers may have difficulty in procuring or maintaining liability insurance to cover their operation and use of our products. Medical malpractice carriers are withdrawing coverage in certain regions or substantially increasing premiums. If this trend continues or worsens, our customers may discontinue using our products and potential customers may opt against purchasing our products due to the cost or inability to procure insurance coverage.

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Risks Related to Government Regulation

Compliance with changing corporate governance and public disclosure regulations may result in additional expenses.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, new SEC regulations and Nasdaq Global Select Market rules, are creating uncertainty for companies such as ours. As one example, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC has promulgated rules regarding disclosure of the presence in a company's products of certain metals, known as “conflict minerals,” which are metals mined from the Democratic Republic of the Congo and adjoining countries, as well as procedures regarding a manufacturer's efforts to identify the sourcing of those minerals from this region. Complying with these rules requires investigative efforts, which causes us to incur associated costs, and could adversely affect the sourcing, supply, and pricing of materials used in our products, or result in process or manufacturing modifications, all of which could adversely affect our results of operations.

To maintain high standards of corporate governance and public disclosure, we have invested, and intend to continue to invest, in reasonably necessary resources to comply with evolving standards. These investments have resulted in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities and may continue to do so in the future.

If we fail to obtain or maintain, or experience significant delays in obtaining, regulatory clearances or approvals for our products or product enhancements, our ability to commercially distribute and market our products could suffer.

Our products are subject to rigorous regulation by the FDA and numerous other federal, state and foreign governmental authorities. Our failure to comply with such regulations or to make adequate, timely corrections, could lead to the imposition of injunctions, suspensions or loss of marketing clearances or approvals, product recalls, manufacturing cessation, termination of distribution, product seizures, civil penalties, or some combination of such actions. The process of obtaining regulatory authorizations to market a medical device, particularly from the FDA, can be costly and time consuming, and there can be no assurance that such authorizations will be granted on a timely basis, if at all. If regulatory clearance or approvals are received, additional delays may occur related to manufacturing, distribution or product labeling. In addition, we cannot assure you that any new or modified medical devices we develop will be eligible for the shorter 510(k) clearance process as opposed to the PMA process. We have no experience in obtaining PMA approvals. For example, the FDA has been reviewing its 510(k) process and could change the criteria to obtain clearance, which could affect our ability to obtain timely reviews and increase the resources needed to meet new criteria. FDA has also issued, and may in the future issue, draft guidance documents that, if implemented, will likely entail additional regulatory burdens. These additional regulatory burdens could delay our ability to obtain new clearances, increase the costs of compliance or restrict our ability to maintain our current clearances. Such changes could adversely affect our business.

In the member states of the European Economic Area, or EEA, our medical devices are required to comply with the essential requirements of the EU Medical Devices Directives before they can be marketed. Our products, including their design and manufacture, must be certified as being compliant with the requirements of the Medical Devices Directives. Upon receipt of such certification, we may affix a CE mark to our products and their packaging and sell these products in the EEA. If we fail to maintain compliance with the Medical Devices Directives, our products will no longer qualify for the CE mark and the relevant devices would not be eligible for marketing in the EEA.

We currently market our IVUS and FFR products in Japan under two types of regulatory approval known as a SHONIN and a NINSHO. As the holder of the SHONINs, we have the authority to import and sell those products for which we have the SHONINs as well as those products for which we have obtained a NINSHO. Responsibility for Japanese regulatory filings and future compliance resides with us. We cannot guarantee that we will be able to adequately meet Japanese regulatory requirements. Non-compliance with Japanese regulations may result in action to prohibit further importation and sale of our products in Japan, a significant market for our products. If we are unable to sell our IVUS and FFR products in Japan, we will lose a significant part of our annual revenues, and our business will be substantially impacted.

Foreign governmental authorities that regulate the manufacture and sale of medical devices have become increasingly stringent, and to the extent we continue to market and sell our products in foreign countries, we will be subject to rigorous regulation in the future. In such circumstances, where we utilize distributors in foreign countries to market and sell our products, we would rely significantly on our distributors to comply with the varying regulations, and any failures on their part could result in restrictions on the sale of our products in foreign countries. Regulatory delays or failures to obtain and maintain marketing authorizations, including 510(k) clearances and PMA approvals, could disrupt our business, harm our reputation, and adversely affect our sales.

Modifications to our products may require new regulatory clearances or approvals or may require us to recall or cease marketing our products until clearances or approvals are obtained.

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Modifications to our products may require the submission of new 510(k) notifications or PMA applications. If a modification is implemented to address a safety concern, we may also need to initiate a recall or cease distribution of the affected device. In addition, if the modified devices require the submission of a 510(k) or PMA and we distribute such modified devices without a new 510(k) clearance or PMA approval, we may be required to recall or cease distributing the devices. The FDA can review a manufacturer's decision not to submit a modification and may disagree. The FDA may also on its own initiative determine that clearance of a new 510(k) or approval of a new PMA submission is required. We have made modifications to our products in the past and may make additional modifications in the future that we believe do not or will not require clearance of a new 510(k) or approval of a new PMA. If we begin manufacture and distribution of the modified devices and the FDA later disagrees with our determination and requires the submission of a new 510(k) or PMA for the modifications, we may also be required to recall the distributed modified devices and to stop distribution of the modified devices, which could have an adverse effect on our business. If the FDA does not clear or approve the modified devices, we may need to redesign the devices, which could also harm our business. When a device is marketed without a required clearance or approval, the FDA has the authority to bring an enforcement action, including injunction, seizure and criminal prosecution. The FDA considers such additional actions generally when there is a serious risk to public health or safety and the company's corrective and preventive actions are inadequate to address the FDA's concerns.

Where we determine that modifications to our products require clearance of a new 510(k) or approval of a new PMA or PMA supplement, we may not be able to obtain those additional clearances or approvals for the modifications or additional indications in a timely manner, or at all. For those products sold in the EEA, we must notify the British Standards Institute, or BSI, our EEA Notified Body, if significant changes are made to the products or if there are substantial changes to our quality assurance systems affecting those products. Delays in obtaining required future clearances or approvals would adversely affect our ability to introduce new or enhanced products in a timely manner, which in turn would harm our future growth.

If we or our suppliers fail to comply with the FDA's Quality System Regulation or ISO Quality Management Systems, manufacturing of our products could be negatively impacted and sales of our products could suffer.

Our manufacturing practices must be in compliance with the FDA's 21 CFR Part 820 Quality System Regulation, or QSR, which governs the facilities, methods, controls, procedures, and records of the design, manufacture, packaging, labeling, storage, shipping, installation, and servicing of our products intended for human use. We are also subject to similar state and foreign requirements and licenses, including the MDD-93/42/EEC and the ISO 13485 Quality Management Systems, or QMS, standard applicable to medical devices. In addition, we must engage in regulatory reporting in the case of potential patient safety risks and must make available our manufacturing facilities, procedures, and records for periodic inspections and audits by governmental agencies, including the FDA, state authorities and comparable foreign agencies. If we fail to comply with the QSR, QMS, or other applicable regulations and standards, our operations could be disrupted and our manufacturing interrupted, and we may be subject to enforcement actions if our corrective and preventive actions are not adequate to ensure compliance.

Failure to take adequate corrective action in response to inspectional observations or any notice of deficiencies from a regulatory inspection or audit could result in partial or total shut-down of our manufacturing operations unless and until adequate corrections are implemented, voluntary or FDA-ordered recall, FDA seizure of affected devices, court-ordered injunction or consent decree that could impose additional regulatory oversight and significant requirements and limitations on our manufacturing operations, significant fines, suspension or withdrawal of marketing clearances and approvals, and criminal prosecutions, any of which would cause our business to suffer. Furthermore, our key component suppliers may not currently be or may not continue to be in compliance with applicable regulatory requirements, which may result in manufacturing delays for our products and cause our revenue to decline.

The FDA, BSI, Japan's Pharmaceutical & Medical Device Administration and other regulatory agencies and bodies have previously imposed inspections and audits on us, and may in the future impose additional inspections or audits at any time, which may conclude that our quality system is noncompliant with applicable regulations and standards. Such findings could potentially disrupt our business, harm our reputation and adversely affect our sales.

Our products may in the future be subject to product recalls or voluntary market withdrawals that could harm our reputation, business and financial results.

The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture that could affect patient safety. In the case of the FDA, the authority to require a recall must be based on an FDA finding that there is a reasonable probability that the device would cause serious adverse health consequences or death. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found or suspected. For example, in 2010 we recalled our Xtract catheter in circumstances where no patient safety incident was reported but where we had evidence that the device's integrity could be compromised under certain storage conditions. A government-mandated recall or voluntary recall by us or one of our distributors could occur as a result of component failures, manufacturing errors, design or labeling defects or other issues. Recalls, which include corrections as well as removals, of any of our products would divert managerial and financial resources and could have an

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adverse effect on our financial condition, harm our reputation with customers, and reduce our ability to achieve expected revenues.

We are required to comply with medical device reporting, or MDR, requirements and must report certain malfunctions, deaths, and serious injuries associated with our products, which can result in voluntary corrective actions or agency enforcement actions.

Under the FDA MDR regulations, medical device manufacturers are required to submit information to the FDA when they receive a report or become aware that a device has or may have caused or contributed to a death or serious injury or has or may have a malfunction that would likely cause or contribute to death or serious injury if the malfunction were to recur. All manufacturers placing medical devices on the market in the EEA are legally bound to report any serious or potentially serious incidents involving devices they produce or sell to the Competent Authority in whose jurisdiction the incident occurred. Were this to happen to us, the relevant Competent Authority would file an initial report, and there would then be a further inspection or assessment if there were particular issues. This would be carried out either by the Competent Authority or it could require that the BSI, as the Notified Body, carry out the inspection or assessment.

Malfunction of our products could result in future voluntary corrective actions, such as recalls, including corrections, or customer notifications, or agency action, such as inspection or enforcement actions. Malfunctions have been reported to us in the past, and, while we investigated each of the incidents and believe we have taken the necessary corrective and preventive actions, we cannot guarantee that similar or different malfunctions will not occur in the future. If malfunctions do occur, we cannot guarantee that we will be able to correct the malfunctions adequately or prevent further malfunctions, in which case we may need to cease manufacture and distribution of the affected devices, initiate voluntary recalls, and redesign the devices; nor can we ensure that regulatory authorities will not take actions against us, such as ordering recalls, imposing fines, or seizing the affected devices. If someone is harmed by a malfunction or by product mishandling, we may be subject to product liability claims. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results.

We are subject to federal, state and foreign healthcare laws and regulations and implementation or changes to such healthcare laws and regulations could adversely affect our business and results of operations.

In an effort to contain rising healthcare costs, in March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, collectively, the PPACA, which may significantly affect the payment for, and the availability of, healthcare services and result in fundamental changes to federal healthcare reimbursement programs. PPACA includes, among other things, the following measures:

• a deductible 2.3% excise tax, with limited exceptions, on the sale of certain medical devices by the manufacturer of the device;

• a Patient-Centered Outcomes Research Institute intended to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research;

• requirements to report certain financial arrangements with physicians and teaching hospitals, as defined in the PPACA and its implementing regulations, including reporting any payment or “transfer of value” made or distributed to teaching hospitals, prescribers, and other healthcare providers and reporting any ownership and investment interests held by physicians and their immediate family members in applicable manufacturers during the preceding calendar year, with data collection required beginning August 1, 2013 and reporting to the U.S. Department of Health and Human Services required by March 31, 2014 and the 90th day of each subsequent calendar year, and with disclosure of such information by the U.S. Department of Health and Human Services on a publicly available website beginning by September 2014; and

• other measures designed to control Medicare spending.

An expansion in the government's role in the U.S. healthcare industry may cause general downward pressure on the prices of medical device products, lower reimbursements for procedures using our products, reduce medical procedure volumes and adversely affect our business and results of operations. Although we cannot predict the many ways that the federal healthcare reform laws might affect our business, sales of certain of our products became subject to the 2.3% excise tax beginning in 2013. It is unclear whether and to what extent, if at all, other anticipated developments resulting from the federal healthcare reform legislation, such as an increase in the number of people with health insurance and an increased focus on preventive medicine, may provide us additional revenue to offset this excise tax. If additional revenue does not materialize, or if our efforts to offset the excise tax through spending cuts or other actions are unsuccessful, the increased tax burden would adversely affect our financial performance, which in turn could cause the price of our stock to decline. In addition, a number of foreign governments are also considering or have adopted proposals to reform their healthcare systems. Because a significant portion of our revenues from our operations is derived internationally, if significant reforms are made to the healthcare systems in other jurisdictions, our sales and results of operations may be materially and adversely impacted.

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We intend to market our products in a number of international markets. Although certain of our IVUS products have been approved for commercialization in Japan and in the EEA, in order to market our products in other foreign jurisdictions, we have had to, and will need to in the future, obtain separate regulatory approvals. The approval procedure varies among jurisdictions and can involve substantial additional testing. Approval or clearance of a device by the FDA does not ensure approval by regulatory authorities in other jurisdictions, and approval by one foreign regulatory authority does not ensure marketing authorization by regulatory authorities in other foreign jurisdictions or by the FDA. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval in addition to other risks. In addition, the time required to obtain foreign approval may differ from that required to obtain FDA approval, and we may not obtain foreign regulatory approvals on a timely basis, if at all. We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any foreign market other than in the EEA and Japan.

We may be subject to federal, state and foreign healthcare fraud and abuse laws and regulations, and a finding of failure to comply with such laws and regulations could have a material adverse effect on our business.

Our operations may be directly or indirectly affected by various broad federal, state or foreign healthcare fraud and abuse laws. In particular, the federal healthcare program Anti-Kickback Statute prohibits any person from knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, in return for or to induce the referring, ordering, leasing, purchasing or arranging for or recommending the ordering, purchasing or leasing of an item or service, for which payment may be made under federal healthcare programs, such as the Medicare and Medicaid programs. This statute has been interpreted to apply to arrangements between device manufacturers on one hand and prescribers and purchasers on the other. For example, the government has sought to apply the Anti-Kickback Statute to device manufacturers' financial relationships with physician consultants. Among other theories, the government has alleged that such relationships are payments to induce the consultants to arrange for or recommend the ordering, purchasing or leasing of the manufacturers' products by the hospitals, medical institutions and other entities with whom they are affiliated. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions, the exemptions and safe harbors are drawn narrowly, and arrangements that involve remuneration that could induce prescribing, purchases, or recommendations may be subject to government scrutiny if they do not qualify for an exemption or a safe harbor. We are also subject to the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), which created federal criminal laws that prohibit executing a scheme to defraud any health care benefit program or making false statements relating to health care matters, and federal “sunshine” requirements to report certain financial arrangements with physicians and teaching hospitals, as defined in the PPACA and its implementing regulations, including reporting any payment or “transfer of value” made or distributed to teaching hospitals, prescribers, and other healthcare providers and reporting any ownership and investment interests held by physicians and their immediate family members in applicable manufacturers.

Also, the federal False Claims Act prohibits persons from knowingly filing, or causing to be filed, a false claim to, or the knowing use of false statements to obtain payment from the federal government. Suits filed under the False Claims Act, known as “qui tam” actions, can be brought by any individual on behalf of the government and such individuals, commonly known as “whistleblowers,” may share in any amounts paid by the entity to the government in fines or settlement. When an entity is determined to have violated the False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civil penalties for each separate false claim. Various states have also enacted laws modeled after the federal False Claims Act.

In addition, several states have adopted laws similar to each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers as well as laws that restrict our marketing activities with physicians, and require us to report consulting and other payments to physicians. Some states, such as California, Connecticut, Massachusetts and Nevada, mandate implementation of commercial compliance programs to ensure compliance with these laws.

The risk of our being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Moreover, recent health care reform legislation has strengthened these laws. For example, the recently enacted PPACA, among other things, amends the intent requirement of the federal anti-kickback and criminal health care fraud statutes; a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. In addition, the PPACA provides that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act. Further, we expect there will continue to be federal and state laws and/or regulations, proposed and implemented, that could impact our operations and business. The extent to which future legislation or regulations, if any, relating to health care fraud abuse laws and/or enforcement, may be enacted or what effect such legislation or regulation would have on our business remains uncertain. If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participating in governmental health care programs, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results.

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We also are subject to foreign fraud and abuse laws, which vary by country. For instance, in the European Union, legislation on inducements offered to physicians and other healthcare workers or hospitals differ from country to country. Breach of the laws relating to such inducements may expose us to the imposition of criminal sanctions. It may also harm our reputation, which could in turn affect sales.

In November 2012, we became aware through newspaper reports in the Italian media that a former employee of ours was under criminal investigation for an alleged violation of Italian anti-bribery laws. The Italian public prosecutor is alleging that the approximately 5,000 euro that we paid to an Italian state-employed physician for conducting a training session was paid in an effort to influence the outcome of a clinical trial. Although we dispute these allegations, if we are unsuccessful in our defense, we may be faced with fines, penalties and a debarment from creating new contractual relationships with hospitals that are part of the Italian national health system. As a result, we cannot assure you that the outcome of this investigation would not have material adverse effects to our business in Italy, or harm our reputation in Europe generally, which could negatively affect our sales.

If our customers are unable to obtain coverage of or sufficient reimbursement for procedures performed with our products, it is unlikely that our products will be widely used.

Successful sales of our products depend on the availability of coverage and adequate reimbursement from third-party payors. Healthcare providers that purchase medical devices for treatment of their patients generally rely on third-party payors to reimburse all or part of the costs and fees associated with the procedures performed with these devices. Both public and private insurance coverage and reimbursement plans are central to new product acceptance. Customers are unlikely to use our products if they do not receive reimbursement adequate to cover the cost of our products and related procedures.

To the extent we sell our products internationally, market acceptance may depend, in part, upon the availability of coverage and reimbursement within prevailing healthcare payment systems. Coverage, reimbursement, and healthcare payment systems in international markets vary significantly by country, and by region in some countries, and include both government-sponsored healthcare and private insurance. We may not obtain international reimbursement approvals in a timely manner, if at all. Our failure to receive international coverage or reimbursement approvals would negatively impact market acceptance of our products in the international markets in which those approvals are sought.

To date, our products have generally been covered as part of procedures for which reimbursement has been available. However, in the United States, as well as in foreign countries, government-funded programs (such as Medicare and Medicaid) or private insurance programs, together commonly known as third-party payors, pay the cost of a significant portion of a patient's medical expenses. Coverage of and reimbursement for medical technology can differ significantly from payor to payor.

All third-party coverage and reimbursement programs, whether government funded or insured commercially, whether inside the United States or outside, are developing increasingly sophisticated methods of controlling healthcare costs. Such cost-containment programs adopted by third-party payors, including legislative and regulatory changes to coverage and reimbursement policies, could potentially limit the amount which healthcare providers are willing to pay for medical devices, or related testing, which could adversely impact our business. The Centers for Medicare & Medicaid Services has announced various efforts to reduce costs in connection with the Medicare program that could have spillover into our business, including for example: (1) a three-year demonstration project that began September 2012, to allow Medicare recovery auditors to audit Medicare payments for procedures prior to Medicare making payment for the procedure, versus following Medicare payment for the procedure as has historically been Medicare's process, and (2) a proposed process to adjust provider payments amounts (with adjustments beginning January 2016) for certain laboratory tests based on changes in technology (historically, the payment for such tests would not typically be adjusted except for annual inflationary and productivity adjustments).

We believe that future coverage of and reimbursement for our products may be subject to increased restrictions both in the U.S. and in international markets. For example, on August 2, 2011, President Obama signed the Budget Control Act of 2011, which imposed significant cuts in federal spending over the next decade. Such cuts in federal spending could impact entitlement programs such as Medicare and aid to states for Medicaid programs. Third-party reimbursement and coverage for our products may not be available or adequate in either the U.S. or international markets. Future legislation, regulations, coverage or reimbursement policies adopted by third-party payors may adversely affect the growth of the markets for our products, reduce the demand for our existing products or our products currently under development and limit our ability to sell our products on a profitable basis.

We may be subject to health information privacy and security standards that include penalties for noncompliance.

The Health Insurance Portability and Accountability Act of 1996, or HIPAA, and its implementing regulations safeguard the privacy and security of individually-identifiable health information. Certain of our operations may be subject to these requirements. Penalties for noncompliance with these rules include both criminal and civil penalties. In addition, the Health Information Technology for Economic and Clinical Health Act, or HITECH Act, expanded federal health information privacy

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and security protections. Among other things, HITECH makes certain of HIPAA's privacy and security standards directly applicable to “business associates”-independent contractors or agents of covered entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity. HITECH also set forth new notification requirements for health data security breaches, increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new authority to enforce HIPAA and seek attorney's fees and costs associated with pursuing federal civil actions. While we do not believe we are a covered entity or a business associate under HIPAA, if we provide services or perform functions where we could have incidental access to protected health information, we would be obligated to protect any protected health information that we may receive in the field in accordance with HIPAA and HITECH.

Compliance with environmental laws and regulations could be expensive, and failure to comply with these laws and regulations could subject us to significant liability.

We use hazardous materials in our research and development and manufacturing processes, including specifically the sterilization processes conducted at our Costa Rica facility. We are subject to foreign, federal, state and local regulations governing use, storage, handling and disposal of these materials and associated waste products. We are currently licensed to handle such materials, but there can be no assurance that we will be able to retain these licenses in the future or obtain licenses under new regulations if and when they are required by governing authorities. We cannot completely eliminate the risk of contamination, injury, or even death resulting from such hazardous materials, and we may incur liability as a result of any such contamination, injury or death. In the event of an accident, we could be held liable for damages or penalized with fines, and the liability could exceed our resources and any applicable insurance. We have also incurred and may continue to incur expenses related to compliance with environmental laws. Such future expenses or liability could have a significant negative impact on our business, financial condition and results of operations. Further, we cannot assure that the cost of compliance with these laws and regulations will not materially increase in the future. We may also incur expenses related to ensuring that our operations comply with environmental laws related to our operations, and those of prior owners or operators of our properties, at current or former manufacturing sites where operations have previously resulted in spills, discharges or other releases of hazardous substances into the environment. We could be held strictly liable under U.S. environmental laws for contamination of property that we currently or formerly owned or operated without regard to fault or whether our actions were in compliance with law at the time. Our liability could also increase if other responsible parties, including prior owners or operators of our facilities, fail to complete their clean-up obligations or satisfy indemnification obligations to us. Similarly, if we fail to ensure compliance with applicable environmental laws in foreign jurisdictions in which we operate, we may not be able to offer our products and may be subject to civil or criminal liabilities.

The use, misuse or off-label use of our products may result in injuries that could lead to product liability suits, which could be costly to our business.

Our currently marketed products have been cleared by the relevant regulatory authority in each jurisdiction where we market them. There may be increased risk of injury if physicians attempt to use our products in procedures outside of those indications cleared or approved for use, known as off-label use. Our sales force is trained according to company policy not to promote our products for off-label uses, and in our instructions for use in all markets we specify that our products are not intended for use outside of those indications cleared for use. However, we cannot prevent a physician from using our products for off-label applications. Our catheters and guide wires are intended to be single-procedure products. In spite of clear labeling and instructions against reuse, we are aware that certain physicians have elected to reuse our products. Reuse of our catheters and guide wires may increase the risk of product liability claims. Reuse may also subject the party reusing the product to regulatory authority inspection and enforcement action. Physicians may also misuse our product if they are not adequately trained, potentially leading to injury and an increased risk of product liability. If our products are defectively designed, manufactured or labeled, contain defective components or are misused, we may become subject to costly litigation by our customers or their patients. Product liability claims could divert management's attention from our core business, be expensive to defend and result in sizable damage awards against us.

Risks Related to our Intellectual Property and Litigation

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

Our success depends significantly on our ability to protect our intellectual property and proprietary technologies. Our policy is to obtain and protect our intellectual property rights. We rely on patent protection, as well as a combination of copyright, trade secret and trademark laws, and nondisclosure, confidentiality and other contractual restrictions to protect our proprietary technology. However, these legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. Our pending U.S. and foreign patent applications may not issue as patents or may not issue in a form that will be advantageous to us. Any patents we have obtained or will obtain may be challenged by re-examination, inter partes or other post-grant review, opposition or other administrative proceeding, or in litigation. Such challenges could result in a determination that the patent is invalid. Some of our older patents have expired or will expire in the

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near future. In addition, competitors may be able to design alternative methods or devices that avoid infringement of our patents. To the extent our intellectual property protection offers inadequate protection, or is found to be invalid, we are exposed to a greater risk of direct competition. If our intellectual property does not provide adequate protection against our competitors' products, our competitive position could be adversely affected, as could our business. Both the patent application process and the process of managing patent disputes can be time consuming and expensive. Furthermore, the laws of some foreign countries may not protect our intellectual property rights to the same extent as do the laws of the United States.

In addition to pursuing patents on our technology, we have taken steps to protect our intellectual property and proprietary technology by entering into confidentiality agreements and intellectual property assignment agreements with our employees, consultants, corporate partners and, when needed, our advisors. Such agreements may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements, and we may not be able to prevent such unauthorized disclosure. Monitoring unauthorized disclosure is difficult, and we do not know whether the steps we have taken to prevent such disclosure are, or will be, adequate.

In the event a competitor infringes upon our patent or other intellectual property rights, litigation to enforce our intellectual property rights or to defend our patents against challenge, even if successful, could be expensive and time consuming and could require significant time and attention from our management. We may not have sufficient resources to enforce our intellectual property rights or to defend our patents against challenges from others.

*The medical device industry is characterized by patent and other intellectual property litigation, and we could become subject to litigation that could be costly, result in the diversion of our management's time and efforts, require us to pay damages or prevent us from selling our products.

The medical device industry is characterized by extensive litigation and interference and other administrative proceedings over patent and other intellectual property rights. Whether or not a product infringes a patent involves complex legal and factual issues, the determination of which is often uncertain. Our competitors may assert that they own U.S. or foreign patents containing claims that cover our products, their components or the methods we employ in the manufacture or use of our products. Because patent applications can take many years to issue and in many instances at least 18 months to publish, there may be applications now pending of which we are unaware, which may later result in issued patents that contain claims that cover our products. There could also be existing patents, of which we are unaware, that contain claims that cover one or more components of our products. As the number of participants in our industry increases, the possibility of patent infringement claims against us also increases.

Any interference proceeding, litigation or other assertion of claims against us may cause us to incur substantial costs, could place a significant strain on our financial resources, divert the attention of our management from our core business and harm our reputation. If the relevant patents asserted against us were upheld as valid and enforceable and were found to be infringed, we could be required to pay substantial damages and/or royalties and could be prevented from selling our products unless we could obtain a license or were able to redesign our products to avoid infringement. Any such license may not be available on reasonable terms, if at all. If we fail to obtain any required licenses or make any necessary changes to our products or technologies, we may be unable to make, use, sell or otherwise commercialize one or more of our products in the affected country. In addition, if we are found to infringe willfully, we could be required to pay treble damages and attorney fees, among other penalties.

We expect to enter new product fields in the future. Entering such additional fields may subject us to claims of infringement. Defending any infringement claims would be expensive and time consuming.

We are aware of certain third-party U.S. patents in fields that we are targeting for development. We do not have licenses to these patents nor do we believe that such licenses are required to develop, commercialize or sell our products in these areas. However, the owners of these patents may initiate a lawsuit alleging infringement of one or more of these or other patents. If they do, we may be required to incur substantial costs related to patent litigation, which could place a significant strain on our financial resources and divert the attention of management from our business and harm our reputation. Adverse determinations in such litigation could cause us to redesign or prevent us from manufacturing or selling our products in these areas, which would have an adverse effect on our business by limiting our ability to generate revenues through the sale of these products.

From time to time in the ordinary course of business, we receive letters from third parties advising us of third-party patents that may relate to our business. The letters do not explicitly seek any particular action or relief from us. Although these letters do not threaten legal action, these letters may be deemed to put us on notice that continued operation of our business might infringe intellectual property rights of third parties. We do not believe we are infringing any such third-party rights, and, other than the matters described in Note 4 "Commitments and Contingencies - Litigation" to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, we are unaware of any litigation or other proceedings having been commenced against us asserting such infringement. We cannot assure you that such litigation or other proceedings asserting infringement by us may not be commenced against us in the future.

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Our rights to a worldwide license of certain IVUS patents owned or licensed by Boston Scientific may be challenged.

The marketing and sale of our current rotational IVUS catheters and pullback products depend on a license for IVUS-related patents owned or licensed by Boston Scientific. Boston Scientific was required to transfer the related intellectual property rights pursuant to a 1995 order of the Federal Trade Commission. We obtained rights to the license in 2003 through our former wholly-owned subsidiary, Pacific Rim Medical Ventures, which merged into us on December 30, 2004. In the event Boston Scientific disputes our rights to the license or seeks to terminate the license, we may be required to expend significant time and resources defending our rights. An adverse determination could cause us to redesign or prevent us from manufacturing or selling our rotational IVUS catheters and pullback products, which would have an adverse effect on our business. Additionally, in the event that the chain of title from the 1995 transfer of rights from Boston Scientific through the 2003 transfer to us is successfully challenged, we may have fewer rights to the technology than our business requires which will negatively impact our ability to continue our development of rotational IVUS catheters and pullback products or subject us to disputes with Boston Scientific or others with respect to the incorporation of this intellectual property into our products.

Our VH IVUS business depends on a license from The Cleveland Clinic Foundation, the loss of which would severely impact our business.

The marketing and sale of our VH IVUS functionality for IVUS depends on an exclusive license to patents owned by The Cleveland Clinic Foundation, the license to which we obtained in April 2002. We are aware that maintenance of the license depends upon certain provisions being met by us including payment of royalties, commercialization of the licensed technology and obtaining regulatory clearances or approvals. If The Cleveland Clinic Foundation were to claim that we committed a material breach or default of these provisions and we were not able to cure such breach or default, The Cleveland Clinic Foundation would have a right to terminate the agreement. The loss of the rights granted under the agreement could require us to redesign our VH IVUS functionality or prevent us from manufacturing or selling our IVUS products containing VH IVUS in countries covered by these patents. In addition, our exclusive license will become non-exclusive if we fail to obtain regulatory clearances or approvals to commercialize the licensed technology within a proscribed time period. The cost of redesigning or an inability to sell our VH IVUS products would have a negative impact on our ability to grow our business and achieve our expected revenues.

Risks Related to our Common Stock

We expect that the price of our common stock will fluctuate substantially.

The market price of our common stock could be subject to significant fluctuation. Factors that could cause volatility in the market price of our common stock include the following:

• changes in earnings estimates, investors' perceptions, recommendations by securities analysts or our failure to achieve analysts' earnings estimates;

• changes in foreign currency exchange rates;

• quarterly variations in our or our competitors' results of operations;

• changes in governmental regulations or in the status of our regulatory clearance or approvals;

• changes in availability of third-party reimbursement in the United States or other countries;

• the announcement of new products or product enhancements by us or our competitors or other developments involving our respective products;

• the announcement of an acquisition or other business combination or strategic transaction;

• possible sales of our common stock by investors who view the 2015 Notes and the 2017 Notes as a more attractive means of equity participation in us;

• the conversion of some or all of the 2015 Notes or the 2017 Notes and any sales in the public market of shares of our common stock issued upon conversion of the 2015 Notes or the 2017 Notes;

• hedging or arbitrage trading activity that may develop involving our common stock, including in connection with the convertible note hedge transactions and warrant transactions we entered into in connection with the offerings of our 2015 Notes and 2017 Notes, and arbitrage strategies employed or that may be employed by investors in our 2015 Notes and 2017 Notes;

• announcements related to patents issued to us or our competitors;

• the announcement of pending or threatened litigation and developments in litigation involving us;

• sales of large blocks of our common stock, including sales by our executive officers and directors; and

• general market and economic conditions and other factors unrelated to our operating performance or the operating performance of our competitors.

These factors may materially and adversely affect the market price of our common stock.

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Additional equity issuances or a sale of a substantial number of shares of our common stock may cause the market price of our common stock to decline.

If our existing stockholders sell a substantial number of shares of our common stock or the public market perceives that existing stockholders might sell shares of our common stock, the market price of our common stock could decline. In addition, sales of a substantial number of shares of our common stock could make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. Because we may need to raise additional capital in the future to continue to expand our business and develop new products, we may, among other things, conduct additional equity offerings. These future equity issuances, together with any additional shares of our common stock issued or issuable in connection with past or any future acquisitions, would result in further dilution to investors and could depress the market price of our common stock.

No prediction can be made regarding the number of shares of our common stock that may be issued or the effect that the future sales of shares of our common stock will have on the market price of our shares.

*Our directors, officers and principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders.

As of September 30, 2014, our directors, officers and principal stockholders (those holding more than 5% of our common stock) collectively controlled a significant portion of our outstanding common stock. To the extent our directors, officers and principal stockholders continue to hold a significant portion of our outstanding common stock, these stockholders, if they act together, would be able to exert significant influence over the management and affairs of our company and most matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control, might adversely affect the market price of our common stock and may not be in the best interests of our other stockholders.

Anti-takeover provisions in our amended and restated certificate of incorporation and bylaws and other agreements and in Delaware law could discourage a takeover.

Our amended and restated certificate of incorporation and bylaws and Delaware law contain provisions that might enable our management to resist a takeover. These provisions include:

• a classified board of directors;

• advance notice requirements to stockholders for matters to be brought at stockholder meetings;

• a supermajority stockholder vote requirement for amending certain provisions of our amended and restated certificate of incorporation and bylaws; and

• the right to issue preferred stock without stockholder approval, which could be used to dilute the stock ownership of a potential hostile acquirer.

We are also subject to the provisions of Section 203 of the Delaware General Corporation Law that, in general, prohibit any business combination or merger with a beneficial owner of 15% or more of our common stock unless the holder's acquisition of our stock was approved in advance by our board of directors. These provisions might discourage, delay or prevent a change in control of our company or a change in our management. The existence of these provisions could adversely affect the voting power of holders of common stock and limit the price that investors might be willing to pay in the future for shares of our common stock.

We have adopted a stockholder rights plan that may discourage, delay or prevent a change of control and make any future unsolicited acquisition attempt more difficult. Under the rights plan:

• the rights will become exercisable only upon the occurrence of certain events specified in the plan, including the acquisition of 20% of our outstanding common stock by a person or group, with limited exceptions;

• each right will entitle the holder, other than an acquiring person, to acquire shares of our common stock at a discount to the then prevailing market price;

• our board of directors may redeem outstanding rights at any time prior to a person becoming an acquiring person at a minimal price per right; and

• prior to a person becoming an acquiring person, the terms of the rights may be amended by our board of directors without the approval of the holders of the rights.

In addition, the terms of our 2015 Notes and 2017 Notes may require us to purchase those notes for cash in the event of a takeover of our company. The indentures governing the Notes also prohibit us from engaging in certain mergers or acquisitions unless, among other things, the surviving entity assumes our obligations under such notes. These and other provisions applicable to the 2015 Notes and 2017 Notes may have the effect of delaying or preventing a takeover of our company that would otherwise be beneficial to our stockholders

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We have not paid dividends in the past and do not expect to pay dividends in the future.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all future earnings for the operation and expansion of our business and, therefore, do not anticipate declaring or paying cash dividends in the foreseeable future. The payment of dividends will be at the discretion of our board of directors and will depend on our results of operations, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payments of dividends present in our current and future debt agreements, and other factors our board of directors may deem relevant. If we do not pay dividends, a return on our common stock will only occur if our stock price appreciates.

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Item 6. Exhibits

Exhibit Number	Description
2.1+	Amendment and Plan of Merger by and Among the Registrant, Athena Sub, Inc, AtheroMed, Inc., and Fortis Advisors LLC, solely in its capacity as Securityholder's Representative (filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K (File No. 000-52045), as originally filed on July 17, 2014 and amended on September 30, 2014, and incorporated herein by reference).
3.1	Amended and Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q (File No. 000-52045), as originally filed on August 9, 2006, and incorporated herein by reference).
3.2	Bylaws of the Registrant, as revised (filed as Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q (File No. 000-52045), as originally filed on August 8, 2013, and incorporated herein by reference).
3.3	Certificate of Designation of Series A Junior Participating Preferred Stock (filed as Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q (File No. 000-52045), as originally filed on August 9, 2006, and incorporated herein by reference).
4.1	Reference is made to Exhibits 3.1, 3.2 and 3.3.
4.2	Specimen Common Stock certificate of the Registrant (filed as Exhibit 4.1 to the Registrant's Registration Statement on Form S-1/A, as amended (File No. 333-132678), as originally filed on May 24, 2006, and incorporated herein by reference).
4.3	Fourth Amended and Restated Investor Rights Agreement, dated February 18, 2005, by and among the Registrant and certain stockholders (filed as Exhibit 4.2 to the Registrant's Registration Statement on Form S-1, as amended (File No. 333-132678), as originally filed on March 24, 2006, and incorporated herein by reference).
4.4	Rights Agreement, dated June 20, 2006, by and between the Registrant and American Stock Transfer & Trust Company (filed as Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q (File No. 000-52045), as originally filed on August 9, 2006, and incorporated herein by reference).
4.5	Indenture, dated September 20, 2010, by and between the Registrant and Wells Fargo Bank (filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K (File No. 000-52045), as originally filed on September 20, 2010, and incorporated herein by reference).
4.6	Supplemental Indenture, dated September 20, 2010 by and between Registrant and Wells Fargo Bank, N.A. (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K (File No. 000-52045), as originally filed on September 20 2010, and incorporated herein by reference).
4.7	Form of 2.875% Convertible Senior Notes due 2015 (filed as Exhibit 4.3 to the Registrant's Current Report on Form 8-K (File No. 000-52045), as originally filed on September 20, 2010, and incorporated herein by reference).
4.8	Second Supplemental Indenture, dated December 10, 2012, by and between the Registrant and Wells Fargo Bank, N.A. (filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K (File No. 000-52045), as originally filed on December 10, 2012, and incorporated herein by reference).
4.9	Form of 1.75% Convertible Senior Notes due 2017 (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K (File No. 000-52045), as originally filed on December 10, 2012, and incorporated herein by reference).
10.1*	Separation Agreement and General Release of All Claims, effective July 1, 2014, by and between the Registrant and Jorge (George) J. Quinoy.
10.2+	Settlement, Release, License Agreement, and Covenants not to Sue, dated August 7, 2014, by and among the Registrant, Axsun Technologies, Inc., St. Jude Medical, Inc., St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, St. Jude Medical S.C., Inc. and LightLab Imaging, Inc.
31.1	Certification of the President & Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
32.1**	Certification of the President & Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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32.2**	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS***	XBRL Instance Document.
101.SCH***	XBRL Taxonomy Extension Schema Document.
101.CAL***	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF***	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB***	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE***	XBRL Taxonomy Extension Presentation Linkbase Document.

* Management contract or compensatory plan or arrangement.

** The certifications attached as Exhibits 32.1 and 32.2 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

*** Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 460T, these interactive data files are deemed not filed and otherwise are not subject to liability.

+ Text omitted and filed separately with the Securities and Exchange Commission. Confidential treatment requested under 17 C.F.R. Sections 200.80(b)(4) and 240.24b-2.

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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 thereunto duly authorized.

Signature	Title	Date
/s/ John T. Dahldorf	Chief Financial Officer (principal financial officer, principal accounting officer and duly authorized officer)	November 7, 2014
John T. Dahldorf

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EXHIBIT INDEX

	Description
2.1+	Amendment and Plan of Merger by and Among the Registrant, Athena Sub, Inc., AtheroMed, Inc. and Fortis Advisors LLC, solely in its capacity as Securityholder's Representative (filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K (File No. 000-52045), as originally filed on July 17, 2014 and amended on September 30, 2014, and incorporated herein by reference).
3.1	Amended and Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q (File No. 000-52045), as originally filed on August 9, 2006, and incorporated herein by reference).
3.2	Bylaws of the Registrant, as revised (filed as Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q (File No. 000-52045), as originally filed on August 8, 2013, and incorporated herein by reference).
3.3	Certificate of Designation of Series A Junior Participating Preferred Stock (filed as Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q (File No. 000-52045), as originally filed on August 9, 2006, and incorporated herein by reference).
4.1	Reference is made to Exhibits 3.1, 3.2 and 3.3.
4.2	Specimen Common Stock certificate of the Registrant (filed as Exhibit 4.1 to the Registrant's Registration Statement on Form S-1/A, as amended (File No. 333-132678), as originally filed on May 24, 2006, and incorporated herein by reference).
4.3	Fourth Amended and Restated Investor Rights Agreement, dated February 18, 2005, by and among the Registrant and certain stockholders (filed as Exhibit 4.2 to the Registrant's Registration Statement on Form S-1, as amended (File No. 333-132678), as originally filed on March 24, 2006, and incorporated herein by reference).
4.4	Rights Agreement, dated June 20, 2006, by and between the Registrant and American Stock Transfer & Trust Company (filed as Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q (File No. 000-52045), as originally filed on August 9, 2006, and incorporated herein by reference).
4.5	Indenture, dated September 20, 2010, by and between the Registrant and Wells Fargo Bank (filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K (File No. 000-52045), as originally filed on September 20, 2010, and incorporated herein by reference).
4.6	Supplemental Indenture, dated September 20, 2010 by and between Registrant and Wells Fargo Bank, N.A. (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K (File No. 000-52045), as originally filed on September 20 2010, and incorporated herein by reference).
4.7	Form of 2.875% Convertible Senior Notes due 2015 (filed as Exhibit 4.3 to the Registrant's Current Report on Form 8-K (File No. 000-52045), as originally filed on September 20, 2010, and incorporated herein by reference).
4.8	Second Supplemental Indenture, dated December 10, 2012, by and between the Registrant and Wells Fargo Bank, N.A. (filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K (File No. 000-52045), as originally filed on December 10, 2012, and incorporated herein by reference).
4.9	Form of 1.75% Convertible Senior Notes due 2017 (filed as Exhibit 4.2 to the Registrant's Current Report on Form 8-K (File No. 000-52045), as originally filed on December 10, 2012, and incorporated herein by reference).
10.1*	Separation Agreement and General Release of All Claims, effective July 1, 2014, by and between the Registrant and Jorge (George) J. Quinoy.
10.2+	Settlement, Release, License Agreement, and Covenants not to Sue, dated August 7, 2014, by and among the Registrant, Axsun Technologies, Inc., St. Jude Medical, Inc., St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, St. Jude Medical S.C., Inc. and LightLab Imaging, Inc.
31.1	Certification of the President & Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.

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32.1**	Certification of the President & Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS***	XBRL Instance Document.
101.SCH***	XBRL Taxonomy Extension Schema Document.
101.CAL***	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF***	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB***	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE***	XBRL Taxonomy Extension Presentation Linkbase Document.

* Management contract or compensatory plan or arrangement.

** The certifications attached as Exhibits 32.1 and 32.2 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

*** Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 460T, these interactive data files are deemed not filed and otherwise are not subject to liability.

+ Text omitted and filed separately with the Securities and Exchange Commission. Confidential treatment requested under 17 C.F.R. Sections 200.80(b)(4) and 240.24b-2.

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EX-10.1

SEPARATION AGREEMENT

AND GENERAL RELEASE OF ALL CLAIMS

This Separation Agreement and General Release of All Claims (“Agreement”) is made by and between Volcano Corporation (the “Company”) and George Quinoy (“Employee”), collectively referred to as the “parties” with respect to the following facts:

A.Employee’s employment is terminated effective July 1, 2014 (“Termination Date”).

B.The Company and Employee wish to settle and resolve all claims of any nature between the parties, including but not limited to, all rights and obligations under any prior written or oral agreements or understandings, and to formalize the terms of Employee’s separation, as described below.

THEREFORE, in consideration of the promises and mutual agreements hereinafter set forth, IT IS HEREBY AGREED, by and between the undersigned parties as follows:

1.Severance Benefits. Employer shall provide Employee with the following Severance Benefits subject to Employee signing and returning this Agreement, and not revoking acceptance of this Agreement:

1.1Severance Payment. Employer agrees to pay Employee a severance payment equal to six (6) months of base salary in the gross amount of One hundred sixty eight thousand and three hundred sixty five U.S. Dollars ($168,365.00), a prorated bonus payment at the target compensation through June 2014, in the gross amount of Sixty seven thousand U.S. Dollars ($67,000.00) and a cash payout in the gross amount of One hundred seventy three thousand U.S. Dollars ($173,000.00) for a total “Severance Payment” of Four hundred eight thousand and three hundred sixty five U.S. Dollars ($408,365.00), less all appropriate federal and state tax withholdings, to which Employee is not otherwise entitled. The Severance Payment will be made in equal installments in accordance with the Company’s regular payroll schedule beginning with the first payment being made on the first regularly scheduled payday following following the later of: a) the Effective Date as described below in Section 4.4; or b) the date on which Employee returns all of the Employer’s property in Employee’s possession as provided under Section 9 below. The Severance Payment will be made via direct deposit (if Employee currently uses direct deposit for receiving wages), or via check mailed to Employee’s last known address (if Employee does not currently use direct deposit).

1.2Insurance Stipend. Employer will pay Employee a benefits stipend of Nine thousand three hundred and ninety three U.S. Dollars and thirty cents ($9,393.30) equivalent to the cost of six (6) months of health insurance coverage. The benefits stipend set forth herein is a grossed up amount and will be subject to appropriate federal and state tax withholdings. The payment will be made on the first payday following the later of: a) the Effective Date as described below in Section 4.4; or b) the date on which Employee returns all of the Employer’s property in Employee’s possession as provided under Section 9 below.

1.3    Employee acknowledges and agrees that the Severance Benefits constitute adequate legal consideration for the promises and representations made by Employee in this Agreement. Up to the Termination Date, Employee will continue to receive his full regular salary and on the Termination Date Employee will receive a check for all accrued but unused Paid Time Off (PTO) and return of any ESPP contributions he has made in the current offering period.  Except for the compensation set forth herein and the Severance Payment and

the Insurance Stipend described in Sections 1.1 and 1.2 above, Employee acknowledges that he is not owed any other compensation, wages, earned commissions and/or earned bonuses though the Termination Date.

2.General Release.

2.1Employee unconditionally, irrevocably and absolutely releases and discharges the Company and all of their parent and subsidiary corporations, divisions and other affiliated entities, past and present, as well as their employees, officers, directors, agents, attorneys, successors and assigns (collectively, “Released Parties”), from all claims related in any way to the transactions or occurrences between them to date to the fullest extent permitted by law including, but not limited to, any losses, liabilities, claims, demands and causes of action, known or unknown, suspected or unsuspected, arising directly or indirectly out of or in any way connected with Employee’s employment with the Company, or the termination of Employee’s employment. This release is intended to have the broadest possible application and includes, but is not limited to, any and all claims for unpaid wages, meal or rest periods, bonuses, and any associated penalties, interests, and any tort, contract, common law, constitutional or other statutory claims, as well as alleged violations of the California Labor Code, Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the California Business and Professions Code, the Employee Retirement and Income Security Act, the California Family Rights Act, the Family and Medical Leave Act, the Americans with Disabilities Act, all as amended, including any and all claims under any other federal, state, and local laws and regulations and all claims for attorneys’ fees, costs and expenses. However, this release shall not apply to claims for workers’ compensation benefits, unemployment insurance benefits, or any other claims that cannot, by statute, lawfully be waived by this Agreement.

2.2Employee acknowledges that he may discover facts or law different from, or in addition to, the facts or law that he knows or believes to be true with respect to the claims released in this Agreement and agrees, nonetheless, that this Agreement and the release contained in it shall be and remain effective in all respects notwithstanding such different or additional facts or the discovery of them.

2.3Employee declares and represents that he intends this Agreement to be final and complete and not subject to any claim of mistake. Employee executes this release with the full knowledge that this release covers all possible claims against the Released Parties, to the fullest extent permitted by law.

2.4    Employee declares and represents that he has not filed or otherwise assisted another in filing or pursuing any charges, complaints or claims of any nature which are in any way pending against the Company or any of the Released Parties with any court, administrative body or any other tribunal with respect to his employment with the Company, conduct that occurred prior to his Termination Date and/or any business conducted by the Company and that, to the extent permitted by law, Employee will not do so in the future.

2.5     To the extent the law permits Employee to file or otherwise pursue on his behalf any charge, complaint or claim against the Company or any Released Party, Employee expressly agrees to waive, forfeit or otherwise forgo Employee’s right to recover any type of monetary damages or reinstatement, including but not limited to compensatory damages, punitive damages, any statutory share of the damages and/or penalties imposed on the Company and attorneys' fees, to which Employee may otherwise be entitled in connection with said charge, complaint, grievance, or claim in any administrative action or proceeding, in any

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litigation, whether state or federal, and whether brought by Employee or on Employee’s behalf by an administrative agency, related in any way to the matters released herein.

2.6    Employee declares and represents that he has not previously engaged in any conduct that would constitute a violation of Company policies, law or regulation and he is not aware of any potential violations of the Company policies, law or regulation that have not been reported in accordance with applicable Company policies and procedures.

3.California Civil Code Section 1542 Waiver. Employee expressly acknowledges and agrees that all rights under Section 1542 of the California Civil Code are expressly waived. That section provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

Employee acknowledges that he has read this entire Agreement, including the above Civil Code section, and fully understands that he is a “creditor” within the meaning of Section 1542.

4.Age Discrimination Claim Waiver. This Agreement is intended by the Parties to release and discharge any and all claims of Employee under the Age Discrimination in Employment Act, 29 U.S.C. section 621 et. seq. It is the intent of Employee and the Company that this Agreement satisfies the requirements of the Older Workers' Benefit Protection Act, 29 U.S.C. section 626(f) for a valid waiver. The following general provisions, along with the other provisions of this Agreement, are agreed to for this purpose:

4.1    Employee acknowledges and agrees that he has read and understands the terms of this Agreement;

4.2    Employee is advised to consult with an attorney before executing this Agreement, and Employee has obtained and considered such legal counsel as he deems necessary, such that he is entering into this Agreement freely, knowingly and voluntarily;

4.3    Employee shall have twenty-one (21) days after receipt of this Agreement in which to consider and execute this Agreement. Employee understands that at his option, he may elect not to use the full 21-day period;

4.4    This Agreement shall not become effective or enforceable until seven (7) days after Employee signs this Agreement. In other words, Employee may revoke his acceptance of this Agreement within seven (7) days after the date he signs it. Employee’s revocation must be in writing and received by Heather Ace within the seven (7) day period in order to be effective. If Employee does not revoke acceptance within the seven (7) day period, his acceptance of this Agreement shall become binding and enforceable on the eighth day after it is signed by him and delivered to the Company (the “Effective Date”); and

4.5    This Agreement shall not apply to any claims for age discrimination that arise after the Effective Date.

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5.Representation Concerning Filing of Legal Actions. Employee represents that, as of the date of this Agreement, hehas not filed any lawsuits, complaints, petitions, claims or other accusatory pleadings against the Company or any of the other Released Parties in any court of law. Employee further agrees that, to the fullest extent permitted by law, hewill not prosecute in any court, whether state or federal, any claim or demand of any type related to the matters released above, it being the intention of the parties that with the execution of this release, the Released Parties will be absolutely, unconditionally and forever discharged of and from all obligations to or on behalf of Employee related in any way to the matters discharged herein.

6.No Admissions. By entering into this Agreement, the Released Parties make no admission that they have engaged, or are now engaging, in any unlawful conduct. The parties understand and acknowledge that this Agreement is not an admission of liability and shall not be used or construed as such in any legal or administrative proceeding.

7.Nondisclosure and Non-Use of Company Confidential Information. Employee acknowledges and agrees that, by reason of his position with the Company, he has been given access to confidential or proprietary documents, materials or information regarding the Company's products, strategic plans, research, business affairs, and personnel matters, which he acknowledges and agrees are of a highly sensitive and confidential nature and considered trade secrets and/or proprietary to the Company. Employee agrees that he will not disclose or communicate "Confidential Information." For purposes of this Agreement, "Confidential information" means any data or information that is proprietary to Company and not generally known to the public, whether in tangible or intangible form, whenever and however disclosed, including, but not limited to: (i) any marketing, sales or research strategies, plans, proposals, programs, financial information, or projections, cost summaries, pricing formulas, customers, business partners, operations, sales estimates, business plans and performance results relating to the past, present or future business activities of such party, its affiliates, subsidiaries and affiliated companies; (ii) plans for products, services, research and customer, investigator or supplier lists; (iii) any scientific or technical information, invention, design, process, procedure, formula, improvement, technology or method; (iv) any concepts, ideas, materials, reports, data, know-how, works-in-progress, designs, development tools, specifications, computer software, source code, object code, flow charts, databases, inventions, research, information and trade secrets; (v) any acquisition or divestitures, litigation related information or strategies, personnel matters and (vi) any other information that should reasonably be recognized as confidential information of Company. Employee acknowledges and agrees that (i) Confidential Information need not be novel, unique, patentable, copyrightable or constitute a trade secret in order to be designated Confidential Information, (ii) Confidential Information is proprietary to Company, has been developed and obtained through great efforts by Company and (iii) Company regards all of its Confidential Information as trade secrets. Employee represents that he has held all such Confidential Information confidential and will continue to do so, and that he will not use such Confidential Information and/or documents for any purpose whatsoever. Employee understands that this obligation of confidentiality continues even after the Termination Date. Employee also reaffirms his agreement to, and all of his obligations under any proprietary information and non-disclosure agreement he signed with the Company, and the Parties expressly incorporate all of the terms and conditions of such an agreement into this Agreement.

Employee acknowledges that the remedy at law for breach of the covenants under this Section 7 will be inadequate and, accordingly, in the event of any breach or threatened breach by Employee of the provisions of this Section 7 Company shall be entitled, in addition to all other

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remedies, to an injunction restraining any such breach, without any bond or other security being required.

8.Confidentiality of Agreement. Employee agrees that confidentiality is one of the most important terms of this Agreement. The terms and conditions of this Agreement shall remain confidential, and neither Employee nor any agent of Employee shall disclose, directly or indirectly, the facts underlying the terms and conditions of this Agreement or this Agreement itself to any other person or entity. Employee specifically agrees that he will not disclose that he has received the Severance Pay and Benefits described above, or that Employee has received any money or benefits relating to his separation from employment, except to Employee’s spouse/domestic partner, attorneys or financial advisors, unless required to do so by law. Employee agrees that disclosure of any of the terms or conditions of this Agreement shall constitute and be treated as a material breach of this Agreement. Nothing in this Agreement shall be construed to prevent Employee from responding truthfully and completely to any lawfully issued court order or subpoena or from communicating with a government agency.

9.Return of Company Property. Employee agrees that, by no later than the Effective Date, he shall return to the Company all property of the Released Parties in his possession, custody or control, including but not limited to all company issued or provided credit cards, keys, entry cards, identification badges, telephones, mobile devices, and all documents, files, folders, correspondence, email communication, memoranda, notes, notebooks, drawings, books, records, plans, forecasts, reports, proposals, agreements, financial information, computer-recorded information, as well as all copies thereof, electronic or otherwise.

10.    Cooperation. As additional consideration for this Agreement, Employee agrees to make himself reasonably available to the Company and its representatives and shall provide truthful and complete information in connection with any and all claims, disputes, negotiations, investigations, lawsuits or administrative proceedings relating to or arising from events, acts, or failures to act that occurred during the period of his employment by the Company. Employee further agrees that he will provide the Company with any information and/or documentation in his possession or control that it may request in connection with all claims, disputes, negotiations, investigations, lawsuits or administrative proceedings related to or arising during or out of Employee’s employment with the Company. Employee further agrees that if requested to do so by the Company, he will provide declarations or statements to the Company, will meet with attorneys or other representatives of the Company, and will prepare for and give depositions or testimony on behalf of the Company relating all claims, disputes, negotiations, investigations, lawsuits or administrative proceedings related to or arising during or out of Employee’s employment with the Company. Employee further agrees to execute any documents necessary to carry out the terms of this Agreement. Employee understands and agrees that to the extent his compliance with the terms of this section require him to travel or otherwise incur expenses, the Company will reimburse him for any such reasonable expenses that he incurs. Nothing herein is intended or should be construed as requiring anything other than Employee’s cooperation in providing truthful and accurate information. Employee agrees that he will not knowingly encourage, counsel, or assist any attorneys, or their clients, or related third parties in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against the Company and/or any of the Released Parties unless he is legally required to do so under a subpoena or court order.

11.    Non-Disparagement. Employee agrees that he will not make any derogatory, disparaging or defamatory statements, publications or comments, written or verbal, regarding the Released Parties or their business, agents, officers, directors, employees or affiliates. This

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section shall in no way prevent Employee from testifying truthfully pursuant to an enforceable subpoena. Company agrees to instruct its officers, directors and executive leadership to not make any derogatory, disparaging or defamatory statements, publications or comments, written or verbal, regarding Employee.

12.    Non Compete and Non Solicitation of Customers.    For a period of one (1) year following the Termination Date (“Restricted Period”), Employee agrees that he will not, directly or indirectly, as an owner, manager, employee, consultant, independent contractor or otherwise, and whether or not for compensation, engage in activities or offer products or services for a Competing Business that compete with those offered or developed by the Company during his employment with the Company. For purposes of this Agreement “Competing Business” means any entity (including any of its subsidiaries or affiliates) that produces a product or performs a service that is the same as or similar to, may be substituted for, or is intended to be used for any of the same purposes as a product or service produced, performed or under development by the Company or that competes directly for customers, clients and accounts of the Company. To remove any doubt, Employee agrees that “Competing Business” includes, but it not limited to, the following entities and their subsidiaries and affiliates, St. Jude Medical, Inc., Boston Scientific, Abbott Laboratories, Covidian LP, Cordis Corporation, Cook, Inc., Bard Medical, Spectranetics, Infraredx, ACIST Medical Systems, Terumo Medical Corporation, Merit Medical, Asahi-Intecc, Eximo Medical, Ra Medical Systems, Biosensors International, Microport, Nipro, Goodman Co. and Cardio Vascular Systems, Inc. and any divisions or successors thereof. Notwithstanding the foregoing, except as related to St. Jude Medical, Inc., Employee may work for a Competing Business whose business is diversified, provided Employee’s work for the Competing Business does not involve selling, managing, overseeing, developing, creating, promoting, servicing, involvement in the finance and/or accounting of, or other responsibility for any product, process, activity, service or technology that resembles or competes with those of the Company on which Employee has worked or gained Confidential Information during the last two years of Employee’s employment (Restricted Product or Service.) Prior to accepting such employment, Employee and the Competing Business must provide the Company with written assurances satisfactory to the Company that Employee will not render services directly or indirectly, for the Restricted Period, in connection with any Restricted Product or Service and that any and all necessary safeguards or procedures have been put in place to ensure that this does not happen. This restriction applies in the entire United States, Asia Pacific, Latin America and Canada, including all foreign countries and foreign territories, all geographies where Company does business and Employee worked, in which the services Employee will provide could enhance the use or marketability of a Restricted Product or Service, use the Company’s goodwill, or otherwise interfere with any of the Company’s protectable interests.)

Nothing in this Agreement shall prevent Employee from owning not more than one percent of the total shares of all classes of stock outstanding of any publically held entity engaged in a Competing Business provided that such ownership represents a passive investment and that neither Employee nor any group of persons in any way, either directly or indirectly, manages or exercises control of any such corporation, guarantees any of its financial obligations, otherwise takes any part in its business, other than exercising Employee’s rights as a shareholder, or seeks to do any of the foregoing.

In addition to, and without limiting the foregoing, for the Restricted Period, Employee will not, directly or indirectly, solicit, induce, promote, market, sell or attempt to solicit, induce, promote, market or sell, or provide any services to any Restricted Customer (defined as any customer of the Company, whether an individual, corporation or any other commercial organization or entity, with whom Employee had dealings, for whom Employee performed services, called upon, had contact with or acquired non-public information about in connection with his employment with

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Company in the United States, Asia Pacific, Latin America and Canada during the last two years of Employee’s employment with Company) to do business with Employee on his own behalf or on behalf of any Competing Business.

13.     Non-Solicitation of Employees. For two (2) years following Employee’s Termination Date, Employee will not, either directly or indirectly solicit, assist in soliciting, entice, induce or attempt to induce or influence any employee, independent contractor, partner or consultant of Company to terminate, alter, reduce or diminish his or her relationship with Company.

14.     Breach. Employee understands and agrees that all breaches of this Agreement are material. If Employee breaches any provision of this Agreement, Employee understands and agrees that he will not be entitled to the Severance Benefits described in this Agreement, all Severance Benefits will cease, and the Company will be entitled to repayment of any Severance Benefits previously received by Employee, attorneys fees and costs (if any) incurred by Company in obtaining such repayment, and all other remedies available under law and equity (including but not limited to rescission).

15.    Entire Agreement. Except as expressly stated herein, this Agreement contains the entire agreement between Employee and the Company and supersedes any prior agreement or understanding between Employee and the Released Parties (whether oral or written) regarding the subject matters contained herein; provided, however, that any confidentiality agreement Employee has with the Company remains in full force and effect. Employee acknowledges that no promise has been made to him that is not contained in this Agreement.

16.     Severability. In the event any provision of this Agreement shall be found unenforceable by a court of competent jurisdiction, the provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the Released Parties shall receive the benefits contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.

17.    Applicable Law. The validity, interpretation and performance of this Agreement shall be construed and interpreted according to the laws of the United States of America and the State of Georgia.

18.    Binding on Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs, and assigns. Employee shall not assign any of her rights or obligations under this Agreement or any other agreements incorporated herein.

19.    Full Defense. This Agreement may be pled as a full and complete defense to, and may be used as a basis for an injunction against, any action, suit or other proceeding that may be prosecuted, instituted or attempted by Employee in breach hereof. Employee agrees that in the event an action or proceeding is instituted by the Released Parties in order to enforce the terms or provisions of this Agreement, the Released Parties shall be entitled to an award of reasonable costs and attorneys’ fees incurred in connection with enforcing this Agreement.

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20.    Good Faith. The parties agree to do all things necessary and to execute all further documents necessary and appropriate to carry out and effectuate the terms and purposes of this Agreement.

21.    Modification. This Agreement may be amended only by a written instrument executed by all parties hereto.

22.    Counterparts. This Agreement may be executed in counterparts and shall be binding on all parties when each has signed either an original or copy of this Agreement.

23.    Expiration of Offer. This offer shall expire on its own terms, without notice, if it not signed and returned to Company within twenty-one (21) days after the final Agreement is received by Employee. The intent of this section is to insure that if Employee does not sign and return this document within the twenty-one day review period provided by Section 4.3 above, the offer shall expire by its own terms.

THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.

Dated: June __, 2014	By:
		George Quinoy
	Volcano Corporation
Dated: June __, 2014	By:
		Darin Lippoldt Executive Vice President, General Counsel and Chief Compliance Officer

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EX-10.2

Exhibit 10.2

***Text Omitted and Filed Separately with the Securities and Exchange Commission.

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

EXECUTION COPY

SETTLEMENT AGREEMENT

BY AND AMONG

ST. JUDE MEDICAL, INC.

AND

VOLCANO CORPORATION

AND

CERTAIN OF THEIR AFFILIATES

DATED AS OF AUGUST 7, 2014

Settlement, Release, License Agreement, and Covenants Not To Sue

This Settlement, Release, License Agreement, and Covenants Not To Sue (“Agreement”) is entered into as of the 7th day of August, 2014 (which shall be the “Effective Date,” as defined below), by and between St. Jude Medical, Inc., a corporation organized under the laws of the state of Minnesota, and its Affiliates St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, St. Jude Medical S.C., Inc., and LightLab Imaging, Inc., on one hand, and Volcano Corporation, a corporation organized under the laws of the state of Delaware, and its Affiliate Axsun Technologies, Inc., on the other hand.

R E C I T A L S

WHEREAS, SJM and certain of its Affiliates and Volcano and certain of its Affiliates are presently parties in the civil actions identified in Section 1.33;

WHEREAS, SJM and Volcano agree that it is in their mutual best interests to fully and finally resolve the Litigations and other disputes between the Parties and desire to achieve complete and lasting litigation peace with respect to the Litigations;

WHEREAS, as part of this Settlement, the Parties wish to grant certain releases to each other, to license the Patents-in-Suit to each other, and to grant certain covenants not to sue each other;

WHEREAS, the Parties wish that the benefits from the releases, licenses and covenants may be shared with their respective Affiliates to the extent set forth herein;

WHEREAS, the Parties wish to provide terms and conditions regarding the conditions under which the Parties and certain of their respective Affiliates may assign this Agreement or rights and obligations hereunder to third parties.

NOW, THEREFORE, for and in consideration of the covenants, conditions and undertakings hereinafter set forth, and for good and other valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

1. Definitions

1.1“Acquirer” means any person or entity (other than an Affiliate of the applicable Party) that acquires (a) substantially all of the assets of a Party, or (b) more than 50% of the outstanding securities of any class of voting securities of a Party or (if such Party is not the surviving corporation) the resulting company or such Party’s parent company, whether through any type of merger, consolidation, amalgamation, share exchange, business combination, recapitalization, tender offer, exchange offer, acquisition of securities, issuance of securities or other similar transaction. “Acquirer” Includes all Affiliates of the Acquirer immediately prior to the closing of any transaction referenced in clause (a) or (b) of this definition.

1.2“Acquirer’s Legacy Patents” shall mean (a) any patent or utility model of an Acquirer, whether foreign or domestic, for which, prior to becoming an Acquirer, the right to enforce the patent, utility model, or the underlying application to the patent or utility model, was

owned by the Acquirer, whether by assignment, exclusive license, or otherwise; (b) all ancestors of the patents referenced in clause (a) of this definition and all descendants of any patent or patent application to which any of the patents referenced in clause (a) of this definition claim priority; and (c) all patents issued and patent applications pending, past, present or future, that claim priority of any kind to the patents referenced in clause (a) or (b) of this definition, Including any continuations, continuations-in-part, divisionals, extensions, reissues, re-examinations, or post-grant reviews of those patents.

1.3“Acquirer’s Legacy Products” shall mean any Product that, before becoming an Acquirer, the Acquirer (a) had already Used, or (b) had available to be Used. Such Products shall be deemed Acquirer’s Legacy Products, whether or not such Products are or have been combined or integrated with a Product of a Party or any of its Affiliates. Any later version or iteration of an Acquirer’s Legacy Product, whether or not it bears the same trade name, after the Acquirer became an Acquirer, shall also be deemed an Acquirer’s Legacy Product.

1.4“Affiliate” of an entity means any person or entity that Controls or is Controlled by or is under common Control with that entity.

1.5“Assign” means to assign or sell rights or to delegate obligations under Section 7.1. “Assignment” is an assignment or sale of rights or a delegation of obligations under Section 7.1. An “Assigning Party” is a Party or any of its Affiliates that makes an Assignment pursuant to Section 7.1. An “Assignee” is a person or entity to whom an Assignment is made pursuant to Section 7.1.

1.6“Assignee’s Legacy Products” shall mean any Product that, before becoming an Assignee, the Assignee (a) has or had already Used, or (b) had available to be Used. Such Products shall be deemed Assignee’s Legacy Products, whether or not such Products are or have been combined or integrated with a Product of the applicable Assigning Party or any of its Affiliates. Any later version or iteration of an Assignee’s Legacy Product, whether or not it bears the same trade name, after the entity became an Assignee, shall also be deemed an Assignee’s Legacy Product.

1.7“Axsun” shall mean Axsun Technologies, Inc.

1.8“Axsun Acquirer” means any person or entity (other than an Affiliate of Volcano) that acquires (a) substantially all of the assets of Axsun or (b) more than 50% of the outstanding securities of any class of voting securities of Axsun or (if Axsun is not the surviving corporation) the resulting company or Axsun’s parent company, whether through any type of merger, consolidation, amalgamation, share exchange, business combination, recapitalization, tender offer, exchange offer, acquisition of securities, issuance of securities or other similar transaction.

1.9“Axsun Rights and Obligations” shall mean Axsun’s rights and obligations, in each case as in effect immediately prior to the closing of the applicable Axsun Transaction, under Sections 5.1(c), 5.1(d), 5.2(b), 5.2(c) and 5.2(d) (each as modified or clarified by Sections 5.4-5.8), and Sections 2, 3, 6, 7, 8, 9, and 10.

1.10“Axsun Transaction” shall mean any transaction in which an entity becomes an Axsun Acquirer.

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1.11“CE Mark Clearance” shall mean the mark or authority signifying clearance to sell a particular Product within the European Economic Area.

1.12“Claimed Trade Secrets” shall mean: (a) all information that LightLab claims to be a trade secret that LightLab communicated to Axsun prior to January 7, 2009, Including alleged trade secret and/or confidential information referenced in any way whatsoever in any of the Litigations identified in Sections 1.33(d), 1.33(e), and 1.33(f); and (b) all information that Axsun claims to be a trade secret that Axsun communicated to LightLab prior to January 7, 2009, Including alleged trade secret and/or confidential information referenced in any way whatsoever in any of the Litigations identified in Sections 1.33(d), 1.33(e), and 1.33(f).

1.13“CNTS” shall mean the covenants not to sue set forth in Sections 5.1 and 5.2.

1.14“Control” shall mean direct or indirect ownership or control of (a) more than fifty percent (50%) of the outstanding shares or securities entitled to vote for the election of directors or similar managing authority of the subject entity; (b) more than fifty percent (50%) of the ownership interest representing the right to make the decisions for the subject entity; or (c) any other ability to elect more than half of the board of directors or similar managing authority of the subject entity, whether by contract or otherwise.

1.15“Current Affiliate” shall mean any Affiliate of St. Jude Medical, Inc. or Volcano Corporation on the Effective Date.

1.16“Current Product” shall mean any Product: (a) that is Used anywhere in the world by St. Jude Medical, Inc. or Volcano Corporation or any of their Current Affiliates on or before the Effective Date; or (b) for which a Regulatory Application has been submitted to the relevant governmental agency or notified body by St. Jude Medical, Inc. or Volcano Corporation or any of their Current Affiliates on or before the Effective Date; or (c) that: (i) received clearance or approval on or before the Effective Date pursuant to a Regulatory Application, and (ii) is modified on or before the Effective Date, and (iii) does not require a Regulatory Application for the modification provided that St. Jude Medical, Inc. or Volcano Corporation or their applicable Current Affiliate has satisfied all regulatory requirements on or before the Effective Date so that the Product can be lawfully sold, Including, for example, where applicable, documentation pursuant to United States Food & Drug Administration 510(k) Memorandum #K97-1 issued January 10, 1997, 21 C.F.R. § 814.39, or 21 C.F.R. § 814.42. “Current Product” does not include any Product of a person or entity that is not St. Jude Medical, Inc. or Volcano Corporation or a Current Affiliate. “Current Product” also does not include Acquirer’s Legacy Products, Assignee’s Legacy Products, or Future Affiliate’s Legacy Products.

1.17“Effective Date” shall mean August 7, 2014.

1.18“Feature” shall mean any aspect or characteristic of a Product.

1.19“Final Judgment” shall mean the Amended Final Judgment entered on February 10, 2011 in the Massachusetts Action, as affirmed by the Decision of the Commonwealth of Massachusetts Supreme Judicial Court, in its Decision issued on July 28, 2014 in Massachusetts Supreme Judicial Court No. 11374.

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1.20“Functional Measurement” shall mean sensing, deriving, receiving, calculating, or displaying either the value of blood pressure within a vessel or the value of blood flow within a vessel.

1.21“Future Affiliate” shall mean any Affiliate of St. Jude Medical, Inc. or Volcano Corporation that becomes an Affiliate after the Effective Date.

1.22“Future Affiliate’s Legacy Products” shall mean any Product that, prior to an entity becoming a Future Affiliate, that entity (a) has or had already Used, or (b) had available to be Used. Such Products shall be deemed Future Affiliate’s Legacy Products, whether or not such Products are or have been combined or integrated with a Product of a Party or any of its Affiliates. Any later version or iteration of a Future Affiliate’s Legacy Product, whether or not it bears the same trade name, after the entity becomes a Future Affiliate, shall also be deemed a Future Affiliate’s Legacy Product.

1.23“Future Product” shall mean any Product in the field of Functional Measurement, Including a multi-modality system that incorporates Functional Measurement: (a) for which a Regulatory Application is submitted to the relevant governmental agency or notified body by St. Jude Medical, Inc. or Volcano Corporation or any of their Affiliates within two years after the Effective Date, or (b) that: (i) received clearance or approval before the Effective Date pursuant to a Regulatory Application, and (ii) is modified within two years after the Effective Date, and (iii) does not require a Regulatory Application for the modification provided that St. Jude Medical, Inc. or Volcano Corporation or their applicable Affiliate has satisfied all regulatory requirements within two years after the Effective Date so that the Product can be lawfully sold, Including, for example, where applicable, documentation pursuant to United States Food & Drug Administration 510(k) Memorandum #K97-1 issued January 10, 1997, 21 C.F.R. § 814.39, or 21 C.F.R. § 814.42. “Future Product” does not include Acquirer’s Legacy Products, Assignee’s Legacy Products, or Future Affiliate’s Legacy Products.

1.24“Grandfathered Feature” shall mean a Feature that is or was in a Grandfathered-Product.

1.25“Grandfathered-Product” shall mean a Current Product or a Future Product.

1.26“iFR Products” shall mean Products that (a) measure pressure using analysis of less than one full cardiac cycle or (b) use hyperemic agent free lesion pressure analysis.

1.27“Including” shall mean “including but not limited to” and “including without limitation.”

1.28“IVUS Products” shall mean Products for intravascular ultrasound.

1.29“LightLab” shall mean LightLab Imaging, Inc.

1.30“LightLab Acquirer” means any person or entity (other than an Affiliate of SJM’s) that acquires (a) substantially all of the assets of LightLab or (b) more than 50% of the outstanding securities of any class of voting securities of LightLab or (if LightLab is not the surviving corporation) the resulting company or LightLab’s parent company, whether through any type of merger, consolidation, amalgamation, share exchange, business combination, recapitalization,

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tender offer, exchange offer, acquisition of securities, issuance of securities or other similar transaction.

1.31“LightLab Rights and Obligations” shall mean LightLab’s rights and obligations, in each case as in effect immediately prior to the closing of the applicable LightLab Transaction, under Sections 5.1(b), 5.1(c), 5.1(d), 5.2(c) and 5.2(d) (each as modified or clarified by Sections 5.4-5.8), and Sections 2, 3, 6, 7, 8, 9, and 10.

1.32“LightLab Transaction” shall mean any transaction in which an entity becomes a LightLab Acquirer.

1.33“Litigations” shall mean, collectively, the actions (Including claims and counterclaims asserted therein) styled:

a)    St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, and St. Jude Medical S.C., Inc. v. Volcano Corporation, United States District Court for the District of Delaware C.A. No. 10-631-RGA;

b)    St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, and St. Jude Medical S.C., Inc. v. Volcano Corporation, United States District Court for the District of Delaware C.A. No. 12-441-RGA;

c)    Volcano Corporation v. St. Jude Medical, Cardiovascular and Ablation Technologies Division, Inc.; St. Jude Medical, Cardiology Division, Inc.; St. Jude Medical, U.S. Division; St. Jude Medical S.C., Inc.; and St. Jude Medical Systems AB, United States District Court for the District of Delaware C.A. No. 13-687-RGA, and United States Court of Appeals for the Federal Circuit, Appeal No. 2014-1376;

d)    LightLab Imaging, Inc. v. Axsun Technologies, Inc. and Volcano Corporation, Massachusetts Superior Court No. C.A. No. 09-0068-BLS1 (“Massachusetts Action”) and Massachusetts Supreme Judicial Court No. 11374 (“SJC Proceeding”);

e)    Axsun Technologies, Inc. and Volcano Corporation v. LightLab Imaging, Inc., Delaware Chancery Court C.A. No. 5250-CB;

f)    LightLab Imaging, Inc. v. Axsun Technologies, Inc. and Volcano Corporation, Delaware Chancery Court C.A. No. 6517-CB; and

g)    St. Jude Medical, Cardiology Division, Inc., v. Volcano Corporation, and Michelle K. Lee, Deputy Director, U.S. Patent and Trademark Office, United States Patent and Trademark Office – Patent Trial and Appeal Board, No. IPR2013-00258, and United States Court of Appeals for the Federal Circuit, Appeal No. 2014-1183.

1.34“NDA” shall mean that certain Non-Disclosure Agreement between Axsun and LightLab dated July 11, 2014.

1.35“OCT Products” shall mean Products for intravascular optical coherence tomography, intravascular optical frequency domain imaging, or optical fiber-based intravascular data collection, Including electromagnetic radiation sources such as lasers and other light sources,

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catheters, interferometers, lenses, optical assemblies, optical clocking mechanisms, software and software-based methods, rotary joints, control systems and methods and manufacturing methods, Including components of the foregoing.

1.36“Party” shall mean either SJM or Volcano. “Parties” shall mean SJM and Volcano, collectively.

1.37“Patents-in-Suit” shall mean shall mean the following U.S. patents: 5,178,159, 5,797,856, 5,938,624, 6,112,598, 6,167,763, 6,196,980, 6,248,083, 6,565,514, 6,976,965, 7,134,994, 8,419,647, and 8,419,648.

1.38“PMDA Approval” shall mean a Ninsho approval or Shonin approval, as applicable, by the Japanese PMDA, signifying clearance to sell a particular Product within Japan.

1.39“Product” shall mean any medical device, or any system, console, probe, apparatus, software, or service used with a medical device.

1.40“Regulatory Application” shall mean an application for: (a) U.S. FDA Approval, (b) CE Mark Clearance, or (c) PMDA Approval.

1.41“[***] Patents” shall mean the patents and patent applications [***] and any continuations or continuations-in-part to those patents and patent applications. The [***] Patents are listed on Exhibit E (and the Parties acknowledge and agree that patents or patent applications or continuations or continuations in part to those patents or patent applications listed on Exhibit E [***] shall not be deemed part of Exhibit E for any purposes of this Agreement).

1.42“SJM” shall mean St. Jude Medical, Inc. and its Assignees under Section 7, Including any Acquirer of St. Jude Medical, Inc. that receives an Assignment of this Agreement under Section 7.1(c) (and any subsequent Acquirer of such Acquirer that receives an Assignment of this Agreement in accordance with Section 7.1). For purposes of clarity, as used in this Agreement, “St. Jude Medical, Inc.” does not include its Assignees.

1.43“SJM Licensed Patents” shall mean (a) U.S. Patent Nos. 5,938,624, 6,112,598, 6,167,763, 6,196,980, 6,248,083, and 6,565,514; (b) all ancestors of the patents referenced in clause (a) of this definition and all descendants of any patent or patent application to which any of the patents referenced in clause (a) of this definition claim priority, whether foreign or domestic; and (c) all patents issued and patent applications pending, past, present or future, that claim priority of any kind to the patents referenced in clauses (a) or (b) of this definition, Including any continuations, continuations-in-part, divisionals, extensions, reissues, re-examinations, or post-grant reviews of those patents.

1.44“SJM Patent” shall mean any past, present or future patent or utility model, issued in the United States or any foreign country, granted to SJM or any of its Affiliates, acquired by or assigned to SJM or any of its Affiliates, or under which SJM or any of its Affiliates have a right to sue, [***]. “SJM Patent” does not include any Acquirer’s Legacy Patents.

***Confidential Treatment Requested

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1.45“Supply Agreement” shall mean the “Axsun-LightLab Tunable Laser Development and Supply Agreement (First Amendment),” dated as of April 29, 2008, as modified to require the delivery of tunable lasers meeting the Version 6 Specification (as confirmed by paragraph 1 of the Declaratory Relief section of the Final Judgment).

1.46“U.S. FDA Approval” shall mean a 510(k) clearance pursuant to 21 C.F.R. § 807.81(a)(3), or PMA approval, as applicable, by the United States Food and Drug Administration, signifying clearance or approval to sell a particular Product within the United States.

1.47“Use” or “Used” shall mean manufacture, make, market, have made, use, import, offer for sale, export, sell, consign, lease, or loan. “Use” also includes practicing a method with a Product.

1.48“Version 6 Specification” shall mean the laser specification that is attached to LightLab Purchase Order No. 209-1009, dated January 6, 2009.

1.49“Volcano” shall mean Volcano Corporation and its Assignees under Section 7, Including any Acquirer of Volcano Corporation that receives an Assignment of this Agreement under Section 7.1(c) (and any subsequent Acquirer of such Acquirer that receives an Assignment of this Agreement in accordance with Section 7.1). For purposes of clarity, as used in this Agreement, “Volcano Corporation” does not include its Assignees.

1.50“Volcano Effective Date Products” means the versions of the Products listed in Exhibit F that are sold by Volcano or its Affiliates as of the Effective Date.

1.51“Volcano Licensed Patents” shall mean (a) U.S. Patent Nos. 5,178,159, 5,797,856, 6,976,965, 7,134,994, 8,419,647, and 8,419,648; (b) all ancestors of the patents referenced in clause (a) of this definition and all descendants of any patent or patent application to which any of the patents referenced in clause (a) of this definition claim priority, whether foreign or domestic; and (c) all patents issued and patent applications pending, past, present or future, that claim priority of any kind to one or more of the patents referenced in clauses (a) or (b) of this definition, Including any continuations, continuations-in-part, divisionals, extensions, reissues, re-examinations or post-grant reviews of any of those patents.

1.52“Volcano Patent” shall mean any past, present or future patent or utility model, issued in the United States or any foreign country, granted to Volcano or any of its Affiliates, acquired by or assigned to Volcano or any of its Affiliates, or under which Volcano or any of its Affiliates have a right to sue. “Volcano Patent” does not include any Acquirer’s Legacy Patents.

1.53“Wholly-Owned” shall mean, with respect to any Affiliate of either Party, such Party owns or controls, directly or indirectly, 100 percent (100%) of the outstanding shares or securities (other than directors’ qualifying shares or securities or shares or securities required to be held by non-United States nationals under applicable non-United States laws and regulations for Affiliates organized outside the United States) entitled to vote for the election of directors or similar managing authority of that Affiliate.

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2. Dismissal of Claims and Actions

2.1Within two (2) business days following the completed execution of this Agreement, the Parties, and any of their Current Affiliates that are parties to the Litigations, shall cause the filings of Stipulations of Dismissal With Prejudice in the forms attached as Exhibits A-D. With respect to the Decision issued on July 28, 2014 in the SJC Proceeding, no Party or any of its Current Affiliates shall file any Petition for Rehearing in the SJC Proceeding, or otherwise seek appellate review of said decision.

2.2In the event any stipulation or agreement in Section 2.1 above is not entered by one or more of the applicable courts, the Parties, and any of their Current Affiliates that are parties to the Litigations, shall cooperate fully to effect prompt dismissal with prejudice of the Litigations. Pending dismissal by the Court, the Parties, and any of their Current Affiliates that are parties to the Litigations, shall not pursue any discovery nor take any further actions adverse to each other in the Litigations.

2.3The Parties, and each of their respective Current Affiliates that are parties to the Litigations, shall comply with the terms of the Protective Orders that have been entered in the Litigations regarding the destruction or return of all confidential materials exchanged in connection with the Litigations. Except as permitted by the applicable Protective Orders, all confidential material received by either Party, or any of its Current Affiliates that are parties to the Litigations, from the other Party, or any of its Current Affiliates that are parties to the Litigations, during the Litigations shall be destroyed by the receiving Party or applicable Current Affiliate, or returned to the producing Party or applicable Current Affiliate.

2.4Each Party, and any of its Current Affiliates that are parties to the Litigations, shall bear its own costs and attorneys’ fees with respect to each of the Litigations and the settlement thereof.

2.5This Agreement is not and shall not in any way be construed as an admission of liability by any Party, or any of its Current Affiliates that are parties to the Litigations, for any alleged wrongful or unlawful acts. This Agreement does not constitute a finding on the merits of any of the Parties’ allegations, or any of the allegations of their respective Current Affiliates that are parties to the Litigations, in any of the Litigations, and neither Party nor any Affiliate is a prevailing party within the meaning of any law. Neither Party, nor any of its Current Affiliates that are parties to the Litigations, makes any admissions as to the alleged infringement of the Patents-in-Suit, or to the validity or enforceability of the Patents-in-Suit. In this regard, neither Party, nor any of its Current Affiliates that are parties to the Litigations, concedes that the other Party’s patents, or any of the patents of the other Party’s Current Affiliates that are parties to the Litigations, are valid, enforceable and/or infringed. Neither Party, nor any of its Current Affiliates that are parties to the Litigations, concedes that any finding as to the scope of any Patent-in-Suit or construction of any claim limitation is correct. The Parties and each of their respective Current Affiliates that are parties to the Litigations agree that appeals of such findings are being dismissed or not pursued to facilitate this settlement, and for no other reason.

2.6Neither Party nor its Affiliates shall during the term of this Agreement challenge the validity or enforceability of a Patent-in-Suit unless the Party or any of its Affiliates is accused of infringing the patent.

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3. Releases

3.1Release from the SJM Releasors to the Volcano Releasees: Upon execution of this Agreement and the filing in court of Exhibits A-D, SJM and its Affiliates (collectively, the “SJM Releasors”) fully, forever, irrevocably, and unconditionally release, remise and discharge Volcano and its Current Affiliates, and all of their officers, directors, shareholders, employees, agents and attorneys (collectively, the “Volcano Releasees”), from any and all claims, obligations, acts, costs, expenses (Including attorneys’ fees and expenses), demands, rights, liabilities, damages, and causes of action of every nature, character and description whatsoever, in law, in equity, or otherwise, that the SJM Releasors or any of them ever had or now have, on or before the Effective Date, against the Volcano Releasees arising out of the conduct, transactions, or occurrences alleged in the Litigations or that could have been alleged under the same facts and circumstances as those which gave rise to the Litigations Including any claims for infringement of any of the Patents-In-Suit or misappropriation of any of the Claimed Trade Secrets, Including the Version 6 Specification (collectively, “SJM Released Claims”).

3.2Release from the Volcano Releasors to the SJM Releasees: Upon execution of this Agreement and the filing in court of Exhibits A-D, Volcano and its Affiliates (collectively, the “Volcano Releasors”) fully, forever, irrevocably, and unconditionally release, remise and discharge SJM and its Current Affiliates, and all of their officers, directors, shareholders, employees, agents and attorneys (collectively, the “SJM Releasees”), from any and all claims, obligations, acts, costs, expenses (Including attorneys’ fees and expenses), demands, rights, liabilities, damages, and causes of action of every nature, character and description whatsoever, in law, in equity, or otherwise, that the Volcano Releasors or any of them ever had or now have, on or before the Effective Date, against the SJM Releasees arising out of the conduct, transactions, or occurrences alleged in the Litigations or that could have been alleged under the same facts and circumstances as those which gave rise to the Litigations Including any claims for infringement of any of the Patents-In-Suit or misappropriation of any of the Claimed Trade Secrets, Including the Version 6 Specification (collectively, “Volcano Released Claims”).

3.3Notwithstanding the terms of Section 3.1 and 3.2, nothing in this Agreement shall release any rights or claims of any SJM Releasor or Volcano Releasor (a) to enforce this Agreement, by way of arbitration pursuant to Section 8 of this Agreement; (b) under Purchase Order Nos. 4501053910, 4501050227, 4500951403, 4500885938 and 4500783806; (c) to purchase – or with respect to LightLab’s, SJM’s, or an SJM Affiliate’s purchase of – lasers under the Supply Agreement (or any new supply agreement entered into between SJM or any of its Affiliates and Axsun), under any LightLab purchase order, or under any Axsun order acknowledgement, Including claims or rights under any express or implied warranty (other than claims already asserted or adjudicated in the Litigations), or claims for product liability, indemnity, or contribution.

3.4The Parties do not believe that the releases set forth in Sections 3.1 and 3.2 constitute a “general release” within the meaning of California Civil Code § 1542. Notwithstanding the foregoing, with respect to the releases set forth in Sections 3.1 and 3.2 and the SJM Released Claims and the Volcano Released Claims, the Parties and their respective Affiliates hereby expressly waive any and all rights that they may have under the laws or statutes of any jurisdiction that limits the extension of releases provided in this Agreement to certain types of claims, such as California Civil Code § 1542, which provides that: “A general release does not

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extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”

3.5The releases granted in this Section 3 extend to each of the Parties’ and each of their respective Affiliates’ direct and indirect customers, end-users, suppliers, distributors, resellers, and dealers, for any patent infringement or trade secret misappropriation relating to their Use of any Product of either of the Parties or any of their Affiliates.

4. Licenses

4.1As of the Effective Date, SJM, on behalf of itself and its Affiliates, grants Volcano and each of its Wholly-Owned Affiliates (and, with respect to each such Affiliate, only for so long as such Affiliate remains a Wholly-Owned Affiliate of Volcano) a fully paid-up, irrevocable, non-exclusive, worldwide license to practice the SJM Licensed Patents (with no right to sublicense).

4.2As of the Effective Date, Volcano, on behalf of itself and its Affiliates, grants SJM and each of its Wholly-Owned Affiliates (and, with respect to each such Affiliate, only for so long as such Affiliate remains a Wholly-Owned Affiliate of SJM) a fully paid-up, irrevocable, non-exclusive, worldwide license to practice the Volcano Licensed Patents (with no right to sublicense).

4.3The licenses granted in Sections 4.1 and 4.2 extend to each of the Parties’ and each of their respective Wholly-Owned Affiliates’ direct and indirect customers, end-users, suppliers, distributors, resellers, and dealers, for their marketing, using, importing, exporting, offering for sale, selling, consigning, leasing or loaning of any Product of either of the Parties or any of their Wholly-Owned Affiliates, but not for making Products or having such Products made.

4.4The licenses granted in Sections 4.1 and 4.2 shall be effective as of the Effective Date and, unless terminated earlier with respect to any Wholly-Owned Affiliate of either Party that ceases to be a Wholly-Owned Affiliate, shall extend until the expiration of each of the SJM Licensed Patents and Volcano Licensed Patents.

5. Covenants Not To Sue

5.1As of the Effective Date, SJM, on behalf of itself and its Affiliates, represents, warrants, covenants, and agrees that neither it nor its Affiliates will, individually or collectively, bring, maintain, or otherwise institute any action in any forum for any claim against Volcano at any time or against any of Volcano’s Wholly-Owned Affiliates at any time while such Affiliate remains a Wholly-Owned Affiliate of Volcano, anywhere in the world, for:

a) infringement of any Patent-In-Suit;

b) infringement of any SJM Patent arising out of or related to the Use of any of Volcano’s or any of its Affiliates’ Current Products or Future Products, or for infringement where a Grandfathered Feature is a basis for a claim of infringement. By way of example, if a particular Feature appears in the current Volcano Corporation s5 System, that particular Feature will thus be a Grandfathered

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Feature, and will be immune from suit by SJM and its Affiliates if it appears in a future Volcano Product, even if the rest of the future Volcano Product is different from the current Volcano s5 System

The covenants in this Section 5.1(b) are intended to only cover Products for which each limitation of the SJM Patent claim is practiced by a Grandfathered Feature. For example, if a Volcano Corporation Current Product includes Features A and B, then A and B are Grandfathered Features. If Volcano then adds Feature C to the Product more than two years after the Effective Date, wherein Feature C is not a Grandfathered Feature, the covenant will prohibit an allegation of infringement of an SJM Patent claim that recites only A and B as claim elements, but will not prohibit an allegation of infringement of an SJM Patent claim that recites A, B and C as claim elements;

c) misappropriation of any of the Claimed Trade Secrets, Including the Version 6 Specification; and

d) claims of any nature that relate to any of the Litigations, Including claims that relate to the Final Judgment entered in the Massachusetts Action.

5.2As of the Effective Date, Volcano, on behalf of itself and its Affiliates, represents, warrants, covenants, and agrees that neither it nor its Affiliates will, individually or collectively, bring, maintain, or otherwise institute any action in any forum for any claim against SJM at any time or against any of SJM’s Wholly-Owned Affiliates at any time while such Affiliate remains a Wholly-Owned Affiliate of SJM, anywhere in the world, for:

a) infringement of any Patent-In-Suit;

b) infringement of any Volcano Patent arising out of or related to the Use of any of SJM’s or any of its Affiliates’ Current Products or Future Products, or for infringement where a Grandfathered Feature is a basis for a claim of infringement. By way of example, if a particular Feature appears in the current PressureWire™ Aeris™ System made by an SJM Affiliate , that particular Feature will thus be a Grandfathered Feature, and will be immune from suit by Volcano and its Affiliates if it appears in a future SJM Product, even if the rest of the future SJM Product is different from the current SJM PressureWire™ Aeris™ System

The covenants in this Section 5.2(b) are intended to only cover Products for which each limitation of the Volcano Patent claim is practiced by a Grandfathered Feature. For example, if a St. Jude Medical, Inc. Current Product includes Features A and B, then A and B are Grandfathered Features. If SJM then adds Feature C to the Product more than two years after the Effective Date, wherein Feature C is not a Grandfathered Feature, the covenant will prohibit an allegation of infringement of a Volcano Patent claim that recites only A and B as claim elements, but will not prohibit an allegation of infringement of a Volcano Patent claim that recites A, B and C as claim elements;

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c) misappropriation of any of the Claimed Trade Secrets, Including the Version 6 Specification; and

d) claims of any nature that relate to any of the Litigations, Including claims that relate to the Final Judgment entered in the Massachusetts Action.

5.3For purposes of clarity, the Parties agree, on behalf of themselves and their Affiliates, that no claim can be brought to enforce Paragraph 3 of the Injunctive Relief Provisions contained in the Final Judgment entered in the Massachusetts Action.

5.4Notwithstanding the terms of Section 5.1 and 5.2, nothing in this Agreement shall limit the right of a Party or its Affiliates to assert (a) claims to enforce this Agreement, by way of arbitration pursuant to Section 8 of this Agreement; (b) claims under LightLab Purchase Order Nos. 4501053910, 4501050227, 4500951403, 4500885938 and 4500783806; or (c) claims for breach of any right to purchase – or claims with respect to LightLab’s, SJM’s, or an SJM Affiliate’s purchase of – lasers under the Supply Agreement (or any new supply agreement entered into between SJM or any of its Affiliates and Axsun), under any LightLab purchase order, or under any Axsun order acknowledgement, Including claims under any express or implied warranties (other than claims already asserted or adjudicated in the Litigations), or claims for product liability, indemnity, or contribution.

5.5The CNTS granted in Sections 5.1 and 5.2 extend to each of the Parties’ and each of their respective Wholly-Owned Affiliates’ direct and indirect customers, end-users, suppliers, distributors, resellers, and dealers, for their marketing, using, importing, exporting, offering for sale, selling, consigning, leasing or loaning of any Product of either of the Parties or any of their Wholly-Owned Affiliates, but not for making Products or having such Products made.

5.6The CNTS granted in Sections 5.1 and 5.2 shall apply to any and all claims, counterclaims, demands, liabilities, suits, and causes of action, Including for alleged direct or indirect infringement, and shall be worldwide, shall survive any termination or cancellation of the Agreement (subject, in the case of any Wholly-Owned Affiliate of either Party, to terminating and no longer being for the benefit of any such Affiliate that ceases to be a Wholly-Owned Affiliate), shall be effective as of the Effective Date, and shall continue until termination of this Agreement pursuant to Section 10.1, or as long as necessary to preclude any claim, counterclaim, demand, liability, suit, or cause of action that is contrary to the CNTS granted (subject, in the case of any Wholly-Owned Affiliate of either Party, to terminating and no longer being for the benefit of any such Affiliate that ceases to be a Wholly-Owned Affiliate), whichever is earlier.

5.7Notwithstanding the CNTS granted in Section 5.1, neither SJM nor its Affiliates grant a CNTS to Volcano or any of its Wholly-Owned Affiliates for patent infringement (whether for direct infringement, contributory infringement, or induced infringement) with respect to: (a) any system, method, sensor (Including a guidewire, catheter, chronically implantable circuit), communication module or software for wireless communication of physiological pressure sensor data between a sensor (Including an attached transmitter) and a monitor or receiver; (b) any OCT Product; (c) any Assignee’s Legacy Product; (d) any Acquirer’s Legacy Product; or (e) any Future Affiliate’s Legacy Product. For clarity, this Section 5.7 trumps the CNTS in Section 5.1.

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5.8Notwithstanding the CNTS granted in Section 5.2, neither Volcano nor its Affiliates grant a CNTS to SJM or any of its Wholly-Owned Affiliates for patent infringement (whether for direct infringement, contributory infringement, or induced infringement) with respect to: (a) any iFR Product; (b) any IVUS Product; (c) any Assignee’s Legacy Product; (d) any Acquirer’s Legacy Product; or (e) any Future Affiliate’s Legacy Product. For clarity, this Section 5.8 trumps the CNTS in Section 5.2.

6. No Payment To Be Made By Either Party Or Any of Its Affiliates

6.1Neither Party nor any of its Affiliates will make any payment to the other Party or any of its Affiliates in connection with this Agreement, Including any contingent payments referred to in the Parties’ Stipulated Dismissal Of Volcano’s Damages And Willful Infringement Claims Relating To St. Jude’s PressureWire 4 And 5 Products, filed January 6, 2014, in Case No. 10-631-RGA (D. Del.), under D.I. Nos. 642 and 643.

7. Assignment

7.1A Party or its Affiliates may only Assign its rights and obligations under this Agreement (a) with prior written consent of the other Party; or (b) subject to the other terms of this Section 7.1:

a) Axsun shall Assign the Axsun Rights and Obligations, in whole and not in part, to any Axsun Acquirer in connection with an Axsun Transaction, and shall ensure that such Axsun Acquirer (i) agrees to comply with and be bound by all provisions of the Axsun Rights and Obligations and (ii) sends notice to that effect to SJM as per the instructions for notices in Section 10 at closing (or promptly thereafter) of the applicable Axsun Transaction. Volcano and its Affiliates agree to indemnify and hold harmless SJM and its Affiliates for any failure to so Assign the Axsun Rights and Obligations pursuant to this Section 7.1(a). Volcano shall have no obligation to indemnify or hold harmless SJM and its Affiliates if it Assigns the Axsun Rights and Obligations pursuant to this Section 7.1(a) and such Axsun Acquirer (i) agrees to comply with and be bound by all provisions of the Axsun Rights and Obligations and (ii) sends notice to that effect to SJM as per the instructions for notices in Section 10 at closing (or promptly thereafter) of the applicable Axsun Transaction, even if the Axsun Acquirer fails to perform any obligations in the Axsun Rights and Obligations.

b) LightLab shall Assign the LightLab Rights and Obligations, in whole and not in part, to any LightLab Acquirer in connection with a LightLab Transaction, and shall ensure that such LightLab Acquirer (i) agrees to comply with and be bound by all provisions of the LightLab Rights and Obligations and (ii) sends notice to that effect to Volcano as per the instructions for notices in Section 10 at closing (or promptly thereafter) of the applicable LightLab Transaction. SJM and its Affiliates agree to indemnify and hold harmless Volcano and its Affiliates for any failure to so Assign the LightLab Rights and Obligations pursuant to this Section 7.1(b). SJM shall have no obligation to indemnify or hold harmless Volcano and its Affiliates if it Assigns the LightLab Rights and Obligations pursuant to this Section 7.1(a) and such LightLab Acquirer (i) agrees to comply with and be bound by all

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provisions of the LightLab Rights and Obligations and (ii) sends notice to that effect to Volcano as per the instructions for notices in Section 10 at closing (or promptly thereafter) of the applicable LightLab Transaction, even if the LightLab Acquirer fails to perform any obligations in the LightLab Rights and Obligations.

c) Volcano and SJM may Assign this Agreement and its rights and obligations hereunder, in whole and not in part, to any Acquirer in connection with the transaction whereby such entity becomes an Acquirer, provided that such Acquirer agrees to comply with and be bound by all provisions of this Agreement and sends notice to that effect to the other Party as per the instruction for notices in Section 10 at closing of the transaction (or promptly thereafter) pursuant to which such entity became an Acquirer.

Any Assignment or attempted Assignment not in accordance with this Section 7.1 shall be null and void. For purposes of clarity (y) any Axsun Acquirer or LightLab Acquirer that receives an Assignment of the Axsun Rights and Obligations or the LightLab Rights and Obligations under Section 7.1(a) or Section 7.1(b), as applicable, may, without the prior written consent of SJM or Volcano, as applicable, Assign the Axsun Rights and Obligations or LightLab Rights and Obligations, as applicable, to a subsequent Assignee so long as such Assignment is made in accordance with Section 7.1(a) or Section 7.1(b), as applicable, and (z) any Acquirer of Volcano or SJM that receives an Assignment of this Agreement and such Party’s rights and obligations hereunder under Section 7.1(c) may, without the prior written consent of the other Party, Assign this Agreement and such Acquirer’s rights and obligations hereunder to a subsequent Acquirer so long as such Assignment is made in accordance with Section 7.1(c).

7.2In the event that SJM or any of its Affiliates transfer the right to enforce, or transfer ownership of, any SJM Licensed Patent or SJM Patent to any person or entity other than an Affiliate of SJM, SJM shall send notice of the transfer to Volcano, and the transfer shall not be effective until the transferee agrees to be bound by all obligations under this Agreement with respect to the transferred patent (Including, for example, any rights relating to the Licenses and CNTS in Sections 4 and 5), in addition to all of the obligations in Sections 7, 8, 9 and 10 of this Agreement. This Section 7.2 does not apply in connection with any Assignment made pursuant to Section 7.1.

7.3In the event that Volcano or any of its Affiliates transfer the right to enforce, or transfer ownership of, any Volcano Licensed Patent or Volcano Patent to any person or entity other than an Affiliate of Volcano, Volcano shall send notice of the transfer to SJM, and the transfer shall not be effective until the transferee agrees to be bound by all obligations under this Agreement with respect to the transferred patent (Including, for example, any rights relating to the Licenses and CNTS in Sections 4 and 5), in addition to all of the obligations in Sections 7, 8, 9 and 10 of this Agreement. This Section 7.3 does not apply in connection with any Assignment made pursuant to Section 7.1 in which the Assignee agrees to comply with and be bound by all provisions of the Axsun Rights and Obligations and Sections 7, 8, 9 and 10, but does apply in the event that an Assignment under Section 7.1 is attempted but the Assignee does not agree to comply with and be bound by all provisions of the Axsun Rights and Obligations and Sections 7, 8, 9 and 10.

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7.4Except as expressly set forth in this Agreement, this Agreement is being entered into exclusively for the benefit of, and shall be binding on, the Parties and their Affiliates and, subject to the terms of Section 7.1, their permitted Assignees under Section 7.1, and, except as expressly set forth in this Agreement, no provision of this Agreement is intended to benefit any third party.

8. Dispute Resolution

8.1In this Section 8 (and only in this Section 8), reference to a “Party” Includes the Party and its Affiliates.

8.2All disputes arising out of this Agreement shall be governed by the arbitration provisions set forth in this Section 8. However, the Parties may not commence any arbitration proceedings regarding this Agreement until they first exhaust the dispute resolution process described in Section 8.3 and 8.4. For purposes of clarity, a dispute arises out of this Agreement, for example, if it relates to the scope or construction of its terms, Including whether or not this Section 8 applies to the dispute. A dispute also arises out of this Agreement, for example, if it relates to an assertion of infringement, invalidity or unenforceability of an SJM Licensed Patent, a Volcano Licensed Patent, an SJM Patent, or a Volcano Patent, except, however, a dispute does not arise out of this Agreement if it relates to an assertion of infringement, invalidity or unenforceability of a patent to which a CNTS does not apply. If a dispute is asserted in any forum other than arbitration, and one of the Parties asserts that this Section 8 applies, the Parties agree to seek a stay of the litigation to allow an arbitrator to decide whether this Section 8 applies.

8.3If any dispute arises between the Parties arising out of this Agreement, the aggrieved Party shall provide written notice of its claim to the other Party (“Claim Notice”). If the dispute involves a claim for patent infringement relating to an SJM Licensed Patent or a Volcano Licensed Patent (“Patent Dispute”), the Claim Notice shall (a) identify the individual patent claims alleged to be infringed; (b) describe the accused system or Product; (c) specifically identify the basis for the claim for infringement; and (d) state the Party’s position as to why the claim is not barred by the Release, License or CNTS provisions in the Agreement. Within thirty (30) days after receipt of a Claim Notice (“Response Period”), the Party receiving the Claim Notice shall send its written response to the Party asserting the claim and said response shall (a) specifically respond to the claim of infringement; and (b) state the Party’s position as to whether and why the claim being asserted is barred by the Release, License or CNTS provisions in the Agreement (“Claim Response”).

8.4    Following the sending of the Claim Response, the Parties shall attempt in good faith to negotiate a resolution of the dispute. As part of such negotiations, representatives of the respective business units involved for the Parties shall be required to meet in person at a mutually agreeable location. The representatives at the meeting shall have full authority to resolve the dispute, and such a meeting shall occur no later than thirty (30) days after the close of the Response Period.

8.5    If the Parties are unable to resolve the dispute identified in the Claim Notice, then either Party may commence arbitration regarding said claim on or after sixty (60) days after the close of the Response Period, pursuant to the CPR Institute for Dispute Resolution (CPR) Rules for Non-Administered Arbitrations then in effect at the time of the dispute, or its successor, except

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where those rules conflict with the procedures set forth in Sections 8.6 through 8.12, in which case the procedures set forth in Sections 8.6 through 8.12 shall control.

8.6    Once the arbitration is initiated, the Tribunal which shall preside over the arbitration shall consist of two Party-appointed arbitrators, one appointed by each of the Parties as provided in Rules 3.3. and 3.5 of the CPR Rules for Non-Administered Arbitrations (or the analogous rules then in effect), and a third arbitrator who shall chair the Tribunal, selected as provided in Rule 5.2 of the CPR Rules for Non-Administered Arbitrations (or the analogous rule then in effect). Notwithstanding anything in this Section 8 or in the CPR Rules for Non-Administered Arbitrations in effect at the time:

a) Each of three arbitrators comprising the Tribunal shall be (a) a former U.S. District Court Judge or U.S. District Court Magistrate Judge who has presided over at least three patent infringement trials, and who is currently serving as a private arbitrator, or (b) an attorney who has served as first chair in at least 3 patent infringement trials; and

b) Each arbitrator shall be neutral, independent, disinterested, impartial, and shall abide by the CPR guidelines for arbitrators then in effect.

8.8    The Parties agree to cooperate to meet with the arbitrators within thirty (30) days of selection to agree upon procedures for discovery and the conduct of the hearing, which will result in the hearing being concluded within no more than four (4) months after selection of the arbitrators and the arbitration decision being rendered within thirty (30) days of the conclusion of the hearings, or of any post hearing briefing, which briefing will be completed by both sides within thirty (30) days after the conclusion of the hearings. The hearing shall take place in Denver, Colorado and shall be no longer than four (4) trial days. The Parties shall make every effort to schedule the hearing on consecutive days.

8.9    In the event the Parties cannot agree upon procedures for discovery and conduct of the hearing then the arbitrators shall set dates for the hearing and the issuance of the decision in accord with the schedule set forth in Section 8.8. The arbitrators shall provide for discovery according to those time limits, giving recognition to the understanding of the Parties, that they contemplate limited discovery, Including document demands and depositions, such that the schedule set forth in Section 8.8 may be met without difficulty. In no event will the arbitrators, absent agreement of the Parties, permit either side to obtain more than a total of 20 hours of deposition testimony from all witnesses, Including both fact and expert witnesses, 20 individual requests for admission, and 5 interrogatories, including no more than 5 related subparts.

8.10    The arbitrators must render his or her decision by application of the substantive law of the United States and of Delaware. The arbitrators shall render a written opinion setting forth findings of fact and conclusions of law with the reasons therefore stated.

8.11    Each Party agrees that the costs and fees of the arbitrators shall be split evenly between the Parties. Each Party also agrees to bear its own costs and fees with respect to the arbitration.

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8.12    If the arbitration involves information and documents that any Party believes to be confidential, the Party may request Confidentiality Orders from the Tribunal pursuant to the CPR Rules for Non-Administered Arbitrations in effect at the time.

9. Public Announcements/Confidentiality.

9.1All communications and negotiations conducted regarding this settlement and the existence and terms of this Agreement are subject to the June 20, 2014 Confidential and Protected Communications Agreement (“CAPCA”) entered into by “the St. Jude Parties” and “the Volcano Parties” (as those parties are defined in the CAPCA), and the Parties and their Affiliates shall only disclose to third parties the information exchanged during those communications and negotiations or the existence and terms of this Agreement in accordance with the terms and conditions of the CAPCA or in accordance with Section 9.2.

9.2The Parties acknowledge and agree that, notwithstanding the CAPCA: (a) either Party or any of its Affiliates may make public disclosure or announcement of this Agreement or its terms if such disclosure (i) has been agreed to between the Parties, provided that any such agreement by a Party shall not be unreasonably withheld, conditioned or delayed, (ii) has been ordered by a court of law, (iii) is directed by any type of governmental or regulatory authority, (iv) is required by regulation, Including as is considered necessary to fulfill an obligation under the Securities and Exchange Commission laws and regulations, the rules of the New York Stock Exchange or the NASDAQ Stock Market or to protect any intellectual property right in any territory, (v) is to any arbitrators referred to in Section 8 in connection with any arbitration proceeding under Section 8 or (vi) is in connection with any Assignment or attempted Assignment permitted under Section 7.1; provided that any such disclosure under clauses (a)(ii), (iii) or (iv) of this Section 9.2 is limited to the extent ordered, directed, or necessary (any such disclosure under this Section 9.2 shall be referred to herein as “Public Disclosures”); and (b) there are no restrictions on the Parties’ and their Affiliates’ right to communicate further with third parties (Including communications made in response to questions from the press, analysts, investors or those attending industry conferences or financial analyst conference calls) regarding any Public Disclosures that have been made in accordance with the terms of this Agreement, so long as such communications are substantially similar to and consistent with the Public Disclosures made in accordance with this Agreement.

9.3In furtherance of Section 9.2 above, SJM, on the one hand, and Volcano, on the other hand, shall consult with each other before making any Public Disclosure (other than any Public Disclosure described in Section 9.2(b)), and shall give each other a reasonable opportunity to review and comment upon any such Public Disclosure before it is made to the extent that any delay needed for such comment period does not unreasonably prejudice the Party seeking to make the public disclosure.

9.4The confidentiality obligations contained in this Section 9 shall survive the termination or expiry of this Agreement.

10. Miscellaneous

10.1This Agreement shall terminate twenty-two (22) years after the Effective Date (other than those provisions that expressly by their terms survive termination of this Agreement).

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10.2The loss of any patent(s) or patent application(s) embraced by the terms “SJM Licensed Patents” or “Volcano Licensed Patents” or “SJM Patents” or “Volcano Patents” by any Party or any of its Affiliates, through abandonment, failure to renew, declaration of invalidity, or otherwise, shall not be cause to terminate this Agreement or the licenses or covenants granted hereunder with respect to all other SJM Licensed Patents, SJM Patents, Volcano Licensed Patents, or Volcano Patents, and such loss, or any declaration of noninfringement, invalidity, or unenforceability, shall not be deemed a failure of consideration.

10.3No license, cross-license, covenant-not-to-sue, or any other rights in either Party’s or any of its Affiliates’ trademarks is granted to the other Party or any of its Affiliates in connection with this Agreement.

10.4Nothing in this Agreement shall be construed as granting by implication, estoppel, or otherwise, any license, right, or interest other than as expressly set forth herein.

10.5SJM represents that it or its Affiliates are the sole owner of, and have complete title, free and clear, to the SJM Licensed Patents. SJM also represents that it or its Affiliates have the right to grant the releases, licenses, and CNTS contained in this Agreement.

10.6Volcano represents that it or its Affiliates are the sole owner of, and have complete title, free and clear, to the Volcano Licensed Patents. Volcano also represents that it or its Affiliates have the right to grant the releases, licenses, and CNTS contained in this Agreement.

10.7SJM represents and warrants that, to its actual knowledge, based on a review of the claims in the [***] Patents and information about the Volcano Effective Date Products on Volcano’s website, and not based on any information designated under the Protective Orders in the Litigations as “Attorneys’ Eyes Only,” “Confidential,” “Highly Confidential,” “Outside Counsel Only,” or “Outside Counsel Only-Special Document,” no claims of any [***] Patents are infringed, either directly or indirectly, literally or under the doctrine of equivalents, by any of the Volcano Effective Date Products, or any Use thereof. SJM and its Affiliates represent and warrant and agree that they shall not [***].

10.8[***].

***Confidential Treatment Requested

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10.9[***]

10.10Volcano and its Affiliates represent and warrant that, under this Agreement, Volcano and its Affiliates are not receiving a license to the [***] Patents.

10.11SJM shall in all events remain fully responsible for, and shall ensure its own and its Affiliates’ performance of, all of their respective obligations under this Agreement, and Volcano shall in all events remain fully responsible for, and shall ensure its own and its Affiliates’ performance of, all of their respective obligations under this Agreement.

10.12The licenses and CNTS granted under this Agreement shall not be used in such a way as to manufacture products on an original equipment manufacturer (“OEM”) basis for any person or entity other than SJM and its Wholly-Owned Affiliates or Volcano and its Wholly-Owned Affiliates. The licenses and CNTS granted or to be granted under this Agreement shall only apply to and for the benefit of Products manufactured by a Party and its Wholly-Owned Affiliates or Products manufactured by a third party on an OEM basis for such Party or its Wholly-Owned Affiliate; provided, however, that such Products must bear only the trademark or trade name of such Party or its Wholly-Owned Affiliate. Notwithstanding the foregoing, such products may bear third-party trade names or trademarks for materials or components used in such products.

10.13At such time and from time to time on and after the Effective Date upon request by a Party, the other Party or any of its Affiliates will execute and deliver or will cause to be executed and delivered, all such further acts, acknowledgments, and assurances that may be reasonably required for carrying out the purposes of this Agreement. Such further assurances may Include an acknowledgment by Affiliates of a Party that such Affiliates are bound by the terms and provisions of this Agreement, or an acknowledgment that a particular patent is an SJM Licensed Patent or a Volcano Licensed Patent.

10.14A Party and its Affiliates shall not be liable to the other Party or any of its Affiliates for any loss, injury, delay, damages or other casualty suffered or incurred by any of the latter as a result of any of the former’s failure to perform its obligations hereunder if such failure is due to strikes, riots, storms, fires, explosions, acts of God, war, action of any government, or any other cause similar thereto, that is beyond the reasonable control of the Party or such of its Affiliates that are failing to perform their obligations hereunder, and any failure or delay by either Party or any of its Affiliates in the performance of any of its obligations under this Agreement due to one or more of the foregoing causes shall not be deemed a breach of this Agreement.

***Confidential Treatment Requested

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10.15Recognizing that the laws within the United States and international jurisdictions vary in their content and effect with respect to similar subject matter, and that the Parties and their Affiliates desire uniformity and predictability in interpretation and enforcement of this Agreement, except as provided in in this Agreement, the Parties and their Affiliates have agreed to the following provisions regarding applicable law to govern this Agreement: All matters affecting the interpretation, form, validity, and performance of this Agreement shall be decided under the laws of the state of Delaware (without regard to principles of conflicts of laws), Including its procedural laws; provided, however, that (a) nothing in Delaware state procedural law shall be deemed to alter or affect the applicability of the Federal Arbitration Act as governing arbitration of disputes as provided in this Agreement; and (b) no Delaware state arbitration laws or arbitration rules shall be applicable.

10.16Capitalized terms used herein shall have the meanings ascribed to them in the Definitions section. The headings and captions used in this Agreement are solely for the convenience of reference and shall not affect its interpretation. The terms “herein”, “hereof”, and “hereunder” refer to this Agreement as a whole. The word “will” shall be construed to have the same meaning and effect as the word “shall.” Where the context of this Agreement requires, singular terms shall be considered plural, and plural terms shall be considered singular.

10.17In the event that any of the provisions of this Agreement shall be held by a court or other tribunal of competent jurisdiction to be illegal, invalid or unenforceable, such provisions shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect.

10.18With regard to any arbitrations regarding the Litigations identified in Sections 1.33(a), 1.33(b), 1.33(c) and 1.33(g), the Parties and their Affiliates consent to the jurisdiction of the United States District Court of Delaware, Including for the enforcement of the arbitration provisions (including a motion to compel arbitration) set forth in Section 8 and the entry of judgment on any decision rendered under Section 8, and agree that said Court shall have exclusive jurisdiction for said disputes. With respect to any arbitrations regarding the Litigations identified in Sections 1.33(d), 1.33(e), and 1.33(f), the Parties and their Affiliates consent to the jurisdiction of the Delaware Chancery Court, Including for the enforcement of the arbitration provisions (including a motion to compel arbitration) set forth in Section 8 and the entry of judgment on any decision rendered under Section 8, and agree that said Court shall have exclusive jurisdiction for said disputes.

10.19Except as to disputes subject to arbitration as described in Section 8, if an action is necessary to enforce this Agreement, the prevailing Party and their Affiliates shall be entitled to receive the reasonable attorneys’ fees and costs they incur in seeking and obtaining such enforcement.

10.20Any term or condition of this Agreement may be waived at any time by the Party or its Affiliate that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party or the Affiliate waiving such term or condition. No waiver by any Party or its Affiliate of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.

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10.21Notices and other communications shall be sent via Federal Express or some other means of overnight delivery service. Notice shall be deemed effective on date of receipt. Notice shall be addressed as follows:

Notices to SJM (or any of its Affiliates):

St. Jude Medical, Inc.

Attention: President and CEO

One St. Jude Medical Drive

St. Paul, MN 55117

With a copy to

St. Jude Medical, Inc.

Attention: General Counsel

One St. Jude Medical Drive

St. Paul, MN 55117

Notices to Volcano (or any of its Affiliates):

Volcano Corporation.

Attention: President & CEO

3721 Valley Centre Dr. # 500

San Diego, CA 92130

With a copy to

Volcano Corporation

Attention: General Counsel

3721 Valley Centre Dr. # 500 San Diego, CA 92130

Either Party or its Affiliates may change its address information by written notice given in accordance with the provisions of this Section.

10.22This Agreement may not be amended or otherwise modified except in writing signed by both Parties and the other signatories hereto. To be effective, any such amendment must be signed by an authorized representative of both Parties and the other signatories hereto.

10.23Subject to Sections 2.3, 3.3, 5.4 and 9.1, and the rights and obligations of the Parties and their Affiliates under the NDA and CAPCA, this Agreement constitutes a single integrated contract expressing the entire agreement of the Parties and their Affiliates with respect to the subject matters hereof, Including the subject matters of any of the Litigations, and supersedes all prior or contemporaneous oral and written agreements and discussions with respect to the subject matter hereof and there are no other agreements, written or oral, express or implied, between the Parties or their Affiliates with respect to the subject matter of this Agreement or the subject matters of the Litigations.

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10.24This Agreement may be executed in multiple counterparts, each of which for all purposes shall be deemed an original. This Agreement may also be executed separately by all or any of the Parties or other signatories and all of such Agreements shall collectively be deemed as an original executed Agreement by all of the Parties and signatories. This Agreement shall not be binding on the Parties and their Affiliates until St. Jude Medical, Inc., St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, St. Jude Medical S.C., Inc., LightLab Imaging, Inc., Axsun Technologies, Inc., and Volcano Corporation have signed the same Agreement or identical counterparts thereof and each Party has received the signature page signed by the other signatories, whether that signature page be an original, a facsimile or an electronic (pdf) version. If the Agreement becomes binding based on an exchange of faxed or pdf electronic copies of signature pages, the Parties will thereafter exchange formal signed originals of this Agreement for their permanent records.

10.25At no time shall any Party or any of its Affiliates hold itself out to be the agent, employee, lessee, sublessee, partner, or joint venture partner of the other Party or any of its Affiliates. Nothing herein contained shall be construed or deemed hereby to create a principal/agent relationship between or among the Parties and/or any of their Affiliates, nor any form of partnership or joint venture. No Party or any of its Affiliates shall have any express or implied right or authority to assume or create any obligations on behalf of, or in the name of, the other Party or any of its Affiliates, or to bind the other Party or any of its Affiliates with regard to any other contract, agreement, or undertaking with a third party.

10.26Each Party hereby represents and warrants that it and each of its Affiliates has the full right and power to enter into this Agreement, Including if necessary approval from its or their Board of Directors. Each Party also hereby represents and warrants that there are no other persons or entities whose consent to this Agreement or whose joinder herein is necessary to make fully effective the provisions of this Agreement or for such Party and each of its Affiliates to be able to perform its obligations under this Agreement, and that this Agreement, when the conditions set forth in Section 10.23 are satisfied, shall constitute such Party’s and each of its Affiliates’ valid and binding obligation, enforceable against each of them in accordance with its terms.

10.27St. Jude Medical, Inc. hereby represents and warrants that it has the authority to execute this Agreement on behalf of and bind its Current Affiliates, and that St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, St. Jude Medical S.C., Inc., and LightLab Imaging, Inc. are Affiliates of SJM as of the Effective Date.

10.28The negotiations of this Agreement (Including the term sheet relating to this Agreement (the “Term Sheet”)) shall not constitute or be submitted as evidence of the meaning of terms in this Agreement. The Parties negotiated after executing the Term Sheet, and terms in this Agreement may differ from the Term Sheet.

10.29Volcano Corporation hereby represents and warrants that it has the authority to execute this Agreement on behalf of and bind its Current Affiliates, and that Axsun Technologies, Inc. is an Affiliate of Volcano as of the Effective Date.

10.30Each Party, on behalf of itself and its Affiliates, acknowledges that it has had the benefit of counsel. Each Party, on behalf of itself and its Affiliates, agrees that this Agreement

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has been jointly negotiated and drafted, and that neither Party nor any Affiliate of a Party shall be construed as the sole draftsman of this Agreement, and that no provision shall be construed or interpreted for or against any of the Parties or their Affiliates because such provision, or any other provision, or the Agreement as a whole, was purportedly drafted by a particular Party or its Affiliate.

10.31Each of the Parties and other signatories acknowledges that it has read all of the terms of this Agreement, and enters into those terms voluntarily and without duress.

[Intentionally Left Blank]

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IN WITNESS WHEREOF, the Parties and the other signatories hereto have caused this Agreement to be signed on their behalf on the date indicated above.

ST. JUDE MEDICAL, INC. By:/s/ John C. Heinmiller John C. Heinmiller_______________                     (Print Name) Its: Executive Vice President      (Title) Dated:August 6, 2014	VOLCANO CORPORATION By:/s/ Darin Lippoldt Darin Lippoldt__________________                   (Print Name) Its: E.V.P. & General Counsel      (Title) Dated: 8/7/14
ST. JUDE MEDICAL, CARDIOLOGY DIVISION, INC. By:/s/ John C. Heinmiller John C. Heinmiller_______________                     (Print Name) Its:President      (Title) Dated:August 6, 2014	AXSUN TECHNOLOGIES, INC. By:/s/ Darin Lippoldt Darin Lippoldt__________________                   (Print Name) Its: Vice President      (Title) Dated: 8/7/14
ST. JUDE MEDICAL SYSTEMS AB By:/s/ John C. Heinmiller John C. Heinmiller_______________                     (Print Name) Its:Director      (Title) Dated:August 6, 2014	LIGHTLAB IMAGING, INC. By:/s/ John C. Heinmiller John C. Heinmiller_______________                     (Print Name) Its: President      (Title) Dated:August 6, 2014
ST. JUDE MEDICAL S.C., INC. By:/s/ John C. Heinmiller John C. Heinmiller_______________                     (Print Name) Its:President      (Title) Dated:August 6, 2014

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Exhibit A

Stipulation of Dismissal For

St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, and St. Jude Medical S.C., Inc. v. Volcano Corporation, United States District Court for the District of Delaware, C.A. No. 10-631-RGA

Exhibit B

Stipulation of Dismissal For

St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, and St. Jude Medical S.C., Inc. v. Volcano Corporation, United States District Court for the District of Delaware, C.A. No. 12-441-RGA

Exhibit C

Stipulation of Dismissal/Termination Documents For

Volcano Corporation v. St. Jude Medical, Cardiovascular And Ablation Technologies Division, Inc.; St. Jude Medical, Cardiology Division, Inc.; St. Jude Medical, U.S. Division; St. Jude Medical S.C., Inc.; and St. Jude Medical Systems AB, United States District Court for the District of Delaware, C.A. No. 13-687-RGA and United States Court of Appeals for the Federal Circuit, Appeal No. 2014-1376

Exhibit D

Stipulation of Dismissal And [Proposed] Order of Dismissal with Prejudice For

Axsun Technologies, Inc. and Volcano Corporation v. LightLab Imaging, Inc., Delaware Chancery Court, C.A. No. 5250-CB

LightLab Imaging, Inc. v. Axsun Technologies, Inc. and Volcano Corporation, Delaware Chancery Court, C.A. No. 6517-CB

Exhibit E

[***] Patents

[***]

***Confidential Treatment Requested

Exhibit F

List of Volcano Effective Date Products

EX-31.1

Exhibit 31.1

VOLCANO CORPORATION

CERTIFICATIONS

I, R. Scott Huennekens, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Volcano Corporation;

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(s) 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(s) 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 7, 2014	/s/    R. SCOTT  HUENNEKENS
	R. Scott Huennekens
	President & Chief Executive Officer (principal executive officer)

EX-31.2

Exhibit 31.2

VOLCANO CORPORATION

CERTIFICATIONS

I, John T. Dahldorf, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Volcano Corporation;

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(s) 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(s) 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 7, 2014	/s/    JOHN T. DAHLDORF
	John T. Dahldorf
	Chief Financial Officer (principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATION 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 Volcano Corporation (the “Company”) on Form 10-Q for the three months ended September 30, 2014, as filed with the Securities and Exchange Commission (the “Report”), I, R. Scott Huennekens, President & Chief Executive Officer of the Company, certify, pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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 7, 2014	/s/    R. SCOTT  HUENNEKENS
	R. Scott Huennekens
	President & Chief Executive Officer (principal executive officer)

This certification accompanies the quarterly report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Volcano Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.

EX-32.2

Exhibit 32.2

CERTIFICATION 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 Volcano Corporation (the “Company”) on Form 10-Q for the three months ended September 30, 2014, as filed with the Securities and Exchange Commission (the “Report”), I, John T. Dahldorf, Chief Financial Officer of the Company, certify, pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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 7, 2014	/s/    JOHN T. DAHLDORF
	John T. Dahldorf
	Chief Financial Officer (principal financial officer)

This certification accompanies the quarterly report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Volcano Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Financial Statement Details (Restructuring Rollforward) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Restructuring Plan, 2013, Strategic Reorganization Initiative [Member]
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	$ 6,842	$ 0
Restructuring charges	(448)	19,041
Payments/impairments for restructuring	(5,871)	(12,199)
Restructuring reserve, ending balance	523	6,842
Employee Termination Benefits [Member] | Restructuring Plan, 2013, Disposables Manufacturing Transition to Costa Rica Initiative [Member]
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	0	0
Restructuring charges	251	333
Payments/impairments for restructuring	(251)	(333)
Restructuring reserve, ending balance	0	0
Employee Termination Benefits [Member] | Restructuring Plan, 2013, Strategic Reorganization Initiative [Member]
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	2,070	0
Restructuring charges	(210)	2,867
Payments/impairments for restructuring	(1,337)	(797)
Restructuring reserve, ending balance	523	2,070
Asset Impairments [Member] | Restructuring Plan, 2013, Strategic Reorganization Initiative [Member]
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	0	0
Restructuring charges	818	11,402
Payments/impairments for restructuring	(818)	(11,402)
Restructuring reserve, ending balance	0	0
Other Associated Costs [Member] | Restructuring Plan, 2013, Strategic Reorganization Initiative [Member]
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	4,772	0
Restructuring charges	(1,056)	4,772
Payments/impairments for restructuring	(3,716)	0
Restructuring reserve, ending balance	$ 0	$ 4,772

XML

Stockholders' Equity (Table Of Stock-Based Compensation Expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Non-cash stock compensation expense	$ 3,205	$ 4,250	$ 10,721	$ 12,098
Cost of revenues
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Non-cash stock compensation expense	144	196	465	583
Selling, general and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Non-cash stock compensation expense	2,641	3,592	9,053	10,152
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Non-cash stock compensation expense	$ 420	$ 462	$ 1,203	$ 1,363

XML

Stockholders' Equity (Fair Value Of Stock Option On Grant Date Using Weighted-Average Assumptions) (Details) (Stock Option [Member], USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.60%	1.30%	1.60%	0.80%
Expected life (years)	4 years 7 months 6 days	4 years 7 months 6 days	4 years 7 months 6 days	4 years 2 months 12 days
Estimated volatility	34.80%	41.90%	35.70%	39.30%
Weighted-average grant date fair value (in dollars per share)	$ 4.76	$ 7.34	$ 5.61	$ 7.44

XML

Financial Statement Details (Offsetting Assets and Liabilities) (Details) (Foreign Exchange Forward [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Foreign Exchange Forward [Member]
Offsetting Liabilities [Line Items]
Gross Amount of Recognized Assets (Liabilities)	$ (27)	$ (1,415)
Financial Instruments	27	1,415
Cash Collateral (Received) or Pledged	0	0
Net Amount	0	0
Offsetting Assets [Line Items]
Gross Amount of Recognized Assets (Liabilities)	7,858	2,988
Financial Instruments	(27)	(1,415)
Cash Collateral (Received) or Pledged	0	0
Net Amount	7,831	1,573
Gross Amount of Recognized Assets (Liabilities)	7,831	1,573
Financial Instruments	0	0
Cash Collateral (Received) or Pledged	0	0
Net Amount	$ 7,831	$ 1,573

XML

Acquisitions and Acquisition-Related Items Acquisitions and Acquisition-Related Items (Pioneer Acquisition - Narrative) (Details) (USD $)			0 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Aug. 30, 2013 Pioneer Plus Re-entry Catheter [Member]
Business Acquisition [Line Items]
Total purchase price			$ 15,000,000
Business combination, recognized identifiable assets acquired and liabilities assumed, intangible assets, other than goodwill			12,700,000
Goodwill	$ 150,882,000	$ 55,087,000	$ 1,500,000

XML

Segment and Geographic Information (Schedule Of Revenues By Segment And Product) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Segment Reporting Information [Line Items]
Revenues	$ 97,457	$ 95,809	$ 294,590	$ 290,384
Medical segment
Segment Reporting Information [Line Items]
Revenues	95,618	93,666	289,375	284,408
Industrial segment
Segment Reporting Information [Line Items]
Revenues	1,839	2,143	5,215	5,976
Consoles [Member] | Medical segment
Segment Reporting Information [Line Items]
Revenues	9,508	10,964	28,243	31,469
IVUS [Member] | Medical segment
Segment Reporting Information [Line Items]
Revenues	44,909	46,024	139,771	143,869
FM [Member] | Medical segment
Segment Reporting Information [Line Items]
Revenues	31,504	27,869	92,421	83,345
Other [Member] | Medical segment
Segment Reporting Information [Line Items]
Revenues	$ 9,697	$ 8,809	$ 28,940	$ 25,725

XML

Financial Statement Details (Liability and Equity Component Of Notes Measured At Fair Value) (Details) (Level 2 [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible senior notes	$ 424,234	$ 482,270
2.875% Convertible Senior Notes Due 2015 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible senior notes	24,885	25,950
1.75% Convertible Senior Notes Due 2017 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible senior notes	$ 399,349	$ 456,320

XML

Financial Statement Details (Intangible Assets By Major Class) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2014		Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Cost	$ 161,840		$ 88,917
Accumulated Amortization	37,033		30,809
Net	124,807		58,108
Developed Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	121,807		57,507
Accumulated Amortization	22,337		16,393
Net	99,470		41,114
Weighted average useful lives of intangible assets (in years)	12 years 3 months 18 days	[1]	8 years 7 months 6 days	[1]
Licenses [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	7,366		7,441
Accumulated Amortization	7,125		7,102
Net	241		339
Weighted average useful lives of intangible assets (in years)	9 years	[1]	8 years 9 months 18 days	[1]
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	4,213		4,441
Accumulated Amortization	4,066		4,312
Net	147		129
Weighted average useful lives of intangible assets (in years)	6 years 2 months 12 days	[1]	6 years 1 month 6 days	[1]
Patents and Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	14,594		13,668
Accumulated Amortization	3,297		2,894
Net	11,297		10,774
Weighted average useful lives of intangible assets (in years)	13 years 10 months 24 days	[1]	13 years 2 months 12 days	[1]
Covenant Not to Compete [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	600		300
Accumulated Amortization	208		108
Net	392		192
Weighted average useful lives of intangible assets (in years)	3 years	[1]	3 years	[1]
Intangible Assets Subject to Amortization [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	148,580		83,357
Accumulated Amortization	37,033		30,809
Net	111,547		52,548
Weighted average useful lives of intangible assets (in years)	12 years 1 month 6 days	[1]	9 years 2 months 12 days	[1]
In Process Research and Development [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	13,260		5,560
Accumulated Amortization	0		0
Net	$ 13,260		$ 5,560

[1] Weighted average life of intangible assets is presented excluding fully amortized assets.

XML

Income Taxes (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Tax Disclosure [Abstract]
Income tax benefit	$ (3,971)	$ (4,392)	$ (8,266)	$ (10,156)
Effective income tax rate			30.70%	42.00%
U.S. federal statutory income tax rate			35.00%
Effective income tax rate, continuing operations excluding research and development tax credit				38.00%
Employee service share-based compensation, tax expense from compensation benefit	$ 787

XML

Stockholders' Equity (Fair Value Of Stock Option Under The Purchase Plan Weighted-Average Assumptions) (Details) (Purchase Option Under Purchase Plan [Member], USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Purchase Option Under Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	0.10%	0.10%	0.10%	0.10%
Expected life (years)	6 months	6 months	6 months	6 months
Estimated volatility	38.70%	29.60%	35.40%	30.00%
Fair value of purchase right (in dollars per share)	$ 4.67	$ 5.53	$ 5.03	$ 5.21

XML

Acquisitions and Acquisition-Related Items

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Acquisitions and Acquisition-Related Items

Acquisitions and Acquisition-Related Items

AtheroMed Acquisition

On June 17, 2014, we completed the acquisition of all outstanding equity interests in AtheroMed, Inc., or AtheroMed, a privately-held company engaged in the development of atherectomy technology used in the treatment of peripheral artery disease, or PAD. AtheroMed’s Phoenix® Atherectomy System, or Phoenix, received 510(k) clearance in January 2014, has a CE Mark, and has reimbursement in the U.S. and select countries in Europe. The primary reasons for the acquisition were to diversify our product offerings and to allow us the opportunity to better position ourselves in the peripheral vascular market. The transaction was accounted for as a business combination. The operating results of AtheroMed from the date of acquisition are included in our unaudited condensed consolidated financial statements.

We paid approximately $116.5 million in cash at closing, which amount was partially offset by our acquisition at closing of approximately $1.7 million in cash. In addition, we agreed to pay a cash milestone of $15.0 million if FDA clearance of a premarket 510(k) notification is received on or before November 15, 2014 for AtheroMed's second generation Phoenix Atherectomy System. The fair market value of this contingent consideration was estimated to be $14.0 million at acquisition. The 510(k) notification was submitted and approved by the FDA during the third quarter of 2014, and the $15.0 million cash milestone was paid during the third quarter of 2014.

Furthermore, we may be required to make payments upon reaching certain sales milestones. We estimate the contingent sales milestone payments to be approximately $39.4 million and the fair value of this contingent consideration was preliminarily estimated to be $29.0 million at acquisition. We determined the fair value of the contingent consideration relative to the milestone payments based on commercial sales of AtheroMed products using various estimates, including revenue projections, discount rates and amount of time until the conditions of the milestone payments are met. This fair value measurement is based on significant inputs not observable in the market, representing a Level 3 measurement within the fair value hierarchy. At September 30, 2014, for the fair value relative to the milestone payments based on the commercial sales of AtheroMed products, the key assumptions in applying the income approach include an 11% discount rate and probability-weighted expected milestone payment ranges from $32.8 million to $49.2 million based on estimated commercial sales of AtheroMed products ranging from $59.9 million to $89.9 million from 2015 to 2017. Using different valuation assumptions could result in significant differences in the fair value of the contingent consideration and accretion expense in the current or future periods.

The assets acquired, consisting primarily of developed technology valued at $61.9 million and IPR&D valued at $9.0 million, were recorded at their estimated fair values as of the acquisition date. The estimated fair value of the IPR&D was determined using the multi-period excess earnings method, a variation of the income approach. The multi-period excess earnings method estimates the value of an intangible asset equal to the present value of the incremental after tax cash flows attributable to that intangible asset. The fair value using the multi-period excess earnings method was dependent on an estimated weighted average cost of capital for AtheroMed of 11%, which represents a rate of return that a market participant would expect for these assets.

The following table sets forth the changes in the estimated fair value of the Company’s contingent liabilities measured on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	September 30, 2014
	Three months ended			Nine months ended
Fair value measurement at beginning of period / acquisition	$	43,145		$	43,000
Change in fair value measurement included in operating expenses	1,783			1,928
Contingent consideration settled	(15,053		)	(15,053		)
Fair value measurement at end of period	29,875			29,875

The excess of purchase price over the fair value amounts of the assets acquired and liabilities assumed is $95.8 million, which represents the goodwill amount resulting from the acquisition, was allocated to our medical segment and is not deductible for income tax purposes. We expect to benefit from the acquisition by expanding our product offerings to physicians thereby contributing to an expanded revenue base. Further, we expect to realize synergies by offering the products developed from the acquisition utilizing our existing sales force.

As of the date of this Quarterly Report on Form 10-Q, the Company is still finalizing the allocation of the purchase price and the valuation of its contingent consideration. Changes to the current allocation and contingent consideration may occur as additional information becomes available including, but not limited to, the valuation of inventory, fixed assets, intangible assets and deferred taxes, with such changes recorded as an adjustment to goodwill.

The acquisition was not individually or collectively considered material to the overall unaudited condensed consolidated financial statements and results of operations of the Company.

Pioneer Acquisition

On August 30, 2013, we completed the acquisition of the Pioneer Plusre-entry catheter product line, or Pioneer, from Medtronic, Inc. or Medtronic. The product line is an interventional medical device designed to enable the crossing of sub-total, total and chronic total occlusions within the peripheral vasculature, potentially eliminating the need for surgery. The primary reason for the acquisition was to increase our penetration of the peripheral vascular market with a therapeutic product offering and continue to diversify our product offerings beyond coronary applications. The transaction was accounted for as a business combination. The operating results of Pioneer from the date of acquisition were included in our unaudited condensed consolidated financial statements.

The aggregate purchase price was $15.0 million. The assets acquired, primarily $12.7 million of intangible assets, were recorded at their estimated fair values as of the acquisition date. The excess of purchase price over the fair value of the assets acquired and liabilities assumed was $1.5 million, which represented the goodwill amount resulting from the acquisition and was allocated to our medical segment and is not deductible for income tax purposes.

The acquisition was not individually or collectively considered material to the overall unaudited condensed consolidated financial statements and the results of the Company’s operations.

Crux Acquisition

On December 12, 2012 we completed the acquisition of all outstanding equity interests in Crux Biomedical, Inc., or Crux, a privately-held company engaged in the development of filter technology for the vascular, cardiovascular and interventional radiology markets. The primary reason for the acquisition was to diversify our product offerings, allow us the opportunity to better position ourselves in the peripheral vascular market and to increase our IVUS product sales. The transaction was accounted for as a business combination. The operating results of Crux from the date of acquisition were included in our unaudited condensed consolidated financial statements.

Under the merger agreement and the amendment to the merger agreement, we agreed to pay a cash milestone payment of $3.0 million following the achievement of written clearance by the U.S. Food and Drug Administration, or FDA, of a 510(k) notification for the commercial sale in the United States of an inferior vena cava filter retrieval device developed by Crux, provided such 510(k) notification was submitted on or before November 30, 2013. The 510(k) notification was submitted on November 30, 2013 and was approved by FDA during the first quarter of 2014. The $3.0 million cash milestone was paid during the first quarter of 2014.

In addition, subject to the terms of the merger agreement, we may be required to make payments upon reaching various sales milestones. We determined the fair value of the contingent consideration relative to the milestone payments based on commercial sales of Crux products using various estimates, including revenue projections, discount rates and amount of time until the conditions of the milestone payments are met. This fair value measurement is based on significant inputs not observable in the market, representing a Level 3 measurement within the fair value hierarchy. At September 30, 2014, for the fair value relative to the milestone payments based on the commercial sales of Crux products, the key assumptions in applying the income approach include a 10% discount rate and probability-weighted expected milestone payment ranges from $23.4 million to $64.3 million based on estimated commercial sales of Crux products ranging from $94.4 million to $204.9 million from 2014 to 2019. During the second quarter of 2014, we reduced the future revenue estimates based on our initial commercial experience. Offsetting the reduction in the liability related to the change in future revenue estimates was a reduction in the discount rate from 14% to 10% to reflect a reduction in the risk premium associated with commercialization now that the product is in full market release. Using different valuation assumptions could result in significant differences in the fair value of the contingent consideration and accretion expense in the current or future periods.

The following table sets forth the changes in the estimated fair value of the Company’s contingent liabilities (net of working capital receivable adjustment) measured on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
Fair value measurement at beginning of period	$	24,290		$	31,687	$	33,638		$	30,231
Change in fair value measurement included in operating expenses	(421		)	881		(6,769		)	2,337
Contingent consideration settled	—			—		(3,000		)	—
Fair value measurement at end of period	23,869			32,568		23,869			32,568

Sync-Rx Acquisition

On November 26, 2012, we acquired all of the outstanding equity interests in Sync-Rx Ltd., or Sync-Rx, a privately-held company, which is engaged in the development of advanced software applications that optimize and facilitate transcatheter cardiovascular interventions using automated online image processing. The Sync-Rx technology will provide us with a platform on which to build a range of advanced software features that will aid clinical decision-making by providing angiography and intra-body image enhancement, measurement and non-invasive imaging and intravascular co-registration capabilities, and future opportunities in physiology and peripheral and minimally invasive structural heart therapy guidance. The transaction was accounted for as a business combination. The operating results of Sync-Rx from the date of acquisition were included in our unaudited condensed consolidated financial statements.

In connection with the acquisition, we recorded a contingent liability of $1.1 million related to a government grant received to develop underlying technologies. The timing of repayment of the grant is contingent upon the generation of revenues derived from the technologies for which grant proceeds were received. We expect to generate revenues sufficient to repay the liability in its entirety. The grant was recorded as other liabilities at its present value using various estimates, including revenue projections, discount rate and estimated years of re-payment. This fair value measurement is based on significant inputs not observable in the market, representing a Level 3 measurement within the fair value hierarchy. At acquisition, for the fair value relative to this liability, the key assumptions in applying the income approach included an 8% discount rate and estimated commercial sales derived from the underlying technology ranging from $256.1 million to $298.3 million over the expected period of re-payment of 10 to 16 years. The long-term liability will be accreted to the re-payment amount of $1.9 million plus interest, with such accretion recorded as interest expense over the expected period of re-payment. As of September 30, 2014, there were no significant changes in the range of outcomes for the contingent liability recognized as a result of the acquisition.

Acquisition-Related Items

During the three months endedSeptember 30, 2014, we recorded expense of $1.6 million from acquisition-related items, including $244,000 of transaction costs primarily associated with the AtheroMed and Sync-Rx acquisitions; and expense of $1.4 million, related to the change in fair value of the contingent consideration associated with the Crux and AtheroMed acquisitions, primarily due to passage of time.

During the nine months endedSeptember 30, 2014, we recorded income of $3.8 million from acquisition-related items, including $1.0 million of transaction costs primarily associated with the AtheroMed and Sync-Rx acquisitions; and income of $4.8 million related to the change in fair value of the contingent consideration associated with the Crux and AtheroMed acquisitions, primarily due to the revised revenue forecasts for Crux, partially offset by a change in the discount factor for Crux and the passage of time for both acquisitions.

During the three and nine months endedSeptember 30, 2013, we recorded charges of $1.3 million and $3.7 million, respectively, in acquisition-related items, including charges of $881,000 and $2.5 million, respectively, related to the change in fair value of the contingent consideration associated with the Crux acquisition, which is primarily due to the passage of time, and $358,000 and $810,000, respectively, in transaction costs primarily associated with the Crux and Pioneer acquisitions.

XML

Commitments and Contingencies (Narrative) (Details)	0 Months Ended	1 Months Ended	9 Months Ended		9 Months Ended
	Apr. 07, 2011 USD ($)	Nov. 30, 2012 EUR (€)	Sep. 30, 2014 USD ($)	Sep. 30, 2014 Cost Method Investment, Preferred Shares [Member] USD ($)	Sep. 30, 2014 Minimum [Member]	Sep. 30, 2014 Maximum [Member]
Loss Contingencies [Line Items]
Loss contingency, damages awarded, value	$ 600,000
Attorney's fees	4,500,000
Settlement payment obligation to third party			5,400,000
Alleged payment to influence outcome of clinical trial (in Euros)		5,000
Purchase commitments			80,300,000
Purchase commitments that require payments in 12 months			76,100,000
Commitments will require payments (in months)			12 months
Purchase commitments that require payments in 3 months			75,800,000
Unrecorded unconditional purchase obligation				$ 2,000,000
Contractual payments due (in years)					1 year	5 years
Number of months needed replace sole source suppliers					6 months	24 months

XML

Financial Statement Details (Narrative) (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	9 Months Ended	15 Months Ended				1 Months Ended						9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014 Restructuring Plan, 2013, Strategic Reorganization Initiative [Member]	Sep. 30, 2014 Employee Severance [Member] Restructuring Plan, 2013, Disposables Manufacturing Transition to Costa Rica Initiative [Member]	Sep. 30, 2014 Employee Severance [Member] Restructuring Plan, 2013, Strategic Reorganization Initiative [Member]	Dec. 31, 2012 1.75% Convertible Senior Notes Due 2017 [Member]	Dec. 31, 2012 2.875% Convertible Senior Notes Due 2015 [Member]	Sep. 30, 2010 2.875% Convertible Senior Notes Due 2015 [Member]	Sep. 30, 2014 Foreign Exchange Forward [Member]	Dec. 31, 2013 Foreign Exchange Forward [Member]	Sep. 30, 2014 Foreign Exchange Forward [Member] Cash Flow Hedging [Member]	Dec. 31, 2013 Foreign Exchange Forward [Member] Cash Flow Hedging [Member]	Sep. 30, 2014 Warrant [Member] 1.75% Convertible Senior Notes Due 2017 [Member]	Sep. 30, 2014 Warrant [Member] 2.875% Convertible Senior Notes Due 2015 [Member]	Sep. 30, 2014 Call Options [Member] 1.75% Convertible Senior Notes Due 2017 [Member]	Sep. 30, 2014 Call Options [Member] 2.875% Convertible Senior Notes Due 2015 [Member]
Derivatives, Fair Value [Line Items]
Maturity period for investments, months	22 months
Notional amount of foreign currency forward contracts								$ 120,400,000	$ 97,300,000	$ 56,400,000	$ 40,300,000
Accumulated other comprehensive income (loss), cumulative changes in net gain (loss) from cash flow hedges, effect net of tax	2,600,000
Right to purchase common stock, number of shares												14,000	850	14,000	850
Purchase price of common stock (in dollars per derivative)														32.8286	29.64
Investment warrants exercise price (in dollars per share)												$ 37.59	$ 34.875
Expected restructuring costs		18,593,000	2,800,000	2,659,000
Restructuring and related cost, expected cost, cash outlay		6,400,000
Aggregate principal amount					460,000,000	115,000,000	115,000,000
Convertible senior notes, interest rate					1.75%		2.875%
Repayments of long-term debt						$ 90,000,000

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Acquisitions and Acquisition-Related Items (Sync-Rx Acquisition and Acquisition Related Items - Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended		0 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended						3 Months Ended	9 Months Ended	0 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Nov. 26, 2012 Synch-Rx Acquisition [Member]	Nov. 26, 2012 Synch-Rx Acquisition [Member] Government Grant to Develop Underlying Technology [Member]	Sep. 30, 2014 AtherMed, Inc. and Sync-Rx Ltd. [Member]	Sep. 30, 2014 AtherMed, Inc. and Sync-Rx Ltd. [Member]	Sep. 30, 2014 AtheroMed, Inc. and Crux Biomedical, Inc. [Member]	Sep. 30, 2014 AtheroMed, Inc. and Crux Biomedical, Inc. [Member]	Sep. 30, 2013 Crux Acquisition [Member]	Sep. 30, 2013 Crux Acquisition [Member]	Sep. 30, 2014 Crux Acquisition [Member]	Jun. 30, 2014 Crux Acquisition [Member]	Dec. 31, 2013 Crux Acquisition [Member]	Jun. 30, 2013 Crux Acquisition [Member]	Dec. 31, 2012 Crux Acquisition [Member]	Sep. 30, 2013 Crux and Sync-Rx Acquisition [Member]	Sep. 30, 2013 Crux and Sync-Rx Acquisition [Member]	Nov. 26, 2012 Minimum [Member] Synch-Rx Acquisition [Member]	Nov. 26, 2012 Minimum [Member] Synch-Rx Acquisition [Member] Government Grant to Develop Underlying Technology [Member]	Nov. 26, 2012 Maximum [Member] Synch-Rx Acquisition [Member]	Nov. 26, 2012 Maximum [Member] Synch-Rx Acquisition [Member] Government Grant to Develop Underlying Technology [Member]
Business Acquisition [Line Items]
Other long-term debt						$ 1,100,000
Fair value inputs, discount rate					8.00%
Business combination, estimated commercial sales																				256,100,000		298,300,000
Business acqusition, development grant, liability, repayment period (in years)																					10 years		16 years
Contingent consideration, at fair value						1,900,000					32,568,000	32,568,000	23,869,000	24,290,000	33,638,000	31,687,000	30,231,000
Business combination, pro forma information, earnings or (loss) of acquiree since acquisition date, actual	(1,600,000)		3,800,000
Acquisition-related items	1,596,000	1,253,000	(3,809,000)	3,742,000			244,000	1,000,000										358,000	810,000
Business combination, contingent consideration arrangements, change in amount of contingent consideration, liability			$ (16,900,000)	$ 0					$ 1,400,000	$ (4,800,000)	$ 881,000	$ 2,500,000

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Stockholders' Equity (Narrative) (Details) (USD $)	0 Months Ended			9 Months Ended				1 Months Ended		4 Months Ended
	Jan. 02, 2014 Amended Plan [Member]	Sep. 30, 2014 Amended Plan [Member]	Sep. 30, 2014 Purchase Plan [Member]	Sep. 30, 2014 Performance Restricted Stock Units [Member] Certification of Achievement of Pre-determined Market Goal [Member]	Sep. 30, 2014 Performance Restricted Stock Units [Member] December 31, 2016, Subject to Continued Service [Member]	Sep. 30, 2014 Performance Restricted Stock Units [Member] Minimum [Member]	Sep. 30, 2014 Performance Restricted Stock Units [Member] Maximum [Member]	Mar. 31, 2014 Accelerated Share Repurchase Program [Member]	Dec. 31, 2013 Accelerated Share Repurchase Program [Member]	Mar. 31, 2014 Accelerated Share Repurchase Program [Member]	Dec. 02, 2013 Accelerated Share Repurchase Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program, authorized amount											$ 200,000,000
Accelerated share repurchases, settlement (payment) or receipt											$ 100,000,000
Common stock repurchase/retirement, shares								1,148,546	3,557,137	4,705,683
Common stock, shares authorized		21,572,558
Share-based compensation arrangement by share-based payment award, number of additional shares authorized	600,000
Common stock issued in equity compensation plan		6,049,248	432,288
Share-based compensation arrangement by share-based payment award, equity instruments other than options, performance condition percentage of original shares granted						0.00%	200.00%
Share-based compensation arrangement by share-based payment award, equity instruments other than options, market condition percentage of original shares grantedShare-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Market Condition Percentage of Original Shares Granted						0.00%	200.00%
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage				66.67%	33.33%

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Financial Statement Details (Available-For-Sale Investments) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Gross Unrealized Losses		$ 22
Available-for-sale Securities, Fair Value Disclosure		62,208
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Gross Unrealized Losses	135	4
Available-for-sale Securities, Fair Value Disclosure	106,244	21,226
U.S. Treasury and Agency Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Gross Unrealized Losses		18
Available-for-sale Securities, Fair Value Disclosure		40,982
Short-term [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	140,927	230,723
Available-for-sale securities, Gross Unrealized Gains	29	74
Available-for-sale securities, Gross Unrealized Losses	62	22
Available-for-sale Securities, Fair Value Disclosure	140,894	230,775
Short-term [Member] | Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	140,927	164,570
Available-for-sale securities, Gross Unrealized Gains	29	72
Available-for-sale securities, Gross Unrealized Losses	62	4
Available-for-sale Securities, Fair Value Disclosure	140,894	164,638
Short-term [Member] | U.S. Treasury and Agency Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost		66,153
Available-for-sale securities, Gross Unrealized Gains		2
Available-for-sale securities, Gross Unrealized Losses		18
Available-for-sale Securities, Fair Value Disclosure		66,137
Long-term [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	44,317	34,705
Available-for-sale securities, Gross Unrealized Gains	0	45
Available-for-sale securities, Gross Unrealized Losses	73	0
Available-for-sale Securities, Fair Value Disclosure	44,244	34,750
Long-term [Member] | Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	44,317	11,697
Available-for-sale securities, Gross Unrealized Gains	0	30
Available-for-sale securities, Gross Unrealized Losses	73	0
Available-for-sale Securities, Fair Value Disclosure	44,244	11,727
Long-term [Member] | U.S. Treasury and Agency Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost		23,008
Available-for-sale securities, Gross Unrealized Gains		15
Available-for-sale securities, Gross Unrealized Losses		0
Available-for-sale Securities, Fair Value Disclosure		$ 23,023

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Financial Statement Details (Available-For-Sale Investments That Are In An Unrealized Loss Position) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Estimated Fair Value		$ 62,208
Available-for-sale Securities, Gross Unrealized Losses		22
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Estimated Fair Value	106,244	21,226
Available-for-sale Securities, Gross Unrealized Losses	135	4
U.S. Treasury and Agency Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Estimated Fair Value		40,982
Available-for-sale Securities, Gross Unrealized Losses		$ 18

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Summary Of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation and Nature of Operations

The unaudited condensed consolidated financial statements of Volcano Corporation (“we,” “us,” “our,” “Volcano” or the “Company”) contained in this quarterly report on Form 10-Q include our financial statements and the financial statements of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. Pursuant to these rules and regulations, the Company has condensed or omitted certain information and footnote disclosures it normally includes in its annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the U.S., or GAAP. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These unaudited condensed consolidated financial statements 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, 2013.

The results of operations for the nine months endedSeptember 30, 2014 are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Reclassification

Certain reclassifications have been made to the prior period condensed consolidated financial statements to conform to the current year presentation.

Net Loss Per Share

Basic net loss per share is computed by dividing consolidated net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing consolidated net loss by the weighted-average number of common shares outstanding and dilutive common stock equivalent shares outstanding during the period. Our potentially dilutive shares include outstanding common stock options, unvested restricted stock units, including those with performance or market conditions, and incremental shares issuable upon the conversion of the Convertible Senior Notes or upon exercise of the warrants relating to the Convertible Senior Notes. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share or increase net income per share as discussed in the following paragraph. For the three months endedSeptember 30, 2014 and 2013, 176,000 and 730,000 in the money option and award shares were dilutive for the period and potentially dilutive shares totaling 49.0 million and 21.5 million have not been included in the computation of diluted net income per share, as the result would be anti-dilutive. For the nine months endedSeptember 30, 2014 and 2013, 571,000 and 872,000 in the money option and award shares were dilutive for the period and potentially dilutive shares totaling 31.7 million and 20.8 million have not been included in the computation of diluted net loss per share, as the result would be anti-dilutive.

Diluted net loss per common share does not include any incremental shares related to the Convertible Senior Notes for the three and nine months endedSeptember 30, 2014 and 2013. Because the principal amount of the Convertible Senior Notes will be settled in cash upon conversion, only the conversion spread relating to the Convertible Senior Notes may be included in our calculation of diluted net loss per common share. As such, the Convertible Senior Notes have no impact on diluted net income (loss) per common share until the price of our common stock exceeds the conversion price (initially $29.64 for the 2.875% Convertible Senior Notes due 2015, or the 2015 Notes, and $32.83 for the 1.75% Convertible Senior Notes due 2017, or the 2017 Notes, or collectively, the Notes, subject to adjustments) of the Notes. In addition, the diluted net loss per common share does not include any incremental shares related to the exercise of the warrants related to the Notes for the three and nine months endedSeptember 30, 2014 and 2013. The warrants will not have an impact on diluted net income (loss) per common share until the price of our common stock exceeds the strike price of the warrants (initially $34.875 for the warrants issued in connection with the 2015 Notes offering and $37.59 for the warrants issued in connection with the 2017 Notes offering, subject to adjustments). When the market price of our stock exceeds the strike price, as applicable, we will include, in the diluted net income (loss) per common share calculation, the effect of the additional shares that may be issued upon exercise of the warrants using the treasury stock method to the extent the effect is not anti-dilutive.

The call options to purchase our common stock, which we purchased to hedge against potential dilution upon conversion of the Notes, are not considered for purposes of calculating the total dilutive weighted average shares outstanding, as their effect would be anti-dilutive. Upon exercise, the call options will mitigate the dilutive effect of the Notes.

On December 2, 2013, our board of directors authorized a $200 million share repurchase program. Pursuant to this approval, we entered into a $100 million accelerated share repurchase, or ASR, program with a counterparty, and received a total of 4,705,683 shares of our common stock (see Note 5 "Stockholders' Equity"), of which 3,557,137 shares of our common stock were delivered in December 2013 and 1,148,546 shares of our common stock were delivered in March 2014. The weighted average number of the shares received was removed from the denominator of the basic and diluted net loss per share calculation at the share delivery date.

The basic and diluted net loss per common share calculations for the three and nine months endedSeptember 30, 2014 and 2013 are as follows (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net loss	$	(8,000	)	$	(8,456	)	$	(18,622	)	$	(14,005	)
Weighted average common shares outstanding for basic	51,529			54,652			51,596			54,466
Weighted average common shares outstanding for diluted	51,529			54,652			51,596			54,466
Net loss per share:
Basic	$	(0.16	)	$	(0.15	)	$	(0.36	)	$	(0.26	)
Diluted	$	(0.16	)	$	(0.15	)	$	(0.36	)	$	(0.26	)

Recent Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update, or ASU, 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. The updated guidance is effective for us beginning in fiscal year 2015. The Company is currently evaluating the new standard to determine the effect, if any, on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 outlines a single comprehensive model for accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for us beginning in fiscal year 2017 and early application is not permitted. The Company is currently evaluating the new standard to determine the effect, if any, on our consolidated financial statements.

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Financial Statement Details (Foreign Currency Forward Contract) (Details) (Foreign Exchange Forward [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Derivatives, Fair Value [Line Items]
Derivative asset, fair value, gross asset	$ 7,858	$ 2,988
Derivative liability, fair value, gross liability	27	1,415
Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative asset, fair value, gross asset	3,825	1,035
Derivative liability, fair value, gross liability	1	251
Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative asset, fair value, gross asset	4,033	1,953
Derivative liability, fair value, gross liability	26	1,164
Other Current Assets [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative asset, fair value, gross asset	3,685	954
Other Current Assets [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative asset, fair value, gross asset	4,033	1,953
Other Current Liabilities [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative liability, fair value, gross liability	1	251
Other Current Liabilities [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative liability, fair value, gross liability	26	1,164
Other Noncurrent Assets [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative asset, fair value, gross asset	140	81
Other Noncurrent Liabilities [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative liability, fair value, gross liability	$ 0	$ 0

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Financial Statement Details (Total Estimated Restructuring) (Details) (Restructuring Plan, 2013, Strategic Reorganization Initiative [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Restructuring Cost and Reserve [Line Items]
Total expected restructuring costs	$ 18,593
Employee Severance [Member]
Restructuring Cost and Reserve [Line Items]
Total expected restructuring costs	2,659
Asset Impairments [Member]
Restructuring Cost and Reserve [Line Items]
Total expected restructuring costs	12,221
Other Associated Costs [Member]
Restructuring Cost and Reserve [Line Items]
Total expected restructuring costs	$ 3,713

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Condensed Consolidated Balance Sheets (unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 31,959	$ 107,159
Short-term available-for-sale investments	140,894	230,775
Accounts receivable, net	78,755	81,962
Inventories	76,342	60,970
Prepaid expenses and other current assets	34,485	28,525
Total current assets	362,435	509,391
Long-term available-for-sale investments	44,244	34,750
Property and equipment, net	122,077	118,094
Intangible assets, net	124,807	58,108
Goodwill	150,882	55,087
Other non-current assets	60,611	56,489
Total assets	865,056	831,919
Current liabilities:
Accounts payable	11,152	19,137
Accrued compensation	28,168	26,918
Accrued expenses and other current liabilities	27,060	28,453
Deferred revenues	11,203	10,652
Current maturities of convertible senior notes	23,882	0
Contingent consideration	365	3,750
Total current liabilities	101,830	88,910
Convertible senior notes	392,045	401,012
Deferred revenues	4,797	5,079
Contingent consideration, non-current portion	53,379	29,888
Other non-current liabilities	7,727	7,228
Total liabilities	559,778	532,117
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value of $0.001; 10,000 shares authorized; no shares issued and outstanding at September 30, 2014 and December 31, 2013	0	0
Common stock, par value of $0.001; 250,000 shares authorized at September 30, 2014 and December 31, 2013; 51,603 and 51,530 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively	52	52
Additional paid-in capital	443,329	420,234
Accumulated other comprehensive loss	(3,085)	(4,088)
Accumulated deficit	(135,018)	(116,396)
Total stockholders’ equity	305,278	299,802
Total liabilities and stockholders’ equity	$ 865,056	$ 831,919

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Stockholders' Equity (Assumptions Used to Value the Performance Restricted Stock Units with a Market Condition) (Details) (Performance Restricted Stock Units [Member], USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014
Performance Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	0.30%	0.30%
Expected life (years)	1 year 10 months 24 days	1 year 10 months 24 days
Estimated volatility	30.90%	30.90%
Weighted-average grant date fair value (in dollars per share)	$ 24.90	$ 24.90

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Condensed Consolidated Statements Of Stockholders' Equity (unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit
Beginning Balance at Dec. 31, 2013	$ 299,802	$ 52	$ 420,234	$ (4,088)	$ (116,396)
Beginning Balance (shares) at Dec. 31, 2013		51,530,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under equity compensation plans	12,663	1	12,662
Issuance of common stock under equity compensation plans, shares		1,222,000
Employee stock-based compensation cost	10,726		10,726
Common stock repurchase/retirement	1	(1)	2
Common stock repurchase/retirement, shares		(1,149,000)
Tax expense related to stock-based compensation	(295)		(295)
Net loss	(18,622)				(18,622)
Other comprehensive income	1,003			1,003
Ending Balance at Sep. 30, 2014	$ 305,278	$ 52	$ 443,329	$ (3,085)	$ (135,018)
Ending Balance (shares) at Sep. 30, 2014		51,603,000

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Financial Statement Details (Financial Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details) (USD $)	Sep. 30, 2014		Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Current	$ 140,894,000		$ 230,775,000
Available-for-sale Securities, Noncurrent	44,244,000		34,750,000
Total assets measured at fair value	224,955,000		375,672,000
Total liabilities measured at fair value	54,902,000		36,302,000
Fair value of working capital receivable	1,300,000		1,200,000
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	31,959,000		196,319,000
Total liabilities measured at fair value	0		0
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	192,996,000		179,353,000
Total liabilities measured at fair value	27,000		1,415,000
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured at fair value	0		0
Total liabilities measured at fair value	54,875,000		34,887,000
Cash [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Current	19,141,000		98,436,000
Cash [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Current	19,141,000		98,436,000
Cash [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Current	0		0
Cash [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Current	0		0
Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Current	12,818,000		8,723,000
Money Market Funds [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Current	12,818,000		8,723,000
Money Market Funds [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Current	0		0
Money Market Funds [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, Current	0		0
Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Current	140,894,000		164,638,000
Available-for-sale Securities, Noncurrent	44,244,000		11,727,000
Corporate Debt Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Current	0		0
Available-for-sale Securities, Noncurrent	0		0
Corporate Debt Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Current	140,894,000		164,638,000
Available-for-sale Securities, Noncurrent	44,244,000		11,727,000
Corporate Debt Securities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Current	0		0
Available-for-sale Securities, Noncurrent	0		0
U.S. Treasury and Agency Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Current			66,137,000
Available-for-sale Securities, Noncurrent			23,023,000
U.S. Treasury and Agency Debt Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Current			66,137,000
Available-for-sale Securities, Noncurrent			23,023,000
U.S. Treasury and Agency Debt Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Current			0
Available-for-sale Securities, Noncurrent			0
U.S. Treasury and Agency Debt Securities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Current			0
Available-for-sale Securities, Noncurrent			0
Foreign Currency Forward Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency forward contracts, current asset	7,718,000		2,907,000
Foreign currency forward contracts, non-current asset	140,000		81,000
Foreign currency forward contracts, current liability	27,000		1,415,000
Foreign Currency Forward Contracts [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency forward contracts, current asset	0		0
Foreign currency forward contracts, non-current asset	0		0
Foreign currency forward contracts, current liability	0		0
Foreign Currency Forward Contracts [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency forward contracts, current asset	7,718,000		2,907,000
Foreign currency forward contracts, non-current asset	140,000		81,000
Foreign currency forward contracts, current liability	27,000		1,415,000
Foreign Currency Forward Contracts [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency forward contracts, current asset	0		0
Foreign currency forward contracts, non-current asset	0		0
Foreign currency forward contracts, current liability	0		0
Other Current Liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other liabilities	95,000
Other Current Liabilities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other liabilities	0
Other Current Liabilities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other liabilities	0
Other Current Liabilities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other liabilities	95,000
Commitments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration, current portion	365,000	[1]	3,750,000	[2]
Contingent consideration, non-current portion	53,379,000		29,888,000
Commitments [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration, current portion	0	[1]	0	[2]
Contingent consideration, non-current portion	0		0
Commitments [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration, current portion	0	[1]	0	[2]
Contingent consideration, non-current portion	0		0
Commitments [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration, current portion	365,000	[1]	3,750,000	[2]
Contingent consideration, non-current portion	53,379,000		29,888,000
Other Noncurrent Liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other liabilities	1,036,000		1,249,000
Other Noncurrent Liabilities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other liabilities	0		0
Other Noncurrent Liabilities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other liabilities	0		0
Other Noncurrent Liabilities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other liabilities	$ 1,036,000		$ 1,249,000

[1] This amount is reflected net of the fair value of the working capital receivable in the amount of $1.3 million at September 30, 2014.

[2] This amount is reflected net of the fair value of the working capital receivable in the amount of $1.2 million at December 31, 2013.

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Summary Of Significant Accounting Policies (Schedule Of Basic And Diluted Net Income (Loss) Per Common Share Calculations) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Accounting Policies [Abstract]
Net loss	$ (8,000)	$ (8,456)	$ (18,622)	$ (14,005)
Weighted average common shares outstanding for basic	51,529	54,652	51,596	54,466
Weighted average common shares outstanding for diluted	51,529	54,652	51,596	54,466
Net loss per share:
Basic (in dollars per share)	$ (0.16)	$ (0.15)	$ (0.36)	$ (0.26)
Diluted (in dollars per share)	$ (0.16)	$ (0.15)	$ (0.36)	$ (0.26)

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Financial Statement Details (Inventories) (Details) (USD $)	Sep. 30, 2014		Dec. 31, 2013
Financial Statement Details [Abstract]
Finished goods	$ 37,325,000	[1]	$ 27,237,000	[1]
Work-in-process	13,243,000		12,051,000
Raw materials	25,774,000		21,682,000
Inventories	76,342,000		60,970,000
Consigned inventory	$ 6,100,000		$ 5,600,000

[1] Finished goods inventory includes consigned inventory of $6.1 million and $5.6 million at September 30, 2014 and December 31, 2013, respectively.

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Acquisitions and Acquisition-Related Items Acquisitions and Acquisition-Related Items (AtheroMed Acquisition - Contingent Consideration Rollforward) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 AtheroMed Inc. [Member]	Sep. 30, 2014 AtheroMed Inc. [Member]	Sep. 30, 2014 AtheroMed Inc. [Member] Operating Expense [Member]	Sep. 30, 2014 AtheroMed Inc. [Member] Operating Expense [Member]
Business Combination, Contingent Consideration, Liability [Roll Forward]
Fair value measurement at beginning of period			$ 43,145	$ 43,000
Change in fair value measurement included in operating expenses	(16,900)	0			1,783	1,928
Contingent consideration settled			(15,053)	(15,053)
Fair value measurement at end of period			$ 29,875	$ 29,875

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Condensed Consolidated Statements Of Cash Flows (unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Operating activities
Net loss	$ (18,622)	$ (14,005)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	24,022	18,677
Amortization (accretion) of investment premium (discount), net	2,567	2,305
Accretion of debt discount on convertible senior notes and other liabilities	15,048	14,148
Change in contingent consideration	(4,841)	2,537
Non-cash stock compensation expense	10,721	12,098
Asset impairment related to restructuring	818	4,616
Gain on sale of other long-term investment	(365)	(4,153)
Effect of exchange rate changes and others	682	10,797
Deferred income taxes	2,211	0
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	665	(3,249)
Inventories	(14,699)	(15,195)
Prepaid expenses and other assets	(16,330)	(16,834)
Accounts payable	(9,669)	(2,599)
Accrued compensation	1,671	(535)
Accrued expenses and other liabilities	25	983
Deferred revenues	486	(550)
Net cash (used in) provided by operating activities	(5,610)	9,041
Investing activities
Purchase of short-term and long-term available-for-sale securities	(161,882)	(342,715)
Sale or maturity of short-term and long-term available-for-sale securities	239,499	247,790
Cash paid related to acquisitions, net of cash acquired	(114,791)	(15,000)
Capital expenditures	(22,854)	(26,533)
Cash paid for intangible assets and other investments	(4,987)	(2,377)
Proceeds from sale of other long-term investments	665	5,654
Net cash used in investing activities	(64,350)	(133,181)
Financing activities
Repayment of capital lease and other liabilities	(179)	(22)
Cash paid for contingent liability related to acquisitions	(16,900)	0
Proceeds from sale of common stock under employee stock purchase plan	3,140	3,576
Proceeds from exercise of common stock options	9,523	2,203
Net cash (used in) provided by financing activities	(4,416)	5,757
Effect of exchange rate changes on cash and cash equivalents	(824)	(846)
Net decrease in cash and cash equivalents	(75,200)	(119,229)
Cash and cash equivalents, beginning of period	107,159	330,635
Cash and cash equivalents, end of period	31,959	211,406
Supplemental disclosures of cash flow information:
Cash paid for interest	4,745	4,542
Cash paid for income taxes	$ 2,185	$ 3,103

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Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	51,603,000	51,530,000
Common stock, shares outstanding	51,603,000	51,530,000

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Acquisitions and Acquisition-Related Items (Tables)

9 Months Ended

Sep. 30, 2014

AtheroMed Inc. [Member]

Business Acquisition [Line Items]

Schedule of Business Acquisitions by Acquisition, Contingent Consideration [Table Text Block]

The following table sets forth the changes in the estimated fair value of the Company’s contingent liabilities measured on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	September 30, 2014
	Three months ended			Nine months ended
Fair value measurement at beginning of period / acquisition	$	43,145		$	43,000
Change in fair value measurement included in operating expenses	1,783			1,928
Contingent consideration settled	(15,053		)	(15,053		)
Fair value measurement at end of period	29,875			29,875

Crux Acquisition [Member]

Business Acquisition [Line Items]

Schedule of Business Acquisitions by Acquisition, Contingent Consideration [Table Text Block]

The following table sets forth the changes in the estimated fair value of the Company’s contingent liabilities (net of working capital receivable adjustment) measured on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
Fair value measurement at beginning of period	$	24,290		$	31,687	$	33,638		$	30,231
Change in fair value measurement included in operating expenses	(421		)	881		(6,769		)	2,337
Contingent consideration settled	—			—		(3,000		)	—
Fair value measurement at end of period	23,869			32,568		23,869			32,568

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Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 31, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Entity Registrant Name	Volcano Corp
Entity Central Index Key	0001354217
Trading Symbol	volc
Entity Filer Category	Large Accelerated Filer
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		51,603,468

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Financial Statement Details (Tables)

9 Months Ended

Sep. 30, 2014

Financial Statement Details [Abstract]

Available-For-Sale Investments

At September 30, 2014 and December 31, 2013, available-for-sale investments are detailed as follows (in thousands):

At September 30, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Short-term:
Corporate debt securities	$	140,927	$	29	$	62	$	140,894
Short-term available-for-sale investments	$	140,927	$	29	$	62	$	140,894
Long-term:
Corporate debt securities	$	44,317	$	—	$	73	$	44,244
Long-term available for sale investments	$	44,317	$	—	$	73	$	44,244

At December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Short-term:
Corporate debt securities	$	164,570	$	72	$	4	$	164,638
U.S. Treasury and agency debt securities	66,153		2		18		66,137
Short-term available-for-sale investments	$	230,723	$	74	$	22	$	230,775
Long-term:
Corporate debt securities	$	11,697	$	30	$	—	$	11,727
U.S. Treasury and agency debt securities	23,008		15		—		23,023
Long-term available for sale investments	$	34,705	$	45	$	—	$	34,750

Available-For-Sale Investments That Are In An Unrealized Loss Position

Available-for-sale investments that are in an unrealized loss position at September 30, 2014 and December 31, 2013 are detailed as follows (in thousands):

	At September 30, 2014
	Estimated Fair Value		Gross Unrealized Losses
Corporate debt securities	$	106,244	$	135

	At December 31, 2013
	Estimated Fair Value		Gross Unrealized Losses
Corporate debt securities	$	21,226	$	4
U.S. Treasury and agency debt securities	40,982		18
	$	62,208	$	22

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following tables summarize the location and fair values of derivative instruments on our unaudited condensed consolidated balance sheets (in thousands) at September 30, 2014 and December 31, 2013. The fair value amounts are presented on a gross basis and are segregated between derivatives that are designated and qualify as hedging instruments and those that are not.

	At September 30, 2014
	Asset Derivatives			Liability Derivatives
	Balance sheet location	Fair Value		Balance sheet location	Fair Value
Derivatives Designated as Hedging Instruments
Foreign exchange forward contracts	Other current assets	$	3,685	Other current liabilities	$	1
Foreign exchange forward contracts	Other long-term assets	140		Other long-term liabilities	—
Total Derivatives Designated as Hedging Instruments		3,825			1
Derivatives Not Designated as Hedging Instruments
Foreign exchange forward contracts	Other current assets	4,033		Other current liabilities	26
Total Derivatives Not Designated as Hedging Instruments		4,033			26
Total Derivatives		$	7,858		$	27

	As of December 31, 2013
	Asset Derivatives			Liability Derivatives
	Balance sheet location	Fair Value		Balance sheet location	Fair Value
Derivatives Designated as Hedging Instruments
Foreign exchange forward contracts	Other current assets	$	954	Other current liabilities	$	251
Foreign exchange forward contracts	Other long-term assets	81		Other long-term liabilities	—
Total Derivatives Designated as Hedging Instruments		1,035			251
Derivatives Not Designated as Hedging Instruments
Foreign exchange forward contracts	Other current assets	1,953		Other current liabilities	1,164
Total Derivatives Not Designated as Hedging Instruments		1,953			1,164
Total Derivatives		$	2,988		$	1,415

Offsetting Assets and Liabilities

The following table provides information (in thousands) as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria as stipulated by the terms of the master netting arrangements with each of the counterparties. Derivatives not subject to master netting arrangements are not eligible for net presentation.

	As of September 30, 2014
				Gross Amount Not Offset on the Balance Sheet
	Gross Amount of Recognized Assets (Liabilities)			Financial Instruments			Cash Collateral (Received) or Pledged	Net Amount
Derivative Assets
Foreign exchange forward contracts	$	7,858		$	(27	)	—	$	7,831
Derivative Liabilities
Foreign exchange forward contracts	(27		)	27			—	—
Total	$	7,831		—			—	7,831

	As of December 31, 2013
				Gross Amount Not Offset on the Balance Sheet
	Gross Amount of Recognized Assets (Liabilities)			Financial Instruments			Cash Collateral (Received) or Pledged	Net Amount
Derivative Assets
Foreign exchange forward contracts	$	2,988		$	(1,415	)	—	$	1,573
Derivative Liabilities
Foreign exchange forward contracts	(1,415		)	1,415			—	—
Total	$	1,573		—			—	1,573

Derivative Instruments, Gain (Loss)

The following table summarizes the effect of our foreign exchange forward contracts on our unaudited Condensed Consolidated Statements of Operations (in thousands).

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Derivatives Designated as Hedging Instruments
Gain (loss) recognized in other comprehensive income on foreign currency forward contracts (effective portion)	$	4,243		$	(727	)	$	3,585		$	(719	)
Gain (loss) reclassified from accumulated other comprehensive income into cost of revenue (effective portion)	16			(44		)	313			(44		)
Gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	(10		)	43			(50		)	11
Derivatives Not Designated as Hedging Instruments
Gain (loss) recognized in exchange rate gain (loss), net	$	4,432		$	(996	)	$	3,490		$	4,880

Financial Assets And Liabilities Measured At Fair Value On A Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis are summarized below at September 30, 2014 and December 31, 2013 (in thousands):

	Fair Value Measurements at September 30, 2014
	Total		Level 1		Level 2		Level 3
Assets:
Current:
Cash	$	19,141	$	19,141	$	—	$	—
Money market funds	12,818		12,818		—		—
Corporate debt securities	140,894		—		140,894		—
Foreign currency forward contracts	7,718		—		7,718		—
Non-current:
Corporate debt securities	44,244		—		44,244		—
Foreign currency forward contracts	140		—		140		—
Total assets measured at fair value	$	224,955	$	31,959	$	192,996	$	—
Liabilities:
Current:
Foreign currency forward contracts	$	27	$	—	$	27	$	—
Other liabilities, current portion	95		—		$	—	95
Contingent consideration, current portion (1)	365		—		—		365
Non-current:
Other liabilities	1,036		—		—		1,036
Contingent consideration	53,379		—		—		53,379
Total liabilities measured at fair value	$	54,902	$	—	$	27	$	54,875

(1) This amount is reflected net of the fair value of the working capital receivable in the amount of $1.3 million at September 30, 2014.

	Fair Value Measurements at December 31, 2013
	Total		Level 1		Level 2		Level 3
Assets:
Current:
Cash	$	98,436	$	98,436	$	—	$	—
Money market funds	8,723		8,723		—		—
Corporate debt securities	164,638		—		164,638		—
U.S. Treasury and agency debt securities	66,137		66,137		—		—
Foreign currency forward contracts	2,907		—		2,907		—
Non-current:
Corporate debt securities	11,727		—		11,727		—
U.S. Treasury and agency debt securities	23,023		23,023		—		—
Foreign currency forward contracts	81		—		81		—
Total assets measured at fair value	$	375,672	$	196,319	$	179,353	$	—
Liabilities:
Current:
Foreign currency forward contracts	$	1,415	$	—	$	1,415	$	—
Contingent consideration, current portion (1)	3,750		—		—		3,750
Non-current:
Other liabilities	1,249		—		—		1,249
Contingent consideration	29,888		—		—		29,888
Total liabilities measured at fair value	$	36,302	$	—	$	1,415	$	34,887

(1) This amount is reflected net of the fair value of the working capital receivable in the amount of $1.2 million at December 31, 2013.

Inventories

Inventories consist of the following (in thousands):

	September 30, 2014		December 31, 2013
Finished goods (1)	$	37,325	$	27,237
Work-in-process	13,243		12,051
Raw materials	25,774		21,682
	$	76,342	$	60,970

(1) Finished goods inventory includes consigned inventory of $6.1 million and $5.6 million at September 30, 2014 and December 31, 2013, respectively.

Intangible Assets By Major Class

Intangible assets consisted of the following (in thousands):

	September 30, 2014
Intangible assets subject to amortization	Cost		Accumulated Amortization		Net		Weighted- Average Life (in years) (1)
Developed technology	$	121,807	$	22,337	$	99,470	12.3
Licenses	7,366		7,125		241		9.0
Customer relationships	4,213		4,066		147		6.2
Patents and trademarks	14,594		3,297		11,297		13.9
Covenant not to compete	600		208		392		3.0
	148,580		37,033		111,547		12.1
Intangible assets not yet subject to amortization
In-process research and development	13,260		—		13,260		n/a
	$	161,840	$	37,033	$	124,807

	December 31, 2013
Intangible assets subject to amortization	Cost		Accumulated Amortization		Net		Weighted- Average Life (in years) (1)
Developed technology	$	57,507	$	16,393	$	41,114	8.6
Licenses	7,441		7,102		339		8.8
Customer relationships	4,441		4,312		129		6.1
Patents and trademarks	13,668		2,894		10,774		13.2
Covenant not to compete	300		108		192		3.0
	83,357		30,809		52,548		9.2
Intangible assets not yet subject to amortization
In-process research and development	5,560		—		5,560		n/a
	$	88,917	$	30,809	$	58,108

(1) Weighted average life of intangible assets is presented excluding fully amortized assets.

Future Amortization Expense Of Intangible Assets

At September 30, 2014, future amortization expense related to our intangible assets subject to amortization is expected to be as follows (in thousands):

2014	2,917
2015	11,366
2016	11,141
2017	10,570
2018	10,514
Thereafter	65,039
	$	111,547

Carrying Values Of The Liability And Equity Components Of The Notes

The carrying values of the liability and equity components of both the 2017 Notes and the 2015 Notes are reflected in our unaudited condensed consolidated balance sheets as follows (in thousands):

	September 30, 2014			December 31, 2013
Debt:
2.875% Convertible Senior Notes due 2015:
Principal amount	$	25,000		$	25,000
Unamortized discount of liability component	(1,006		)	(1,818		)
Unamortized debt issuance costs	(112		)	(204		)
Carrying value of liability component	23,882			22,978
1.75% Convertible Senior Notes due 2017:
Principal amount	460,000			460,000
Unamortized discount of liability component	(60,440		)	(72,902		)
Unamortized debt issuance costs	(7,515		)	(9,064		)
Carrying value of liability component	392,045			378,034
Equity—net carrying value
2.875% Convertible Senior Notes due 2015	$	452		$	452
1.75% Convertible Senior Notes due 2017	89,415			89,415

Schedule of Fair Value Of Notes

The fair values of the Notes, which are all Level 2 measurements, are summarized as follows (in thousands):

	September 30, 2014		December 31, 2013
2.875% Convertible Senior Notes due 2015	$	24,885	$	25,950
1.75% Convertible Senior Notes due 2017	399,349		456,320
Total	$	424,234	$	482,270

Schedule of Restructuring Reserve by Type of Cost

A summary of the activities related to this initiative is presented below (in thousands):

	Employee Termination Cost
Balance at 01/01/2013	$	—
Restructuring charges during 2013	333
Payments during 2013	(333		)
Balance at 12/31/2013	$	—
Restructuring charges during nine months ended 9/30/2014	251
Payments during nine months ended 09/30/2014	(251		)
Balance at 9/30/2014	$	—

A summary of the restructuring charges related to this initiative is presented below (in thousands):

	Employee Termination Benefits			Asset Impairments			Other Associated Costs			Total
Balance at 01/01/2013	$	—		$	—		$	—		$	—
Restructuring charges during 2013	2,867			11,402			4,772			19,041
Payments/impairments during 2013	(797		)	(11,402		)	—			(12,199		)
Balance at 12/31/2013	$	2,070		$	—		$	4,772		$	6,842
Restructuring charges during 2014	$	(210	)	818			(1,056		)	(448		)
Payments/impairments during 2014	$	(1,337	)	(818		)	(3,716		)	(5,871		)
Balance at 09/30/2014	523			—			—			523

Restructuring and Related Costs

The following provides a summary of the total costs associated with the plan by major type of cost (in thousands):

Type of Cost	Total Estimated Amount
Employee termination benefits	$	2,659
Asset impairments	12,221
Other associated costs	3,713
Total	$	18,593

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Condensed Consolidated Statements Of Operations (unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Statement [Abstract]
Revenues	$ 97,457	$ 95,809	$ 294,590	$ 290,384
Cost of revenues, excluding amortization of intangibles	37,292	33,458	110,086	102,624
Gross profit	60,165	62,351	184,504	187,760
Operating expenses:
Selling, general and administrative	47,400	45,479	147,064	134,784
Research and development	13,508	16,609	41,165	50,214
Amortization of intangibles	2,804	834	6,405	2,488
Acquisition-related items	1,596	1,253	(3,809)	3,742
Restructuring (benefits) charges	(229)	4,616	(197)	4,874
Total operating expenses	65,079	68,791	190,628	196,102
Operating loss	(4,914)	(6,440)	(6,124)	(8,342)
Interest income	237	327	833	970
Interest expense	(7,370)	(6,756)	(21,868)	(19,908)
Exchange rate gain (loss)	20	54	91	(1,025)
Other, net	56	(33)	180	4,144
Loss before income tax	(11,971)	(12,848)	(26,888)	(24,161)
Income tax benefit	(3,971)	(4,392)	(8,266)	(10,156)
Net loss	$ (8,000)	$ (8,456)	$ (18,622)	$ (14,005)
Net loss per share:
Basic (in dollars per share)	$ (0.16)	$ (0.15)	$ (0.36)	$ (0.26)
Diluted (in dollars per share)	$ (0.16)	$ (0.15)	$ (0.36)	$ (0.26)
Shares used in calculating net loss per share:
Basic (in shares)	51,529	54,652	51,596	54,466
Diluted (in shares)	51,529	54,652	51,596	54,466

XML

Stockholders' Equity

9 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Share Repurchase Program

On December 2, 2013, our board of directors authorized a $200 million share repurchase program. Pursuant to this approval, we entered into a $100 million accelerated share repurchase, or ASR, program with a counterparty, and received a total of 4,705,683 shares of our common stock, of which 3,557,137 shares of our common stock were delivered in December 2013 and 1,148,546 shares of our common stock were delivered in March 2014.

All of our repurchases were treated as effective retirements of the purchased shares and therefore reduced reported shares issued and outstanding by the number of shares repurchased. In addition, the Company recorded the excess of the purchase price over the par value of the common stock as a reduction to additional paid-in capital.

Equity Compensation Plans

Our Amended and Restated 2005 Equity Compensation Plan, or the 2005 Amended Plan, provides for an aggregate of 21,572,558 shares of our common stock that may be issued or transferred to our employees, non-employee directors and consultants.

At September 30, 2014, we have granted stock options, time-vested restricted stock units, or RSUs, and performance-based RSUs, or PRSUs, under the 2005 Amended Plan. Stock options previously granted under the 2000 Long Term Incentive Plan that are canceled or expired will increase the shares available for grant under the 2005 Amended Plan. In addition, employees have purchased shares of the Company’s common stock under the 2007 Employee Stock Purchase Plan, or the Purchase Plan. According to the terms of the Purchase Plan, the number of shares of common stock available for issuance under the Purchase Plan was automatically increased by 600,000 shares on January 1, 2014. At September 30, 2014, 6,049,248 shares and 432,288 shares remained available to grant under the 2005 Amended Plan and the Purchase Plan, respectively.

On February 12, 2014, our Compensation Committee adopted, under the terms of the 2005 Amended Plan, the 2014 Long Term Incentive Plan, or LTIP, and granted PRSUs under such LTIP. The PRSUs will vest contingent on the achievement of our revenue goal, our revenue growth and relative total shareholder return, which is measured against the performance of a defined peer group. Half of the PRSUs are earned based on the achievement of our revenue goal and revenue growth, or the performance condition, and the remaining half of the PRSUs are earned based on the achievement of the revenue goal and the relative total shareholder return, or the market condition.

The measurement period for the PRSUs granted under the LTIP with the performance condition is our 2014 and 2015 fiscal years. The performance condition awards can range from 0% to 200% of the number of original shares granted. If the pre-determined performance goal is met, shares of stock subject to the PRSUs with the performance condition granted to the recipient will begin to vest, with two-thirds vesting on the date of certification of achievement of the pre-determined performance goal, and the remaining one third vesting on December 31, 2016, subject to continued service.

The measurement period for the PRSUs granted under the LTIP with the market condition is our 2014 and 2015 fiscal years. The market condition awards can range from 0% to 200% of the number of original shares granted. If the pre-determined market goal is met, shares of stock subject to the PRSUs with the market condition granted to the recipient will begin to vest, with two-thirds vesting on the date of certification of achievement of the pre-determined market goal, and the remaining one third vesting on December 31, 2016, subject to continued service.

Fair Value Assumptions

PRSUs with Performance Condition and RSUs

The fair value of the PRSUs with performance condition and the RSUs is estimated using the market price of our common stock on the grant date.

PRSUs with Market Condition

The fair value of the PRSUs that include a market condition is estimated using a Monte Carlo simulation model at the grant date. The Monte Carlo method is a statistical simulation technique used to provide the grant date fair value of an award. The assumptions used in the Monte Carlo simulation to value our PRSUs with market condition are presented below:

	Three and nine months ended September 30, 2014
Risk-free interest rate	0.3%
Expected life / remaining measurement period (years)	1.9
Estimated volatility	30.9%
Expected dividends	None
Weighted-average grant date fair value	$24.90

The risk-free interest rate is based on the implied yield available on U.S. Treasury constant maturity securities with the substantially equivalent period as the market condition measurement period remaining as of the grant date, which is 1.9 years. We utilize the volatility of our own common stock over the remaining measurement period in determining the grant date fair value. We use a zero value of the expected dividend value factor since we have not declared dividends in the past and we do not anticipate declaring dividends in the foreseeable future.

Stock Options

The fair value of each stock option is estimated on the date of grant using the Black-Scholes model utilizing the following weighted-average assumptions:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Risk-free interest rate	1.6%	1.3%	1.6%	0.8%
Expected life (years)	4.6	4.6	4.6	4.2
Estimated volatility	34.8%	41.9%	35.7%	39.3%
Expected dividends	None	None	None	None
Weighted-average grant date fair value	$4.76	$7.34	$5.61	$7.44

The risk-free interest rate for periods within the contractual life of the stock option is based on the implied yield available on U.S. Treasury constant maturity securities with substantially equivalent remaining terms at the time of grant. We use our historical stock option exercise experience to estimate the expected life of our stock options. We utilize the volatility of our own common stock over the expected life in determining the grant date fair value. We use a zero value for the expected dividend value factor since we have not declared dividends in the past and we do not anticipate declaring dividends in the foreseeable future.

Employee Stock Purchase Plan

The first offering period under the Purchase Plan commenced in September 2007. The fair value of each purchase option under the Purchase Plan is estimated at the beginning of each purchase period using the Black-Scholes model utilizing the following weighted-average assumptions:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Risk-free interest rate	0.1%	0.1%	0.1%	0.1%
Expected life (years)	0.5	0.5	0.5	0.5
Estimated volatility	38.7%	29.6%	35.4%	30.0%
Expected dividends	None	None	None	None
Fair value of purchase right	$4.67	$5.53	$5.03	$5.21

The risk-free interest rate is based on the implied yield available on the U.S. Treasury constant maturity securities for the six-month term of each offering period in effect at the beginning of the offering period. We utilize the volatility of our own common stock over the offering period in determining the purchase rights fair value. We use a zero value for the expected dividend value factor since we have not declared dividends in the past and we do not anticipate declaring dividends in the foreseeable future.

Stock-Based Compensation Expense

With the exception of PRSUs with performance condition, stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the entire award, which is generally the vesting period, net of estimated forfeitures.

We recognize the estimated compensation cost of PRSUs with performance condition on a straight-line basis over the requisite service period for each vesting tranche of the award, net of estimated forfeitures.

The following table sets forth stock-based compensation expense included in our unaudited condensed consolidated statements of operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Cost of revenues	$	144	$	196	$	465	$	583
Selling, general and administrative	2,641		3,592		9,053		10,152
Research and development	420		462		1,203		1,363
	$	3,205	$	4,250	$	10,721	$	12,098

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Loss Contingency [Abstract]

Commitments and Contingencies

Commitments and Contingencies

St. Jude Medical and LightLab Litigation Settlement

On August 7, 2014, Volcano and its wholly-owned subsidiary, Axsun Technologies, Inc., or Axsun, and together with Volcano, the Volcano Parties, entered into a Settlement, Release, License Agreement, and Covenants Not To Sue, or the Agreement, with St. Jude Medical, Inc., or St. Jude, and its affiliates St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, St. Jude Medical S.C., Inc., and LightLab Imaging, Inc., or LightLab, (collectively, the “St. Jude Parties”), to settle all currently ongoing litigation among the Volcano Parties and the St. Jude Parties. The settlement covers the following civil actions:

• LightLab Imaging, Inc. v. Axsun Technologies, Inc. and Volcano Corporation, in the Massachusetts Superior Court and the Massachusetts Supreme Judicial Court, or the Massachusetts Proceeding;

• Axsun Technologies, Inc. and Volcano Corporation v. LightLab Imaging, Inc., in the Delaware Chancery Court;

• LightLab Imaging, Inc. v. Axsun Technologies, Inc. and Volcano Corporation, in the Delaware Chancery Court;

• St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, and St. Jude Medical S.C., Inc. v. Volcano Corporation, in the United States District Court for the District of Delaware;

• St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB, and St. Jude Medical S.C., Inc. v. Volcano Corporation, in the United States District Court for the District of Delaware;

• Volcano Corporation v. St. Jude Medical, Cardiovascular and Ablation Technologies Division, Inc.; St. Jude Medical, Cardiology Division, Inc.; St. Jude Medical, U.S. Division; St. Jude Medical S.C., Inc.; and St. Jude Medical Systems AB, in the United States District Court for the District of Delaware and the United States Court of Appeals for the Federal Circuit; and

• St. Jude Medical, Cardiology Division, Inc., v. Volcano Corporation, and Michelle K. Lee, Deputy Director, U.S. Patent and Trademark Office, in the United States Patent and Trademark Office and the United States Court of Appeals for the Federal Circuit.

No payments are being made in connection with the Agreement.

Pursuant to the Agreement, the parties agreed to cause each of the Litigations to be dismissed with prejudice and to not seek appellate review of a recent decision issued in the Massachusetts Proceeding.

The Agreement contains mutual releases covering all claims that the Volcano Parties or the St. Jude Parties, or their respective affiliates, have or may have against the other in connection with the Litigations.

The Agreement contains covenants not to sue by each party for (i) infringement of any of the patents that are the subject of any of the Litigations, (ii) infringement of any of the other party’s patents (subject to specified exceptions) by a party’s current products, products in the field of functional measurement for which regulatory approval is submitted before August 7, 2016, or features of those products, (iii) misappropriation of certain claimed trade secrets communicated each way between Axsun and LightLab and (iv) claims of any nature that relate to any of the Litigations. The covenants described in the preceding sentence do not extend to any: (a) patent infringement claims by St. Jude with respect to any (1) wireless communication of physiological pressure sensor data between a sensor and a receiver, or (2) products for intravascular optical coherence tomography (OCT); (b) patent infringement claims by Volcano with respect to any (1) iFR^® patents or (2) products for intravascular ultrasound (i.e., IVUS products); or (c) products of an assignee existing prior to the assignment.

The agreement contains licenses by each party to the other party of the patents that are the subject of the Litigations.

Each party to the Agreement also agreed not to challenge the validity or enforceability of any of the patents that are the subject of any of the Litigations during the term of the Agreement, unless such party is accused of infringing the applicable patent. The Agreement terminates on August 7, 2036.

Litigation-LightLab

On January 7, 2009, LightLab Imaging, Inc., or LightLab, which was acquired by St. Jude Medical, Inc., or St. Jude, in 2010, filed a complaint against us and our wholly owned subsidiary, Axsun, in the Superior Court of Massachusetts, Suffolk County, seeking injunctive relief and unspecified damages, or the Massachusetts Action. The complaint included allegations that Volcano interfered with an agreement between Axsun and LightLab and with LightLab's advantageous business relationship with Axsun, breach of contract by Axsun, that Axsun and Volcano misappropriated LightLab's confidential information and trade secrets, and violated Chapter 93A, a Massachusetts statute that provides for recovery of up to three times damages plus attorney's fees (93A).

On April 7, 2011, the court entered an Amended Final Judgment, in the Massachusetts Action: a) in favor of Volcano and Axsun on LightLab's claims for trade secret misappropriation on items 1-30 on LightLab's list of alleged trade secrets, b) ordered Volcano and Axsun to collectively pay $600,000 in damages and $4.5 million in attorneys' fees, c) in favor of LightLab on its claims against Axsun for breach of contract, breach of implied covenant of good faith and fair dealing, for violation of 93A, and misappropriation of trade secrets for disclosing three particular items to Volcano in December 2008 - the specifications for the two lasers provided by Axsun to LightLab and one Axsun laser prototype made in 2008, d) in favor of LightLab on its claims against Volcano for intentional interference with a contract and advantageous business relationship, unjust enrichment, violation of 93A, and misappropriation of trade secrets for the same three trade secrets described above. In addition, the Court denied a majority of LightLab's requested injunctions, and entered limited injunctive relief, none of which management believes have a material effect upon Volcano.

LightLab appealed various decisions of the Court including, a) the Court's pre-trial rulings excluding certain lost profits damages evidence that LightLab sought to introduce at trial; b) the Court's decisions adverse to LightLab's claims for trade secret misappropriation in items 1-30 of LightLab's alleged list of trade secrets, including various rulings requiring evidence of use or intent to use as a prerequisite for injunctive relief; c) the Court's post-trial decisions denying permanent injunctive relief that LightLab requested as terms of the Final Judgment; and; d) the denial of LightLab's motion to alter or amend the Final Judgment, which motion sought to obtain additional declaratory relief barring Axsun from “supplying” tunable lasers to Volcano. Volcano and Axsun did not cross appeal the Amended Final Judgment in 2011, and Volcano and Axsun satisfied their payment obligations under the Amended Final Judgment by Volcano paying LightLab approximately $5.4 million. The Massachusetts Supreme Judicial Court issued a ruling in Volcano and Axsun's favor on July 28, 2014.

In February 2010, Volcano and Axsun commenced an action in the Delaware Chancery Court, or the Chancery Court Action, against LightLab seeking a declaration of Volcano and Axsun's rights with respect to certain OCT technology, the High Definition Swept Source. LightLab then filed a counter-claim that included a claim against Axsun and Volcano for violations of 93A. This case has been stayed until such time as Volcano has achieved certain development and regulatory milestones.

Additionally, on May 24, 2011, LightLab commenced a separate action in Delaware Chancery Court, or the Second Chancery Court Action, against Volcano and Axsun alleging that Axsun is inappropriately assisting Volcano in the development of a third-party laser. The complaint seeks injunctive relief and unspecified damages. After Volcano and Axsun moved to dismiss the Second Chancery Court Action, LightLab filed an amended complaint against Volcano and Axsun, adding additional allegations regarding misappropriation of trade secrets. This case has been stayed indefinitely.

In January 2014, Volcano requested the Chancery Court dismiss the Chancery Court Actions. The Chancery Court has not ruled on this motion.

As described above, these actions were settled on August 7, 2014.

Litigation - St. Jude Medical

On July 27, 2010, St. Jude Medical filed a lawsuit against Volcano in federal district court in Delaware (collectively, with the counterclaims described below, the Delaware Patent Action), alleging that our pressure guide wire products infringe five patents owned by St. Jude Medical. St. Jude Medical is seeking injunctive relief and monetary damages. This action does not involve OCT technology and is separate from the Massachusetts Action.

On September 20, 2010, Volcano filed its response, in which we denied the allegations that our PrimeWire^® products infringe any valid claim of St. Jude Medical's asserted patents. In addition, Volcano filed a counterclaim in which we alleged that St. Jude Medical's PressureWire^® products and its RadiAnalyzer^® Xpress product infringe three Volcano patents. In our counterclaim, Volcano sought injunctive relief and monetary damages. Trials on the St. Jude Medical patents and Volcano's patents were held in October 2012.

On October 12, 2012, the court entered summary judgment for Volcano with respect to one of St. Jude Medical's asserted patents. On October 19, 2012, a jury found in favor of Volcano on the remaining four St. Jude Medical patents, finding that two of the patents were invalid and that Volcano did not infringe two of the patents. On October 22, 2012, Volcano voluntarily dismissed its claims against St. Jude Medical with respect to one of Volcano's patents. On October 25, 2012, a jury found in favor of St. Jude Medical with respect to Volcano's asserted patents. In conjunction with the trial, St. Jude Medical agreed that previous versions of its PressureWire^® products infringed Volcano's 6,976,965 patent (a pressure sensing guide wire patent). Post-trial motions are pending or remain available to the parties in the case. Volcano and St. Jude have stipulated to a confidential damages amount.

On April 9, 2012, St. Jude Medical, Cardiology Division, Inc., St. Jude Medical Systems AB and St. Jude Medical S.C. filed a sealed complaint in the United States District Court for the District of Delaware alleging that Volcano Corporation infringes United States Patent No. 6,565,514. Trial will be in December 2014 in this case.

On April 16, 2013, Volcano filed suit in Federal District Court in Delaware against St. Jude Medical, Cardiovascular and Ablation Technologies Division, Inc., St. Jude Medical, Cardiology Division, Inc., St. Jude Medical, U.S. Division, St. Jude Medical S.C. Inc., and St. Jude Medical Systems AB, (collectively, “St. Jude”) for infringement of Volcano's recently issued United States Patent Nos. 8,419,647 and 8,419,648 both entitled “Ultra Miniature Pressure Sensor.” Volcano's complaint accuses St. Jude's PressureWire^® Certus and PressureWire^® Aeris cardiac pressure sensing guide wire products (the “Accused Guide Wires”) and St. Jude's RadiAnalyzer^® Xpress Measurement System, Ilumien^® PCI Optimization System and Quantien^® Integrated FFR Platform, which are used with the Accused Guide Wires, of infringing the patented methods of United States Patent No. 8,419,647. Volcano's complaint also accuses the Accused Guide Wires of infringing the patented device claims of United States Patent No. 8,419,648. A claim construction hearing was held in November 2013, and a ruling adverse to Volcano was issued in January 2014. In February 2014, the parties submitted a joint stipulation to the Court agreeing that the Accused Guide Wires do not infringe Volcano’s patents under the Court’s claim construction ruling. The Court entered judgment in March 2014 and Volcano has appealed to the Federal Circuit Court of Appeals, which will likely hear the appeal prior to the end of 2014.

As described above, these actions were settled on August 7, 2014.

Litigation - CardioSpectra

On March 27, 2012, Christopher E. Banas, et al., filed a lawsuit against Volcano in federal district court in the Northern District of California, alleging claims for breach of contract, breach of fiduciary duty, and breach of the implied covenant of good faith and fair dealing based on Volcano's acquisition of CardioSpectra in 2007. Specifically, plaintiffs assert that Volcano has failed to comply with the terms and the alleged implied obligations of the Merger Agreement relating to potential milestone payments. CardioSpectra was in the business of developing OCT technology; however, this litigation is separate from the Massachusetts Action.

On May 14, 2012, Volcano moved to dismiss the complaint in its entirety. The motion sought to dismiss the breach of fiduciary duty and implied covenant claims without leave for amendment, and to dismiss the breach of contract claim with leave to amend. By order dated August 6, 2012, the Court granted Volcano's motion as to all issues with leave to amend. The plaintiffs filed a Second Amended Complaint on August 20, 2012, which included a single claim for breach of the Merger Agreement. In addition, the plaintiffs identified in the Second Amended Complaint are listed as Christopher E. Banas and Paul Castella in their respective capacities as Shareholder Representatives under the Merger Agreement. Volcano answered the Second Amended Complaint on September 4, 2012, and in the same document Volcano asserted several affirmative defenses. In March 2014, the Court granted Volcano's motion for summary judgment and entered judgment in favor of Volcano. The plaintiffs have filed a notice of appeal. Volcano filed a petition to recover its attorneys’ fees as the prevailing party pursuant to the Merger Agreement. Volcano is awaiting the Court’s order.

Litigation - Other

In November 2012, we became aware through newspaper reports in the Italian media that a former employee of ours was under criminal investigation for an alleged violation of Italian anti-bribery laws. We also learned that Volcano Europe B.V.B.A., our wholly-owned subsidiary, had temporarily been prohibited from establishing new contractual relationships with hospitals that are part of the Italian national health system. Following a court hearing, the temporary prohibition was lifted. The Italian public prosecutor's request that such prohibition be reinstituted was denied. The Italian public prosecutor is alleging that the approximately €5,000 that we paid to an Italian state-employed physician for conducting a training session was paid in an effort to influence the outcome of a clinical trial.

The Company believes the lawsuits and other matter described above are without merit, and intends to vigorously defend against or prosecute, as applicable, the matters described above.

We may also be a party to various other claims in the normal course of business. Legal fees and other costs associated with such actions are expensed as incurred and were not material in any period reported. Additionally, we assess, in conjunction with our legal counsel, the need to record a liability for litigation and contingencies. Reserve estimates are recorded when and if it is determined that a loss related matter is both probable and reasonably estimable. Any provisions are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information and events pertinent to a particular matter. Based on its experience, the Company also believes that the damage amounts claimed in the lawsuits disclosed above are not a meaningful indicator of the Company's potential liability. At this time, we are not able to predict or estimate the ultimate outcome or range of possible losses relating to the lawsuits, claims or counterclaims described above. However, we believe that the ultimate disposition of these matters, individually and in the aggregate, including the matters discussed above, will not have a material impact on our consolidated results of operations, financial position or cash flows. Our evaluation of the likely impact of these matters could change in the future, as litigation is inherently unpredictable, and unfavorable outcomes and/or defense costs, depending upon the amount and timing, could have a material adverse effect on our results of operations, financial position, or cash flows in future periods.

Operating Leases

Rent expense for our facilities leases is being recognized on a straight-line basis over the respective minimum lease terms.

Commitments

We have obligations under non-cancelable purchase commitments. The majority of these obligations related to inventory, primarily raw materials. At September 30, 2014, the future minimum payments under these non-cancelable purchase commitments totaled $80.3 million. Approximately $76.1 million of these commitments will require payment in 12 months, of which $75.8 million of these commitments will require payment prior to December 31, 2014. The remaining amount will require payments on various dates through 2016.

We have commitments to provide funding for various clinical studies, for which we will be billed as services are performed under these agreements. At September 30, 2014, the remaining obligation under these agreements collectively is insignificant to our financial condition. In addition, we have entered into agreements with other third parties to sponsor clinical studies. Generally, we contract with one or more clinical research sites for a single study and no one agreement is material to our consolidated results of operations or financial condition. We are usually billed as services are performed based on enrollment and are required to make payments over periods ranging from less than one year up to five years. Our actual payments under these agreements will vary based on enrollment.

At September 30, 2014, we have a commitment to purchase an additional $2.0 million of preferred shares in an existing cost-method investment in a private company. This commitment will expire in February 2015 if the option is not exercised by the private company.

Indemnification

Our supplier, distributor and collaboration agreements generally include certain provisions for indemnification against liabilities if our products are recalled, infringe a third party’s intellectual property rights or cause bodily injury due to alleged defects in our products. Many of our customer agreements also contain indemnification obligations in favor of our customers. In addition, we have agreements with our present and former directors and executive officers indemnifying them against liabilities arising from service in their respective capacities to Volcano. We maintain directors’ and officers’ insurance policies that may limit our exposure to such liabilities. To date, we have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in the accompanying unaudited condensed consolidated financial statements.

Sole source suppliers

We rely on a number of sole source suppliers to supply certain of our products, including our transducers and substrates used in our catheters. We do not carry significant inventory of transducers or substrates. If we had to change suppliers, we expect that it would take 6 to 24 months to identify appropriate suppliers, complete design work and undertake the necessary inspections and testing before the new transducers and substrates would be available. We are not parties to supply agreements with these suppliers but instead use purchase orders as needed.

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Acquisitions and Acquisition-Related Items (AtheroMed Acquisition - Narrative) (Details) (USD $)	9 Months Ended			0 Months Ended	3 Months Ended	9 Months Ended						3 Months Ended			3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Jun. 17, 2014 AtheroMed Inc. [Member]	Sep. 30, 2014 AtheroMed Inc. [Member]	Sep. 30, 2014 AtheroMed Inc. [Member]	Jun. 30, 2014 AtheroMed Inc. [Member]	Jun. 17, 2014 AtheroMed Inc. [Member]	Dec. 31, 2013 AtheroMed Inc. [Member]	Jun. 17, 2014 AtheroMed Inc. [Member] Developed Technology Rights [Member]	Jun. 17, 2014 AtheroMed Inc. [Member] In Process Research and Development [Member]	Sep. 30, 2014 AtheroMed Inc. [Member] Appropriate and Timely Filing of 510(k) [Member]	Jun. 17, 2014 AtheroMed Inc. [Member] Appropriate and Timely Filing of 510(k) [Member]	Jun. 17, 2014 AtheroMed Inc. [Member] Various Sales Milestones [Member]	Sep. 30, 2014 AtheroMed Inc. [Member] Various Sales Milestones [Member] Level 3 [Member]	Jun. 17, 2014 AtheroMed Inc. [Member] Various Sales Milestones [Member] Level 3 [Member]	Sep. 30, 2014 AtheroMed Inc. [Member] Various Sales Milestones [Member] Level 3 [Member] Minimum [Member]	Sep. 30, 2014 AtheroMed Inc. [Member] Various Sales Milestones [Member] Level 3 [Member] Maximum [Member]
Business Acquisition [Line Items]
Cash paid related to acquisitions, net of cash acquired	$ 114,791,000	$ 15,000,000		$ 116,500,000
Cash acquired from acquisition				1,700,000
Business combination, contingent consideration arrangements, amount of contingent consideration settled, liability					15,053,000	15,053,000						15,000,000
Contingent consideration, at fair value					29,875,000	29,875,000	43,145,000		43,000,000				14,000,000			29,000,000
Business combination, contingent consideration arrangements, range of outcomes, estimated amount														39,400,000
Fair value inputs, discount rate															11.00%
Business combination, contingent consideration arrangements, range of outcomes, value, low															32,800,000
Business combination, contingent consideration arrangements, range of outcomes, value, high															49,200,000
Business combination, contingent consideration, fair value input, commercial sales																	59,900,000	89,900,000
Business combination, recognized identifiable assets acquired and liabilities assumed, finite-lived intangibles										61,900,000	9,000,000
Goodwill	$ 150,882,000		$ 55,087,000					$ 95,800,000

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

Schedule of Assumptions Used

The assumptions used in the Monte Carlo simulation to value our PRSUs with market condition are presented below:

	Three and nine months ended September 30, 2014
Risk-free interest rate	0.3%
Expected life / remaining measurement period (years)	1.9
Estimated volatility	30.9%
Expected dividends	None
Weighted-average grant date fair value	$24.90

Fair Value Of Stock Option On Grant Date Using Weighted-Average Assumptions

The fair value of each stock option is estimated on the date of grant using the Black-Scholes model utilizing the following weighted-average assumptions:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Risk-free interest rate	1.6%	1.3%	1.6%	0.8%
Expected life (years)	4.6	4.6	4.6	4.2
Estimated volatility	34.8%	41.9%	35.7%	39.3%
Expected dividends	None	None	None	None
Weighted-average grant date fair value	$4.76	$7.34	$5.61	$7.44

Fair Value Of Stock Option Under The Purchase Plan, Weighted-Average Assumptions

The fair value of each purchase option under the Purchase Plan is estimated at the beginning of each purchase period using the Black-Scholes model utilizing the following weighted-average assumptions:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Risk-free interest rate	0.1%	0.1%	0.1%	0.1%
Expected life (years)	0.5	0.5	0.5	0.5
Estimated volatility	38.7%	29.6%	35.4%	30.0%
Expected dividends	None	None	None	None
Fair value of purchase right	$4.67	$5.53	$5.03	$5.21

Table Of Stock-Based Compensation Expense

The following table sets forth stock-based compensation expense included in our unaudited condensed consolidated statements of operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Cost of revenues	$	144	$	196	$	465	$	583
Selling, general and administrative	2,641		3,592		9,053		10,152
Research and development	420		462		1,203		1,363
	$	3,205	$	4,250	$	10,721	$	12,098

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Summary Of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Basis Of Presentation And Principles Of Consolidation

The unaudited condensed consolidated financial statements of Volcano Corporation (“we,” “us,” “our,” “Volcano” or the “Company”) contained in this quarterly report on Form 10-Q include our financial statements and the financial statements of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC. Pursuant to these rules and regulations, the Company has condensed or omitted certain information and footnote disclosures it normally includes in its annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the U.S., or GAAP. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These unaudited condensed consolidated financial statements 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, 2013.

Our Company

The results of operations for the nine months endedSeptember 30, 2014 are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Reclassification

Reclassification

Certain reclassifications have been made to the prior period condensed consolidated financial statements to conform to the current year presentation.

Net Income (Loss) Per Share

Net Loss Per Share

Basic net loss per share is computed by dividing consolidated net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing consolidated net loss by the weighted-average number of common shares outstanding and dilutive common stock equivalent shares outstanding during the period. Our potentially dilutive shares include outstanding common stock options, unvested restricted stock units, including those with performance or market conditions, and incremental shares issuable upon the conversion of the Convertible Senior Notes or upon exercise of the warrants relating to the Convertible Senior Notes. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share or increase net income per share as discussed in the following paragraph. For the three months endedSeptember 30, 2014 and 2013, 176,000 and 730,000 in the money option and award shares were dilutive for the period and potentially dilutive shares totaling 49.0 million and 21.5 million have not been included in the computation of diluted net income per share, as the result would be anti-dilutive. For the nine months endedSeptember 30, 2014 and 2013, 571,000 and 872,000 in the money option and award shares were dilutive for the period and potentially dilutive shares totaling 31.7 million and 20.8 million have not been included in the computation of diluted net loss per share, as the result would be anti-dilutive.

Diluted net loss per common share does not include any incremental shares related to the Convertible Senior Notes for the three and nine months endedSeptember 30, 2014 and 2013. Because the principal amount of the Convertible Senior Notes will be settled in cash upon conversion, only the conversion spread relating to the Convertible Senior Notes may be included in our calculation of diluted net loss per common share. As such, the Convertible Senior Notes have no impact on diluted net income (loss) per common share until the price of our common stock exceeds the conversion price (initially $29.64 for the 2.875% Convertible Senior Notes due 2015, or the 2015 Notes, and $32.83 for the 1.75% Convertible Senior Notes due 2017, or the 2017 Notes, or collectively, the Notes, subject to adjustments) of the Notes. In addition, the diluted net loss per common share does not include any incremental shares related to the exercise of the warrants related to the Notes for the three and nine months endedSeptember 30, 2014 and 2013. The warrants will not have an impact on diluted net income (loss) per common share until the price of our common stock exceeds the strike price of the warrants (initially $34.875 for the warrants issued in connection with the 2015 Notes offering and $37.59 for the warrants issued in connection with the 2017 Notes offering, subject to adjustments). When the market price of our stock exceeds the strike price, as applicable, we will include, in the diluted net income (loss) per common share calculation, the effect of the additional shares that may be issued upon exercise of the warrants using the treasury stock method to the extent the effect is not anti-dilutive.

The call options to purchase our common stock, which we purchased to hedge against potential dilution upon conversion of the Notes, are not considered for purposes of calculating the total dilutive weighted average shares outstanding, as their effect would be anti-dilutive. Upon exercise, the call options will mitigate the dilutive effect of the Notes.

On December 2, 2013, our board of directors authorized a $200 million share repurchase program. Pursuant to this approval, we entered into a $100 million accelerated share repurchase, or ASR, program with a counterparty, and received a total of 4,705,683 shares of our common stock (see Note 5 "Stockholders' Equity"), of which 3,557,137 shares of our common stock were delivered in December 2013 and 1,148,546 shares of our common stock were delivered in March 2014. The weighted average number of the shares received was removed from the denominator of the basic and diluted net loss per share calculation at the share delivery date.

The basic and diluted net loss per common share calculations for the three and nine months endedSeptember 30, 2014 and 2013 are as follows (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net loss	$	(8,000	)	$	(8,456	)	$	(18,622	)	$	(14,005	)
Weighted average common shares outstanding for basic	51,529			54,652			51,596			54,466
Weighted average common shares outstanding for diluted	51,529			54,652			51,596			54,466
Net loss per share:
Basic	$	(0.16	)	$	(0.15	)	$	(0.36	)	$	(0.26	)
Diluted	$	(0.16	)	$	(0.15	)	$	(0.36	)	$	(0.26	)

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update, or ASU, 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. The updated guidance is effective for us beginning in fiscal year 2015. The Company is currently evaluating the new standard to determine the effect, if any, on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 outlines a single comprehensive model for accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The updated guidance is effective for us beginning in fiscal year 2017 and early application is not permitted. The Company is currently evaluating the new standard to determine the effect, if any, on our consolidated financial statements.

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Segment and Geographic Information

9 Months Ended

Sep. 30, 2014

Segment And Geographic Information [Abstract]

Segment And Geographic Information

Segment and Geographic Information

Our chief operating decision-maker reviews financial information presented on a consolidated basis, accompanied by disaggregated information about segment revenues by product and geographic region for purposes of making operating decisions and assessing financial performance. We have two reporting segments, the first being the medical segment which includes the manufacture, sale, discovery, development and commercialization of products for the diagnosis of atherosclerosis in the coronary arteries and peripheral vascular system. In addition we have an industrial segment which includes the discovery, development, manufacture and sale of micro-optical spectrometers and optical channel monitors to telecommunications and other industrial companies.

We do not assess the performance of our segments on other measures of income or expense, such as depreciation and amortization, operating income or net income. We do not produce reports for, or measure the performance of, our segments on any asset-based metrics. Therefore, segment information is presented only for revenues by product.

The following table sets forth our revenues by segment and product (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Medical segment:
Consoles	$	9,508	$	10,964	$	28,243	$	31,469
Single-procedure disposables:
IVUS	44,909		46,024		139,771		143,869
FM	31,504		27,869		92,421		83,345
Other	9,697		8,809		28,940		25,725
Sub-total medical segment	95,618		93,666		289,375		284,408
Industrial segment	1,839		2,143		5,215		5,976
	$	97,457	$	95,809	$	294,590	$	290,384

The following table sets forth our revenues by geography expressed as dollar amounts (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Revenues (1):
United States	$	49,647	$	46,673	$	145,947	$	139,076
Japan	21,678		26,368		68,964		82,292
Europe, the Middle East and Africa	20,329		17,371		61,941		51,512
Rest of world	5,803		5,397		17,738		17,504
	$	97,457	$	95,809	294,590		$	290,384

(1) Revenues are attributed to geographies based on the location of the customer, except for shipments to original equipment manufacturers, which are attributed to the country of origin of the equipment distributed.

At September 30, 2014, approximately 49% of our long-lived assets, excluding financial assets, are located in the U.S., approximately 38% are located in Costa Rica, approximately 8% are located in Japan, and approximately 5% are located in our remaining geographies. At December 31, 2013, approximately 50% of our long-lived assets, excluding financial assets, were located in the U.S., approximately 38% were located in Costa Rica, approximately 8% were located in Japan, and approximately 4% were located in our remaining geographies.

At September 30, 2014 and December 31, 2013, goodwill of $150.9 million and $55.1 million, respectively, has been allocated entirely to our medical segment.

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Income Taxes

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income taxes are determined using an estimated annual effective tax rate applied against income, and then adjusted for the tax impacts of certain discrete items. The Company recorded an income tax benefit of $8.3 million during the nine months endedSeptember 30, 2014, resulting in an effective benefit rate of 30.7%. The effective tax rate differs from the Federal statutory rate of 35.0% primarily due to foreign income tax rate differentials and nondeductible expenses such as certain stock compensation and acquisition related items.

We recorded an income tax benefit of $10.2 million during the nine months endedSeptember 30, 2013, resulting in an income tax benefit rate of 42.0%. During the nine months endedSeptember 30, 2013, federal legislation was enacted within the U.S. that retroactively allowed the research and development tax credit for all of 2012 and extended the credit through the twelve months ending December 31, 2013. Because this legislation was enacted in 2013, the full benefit of the credit related to 2012 activities was recognized during the nine months endedSeptember 30, 2013. In the absence of the 2012 federal research and development tax credit, our effective benefit tax rate for the nine months endedSeptember 30, 2013 would have been 38.0%.

Our effective tax benefit rate decreased for the nine months endedSeptember 30, 2014 as compared to the nine months endedSeptember 30, 2013. The decrease was primarily due to the expiration of the federal research and development tax credit in December 2013 and nondeductible expenses related to stock compensation. In addition to the above noted items, the effective tax rate during the nine months endedSeptember 30, 2013 included tax benefits related to the 2012 federal research and development tax credit’s retroactive reinstatement in January 2013.

During the three months endedSeptember 30, 2014, certain stock options were exercised and certain shares related to restricted stock awards vested at times when the Company’s stock price was substantially lower than the fair value of those shares at the time of grant. As a result, the income tax deduction related to such shares is less than the expense previously recognized for book purposes. Such shortfalls reduce additional paid-in capital to the extent windfall tax benefits have been previously recognized. During the three months endedSeptember 30, 2014, no shortfalls reduced additional paid-in capital and $787,000 of the shortfall was included in income tax expense.

The Company evaluates the realizability of the deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes guidance requires that a valuation allowance be established when it is more-likely-than-not that all or a portion of the deferred tax assets will not be realized. As part of the evaluation, the Company reviews both positive and negative evidence to determine if a valuation allowance is needed.

In 2013, the Company incurred a net loss, and is not projecting a return to profitability in 2014. As of September 30, 2014, management has evaluated the recoverability of its Federal deferred tax assets, including factors such as a consideration of forecasted operating results, in-process changes in its manufacturing processes, potential tax planning strategies, as well as the period of time that will transpire before the underlying deferred tax assets will expire. Based on this evaluation, management has concluded that it is more likely than not that the underlying deferred tax assets will be utilized prior to their expiration, and therefore continues to believe that the Federal deferred tax assets will be recovered.

Further, during the fourth quarter of 2013, we concluded that it was more likely than not that we would not be able to realize our U.S. state and select foreign deferred tax assets. The Company’s continues to maintain the recorded valuation allowance against our U.S. state and select foreign deferred tax assets as of September 30, 2014.

We will continue to assess the need for a valuation allowance on deferred tax assets by evaluating both positive and negative evidence that may exist. To the extent we establish or change the valuation allowance in a period, the tax effect will generally flow through the statement of operations. In the case of an acquired or merged entity, we will record valuation allowance on a deferred tax asset through purchase accounting procedures as an adjustment to goodwill at the acquisition date, if it is more likely than not that all or a portion of the acquired deferred tax assets will not be realized in the future. Any subsequent change to a valuation allowance established during purchase accounting within the measurement period of the acquisition (not to exceed twelve months) will also be recorded as an adjustment to goodwill, provided that such change relates to new information about the facts and circumstances that existed on the acquisition date.

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Summary Of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Schedule Of Basic And Diluted Net Income (Loss) Per Common Share Calculations

The basic and diluted net loss per common share calculations for the three and nine months endedSeptember 30, 2014 and 2013 are as follows (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net loss	$	(8,000	)	$	(8,456	)	$	(18,622	)	$	(14,005	)
Weighted average common shares outstanding for basic	51,529			54,652			51,596			54,466
Weighted average common shares outstanding for diluted	51,529			54,652			51,596			54,466
Net loss per share:
Basic	$	(0.16	)	$	(0.15	)	$	(0.36	)	$	(0.26	)
Diluted	$	(0.16	)	$	(0.15	)	$	(0.36	)	$	(0.26	)

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Financial Statement Details (Effect Of Foreign Exchange Forward Contracts On Consolidated Statements Of Income) (Details) (Foreign Exchange Forward [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in other comprehensive income on foreign currency forward contracts (effective portion)	$ 4,243	$ (727)	$ 3,585	$ (719)
Gain (loss) reclassified from accumulated other comprehensive income into cost of revenue (effective portion)	16	(44)	313	(44)
Gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	(10)	43	(50)	11
Not Designated as Hedging Instrument [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in exchange rate gain (loss), net	$ 4,432	$ (996)	$ 3,490	$ 4,880

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Segment and Geographic Information (Schedule Of Revenues By Geography) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014	Sep. 30, 2013
Segment Reporting Information [Line Items]
Revenues	$ 97,457		$ 95,809		$ 294,590	$ 290,384
United States [Member]
Segment Reporting Information [Line Items]
Revenues	49,647	[1]	46,673	[1]	145,947	139,076
Japan [Member]
Segment Reporting Information [Line Items]
Revenues	21,678	[1]	26,368	[1]	68,964	82,292
Europe, The Middle East And Africa [Member]
Segment Reporting Information [Line Items]
Revenues	20,329	[1]	17,371	[1]	61,941	51,512
Rest Of World [Member]
Segment Reporting Information [Line Items]
Revenues	$ 5,803	[1]	$ 5,397	[1]	$ 17,738	$ 17,504

[1] Revenues are attributed to geographies based on the location of the customer, except for shipments to original equipment manufacturers, which are attributed to the country of origin of the equipment distributed.

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Summary Of Significant Accounting Policies (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended		1 Months Ended		4 Months Ended						9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Mar. 31, 2014 Accelerated Share Repurchase Program [Member]	Dec. 31, 2013 Accelerated Share Repurchase Program [Member]	Mar. 31, 2014 Accelerated Share Repurchase Program [Member]	Dec. 02, 2013 Accelerated Share Repurchase Program [Member]	Sep. 30, 2010 2.875% Convertible Senior Notes Due 2015 [Member]	Dec. 31, 2012 1.75% Convertible Senior Notes Due 2017 [Member]	Sep. 30, 2014 Options Held [Member] 2.875% Convertible Senior Notes Due 2015 [Member]	Sep. 30, 2014 Options Held [Member] 1.75% Convertible Senior Notes Due 2017 [Member]	Sep. 30, 2014 Warrant [Member] 2.875% Convertible Senior Notes Due 2015 [Member]	Sep. 30, 2014 Warrant [Member] 1.75% Convertible Senior Notes Due 2017 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Dilutive shares not included in the computation of diluted net income (loss) per share	176,000	730,000	571,000	872,000
Potentially dilutive shares not included in the computation of diluted net income (loss) per share	49,000,000	21,500,000	31,700,000	20,800,000
Initial effective conversion price (in dollars per share)											$ 29.64	$ 32.83
Convertible senior notes, interest rate									2.875%	1.75%	2.875%	1.75%
Investment warrants exercise price (in dollars per share)													$ 34.875	$ 37.59
Stock repurchase program, authorized amount								$ 200,000,000
Accelerated share repurchases, settlement (payment) or receipt								$ 100,000,000
Common stock repurchase/retirement, shares					1,148,546	3,557,137	4,705,683

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Acquisitions and Acquisition-Related Items (Crux Acquisition - Narrative) (Details) (Crux Acquisition [Member], USD $)	3 Months Ended		9 Months Ended		1 Months Ended	3 Months Ended	6 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2012 Appropriate and Timely Filing of 510(k) [Member]	Mar. 31, 2014 Various Sales Milestones [Member]	Sep. 30, 2014 Various Sales Milestones [Member]	Sep. 30, 2014 Various Sales Milestones [Member] Minimum [Member]	Sep. 30, 2014 Various Sales Milestones [Member] Maximum [Member]
Business Acquisition [Line Items]
Business combination, contingent consideration arrangements, amount of contingent consideration settled, liability	$ 0	$ 0	$ 3,000,000	$ 0	$ 3,000,000
Fair value inputs, discount rate						14.00%	10.00%
Business combination, contingent consideration arrangements, range of outcomes, value, low							23,400,000
Business combination, contingent consideration arrangements, range of outcomes, value, high							64,300,000
Business combination, contingent consideration, fair value input, commercial sales								$ 94,400,000	$ 204,900,000

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Segment and Geographic Information (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014 segment	Dec. 31, 2013
Segment Reporting Information [Line Items]
Number of reportable segments	2
Goodwill	$ 150,882	$ 55,087
United States [Member]
Segment Reporting Information [Line Items]
Percentage of long-lived assets excluding financial assets	49.00%	50.00%
Costa Rica [Member]
Segment Reporting Information [Line Items]
Percentage of long-lived assets excluding financial assets	38.00%	38.00%
Japan [Member]
Segment Reporting Information [Line Items]
Percentage of long-lived assets excluding financial assets	8.00%	8.00%
Rest Of World [Member]
Segment Reporting Information [Line Items]
Percentage of long-lived assets excluding financial assets	5.00%	4.00%

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Financial Statement Details (Carrying Values Of The Liability And Equity Components Of The Notes) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
2.875% Convertible Senior Notes Due 2015 [Member]
Debt Instrument [Line Items]
Principal amount	$ 25,000	$ 25,000
Unamortized discount of liability component	(1,006)	(1,818)
Unamortized debt issuance costs	(112)	(204)
Carrying value of liability component	23,882	22,978
Equity - net carrying value	452	452
1.75% Convertible Senior Notes Due 2017 [Member]
Debt Instrument [Line Items]
Principal amount	460,000	460,000
Unamortized discount of liability component	(60,440)	(72,902)
Unamortized debt issuance costs	(7,515)	(9,064)
Carrying value of liability component	392,045	378,034
Equity - net carrying value	$ 89,415	$ 89,415

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Condensed Consolidated Statements Of Comprehensive Loss (unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Statement of Comprehensive Income [Abstract]
Net loss	$ (8,000)	$ (8,456)	$ (18,622)	$ (14,005)
Other comprehensive (loss) income
Foreign currency translation adjustments	(2,797)	1,522	(1,044)	1,527
Changes in unrealized (loss) gain on available-for-sale investments, net of tax
Changes in unrealized (loss) gain on available-for-sale investments, net of tax	(92)	190	(132)	(4)
Changes in unrealized gain (loss) on foreign currency forward exchange contracts, net of tax
Changes in unrealized gain (loss) on foreign currency forward exchange contracts, net of tax	2,799	(422)	2,179	(414)
Other comprehensive (loss) income	(90)	1,290	1,003	1,109
Comprehensive loss	$ (8,090)	$ (7,166)	$ (17,619)	$ (12,896)

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Financial Statement Details

9 Months Ended

Sep. 30, 2014

Financial Statement Details [Abstract]

Financial Statement Details

Financial Statement Details

Cash and Cash Equivalents and Available-for-Sale Investments

We invest our excess funds in U.S. government securities, corporate fixed income securities, commercial paper, certificates of deposit and money market funds. As of September 30, 2014, all of these investments were classified as available-for-sale and mature within 22 months. These investments are recorded at their estimated fair value, with unrealized gains or losses reported as a separate component of accumulated other comprehensive income or loss.

At September 30, 2014 and December 31, 2013, available-for-sale investments are detailed as follows (in thousands):

At September 30, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Short-term:
Corporate debt securities	$	140,927	$	29	$	62	$	140,894
Short-term available-for-sale investments	$	140,927	$	29	$	62	$	140,894
Long-term:
Corporate debt securities	$	44,317	$	—	$	73	$	44,244
Long-term available for sale investments	$	44,317	$	—	$	73	$	44,244

At December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Short-term:
Corporate debt securities	$	164,570	$	72	$	4	$	164,638
U.S. Treasury and agency debt securities	66,153		2		18		66,137
Short-term available-for-sale investments	$	230,723	$	74	$	22	$	230,775
Long-term:
Corporate debt securities	$	11,697	$	30	$	—	$	11,727
U.S. Treasury and agency debt securities	23,008		15		—		23,023
Long-term available for sale investments	$	34,705	$	45	$	—	$	34,750

Available-for-sale investments that are in an unrealized loss position at September 30, 2014 and December 31, 2013 are detailed as follows (in thousands):

	At September 30, 2014
	Estimated Fair Value		Gross Unrealized Losses
Corporate debt securities	$	106,244	$	135

	At December 31, 2013
	Estimated Fair Value		Gross Unrealized Losses
Corporate debt securities	$	21,226	$	4
U.S. Treasury and agency debt securities	40,982		18
	$	62,208	$	22

Derivative Financial Instruments

Foreign Currency Forward Contracts

We are exposed to foreign currency risks through our global operations, primarily in Japan and Europe, and when we enter into transactions in non-functional currencies. Exchange rate fluctuations between the U.S. dollar and foreign currencies, primarily the Japanese yen, or yen, and the euro, could adversely affect our financial results. We use derivative financial instruments to mitigate our foreign currency exposures. We do not enter into derivative instruments for speculative purposes.

We enter into derivative financial instruments, principally forward contracts, to manage a portion of the foreign currency risk related to transactions in non-functional currencies. We record derivative financial instruments as either assets or liabilities in our unaudited condensed consolidated balance sheets and measure them at fair value. Certain of the derivative instruments we use to mitigate this exposure are not designated for hedge accounting treatment, and as a result, changes in their fair values are recorded in exchange rate gain (loss) in the unaudited condensed consolidated statement of operations.

We hedge forecasted intercompany inventory transactions that are denominated in yen and euro. Forward contracts are used to hedge forecasted intercompany inventory transactions over specific time periods. These forward contracts are designated as cash flow hedges and have maturity dates of up to 22 months. Changes in the fair value of cash flow hedges, excluding time value of the hedges which is recorded as interest expense, are reported as a component of accumulated other comprehensive income (loss), or AOCI, within stockholders' equity. Once the underlying hedged transaction occurs, we de-designate the derivative, cease to apply hedge accounting treatment to the transaction, reclassify the gain or loss recorded to date from AOCI into cost of sales, and record any further gains or losses to exchange rate gain (loss). We evaluate hedge effectiveness at the inception of the hedge and on an ongoing basis. To the extent we experience ineffectiveness in our hedges, the gains or losses accumulated in other comprehensive income associated with the ineffective portion of the hedge are reclassified immediately into exchange rate gain (loss). We adjust the level and use of derivatives as soon as practicable after learning that an exposure has changed. We review all exposures on derivative positions on a regular basis.

At September 30, 2014 and December 31, 2013, the notional amount of our outstanding forward contracts was $120.4 million and $97.3 million, respectively, of which $56.4 million and $40.3 million, respectively, were designated as cash flow hedges. At September 30, 2014, our outstanding forward contracts mature through November 2015.

As of September 30, 2014, the deferred gain, net of tax, for those derivative contracts that qualified for hedge accounting treatment was $2.6 million, all of which will be reclassified from accumulated other comprehensive income (loss) into cost of sales at the then-current values over the next twelve months as the underlying hedged transactions are recognized.

The following tables summarize the location and fair values of derivative instruments on our unaudited condensed consolidated balance sheets (in thousands) at September 30, 2014 and December 31, 2013. The fair value amounts are presented on a gross basis and are segregated between derivatives that are designated and qualify as hedging instruments and those that are not.

	At September 30, 2014
	Asset Derivatives			Liability Derivatives
	Balance sheet location	Fair Value		Balance sheet location	Fair Value
Derivatives Designated as Hedging Instruments
Foreign exchange forward contracts	Other current assets	$	3,685	Other current liabilities	$	1
Foreign exchange forward contracts	Other long-term assets	140		Other long-term liabilities	—
Total Derivatives Designated as Hedging Instruments		3,825			1
Derivatives Not Designated as Hedging Instruments
Foreign exchange forward contracts	Other current assets	4,033		Other current liabilities	26
Total Derivatives Not Designated as Hedging Instruments		4,033			26
Total Derivatives		$	7,858		$	27

	As of December 31, 2013
	Asset Derivatives			Liability Derivatives
	Balance sheet location	Fair Value		Balance sheet location	Fair Value
Derivatives Designated as Hedging Instruments
Foreign exchange forward contracts	Other current assets	$	954	Other current liabilities	$	251
Foreign exchange forward contracts	Other long-term assets	81		Other long-term liabilities	—
Total Derivatives Designated as Hedging Instruments		1,035			251
Derivatives Not Designated as Hedging Instruments
Foreign exchange forward contracts	Other current assets	1,953		Other current liabilities	1,164
Total Derivatives Not Designated as Hedging Instruments		1,953			1,164
Total Derivatives		$	2,988		$	1,415

The Company has elected to present the fair value of derivative assets and liabilities within the unaudited condensed consolidated balance sheets on a gross basis even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation. The following table provides information (in thousands) as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria as stipulated by the terms of the master netting arrangements with each of the counterparties. Derivatives not subject to master netting arrangements are not eligible for net presentation.

	As of September 30, 2014
				Gross Amount Not Offset on the Balance Sheet
	Gross Amount of Recognized Assets (Liabilities)			Financial Instruments			Cash Collateral (Received) or Pledged	Net Amount
Derivative Assets
Foreign exchange forward contracts	$	7,858		$	(27	)	—	$	7,831
Derivative Liabilities
Foreign exchange forward contracts	(27		)	27			—	—
Total	$	7,831		—			—	7,831

	As of December 31, 2013
				Gross Amount Not Offset on the Balance Sheet
	Gross Amount of Recognized Assets (Liabilities)			Financial Instruments			Cash Collateral (Received) or Pledged	Net Amount
Derivative Assets
Foreign exchange forward contracts	$	2,988		$	(1,415	)	—	$	1,573
Derivative Liabilities
Foreign exchange forward contracts	(1,415		)	1,415			—	—
Total	$	1,573		—			—	1,573

The following table summarizes the effect of our foreign exchange forward contracts on our unaudited Condensed Consolidated Statements of Operations (in thousands).

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Derivatives Designated as Hedging Instruments
Gain (loss) recognized in other comprehensive income on foreign currency forward contracts (effective portion)	$	4,243		$	(727	)	$	3,585		$	(719	)
Gain (loss) reclassified from accumulated other comprehensive income into cost of revenue (effective portion)	16			(44		)	313			(44		)
Gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	(10		)	43			(50		)	11
Derivatives Not Designated as Hedging Instruments
Gain (loss) recognized in exchange rate gain (loss), net	$	4,432		$	(996	)	$	3,490		$	4,880

Options and Warrants Related to Our Convertible Notes

In connection with our convertible debt offering in December 2012, we purchased call options on our common stock. The call options give us the right to purchase up to approximately 14.0 million shares of our common stock at $32.83 per share subject to certain adjustments that generally correspond to the adjustments to the conversion rate for the underlying debt. Additionally, we sold warrants, which give the purchasers of the warrants the right to purchase up to approximately 14.0 million shares of our common stock at $37.59 per share, subject to certain adjustments.

In connection with our convertible debt offering in September 2010 and subsequent partial repurchase in December 2012, we purchased call options on our common stock and sold warrants. The remaining call options give us the right to purchase up to approximately 850,000 shares of our common stock at $29.64 per share, subject to certain adjustments, and the remaining warrants give the counterparty the right to purchase up to approximately 850,000 shares of our common stock at $34.88 per share, subject to certain adjustments.

In accordance with the authoritative guidance, we concluded that these call options and warrants were indexed to our stock. Therefore, the call options and warrants were classified as equity instruments and are not being marked to market prospectively unless certain conditions as described in the 2017 and 2015 Notes occur.

Concentration of Credit Risk

Financial instruments which subject us to potential credit risk consist of our cash and cash equivalents, short-term and long-term available-for-sale investments, foreign currency derivative contracts, and trade accounts receivable.

We have established guidelines to limit our exposure to credit risk by placing investments with high credit quality financial institutions, diversifying our investment portfolio and holding investments with maturities that maintain safety and liquidity. We place our cash and cash equivalents with high credit quality financial institutions. Deposits with these financial institutions may exceed the amount of insurance provided; however, these deposits typically are redeemable upon demand. Therefore we believe the financial risks associated with these financial instruments are minimal.

Trade accounts receivable are recorded at the net invoice value and are not interest bearing. We consider receivables past due based on the contractual payment terms. We perform ongoing credit evaluations of our customers, and generally we do not require collateral on our accounts receivable. We estimate the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and we record a provision for uncollectible accounts when collection is uncertain. To date, we have not experienced significant credit related losses.

We are exposed to credit losses in the event of nonperformance by the banks with which we transact foreign currency contracts. We currently hold foreign exchange forward contracts with two counterparties. Our overall risk of loss in the event of a counterparty default is limited to the amount of any unrealized gains on outstanding contracts (i.e., those contracts that have a positive fair value) at the date of default. We manage this credit risk by executing foreign currency contracts with major financial institutions with a Moody's and Standard & Poor's long-term debt rating of at least A/A2, and monitoring the credit ratings of our counterparties on a periodic basis.

In connection with the issuance of our 2015 Notes and our 2017 Notes, we purchased call options from counterparties. Non-performance by the counterparties under these call options would potentially expose us to dilution of our common stock to the extent our stock price exceeds the conversion price (in the case of the 2015 Notes and the 2017 Notes).

We purchase integrated circuits and other key components for use in our products. For certain components, which are currently single sourced, there are relatively few sources of supply. Although we believe that other suppliers could provide similar components on comparable terms, establishment of additional or replacement suppliers cannot be accomplished quickly. Any significant supply interruption could have a material adverse effect on our business, financial condition and results of operations. For further discussion, see “Risk Factors—Our manufacturing operations are dependent upon third party suppliers, some of which are sole-sourced, which makes us vulnerable to supply problems, price fluctuations and manufacturing delays.”

Fair Value Measurements

Fair value is defined as an exit price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Authoritative guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.

• Level 1—Valuations based on quoted prices for identical assets or liabilities in active markets at the measurement date. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Our Level 1 assets consist of money market funds and U.S. Treasury and agency debt securities.

• Level 2—Valuations based on quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data, such as alternative pricing sources with reasonable levels of price transparency. Our Level 2 assets consist of corporate debt securities including commercial paper, corporate bonds, certificates of deposit and foreign currency forward contracts.

• Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Our Level 3 liability includes the contingent consideration related to the Crux and AtheroMed acquisitions and the other liability related to the Sync-Rx acquisition.

We utilize a third-party pricing service to assist us in obtaining fair value pricing for our investments. Pricing for certain securities is based on proprietary models. Inputs are documented in accordance with the fair value disclosure hierarchy. We also utilize third-party financial institutions to assist us in obtaining fair value pricing for our foreign currency forward contracts.

Contingent consideration arrangements obligate us to pay former shareholders of an acquired entity if specified future events occur or conditions are met such as the achievement of certain technological milestones or the achievement of targeted revenue milestones. We measure such liabilities using Level 3 unobservable inputs, applying the income approach, such as the discounted cash flow technique, or the probability-weighted scenario method. We used various key assumptions, such as the probability of achievement of the agreed milestones and the discount rate, in our determination of the fair value of contingent consideration. We monitor the fair value of the contingent consideration and the subsequent revisions are reflected in our unaudited consolidated statements of operations. For a further discussion on the key assumptions used in determining the fair value and the change in the estimated fair value of the contingent consideration during the three and nine months endedSeptember 30, 2014, refer to Note 2, "Acquisitions and Acquisition-Related Items".

In connection with the Sync-Rx acquisition, we recorded a contingent liability related to a government grant received to develop underlying technologies. The timing of repayment of the grant is contingent upon the generation of revenues derived from the technologies for which grant proceeds were received. We measure such liability using Level 3 unobservable inputs, applying the income approach, such as the discounted cash flow technique, or the probability-weighted scenario method. The grant was recorded as other liabilities at its present value using various estimates, including revenue projections, discount rate and estimated years of re-payment. We monitor the fair value of the contingent liability and the subsequent revisions are reflected in our Statements of Operations. For a further discussion on the key assumptions used in determining the fair value, refer to Note 2, "Acquisitions and Acquisition-Related Items - Sync-Rx Acquisition".

During the three and nine months endedSeptember 30, 2014 and 2013, no transfers were made into or out of the Level 1, 2, or 3 categories.

Financial assets and liabilities measured at fair value on a recurring basis are summarized below at September 30, 2014 and December 31, 2013 (in thousands):

	Fair Value Measurements at September 30, 2014
	Total		Level 1		Level 2		Level 3
Assets:
Current:
Cash	$	19,141	$	19,141	$	—	$	—
Money market funds	12,818		12,818		—		—
Corporate debt securities	140,894		—		140,894		—
Foreign currency forward contracts	7,718		—		7,718		—
Non-current:
Corporate debt securities	44,244		—		44,244		—
Foreign currency forward contracts	140		—		140		—
Total assets measured at fair value	$	224,955	$	31,959	$	192,996	$	—
Liabilities:
Current:
Foreign currency forward contracts	$	27	$	—	$	27	$	—
Other liabilities, current portion	95		—		$	—	95
Contingent consideration, current portion (1)	365		—		—		365
Non-current:
Other liabilities	1,036		—		—		1,036
Contingent consideration	53,379		—		—		53,379
Total liabilities measured at fair value	$	54,902	$	—	$	27	$	54,875

(1) This amount is reflected net of the fair value of the working capital receivable in the amount of $1.3 million at September 30, 2014.

	Fair Value Measurements at December 31, 2013
	Total		Level 1		Level 2		Level 3
Assets:
Current:
Cash	$	98,436	$	98,436	$	—	$	—
Money market funds	8,723		8,723		—		—
Corporate debt securities	164,638		—		164,638		—
U.S. Treasury and agency debt securities	66,137		66,137		—		—
Foreign currency forward contracts	2,907		—		2,907		—
Non-current:
Corporate debt securities	11,727		—		11,727		—
U.S. Treasury and agency debt securities	23,023		23,023		—		—
Foreign currency forward contracts	81		—		81		—
Total assets measured at fair value	$	375,672	$	196,319	$	179,353	$	—
Liabilities:
Current:
Foreign currency forward contracts	$	1,415	$	—	$	1,415	$	—
Contingent consideration, current portion (1)	3,750		—		—		3,750
Non-current:
Other liabilities	1,249		—		—		1,249
Contingent consideration	29,888		—		—		29,888
Total liabilities measured at fair value	$	36,302	$	—	$	1,415	$	34,887

(1) This amount is reflected net of the fair value of the working capital receivable in the amount of $1.2 million at December 31, 2013.

Inventories

Inventories consist of the following (in thousands):

	September 30, 2014		December 31, 2013
Finished goods (1)	$	37,325	$	27,237
Work-in-process	13,243		12,051
Raw materials	25,774		21,682
	$	76,342	$	60,970

(1) Finished goods inventory includes consigned inventory of $6.1 million and $5.6 million at September 30, 2014 and December 31, 2013, respectively.

Intangible Assets

Intangible assets consisted of the following (in thousands):

	September 30, 2014
Intangible assets subject to amortization	Cost		Accumulated Amortization		Net		Weighted- Average Life (in years) (1)
Developed technology	$	121,807	$	22,337	$	99,470	12.3
Licenses	7,366		7,125		241		9.0
Customer relationships	4,213		4,066		147		6.2
Patents and trademarks	14,594		3,297		11,297		13.9
Covenant not to compete	600		208		392		3.0
	148,580		37,033		111,547		12.1
Intangible assets not yet subject to amortization
In-process research and development	13,260		—		13,260		n/a
	$	161,840	$	37,033	$	124,807

	December 31, 2013
Intangible assets subject to amortization	Cost		Accumulated Amortization		Net		Weighted- Average Life (in years) (1)
Developed technology	$	57,507	$	16,393	$	41,114	8.6
Licenses	7,441		7,102		339		8.8
Customer relationships	4,441		4,312		129		6.1
Patents and trademarks	13,668		2,894		10,774		13.2
Covenant not to compete	300		108		192		3.0
	83,357		30,809		52,548		9.2
Intangible assets not yet subject to amortization
In-process research and development	5,560		—		5,560		n/a
	$	88,917	$	30,809	$	58,108

(1) Weighted average life of intangible assets is presented excluding fully amortized assets.

At September 30, 2014, future amortization expense related to our intangible assets subject to amortization is expected to be as follows (in thousands):

2014	2,917
2015	11,366
2016	11,141
2017	10,570
2018	10,514
Thereafter	65,039
	$	111,547

Restructuring Activity

Disposables Manufacturing Transition to Costa Rica Initiative

During the second quarter of 2013, our management approved plans to consolidate and transition our manufacturing resources related to the manufacturing of disposables to Costa Rica. Activities under this restructuring plan were initiated in the second quarter of 2013 and are expected to be substantially completed by mid-2015. We estimate that this restructuring plan will result in total pre-tax charges of approximately $2.8 million, all of which are one-time termination benefits, including severance payments and continuing medical benefits.

A summary of the activities related to this initiative is presented below (in thousands):

	Employee Termination Cost
Balance at 01/01/2013	$	—
Restructuring charges during 2013	333
Payments during 2013	(333		)
Balance at 12/31/2013	$	—
Restructuring charges during nine months ended 9/30/2014	251
Payments during nine months ended 09/30/2014	(251		)
Balance at 9/30/2014	$	—

Strategic Reorganization Initiative

During the third quarter of 2013, our management evaluated various development projects, product lines and functional areas in an effort to reprioritize and reallocate our resources within our distribution, research and development, and clinical programs to focus on development and commercial efforts that we believe better advance our key strategies. The key elements under this restructuring plan include the discontinuation of development programs for our forward-looking IVUS, or FL.IVUS, forward-looking intracardiac echocardiography, or FL.ICE, and optical computed tomography, or OCT, intravascular coronary imaging development programs, the termination of the commercial sale of the ReFLOW product line, and a modest reorganization of several functional areas and business units within the Company.

Activities under this restructuring plan were initiated in the third quarter of 2013 and were substantially completed during the second quarter of 2014. This restructuring resulted in total pre-tax charges of approximately $18.6 million, of which approximately $6.4 million resulted or will result in cash outlay. The following provides a summary of the total costs associated with the plan by major type of cost (in thousands):

Type of Cost	Total Estimated Amount
Employee termination benefits	$	2,659
Asset impairments	12,221
Other associated costs	3,713
Total	$	18,593

A summary of the restructuring charges related to this initiative is presented below (in thousands):

	Employee Termination Benefits			Asset Impairments			Other Associated Costs			Total
Balance at 01/01/2013	$	—		$	—		$	—		$	—
Restructuring charges during 2013	2,867			11,402			4,772			19,041
Payments/impairments during 2013	(797		)	(11,402		)	—			(12,199		)
Balance at 12/31/2013	$	2,070		$	—		$	4,772		$	6,842
Restructuring charges during 2014	$	(210	)	818			(1,056		)	(448		)
Payments/impairments during 2014	$	(1,337	)	(818		)	(3,716		)	(5,871		)
Balance at 09/30/2014	523			—			—			523

The employee termination benefits include severance payments and continuing medical and other benefits. The asset impairments are related to the discontinued programs and include impairment of property, plant and equipment assets, impairment of intangible assets and other tangible asset impairments. The other associated costs include the contract termination costs related to our purchase and lease commitments, and other costs directly related to the restructuring activities. The $1.1 million reduction in other associated costs during the nine months endedSeptember 30, 2014 is primarily from negotiating a favorable settlement on a contract termination. Reductions in employee termination benefits are the result of final severance costs being less than previously estimated.

All charges were recorded in the restructuring charges line item within our unaudited condensed consolidated statement of operations.

Both restructuring initiatives are related to our medical segment.

Debt

In December 2012, we issued $460 million aggregate principal amount of 1.75% Convertible Senior Notes due 2017, or the 2017 Notes, in an offering registered under the Securities Act of 1933, as amended. Interest is payable semiannually in arrears on June 1 and December 1, commencing on June 1, 2013.

In September 2010, we issued $115 million aggregate principal amount of 2.875% Convertible Senior Notes due 2015, or the 2015 Notes, in an offering registered under the Securities Act of 1933, as amended. Interest is payable semiannually in arrears on March 1 and September 1, commencing on March 1, 2011. In December 2012, in connection with the issuance of the 2017 Notes, we repurchased $90 million of the $115 million in aggregate principal amount of the 2015 Notes.

The carrying values of the liability and equity components of both the 2017 Notes and the 2015 Notes are reflected in our unaudited condensed consolidated balance sheets as follows (in thousands):

	September 30, 2014			December 31, 2013
Debt:
2.875% Convertible Senior Notes due 2015:
Principal amount	$	25,000		$	25,000
Unamortized discount of liability component	(1,006		)	(1,818		)
Unamortized debt issuance costs	(112		)	(204		)
Carrying value of liability component	23,882			22,978
1.75% Convertible Senior Notes due 2017:
Principal amount	460,000			460,000
Unamortized discount of liability component	(60,440		)	(72,902		)
Unamortized debt issuance costs	(7,515		)	(9,064		)
Carrying value of liability component	392,045			378,034
Equity—net carrying value
2.875% Convertible Senior Notes due 2015	$	452		$	452
1.75% Convertible Senior Notes due 2017	89,415			89,415

The fair values of the Notes, which are all Level 2 measurements, are summarized as follows (in thousands):

	September 30, 2014		December 31, 2013
2.875% Convertible Senior Notes due 2015	$	24,885	$	25,950
1.75% Convertible Senior Notes due 2017	399,349		456,320
Total	$	424,234	$	482,270

XML

Acquisitions and Acquisition-Related Items Acquisitions and Acquisition-Related Items (Crux Acquisition - Contingent Consideration Rollforward) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Business Combination, Contingent Consideration, Liability [Roll Forward]
Change in fair value measurement included in operating expenses			$ (16,900)	$ 0
Crux Acquisition [Member]
Business Combination, Contingent Consideration, Liability [Roll Forward]
Fair value measurement at beginning of period	24,290	31,687	33,638	30,231
Change in fair value measurement included in operating expenses		881		2,500
Contingent consideration settled	0	0	(3,000)	0
Fair value measurement at end of period	23,869	32,568	23,869	32,568
Crux Acquisition [Member] | Operating Expense [Member]
Business Combination, Contingent Consideration, Liability [Roll Forward]
Change in fair value measurement included in operating expenses	$ (421)	$ 881	$ (6,769)	$ 2,337

XML

Financial Statement Details (Future Amortization Expense Of Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Acquired Finite-Lived Intangible Assets [Line Items]
Net	$ 124,807	$ 58,108
Intangible Assets Subject to Amortization [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
2014	2,917
2015	11,366
2016	11,141
2017	10,570
2018	10,514
Thereafter	65,039
Net	$ 111,547	$ 52,548

XML

Segment and Geographic Information (Tables)

9 Months Ended

Sep. 30, 2014

Segment And Geographic Information [Abstract]

Schedule Of Revenues By Segment And Product

The following table sets forth our revenues by segment and product (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Medical segment:
Consoles	$	9,508	$	10,964	$	28,243	$	31,469
Single-procedure disposables:
IVUS	44,909		46,024		139,771		143,869
FM	31,504		27,869		92,421		83,345
Other	9,697		8,809		28,940		25,725
Sub-total medical segment	95,618		93,666		289,375		284,408
Industrial segment	1,839		2,143		5,215		5,976
	$	97,457	$	95,809	$	294,590	$	290,384

Schedule Of Revenues By Geography

The following table sets forth our revenues by geography expressed as dollar amounts (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Revenues (1):
United States	$	49,647	$	46,673	$	145,947	$	139,076
Japan	21,678		26,368		68,964		82,292
Europe, the Middle East and Africa	20,329		17,371		61,941		51,512
Rest of world	5,803		5,397		17,738		17,504
	$	97,457	$	95,809	294,590		$	290,384

(1) Revenues are attributed to geographies based on the location of the customer, except for shipments to original equipment manufacturers, which are attributed to the country of origin of the equipment distributed.