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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 20-F

(Mark One)

/ / Registration statement pursuant to Section 12(b) or (g) of the Securities
    Exchange Act of 1934

                                       or

/X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934

For the fiscal year ended December 31, 2001

                                       or

/ / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

For the transition period from ________ to ________

                      Commission file number _____________

                                   CAMTEK LTD.
             (Exact name of Registrant as specified in its charter)

                                     ISRAEL
                 (Jurisdiction of incorporation or organization)

       RAMAT GAVRIEL INDUSTRIAL ZONE, P.O. BOX 544, MIGDAL HAEMEK, ISRAEL
                    (Address of principal executive offices)

 Securities registered or to be registered pursuant to Section 12(b) of the Act:
                                      None

 Securities registered or to be registered pursuant to Section 12(g) of the Act:

                       Ordinary Shares, par value NIS 0.01

        Securities for which there is a reporting obligation pursuant to
                            Section 15(d) of the Act:
                       Ordinary Shares, par value NIS 0.01

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report:

                 22,138,308 Ordinary Shares, par value NIS 0.01

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     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 Company
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

     Yes /X/  No / /

     Indicate by check mark which financial statement item the registrant has
elected to follow.

     Item 17 / / Item 18 /X/

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                                TABLE OF CONTENTS

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<Caption>
                                                                                   PAGE
                                                                                   ----
<S>                                                                                  <C>
PART I................................................................................2

 Item 1.   Identity of Directors, Senior Management and Advisers......................2

 Item 2.   Offer Statistics and Expected Timetable....................................2

 Item 3.   Key Information............................................................2

 Item 4.   Information on the Company................................................12

 Item 5.   Operating and Financial Review and Prospects..............................20

 Item 6.   Directors, Senior Management and Employees................................28

 Item 7.   Major Shareholders and Related Party Transactions.........................36

 Item 8.   Financial Information.....................................................38

 Item 9.   The Offer and Listing.....................................................38

 Item 10.  Additional Information....................................................40

 Item 11.  Quantitative and Qualitative Disclosures About Market Risk................50

 Item 12.  Description of Securities Other than Equity Securities....................51

PART II..............................................................................52

 Item 13.  Defaults, Dividend Arrearages and Delinquencies...........................52

 Item 14.  Material Modifications to the Rights of Security Holders and Use of
           Proceeds..................................................................52

 Item 15.  [Reserved]................................................................53

 Item 16.  [Reserved]................................................................53

PART III.............................................................................54

 Item 17.  Financial Statements......................................................54

 Item 18.  Financial Statements......................................................54

 Item 19.  Exhibits..................................................................54
</Table>

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                           FORWARD-LOOKING STATEMENTS

     Statements in this annual report about our future results, levels of
activity, performance, goals or achievements or other future events constitute
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or events to
differ materially from those anticipated in our forward-looking statements.
These factors include, among others, those listed under "Risk Factors" or
described elsewhere in this annual report.

     In some cases, one can identify forward-looking statements by our use of
words such as "may," "will," "should," "could," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "predicts," "seeks," "strategy,"
"potential" or "continue" or the negative or other variations of these words, or
other comparable words or phrases.

     Although we believe that the expectations reflected in our forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements or other future events. We are under no
duty to update any of our forward-looking statements after the date of this
annual report, other than as required by law. One should not place undue
reliance on forward-looking statements.

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                                     PART I

ITEM 1.   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.

          Not applicable.

ITEM 2.   OFFER STATISTICS AND EXPECTED TIMETABLE.

          Not Applicable.

ITEM 3.   KEY INFORMATION.

          A.   SELECTED CONSOLIDATED FINANCIAL DATA.

      Camtek derived the statement of operations data for the years ended
December 31, 1999, 2000 and 2001, and balance sheet data as of December 31, 2000
and 2001 from the audited consolidated financial statements in this annual
report. These statements were jointly audited by Goldstein Sabo Tevet and
Eisner, LLP, independent auditors. Camtek derived the statement of operations
data for the year ended December 31, 1997 and 1998 and the balance sheet data as
of December 31, 1997, 1998 and 1999 from audited financial statements that are
not included in the annual report. Historical results are not necessarily
indicative of results to be expected in the future or for the full year.

      For all fiscal periods for which consolidated financial data are set forth
below, our audited consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United States.

<Table>
<Caption>
                                                               YEAR ENDED DECEMBER 31,
                                                  -----------------------------------------------
                                                   1997      1998       1999      2000      2001
                                                  -------   -------   -------   -------   -------
                                                       (In thousands, except per share data)
<S>                                               <C>       <C>       <C>       <C>       <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................................   $15,733   $20,343   $23,892   $53,125   $44,068
Cost of revenues...............................     6,602    10,095    12,159    24,156    21,651
                                                  -------   -------   -------   -------   -------
Gross profit...................................     9,131    10,248    11,733    28,969    22,417
Research and development cost:
   Expenses....................................     2,138     3,503     4,307     7,037     9,017
Purchased in process research and
development....................................        --        --        --        --     3,634
   Less royalty-bearing participations from
   the Government of Israel....................       565     1,177     1,888     2,086        --
                                                  -------   -------   -------   -------   -------

   Research and development costs, net.........     1,573     2,326     2,419     4,951    12,651
Selling, general and administrative expenses...     5,429     6,848     7,827    12,310    14,178
Restructuring expenses.........................        --        --        --        --       547
                                                  -------   -------   -------   -------   -------
Operating income (loss)........................     2,129     1,074     1,487    11,708    (4,959)
Financial and other (expenses) income, net.....      (137)      241      (862)       31     1,400
                                                  -------   -------   -------   -------   -------
Income (loss) before income taxes..............     1,992     1,315       625    11,739    (3,559)
Provision for income taxes.....................        --        --        --      (848)     (152)
                                                  -------   -------   -------   -------   -------
Net income (loss)..............................   $ 1,992   $ 1,315   $   625   $10,891   $(3,711)
                                                  =======   =======   =======   =======   =======
Earnings (loss) per ordinary shares
   outstanding
   Basic.......................................   $  0.13   $  0.09   $  0.04   $  0.58   $ (0.17)
                                                  =======   =======   =======   =======   =======
   Diluted.....................................   $  0.12   $  0.08   $  0.04   $  0.57   $ (0.17)
                                                  =======   =======   =======   =======   =======
</Table>

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<Table>
<Caption>
Weighted average number of shares outstanding:
                                                               YEAR ENDED DECEMBER 31,
                                                  -----------------------------------------------
                                                   1997      1998       1999      2000      2001
                                                  -------   -------   -------   -------   -------
                                                       (In Thousands, except per share data)
   <S>                                             <C>       <C>       <C>       <C>       <C>
   Basic......................................     15,020    15,020    15,226    18,692    22,043
   Diluted....................................     16,130    16,494    16,422    19,202    22,043

<Caption>
                                                                   DECEMBER 31,
                                                  -----------------------------------------------
                                                   1997      1998       1999      2000      2001
                                                  -------   -------   -------   -------   -------
                                                                 (in thousands)
<S>                                               <C>       <C>       <C>       <C>       <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................   $   566   $   328   $   538   $ 9,793   $ 7,029
Working capital (deficiency)...................      (588)       12      (304)   45,492    34,852
Total assets...................................    10,283    12,915    18,613    65,727    61,254
Total debt.....................................     5,474     6,854     8,479       931     4,816
Shareholders' equity...........................     1,034     2,420     3,389    49,770    46,021
</Table>

          B.   CAPITALIZATION AND INDEBTEDNESS.

               Not applicable.

          C.   REASONS FOR THE OFFER AND USE OF PROCEEDS.

               Not  applicable.

          D.   RISK FACTORS.

      There is a high degree of risk associated with our company and business.
If any of the following risks occur, our business, operating results and
financial condition could be materially adversely affected and the trading price
of our ordinary shares could decline.

                      RISK FACTORS RELATED TO OUR BUSINESS

THE MAIN MARKET WE SERVE, THE PRINTED CIRCUIT BOARD INDUSTRY, IS CURRENTLY
EXPERIENCING A PROLONGED AND SEVERE DOWNTURN, AND IT IS DIFFICULT TO PREDICT THE
LENGTH OF THE DOWNTURN OR THE TIMING OR STRENGTH OF A RECOVERY.

      Historically, we derived all of our revenues, and we expect to continue to
derive a majority of our revenues from sales of our AOI systems and related
services for the printed circuit board industry. Our business depends in large
part upon capital expenditures by printed circuit board manufacturers, which in
turn depend upon the current and anticipated demand for products using printed
circuit boards. The printed circuit board industry is experiencing a prolonged
and severe downturn, which is reflected in a steep decline in the sales of
printed circuit boards. As a result, the overall rate of capital spending by
printed circuit board manufacturers has been sharply cut, and sales of our
products to these manufacturers have declined. As a result of the general
economic decline, we have provided some of our customers with extended payment
cycles. Consequently, we have experienced longer accounts receivable payment
cycles. If any of our customers become insolvent or have difficulties meeting
their financial obligations to us, we may suffer additional losses.

      Furthermore, many of our customers are currently experiencing a period of
excess capacity, and it is not clear how long after a recovery in sales of
printed circuit boards begins demand for our AOI systems will start to grow. We
cannot predict the length of the downturn or the timing or strength of a
recovery. If this downturn continues, our sales will continue to be low and may
decrease further. In addition, we have only a limited ability to

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reduce expenses during any period of a downturn in demand because of the need
for significant ongoing expenditures related to engineering, research and
development and worldwide customer service and support operations. Accordingly,
we may incur further losses.

WE HAVE RECENTLY ENTERED TWO NEW MARKETS: THE SEMICONDUCTOR PACKAGING INDUSTRY
AND THE MICROELECTRONICS INDUSTRY. IF THESE MARKETS FAIL TO GROW OR IF OUR
PRODUCTS ARE NOT ACCEPTED IN THESE MARKETS, OUR RESULTS OF OPERATIONS WILL BE
ADVERSELY AFFECTED.

      We recently began sales of products for the inspection of high density
interconnect substrates, or HDI-S, to serve the semiconductor packaging industry
and for the inspection of wafers, which are silicon disks from which individual
chips are diced, to serve the microelectronics industry. The rate of our future
success in these markets depends on the development and rate of growth of the
market for intelligent optical inspection technology in these industries and on
the acceptance of our products. The markets for intelligent optical inspection
systems in the semiconductor packaging and the microelectronics industries are
currently emerging and may not fully develop, whether as a result of
competition, alternative technologies, changes in technology, changes in product
standards or otherwise. If widespread acceptance of intelligent optical
inspection technology does not develop in these industries, our success will be
adversely affected. Furthermore, our sales depend upon the adoption of our
products by manufacturers in these industries. If these markets do not develop
or grow or if manufacturers do not find our products to be appropriate for their
use, our future sales could suffer.

TECHNOLOGY IN THE MARKETS IN WHICH WE OPERATE IS RAPIDLY EVOLVING, AND WE MAY
NOT BE ABLE TO KEEP PACE WITH THESE CHANGES OR WITH EMERGING INDUSTRY STANDARDS.
THIS COULD RESULT IN A LOSS OF REVENUES.

      The markets for our products are characterized by changing technology,
evolving industry standards, changes in end-user requirements and new product
introductions. Potential new technologies and improvements to existing
production equipment and methods could improve production yields, thereby
lowering the cost-benefit equation currently justifying the use of our products
in these industries. In addition, new technologies could emerge as alternatives
to using our products.

      Our future success will depend on our ability to enhance our existing
products and to develop and introduce new technologies for intelligent optical
inspection of printed circuit boards, HDI-S and wafers. These products and
features must keep pace with technological developments and address the
increasingly sophisticated needs of our customers. Our failure to keep pace with
technological changes, with products offered by our competitors and with
emerging industry standards could damage our reputation and adversely affect our
ability to attract new business and generate revenues.

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THE MARKETS WE SERVE ARE HIGHLY COMPETITIVE, THERE IS A DOMINANT MARKET
PARTICIPANT FOR AOI SYSTEMS FOR THE PRINTED CIRCUIT BOARDS INDUSTRY AND SOME OF
OUR COMPETITORS HAVE GREATER RESOURCES, WHICH MAY MAKE IT DIFFICULT FOR US TO
MAINTAIN PROFITABILITY.

      Competition in the markets we serve is intense. Competition has increased
further due to a decline in demand for our products resulting from the general
economic downturn. If this trend continues, it could mean lower prices for our
products, reduced demand for our products and a corresponding reduction in our
ability to recover development, engineering and manufacturing costs. If we have
to lower prices to remain competitive and are unable to reduce our costs to
offset price reductions or are unable to introduce new higher performance
products with higher prices, our operating results may be seriously harmed.

      Competitors currently sell products that provide similar benefits to those
that we sell. Our principal direct competitor in the sale of AOI systems for the
printed circuit board industry is Orbotech Ltd., an Israeli company, which
currently commands a substantial majority of the market for AOI systems and
services for printed circuit board manufacturers. We also compete against other
companies in the semiconductor packaging and the microelectronics industries.

      Some of our competitors, most notably Orbotech, have greater financial,
personnel and other resources, offer a broader range of products and services
than we do and may be able to respond more quickly to new or emerging
technologies or changes in customer requirements, develop additional or superior
products, benefit from greater purchasing economies, offer more aggressive
pricing or devote greater resources to the promotion of their products.

IF WE ARE NOT ABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY, WE MAY NOT BE ABLE TO
COMPETE EFFECTIVELY.

      We differentiate our products and technologies through the use of our
proprietary software, our image processing algorithms and the integration of our
advanced hardware components. We rely on a combination of copyrights, trade
secrets, patents, trademarks, confidentiality and non-disclosure agreements to
protect our proprietary know-how and intellectual property, including both
hardware and software components of our products. These measures may not be
adequate to protect our proprietary technology, and it may be possible for a
third party, including a competitor, to copy or otherwise obtain and use our
products or technology without authorization or to develop similar technology
independently. Additionally, our products may be sold in foreign countries that
provide less protection to intellectual property than that provided under U.S.
or Israeli laws.

OUR PRODUCTS MAY INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, WHICH
COULD RESULT IN CLAIMS AGAINST US.

      Third parties may assert claims that we have violated patents or that we
have infringed upon their intellectual property rights. Intellectual property
claims have been asserted against us in the past and may be asserted against us
in the future. Any intellectual property claims against us, even if without
merit, could cost us a significant amount of money to defend and divert
management's attention away from our business.

IF ONE OR MORE OF OUR THIRD-PARTY SUPPLIERS OR SUBCONTRACTORS DO NOT PROVIDE US
WITH KEY COMPONENTS OR SUBSYSTEMS, THEN WE MAY NOT BE ABLE TO DELIVER OUR
PRODUCTS TO OUR CUSTOMERS IN A TIMELY MANNER AND WE MAY INCUR SUBSTANTIAL COSTS
TO OBTAIN THESE COMPONENTS FROM ALTERNATE SOURCES.

      Currently, we rely on single source and limited source suppliers and
subcontractors for a number of essential components and subsystems of our
products. We have not signed agreements with all of these suppliers and
subcontractors for the continued supply of the components or subsystems they
provide. An interruption in supply from these sources or an unexpected
termination of the manufacture of key components or subsystems would, therefore,
disrupt production and adversely affect our ability to deliver products to our
customers. An

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unexpected termination of supply would require an investment in capital and
manpower resources in order to shift to other suppliers and might cause a
significant delay in introducing replacement products since we do not develop
and supply these components and subsystems in-house.

WE DEPEND ON A FEW LARGE ORDERS, AND THE INABILITY TO GENERATE THOSE ORDERS IN
ANY GIVEN PERIOD COULD HAVE A DISPROPORTIONATE IMPACT ON OUR REVENUE.

      Historically, a substantial portion of our revenue has come from large
purchases by a small number of customers. For example, in 2000, three customers
accounted for about 12.4% of our total revenue, and in 2001, two customers
accounted for about 10.0% of our total revenues. Based on our experience, we
expect that the identity of our customers may change from period to period. We
have not entered into long-term agreements with any of our large customers nor
have we secured commitments to purchase any specific quantities of our products
from any of our customers. If we do not receive large orders from customers in
any given period, we may not be able to meet our sales expectations for that
period.

DUE TO FLUCTUATIONS IN FOREIGN EXCHANGE RATES, THE PRICES OF OUR PRODUCTS MAY
BECOME LESS COMPETITIVE OR WE MAY INCUR ADDITIONAL EXPENSES.

      Foreign currency fluctuations may affect the prices of our products. Our
prices in most countries outside of Europe are denominated in dollars. In those
countries, if there is a significant devaluation in the local currency as
compared to the dollar, the prices of our products will increase relative to
that local currency and may be less competitive. In 2001, we derived
approximately 17.7% of our revenues from customers in Europe where our prices
are mainly denominated in euros. A devaluation of the euro as compared to the
dollar can cause our revenues to decrease in dollar terms. If a larger number of
our sales were to be denominated in currencies other than dollars, our reported
revenue and earnings would be subject to a greater degree of foreign exchange
fluctuations.

WE MAY EXPERIENCE FLUCTUATIONS IN OUR FUTURE OPERATING RESULTS WHICH MAKE IT
DIFFICULT TO PREDICT FUTURE RESULTS.

      Our revenues and net income, if any, in any particular period may be lower
than revenues and net income, if any, in a preceding or comparable period. This
complicates our planning processes and reduces the predictability of our
earnings. Period-to-period comparisons of our results of operations may not be
meaningful, and you should not rely upon them as indications of our future
performance.

      Our quarterly results of operations may be subject to significant
fluctuations due to the following factors:

      -    the cyclical nature of the electronics industry;

      -    the size, timing and shipment of orders;

      -    customer budget cycles and installation schedules;

      -    product introductions;

      -    the timing of new product upgrade or enhancement announcements; and

      -    interest and exchange rates.

      For example, the introduction of new products or new versions of existing
products for the same market segment in the past often resulted in a decline in
the sales of our older products and product versions.

WE DEPEND ON A LIMITED NUMBER OF KEY PERSONNEL WITH PARTICULAR KNOWLEDGE OF THE
INDUSTRIES IN WHICH WE OPERATE AND TECHNOLOGIES WE DEVELOP WHO WOULD BE
DIFFICULT TO REPLACE.

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      Our continued growth and success largely depends on the managerial and
technical skills of the members of our senior management and on our ability to
recruit and retain highly skilled technical, manufacturing, managerial,
financial and marketing personnel. The labor market in which we operate is
competitive during periods of economic growth, and, as a result, we may not be
able to retain and recruit key personnel during such periods. In particular, we
may find it difficult to hire key personnel with the requisite knowledge of our
business, products and technologies. Our failure to hire, retain, or adequately
train key personnel could have a negative impact on our performance.

IN THE EVENT OF AN ECONOMIC RECOVERY, WE MAY ENCOUNTER DIFFICULTIES IN EXPANDING
OUR OPERATIONS AND PURCHASING KEY COMPONENTS AND SUBSYSTEMS TO MEET INCREASED
CUSTOMER DEMAND.

      In the event of an economic recovery, our operations will have to expand
in order to meet increasing customer demands. Our growth will depend in large
part on our ability to manage our expanding operation and may place a
significant strain on our engineering, technical, administrative, operational,
financial and marketing resources, as well as increased demands on our systems
and controls. If we expand our operations, we believe that we will need to
promote and hire qualified engineering, administrative, operational, financial
and marketing personnel. During periods of economic growth, competition for
qualified engineering and technical personnel is intense in Israel. There are a
limited number of persons with the requisite knowledge and experience in our
business, products and other necessary technology areas. The process of
locating, training and successfully integrating qualified personnel into our
operations can be lengthy and expensive. We may not be successful in attracting,
integrating and retaining those new employees. Also, in the event of an economic
recovery, our suppliers and subcontractors may be unable to meet our increased
demand for key components and subsystems.

      Our inability to satisfy any increase in customer orders could result in
the loss of customers or could cause customers to seek alternative sources for
products. Our inability to expand our operating and financial control systems,
recruit and hire necessary personnel, successfully integrate new personnel into
our operations, or purchase key components could adversely affect our ability to
grow and to respond to any economic recovery.

PRIORTECH LTD. HAS SUBSTANTIAL CONTROL OVER MOST MATTERS SUBMITTED TO A VOTE OF
OUR SHAREHOLDERS, THEREBY LIMITING YOUR POWER TO INFLUENCE CORPORATE ACTION.

      Priortech Ltd., formerly PCB Ltd., beneficially owns 68.3% of our issued
ordinary shares, or 69.1% issued ordinary shares without giving effect to the
250,000 shares held by us. As a result, Priortech has the power to control the
outcome of most matters submitted to a vote of shareholders, including the
election of members of our board and the approval of significant corporate
transactions. This concentration of ownership may also have the effect of making
it more difficult to obtain approval for a change in control of Camtek. The
equity interest of Priortech will make it impossible to obtain shareholder
approval without Priortech's consent on matters requiring shareholder approval.
We recently announced our intention to make a rights offering of ordinary shares
to our current shareholders, subject to required approvals. Priortech has
expressed its intention to exercise its rights under this anticipated offering,
and, as a result, its percentage ownership of us could increase. Messrs. Rafi
Amit, Yotam Stern and Itzhak Krell control Priortech and may be deemed to
control us.

OUR RELATIONSHIP WITH PRIORTECH LTD. MAY GIVE RISE TO CONFLICTS OF INTEREST.

      From time to time, we use services and products of other companies owned
or controlled by Priortech, which may create a conflict of interest. Although
Israeli law imposes procedural requirements, like obtaining special approvals,
in order to approve extraordinary interested party transactions, we cannot be
certain that those procedures will eliminate the possible detrimental effects of
any of these potential conflicts of interest. In addition, pursuant to their
employment agreements with us, Mr. Rafi Amit, our general manager, and Mr. Yotam
Stern, our Executive Vice President, Business and Strategy, may each spend up to
20% and 25% of their time, respectively, working for Priortech and other
entities in the Priortech group.

OUR OPERATING RESULTS COULD BE NEGATIVELY IMPACTED IF WE ARE UNABLE TO OBTAIN
THE NECESSARY RESOURCES TO MAINTAIN OUR OPERATIONS AND INVEST IN OUR FUTURE.

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      Although the markets we serve are currently in a downturn, we need to
maintain our current operations and to prepare for any potential recovery in
these markets by continuing to invest in certain areas of our business. These
investments require us to use existing cash reserves to fund our research and
development activities, to fund the development of new products and to respond
to unanticipated developments, increasing customer demands or competitive
pressures.

      Our cash reserves are currently at a level of approximately $11.0 million.
If our cash reserves, together with cash available under our credit facility,
are insufficient to meet our cash requirements, we will need to seek alternative
sources of financing to carry out our operating strategies. We may not be able
to raise needed cash or we may not be able to do so on terms that are acceptable
to us. Additional financing may be on terms that are dilutive or potentially
dilutive to existing shareholders. In addition, the current economic environment
and political climate in Israel may make it more difficult for us to obtain
financing. We have recently announced our intention to make a rights offering of
ordinary shares to our current shareholders, for up to a total of approximately
$9.0 million at the market price at the time of the offering, subject to
obtaining required approvals. The anticipated proceeds from this rights offering
may not be sufficient for our long-term needs. If we are not able to find
alternative sources of financing that are sufficient to meet our cash
requirements, we may need to modify our operating plans to the extent of
available resources.

OUR SHARE PRICE HAS BEEN VOLATILE IN THE PAST AND MAY CONTINUE TO DECLINE IN THE
FUTURE.

      Our ordinary shares have experienced significant market price and volume
fluctuations in the past and may experience significant market price and volume
fluctuations in the future in response to factors such as the following, some of
which are beyond our control:

      -    quarterly variations in our operating results;

      -    operating results that vary from the expectations of securities
      analysts and investors;

      -    changes in expectations as to our future financial performance,
      including financial estimates by securities analysts and investors;

      -    announcements of technological innovations or new products by us or
      our competitors;

      -    announcements by us or our competitors of significant contracts,
      acquisitions, strategic partnerships, joint ventures or capital
      commitments;

      -    changes in the status of our intellectual property rights;

      -    announcements by third parties of significant claims or proceedings
      against us;

      -    additions or departures of key personnel;

      -    future sales of our ordinary shares; and

      -    stock market price and volume fluctuations.

      Domestic and international stock markets often experience extreme price
and volume fluctuations. Market fluctuations, as well as general political and
economic conditions, such as a recession or interest rate or currency rate
fluctuations or political events or hostilities in or surrounding Israel, could
adversely affect the market price of our ordinary shares.

      In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation. Securities
litigation could result in substantial costs and divert management's attention
and resources.

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OUR SHARES ARE LISTED FOR TRADE ON MORE THAN ONE STOCK EXCHANGE, AND THIS MAY
RESULT IN PRICE VARIATIONS.

      Our ordinary shares are listed for trade on the Nasdaq National Market and
on the Tel Aviv Stock Exchange, and this may result in price variations. Our
ordinary shares are traded on these markets in different currencies (U.S.
dollars on the Nasdaq and New Israeli shekels, or NIS, on the Tel Aviv Stock
Exchange). These markets have different opening times and close on different
days. Different trading times and differences in exchange rates, among other
factors, may result in our shares being traded at a price differential on these
two markets. In addition, market influences in one market may influence the
price at which our shares are traded on the other.

WE MAY BE CLASSIFIED AS A PASSIVE FOREIGN INVESTMENT COMPANY AND, AS A RESULT,
OUR U.S. SHAREHOLDERS MAY SUFFER ADVERSE TAX CONSEQUENCES.

      Generally, if for any taxable year 75% or more of our gross income is
passive income, or at least 50% of our assets are held for the production of, or
produce, passive income, we may be characterized as a passive foreign investment
company for U.S. federal income tax purposes. Our passive income would not
include income derived from the sale of our products but would include amounts
derived by reason of the temporary investment of any cash amounts. This
characterization could result in adverse U.S. tax consequences to our
shareholders, including having gain realized on the sale of our shares be
treated as ordinary income, as opposed to capital gain income, and having
potentially punitive interest charges apply to such sales proceeds. U.S.
shareholders should consult with their own U.S. tax advisors with respect to the
U.S. tax consequences of investing in our ordinary shares.

      We believe that in 2001 we were not a PFIC and currently we expect that we
will not be a PFIC in 2002. However, PFIC status is determined as of the end of
the taxable year and is dependent on a number of factors, including the value of
a corporation's assets and the amount and type of its gross income. Therefore,
there can be no assurance that we will not become a PFIC for the current fiscal
year ending December 31, 2002 or in a future year. For a discussion of how we
might be characterized as a passive foreign investment company and related tax
consequences, please see the section of this annual report entitled "Taxation --
U.S. Federal Income Tax Considerations Regarding Shares Acquired by U.S.
Taxpayers."

                                        9
<Page>

                   RISKS RELATING TO OUR OPERATIONS IN ISRAEL

CONDUCTING BUSINESS IN ISRAEL ENTAILS SPECIAL RISKS.

      We are incorporated under the laws of, and our principal offices are
located in, the State of Israel. We are directly influenced by the political,
economic and military conditions affecting Israel. Our product development
depends on components imported from outside of Israel. A majority of our sales
occur outside of Israel. We could be adversely affected by:

      -    any major hostilities involving Israel;

      -    a full or partial mobilization of the reserve forces of the Israeli
      army;

      -    the interruption or curtailment of trade between Israel and its
      present trading partners;

      -    a significant increase in inflation; and

      -    a significant downturn in the economic or financial condition of
      Israel.

      Since September 2000, there has been a marked increase in violence, civil
unrest and hostility, including armed clashes, between the State of Israel and
the Palestinians, and acts of terror have been committed inside Israel and
against Israeli targets in the West Bank and Gaza. In 2002, there has been a
significant escalation in armed clashes between Israel and the Palestinians, and
Israel has undertaken military actions in Palestinian controlled areas. In
connection with these actions, Israel instituted a partial mobilization of its
reserve forces. There is no indication how long the current hostilities will
last or whether there will be any further escalation. Any further escalation in
these hostilities or any future armed conflict, political instability or
violence in the region may have a negative effect on our business condition,
harm our results of operations and adversely affect our share price. There are a
number of countries that restrict business with Israel or Israeli companies.
Restrictive laws or policies directed towards Israel or Israeli businesses and
civil unrest, military conflict and uncertainty may have an adverse impact on
our operating results, financial condition or the expansion of our business.

OUR OPERATIONS COULD BE DISRUPTED AS A RESULT OF THE OBLIGATION OF KEY PERSONNEL
IN ISRAEL TO PERFORM MILITARY SERVICE.

      Many of our officers and employees in Israel, including certain key
employees, are obligated to perform annual reserve duty in the Israeli army and
are subject to being called up for reserve duty at any time. The absence of one
or more of our officers and key employees for significant periods of time due to
military service could be disruptive to our operations. Although we have
effectively operated under these conditions since our inception, there has not
been a full mobilization of the Israeli army during such time, and a full
mobilization will likely have an adverse effect on our operations. We cannot
predict the effect these obligations may have on us in the future.

THE ISRAELI RATE OF INFLATION MAY NEGATIVELY IMPACT OUR COSTS IF IT EXCEEDS THE
RATE OF DEVALUATION OF THE NIS AGAINST THE U.S. DOLLAR.

      We generate most of our revenues in dollars but we incur the majority of
our salary and operating expenses in NIS. As a result, we bear the risk that the
rate of inflation in Israel will exceed the rate of devaluation of the NIS in
relation to the dollar, which will increase our costs expressed in dollars.

      THE GOVERNMENT PROGRAMS AND TAX BENEFITS IN WHICH WE PARTICIPATED IN THE
PAST AND IN WHICH WE CURRENTLY PARTICIPATE OR FROM WHICH WE RECEIVE BENEFITS,
REQUIRE US TO MEET SEVERAL CONDITIONS. THESE PROGRAMS OR BENEFITS MAY BE
TERMINATED OR REDUCED IN THE FUTURE, WHICH COULD INCREASE OUR COSTS.

                                       10
<Page>

      Since our inception, we had relied on government grants for the financing
of a significant portion of our product development expenditures. Until March
2001, we received grants and we participated in programs sponsored by the
Government of Israel through the Ministry of Industry and Trade, Office of the
Chief Scientist. In March 2001, we made an arrangement with the Chief Scientist
whereby we have to repay the outstanding balance of the grants we received, not
including grants received by Inspectech prior to its merger into us, at a
quarterly rate equal to 4.5% of the revenues derived in connection with products
we developed as a result of research and development funded by Chief Scientist
participations, up to a the maximum amount of $250,000 per quarter. We did not
apply for additional grants from the Office of the Chief Scientist in 2001. As
of December 31, 2001, the outstanding balance of the grants was approximately
$1.6 million, including grants received by Inspectech Ltd. prior to its merger
into us. We continue to benefit from government programs and tax benefits,
particularly as a result of the Approved Enterprise status of our existing
facilities. To be eligible for these programs and tax benefits, we must continue
to meet certain conditions, including:

      -    making investments in fixed assets, the amount of which varies
depending on the program approved by the Government of Israel;

      -    financing at least 30% of the investment for the Approved Enterprise
with share capital; and

      -    receiving revenues from the Approved Enterprise.

      The tax benefits could be cancelled and we may be required to refund the
tax benefits already received if we fail to meet these conditions in the future.
These programs and tax benefits may not be continued in the future at their
current levels or at any level or our requests for future participation in these
programs may not be approved. In July 2000, a proposed bill adopting tax reform
proposals, which could have reduced or eliminated some of the benefits we
receive as a result of our Approved Enterprise status, was introduced to the
Israeli legislature. Legislation implementing this bill has not been enacted.
Due to significant political and economic changes, in February 2002, the
Minister of Finance appointed a new committee to reconsider and make new
recommendations on the tax reforms. The recommendations of this committee, which
were adopted in principle by the Israeli government in June 2002, do not propose
to reduce the benefits we receive as a result of our Approved Enterprise status.
Legislation will be required to implement any recommendations made by this
committee as well. We cannot be certain whether any of the proposed reforms will
be adopted, when they will be adopted or what form any reform will ultimately
take.

      The terms of the Israeli government participation in research and
development programs also require that the technology developed with government
grants will not be transferred out of Israel and that the manufacture of
products developed with government grants be performed in Israel. However, in
the event that the manufacture of products is performed outside of Israel with
the approval of Israel's Office of the Chief Scientist, we would be required to
pay royalties at a higher royalty rate and an increased aggregate pay back
amount in proportion to manufacturing performed outside of Israel. This could
result in our being required to repay up to three times the amount of our
original grant. The restriction regarding the transfer of technology out of
Israel or the lack of approval by Israel's Office of the Chief Scientist with
respect to the transfer of manufacturing out of Israel could have a material
adverse effect on our ability to enter into strategic alliances in the future
that provide for the transfer of manufacturing rights. An amendment to the law
governing the Israeli government's participation in research and development
programs is now in the process of legislation. The proposed amendment would
allow technology supported by Chief Scientist grants to be transferred, subject
to certain payment conditions, and change the conditions for the transfer of
manufacturing out of Israel. The amendment may also enable a company to be
completely released from the provisions of this law, subject to the payment of a
lump-sum redemption. We cannot be certain, however, whether or when the proposed
legislation will be enacted or what form this legislation will ultimately take.

IT MAY BE DIFFICULT TO ENFORCE A U.S. JUDGMENT AGAINST US, OUR OFFICERS AND
DIRECTORS AND SOME OF THE EXPERTS NAMED IN THIS PROSPECTUS OR TO ASSERT U.S.
SECURITIES LAW CLAIMS IN ISRAEL.

      We are incorporated in Israel. Substantially all of our executive officers
and directors and our Israeli accountants and attorneys, are nonresidents of the
United States, and a substantial portion of our assets and the assets of these
persons are located outside the United States. Therefore, it may be difficult to
enforce a judgment

                                       11
<Page>

obtained in the United States against us or any of these persons. Additionally,
it may be difficult for you to enforce civil liabilities under U.S. Federal
Securities laws in original actions instituted in Israel.

THE EFFECTS OF ANTI-TAKEOVER PROVISIONS COULD INHIBIT THE ACQUISITION OF US BY
OTHERS.

      Some of the provisions of our articles and Israeli law could, together or
separately

      -    discourage potential acquisition proposals;

      -    delay or prevent a change in control; and

      -    limit the price that investors might be willing to pay in the future
      for our ordinary shares.

      We are subject to Israeli corporate law. Generally, under Israeli
corporate law, a merger (1) if effected within the framework of an
"arrangement," is subject to approval by the court and a majority of
shareholders present and voting on the proposed merger, holding at least 75% of
the shares represented at the shareholders' meeting and a similar majority at
the creditors' meeting; or (2) if effected not within the framework of an
"arrangement," must receive the approval of the board of directors and
shareholders of both merging companies, and is consummated after 70 days have
passed from the date the merger proposal was filed with the Registrar of
Companies. Additionally, a tender offer for our shares, or the acquisition of
the interests of our minority shareholders, may be subject to the requirements
of Israeli corporate law. The requirements of Israeli corporate law generally
make these forms of acquisition significantly more difficult than under United
States corporate laws.

      Israeli tax law treatment for acquisitions, like stock-for-stock exchanges
between an Israeli company and a foreign company, may be less favorable than the
treatment that may be available under U.S. tax law. Israeli tax law may, for
instance, subject a shareholder who exchanges his shares in us for shares in a
foreign corporation to immediate taxation.

      In addition, our technology developed pursuant to the terms of the Law for
the Encouragement of Industrial Research and Development, 1984 may not be
transferred to third parties without the prior approval of a governmental
committee. This approval is not required for the export of any products
resulting from that research and development. Approval for the transfer of
technology developed with government grants may be granted only if the recipient
abides by all of the provisions of the research law and its associated
regulations, including the restrictions on the transfer of know-how, the
obligation to manufacture in Israel and the obligation to pay royalties in an
amount that may be increased. These requirements could inhibit the acquisition
of us by others. There can be no assurance that this consent, if requested, will
be granted. An amendment to this law is now in the process of legislation. This
amendment would allow technology supported by Chief Scientist grants to be
transferred, subject to certain payment conditions, and changes the conditions
for the transfer of the manufacturing out of Israel. The amendment may also
enable a company to be completely released from the provisions of this law,
subject to the payment of a lump-sum redemption. We cannot be certain, however,
whether or when the proposed legislation will be enacted or what form this
legislation will ultimately take.

ITEM 4.   INFORMATION ON THE COMPANY.

          A.   HISTORY AND DEVELOPMENT OF THE COMPANY.

      We were incorporated under the laws of Israel in 1987. During our first
years of operation, we were engaged in the development, production and marketing
of a manual optical inspection system for the detection of manufacturing defects
in printed circuit boards. In 1992, Priortech purchased all of our shares then
held by Camtek Corp. N.V., and became the holder of a controlling interest of
66 2/3% in us. In April 1996, Priortech purchased all of the remaining shares of
Camtek, and Camtek became a wholly-owned subsidiary of Priortech.

      In July 2000, we sold 5,600,000 ordinary shares in an initial public
offering in which we received net proceeds of $34.5 million. In August 2000, we
sold an additional 235,000 ordinary shares following the exercise of the
underwriters' over-allotment option in which we received an additional $1.5
million in net proceeds. Our

                                       12
<Page>

shares began trading on the Nasdaq in July 2000. Since December 2001, our
ordinary shares have also been listed for trade on the Tel Aviv Stock Exchange.

      In September 2001, we acquired all the outstanding shares of Inspectech
Ltd., a developer and producer of intelligent automatic inspection systems for
the microelectronics industry for an aggregate purchase price of $2,250,000, and
in December 2001, Inspectech was merged with us. In the second half of 2001, we
relocated to our new facilities and reorganized along three product divisions
for the printed circuit boards industry, the semiconductor packaging industry
and the microelectronics industry.

      Our principal executive offices are located at our new facilities in Ramat
Gavriel Industrial Zone, P.O. Box 544, Migdal Haemek 23150, Israel, and our
telephone number is 011-972-4-604-8111. Our agent for service of process in the
United States is Camtek USA, Inc., located at 2 Meridian Road, Eatontown, New
Jersey 07724. Our website is located at www.camtek.co.il. The information on our
website is not incorporated by reference into this annual report.

          B.   BUSINESS OVERVIEW.

      For discussion of capital expenditures and divestitures, see "Item
5-Operating and Financial Review and Prospects- Liquidity and Capital
Resources."

OUR BUSINESS

      We design, develop, manufacture and market technologically advanced and
cost-effective intelligent optical inspection systems and related products
principally for the high-end printed circuit board industry. More recently, we
introduced intelligent optical inspection systems for the semiconductor
packaging industry and, as a result of our acquisition of Inspectech Ltd., the
microelectronics industry. We intend to further penetrate these markets in 2002.

The following table shows our revenue classified by geographical segments for
each of the last three financial years.

<Table>
<Caption>
                            Year Ended December 31,
                            1999      2000      2001
                          -------   -------   -------
                                 (in thousands)
<S>                       <C>       <C>       <C>
United States             $ 5,413   $10,940   $ 8,235
Europe                      4,990     8,788     7,796
Japan                       1,322     4,791     2,845
Taiwan                      6,045     6,372     5,763
China                       1,306     9,589    12,648
Other Asia(1)               3,984     9,303     3,959
Rest of the world(2)          832     3,342     2,822
                          -------   -------   -------

Total                     $23,892   $53,125   $44,068
                          =======   =======   =======
</Table>

-----------
(1)   Most of the reve nues under "Other Asia" were derived from Korea and
      Singapore as follows:

<Table>
<Caption>
                                    Year Ended December 31,
                                    1999      2000      2001
                                  -------   -------   -------
                                         (in thousands)
        <S>                       <C>       <C>       <C>
        Korea                     $ 1,165   $ 5,045   $ 1,685
        Singapore                     878     3,718       864
</Table>

                                       13
<Page>

(2)   Most of the revenues in 2000 and 2001 under "Rest of the World" were
      derived from Canada, which is part of our North American operations:

<Table>
<Caption>
                                    Year Ended December 31,
                                    1999      2000      2001
                                  -------   -------   -------
                                         (in thousands)
        <S>                       <C>       <C>       <C>
        Canada                    $     0   $ 2,416   $ 1,519
</Table>

      We believe that our products offer customers a high level of intelligent
optical inspection and competitive price performance, thereby enhancing their
production yields and processes. Our products incorporate proprietary advanced
software, as well as advanced electro-optics, precision mechanics and image
processing technology. Our products are designed for easy operation and
maintenance, which, we believe, allows for relatively short training time.

      Priortech, our parent company, through its affiliated companies, engages
in various aspects of electronic packaging, including the assembly of printed
circuit boards and the development of advanced substrates, which are
intermediate components connecting the chip to the printed circuit board.
Priortech is also one of the largest manufacturers of printed circuit boards in
Israel, based on 2000 and 2001 sales. We have worked closely with Priortech and
its affiliated companies and have utilized their facilities to develop, modify
and test, during the manufacturing process, our AOI systems for the printed
circuit board industry and our products for the semiconductor packaging
industry. This relationship has provided us with insights into the needs of our
customers and has enabled us to develop and refine our products and technology
with a customer orientation.

PRODUCTS

      We have historically designed, developed, manufactured and marketed
technologically advanced and cost-effective automated optical inspection, or
AOI, systems and related products used to detect defects in printed circuit
boards during the manufacturing process. These printed circuit boards are
"bare," meaning that they have not yet been populated by chips or other
components. AOI systems are used to ensure the quality of printed circuit boards
and enhance production yield for printed circuit board manufacturers.

      More recently, we also began to manufacture and market our intelligent
optical inspection systems for the inspection of high density interconnect
substrates, or HDI-S, used in the packaging of sensitive high density
semiconductor devices at various stages of production. HDI-S are intermediate
components connecting the chip to the printed circuit board and are more dense
and complex than the printed circuit board.

      In addition, following the acquisition of Inspectech Ltd. in 2001, we also
design, develop, manufacture and market intelligent optical inspection systems
for the microelectronics industry. These products inspect wafers, which are
silicon disks from which individual chips are diced.

      We believe that the introduction of these new products for the
semiconductor packaging and microelectronics industries will enable us to expand
our customer base and our sales.

      The following table describes our current product line and some of our
products under development:

<Table>
<Caption>
PRODUCT                          TARGET MARKET                    FUNCTIONALITY
-------------------------------  -------------------------------  --------------------------------------
<S>                              <C>                              <C>
PCB PRODUCT DIVISION

Orion Product Line               Manufacturers of high-end        Inspection and verification of printed
                                 printed circuit boards           circuit boards
</Table>

                                       14
<Page>

<Table>
<S>                              <C>                              <C>
Vega Systems                     High-volume manufacturers        Inspection and verification of printed
                                 of high-end printed circuit      circuit boards
                                 boards who require unattended
                                 operation

Lynx Systems                     Manufacturers of high-end,       Inspection and verification of printed
                                 back-plane printed circuit       circuit boards
                                 boards

Sirius Systems                   Manufacturers of high-end        Offline verification of printed
                                 printed circuit boards that      circuit boards
                                 require offline verification

HDI-S PRODUCT DIVISION

Pegasus FI-S Systems             Manufacturers of high-end        Inspection of surface defects on both
                                 HDI-S                            sides of HDI-S

Phoenix Systems                  Manufacturers of high-end        Inspection of surface defects and
                                 HDI-S                            inspection and measurement of bumps
                                                                  on flip chip BGA packages

Orion ASI Systems                Manufacturers of HDI-S and       Inspection of HDI-S and very dense and
                                 manufacturers of very dense      complex printed circuit boards
                                 and complex printed circuit
                                 boards

MICROELECTRONICS PRODUCT
DIVISION

KIS Systems                      Manufacturers of                 Inspection of wafer dicing
                                 semiconductors

BIS Systems                      Manufacturers of                 Inspection of surface defects and
                                 semiconductors                   inspection and measurement of bumps
                                                                  on wafers

WIS Systems                      Manufacturers of                 Inspection of surface defects and
                                 semiconductors                   dicing
</Table>

      AOI SYSTEMS FOR THE PRINTED CIRCUIT BOARD INDUSTRY.

      Our AOI systems for the printed circuit board industry utilize technology
that enables the customer to handle a wide range of sophisticated printed
circuit board inspection and verification needs. Advanced proprietary software
algorithms designed for intelligent feature recognition provide for a high level
of defect detection and are programmed to run on special imaging processing
hardware as well as very high speed processors. Our AOI systems can be used with
various software applications that we offer.

      We believe that the modular design of our AOI systems for the printed
circuit board industry, their high level of defect detection and our flexible
price structure enable printed circuit board manufacturers to plan their
investments in AOI systems incrementally in accordance with their increasing
technological needs, throughput and capacity needs.

                                       15
<Page>

      THE ORION PRODUCT LINE

      Our Orion AOI systems for the printed circuit board industry scan printed
circuit board panels for defects for verification by an operator. The Orion AOI
systems utilize technology that enables customers to handle a wide range of
sophisticated printed circuit board inspection and verification needs as well as
high and low densities and resolutions. The market for our Orion AOI systems
consists of the whole range of low-volume to high-volume manufacturers of
high-end printed circuit boards.

      THE VEGA PRODUCT LINE

      The Vega AOI systems for printed circuit board manufacturers use the same
detection technology as our Orion AOI system. The Vega is an operatorless system
that uses automated material handling of printed circuit board panels. The Vega
systems have a high throughput and a wide resolution scanning range. We market
the Vega systems to high-volume manufacturers of high-end printed circuit boards
who require unattended operation.

      THE LYNX SYSTEM

      Formerly called the Orion 1004, the Lynx system is a new inspection system
for large format panels and back-planes. The Lynx system uses the same detection
technology as our Orion AOI systems. We market the Lynx system to manufacturers
of high-end back-plane printed circuit boards.

      THE SIRIUS SYSTEM

      The Sirius, our stand-alone verification and repair station, provides
offline verification of printed circuit boards and is used after the boards have
been inspected by one of our other AOI systems. We market the Sirius system to
manufacturers of high-end printed circuit boards that require offline
verification.

INTELLIGENT OPTICAL INSPECTION SYSTEMS FOR THE SEMICONDUCTOR PACKAGING INDUSTRY.

      Our intelligent optical inspection systems for the semiconductor packaging
industry inspect HDI-S, which increase both yields and throughput of HDI-S
manufacturers. These systems utilize proprietary technologies that enable the
customer to handle a wide scope of HDI-S packaging inspection and verification
needs. These systems use advanced software algorithms that are designed for
intelligent feature recognition and provide for a high level of defect
detection.

      THE PEGASUS FI-S SYSTEM

      Our new Pegasus FI-S system performs automatic optical inspection of
surface defects found on both sides of the HDI-S, the side which attaches to the
chip and the side which attaches to the printed circuit board where ball-grid
array, or BGA, strips are found. BGA strips are high-density packages that use
an array of solder balls, or joints that provide the contact between the grid
package and the printed circuit board, in a grid pattern to mount chips on
printed circuit boards. The Pegasus FI-S system uses an automatic material
handling system for unattended operation. It scans the substrates after the
completion of the manufacturing process and then analyzes the acquired images
for defects. The Pegasus FI-S System employs self-learning routines and
statistical methods to enhance detection accuracy and reduce false alarms. HDI-S
that require verification may be scanned on our Pegasus Verification Station. We
market the Pegasus FI-S to high volume manufacturers of high-end HDI-S.

      THE PHOENIX SYSTEM

      Our Phoenix system is currently under development. We expect that it will
be introduced to the market in the second half of 2002. The Phoenix system
performs intelligent optical inspection on flip chip BGA packages with counter
bumps on their pads and is based on the technology acquired from Inspectech. The
Phoenix system is used for flip chip BGA technology, a technique used to attach
the bumps on a chip to the bumps on a substrate by flipping the chip on to the
substrate. The Phoenix system is capable of handling most complex substrate
devices, including substrates with a high number of contact points. The Phoenix
system performs substrate

                                       16
<Page>

metrology measurements and records bump dimension and shape. The Phoenix system
also scans the substrate surface for detection of surface defects, and, using
user-determined parameters, marks out rejected units. The Phoenix system helps
enhance yields in the package manufacturing stage. We will market the Phoenix
system to manufacturers of integrated circuit packages.

      THE ORION ASI SYSTEM

      Our Orion ASI system for the semiconductor packaging industry is currently
under development. We expect that it will be introduced to the market in the
second half of 2002. The Orion ASI is based on the detection technology of the
Orion AOI systems and adds a new high-resolution optical system. The Orion ASI
system is used to inspect complex, fine-line and high-density substrate designs
and very dense and complex printed circuit boards during the manufacturing
process. We will market the Orion ASI system to manufacturers of HDI-S and
manufacturers of very dense and complex printed circuit boards.

INTELLIGENT OPTICAL INSPECTION SYSTEMS FOR THE MICROELECTRONICS INDUSTRY.

      Our intelligent optical inspection systems for the microelectronics
industry detect surface defects on wafers, detect defects at different stages of
the dicing process, and inspect and measure bumps on wafers. These products
assess the quality of the manufacturing process, allowing for enhanced process
control and ultimately leading to improved yields.

      THE KIS PRODUCT LINE

      The KIS systems inspect the wafer dicing process for the detection and
analysis of defects caused during the dicing process. These systems inspect both
the front and backsides of diced wafers and can distinguish chipping, cracks and
scratches. The KIS systems use statistical processing control to analyze
chipping, cracking, and dicing trends, which enables both engineering and
production teams to improve, optimize and stabilize the wafer dicing process.
The KIS systems are capable of handling a wide range of wafer material, thin
wafers and wafers of up to 12 inches. We market the KIS systems to manufacturers
of semiconductors, however, as the features of the KIS system will be integrated
into our WIS system, which is currently under development, we do not believe
that the KIS system, as a stand-alone unit, will generate a significant amount
of revenues in the future.

      THE BIS PRODUCT LINE

      Our BIS systems inspect surface defects and inspect and measure bumps on
wafers using advanced vision and image processing technologies that can perform
two and three-dimensional detection. The BIS systems have a sensor for
three-dimensional inspection based on color-coded techniques that enables the
measurement of bump volume and have the capacity to inspect all bump types and
shapes. The BIS systems can detect numerous defects on bumps, including
misplacements and deformations. In addition, the BIS systems can inspect surface
defects on the silicon area of wafers that do not include bumps and can handle
wafers of up to 12 inches.

      The BIS systems include products that come with both surface and bump
inspection capabilities, only surface inspection capabilities, or only bump
inspection capabilities. We market the BIS systems to manufacturers of
semiconductors.

      THE WIS PRODUCT LINE

      Our WIS systems are currently under development, and we expect that they
will be introduced to the market in the second half of 2002. The WIS systems
perform wafer surface inspection at different stages of the dicing process and
inspect wafers surface defects on diced wafers. The WIS systems are based on the
KIS systems and combine the ability to detect defects caused during the dicing
process with full surface defect inspection capability for both bumped and
non-bumped wafers. The WIS systems incorporate process control software that
store information and act as a data base for monitoring the production process.
The WIS systems generate outputs in a variety of forms such as reports, charts,
wafer maps, and histograms. We will market the WIS systems to manufacturers of
semiconductors.

                                       17
<Page>

CUSTOMERS

      Our customers are located in 32 countries. During the year ended December
31, 2001, two customers accounted together for about 10.0% of our total revenue.

SALES, MARKETING AND CUSTOMER SUPPORT

      Our policy is to provide customer support and services through local
subsidiaries in each territory in which our products are sold. We have
established a global distribution and support network, spread over territories
in which we have sales, including North America, Europe and Asia. We expect to
expand our network into additional territories as market conditions warrant.

      In North America and Europe, we currently market our products through
Camtek USA, Inc., and Camtek (Europe) N.V., respectively, our wholly owned
subsidiaries, which operate independently using a direct sales force and through
a network of local agents. In Asia, we market our products using distributors,
sales representatives and our own sales support personnel, and in Japan, we
distribute our products for the printed circuit board and semiconductor
packaging industries using a local distributor. Our foreign subsidiaries in the
United States, Europe and Asia employ local personnel. Worldwide marketing
efforts are coordinated by our General Manager, who is based at our headquarters
in Israel.

      As of December 31, 2001, 121 people were engaged in our worldwide sales,
marketing and support efforts, including support and sales administration staff.
Our marketing efforts include participation in various trade shows and
conventions, publications and trade press, demonstrations performed at our
facilities and regular contact with customers by sales personnel. We service and
provide training to customers on all our products. We provide our customers with
system documentation and training in maintenance and use. In addition, for a
fee, we offer service and maintenance contracts commencing after the expiration
of the warranty period, which is typically one year. Under our service and
maintenance contracts, we provide prompt on-site customer support. Software
updates are typically included in the service and maintenance contract fees.

MANUFACTURING

      We maintain an ISO-9002 certified, manufacturing facility in Israel of
approximately 28,000 square feet for production of our products, and we are
subject to periodic inspections by ISO representatives, to ensure continued
adherence to ISO guidelines. Maintenance of ISO certified manufacturing
facilities is standard in our industry.

      We believe that our production capacity is sufficient for our current and
expected level of sales and the manufacturing process for our products generally
lasts three to four weeks.

      Our manufacturing activities consist primarily of the assembly,
integration and testing of parts, components and subassemblies, which are
acquired from third-party vendors and subcontractors. We utilize subcontractors
in Israel, the United States, Europe and Japan for the production of subsystems,
mechanical parts, optical components, castings and casings, electronic cabinets,
printed circuit board fabrication and assembly. Most electronic components are
imported from the United States, Europe and Japan.

      We purchase some of the key components and subassemblies included in our
products from a limited group of suppliers. To date, we have been able to obtain
sufficient units of these components to meet our needs and do not foresee any
short-term supply difficulty in obtaining timely delivery of any parts or
components. We generally maintain a two- to three-month inventory of critical
components used in the manufacture and assembly of our products.

COMPETITION

      The industries and markets we serve are characterized by intense
competition. We believe our success will depend primarily on our ability to
provide competitively priced, efficient and easy-to-use products, which

                                       18
<Page>

offer reliable defect detection capability, as well as prompt delivery and
responsive customer support. As a result, we cannot be certain that the products
and services we offer will compete effectively with those of our competitors.
Furthermore, should competition intensify, we may have to reduce the prices of
our products. If we are unable to compete successfully against our competitors,
our business would be materially adversely affected.

      Our principal competitor in the printed circuit boards industry is
Orbotech, which currently commands a substantial majority of that market for AOI
systems and services for printed circuit board manufacturers. Our other
competitors in this industry include Lloyd Doyle, Dainippon Screen
Manufacturing, and Barco-Manya. To date, Orbotech has the largest installed base
of AOI systems globally for printed circuit board manufacturers, which gives
Orbotech a distinct advantage in this field. Our inability to further penetrate
this market or the development of superior products by one or more competitors,
or our failure to successfully respond to these developments, could adversely
affect our business prospects.

      The semiconductor packaging and microelectronics markets we serve are also
characterized by intense competition, and many companies develop and provide
products for these markets that are similar to or serve the same function as our
products, although there are no dominant market participants presently in either
of those markets. The principal competitive factors in these markets are
reliability, technology, sales and equipment performance. Some of our primary
competitors in the semiconductor packaging industry are Orbotech, Robotic Vision
Systems, Inc., and Utechzone Co. Ltd. Some of our primary competitors in the
microelectronics industry are August Technology Corporation, Robotic Vision
Systems, Inc. and Semiconductor Technologies & Instruments, Inc. Competition may
also include companies seeking to enter our markets. If widespread acceptance of
intelligent optical inspection technology and for our systems does not develop
in the semiconductor packaging and microelectronics industries or if we fail to
further penetrate printed circuit board market due to the acceptance of our
competitors' technologies, our future growth will be adversely affected.

      Some of our competitors, most notably Orbotech, have greater financial,
personnel and other resources, offer a broader range of products and services
than we do, and may be able to respond more quickly to new or emerging
technologies or changes in customer requirements, benefit from greater
purchasing economies, offer more aggressive pricing or devote greater resources
to the promotion of their products. In addition, one or more of our competitors
may develop superior products and these products may achieve greater market
acceptance than our products.

LEGAL PROCEEDINGS

      We are not party to any material legal proceedings.

          C.   ORGANIZATIONAL STRUCTURE

      We have eight subsidiaries: Camtek USA, Inc., incorporated under the laws
of the State of New Jersey, Camtek (Europe) N.V., incorporated under the laws of
Belgium, Camtek H.K. Limited, incorporated under the laws of Hong Kong, Camtek
Japan Limited, incorporated under the laws of Japan, Camtek Electronic
Technologies (Suzhou) Co. Limited, incorporated under the laws of China, Camtek
Korea Limited, incorporated under the laws of Korea, Camtek South East Asia Pte.
Limited, incorporated under the laws of Singapore, and Camtek Taiwan Ltd.,
incorporated under the laws of Taiwan.

          D.   PROPERTY, PLANTS AND EQUIPMENT.

      Our main office, manufacturing and research and development facilities,
located in the Ramat Gavriel new industrial area of Migdal Haemek in northern
Israel, occupy 74,000 square feet. We believe that these facilities are adequate
for our current operations.

      On September 14, 1998, we entered into an agreement to lease our present
premises, to be built by the lessor. We also acquired an option to purchase the
building and the underlying land from the lessor, which we intend to exercise.
We relocated to this facility in the fourth quarter of 2001. The lease is for a
term of 23 years and eight months commencing upon the completion of the building
and the transfer thereof to us, which occurred

                                       19
<Page>

in the fourth quarter of 2001. The lease payments and the price of the option
equal the actual cost of the building, which is approximately $8.0 million, plus
standard financing costs and $595,000, less any grants received for the
building, divided by the term of the lease. We have the right to terminate the
lease agreement after seven years and at the end of each three year period
thereafter.

ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS.

          A.   OPERATING RESULTS

      The following discussion of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the notes to those statements included herein, which have been
prepared in accordance with accounting principles generally accepted in the
United States, or United States GAAP.

OVERVIEW

      We design, develop, manufacture and market intelligent optical inspection
systems and related products for the printed circuit board, semiconductor
packaging and microelectronics industries used to enhance yields and processes
in these industries. We began operations in 1987. In 1992, Priortech purchased
all of our shares then held by Camtek Corp. N.V., and became the holder of a
controlling interest of 66 2/3% in us. In April 1996, Priortech purchased all of
the remaining shares of Camtek, and Camtek became a wholly-owned subsidiary of
Priortech.

      During 1993, we began development of our AOI systems for the printed
circuit board industry and sold our first AOI systems in the last quarter of
1994. Since 1995, we have derived substantially all of our revenues from sales
of our AOI systems. In 2001, we began to develop products for the inspection of
HDI-S for the semiconductor packaging industry, and in 2002, we commercially
released our Pegasus product for this market.

      In September 2001, we acquired all of the outstanding shares of Inspectech
Ltd., a developer and producer of automatic inspection systems for the
microelectronics industry for an aggregate purchase price of $2,250,000. In
December 2001, Inspectech was merged with us. The acquisition has allowed us to
market a new line of products for the microelectronics industry and to develop a
new system for inspecting flip chip bumps. In the second half of 2001, we
reorganized along three product divisions for the printed circuit boards
industry, the semiconductor packaging industry and the microelectronics
industry. Our research and development expenses have increased since the
acquisition as a result of the write off of purchased in process research and
development, our efforts to assimilate Inspectech's technology and products into
our own and our ongoing development efforts. In 2001, we introduced six new
products. We anticipate that we will continue to devote substantial resources to
research and development and that these expenses as a percentage of our revenues
will continue to increase, due in part to the decline in our revenues. We
anticipate, however, that our overall research and development expenditures will
not increase or will decrease slightly in 2002.

      The printed circuit board industry is experiencing a prolonged and severe
downturn, which is reflected in a steep decline in the sales of printed circuit
boards. As a result, the overall rate of capital spending by printed circuit
board manufacturers has been greatly reduced, and sales of our products to these
manufacturers have declined. In addition, many of our customers are currently
experiencing a period of excess capacity, and it is not clear when a recovery in
sales will take place or when demand for our AOI systems will start to increase.
This downturn has resulted in a 17.1% decrease in our revenues in 2001 from
2000. It is also unclear as to whether a market for our new products for the
semiconductor packaging and microelectronics industries will develop or whether
these products will be accepted by manufacturers in these industries. As a
result, our revenues could continue to decline.

      We recognize revenues from the sales of our products upon the acceptance
of our systems, which, in general, occurs no earlier than at the time we install
the system at the customer's site.

                                       20
<Page>

      We recognize revenues from the provision of services at the time the
service is provided or, if provided under a service contract, over the life of
the contract on a straight-line basis. We expect that in the long term revenues
from the performance of services will increase with the increase in the
installed base, however, this may not occur in periods of economic decline.
Estimated warranty obligations are charged to operations in the period in which
the associated revenue is recognized. Our research and development costs are
expensed as incurred.

      Grants received from the Office of the Chief Scientist for approved
research and development programs are recognized upon the later of the time the
costs related to a particular project are incurred and the time that project
receives approval from the Office of the Chief Scientist. Royalties related to
those grants are included in selling, general and administrative expenses when
paid. In March 2001 we made an arrangement with the Chief Scientist whereby we
have to repay the outstanding balance of the grants we received, not including
grants received by Inspectech prior to its merger into us, at a quarterly rate
equal to 4.5% of the revenues derived in connection with products we developed
as a result of research and development funded by Chief Scientist
participations, up to a maximum amount of $250,000 per quarter. We did not apply
for additional grants from the Office of the Chief Scientist in 2001. As of
December 31, 2001, the outstanding balance of the grants was approximately $1.6
million, including approximately $500,000 in grants received by Inspectech prior
to its merger into us. See "Business--Research and Development."

      We sell our AOI systems for the printed circuit board industry to
Priortech affiliates at a discount off the list price of our AOI systems which
is within the range of discounts we give to other multiple-order customers or
other customers that are located near to us. Sales to Priortech affiliates
represented 3.4% of sales in 1999, 1.3% of sales in 2000, and 1.2% of our sales
in 2001.

      The currency of the primary economic environment in which our operations
are conducted is the dollar. Most of our revenues are derived in dollars while
the prices of most of our materials and components are purchased in dollars or
are linked to changes in the dollar/NIS exchange rate effective on the date of
delivery of the goods to our factory. Most of our marketing expenses are also
denominated in dollars or are dollar linked. Salaries and other operating
expenses in Israel are paid in NIS. In our consolidated financial statements,
transactions and balances originally denominated in dollars are presented at
their original amounts. In Europe, our sales are denominated in euros. Gains and
losses arising from non-dollar transactions and balances are included in the
determination of net income as part of financial expenses, net.

      During the fourth quarter of 2001, we implemented a cost cutting and
adjustment program, which included reductions in salaries, selective layoffs on
a world-wide basis, and a reduction of other expenses, including subcontractor
and materials costs. Due to the costs of the Inspectech acquisition, our
reorganization and the move to our new facilities in the second half of 2001,
the effects of our cost reduction program did not become apparent until the
first quarter of 2002.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

REVENUES. Revenues decreased 17.1% to 44.1 million in the year ended December
31, 2001 from $53.1 million in the year ended December 31, 2000 primarily as a
result of decreased sales resulting from the downturn in the global electronics
industry, which resulted in our customers having excess capacity of capital
equipment. Our revenues in 2001 included for the first time revenue from
Inspectech, which we acquired in September 2001, in the amount of $842,000. In
2001, our sales decreased in Europe, the United States and in Asia, with the
exception of China. In China, our sales increased by approximately 30% in 2001
as compared with 2000.

GROSS PROFIT. Gross profit consists of revenues less cost of revenues, which
includes the cost of components, other production materials, labor,
depreciation, factory overhead, installation and training. These expenditures
are only partially affected by sales volume. In 2001, we experienced a decrease
in gross profit and margins primarily due to a decrease in our sales volume and
price reductions. Gross profit decreased 22.6% to $22.4 million in 2001 from
$29.0 million in 2000. Gross margin decreased to 51.0% in 2001 from 54.5% in
2000.

RESEARCH AND DEVELOPMENT COSTS, NET. Research and development expenses consist
primarily of salaries, materials consumption and costs associated with
subcontracting certain development efforts. In 2001, our research and
development costs included a one-time charge of $3.6 million related to in
process research and development

                                       21
<Page>

which was written off in connection with the acquisition of Inspectech. Before
participation by the Office of the Chief Scientist and after eliminating the
research and development cost of the Inspectech acquisition, research and
development expenses increased 28.1% to $9.0 million in 2001 from $7.0 million
in 2000. In 2001, we received no funding from the Office of the Chief Scientist
as compared to $2.1 million in 2000.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses consist primarily of expenses associated with salaries,
commissions, royalties, promotional and travel, doubtful debts and rent costs.
Our selling, general and administrative expenses increased 15.2% to $14.2
million in 2001 from $12.3 million in 2000. Selling, general and administrative
expenses as a percentage of revenues increased to 32.2% from 23.2% in 2000
primarily due to the expansion of our global sales and marketing infrastructure
and from the integration of Inspectech.

FINANCIAL AND OTHER (EXPENSES) INCOME, NET. We had a net financial income of
$1.4 million in 2001 as compared to a net financial income of $31,000 in 2000.
Our cash balance resulting from our initial public offering derived interest
income throughout 2001, as compared to only the second half of 2000.
Additionally, our net financial income in 2001 also includes exchange rate
income which derived mainly from a significantly higher rate of devaluation of
the NIS against the US dollar in 2001 as compared with 2000.

PROVISION FOR INCOME TAXES. We had a provision for income taxes of $152,000 in
2001 as compared to $848,000 in 2000. The decrease in 2001 is attributable to
the losses we incurred in 2001.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

REVENUES. Revenues increased 122.4% to $53.1 million in the year ended December
31, 2000 from $23.9 million in the year ended December 31, 1999 as a result of
increased sales of our new Orion AOI systems that were introduced in the second
quarter of 1999 and due to an increase in sales to high-volume manufacturers of
high-end printed circuit boards during the year 2000.

GROSS PROFIT. These expenditures are only partially affected by sales volume.
Gross profit increased 146.9% to $29.0 million in 2000 from $11.7 million in
1999. Gross margin increased to 54.5% in 2000 from 49.1% in 1999, primarily due
to increased sales in 2000.

RESEARCH AND DEVELOPMENT COSTS, NET. Before participation by the Office of the
Chief Scientist, research and development expenses increased 63.4% to $7.0
million in 2000 from $4.3 million in 1999. This increase was offset by the
receipt of $2.1 million of participation from the Office of the Chief Scientist
in 2000 as compared to 1.9 million in 1999. The net research and development
expense increased 104.7% from $2.4 million in 1999 to $5 million in 2000.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Our selling, general and
administrative expenses increased 57.3% to $12.3 million in 2000 from $7.8
million in 1999. Selling, general and administrative expenses as a percentage of
revenues decreased to 23.2% in 2000 from 32.8% in 1999, due to the fact that the
majority of these expenditures are fixed.

FINANCIAL AND OTHER (EXPENSES) INCOME, NET. We had a net financial income of
$31,000 in 2000, as compared to a net financial expense of $862,000 in 1999.
This difference is primarily the result of the interest income on the proceeds
we received in our initial public offering.

PROVISION FOR INCOME TAXES. We had a provision for income taxes of $848,000 in
2000. We had no provision for income taxes for 1999. The provision in 2000 was
attributable to the expiration of our initial approved enterprise status.

QUARTERLY RESULTS OF OPERATIONS

      The following table shows unaudited quarterly financial information for
each of the eight quarters ended December 31, 2001. We have prepared this
information on the same basis as our audited consolidated financial

                                       22
<Page>

statements. This information should be read in conjunction with our consolidated
financial statements. The results of operations for any quarter are not
necessarily indicative of results that we might achieve for any subsequent
periods.

<Table>
<Caption>
                                                                         Quarters Ended
                                 ---------------------------------------------------------------------------------------------
                                  Mar. 31,    June 30,   Sept. 30,    Dec. 31,    Mar. 31,    June 30,   Sept. 30,    Dec. 31,
                                    2000        2000       2000         2000        2001        2001       2001         2001
                                 ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
                                                                         (In thousands)
<S>                              <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
Revenues.......................  $  10,517   $  11,468   $  15,041   $  16,099   $  16,309   $  13,428   $   7,016   $   7,315
Cost of revenues...............      4,867       5,238       6,785       7,266       7,341       6,322       3,644       4,344
                                 ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
Gross profit...................      5,650       6,230       8,256       8,833       8,968       7,106       3,372       2,971
   Research and development
   costs, net..................        939       1,004       1,239       1,769       2,193       2,438       5,648       2,372
   Selling, general and
   administrative expenses.....      2,154       2,627       3,455       4,074       3,997       3,396       3,025       3,760
   Restructuring expenses......         --          --          --          --          --          --          --         547
                                 ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
Operating Income (loss)........      2,557       2,599       3,562       2,990       2,778       1,272      (5,301)     (3,708)
Financial and other
   (expenses) income, net......       (605)       (136)         48         724         473         450         675        (198)
                                 ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
Income (loss) before income
   taxes.......................      1,952       2,463       3,610       3,714       3,251       1,722      (4,626)     (3,906)
Provision for income taxes.....        241         164         305         138        (187)       (244)       (146)        425
                                 ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
Net income (loss)                $   1,711   $   2,299   $   3,305   $   3,576   $   3,064   $   1,478   $  (4,772)  $  (3,481)
                                 =========   =========   =========   =========   =========   =========   =========   =========
Earnings (loss) per
   ordinary share
Basic..........................  $    0.11   $    0.14   $    0.16   $    0.16   $    0.14   $    0.07   $   (0.22)  $   (0.16)
                                 =========   =========   =========   =========   =========   =========   =========   =========
Diluted........................  $    0.10   $    0.14   $    0.16   $    0.16   $    0.14   $    0.07   $   (0.22)  $   (0.16)
                                 =========   =========   =========   =========   =========   =========   =========   =========
Weighted average number of
   ordinary shares outstanding
Basic..........................     16,261      16,261      20,151      22,096      22,096      22,109      22,124      22,134
Diluted........................     16,830      16,890      20,741      22,615      22,580      22,534      22,124      22,134

<Caption>
                                                                         Quarters Ended
                                 ---------------------------------------------------------------------------------------------
                                  Mar. 31,    June 30,   Sept. 30,    Dec. 31,    Mar. 31,    June 30,   Sept. 30,    Dec. 31,
                                    2000        2000       2000         2000        2001        2001       2001         2001
                                 ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
                                                                         (In thousands)
<S>                                   <C>         <C>         <C>         <C>         <C>         <C>        <C>         <C>
Revenues.......................        100%        100%        100%        100%        100%        100%        100%        100%
Cost of revenues...............       46.3        45.7        45.1        45.1        45.0        47.1        51.9        59.4
                                 ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
Gross profit...................       53.7        54.3        54.9        54.9        55.0        52.9        48.1        40.6
                                 ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
   Research and development
   costs, net..................        8.9         8.8         8.2        11.0        13.4        18.2        80.5        32.4
   Selling, general and
   administrative expenses.....       20.5        22.9        23.0        25.3        24.5        25.3        43.1        51.4
   Restructuring
   expenses....................         --          --          --          --          --          --          --         7.5
                                 ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
Operating Income (loss)........       24.3        22.7        23.7        18.6        17.0         9.5       (75.5)      (50.7)
Financial and other
   (expenses) income, net......       (5.7)       (1.1)        0.4         4.6         3.0         3.5         9.7        (2.6)
                                 ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
Income (loss) before income
   taxes.......................       18.6        21.5        24.0        23.1        19.9        12.8       (65.9)      (53.4)
Provision for income taxes.....        2.3         1.4         2.0         0.9        (1.1)       (1.8)       (2.1)        5.8
                                 ---------   ---------   ---------   ---------   ---------   ---------   ---------   ---------
Net income (loss)                     16.3%       20.0        22.0        22.2        18.8%       11.0%      (68.0)%     (47.6)%
                                 =========   =========   =========   =========   =========   =========   =========   =========
</Table>

      Our quarterly results of operations may be subject to significant
fluctuations due to several factors, including the size, timing and shipment of
orders, customer budget cycles, the timing of new product upgrade or enhancement
announcements, or product introductions and general economic conditions as they
affect the industry.

      Revenues in 2001 decreased from the first to third quarters and increased
slightly in the fourth quarter. In the first quarter of 2001, we supplied orders
that were received in 2000, and, since the second quarter of 2001, our

                                       23
<Page>

sales decreased as a result of the global economic downturn in the electronics
industry. In 2001, we experienced a major decrease in demand for our products,
and our revenues declined 55.2% from the first quarter to the fourth quarter of
2001. Sales of our AOI systems for the printed circuit board industry during
2000 and 2001 were concentrated mainly on our Orion system, and, during 2001, on
a particular configuration of the Orion system. Gross margin decreased
significantly as a result of a sharp decrease in revenue from 55.0% in the first
quarter of 2001 to 40.6% in the fourth quarter of 2001. During the third quarter
of 2001, we acquired Inspectech and included a one-time charge of $3.6 million
in our research and development costs related to in process research and
development which was written off in connection with the acquisition. During the
fourth quarter of 2001, we implemented a cost cutting and adjustment program to
reduce and reorganize our business and expense structure to our new economic
environment. Our cost cutting program included reductions in salaries and other
expenses, layoffs and reorganization. As a result of this program, we recorded a
one time expense of $547,000 in the fourth quarter of 2001. Starting in the
second half of 2001, we have observed a bigger reduction in the capital
expenditures of the high volume manufacturers of printed circuit boards as
opposed to other segments of the printed circuit board industry. As a result,
our AOI systems sales mix has changed from high configuration AOI systems to
lower margin basic configuration models.

      Our quarterly and annual operating results have in the past varied
significantly depending upon a variety of factors, many of which are beyond our
control. We generally arrange shipment of our products soon after receipt of
orders. Accordingly, the shifting of any large order of products from one fiscal
quarter to another fiscal quarter could cause substantial variability in our
quarterly results of operations. We cannot be certain that revenues and net
income, if any, in any particular quarter or year will not be lower than
revenues and net income, if any, in a preceding or comparable quarter or
quarters or year or years. Furthermore, period-to-period comparisons of our
results of operations may not necessarily be meaningful and should not be relied
upon as indications of future performance. Additionally, grants received from
the Office of the Chief Scientist for research and development are recognized
upon the later of the time the costs related to a particular project are
incurred and the time such project receives approval from the Office of the
Chief Scientist. As a result, operating income can fluctuate significantly due
to the timing of recognition of grants from the Office of Chief Scientist. In
March 2001, we made an arrangement with the Chief Scientist whereby we have to
repay the outstanding balance of the grants we received, not including grants
received by Inspectech prior to its merger into us, at a quarterly rate equal to
4.5% of the revenues derived in connection with products we developed as a
result of research and development funded by Chief Scientist participations, up
to a maximum amount of $250,000 per quarter. We did not apply for additional
grants from the Office of the Chief Scientist in 2001. Given the relatively
small number of products which constitute our sales in each quarter, the timing
of sales of a few products may significantly change the results of operations in
any given quarter.

      B.   LIQUIDITY AND CAPITAL RESOURCES

      We had a negative cash flow from operations of $391,000 in 1999, a
positive cash flow from operations of $10.0 million in 2000, and a negative cash
flow from operations of $ 9.4 in 2001. The sharp decrease in our cash flow in
2001 was mainly to finance our losses using available cash reserves, increasing
receivables and decreasing payables, which reflect a general decrease of
activity. During 1999, we financed our operations primarily through short-term
bank credit lines. During the year 2000, we raised $36.0 million from our
initial public offering, which helped finance our activities in 2000 and 2001.

      As of December 31, 2001, we had approximately $7.0 million in cash and
cash equivalents and our working capital was approximately $34.9 million. As of
December 31, 2001, we had $13.9 million invested in short-term marketable
securities that consist of corporate bonds with strong credit ratings with a
maturity between three and 18 months at the time of purchase. The average annual
interest rate on those marketable securities was approximately 3.4% in 2001.

      As of December 31, 1999, we had outstanding loans payable under two line
of credit agreements with a bank, one loan of $1.2 million and a second loan of
$722,000. Both of the credit lines bore interest at an annual rate of between
13.7% to 15.7%. We also had a short-term loan payable to the bank of $4.9
million, bearing interest at 13%. The credit agreements expired and the loans
were repaid during 2000 with the proceeds we received from our initial public
offering. We may make additional borrowings under the bank loan on an as needed
basis.

                                       24
<Page>

      Since December 18, 2001, we have a revolving short-term bank loan which
provides for borrowings of up to approximately $1.8 million. This loan is
denominated in euros and bears interest at 4.5% per annum. The loan is being
extended on a monthly basis. The outstanding balance as of December 31, 2001 was
approximately $1.8 million.

      Since December 27, 2001, we have a revolving short-term bank loan, which
provides for borrowing of up to approximately $2.7 million. This loan is
denominated in NIS and bears interest at 4.4% per annum. The outstanding balance
as of December 31, 2001 was approximately $2.7 million.

      Borrowings under the bank loans are collateralized by substantially all of
our assets and are guaranteed by Priortech.

      We have recently come to an understanding in principle with Bank Leumi
regarding the increase of our existing credit line to approximately $5.0
million. In connection with the increase of our credit line, we will be required
to maintain a deposit of a minimum of $2.0 million in a bank account or invest
such amount in debentures rated AA or higher and to maintain a certain minimal
tangible shareholders equity at a rate which has not yet been determined. Any
change of control in us and any merger that is effected without Bank Leumi's
consent will be considered a default under the terms of the increased credit
line. The increase of our credit line is subject to the finalization and
execution of formal documents. We cannot be certain whether these documents will
be signed and what the final terms of the increase of our credit line will be.

      Net cash used for operating activities was $9.4 million for the year ended
December 31, 2001 as compared to net cash provided by operating activities of
$10.0 million for the year ended December 31, 2000. The sharp decrease in net
cash provided by operating activities in 2001 resulted primarily from our $3.7
million loss in 2001 compared with a profit of $10.9 million in 2000. In 2001,
our outstanding accounts receivable increased by $3.8 million, our accounts
payable decreased by $3.7 million and our current liabilities decreased by $1.0
million. Increases in accounts receivable resulted primarily from the grant of
payment terms to customers in 2001 that were more favorable than in the past.
The decrease in accounts payable reflects the slowdown in our activities in the
eight quarters ended December 31, 2001. Net cash provided by financing
activities in 2001 was $2.1 million, mainly due to an increase of $2.8 million
in our short term loans, compared to $27.7 million provided by financing
activity in 2000, mainly due to the proceeds from our initial public offering,
and $2.0 million provided in 1999.

      Cash provided by investing activity was $4.5 million in 2001, consisting
of a net redemption of marketable securities of $13.0 million, reduced by $7.4
million invested in fixed assets, mainly in our new facility, and the
acquisition of Inspectech for a net of $1.2 million. In 2000, cash used in
investing activities was $28.5 million, primarily due to the investment of the
proceeds received from our initial public offering in securities for the net
amount of $26.8 million.

      Capital expenditures were $1.7 million in 2000 and $7.4 million in 2001.
We made investments in our new facility in the amount of $575,000 in 2000
and$6.5 million in 2001, respectively. With the exception of investments in our
new facility, which was completed by the end of 2001, we currently do not have
significant capital spending or purchase commitments.

      We believe that our existing sources of liquidity and anticipated cash
flow from operations will be sufficient to meet our anticipated cash
requirements for at least the next twelve months. We recently announced our
intention to make a rights offering to our current shareholders, for up to a
total of approximately $9.0 million

                                       25
<Page>

at the market price at the time of the offering, subject to required corporate,
regulatory and other approvals. Priortech has expressed intention to exercise
its rights under this anticipated offering.

EFFECTIVE CORPORATE TAX RATE

      Our production facilities are the subject of several "investment
programs," and have been granted "Approved Enterprise" status under the Law for
Encouragement of Capital Investments, 1959, and consequently are eligible for
tax benefits for the first several years in which they generate taxable income.
We are entitled to a tax holiday for a period of ten years from the year in
which the Approved Enterprise first earns taxable income, limited to 12 years
from the commencement of production or 14 years from the date of approval,
whichever is earlier. The periods of benefits relating to our investment
programs which received Approved Enterprise status expire at different times.
The tax benefits with regard to our first investment program which received
Approved Enterprise status, expired on December 31, 1999, and the tax benefits
with regard to our latest approved investment program will expire in 2008.
Income related to our first investment program is now subject to a 36% corporate
tax rate. The percentage of our income which will be subject to the 36% tax rate
is dependent on several factors, mainly the amount of our revenues in Israel. In
2002, approximately a quarter of our taxable income will be subject to the 36%
tax rate.

      In the event that we operate under more than one approval or that our
capital investments are only partly approved, our effective tax rate will be a
weighted combination of the various applicable tax rates.

NEW ACCOUNTING PRONOUNCEMENTS

      In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 141, "Business Combinations" and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that
the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. The statement also identifies criteria that
intangible assets acquired in a business combination must meet to be recognized
and reported separately from goodwill. SFAS No. 142 requires that upon adoption,
amortization of goodwill and intangibles with indefinite useful lives will cease
and instead, the carrying value of these intangibles will be evaluated for
impairment on at least an annual basis. SFAS No. 142 is effective for fiscal
years beginning after December 15, 2001. The Company does not anticipate that
the adoption of SFAS No. 142 will have a significant effect on the earnings and
financial position of the Company.

DISCLOSURE ABOUT MARKET RISK

      Since the majority of our revenues are denominated in dollars, we believe
that inflation and fluctuations in the NIS/dollar exchange rate have no material
effect on our revenues. However, a portion of the cost of our Israeli
operations, mainly personnel and facility-related, is incurred in NIS. Inflation
in Israel and dollar exchange rate fluctuations, however, have some influence on
our expenses and, as a result, on our net income. Our NIS costs, as expressed in
dollars, increase to the extent by which any increase in the rate of inflation
in Israel is not offset, or is offset on a lagging basis, by a devaluation of
the NIS in relation to the dollar or to the extent that the NIS appreciates in
relation to the dollar.

      The following table sets forth, for the periods indicated, information
with respect to the rate of inflation in Israel and the rate of devaluation
(appreciation) of the NIS in Israel. These figures are based on reports of the
Israel Central Statistics Bureau. Inflation is the percentage change in the
Israeli consumer price index between December 31 of the year indicated and
December of the preceding year. Devaluation is the percentage decrease in the
value of the Israeli currency in relation to the dollar calculated by comparing
the rate of exchange at the beginning and the end of the year.

<Table>
<Caption>
                                                        Israeli     Devaluation
                                                       Inflation  (Appreciation)
YEAR ENDED DECEMBER 31,                                  Rate %        Rate %
-----------------------                               ----------  --------------
<S>                                                          <C>            <C>
1997..................................................       7.0             8.8
1998..................................................       8.6            17.6
</Table>

                                       26
<Page>

<Table>
<S>                                                          <C>            <C>
1999..................................................       1.3            (0.2)
2000..................................................         0            (3.0)
2001..................................................       1.4             9.3
</Table>

      Currently, we do not engage in hedging or other transactions intended to
manage risks relating to foreign currency exchange rate or interest rate
fluctuations.

      C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

      In order to accommodate the rapidly changing needs of the markets we
serve, to improve our existing products and to develop new products and product
lines, we place considerable emphasis on research and development projects,
including the development of generic technologies in the fields of software
algorithms, three-dimensional image acquisition and sensors for high-speed,
sub-micron metrology. As of December 31, 2001, 79 of our employees were engaged
primarily in research and development.

      In our printed circuit board product division our product development
efforts in 2001 focused on enhancing our current product lines and core
technologies. In our semiconductor packaging product division, our research and
development efforts focused in 2001 on the development of our Pegasus product
for the automatic optical inspection of HDI-S as well as on the development of
the Orion ASI product for the inspection of HDI-S during the manufacturing
process.

      In September 2001, we acquired Inspectech Ltd., an Israel-based developer
and producer of intelligent automatic inspection systems for the
microelectronics industry, and in December 2001, Inspectech was merged with us.
Since the acquisition, we have focused our development efforts on the
continuation of development of the WIS product for the inspection of surface
defects on wafers and BIS product for the inspection of surface defects and
measurement of bumps, both of which are targeted at the microelectronics
industry. On the basis of technology we acquired from Inspectech, we started the
development of the Phoenix system for the inspection of flip chip BGA packages,
which is directed at the semiconductor packaging industry.

      We use subcontractors for assistance in different development efforts, in
areas such as mechanics, optics and hardware.

      A portion of our research and development expenses had been funded through
third-party royalty-bearing participations from the Government of Israel. The
following table shows our total research and development expenditures and
participation in these expenditures by the Government of Israel for the periods
indicated:

<Table>
<Caption>
                                                      Year Ended December 31,
                                                   ----------------------------
                                                     1999      2000      2001
                                                   --------  --------  --------
                                                           (In thousands)
      <S>                                          <C>       <C>       <C>
      Research and development expenses..........  $  4,307  $  7,037  $  9,017
      Purchased in process research and                   -         -     3,634
        development..............................
      Royalty-bearing participations from the
        Government of Israel.....................    (1,888)   (2,086)        -
                                                   --------  --------  --------
      Research and development costs, net........     2,419     4,951    12,651
                                                   ========  ========  ========
</Table>

      We are obligated to pay to the State of Israel royalties on revenues
derived in connection with products we develop as a result of research and
development funded by Chief Scientist participations of up to 100% of the
dollar-linked value of the participations received. During 1999, our royalty
expenses to the Government of Israel with respect to its participations were
approximately $956,000, during 2000, they were approximately $2,391,000, and
during 2001, they were approximately $1.0 million. In March 2001, we made an
arrangement with the Chief Scientist whereby we have to repay the outstanding
balance of the grants we received, not including grants received by Inspectech
prior to its merger into us, at a quarterly rate equal to 4.5% of the revenues
derived in

                                       27
<Page>

connection with products we developed as a result of research and development
funded by Chief Scientist participations, up to a maximum amount of $250,000 per
quarter. We did not apply for additional grants from the Office of the Chief
Scientist in 2001. As of December 31, 2001, the outstanding balance of the
grants was approximately $1.6 million, including approximately $500,000 in
grants received by Inspectech prior to its merger into us. In addition, products
developed under programs supported by the Office of the Chief Scientist may not
be manufactured, nor may the technology embodied in those products be
transferred, outside of Israel without appropriate government approvals.
Accordingly, we may not be able to take advantage of strategic manufacturing and
other opportunities outside of Israel. These restrictions do not apply to the
sale or export from Israel of our products developed with that know-how. An
amendment to the law governing the Israeli government's participation in
research and development programs is now in the process of legislation. The
proposed amendment would enable the transfer of technology supported by Chief
Scientist grants, subject to certain payment conditions, and change the
conditions for the transfer of manufacturing out of Israel. The amendment may
also enable a company to be completely released from the provisions of this law,
subject to the payment of a lump-sum redemption. We cannot be certain, however,
whether or when the proposed legislation will be enacted or what form this
legislation will ultimately take.

      In general, we rely on a combination of copyrights, trade secrets,
patents, trademarks and non-disclosure agreements to protect our proprietary
know-how and intellectual property. We also enter into confidentiality
agreements with our key employees and key sub-contractors who develop and
manufacture components and subsystems for use in our products. We cannot be
certain that actions we take to protect our proprietary rights will be adequate
nor can we be certain that we will be able to deter reverse engineering or that
there will not be independent third-party development of our technology.
Although we have not been involved in any litigation regarding our intellectual
property rights, we cannot be certain that any litigation will not be brought in
the future.

      We have registered several trademarks with the Israeli Registrar of
Trademarks, and we are in the process of registering additional trademarks. We
have also filed several patent applications with the Israeli Registrar of
Patents and correlative applications under the Patent Convention Treaty. In
addition, we registered one patent in the United States and have a patent
pending in Japan.

      We consider aspects of all elements of our products to be proprietary to
us. To the extent that we rely on technology which we license from third
parties, including software that is integrated with internally developed
software and used in our products and services we cannot be certain that these
third-party technology licenses will continue to be available to us on
commercially reasonable terms or at all.

      D. TREND INFORMATION

      The printed circuit board industry is experiencing a prolonged and severe
downturn, which is reflected in a steep decline in the overall rate of capital
spending by printed circuit board manufacturers, and sales of our AOI systems
for the printed circuit board industry have declined. We cannot predict the
extent to which this trend will continue. If this trend continues, our sales and
profitability will continue to decrease. Our visibility of future sales of all
of our products has become significantly shorter. Additionally, as a result of a
general decline in economic conditions in 2001 and 2002, we experienced
increased pressure from our customers to provide more favorable terms of sale,
such as extended payment cycles. Since the beginning of 2001, we have
experienced longer accounts receivable payment cycles. We have also increased
our provisions for doubtful debts.

ITEM 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.

          A.   DIRECTORS AND SENIOR MANAGEMENT.

      The following table sets forth information with respect to our executive
officers and directors as of the date of this annual report:

                                       28
<Page>

<Table>
<Caption>
                    Name                   Age                         Position
                    ----                   ---                         --------
<S>                                        <C>   <C>
Rafi Amit...............................   53    Chairman of the Board of Directors and General
                                                 Manager

Moshe Amit..............................   57    Executive Vice President and Chief Financial Officer

Yotam Stern.............................   49    Executive Vice President, Business and Strategy and
                                                 Director

Benjamin P. Sabbah......................   69    Executive Vice President, New Technologies

Amir Gilead.............................   51    Vice President, Semiconductor Packaging (HDI)
                                                 Division

Adi Corem...............................   49    Vice President, Operations

Jacob Yavor.............................   43    Vice President, Printed Circuit Boards Division

Meir Ben-Shoshan........................   72    Director

Haim Horowitz...........................   54    Director

Eran Bendoly............................   38    Director
</Table>

RAFI AMIT has served as our General Manager, or Chief Executive Officer since
January 1998 and has served as Chairman of the Board of Directors since 1987.
Since 1981, Mr. Amit has also served as the President, General Manager and
director of Priortech and has been the Chairman of the Board of Directors of
Priortech since 1988. Mr. Amit has a B.Sc. in Industrial Engineering and
Management from The Technion-Israel Institute of Technology. Rafi Amit is the
brother of Moshe Amit.

MOSHE AMIT has served as our Executive Vice President and Chief Financial
Officer since February 2001, and prior to that from March 2000 to February 2001,
Mr. Amit served as our Vice President, Sales and Subsidiaries, and from October
1994 to March 2000, he served as our Vice President, Sales and Marketing. From
1987 until 1994, Mr. Amit served as the President of PCE, Inc., a New
Jersey-based company affiliated with Camtek and, which until 2001, sold and
serviced printed circuit boards and AOI systems. Mr. Amit has a B.Sc. in
Industrial Engineering and Management from the Technion. Moshe Amit is the
brother of Rafi Amit.

YOTAM STERN has served as our Executive Vice President, Business and Strategy
and Director since February 2001 and as a Director since 1987. From January 1998
until February 2001, Mr. Stern served as Chief Financial Officer. Mr. Stern has
also served as the Chief Financial Officer of Priortech since 1981 and has
served as a director of Priortech Ltd. since 1985. Mr. Stern has a B.A. in
Economics from the Hebrew University of Jerusalem.

BENJAMIN P. SABBAH has served as our Executive Vice President, New Technologies
since May 1999, and, from November 1995 until May 1999 Mr. Sabbah was our
Executive Vice President, Research and Development. Mr. Sabbah is also a senior
member of the Institute of Electrical Engineers in Israel. Prior to joining
Camtek, Mr. Sabbah co-founded and served as the President, Chief Executive
Officer and Chief Operations Officer of Elscint Ltd., which was a medical
imaging equipment company. From 1987 to 1989, Mr. Sabbah was a senior research
associate and lecturer at the Technion. Mr. Sabbah has a B.Sc. and an M.Sc. in
Electrical Engineering from the Technion.

                                       29
<Page>

AMIR GILEAD has served as our Vice President, Semiconductor Packaging (HDI)
Division since November 2001, and from March 2000 until November 2001, he served
as our Vice President, Marketing. From 1999 until March 2000, Mr. Gilead served
as President and Chief Executive Officer of Advanced Automation International
Inc., a startup in the semiconductor equipment manufacturing industry. From 1990
until 1999, Mr. Gilead held various executive positions with Kulicke & Soffa, a
semiconductor equipment manufacturer. From 1984 until 1990, Mr. Gilead held
various management positions with Optrotech Ltd., which subsequently merged with
Orbotech. Mr. Gilead has a B.Sc. and an M.Sc. in electrical engineering from the
Technion.

ADI COREM has served as our Vice President, Operations since January 2001, and
from November 1998, he served as our Operations Manager. From 1988 to November
1998, Mr. Corem served as the Operation Manager of Volta Carmiel Ltd., a
manufacturer of plastic products. From 1984 to 1988, Mr. Corem worked as a
Projects Manager in Elbit Systems Ltd., a military technology developer and
producer. Mr. Corem has a B.Sc. in Industrial Engineering from the Technion.

JACOB YAVOR has served as our Vice President, Printed Circuit Boards Division
since May 2002. Prior to that time and since January 2001, he served as a Vice
President. From 1998 until January 2001, Mr. Yavor served as Regional Manager in
our subsidiary, Camtek USA, Inc. From 1987 to 1998, Mr. Yavor held various
positions in Camtek, including Regional Manager, Worldwide Customer Support
Manager, Products Manager and Deputy Manager of our Electronics Department. Mr.
Yavor has a B.Sc. in Computers Engineering from the Technion.

MEIR BEN-SHOSHAN has served as one of our Directors since November 1998. From
May 1995 until March 1999, Mr. Ben-Shoshan was a director of AG Associates
(Israel) Ltd., a manufacturer of integrated processing equipment for the
semiconductor industry, and was Chairman of its Board from April 1996 to March
1999. From 1986 to 1998, Mr. Ben-Shoshan was a Vice President of Clal
Electronics Industries Ltd., an electronics company the shares of which are
traded on the Tel-Aviv Stock Exchange. From March 2000 to March 2001, Mr.
Ben-Shoshan was a director of Tower Semiconductor Ltd., a manufacturer of
semiconductors. He has been a director of IFN Ltd., a company dealing in
e-knowledge and e-content management, since January 2000, and is Chairman of the
Board of Jordan Valley Applied Radiation Ltd. since August 1999. Mr. Ben-Shoshan
has been a member of the Association of Production Engineers in England since
1965, and received an M.B.A. from Tel-Aviv University.

HAIM HOROWITZ has served as one of our Directors since November 1998. Mr.
Horowitz is also the Vice President and Chief Financial Officer of Menen Medical
Ltd., a medical equipment manufacturer, since 1999, and, between 1994 and 1999,
he served as Treasurer of Menen Medical Ltd. From 1993 Mr. Horowitz served as
the Chief Financial Officer of Menen Medical Corp., a subsidiary of Menen
Medical Ltd. From 1991 to 1993, Mr. Horowitz served as Treasurer of Elscint,
Inc., which was a medical imaging equipment company. Mr. Horowitz holds a B.Sc.
in Industry and Management from the Technion.

ERAN BENDOLY has served as one of our Directors since November 2000. Currently,
Mr. Bendoly is a self-employed business consultant. From 2000 to 2002, Mr.
Bendoly served as Director Finance for Europe, the Middle East and Africa at
Mindspeed Technologies, a developer of high-speed integrated circuits for
internet infrastructure applications. From 1998 to 2000, Mr. Bendoly served as
Chief Financial Officer of Novanet Semiconductor Ltd., and from 1996 to 1998, he
served as Vice President, Finance and Operations of Novacom Technologies Ltd..
Mr. Bendoly holds a B.A. from the Hebrew University of Jerusalem and an M.B.A.
from the KU Leuven University of Belgium.

          B.   COMPENSATION.

COMPENSATION OF OFFICERS

      The aggregate remuneration paid by us to the eight persons who served in
the capacity of executive officer in the year ended December 31, 2001 was
approximately $1.35 million, which includes amounts paid to provide pension,
retirement or similar benefits, as well as amounts expended by us for
automobiles made available

                                       30
<Page>

to all our officers, expenses reimbursed to officers and other fringe benefits
commonly reimbursed or paid by companies in Israel. In September 2001, our
executive officers agreed to a temporary reduction in their base salary and, in
January 2002, to a further reduction.

EMPLOYMENT AGREEMENTS

      We maintain written employment agreements with our key employees that
contain customary provisions, like non-compete and confidentiality agreements.
Recently, Israeli courts have required employers seeking to enforce non-compete
undertakings of a former employee to demonstrate that the competitive activities
of the former employee will harm one of a limited number of material interests
of the employer. If we cannot demonstrate that we will be harmed by the
competitive activities of a former employee, we may be unable to prevent our
competitors from benefiting from the expertise of our former employees.

      Effective January 1, 1998, we entered into an employment agreement with
Mr. Rafi Amit, our General Manager. The agreement is for an initial term of two
years and is automatically renewable for two-year periods thereafter. The
agreement contains confidentiality and non-compete provisions for the term of
Mr. Amit's employment and for a two-year period after the termination of his
employment. Furthermore, the agreement provides that all intellectual property
developed by Mr. Amit, or in which he took part, in connection with his
employment, are the sole property of us. Pursuant to his employment agreement,
Mr. Amit may dedicate not more than 20% of his time to work for Priortech or any
of the Priortech entities. The employment agreement may be terminated by either
party or not renewed at the end of the initial term or any extension, by written
notice of termination or non-renewal delivered to the other party eight months
in advance. We, however, may immediately terminate the employment of Mr. Amit in
various circumstances, including a breach of fiduciary duty.

      Effective January 1, 1998, we entered into an employment agreement with
Mr. Yotam Stern, our Executive Vice President, Business and Strategy. This
agreement is for an initial term of two years and is automatically renewable for
two-year periods thereafter. The agreement contains confidentiality and
non-compete provisions for the term of Mr. Stern's employment and for a two-year
period after the termination of his employment. Pursuant to his employment
agreement, Mr. Stern may dedicate not more than 25% of his time to work for
Priortech or any of the Priortech entities. The employment agreement may be
terminated by either party at any time, or not renewed at the end of the initial
term or any extension, by written notice of termination or non-renewal delivered
to the other party six months in advance. We, however, may immediately terminate
the employment of Mr. Stern upon the occurrence of various circumstances,
including a breach of fiduciary duty.

      As of January 2001, Mr. Rafi Amit has been authorized to dedicate not more
than 20% of his time to work for Priortech or any of the Priortech entities, and
Mr. Yotam Stern has been authorized to dedicate not more than 25% of his time to
work for Priortech or any of the Priortech entities. Mr. Rafi Amit receives 80%
of a full time salary while Mr. Yotam Stern receives 75% of a full time salary.
Messrs. Amit and Stern will be compensated directly by each of the Priortech
entities for which they work. In September 2001, Messrs. Amit and Stern agreed
to a temporary reduction in their base salary and, in January 2002, to a further
reduction. For additional information on the employment structure of Messrs.
Amit and Stern, please see the section of this annual report entitled "Related
Party Transactions."

COMPENSATION OF DIRECTORS

      Regulations promulgated under the Israeli Companies Law regulate the
annual remuneration and remuneration for participation in meetings of outside
directors and the refund of their expenses. The aggregate remuneration paid by
us to the seven persons who served in the capacity of director in the year ended
December 31, 2001 was approximately $40,000. In December 2001, our Audit
Committee and our Board of Directors approved the grant of options to Mr. Rafi
Amit for the purchase of 20,000 of our ordinary shares and the grant of options
to Mr. Yotam Stern for the purchase of 12,000 of our ordinary shares. The grant
of these options will require the approval of our shareholders.

          C.   BOARD PRACTICES.

                                       31
<Page>

COMPOSITION OF THE BOARD OF DIRECTORS

      Our articles provide that the board of directors shall consist of not less
than five nor more than ten directors, including the outside directors.
Currently, our board consists of five directors.

      Directors, other than outside directors, are elected by a resolution of
the shareholders at the annual general meeting and serve until the conclusion of
the next annual meeting of the shareholders. Directors may be removed at any
time by a resolution of the shareholders. Since directors may be elected and
removed by a majority vote, Priortech, which holds a majority of our voting
shares has the power to elect all of our directors, subject to the restrictions
placed on the election of outside directors as described below. The General
Manager, and any officer who is also a controlling shareholder or a director, is
appointed by and serves at the pleasure of the board. Each of the other officers
is appointed by the General Manager.

      The Chairman of our Board of Directors is Mr. Rafi Amit, who also serves
as our General Manager, or Chief Executive Officer. Under the Israeli Companies
Law, 1999, effective as of February 1, 2000, the Chief Executive Officer of a
public company may not hold the position of Chairman of the Board unless that
designation is approved by a vote of at least two-thirds of the non-controlling
shareholders attending the meeting and voting on the resolution. In any case,
the Chief Executive Officer of a public company may not hold the position of
Chairman of the Board for more than three years. At our shareholders' meeting
held in December 2000, our shareholders authorized Mr. Rafi Amit to continue to
hold the position of Chief Executive Officer for so long as he continues to
serve as Chairman of the Board, and for a maximum period of three years. A
proposed amendment to the Companies Law is currently in the process of
legislation. The proposed amendment would allow the general assembly of a public
company to authorize its Chief Executive Officer to hold the position of
Chairman of the Board for additional three year terms, provided each such
additional term is approved by a vote of at least two-thirds of the
non-controlling shareholders attending the meeting and voting on the resolution
or if the total shareholdings of those who vote against this resolution
represent 1% or less of all of the voting rights in the company. We cannot be
certain, however, whether or when the proposed amendment will be enacted or what
form this amendment will ultimately take.

      Our articles provide that any director may appoint, by written notice to
us or to the Chairman of the Board, any individual who is qualified to serve as
director and who is not then serving as a director or alternate director, to
serve as an alternate director.

      An alternate director has all of the rights and obligations of a director,
excluding the right to appoint an alternate for himself. Unless the period or
scope of any such appointment is limited by the appointing director, the
appointment is effective for all purposes and for a period of time concurrent
with the term of the appointing director. Currently there are no alternate
directors on our board.

OUTSIDE DIRECTORS; INDEPENDENT DIRECTORS

      Under the Israeli Companies Law, "public" Israeli companies, including
those whose shares are registered for trade also outside of Israel, are required
to appoint at least two directors who are not affiliated with the company.

      The outside directors that must be appointed under the Israeli Companies
Law must not have any relationship with us. An individual whose relatives,
business partners, employers or controlled companies have a relationship with us
may not serve as an outside director. In addition, an individual whose other
business affairs may cause a conflict of interest with us may not serve as an
outside director. Outside directors are elected by the shareholders, and the
shareholders voting in favor of their election must include at least one third
of the shareholders present and voting at the meeting, not counting abstentions,
who are not controlling shareholders of the company. This minority approval
requirement need not be met if the total shareholdings of those who vote against
their election represent 1% or less of all of the voting rights in us. However,
shareholder approval is not required if the board of directors resolves that a
director in office at the time the Israeli Companies Law became effective, be
deemed to be an outside director, provided that he or she otherwise qualifies as
an outside director.

                                       32
<Page>

      Outside directors serve for a three-year term, which may be renewed for a
maximum of one additional three-year term. An outside director can be removed
from office only by either the same percentages of shareholders that may elect
him, or by a court order and then only if the outside director ceases to meet
the statutory qualifications or breaches his fiduciary duty. The court may also
remove an outside director from office if he is unable to perform his duties on
a regular basis. According to regulations promulgated under the Israeli
Companies Law, outside directors of an Israeli company whose shares are
registered for trade outside of Israel may be non-Israeli residents. If at the
time an outside director is appointed by the shareholders, all other directors
are of the same gender, the outside director to be appointed shall be of the
other gender.

      Mr. Horowitz and Mr. Ben-Shoshan qualify as outside directors and serve in
such capacity on our board of directors.

      Under the requirements for listing on the Nasdaq National Market, we are
required to have at least three independent directors on our board of directors.
Mr. Haim Horowitz, Mr. Meir Ben-Shoshan, and Mr. Eran Bendoly are independent
directors.

COMMITTEES OF THE BOARD OF DIRECTORS

      Our articles provide that the board of directors may delegate its powers
to such committees of the board of directors as it deems appropriate, subject to
the provisions of the Israeli Companies Law. Powers that may not be delegated
include, among others, the power to distribute dividends, the determination of
general company policy or the allotment of securities or the approval of
financial reports. However, those matters can be delegated to committees for
recommendation. According to the Companies Law, at least one outside director
must be appointed to serve on each committee of the board.

      Our board of directors has a Compensation Committee and an Audit
Committee.

      COMPENSATION COMMITTEE. The Compensation Committee reviews and makes
recommendations to our board concerning the terms of the compensation packages
provided to our employees, including our executive officers, the terms of any
bonus, share options or other awards provided to our employees, including our
executive officers. Our Compensation Committee also administers our current
stock option arrangements. The members of our Compensation Committee are Mr.
Rafi Amit, Mr. Meir Ben Shoshan, and Mr. Eran Bendoly.

      AUDIT COMMITTEE. The Audit Committee oversees the retention, performance
and compensation of our independent auditors, and oversees and establishes
procedures concerning our systems of internal accounting and auditing control,
overseas deficiencies in our management operations and proposes means of
rectification, and approves certain acts and transactions that involve conflicts
of interest or that involve interested parties, in accordance with the Israeli
Companies Law. The members of our Audit Committee are Mr. Meir Ben Shoshan, Mr.
Eran Bendoly, and Mr. Haim Horowitz. We may modify the composition of our Audit
Committee to ensure compliance with the rules promulgated by the Securities and
Exchange Commission, The Nasdaq Stock Market, Inc. and the Israeli Companies
Law.

          D.   EMPLOYEES.

      As of December 31, 2001, we employed a total of 266 people worldwide,
including 79 in research and development, 12 in executive management, 68 in
customer service and support, 32 in sales and marketing, 28 in administration
and 47 in operations. As of December 31, 2001, we employed 166 people in Israel,
25 people in the United States, 14 people in Europe, 34 people in Hong Kong,
Singapore and China, 17 people in Taiwan, 6 people in Korea, and 4 people in
Japan.

      Israeli labor laws and regulations are applicable to our employees in
Israel. These laws principally concern matters like paid annual vacation, paid
sick days, length of the workday, pay for overtime, insurance for work-related
accidents, severance pay and other conditions of employment. Israeli law
generally requires severance pay, which may be funded by Manager's Insurance as
described below, upon the retirement or death of an employee or the termination
of employment by the employer. Furthermore, Israeli employees and employers

                                       33
<Page>

are required to pay predetermined sums to the National Insurance Institute.
Since January 1, 1995, these amounts also include payments for national health
insurance. The payments to the National Insurance Institute are approximately
14.5% of wages (up to a specified amount), of which the employee contributes
approximately 66% and the employer contributes approximately 34%.

      Although not legally required, we regularly contribute to a "Manager's
Insurance" fund or to a privately managed pension fund on behalf of our
employees located in Israel. These funds provide employees with a lump sum
payment upon retirement (or a pension, in case of a pension fund) and severance
pay, if legally entitled thereto, upon termination of employment. We provide for
payments to a Manager's Insurance Fund and pension fund contributions in the
amount of 13.3% of an employee's salary on account of severance pay and
provident payment or pension, with the employee contributing 5.0% of his salary.
We also pay an additional 2.5% to some of our employees' salaries in connection
with disability payments. In addition, we administer an Education Fund for some
of our Israeli employees and pay 5% or 7.5% thereto, with the employees
contributing 5% or 2.5%, respectively, of their salary.

      Furthermore, our employees are subject to the provisions of the collective
bargaining agreements between the Histadrut, which is the General Federation of
Labor in Israel, and the Coordination Bureau of Economic Organizations,
including the Industrialists Associations, by order of the Israeli Ministry of
Labor and Welfare. These provisions principally concern cost of living
increases, recreation pay and other conditions of employment. We generally
provide our employees with benefits and working conditions above the required
minimums. Our employees, as a group, are not currently represented by a labor
union. To date, we have not experienced any work stoppages.

          E.   SHARE OWNERSHIP.

      The following table sets forth certain information concerning the share
ownership of our directors and executive officers as of May 15, 2002:

<Table>
<Caption>
                                                 Number of Ordinary    Percentage of Ordinary Shares
      Name                                         Shares Owned(1)          Beneficially Owned(2)
      ----                                      --------------------  ------------------------------
      <S>                                            <C>                         <C>
      Rafi Amit(3)                                     140,000                   0.63%
      Yotam Stern(4)                                   155,000                    0.7%
      10 directors and executive officers as a       1,457,700                    6.6%
      group(5)
</Table>

----------
      (1)      Beneficial ownership is determined in accordance with the rules
               of the Securities and Exchange Commission and generally includes
               voting or investment power with respect to securities. Ordinary
               shares relating to options currently exercisable or exercisable
               within 60 days of the date of this annual report are deemed
               outstanding for computing the percentage of the person holding
               such securities but are not deemed outstanding for computing the
               percentage of any other person. Except as indicated by footnote,
               and subject to community property laws where applicable, the
               persons named in the table above have sole voting and investment
               power with respect to all shares shown as beneficially owned by
               them.
      (2)      The percentages shown are based on 22,138,308 ordinary shares
               issued as of May 15, 2002 and do not give effect to a reduction
               of 250,000 ordinary shares held by us.
      (3)      As a result of a voting agreement relating to a majority of
               Priortech Ltd.'s voting equity, Messrs. Amit and Stern may be
               deemed to control Priortech. Also includes options to purchase
               140,000 ordinary shares.
      (4)      As a result of a voting agreement relating to a majority of
               Priortech Ltd.'s voting equity, Messrs. Amit and Stern may be
               deemed to control Priortech. Also includes options to purchase
               92,000 ordinary shares.
      (5)      Includes options to purchase 200,000 ordinary shares.

OPTION GRANTS DURING FISCAL YEAR 2001

                                       34
<Page>

      We granted options to our directors and senior executive officers during
the year ended December 31, 2001 as follows:

<Table>
<Caption>
                             NUMBER OF
                          ORDINARY SHARES                                       MARKET VALUE OF
                            UNDERLYING        % OF TOTAL     EXERCISE PRICE     ORDINARY SHARES
NAME                          OPTIONS           OPTIONS        ($/SHARE)       UNDERLYING OPTIONS    EXPIRATION DATE
-----------------------  -----------------   ------------   ----------------  --------------------  ----------------
<S>                           <C>                <C>             <C>                  <C>              <C>
Rafi Amit                      20,000            1.2                 3.29              72,000          December 2007
Yotam Stern                    12,000            0.7                 3.29              43,200          December 2007
6 directors and               135,000            7.8             3.29 to 7.5          486,000           May 2004 to
executive officers as a                                                                                December 2007
group
-----------------------  -----------------   ------------   ----------------  --------------------  ----------------
</Table>

OPTIONS EXERCISABLE IN FISCAL YEAR 2001
      The following table sets forth the estimated value as of December 31, 2001
of the exercisable and unexercisable options held by our executive officers.

<Table>
<Caption>
                                NUMBER OF SECURITIES UNDERLYING         VALUE OF UNEXERCISED IN-THE-
                              UNEXERCISED OPTIONS AT YEAR END (#)      MONEY OPTIONS AT YEAR END(1)
                            --------------------------------------   --------------------------------
NAME                            EXERCISABLE       UNEXERCISABLE        EXERCISABLE      UNEXERCISABLE
----                        ------------------  ------------------   ---------------   --------------
<S>                               <C>                <C>                 <C>                <C>
Rafi Amit                         110,000             30,000                  0             6,200
Yotam Stern                        73,333             18,667                  0             3,720
10 directors and executive         47,972            221,088             88,768             3,530
officers as a group
</Table>

----------
      (1)      The value of an "in-the-money" option represents the difference
               between the aggregate fair market value of the ordinary shares
               issuable upon exercise of the option and the aggregate exercise
               price of the option.

DIRECTOR AND EMPLOYEE SHARE OPTIONS

SHARE OPTION PLAN

      In September 1997, our board of directors adopted share option plans, as
amended, under which options for our shares are granted to employees as
determined by the board from time to time. One of the share option plans covers
Israeli employees, while the remaining two share option plans cover employees of
our European, U.S. and Asian subsidiaries. In addition, in November 2000, the
board adopted the Executive Share Option Plan, under which options may be
granted to directors and other executive officers of the company and its
subsidiaries who are not entitled to receive options under the other share
option plans. The share option plans are intended to afford key employees the
opportunity to acquire a proprietary interest in Camtek, thus encouraging them
and also providing them with an incentive to remain in our employ and/or to be
personally involved in our long-term success. The share option plans are
administered by the board of directors which, among other things, is authorized
to designate the recipients of the options, the number of the options to be
granted and the exercise price therefor. The options issued are non-assignable,
except by the laws of descent. The options are exercisable, following a vesting
period, into ordinary shares. However, the ordinary shares issued upon exercise
of options granted under the share option plans for Israel, Europe and under the
Executive Share Option Plan within the first two years after the issuance of the
options are deposited with a trustee and may be released to the employee only at
the expiration of this two year period. The board may also resolve that
non-qualified stock options granted under the share option plan for employees of
the U.S. and Asian subsidiaries and the ordinary shares issued upon the exercise
of those options shall be held by a custodian for such period of time as the
board determines. With respect to options issued to Israeli employees, the
waiting period is a restriction period in accordance with the provisions of the
Israeli Income

                                       35
<Page>

Tax Ordinance and the regulations promulgated thereunder, as amended from time
to time. The share option plan for Israeli employees is subject to the Israeli
Income Tax Ordinance, under which the payment of tax regarding the grant of the
options is delayed so that the recipient is taxed only upon the sale or transfer
of shares into which the options are exercisable. In February 2001 and in
November 2001, our board of directors increased the number of shares issuable
upon exercise of options under our share option plans.

      As of December 31, 2001, there were outstanding options exercisable for
615,148 ordinary shares at an average weighted exercise price of $2.79 per
share, presently unvested options exercisable for 1,104,056 ordinary shares at
an average weighted exercise price of $4.97.

      Three of our directors, Mr. Meir Ben Shoshan, Mr. Haim Horowitz, and Mr.
Eran Bendoly each received options to purchase 6,000 of our ordinary shares of
which 1,667 are vested for each such director, and one of our former directors,
Ms. Riki Granot, has vested options to purchase 1,667 ordinary shares. Our chief
executive officer, Mr. Rafi Amit, and our Executive Vice President, Business and
Strategy, Mr. Yotam Stern have been granted options to purchase 120,000 ordinary
shares and 80,000 ordinary shares, respectively, following our initial public
offering. In December 2001, our Audit Committee and our Board of Directors
approved, subject to the approval of our shareholders, the grant of additional
options to Mr. Rafi Amit for the purchase of 20,000 of our ordinary shares and
the grant of additional options to Mr. Yotam Stern for the purchase of 12,000 of
our ordinary shares. The grant of these options will require the approval of our
shareholders.

ITEM 7.   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

          A.   MAJOR SHAREHOLDERS.

      The following table provides information regarding the beneficial
ownership of our ordinary shares as of May 15, 2002, as to each person or entity
who beneficially owns more than 5.0% of our outstanding ordinary shares. None of
these shareholders has different voting rights than any of the Company's other
shareholders.

<Table>
<Caption>
      NAME                  NUMBER OF ORDINARY SHARES      PERCENTAGE OF ORDINARY SHARES
      -----------------    ---------------------------   ---------------------------------
      <S>                             <C>                                <C>
      Priortech Ltd.(1)               15,123,002                         68.3%
</Table>

      (1) A majority of the voting equity in Priortech Ltd. is subject to a
voting agreement. As a result of this agreement, Messrs. Rafi Amit, Yotam Stern
and Itzhak Krell may be deemed to control Priortech Ltd. The percentages shown
do not give effect to a reduction of 250,000 ordinary shares that are held by
us.

      Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power with
respect to the securities. Except as otherwise indicated, the persons named in
the table have sole voting and investment power with respect to all ordinary
shares held by them. The number of ordinary shares outstanding used in
calculating the percentage for each listed person includes the ordinary shares
underlying options held by such person that are exercisable within 60 days of
May 15, 2002, but excludes ordinary shares underlying options held by any other
person. Percentage ownership is calculated by reference to the 22,138,308
ordinary shares deemed outstanding as of May 15, 2002, and does not give effect
to a reduction of 250,000 ordinary shares that are held by us. All of our
shareholders hold ordinary shares.

          B.   RELATED PARTY TRANSACTIONS

      On January 1, 1998, we entered into a real property lease agreement with
Priortech, which replaced a previous agreement for the lease of an industrial
building to us by Priortech under which we paid Priortech $49,000 in 1997. Under
the lease agreement, we lease from Priortech a building of 7,500 square feet for
a term of four years, at a monthly rental rate of $3,500 plus V.A.T. As of
January 1, 1999, the leased area was increased to 8,600 square feet, and the
monthly rate was increased to $4,000. As of January 1, 2000, the leased area was
increased to 12,400 square feet and the monthly rate was increased to $6,450.
This lease terminated in November 2001.

                                       36
<Page>

      On January 1, 1998, we entered into a services agreement with Priortech
replacing their previous agreement with regard to the provision of services by
Priortech. Under the services agreement, Priortech undertook to provide services
to us, including accounting and bookkeeping, building maintenance, human
resources, payroll, vehicles, maintenance, employee transportation and employee
meals services. Under the services agreement, we are entitled to terminate the
provision of any service received from Priortech by prior written notification
to Priortech. The consideration to be paid by us is generally calculated as a
percentage of Priortech's actual costs in providing these services to both us
and to Priortech itself, whereas the actual percentage paid by us depends on the
relative portion of each service rendered to us out of Priortech's total costs
for each service. The term of the services agreement is four years which
automatically extends for one year periods, unless written notice of termination
is given by one party to the other three months prior to the end of the initial
term or any extension thereof. In 1998, we paid $166,000 to Priortech under this
agreement. No services were provided under this agreement in 1999, 2000 and
2001.

      On January 1, 1998, we entered into a management services agreement with
Priortech, under which we rendered to Priortech the management services of Rafi
Amit, our General Manager, or Chief Executive Officer, and Yotam Stern, our
Executive Vice President, Business and Strategy. Under this agreement, Mr. Amit
has agreed to dedicate not more than 25% of his time to Priortech, where he
serves as General Manager, and Mr. Stern has agreed to dedicate not more than
25% of his time to Priortech, where he serves as Chief Financial Officer. The
management services agreement provided that no employer-employee relationship
shall exist between Priortech and either of Messrs. Amit and Stern, and that we
shall have no liability in connection with their previous employment by
Priortech. In consideration for these management services, Priortech paid us, on
a monthly basis, a portion of our compensation costs with respect to Mr. Amit's
and Mr. Stern's employment, which portion is to be calculated on the basis of
the actual amount of time spent in rendering those services in relation to our
total monthly compensation costs with respect to Mr. Amit's and Mr. Stern's
employment, assuming a full time position of 180 hours per month. Priortech was
charged $37,000 in 1998, $100,000 for management services in 1999, and $100,000
in 2000. The management services agreement with Priortech was terminated, and as
of January 2001, Mr. Amit has been authorized to dedicate not more than 20% of
his time to work for Priortech or any of the Priortech entities, and Mr. Stern
has been authorized to dedicate not more than 25% of his time to work for
Priortech or any of the Priortech entities. Mr. Amit receives 80% of a full time
salary while Mr. Stern receives 75% of a full time salary. Messrs. Amit and
Stern will be compensated directly by each of the Priortech entities for which
they work.

      In January 1988, we entered into an agreement with Priortech, whereby we
undertook to pay Priortech royalties from the sale of our AOI systems for the
printed circuit board industry in exchange for financing provided by Priortech
to us to assist us in product development. Under an agreement dated May 21, 1998
it was mutually agreed that our obligation to pay royalties to Priortech would
end on December 31, 1999. The royalties were based on a percentage of revenues
derived from sales of our AOI systems, which was 0.5% at December 31, 1999.
During 1997, 1998 and 1999 we paid an aggregate of $300,000 in royalties to
Priortech. In addition, Priortech and its affiliates receive beneficial prices
and sales terms which are within the range given to our other multiple-order
customers or other customers that are located near to us.

      From time to time we have made transactions in the ordinary course of
business with Priortech and its affiliates. Our purchases of raw materials, such
as printed circuit boards and assembled printed circuit board from Priortech and
its affiliates, totaled $96,000, $1.6 million and $1.7 million in 1999, 2000 and
2001, respectively. In 2000 and 2001, we sold an aggregate of $698,000 and
$521,000 of AOI systems for the printed circuit boards industry and related
services to Priortech and one of its subsidiaries. In addition, we have
committed to purchase printed circuit boards and assembled printed circuit
boards from a Priortech subsidiary for the development and manufacture of our
systems so long as the price charged is comparable to the best offer we could
obtain from a third party.

      We have a credit facility with Bank Leumi. Any loans we borrow from Bank
Leumi are guaranteed by Priortech.

          C.   INTERESTS OF EXPERTS AND COUNSEL.

      Not Applicable.

                                       37
<Page>

ITEM 8.   FINANCIAL INFORMATION.

          A.   CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION.

      Please see the consolidated financial statements listed in Item 18 for
audited consolidated financial statements prepared in accordance with this Item.

B.    SIGNIFICANT CHANGES.
      There have been no significant changes since the date of the financial
statements included in this annual report.

ITEM 9.   THE OFFER AND LISTING.

          A.   OFFER AND LISTING DETAILS.

PRICE HISTORY OF ORDINARY SHARES.

      Our ordinary shares are quoted on the Nasdaq National Market and on the
Tel Aviv Stock Exchange under the symbol "CAMT". The following tables set forth,
for the periods indicated, high and low closing prices of our ordinary shares as
reported on the Nasdaq National Market since our initial public offering on July
28, 2000:

                                       38
<Page>

                            NASDAQ NATIONAL MARKET
<Table>
<Caption>
                                                    High       Low
                                                  --------   -------
<S>                                               <C>        <C>
Quarterly Market Prices
   Fiscal Year Ended December 31, 2000
     Fourth Quarter (from August 2).............  $   11.5   $   4.5
   Fiscal Year Ended December 31, 2001
     First Quarter..............................       8.9       4.0
     Second Quarter.............................       7.1       4.0
     Third Quarter..............................       5.4       1.9
     Fourth Quarter.............................       3.9       1.6
     Fiscal Year Ended December 31, 2001
     First Quarter..............................       3.9       2.0

Monthly Market Prices
     November 2000..............................  $    9.7   $   6.9
     December 2000..............................       7.4       5.8
     January 2001...............................       8.9       6.2
     February 2001..............................       8.8       6.2
     March 2001.................................       6.6       4.0
     April 2001.................................       4.9       4.0
     May 2001...................................       6.7       4.1
     June 2001..................................       7.1       5.1
     July 2001..................................       5.3       4.6
     August 2001................................       5.4       4.0
     September 2001.............................       3.8       1.9
     October 2001...............................       2.0       1.6
     November 2001..............................       3.0       1.8
     December 2001..............................       3.9       2.7
     January 2002...............................       3.9       3.1
     February 2002..............................       3.0       2.3
     March 2002.................................       2.8       2.0
     April 2002.................................       2.0       1.6
     May 2002...................................
</Table>

Since our ordinary shares were listed on the Tel Aviv Stock Exchange, no shares
have been traded, and our shares have been listed at a price of 10.86 NIS.

          B.   PLAN OF DISTRIBUTION.

               Not applicable.

          C.   MARKETS.

         As noted above, the Company's ordinary shares are traded on the Nasdaq
National Market and on the Tel Aviv Stock Exchange under the Symbol "CAMT".

          D.   SELLING SHAREHOLDERS.

               Not applicable.

          E.   DILUTION.

               Not applicable.

          F.   EXPENSES OF THE ISSUE.

                                       39
<Page>

                Not applicable.

ITEM 10.  ADDITIONAL INFORMATION.

          A.   SHARE CAPITAL.

               Not applicable.

          B.   MEMORANDUM AND ARTICLES.

      Our object under our memorandum is to deal in the manufacture and
marketing of industrial machines in Israel and in any other part of the world.
Our object under our Articles is to conduct any legal business.

      Set forth below is a summary of the material provisions of our Articles
relating to the shares. This description does not purport to be complete and is
qualified on its entirety by reference to the Articles.

      Our authorized share capital consists of 100,000,000 ordinary shares, par
value NIS 0.01 per share.

          ORDINARY SHARES

      The ordinary shares do not have preemptive rights. The ownership and
voting of ordinary shares by non-residents of Israel are not restricted in any
way by our memorandum of association or Articles or by the laws of the State of
Israel. Under the Companies Law, Israeli companies may purchase or hold their
own shares subject to the same conditions that apply to distribution of
dividends. These shares do not confer any rights whatsoever for as long as they
are held by the company. Additionally, a subsidiary may purchase or hold shares
of its parent company to the same extent that the parent company is entitled to
purchase its own shares and these shares do not confer any voting rights for as
long as they are held by the subsidiary.

          ACTION NECESSARY TO CHANGE RIGHTS OF SHAREHOLDERS

      Holders of ordinary shares have one vote for each ordinary share held on
all matters submitted to a vote of the shareholders. These voting rights may be
affected by the grant of special voting rights to the holders of any class of
shares with preferential rights that may be authorized in the future.

          MEETINGS OF SHAREHOLDERS

      An annual meeting of the shareholders must be held every year and not
later than 15 months following the last annual meeting. A special meeting of the
shareholders may be convened by the board of directors at its decision or upon
the demand of any of: (1) two of the directors or 25% of the then serving
directors, whichever is fewer; (2) shareholders owning at least 5% of the issued
share capital and at least 1% of the voting rights in the company; or (3)
shareholders owning at least 5% of the voting rights in the company. If the
board does not convene a meeting upon a valid demand of any of the above, then
whoever made the demand, and in the case of shareholders, those shareholders
holding more than half of the voting rights of the persons making the demand,
may, not later than three months after having made the demand, convene a meeting
of the shareholders. Alternatively, upon application by the individuals making
the demand, a court may order that a meeting be convened. The quorum required
for a meeting of shareholders consists of at least two shareholders present in
person or by proxy who hold or represent together at least 33 1/3% of the issued
shares of the company which entitle the holders thereof to participate and vote
at shareholders' meetings. A meeting adjourned due to lack of a quorum is
generally adjourned to the same day in the following week at the same time and
place or any time and place as the directors designate in a notice to the
shareholders. If a quorum is not present at the deferred meeting, the meeting
may be held with any number of participants. However, if the meeting was
convened following a demand by the shareholders, the quorum will be that minimum
number of shareholders authorized to make the demand.

                                       40
<Page>

      In any shareholders' meeting, a shareholder can vote either in person or
by proxy. General meetings of shareholders will be held in Israel, unless
decided otherwise by our board.

      Most resolutions at a shareholders' meeting may be passed by a simple
majority. Resolutions requiring special voting procedures include the
appointment of outside directors and approval of transactions with controlling
shareholders.

      Under the Companies Law, a shareholder has a duty to act in good faith and
in a customary manner in exercising his rights and duties towards the company
and other shareholders, to refrain from prejudicing the rights of other
shareholders and to refrain from abusing his power in the company. The rights
and duties include, among other things, in voting at the general meeting of the
shareholders on the following matters: (1) amendments to the articles; (2) an
increase in the company's authorized share capital; (3) a merger; or (4) an
approval of those related party transactions that require shareholder approval.

      In addition, any shareholder who: (1) knows that it possesses power to
determine the outcome of a shareholder vote; (2) under the provisions of the
articles, has the power to appoint or to prevent the appointment of an office
holder in the company; or (3) controls the company in any other way, is under a
duty to act in fairness towards the company.

               C.  MATERIAL CONTRACTS.

               None.

               D.  EXCHANGE CONTROLS.

      Nonresidents of Israel who purchase our shares may exchange any NIS
received as dividends, if any, thereon, and any amounts payable upon the
dissolution, liquidation or winding up of our affairs, as well as the proceeds
of any sale in Israel of the ordinary shares to an Israeli resident, into freely
repatriable dollars, at the rate of exchange prevailing at the time of exchange,
pursuant to regulations issued under the Currency Control Law, 1978, provided
that Israeli income tax has been withheld with respect to amounts that are being
repatriated to the extent applicable or an exemption has been obtained. Israeli
residents are eligible, subject to reporting requirements, to purchase
securities in foreign currencies and will be eligible to purchase the ordinary
shares offered hereby.

               E.  TAXATION.

U.S. FEDERAL INCOME TAX CONSIDERATIONS REGARDING SHARES ACQUIRED BY U.S.
TAXPAYERS

      Subject to the limitations described herein, this discussion summarizes
the material U.S. federal income tax consequences of the purchase, ownership and
disposition of ourordinary shares to a U.S. holder. A U.S. holder is

          / /  an individual citizen or resident of the United States;
          / /  a corporation or another entity taxable as a corporation
               created or organized under the laws of the United States or any
               political subdivision thereof;
          / /  an estate, the income of which is includable in gross income
               for United States federal income tax purposes regardless of its
               source; or
          / /  a trust, if a U.S. court is able to exercise primary  supervision
               over its administration and one or more United States persons who
               have the authority to control all of its substantial decisions.

                                       41
<Page>

      Unless otherwise specifically indicated, this discussion does not consider
the United States tax consequences to a person that is not a U.S. holder and
considers only U.S. holders that will own the ordinary shares as capital assets.

      This discussion is based on current provisions of the Internal Revenue
Code of 1986, as amended, referred to as the Code, current and proposed Treasury
regulations promulgated under the Code and administrative and judicial
interpretations of the Code, all as in effect today and all of which are subject
to change, possibly with a retroactive effect. This discussion does not address
all aspects of U.S. federal income taxation that may be relevant to any
particular U.S. holder based on the U.S. holder's particular circumstances, like
the tax treatment of U.S. holders who are broker-dealers or who own, directly,
indirectly or constructively, 10% or more of our outstanding voting shares, U.S.
holders holding the ordinary shares as part of a hedging, straddle or conversion
transaction, U.S. holders whose functional currency is not the U.S. dollar,
insurance companies, tax-exempt organizations, financial institutions and
persons subject to the alternative minimum tax, who may be subject to special
rules not discussed below. Additionally, the tax treatment of persons who hold
the ordinary shares through a partnership or other pass-through entity is not
considered, nor is the possible application of U.S. federal estate or gift taxes
or any aspect of state, local or non-U.S. tax laws.

      YOU ARE ADVISED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE SPECIFIC
U.S. FEDERAL, STATE, LOCAL AND FOREIGN INCOME TAX CONSEQUENCES TO YOU OF
PURCHASING, HOLDING OR DISPOSING OF OUR ORDINARY SHARES.

TAXATION ON DISTRIBUTIONS ON THE ORDINARY SHARES

      The amount of a distribution with respect to the ordinary shares will
equal the amount of cash and the fair market value of any property distributed
and will also include the amount of any Israeli taxes withheld as described
below under "Israeli Taxation-Taxation of Non-Residents on Receipt of
Dividends." A distribution paid by us with respect to the ordinary shares to a
U.S. holder will be treated as ordinary dividend income to the extent that the
distribution does not exceed our current and accumulated earnings and profits,
as determined for U.S. federal income tax purposes. The amount of any
distribution which exceeds these earnings and profits will be treated first as a
non-taxable return of capital, reducing the U.S. holder's tax basis in its
ordinary shares to the extent thereof, and then as capital gain from the deemed
disposition of the ordinary shares. Corporate holders will not be allowed a
deduction for dividends received in respect of the ordinary shares.

      Dividends paid by us in NIS will be included in the income of U.S. holders
at the dollar amount of the dividend, based upon the spot rate of exchange in
effect on the date of the distribution. U.S. holders will have a tax basis in
the NIS for U.S. federal income tax purposes equal to that dollar value. Any
subsequent gain or loss in respect of the NIS arising from exchange rate
fluctuations will be taxable as ordinary income or loss and will be U.S. source
income or loss.

      Subject to the limitations set forth in the Code and the Treasury
regulations thereunder, U.S. holders may elect to claim as a foreign tax credit
against their U.S. federal income tax liability the Israeli income tax withheld
from dividends received in respect of the ordinary shares. The limitations on
claiming a foreign tax credit include, among others, computation rules under
which foreign tax credits allowable with respect to specific classes of income
cannot exceed the U.S. federal income taxes otherwise payable with respect to
each such class of income. In this regard, dividends paid by us will be foreign
source "passive income" for U.S. foreign tax credit purposes or, in the case of
a financial services entity, "financial services income." U.S. holders that do
not elect to claim a foreign tax credit may instead claim a deduction for the
Israeli income tax withheld. The rules relating to foreign tax credits are
complex, and you should consult your tax advisor to determine whether and to
what extent you would be entitled to this credit.

TAXATION ON DISPOSITION OF THE ORDINARY SHARES

      Upon the sale or exchange of the ordinary shares, a U.S. holder will
recognize capital gain or loss in an amount equal to the difference between the
amount realized on the sale or exchange and the U.S. holder's tax basis in the
ordinary shares. The gain or loss recognized on the sale or exchange of the
ordinary shares will be long-term capital gain or loss if the U.S. holder held
the ordinary shares for more than one year at the time of the sale or

                                       42
<Page>

exchange. Gain or loss recognized by a U.S. holder on a sale, exchange or other
disposition of ordinary shares will be treated as U.S. source income or loss for
U.S. foreign tax credit purposes.

TAX CONSEQUENCES IF WE ARE A PASSIVE FOREIGN INVESTMENT COMPANIES

      We will be a passive foreign investment company, or PFIC, if either (1)
75% or more of our gross income in a taxable year is passive income; or (2) 50%
or more of the value, determined on the basis of a quarterly average, of our
assets in a taxable year are held for the production of passive income. If we
own (directly or indirectly) at least 25% by value of the stock of another
corporation, we will be treated for purposes of the foregoing tests as owning
our proportionate share of the other corporation's assets and as directly
earning our proportionate share of the other corporation's income. If we are a
PFIC, a U.S. holder must determine under which of three alternative taxing
regimes it wishes to be taxed:

      -    The "QEF" regime applies if the U.S. holder elects to treat us as a
           "qualified electing fund" ("QEF") for the first taxable year in which
           the U.S. holder owns our ordinary shares or in which we are a PFIC,
           whichever is later, and if we comply with certain reporting
           requirements. If the QEF regime applies, then each year that we are a
           PFIC such U.S. holder will include in its gross income a
           proportionate share of the our ordinary earnings (which is taxed as
           ordinary income) and net capital gain (which is taxed as long-term
           capital gain), subject to a separate election to defer payment of
           taxes, which deferral is subject to an interest charge. These amounts
           would be included in income by an electing U.S. holder for its
           taxable year in which our taxable year ends, whether or not such
           amounts are actually distributed to the U.S. holder. A U.S. holder's
           basis in our ordinary shares for which a QEF election has been made
           would be increased to reflect the amount of any taxed but
           undistributed income. Generally, a QEF election allows an electing
           U.S. holder to treat any gain realized on the disposition of his
           ordinary shares in the PFIC as capital gain.

           Once made, the QEF election applies to all subsequent taxable years
           of the U.S. holder in which it holds our ordinary shares and for
           which we are a PFIC and can be revoked only with the consent of the
           Internal Revenue Service. A shareholder makes a QEF election by
           attaching a completed Internal Revenue Service Form 8621, including
           the PFIC annual information statement, to a timely filed United
           States federal income tax return. Even if a QEF election is not made,
           a U.S. person who is a shareholder in a PFIC must file a completed
           Internal Revenue Service Form 8621 every year.

           If a QEF election is not made for the first taxable year in which a
           U.S. holder holds our ordinary shares and we are a PFIC, then special
           rules would apply.

      -    A second regime, the "mark-to-market" regime, may be elected so long
           as our ordinary shares are publicly traded. Pursuant to this regime,
           an electing U.S. holder's ordinary shares are marked-to-market each
           year and the U.S. holder recognizes as ordinary income or loss an
           amount equal to the difference as of the close of the taxable year
           between the fair market value of our ordinary shares and the U.S.
           holder's adjusted tax basis in our ordinary shares. Losses are
           allowed only to the extent of net mark-to-market gain previously
           included by the U.S. holder under the election for prior taxable
           years. An electing U.S. holder's adjusted basis in our ordinary
           shares is increased by income recognized under the mark-to-market
           election and decreased by the deductions allowed under the election.

           Under the mark-to-market election, gain on the sale of our ordinary
           shares is treated as ordinary income, and loss on the sale of our
           ordinary shares, to the extent the amount of loss does not exceed the
           net mark-to-market gain previously included, is treated as ordinary
           loss. The mark-to-market election applies to the tax year for which
           the election is made and all later tax years, unless the ordinary
           shares cease to be marketable or the Internal Revenue Service
           consents to the revocation of the election.

           If the mark-to-market election is not made for the first taxable year
           in which a U.S. holder holds

                                       43
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           our ordinary shares and we are a PFIC, then special rules would
           apply.

      -    A U.S. holder making neither the QEF election nor the mark-to-market
           election is subject to the "excess distribution" regime. Under this
           regime, "excess distributions" are subject to special tax rules. An
           excess distribution is either (1) a distribution with respect to
           ordinary shares that is greater than 125% of the average
           distributions received by the U.S. holder from us over the shorter of
           either the preceding three years or such U.S. holder's holding period
           for our ordinary shares, or (2) 100% of the gain from the disposition
           of our ordinary shares.

           Excess distributions must be allocated ratably to each day that a
           U.S. holder has held our ordinary shares. A U.S. holder must include
           amounts allocated to the current taxable year in its gross income as
           ordinary income for that year. All amounts allocated to prior years
           of the U.S. holder would be taxed at the highest tax rate for each
           such prior year applicable to ordinary income. The U.S. holder also
           would be liable for interest on the deferred tax liability for each
           such prior year calculated as if such liability had been due with
           respect to each such prior year. A U.S. holder that is an individual
           is not allowed a deduction for interest on the deferred tax
           liability. The portions of gains and distributions that are not
           characterized as "excess distributions" are subject to tax in the
           current year under the normal tax rules of the Code.

           A U.S. person who inherits shares in a foreign corporation that was a
           PFIC in the hands of the decedent (who did not make either of the
           elections described above), is denied the otherwise available step-up
           in the tax basis of such shares to fair market value at the date of
           death. The U.S. person steps into the shoes of the decedent and will
           be subject to the rules described above.

      We believe that in 2001 we were not a PFIC and currently we expect that we
will not be a PFIC in 2002. However, PFIC status is determined as of the end of
the taxable year and is dependent on a number of factors, including the value of
a corporation's assets and the amount and type of its gross income. Therefore,
there can be no assurance that we will not become a PFIC for the current fiscal
year ending December 31, 2002 or in a future year. We will notify U.S. holders
in the event we conclude that we will be treated as a PFIC for any taxable year
to enable U.S. holders to consider whether or not to elect to treat us as a QEF
for U.S. federal income tax purposes or to "mark to market" the ordinary shares
or to become subject to the "excess distribution" regime.

      U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE
APPLICATION OF THE PFIC RULES, INCLUDING ELIGIBILITY FOR AND THE MANNER AND
ADVISABILITY OF MAKING, THE QEF ELECTION OR THE MARK-TO-MARKET ELECTION.

BACKUP WITHHOLDING

      A U.S. holder may be subject to backup withholding at rate of up to 30%
with respect to dividend payments and receipt of the proceeds from the
disposition of the ordinary shares. Backup withholding will not apply with
respect to payments made to exempt recipients, including corporations and
tax-exempt organizations, or if a U.S. holder provides a correct taxpayer
identification number (or certifies that he has applied for a taxpayer
identification number), certifies that such holder is not subject to backup
withholding or otherwise establishes an exemption. Backup withholding is not an
additional tax and may be claimed as a credit against the U.S. federal income
tax liability of a U.S. holder, or alternatively, the U.S. holder may be
eligible for a refund of any excess amounts withheld under the backup
withholding rules, in either case, provided that the required information is
furnished to the Internal Revenue Service.

NON-U.S. HOLDERS OF ORDINARY SHARES

      Except as provided below, a non-U.S. holder of ordinary shares except
certain former U.S. citizens and long-term residents of the United States will
not be subject to U.S. federal income or withholding tax on the receipt of
dividends on, and the proceeds from the disposition of, an ordinary share,
unless that item is effectively connected with the conduct by the non-U.S.
holder of a trade or business in the United States or, in the case of a resident
of a country which has an income tax treaty with the United States, that item is
attributable to a permanent
                                       44
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establishment in the United States or, in the case of an individual, a fixed
place of business in the United States. In addition, gain recognized by an
individual non-U.S. holder will be subject to tax in the United States if the
non-U.S. holder is present in the United States for 183 days or more in the
taxable year of the sale and other conditions are met.

      Non-U.S. holders will not be subject to information reporting or backup
withholding with respect to the payment of dividends on ordinary shares unless
the payment is made through a paying agent, or an office of a paying agent, in
the United States. Non-U.S. holders will be subject to information reporting
and, under regulations generally effective January 1, 2001, to backup
withholding at a rate of up to 30% with respect to the payment within the United
States of dividends on the ordinary shares unless the holder provides its
taxpayer identification number, certifies to its foreign status, or otherwise
establishes an exemption.

      Non-U.S. holders will be subject to information reporting and backup
withholding at a rate of up to 30% on the receipt of the proceeds from the
disposition of the ordinary shares to, or through, the United States office of a
broker, whether domestic or foreign, unless the holder provides a taxpayer
identification number, certifies to its foreign status or otherwise establishes
an exemption. Non-U.S. holders will not be subject to information reporting or
backup withholding with respect to the receipt of proceeds from the disposition
of the ordinary shares by a foreign office of a broker; provided, however, that
if the broker is a U.S. person or a "U.S. related person," information reporting
(but not backup withholding) will apply unless the broker has documentary
evidence in its records of the non-U.S. holder's foreign status or the non-U.S.
holder certifies to its foreign status under penalties of perjury or otherwise
establishes an exemption. For this purpose, a "U.S. related person" is a broker
or other intermediary that maintains one or more enumerated U.S. relationships.
Backup withholding is not an additional tax and may be claimed as a credit
against the U.S. federal income tax liability of a non-U.S. holder, or
alternatively, the non-U.S. holder may be eligible for a refund of any excess
amounts withheld under the backup withholding rules, in either case, provided
that the required information is furnished to the Internal Revenue Service.

      ISRAELI TAXATION

      The following summary describes the current tax structure applicable to
companies in Israel, with special reference to its effect on us. It also
discusses Israeli tax consequences material to persons purchasing our ordinary
shares. To the extent that the summary is based on new tax legislation yet to be
judicially or administratively interpreted, we cannot be sure that the views
expressed will accord with any future interpretation. The summary is not
intended, and should not be construed, as specific professional advice and does
not exhaust all possible tax considerations. Accordingly, you should consult
your tax advisor as to the particular tax consequences of an investment in our
ordinary shares.

POSSIBLE TAX REFORM

      A proposed bill adopting tax reform proposals was introduced in July 2000
to the Israeli legislature. Legislation implementing this bill, which would have
reduced or eliminated some of the benefits granted to Approved Enterprises and
would have altered the taxation of individuals, has not been enacted. In
February 2002, due to significant political and economic changes, the Minister
of Finance appointed a new committee to reconsider and make new recommendations
on tax reform. The recommendations of this committee were adopted in principle
by the Israeli government in June 2002. These recommendations would, among other
things, alter the taxation of individuals and of capital gains. Legislation will
be required to implement any tax reform recommendations. We cannot be certain
whether any of the proposed reforms will be adopted, when they will be adopted
or what form any reform will ultimately take.

TAXATION OF CAMTEK

GENERAL CORPORATE TAX STRUCTURE

      Most Israeli companies are subject to corporate tax at the rate of 36% of
their taxable income. In our case, the rate is currently effectively reduced, as
set forth below.

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TAXATION UNDER INFLATIONARY CONDITIONS

      The Income Tax Law (Inflationary Adjustments), 1985, or the "Inflationary
Adjustments Law," is intended to neutralize the erosion of capital investments
and to prevent tax benefits resulting from deduction of inflationary expenses.
This law applies a supplementary set of inflationary adjustments to the normal
taxable profits and losses computed under the regular cost principles. We are
subject to tax under this law.

      Under the Inflationary Adjustments Law, income and loss for tax purposes
are adjusted for inflation on the basis of changes in the Israeli consumer price
index. In addition, subject to limitations regarding depreciation of fixed
assets and losses carried forward are adjusted for inflation on the basis of
changes in the Israeli consumer price index. Under a recent amendment to the
Inflationary Adjustment Law, the Minister of Finance is authorized, with the
approval of the Finance Committee of the Israeli parliament, to suspend the
application of the Inflationary Adjustment Law for any particular year if the
rate of inflation for that year was not higher than 3%. In 2001, the
Inflationary Adjustment Law was not suspended.

LAW FOR THE ENCOURAGEMENT OF CAPITAL INVESTMENTS, 1959

      GENERAL. The Law for Encouragement of Capital Investments, 1959 provides
that capital investments in a production facility (or other eligible assets)
may, upon approval by the Israel Investment Center, be designated as an Approved
Enterprise. Each certificate of approval for an Approved Enterprise relates to a
specific investment program, delineated both by the financial scope of the
investment and by the physical characteristics of the facility or the asset. The
tax benefits from any such certificate of approval relate only to taxable
profits attributable to the specific Approved Enterprise. An Approved Enterprise
is entitled to benefits, including Israeli Government cash grants, which are
made available if it is located in a government designated development area, and
tax benefits. As discussed below, our production facilities have been granted
Approved Enterprise status.

      TAX BENEFITS. Taxable income derived from an Approved Enterprise is
subject to a reduced corporate tax rate of 25% until the earlier of

      / /  the end of the seven year period (or ten in the case of a Foreign
           Investment Company as defined below) commencing in the year in which
           the Approved Enterprise first generates taxable income;
      / /  the end of the 12-year period from commencement of production; or
      / /  the end of the 14-year  period from the date of approval of the
           Approved Enterprise status.

      That income is eligible for further reductions in tax rates if the company
qualifies as a Foreign Investors' Company, or Foreign Investment Company,
depending on the percentage of the foreign ownership of its equity. A Foreign
Investment Company is a company more than 25% of whose share capital (in terms
of shares, rights to profits, voting and appointment of directors) and loan
capital is owned by non-Israeli residents. The tax rate is reduced to 20% if the
foreign ownership of the foreign investment company is 49% or more but less than
74%; 15% if the foreign ownership of the foreign investment company is 74% or
more but less than 90%; and 10% if the foreign ownership of the foreign
investment company is 90% or more. The determination of foreign ownership is
made on the basis of the lowest level of foreign ownership during the tax year.

      In the event that a company is operating under more than one approval, or
that not all of its capital investments are approved, its effective corporate
tax rate is the result of a weighted combination of the various applicable
rates.

      A company may elect to forego entitlement to the grants otherwise
available under the Investment Law and, in lieu thereof, participate in an
alternative benefits program, referred to as the Alternative Benefits Program,
under which the undistributed income from the Approved Enterprise is fully
exempt from corporate tax for a period of between two and ten years, depending
upon the location within Israel and the type of the Approved Enterprise. Upon
expiration of the exemption period, the Approved Enterprise is eligible for
beneficial tax rates under the Investment Law for the remainder, if any, of the
otherwise applicable benefits period. We participate in the Alternative Benefits
Program. There can be no assurance that this benefit program will continue to be
available or that we will continue to qualify for benefits under the current
program.

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<Page>

      Dividends paid by a company that owns an Approved Enterprise and that are
attributable to income derived from that Approved Enterprise during the
applicable benefits period, are taxed at a reduced rate of 15%, if the dividends
are paid during the benefit period or no more than twelve years thereafter; or,
if the Company qualifies as a foreign investment company without any time
limitations. This tax must be withheld at source by the company paying the
dividend. A dividend paid from income derived from an enterprise owned by a
company that has elected the Alternative Benefits Program during the period in
which it is exempt from tax is also subject to tax at a 15% rate but causes the
company to be liable for corporate tax on the amount distributed which for this
purpose includes the amount of the corporate tax at the rate that would have
been applicable had the company not elected the Alternative Benefits Program of
up to 25%.

      Our production facilities are the subject of several "investment programs"
that have been granted "Approved Enterprise" status under the Investment Law. We
participate in the Alternative Benefits Program and, accordingly, income from
our first Approved Enterprise will be tax exempt for 10 years due to the fact
that we operate in "Zone A". This tax exempt status commences in the year in
which our Approved Enterprise first generates taxable income. The period of
benefits expired in December 1999 for our first Approved Enterprise and will
expire in 2008 for our latest Approved Enterprise.

      Since we participate in the Alternative Benefits Program, in the event we
distribute a cash dividend from income that is tax exempt, as described above,
we would have to pay corporate tax at the rate of up to 25% on an amount equal
to the amount distributed and the corporate tax thereon.

      The benefits available to an Approved Enterprise are conditioned upon
terms stipulated in the Investment Law and the regulations thereunder and the
criteria set forth in the applicable certificate of approval. These conditions
include the filing of periodic reports and a requirement that minimum
proportions of our paid-up capital be 30% of our fixed assets. In the event that
we do not fulfill these conditions in whole or in part, the benefits can be
canceled and we may be required to refund the amount of the benefits, with the
addition of the Israeli consumer price index linkage differences and interest.
We believe that our Approved Enterprises currently operate in compliance with
all applicable conditions and criteria, but there can be no assurance that they
will continue to do so. These programs and tax benefits may not be continued in
the future at their current levels or at any level or our requests for future
participation in these programs may not be approved. Furthermore, in July 2000,
a proposed bill adopting tax reform proposals, which could have reduced or
eliminated some of the benefits we receive as a result of our Approved
Enterprise status, was introduced to the Israeli legislature. Legislation
implementing this bill has not been enacted. In February 2002, the Minister of
Finance appointed a new committee to reconsider and make new recommendations on
the tax reforms. The recommendations of this committee, which were adopted in
principle by the Israeli government in June 2002, do not propose to reduce the
benefits we receive as a result of our Approved Enterprise status. Legislation
will be required to implement any recommendations made by this committee as
well. We cannot be certain whether any of the proposed reforms will be adopted,
when they will be adopted or what form they will take.

LAW FOR THE ENCOURAGEMENT OF INDUSTRY (TAXES), 1969

      We believe that we currently qualify as an "Industrial Company" within the
meaning of the Law for the Encouragement of Industry (Taxes), 1969, or the
Industry Encouragement Law. According to the Industry Encouragement Law, an
"Industrial Company" is a company resident in Israel, 90% or more of the income
of which in any tax year, other than of income from defense loans, capital
gains, interest and dividends, is derived from an "Industrial Enterprise" owned
by it. An "Industrial Enterprise" is defined as an enterprise whose major
activity in a given tax year is industrial production.

      The following corporate tax benefits are available to Industrial
Companies:

      / /  amortization of the cost of purchased know-how and patents over an
           eight-year period for tax purposes;
      / /  amortization of expenses incurred in some cases in connection with a
           public issuance of securities over a three-year period;
      / /  an election to file consolidated tax returns with additional related
           Israeli Industrial Companies; and
      / /  accelerated depreciation rates on equipment and buildings.

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<Page>

      Eligibility for the benefits under the Industry Encouragement Law is not
subject to receipt of prior approval from any governmental authority. No
assurance can be given that we qualify or will continue to qualify as an
"Industrial Company" or that the benefits described above will be available in
the future. See notes to the consolidated financial statements.

LAW FOR THE ENCOURAGEMENT OF INDUSTRIAL RESEARCH AND DEVELOPMENT, 1984

      Under the Law for the Encouragement of Industrial Research and
Development, 1984, research and development programs approved by a governmental
committee of the Office of the Chief Scientist are eligible for grants, in
exchange for payment of royalties from revenues generated by the products
developed in accordance with the program. Once a project is approved, the Office
of the Chief Scientist will award grants up to 50% of the project's cost, in
exchange for royalties at a rate of 2% to 6%, depending on the date of approval
of the project, of the proceeds from the sales of the products that are
developed from projects funded by the Office of the Chief Scientist. These
royalties must be paid beginning with the commencement of sales of those
products and ending when 100% of the dollar value of the grant was repaid or,
for projects approved after January 1, 1999, the dollar amount of the grant plus
interest at the rate LIBOR for dollar deposits in a twelve-month period.

      The terms of this Israeli governmental participation also require that the
products developed with government grants be manufactured in Israel, unless the
Office of the Chief Scientist in its discretion consents to manufacturing
abroad. However, in the event that any of the manufacturing rights are
transferred out of Israel, if approved by the Office of the Chief Scientist, we
may be required to pay royalties at a higher rate and be liable to an increased
aggregate pay back amount in proportion to manufacturing performed outside of
Israel, up to a maximum of 300% of the dollar amount of the grant, or of the
dollar amount plus interest, as applicable. The technology developed pursuant to
the terms of these grants may not be transferred to third parties without the
prior approval of a governmental committee. This approval is not required for
the export of any products resulting from that research development. Approval of
the transfer of technology may be granted only if the recipient abides by all of
the provisions of the research law and regulations promulgated thereunder,
including the restrictions on the transfer of know-how and the obligation to pay
royalties in an amount that may be increased. There can be no assurance that
this consent, if requested, will be granted. An amendment to this law is now in
the process of legislation. The proposed amendment would enable the transfer of
technology supported by Chief Scientist grants, subject to certain payment
conditions, and change the conditions for the transfer of manufacturing out of
Israel. The amendment may also enable a company to be completely released from
the provisions of this law, subject to the payment of a lump-sum redemption. We
cannot be certain, however, whether or when the proposed legislation will be
enacted or what form this legislation will ultimately take.

      Each application to the Office of the Chief Scientist is reviewed
separately, and grants are based on the program approved by the research
committee of the Office of the Chief Scientist. Expenditures supported under
other incentive programs of the State of Israel are not eligible for Office of
the Chief Scientist grants.

      In March 2001, we reached an arrangement with the Chief Scientist whereby
we have to repay the outstanding balance of the grants we received, not
including grants received by Inspectech prior to its merger into us, at a
quarterly rate equal to 4.5% of the revenues derived in connection with products
we develop as a result of research and development funded by Chief Scientist
participations, up to a maximum amount of $250,000 per quarter. We did not apply
for additional grants from the Office of the Chief Scientist in 2001. As of
December 31, 2001, the outstanding balance of the grants was approximately $1.6
million, including approximately $500,000 in grants received by Inspectech prior
to its merger into us. As of December 31, 2001, the maximum royalty payable by
us on future sales was approximately $1.6 million. Our annual repayments were
$956,000 in 1999, $2.4 million in 2000 and $1.1 million in 2001.

TAXATION OF SHAREHOLDERS CAPITAL GAINS TAX

      Israeli law imposes a capital gains tax on the sale of capital assets. The
law distinguishes between the "Real Gain" and the "Inflationary Surplus." The
Real Gain is the difference between the total capital gain and the Inflationary
Surplus. The Inflationary Surplus is computed on the basis of the difference
between the Israeli consumer price index in the month of sale and the month of
purchase. The Inflationary Surplus accumulated until

                                       48
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December 31, 1993 is taxed at a rate of 10% for Israeli residents. The tax rate
used for the Inflationary Surplus is reduced to zero for nonresidents if
calculated according to the exchange rate of the foreign currency lawfully
invested in shares of the Israeli resident company, instead of the Israeli
consumer price index. The Real Gain is added to ordinary income, and is taxed at
ordinary rates of up to 50% for individuals and 36% for corporations. If the tax
reform recommendations adopted in principle by the Israeli government in June
2002 are legislated into law, these rates would be reduced to 25% for both
individuals and corporations. Inflationary Surplus accumulated from and after
December 31, 1993 is exempt from capital gains tax. Under current law, sales of
our ordinary shares by anyone who is not a dealer in securities in Israel and is
not a company that is subject to the Inflationary Adjustments Law are exempt
from Israeli capital gains tax so long as the ordinary shares are traded on the
Tel Aviv Stock Exchange, and, provided we continue to qualify as an Industrial
Company or industrial holding company, so long as they are listed on the Nasdaq
National Market or on another stock exchange recognized by the Israeli Ministry
of Finance. There can be no assurance that we will maintain this listing or
qualification. See "Law for Encouragement of Industry (Taxes), 1969." If the tax
reform recommendations adopted in principle by the Israeli government in June
2002 are legislated into law, foreign residents will be exempt from capital
gains tax on sales of securities traded on Israeli stock exchanges and Israeli
residents may become subject to capital gains tax at different rates. We cannot
be certain, however, if tax reform recommendations will be adopted, when they
will be adopted and what form any reform may take.

APPLICATION OF THE U.S.-ISRAEL TAX TREATY TO CAPITAL GAINS TAX

      Subject to the U.S.-Israel Tax Treaty, the sale, exchange or disposition
of the ordinary shares by a person who qualifies as a resident of the United
States and who is entitled to claim the benefits afforded to that resident,
which is called a Treaty U.S. Resident, will not be subject to Israeli capital
gains tax unless that Treaty U.S. Resident held, directly or indirectly, shares
representing 10% or more of our voting power during any part of the 12-month
period preceding the sale, exchange or disposition. A sale, exchange or
disposition of the ordinary shares by a Treaty U.S. Resident who held, directly
or indirectly, shares representing 10% or more of our voting power at any time
during the 12-month period preceding the sale, exchange or disposition will be
subject to Israeli capital gains tax, to the extent applicable. However, under
the U.S.-Israel Tax Treaty, this Treaty U.S. Resident would be permitted to
claim credit for these taxes against U.S. income tax imposed with respect to
such sale, exchange or disposition, subject to the limitations set in U.S. laws
applicable to foreign tax credits.

TAXATION OF NON-RESIDENTS ON RECEIPT OF DIVIDENDS

      Nonresidents of Israel will be subject to Israeli income tax on the
receipt of dividends paid on the ordinary shares at the rate of 25%, which tax
will be withheld at source, unless the dividends are paid from income derived
from an approved enterprise during the applicable benefit period, or a different
rate is provided in a treaty between Israel and the shareholder's country of
residence. Under the U.S.-Israel Tax Treaty, the maximum tax on dividends paid
to a holder of the ordinary shares who is a Treaty U.S. Resident will be 25%.
However, when dividends are paid from income derived during any period for which
the Israeli company is not entitled to the reduced tax rate applicable to an
approved enterprise under Israel's Law for the Encouragement of Capital
Investments, 1959, the maximum tax will be 12.5% if the holder is a company
holding shares representing 10% or more of the voting power during the part of
the taxable year preceding the date of payment of dividends and during the whole
of its prior taxable year, if any. When dividends are paid from income derived
during any period for which the Israeli company is entitled to the reduced tax
rate applicable to an approved enterprise, then the tax will be 15%.

          F.   DIVIDENDS AND PAYING AGENTS.

          Not applicable.

          G.   STATEMENT BY EXPERTS.

          Not  applicable.

          H.   DOCUMENTS ON DISPLAY.

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      We have filed this annual report with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended. Statements
made in this annual report as to the contents of any contract, agreement or
other document referred to herein are not necessarily complete. With respect to
each such contract, agreement or other document filed as an exhibit to this
annual report, reference is made to the exhibit for a more complete description
of the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.

      We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and file reports and other information with
the Securities and Exchange Commission. Reports and other information which we
file with the Securities and Exchange Commission, including this annual report,
may be inspected and copied at the public reference facilities of the Securities
and Exchange Commission at:

     450 Fifth Street N.W.                       500 West Madison Street
           Room 1024                                     Suite 1400
     Washington D.C. 20549                       Chicago, Illinois 60661

      Copies of this material can also be obtained by mail from the Public
Reference Section of the Securities and Exchange Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. Additionally, copies of this
material may also be obtained from the Securities and Exchange Commission's
Internet site at http://www.sec.gov. The Commission's telephone number is
1-800-SEC-0330. Documents filed in Canada are available at the website of the
Canadian System for Election and Document Analysis and Retrieval (SEDAR) at
http://www.sedar.com.

          I.   SUBSIDIARY INFORMATION.

      Not applicable.

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

      INTEREST RATE RISK

      We currently do not hold or invest in derivative financial instruments for
trading or other purposes and, as of December 31, 2001, we had no outstanding
derivative financial instruments of any kind. We have no material market risk
exposure of the type contemplated by Item 11, and, therefore, no quantitative
tabular disclosures are required.

      Our non-NIS denominated loans bear interest based on the LIBOR, and our
NIS denominated loans are based on the Israeli prime interest rate. From time to
time, we use short-term loans. As of December 31, 2001, our short-term loans
were mainly NIS denominated.

      Most of our investments are in highly rated corporate bonds for terms of
up to 18 months and bear fixed interest rates. We generally hold these bonds to
the date of maturity, and, therefore, financial income from these investments
are not sensitive to interest changes over the holding period of the bonds.

      FOREIGN CURRENCY RATE FLUCTUATIONS.

      Our production facility is located in Israel, and most of our
manufacturing and other headquarter expenses are in NIS. An evaluation of the
NIS against the U.S. dollar, our reporting currency, will expose us to higher
expenses in U.S. dollars and may influence our profitability. A significant
portion of our sales are derived from the Far East and from Europe and are
primarily denominated in U.S. dollars. A devaluation of the local currency
against the U.S. dollar may cause our product to become less competitive and may
lead to a reduction of prices. Our experience shows that these influences are
not material, and, therefore, no quantitative tabular disclosures are required.

                                       50
<Page>

      Our balance sheet exposure to fluctuations in the exchange rate between
the U.S. dollar and other currencies are primarily from NIS denominated
balances. As of December 31, 2001, we had net liabilities of approximately $5.6
million, denominated in NIS.

      Any fluctuation in the exchange rate between the NIS and the U.S. dollar
of 1% will cause us expenses of $50,000 or income for the same amount in case of
evaluation or devaluation, respectively.

      As of December 31, 2001, we had no interest rate or foreign currencies
derivative financial instruments outstanding.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.

          Not applicable.

                                       51
<Page>

                                     PART II

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

          None.

ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS.

USE OF PROCEEDS

The effective date of the registration statement for which the information is
being disclosed is July 28, 2000 (File No. 333-12292) (the "Registration
Statement"). The following table sets forth, with respect to the ordinary shares
registered, the amount of securities registered, the aggregate offering price of
amount registered, the amount sold (including 235,000 shares sold pursuant to
the over-allotment option) and the aggregate offering price of the amount sold,
for the account of our company.

<Table>
<Caption>
                                                         For the account of the
                                                                company
<S>                                                           <C>
Number of ordinary shares registered                            6,440,000
Aggregate offering price of shares registered                 $45,080,000
Number of ordinary shares sold                                  5,835,000
Aggregate offering price of shares sold                       $40,845,000
</Table>

The following table sets forth the expenses incurred by us in connection with
our public offering during the period commencing the effective date of the
Registration Statement and ending December 31, 2000. None of such expenses were
paid directly or indirectly to directors, officers, persons owning 10% or more
of any class of equity securities of our company or to our affiliates.

<Table>
<Caption>
                    1.       Purpose             Direct or indirect payments to persons other than
                                                 -------------------------------------------------
                                                                 affiliated persons
                                                                 ------------------
<S>                                                                   <C>
Underwriting discounts and commissions....                            $2,859,150
Other expenses............................                            $2,256,850
                                                                      ----------
Total expenses............................                            $5,116,000
                                                                      ==========
</Table>

The net public offering proceeds to us, after deducting the total expenses (set
forth in the table above), were approximately $35,700,000.

The following table sets forth the amount of net public offering proceeds used
by us for the purposes listed below. None of such payments were paid directly or
indirectly to directors, officers, persons owning 10% or more of any class of
our equity securities or to our affiliates.

<Table>
<Caption>
                          Purpose                            Direct or indirect payments to persons other than to
                          -------                            ----------------------------------------------------
                                                                              affiliated persons
                                                                              ------------------
<S>                                                                                <C>
Acquisition of other companies and business(es)........                            2,250,000
Construction of plant, building and facilities.........                            6,500,000
Purchase and installation of machinery and equipment...                               N/A
Purchase of real estate................................                               N/A
Repayment of indebtedness..............................                            9,000,000
Working capital........................................                               N/A
Temporary investments..................................                               N/A
</Table>

                                       52
<Page>

<Table>
<S>                                                                                   <C>
Other purposes.........................................                               N/A
</Table>

ITEM 15. RESERVED

          Not applicable.

ITEM 16. RESERVED

          Not applicable.

                                       53
<Page>

                                    PART III

ITEM 17.  CONSOLIDATED FINANCIAL STATEMENTS.

      The Company has elected to furnish financial statements and related
information specified in Item 18.

ITEM 18.  CONSOLIDATED FINANCIAL STATEMENTS.

<Table>
<S>                                                                     <C>
Report of Independent Public Accountants.........................       F-1
Consolidated Balance Sheets as of December 31, 2000 and 2001.....       F-2
Consolidated Statements of Operations for the years ended
  December 31, 1999, 2000 and 2001...............................       F-3
Consolidated Statements of Shareholders' Equity for the
  years ended December 31, 1999, 2000 and 2001...................       F-4
Consolidated Statements of Cash Flows for the years ended
  December 31, 1999, 2000 and 2001...............................       F-5
Notes to Consolidated Financial Statements.......................       F-6
</Table>

ITEM 19.  EXHIBITS.

<Table>
<Caption>
  EXHIBIT NUMBER        NAME OF DOCUMENT
  --------------        ----------------
<S>                     <C>
3.1                     Memorandum of Association of Registrant(1)
3.2                     Articles of Registrant(2)
4.1                     Specimen of Certificate for Ordinary Shares(3)

10.1                    Employee Share Option Plan.(4)
10.2                    Subsidiary Employee Share Option Plan (formerly, the Employee Share Option
                        Plan United States).(5)
10.3                    Employee Share Option Plan--Europe.(6)
                        Executive Share Option Plan
10.4                    Lease Agreement between the Company and PCB Ltd. (currently Priortech Ltd.), dated
                        1, 1998, as amended on January 1, 2000(7)
10.5                    Services Agreement between the Company and PCB Ltd. (currently Priortech Ltd.),
                        dated January (9)
10.6                    Management Services Agreement between the Company and PCB Ltd. (currently
                        Priortech Ltd.), dated January 1, 1998.(10)
10.7                    Loan Agreement between the Company and PCB Ltd. (currently Priortech Ltd.), dated
                        January 1, 1998(11
10.8                    Royalty Agreement between the Company and PCB Ltd. (currently Priortech Ltd.),
                        dated January 1988(12)
10.9                    Termination Agreement between the Company and PCB Ltd. (currently Priortech Ltd.),
                        dated May 21, 1998
10.10                   Form of Indemnification Agreement(13)
21.1                    Subsidiaries of the Registrant(14)

23.2                    Consent of Eisner, LLP and Goldstein Sabo Tevet.
24.1                    Power of attorney (included in signature page, which has been previously filed)
</Table>

----------

(1)       Incorporated by reference from Exhibit 3.1 to Amendment No. 1 to the
Company's Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 21, 2000.
(2)       Incorporated by reference from Exhibit 3.1 to Amendment No. 1 to the
Company's Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 21, 2000.
(3)       Incorporated by reference from Exhibit 4.1 to Amendment No. 1 to the
Company's Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 21, 2000.
(4)       Incorporated by reference from Exhibit 10.1 to Amendment No. 1 to the
Company's Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 21, 2000.
(5)       Incorporated by reference from Exhibit 10.2 to Amendment No. 1 to the
Company's Registration

                                       54
<Page>

Statement on Form F-1, File No. 333-12292, filed with the Securities and
Exchange Commission on July 21, 2000.
(6)       Incorporated by reference from Exhibit 10.3 to the Company's
Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 31, 2000.
(7)       Incorporated by reference from Exhibit 10.4 to the Company's
Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 31, 2000.
(8)       Incorporated by reference from Exhibit 10.5 to the Company's
Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 31, 2000.
(9)       Incorporated by reference from Exhibit 10.6 to the Company's
Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 31, 2000.
(10)      Incorporated by reference from Exhibit 10.7 to Amendment No. 2 to the
Company's Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 21, 2000.
(11)      Incorporated by reference from Exhibit 10.8 to Amendment No. 2 to the
Company's Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 21, 2000.
(12)      Incorporated by reference from Exhibit 10.9 to Amendment No. 2 to the
Company's Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 21, 2000.
(13)      Incorporated by reference from Exhibit 10.10 to Amendment No. 2 to the
Company's Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 21, 2000.
(14)      Incorporated by reference from Exhibit 10.11 to Amendment No. 2 to the
Company's Registration Statement on Form F-1, File No. 333-12292, filed with the
Securities and Exchange Commission on July 21, 2000.

                                       55
<Page>

                                   SIGNATURES


      The Company hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

                                          CAMTEK LTD.


                                          By:   /s/ Rafi Amit
                                                --------------------------------
                                                Rafi Amit
                                                Chief Executive Officer

Date: June 28, 2002

                                       56
<Page>

INDEPENDENT AUDITORS' REPORT

To the Shareholders and Board of Directors
Camtek Ltd.
Migdal Haemek, Israel

We have audited the accompanying consolidated balance sheets of Camtek Ltd. and
subsidiaries as of December 31, 2001 and 2000, and the related consolidated
statements of operations, changes in shareholders' equity and cash flows for
each of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Camtek Ltd. and
subsidiaries as of December 31, 2001 and 2000, and the consolidated results of
their operations and their consolidated cash flows for each of the three years
in the period ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America.

Eisner LLP                             Goldstein Sabo Tevet
                                       Certified Public Accountants (Isr.)
New York, New York                     Tel-Aviv, Israel
March 5, 2002

                                                                             F-1
<Page>

CAMTEK LTD.

CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

<Table>
<Caption>
                                                                                           DECEMBER 31,
                                                                                     -----------------------
                                                                                        2000         2001
                                                                                     ----------   ----------
<S>                                                                                  <C>          <C>
ASSETS
Current assets:
  Cash and cash equivalents                                                          $    9,793   $    7,029
  Marketable securities                                                                  26,592       13,908
  Accounts receivable - trade (net of allowance of $655 and $1,135)                       9,989       13,818
  Inventories                                                                            10,700       12,039
  Due from Priortech Ltd.                                                                   994            -
  Due from affiliates                                                                       148          374
  Other current assets                                                                    3,169        2,555
                                                                                     ----------   ----------

      Total current assets                                                               61,385       49,723

Fixed assets, net                                                                         3,818       11,225
Intangibles, net                                                                             76            -
Deferred taxes                                                                              448          306
                                                                                     ----------   ----------

                                                                                     $   65,727   $   61,254
                                                                                     ==========   ==========

LIABILITIES
Current liabilities:
  Short-term bank credit                                                             $      931   $    4,816
  Accounts payable                                                                        6,377        2,857
  Due to Priortech Ltd.                                                                       -        1,114
  Other current liabilities                                                               8,585        6,084
                                                                                     ----------   ----------

      Total current liabilities                                                          15,893       14,871

Long term loans                                                                               -           55
Accrued severance pay, net of amounts funded                                                 64          307
                                                                                     ----------   ----------

                                                                                         15,957       15,233
                                                                                     ----------   ----------

Commitments and contingent liability (Note 10)

SHAREHOLDERS' EQUITY
Ordinary shares NIS 0.01 par value, authorized 100,000,000 shares,
  issued 22,096,002 shares in 2000 and 22,130,798 shares in 2001                            112          112
Additional paid-in capital                                                               36,930       37,196
Unearned compensation                                                                       (69)        (162)
Accumulated other comprehensive (loss) income:
  Unrealized holding (loss) gain on marketable securities                                  (253)         128
Retained earnings                                                                        13,050        9,339
Treasury stock, at cost (250,000 shares)                                                      -         (592)
                                                                                     ----------   ----------

                                                                                         49,770       46,021
                                                                                     ----------   ----------

                                                                                     $   65,727   $   61,254
                                                                                     ==========   ==========
</Table>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                               F-2
<Page>

CAMTEK LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

<Table>
<Caption>
                                                                                                YEAR ENDED DECEMBER 31,
                                                                                        -------------------------------------
                                                                                           1999         2000          2001
                                                                                        ----------   ----------    ----------
<S>                                                                                     <C>          <C>           <C>
Revenues                                                                                $   23,892   $   53,125    $   44,068
Cost of revenues                                                                            12,159       24,156        21,651
                                                                                        ----------   ----------    ----------

Gross profit                                                                                11,733       28,969        22,417
                                                                                        ----------   ----------    ----------

Research and development costs:
  Expenses                                                                                   4,307        7,037         9,017
  Less royalty-bearing participations from the Government of Israel                         (1,888)      (2,086)            -
  Acquired in-process research and development                                                   -            -         3,634
                                                                                        ----------   ----------    ----------

  Research and development costs, net                                                        2,419        4,951        12,651

Selling, general and administrative expenses                                                 7,827       12,310        14,178
Restructuring expenses                                                                           -            -           547
                                                                                        ----------   ----------    ----------

Operating expenses                                                                          10,246       17,261        27,376
                                                                                        ----------   ----------    ----------

Operating income (loss)                                                                      1,487       11,708        (4,959)
Financial and other income (expenses), net                                                    (862)          31         1,400
                                                                                        ----------   ----------    ----------

INCOME (LOSS) BEFORE INCOME TAXES                                                              625       11,739        (3,559)
Provision for income taxes                                                                       -          848           152
                                                                                        ----------   ----------    ----------

NET INCOME (LOSS)                                                                       $      625   $   10,891    $   (3,711)
                                                                                        ==========   ==========    ==========

NET INCOME (LOSS) PER ORDINARY SHARE:
   BASIC                                                                                $     0.04   $     0.58    $    (0.17)
                                                                                        ==========   ==========    ==========


  DILUTED                                                                               $     0.04   $     0.57    $    (0.17)
                                                                                        ==========   ==========    ==========

WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING:
  BASIC                                                                                     15,226       18,692        22,043
                                                                                        ==========   ==========    ==========

  DILUTED                                                                                   16,422       19,202        22,043
                                                                                        ==========   ==========    ==========
</Table>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                               F-3
<Page>

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands)

<Table>
<Caption>

                                       ORDINARY A                                 ACCUMULATED
                                   NIS 0.01 PAR VALUE  ADDITIONAL                    OTHER
                                   ------------------   PAID-IN      UNEARNED    COMPREHENSIVE
                                   SHARES     AMOUNT    CAPITAL    COMPENSATION  (LOSS) INCOME
                                   -------   --------  ----------  ------------  -------------
<S>                                <C>       <C>       <C>         <C>           <C>
BALANCE - JANUARY 1, 1999           15,020   $     95  $      994  $       (203)
Cancellation of share options            -          -         (25)           25
Amortization of share options            -          -           -            70
Exercise of share options            1,241          3         271             -
Net income                               -          -           -             -
                                   -------   --------  ----------  ------------

BALANCE - DECEMBER 31, 1999         16,261         98       1,240          (108)
Cancellation of share options            -          -          (7)            7
Amortization of share options            -          -           -            32
Issuance of common shares, net       5,835         14      35,697             -
Unrealized holding loss on
  marketable securities                  -          -           -             -  $        (253)
Net income                               -          -           -             -              -

Comprehensive income                     -          -           -             -              -
                                   -------   --------  ----------  ------------  -------------

BALANCE - DECEMBER 31, 2000         22,096        112      36,930           (69)          (253)
Cancellation of share options            -          -          (3)            3              -
Exercise of share options               35          -          46             -              -
Grant of warrant                         -          -         324          (324)             -
Amortization of share options            -          -           -           228              -
Additional share issuance
  expense, net of tax benefits
  of $13                                 -          -        (101)            -              -
Unrealized holding gain on
  marketable securities                  -          -           -             -            381
Net loss                                 -          -           -             -              -

Comprehensive loss                       -          -           -             -              -

Purchase of 250,000 treasury
  shares                                 -          -           -             -              -
                                   -------   --------  ----------  ------------  -------------

BALANCE - DECEMBER 31, 2001         22,131   $    112  $   37,196  $       (162) $         128
                                   =======   ========  ==========  ============  =============

<Caption>
                                   RETAINED  TREASURY            COMPREHENSIVE
                                   EARNINGS   STOCK     TOTAL     INCOME/LOSS
                                   --------  --------  -------   -------------
<S>                                <C>       <C>       <C>       <C>
BALANCE - JANUARY 1, 1999          $  1,534            $ 2,420
Cancellation of share options             -                  0
Amortization of share options             -                 70
Exercise of share options                 -                274
Net income                              625                625
                                   --------            -------

BALANCE - DECEMBER 31, 1999           2,159              3,389
Cancellation of share options             -                  0
Amortization of share options             -                 32
Issuance of common shares, net            -             35,711
Unrealized holding loss on
  marketable securities                   -               (253)  $        (253)
Net income                           10,891             10,891          10,891
                                                                 -------------
Comprehensive income                      -                  -   $      10,638
                                   --------            -------   =============

BALANCE - DECEMBER 31, 2000          13,050             49,770
Cancellation of share options             -                  0
Exercise of share options                 -                 46
Grant of warrant                          -                  0
Amortization of share options             -                228
Additional share issuance
  expense, net of tax benefits
  of $13                                  -               (101)
Unrealized holding gain on
  marketable securities                   -                381   $         381
Net loss                             (3,711)            (3,711)         (3,711)
                                                                 -------------
Comprehensive loss                        -                  -   $      (3,330)
                                                                 =============
Purchase of 250,000 treasury
  shares                                  -  $   (592)    (592)
                                   --------  --------  -------

BALANCE - DECEMBER 31, 2001        $  9,339  $   (592) $46,021
                                   ========  ========  =======
</Table>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                               F-4
<Page>

CAMTEK LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

<Table>
<Caption>
                                                                                                YEAR ENDED DECEMBER 31,
                                                                                       --------------------------------------
                                                                                          1999          2000          2001
                                                                                       ---------     -----------   ----------
<S>                                                                                    <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                                                   $     625     $    10,891   $   (3,711)
   Adjustments to reconcile net income (loss) to net cash provided by
      (used in) operating activities:
        Depreciation and amortization                                                        474             522          618
        Purchased research and development                                                     -               -        3,634
        Loss on disposal of fixed assets                                                      18               1           89
        Amortization of unearned compensation                                                 70              32          228
        Changes in operating assets and liabilities, net of effects from
           acquisition in 2001:
              Accounts receivable                                                           (577)         (3,401)      (3,829)
              Inventories                                                                 (3,142)         (4,126)        (286)
              Due (from) to Priortech Ltd. and affiliates                                      -          (1,142)       1,882
              Other current assets                                                          (453)         (1,937)      (1,616)
              Deferred taxes                                                                   -             121           89
              Accounts payable                                                             1,084           4,166       (3,662)
              Other current liabilities                                                    1,479           4,826       (3,010)
              Accrued severance pay                                                           31               5          150
                                                                                       ---------     -----------   ----------

                Net cash provided by (used in) operating activities                         (391)          9,958       (9,424)
                                                                                       ---------     -----------   ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of marketable securities                                                           -         (33,365)     (20,689)
   Redemption of marketable securities                                                         -           6,520       33,754
   Acquisition of subsidiary, net of $1,159 cash acquired                                      -               -       (1,191)
   Construction of building and purchase of other fixed assets                            (1,421)         (1,712)      (7,434)
   Proceeds from disposal of fixed assets                                                     47             105           80
                                                                                       ---------     -----------   ----------

                Net cash (used in) provided by investing activities                       (1,374)        (28,452)       4,520
                                                                                       ---------     -----------   ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of common shares                                                     -          36,013            -
   Increase (decrease) in short-term bank credit                                           3,699          (5,863)       2,800
   Decrease in due to Priortech Ltd. and affiliates                                       (1,564)         (2,401)           -
   Exercise of share options                                                                 274               -           46
   Purchase of treasury shares                                                                 -               -         (592)
   Payments for registration costs                                                          (434)              -         (114)
                                                                                       ---------     -----------   ----------

                Net cash provided by financing activities                                  1,975          27,749        2,140
                                                                                       ---------     -----------   ----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                         210           9,255       (2,764)
Cash and cash equivalents at beginning of period                                             328             538        9,793
                                                                                       ---------     -----------   ----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             $     538     $     9,793   $    7,029
                                                                                       =========     ===========   ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid for interest                                                              $     647     $       802   $      295
</Table>

                                                                             F-5
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 1 - BUSINESS

Camtek Ltd. ("Camtek"), an Israeli company, is a majority owned (68%) subsidiary
of Priortech Ltd. (formerly PCB Ltd.), an Israeli company that is listed on the
Tel-Aviv Stock Exchange. Camtek designs, develops, manufactures and markets
intelligent optical inspection systems and related products for the printed
circuit board, semiconductor packaging and microelectronics industries used to
enhance yields and processes in these industries. Camtek activities are
conducted in one reportable business segment.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

(a)   BASIS OF PREPARATION:

      The consolidated financial statements, which include the accounts of
      Camtek and its subsidiaries (collectively the "Company"), are prepared in
      accordance with accounting principles generally accepted in the United
      States of America. All material intercompany balances and transactions
      have been eliminated.

(b)   ESTIMATES:

      The preparation of financial statements in conformity with generally
      accepted accounting principles in the United States of America requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the financial statements and the reported
      amounts of revenues and expenses during the reporting period. Actual
      results may differ from those estimates.

(c)   FOREIGN CURRENCY TRANSACTIONS:

      The functional currency of the Company is the U.S. dollar. Substantially
      all revenues generated by the Company are from outside Israel and a
      majority thereof are received in U.S. dollars. In addition, most
      salaries, materials and components purchased and marketing expenses
      incurred are either paid for in U.S. dollars or in New Israeli Shekels
      ("NIS") where cost is linked to changes in the dollar/NIS exchange rate.
      A significant portion of the Company's expenses are incurred in Israel
      and paid for in NIS. Foreign currency gains and losses included in
      financial income (expense), net resulting from transactions not
      denominated in U.S. dollars amounted to a loss of $155 in 1999, income of
      $130 in 2000 and income of $187 in 2001, respectively.

(d)   CASH EQUIVALENTS:

      All highly liquid investments purchased with a maturity of three months
      or less are considered to be cash equivalents.

(e)   MARKETABLE SECURITIES:

      Marketable securities consist of corporate bonds which have strong credit
      ratings and maturities greater than three months and up to 18 months at
      the time of purchase. These securities, which are classified as
      available-for-sale, are carried at fair value, with unrealized gains and
      losses, net of any tax effect, reported in shareholders' equity as
      accumulated other comprehensive income (loss). Amortization of premiums
      and discounts are included in interest income and are not material.

                                                                             F-6
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(f)   INVENTORIES:

      Inventories consist of completed AOI systems, AOI systems partially
      completed and components, and are recorded at the lower of cost,
      determined on a first-in first-out basis, or market.

(g)   FIXED ASSETS:

      Fixed assets are stated at cost less accumulated depreciation and are
      depreciated over their estimated useful lives on a straight-line basis.

      Annual rates of depreciation are as follows:

<Table>
          <S>                                     <C>            <C>
          Building                                 2%
          Machinery and equipment                 10% - 20%      (mainly 20%)
          Office furniture and equipment           6% - 20%      (mainly 6%)
          Automobiles                             15% - 20%
</Table>

(h)   FAIR VALUES OF FINANCIAL INSTRUMENTS:

      The carrying amounts reported in the balance sheet for cash and cash
      equivalents, accounts receivable, accounts payable and accrued expenses
      and amounts due to or from affiliates approximate fair value because of
      the short-term duration of those items. Marketable securities are carried
      at quoted market prices which represents fair value. The carrying amounts
      of short-term bank credit and amounts due to or from Priortech Ltd.
      approximate fair value because the interest rates on such debt approximate
      the market rate.

(i)   AMORTIZATION OF INTANGIBLES:

      Intangible assets, consisting of patents and related intellectual property
      purchased from a former shareholder $(297) and the excess of the purchase
      price over the underlying book value related to shares of the Company's
      stock acquired by Priortech Ltd. from former shareholders $(628), were
      being amortized over a period of five years and as of December 31, 2001,
      these assets have been fully amortized. Accumulated amortization at
      December 31, 2000 and 2001 was $849 and $925, respectively.

(j)   RECOGNITION OF REVENUE:

      The Company recognizes revenue from sales of its products upon acceptance
      by the customer which, in general, occurs no earlier than at the time the
      Company installs the AOI system at the customer's premises.

      Service fees are recognized at the time the service is provided or over
      the life of the service contract on a straight-line basis. Service fees
      aggregated $1,911, $2,591 and $2,888 for 1999, 2000 and 2001,
      respectively.

(k)   WARRANTY:

      Estimated warranty obligations are charged to operations in the period in
      which the related sale is recognized. AOI systems are generally sold with
      a twelve month warranty.

                                                                             F-7
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(l)   INCOME TAXES:

      The Company uses the liability method of accounting for income taxes.
      Deferred taxes, which may arise as a result of temporary differences
      between the reported amount of an asset or a liability in the balance
      sheet and its tax basis, are recognized at their statutory rate. A
      valuation allowance may reduce any resulting deferred tax asset to the
      amount that is more likely than not to be realized.

(m)   RESEARCH AND DEVELOPMENT:

      Research and development costs are expensed as incurred. Grants received
      from the Government of Israel through the Ministry of Industry and Trade,
      Office of the Chief Scientist (the "Chief Scientist"), for approved
      research and development programs are recognized upon the later of the
      time the costs related to a particular project are incurred and the time
      such project receives approval from the Chief Scientist. See Note 3 for
      accounting for acquired in process research and development.

(n)   LONG-LIVED ASSETS:

      Long-lived assets are reviewed for impairment whenever events or changes
      in circumstances indicate that the carrying amount of the asset may not be
      recoverable. If an evaluation is required, the estimated future
      undiscounted cash flows associated with the asset would be compared to the
      asset's carrying amount to determine if a writedown to market value or
      discounted cash flow value is required.

(o)   EARNINGS (LOSS) PER ORDINARY SHARE:

      Basic earnings (loss) per share are calculated utilizing only weighted
      average ordinary shares outstanding. Diluted earnings per share gives
      effect to dilutive potential ordinary shares outstanding during the
      reporting periods. Such dilutive shares consist of incremental shares,
      utilizing the treasury stock method, from assumed exercise of share
      options. The effect of the exercise of outstanding stock options and
      warrants would be anti-dilutive for the year ended December 31, 2001 and
      have not been included in computing dilutive loss per ordinary share.

(p)   COMPREHENSIVE INCOME:

      Statement of Financial Accounting Standards No. 130 "Reporting
      Comprehensive Income" requires the Company to report the changes in
      shareholders' equity from all sources during the period other than those
      resulting from investments by shareholders as comprehensive income.
      Comprehensive income (loss) which includes, in addition to net income
      (loss), unrealized gains and losses on marketable securities, is displayed
      in the statements of changes in shareholders' equity.

(q)   NEW ACCOUNTING PRONOUNCEMENT:

      In June 2001, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards ("SFAS") No. 141, "Business Combinations"
      and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141
      requires that the purchase method of accounting be used for all business
      combinations initiated after June 30, 2001. The statement also identifies
      criteria that intangible assets acquired in a business combination must
      meet to be recognized and reported separately from goodwill. SFAS No. 142
      requires that upon adoption, amortization of goodwill and intangibles with
      indefinite useful lives will cease and instead, the carrying value of
      these intangibles will be evaluated for impairment on at least an annual
      basis. SFAS No. 142 is effective for fiscal years beginning after
      December 15, 2001. The Company does not anticipate that the adoption of
      SFAS No. 142 will have a significant effect on the earnings and financial
      position of the Company.

                                                                             F-8
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 3 - ACQUISITION OF INSPECTECH LTD.

In September 2001, the Company acquired all of the outstanding shares of
Inspectech Ltd. ("Inspectech") for $2,350 in cash, including $100 in legal and
other acquisition costs. The results of operations of Inspectech have been
included in the consolidated financial statements since that date. Inspectech,
which was merged into Camtek in December 2001, is an Israel based developer and
producer of products for the inspection of wafers to serve the microelectronics
industry. The acquisition allows the Company to develop a new line of inspection
systems which are complimentary to its existing product lines.

The following summarizes the fair values of the assets acquired and the
liabilities assumed at the date of acquisition:

<Table>
          <S>                                                        <C>
          Cash                                                       $    1,159
          Inventory                                                       1,053
          Fixed assets                                                      684
          In-process research and development                             3,634
                                                                     ----------

             Total assets acquired                                        6,530
                                                                     ----------

          Current liabilities, including loan payable of $55              3,002
          Loans payable, non-current                                      1,085
          Accrued severance pay                                              93
                                                                     ----------

             Total liabilities assumed                                    4,180
                                                                     ----------

          Net assets acquired                                        $    2,350
                                                                     ==========
</Table>

The value assigned to in-process research and development was determined
pursuant to a third-party valuation. Such amount was written off at the date of
acquisition because technological feasibility had not been established and no
future alternative uses existed.

The following unaudited pro forma summary presents the consolidated results of
operations of the Company as if the above acquisition had occurred at the
beginning of the 2000 year. The results of operations in both years excludes the
amounts assigned to research and development assets that were written off at the
date of acquisition.

<Table>
<Caption>
                                                                     YEAR ENDED DECEMBER 31,
                                                                     -----------------------
                                                                       2000           2001
                                                                     --------       --------
          <S>                                                        <C>            <C>
          Revenue                                                    $ 55,439       $ 44,376
          Operating income (loss)                                       9,513         (8,081)
          Net income (loss)                                             8,614         (6,869)
          Basic income (loss) per share                                  0.46          (0.31)
          Diluted income (loss) per share                                0.45          (0.31)
</Table>

The Company granted a warrant to acquire 104,374 ordinary shares at an exercise
price of $.01 to Inspectech's principal owner who continues to be employed by
the Company. The Company recorded unearned compensation of $324 related to the
grant. The warrant vests 50% on date of grant, 25% on the third anniversary of
employment and 25% after the fourth anniversary of employment. Accordingly,
based on the percentage vested, the Company amortized $162 of unearned
compensation for the year ended December 31, 2001 which is included in selling,
general and administrative expenses in the accompanying statement of operations.

                                                                             F-9
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 4 - INVENTORIES

<Table>
<Caption>
                                                                                    DECEMBER 31,
                                                                              ----------   ----------
                                                                                 2000         2001
                                                                              ----------   ----------
          <S>                                                                 <C>          <C>
          Components                                                          $    3,351   $    4,530
          Systems partially completed                                              1,203        2,113
          Completed systems, including systems not yet purchased
             at customer locations                                                 6,146        5,396
                                                                              ----------   ----------

                                                                              $   10,700   $   12,039
                                                                              ==========   ==========
</Table>

NOTE 5 - OTHER CURRENT ASSETS

<Table>
<Caption>
                                                                                  DECEMBER 31,
                                                                              --------------------
                                                                                 2000      2001
                                                                              ---------  ---------
          <S>                                                                 <C>        <C>
          Due from Government of Israel departments and agencies              $   1,320  $   1,311
          Due from employees                                                        170        150
          Income receivable                                                         705        146
          Deferred taxes                                                            179        244
          Other                                                                     795        704
                                                                              ---------  ---------

                                                                              $   3,169  $   2,555
                                                                              =========  =========
</Table>

NOTE 6 - FIXED ASSETS

<Table>
<Caption>
                                                                                  DECEMBER 31,
                                                                              -------------------
                                                                                2000       2001
                                                                              ---------  --------
          <S>                                                                 <C>        <C>
          Land                                                                $     425  $    624
          Building (1)                                                            1,664     7,556
          Machinery and equipment                                                 1,885     2,557
          Office furniture and equipment                                            580     1,600
          Automobiles                                                               324       490
                                                                              ---------  --------

                                                                                  4,878    12,827
          Less accumulated depreciation                                           1,060     1,602
                                                                              ---------  --------

                                                                              $   3,818  $ 11,225
                                                                              =========  ========
</Table>

          (1)  Under construction at December 31, 2000

In September 1998, the Company entered into a lease for a building in Israel to
be built by the lessor and also acquired an option to purchase the building and
underlying land from the lessor. Both the lease payments and the option price
will equal the cost of constructing the building, plus financing costs and $595
for the land, less any grants received. In addition, if the option is exercised,
the option price is reduced for any payments made under the lease. The lease is
for a term of 23 years and 8 months and commenced upon completion of
construction in October 2001. The Company has until September 2003 to exercise
the option and intends to exercise the option. As the Company is providing
construction financing, it is being treated as the owner of the land and
building.

                                                                            F-10
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 7 - SHORT-TERM BANK CREDIT

<Table>
<Caption>
                                                                                   DECEMBER 31,
                                                                             -----------------------
                                                                                2000         2001
                                                                             ----------   ----------
          <S>                                                                <C>          <C>
          Revolving bank loan denominated in Euro, interest at 6%
             (2000) and 4.5% (2001), being extended on a monthly basis       $      931   $    1,770
          Loan payable denominated in NIS, interest at 4.4%, being
             extended on a monthly basis                                                       2,717
          Other                                                                                  329
                                                                             ----------   ----------
                                                                             $      931   $    4,816
                                                                             ==========   ==========
</Table>

Borrowings under the bank loans are collateralized by all of the assets of the
Company, and are guaranteed by Priortech Ltd.

NOTE 8 - OTHER CURRENT LIABILITIES

<Table>
<Caption>
                                                                                   DECEMBER 31,
                                                                              ---------------------
                                                                                 2000        2001
                                                                              ---------   ---------
          <S>                                                                 <C>         <C>
          Accrued compensation and related benefits                           $   2,286   $   2,027
          Government of Israel departments and agencies
             (substantially for royalties)                                        2,234         715
          Accrued warranty costs                                                  1,327         942
          Commissions                                                               845       1,285
          Advances from customers and deferred revenues                           1,360         338
          Other                                                                     533         777
                                                                              ---------   ---------

                                                                              $   8,585   $   6,084
                                                                              =========   =========
</Table>

NOTE 9 - SEVERANCE PAY

Israeli law requires payment of severance pay in certain circumstances. The
Company's severance pay liability to its Israeli employees, based upon the
number of years of service and the latest monthly salary, is partly covered by
regular deposits with severance pay funds, recognized pension funds and by
purchase of managers' insurance policies.

The amounts accrued and the portions funded with severance pay funds and by
purchase of insurance policies are composed as follows:

<Table>
<Caption>
                                                                                 DECEMBER 31,
                                                                              -----------------
                                                                                2000     2001
                                                                              -------   -------
          <S>                                                                 <C>       <C>
          Accrued severance pay                                               $   220   $   471
          Less amounts funded                                                     156       164
                                                                              -------   -------

          Unfunded balance                                                    $    64   $   307
                                                                              =======   =======
</Table>

The Company may only make withdrawals from the funds for the purpose of paying
severance pay.

                                                                            F-11
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 9 - SEVERANCE PAY (CONTINUED)

The severance pay liabilities covered by the pension funds are not reflected in
the above amounts, as the severance pay liabilities have been irrevocably
transferred to the pension funds.

Severance pay expense was $225, $353 and $720 in 1999, 2000 and 2001,
respectively.


NOTE 10 - COMMITMENTS, CONTINGENT LIABILITIES AND OTHER

(a)   ROYALTIES:

      (1)  The Company is committed to pay royalties to the Government of Israel
           on sales of products and service fees in which the Government
           participates by way of research and development grants, up to the
           amount of the grants received for certain projects. According to an
           agreement entered into in 2001 with the Office of the Chief
           Scientist, Camtek's royalty payments are based on 4.5% of revenues
           and will not exceed $250 per quarter. The maximum royalty payable by
           the Company on future revenues, including royalties related to grants
           received by Inspectech prior to acquisition, approximates $1,600 at
           December 31, 2001.

      (2)  In 1989, Priortech Ltd. invested approximately $645 (NIS 1,000) in
           the Company's research and development. In return, the Company agreed
           to pay royalties to Priortech Ltd. of .5% of aggregate sales of the
           systems, purchase circuit boards from Priortech Ltd. at prevailing
           market prices and to grant Priortech Ltd. favored customer status in
           its purchase of AOI systems. The obligation of the Company to pay
           Priortech Ltd. the aforementioned royalties terminated for sales made
           after December 31, 1999.

      (3)  Royalty expense totaled $1,075, $ 2,391 and $ 1,000 in 1999, 2000 and
           2001, respectively, including amounts to Priortech Ltd. (see Note
           17).

(b)   OPERATING LEASES:

      (1)  The Company has entered into an operating lease agreement with
           Priortech Ltd. for an administrative office and research and
           development facilities which expired in December 2001 and provides
           for an annual rental of $48. At January 1, 2000, the Company leased
           additional space and the aggregate annual rental increased to $77.
           The lease agreement was not renewed due to the completion of Camtek's
           new building.

      (2)  Effective January 1, 1998, the Company entered into a cancelable
           four-year term operating lease for production facilities in Migdal
           Haemek, Israel. The annual rental approximates $53 through 2001 and
           will increase to $59 thereafter. Effective October 1, 2000, the
           Company entered into another three-year term operating lease for
           production facilities in Migdal Haemek, Israel. The annual rental
           approximates $18 through 2003. In December 2001, such lease agreement
           was cancelled due to the completion of Camtek's new building.

      (3)  The Company's subsidiaries have entered into various operating lease
           agreements. As of December 31, 2001, minimum future rental payments
           under these leases amount to $310.

      (4)  In October 2000, the Company entered into an operating lease of
           vehicles for a period of 44 months. As of December 31, 2001, the
           minimum future rental payments are approximately $946.

      (5)  Aggregate rent expense amounted to $291, $317 and $451 in 1999, 2000
           and 2001, respectively.

                                                                            F-12
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 10 - COMMITMENTS, CONTINGENT LIABILITIES AND OTHER (CONTINUED)

(c)   PATENT INFRINGEMENT ALLEGATION:

      On July 21, 1998, the Company received a letter from Orbotech Ltd., a
      principal competitor, alleging, among other things, infringement of an
      Israeli patent and unjust enrichment due to misappropriation of
      confidential information by the Company with respect to certain
      technologies used in the manufacture and design of certain of the
      Company's products. Management believes that Orbotech's allegations are
      without merit; nevertheless, a final judicial decision adverse to the
      Company with respect to these allegations could have a material adverse
      effect on the Company's business, financial condition and results of
      operations. Any litigation could involve substantial expenditures by the
      Company and diversion of management's attention.

(d)   VALUATION AND QUALIFYING ACCOUNTS:

      The following is a summary of the allowance for doubtful accounts related
      to accounts receivable for the years ended December 31:

<Table>
<Caption>
                          BALANCE AT       CHARGED                      BALANCE AT
                         BEGINNING OF     COSTS AND                       END OF
                            PERIOD         EXPENSES       DEDUCTIONS      PERIOD
                         ------------     ---------       ----------    ----------
          <S>              <C>              <C>               <C>         <C>
          1999             $ (524)          $ (171)           $ 144       $  (551)
          2000             $ (551)          $ (226)           $ 122       $  (655)
          2001             $ (655)          $ (716)           $ 236       $(1,135)
</Table>

NOTE 11 - CONCENTRATION OF RISK

During the years ended December 31, 1999, 2000 and 2001, no customer accounted
for 10% or more of the Company's revenue.

At December 31, 2000, accounts receivable from one customer approximated $1,120.
At December 31, 2001, accounts receivable from one customer approximated $1,853.

NOTE 12 - SHAREHOLDERS' EQUITY

(a)   INITIAL PUBLIC OFFERING:

      In July 2000, the Company sold 5,835,000 shares of its common stock in an
      initial public offering ("IPO"). In connection therewith, the Company
      received proceeds of $34,957, net of offering costs of $5,875 including
      $114 recorded in 2001. In addition, $653 of tax benefits, including $13
      recorded in 2001, related to the offering costs have been credited to
      additional paid-in-capital.

(b)   ORDINARY SHARES:

      In February 2000, the Company changed its designation of ordinary A shares
      to ordinary shares. On July 11, 2000, the Board of Directors approved a 2
      for 1 ordinary share split. Share and per share amounts in the
      accompanying consolidated financial statements give retroactive effect to
      the split. Since December 2001, the Company's shares are also traded on
      the Tel Aviv stock exchange.

                                                                            F-13
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 12 - SHAREHOLDERS' EQUITY (CONTINUED)

(c)   SHARE OPTIONS:

      In September 1997, the Company's Board of Directors adopted three share
      option plans for key employees, one of which covers employees in Israel
      and the others cover employees in the United States, Europe and Asia.
      Options granted under those plans are vested up to 50% after two years of
      continued employment with an additional 25% vesting after each of years
      three and four, unless otherwise determined by the Board of Directors.
      Vested options are exercisable for two years beginning on the later of
      July 28, 2000, the date the Company's shares began trading on NASDAQ or
      the date of vesting.

      In November 2000, the Board of Directors adopted a fourth option plan.
      Options granted under the plan for officers and directors are vested up to
      25% after one year and the remaining 75% are proportionally vested on a
      monthly basis during the following three-year period, unless otherwise
      determined by the Board. Vested options are exercisable for five years.
      The Board of Directors administers the plans, which designates the
      recipients, number of options granted and exercise price.

      During 2001, the Board of Directors increased by 700,000 the shares
      issuable upon exercise of options under the share option plan. As of
      December 31, 2001, options to purchase an aggregate of 2,173,128 ordinary
      shares may be granted under these plans, of which 1,754,000 options have
      been granted through December 31, 2001. The exercise price of options
      granted during 1999, 2000 and 2001 was at or above the estimated fair
      value or, after the Company's IPO, quoted market price of the Company's
      common stock at the date of grant.

      In August 2000, the Company granted an aggregate of 200,000 share options
      to two executive officers of the Company at an exercise price equal to the
      quoted market price on the date of grant. These options were granted
      outside the above mentioned plans.

      Share option activity during the years is as follows:

<Table>
<Caption>
                                                                     YEAR ENDED DECEMBER 31,
                                           -----------------------------------------------------------------------------
                                                    1999                      2000                        2001
                                           -----------------------    ----------------------     -----------------------
                                                          WEIGHTED                  WEIGHTED                    WEIGHTED
                                             NUMBER       AVERAGE      NUMBER        AVERAGE      NUMBER         AVERAGE
                                               OF         EXERCISE       OF         EXERCISE        OF          EXERCISE
                                             SHARES        PRICE       SHARES         PRICE       SHARES          PRICE
                                           ----------     --------    ---------     --------     ---------      --------
          <S>                              <C>              <C>       <C>             <C>        <C>              <C>
          Outstanding at January 1          1,714,128       $0.52       735,980       $1.95      1,294,042        $4.43
          Granted                             345,456        2.66       627,289        7.26        636,454*        3.82
          Cancelled                           (82,604)       1.33       (69,227)       3.68       (176,496)        5.21
          Exercised                        (1,241,000)       0.22                                  (34,796)        1.33
                                           ----------                 ---------                  ---------

          Outstanding at year end             735,980        1.95     1,294,042        4.43      1,719,204         4.19
                                           ==========                 =========                  =========

          Exercisable at year end             119,410        1.33       250,462        1.33        615,148         2.79
                                           ==========                 =========                  =========
</Table>

*Includes warrant for 104,374 common shares exercisable at $.01 per share (see
Note 3).

                                                                            F-14
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 12 - SHAREHOLDERS' EQUITY (CONTINUED)

(c)  SHARE OPTIONS:  (CONTINUED)

      The following table summarizes information about stock options at December
31, 2001:

<Table>
<Caption>
                                                         WEIGHTED
                                                         AVERAGE
                                                         REMAINING         WEIGHTED                       WEIGHTED
                                                        CONTRACTUAL        AVERAGE                         AVERAGE
                  RANGE OF               NUMBER             LIFE           EXERCISE        NUMBER         EXERCISE
               EXERCISE PRICE          OUTSTANDING        IN YEARS          PRICE        EXERCISABLE        PRICE
              ---------------        --------------     -----------        --------     -------------      --------
              <S>                         <C>               <C>             <C>              <C>             <C>
                   $0.01                    104,374         2.50            $0.01             52,187         $0.01
                   $1.33                    342,585         1.44            $1.33            306,725          1.33
              $2.66 to $3.29                579,306         3.79            $3.04            116,403          2.66
              $5.97 to $8.00                692,939         3.15            $7.20            139,833          7.13
                                     --------------                                     ------------

                                          1,719,204         4.19                             615,148          2.79
                                     ==============                                     ============
</Table>

      The Company applies Accounting Principles Board Opinion No. 25 ("APB 25")
      in accounting for stock-based compensation to employees and, accordingly,
      recognizes compensation expense for the difference between the fair value
      or after the Company's IPO, the quoted market price of the underlying
      ordinary shares and the exercise price of the option at the date of grant.
      Statement of Financial Accounting Standards No. 123, "Accounting for
      Stock-Based Compensation" ("SFAS 123"), issued in October 1995, requires
      the use of the fair value based method of accounting for stock options.
      Under this method, compensation cost is measured at the grant date based
      on the fair value of the options granted and is recognized over the
      vesting period. SFAS 123, however, allows the Company to continue to
      measure the compensation cost of employees in accordance with APB 25, but
      requires the Company to disclose pro forma information regarding net
      income (loss) and per share data determined as if the Company had
      accounted for its employee share options under the fair value method of
      that statement.

      Pro forma net income (loss) and per share data, had the Company adopted
      the fair value method of SFAS 123, is as follows:

<Table>
<Caption>
                                                                            YEAR ENDED DECEMBER 31,
                                                                       --------   ---------   ---------
                                                                         1999        2000        2001
                                                                       --------   ---------   ----------
          <S>                                                          <C>        <C>         <C>
          Pro forma:
             Net income (loss)                                         $    480   $  10,358   $  (4,660)
                                                                       ========   =========   =========

             Net income (loss) per ordinary share - basic              $    .03   $     .55   $    (.21)
                                                                       ========   =========   =========

             Net income (loss) per ordinary share - diluted            $    .03   $     .54   $    (.21)
                                                                       ========   =========   =========
</Table>

      The weighted average fair value of the options granted during 1999, 2000
      and 2001 in applying the fair value method was estimated at $2.09, $4.83
      and $2.91, respectively, using the Black-Scholes pricing model with the
      following assumptions:

<Table>
<Caption>
                                                       1999 GRANT        2000 GRANT          2001 GRANT
                                                       ----------      -------------        -------------
          <S>                                             <C>          <C>                  <C>
          Dividend yield                                     0                 0                    0
          Volatility                                        40%               93%                  83%
          Risk-free interest rate                         5.80%        5.71% - 6.54%        3.90% - 4.86%
          Expected life                                      4                 4                    4
</Table>

                                                                            F-15
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 12 - SHAREHOLDERS' EQUITY (CONTINUED)

(d)   TREASURY STOCK:

      On September 17, 2001, the Company announced that the Board of Directors
      authorized a share repurchase program to acquire up to $3,000 of the
      Company's ordinary shares from time to time in open market transactions.
      During September 2001, the Company purchased 250,000 ordinary shares at a
      cost of $592 in connection with such program.

NOTE 13 - MONETARY BALANCES IN NONDOLLAR CURRENCIES

<Table>
<Caption>
                                                                 DECEMBER 31,
                             -------------------------------------------------------------------------------------
                                               2000                                         2001
                             ----------------------------------------      ---------------------------------------
                               ISRAELI CURRENCY (a)          OTHER          ISRAELI CURRENCY (a)          OTHER
                             -----------------------       NONDOLLAR       ----------------------       NONDOLLAR
                             UNLINKED      LINKED (b)      CURRENCIES      UNLINKED     LINKED (b)      CURRENCIES
                             --------      ---------       ----------      --------     ----------      ----------
<S>                            <C>           <C>              <C>           <C>          <C>              <C>
Assets - current               $ 2,845       $ 1,170          $ 3,178       $ 1,537                       $ 4,913
Liabilities - current            8,011                          1,785         3,537      $ 3,584            4,544
</Table>

(a)   The above does not include balances in Israeli currency linked to the
      dollar.
(b)   To the Israeli CPI.

NOTE 14 - GEOGRAPHIC INFORMATION

Substantially all fixed assets are located in Israel and substantially all
revenues are derived from shipments to other countries. Revenues are
attributable to geographic areas/countries based upon the destination of
shipment of product as follows:

<Table>
<Caption>
                                                                   YEAR ENDED DECEMBER 31,
                                                            -----------------------------------
                                                               1999         2000         2001
                                                            ----------   ----------  ----------
          <S>                                               <C>          <C>         <C>
          United States                                     $    5,413   $   10,940  $    8,235
          Europe                                                 4,990        8,788       7,796
          Japan                                                  1,322        4,791       2,845
          Taiwan                                                 6,045        6,372       5,763
          China                                                  1,306        9,589      12,648
          Korea                                                  1,165        5,045       1,685
          Singapore                                                878        3,718         864
          Canada                                                              2,416       1,519
          Other Asia                                             1,941          540       1,410
          Rest of the world                                        832          926       1,303
                                                            ----------   ----------  ----------

                                                            $   23,892   $   53,125  $   44,068
                                                            ==========   ==========  ==========
</Table>

                                                                            F-16
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 15 - SELECTED INCOME STATEMENT DATA

(a)   SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:

<Table>
<Caption>
                                                                      YEAR ENDED DECEMBER 31,
                                                                -----------------------------------
                                                                   1999        2000         2001
                                                                ---------   ----------   ----------
          <S>                                                   <C>         <C>          <C>
          Selling                                               $   6,224   $    9,982   $   11,212
          General and administrative                                1,603        2,328        2,966
                                                                ---------   ----------   ----------

                                                                $   7,827   $   12,310   $   14,178
                                                                =========   ==========   ==========
</Table>

(b)   FINANCIAL AND OTHER INCOME (EXPENSE), NET:

      Financial and other income (expense), net includes interest income of $15
      (1999), $896 (2000) and $1,784 (2001) and interest expense of $700 (1999),
      $816 (2000) and $365 (2001).

(c)   RESTRUCTURING EXPENSES:

      Restructuring expenses consist principally of payments aggregating $314 to
      terminated employees resulting from implementation of a plan to reduce
      costs due to a reduction in sales and expenses of $146 related to a leased
      facility vacated by the Company in connection with relocating its
      operations to its newly constructed facility.

NOTE 16 - TAXES ON INCOME

(a)   TAX BENEFITS UNDER THE LAW FOR ENCOURAGEMENT OF CAPITAL INVESTMENTS, 1959:

      The Company's production facilities have been granted "approved
      enterprise" status under the above law. The Company participates in the
      Alternative Benefits Program and, accordingly, income from its approved
      enterprises will be tax exempt for a period of ten years (limited to 12
      years from commencement of production or 14 years from the date of
      approval, whichever is earlier), commencing in the first year in which the
      approved enterprise first generates taxable income due to the fact that
      the Company operates in Zone "A" in Israel.

      The period of benefits relating to the recent approved enterprise
      production facilities will expire in 2008. The tax benefits with regard to
      the first approved enterprise production facilities expired on December
      31, 1999. In the event of distribution of cash dividends from tax exempt
      income, the Company would have to pay the 25% tax in respect of the amount
      distributed (the amount distributed for this purpose includes the amount
      of the Company's tax that applies as a result of the distribution). The
      Company has decided to reinvest the amount of the tax-exempt income, and
      not to distribute such income as cash dividends. Accordingly, no deferred
      income tax has been provided with respect to the tax-exempt income.

      Undistributed taxable earnings in Israel, for which taxes have not been
      provided, aggregated $16,670 at December 31, 2001. The amount of tax that
      would be owed if such amounts were distributed would be approximately
      $4,168 at December 31, 2001.

      The entitlement to the above benefits is conditional upon the Company's
      fulfilling the conditions stipulated by the above law, regulations
      published thereunder and the certificate of approval for the specific
      investments in approved enterprises. In the event of failure to comply
      with these conditions, the benefits may be canceled and the Company may be
      required to refund the amount of the benefits, in whole or in part, with
      the addition of linkage differences to the Israeli CPI and interest.

                                                                            F-17
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 16 - TAXES ON INCOME (CONTINUED)

(b)   MEASUREMENT OF RESULTS FOR TAX PURPOSES UNDER THE INCOME TAX (INFLATIONARY
      ADJUSTMENTS) LAW, 1985 (THE "INFLATIONARY ADJUSTMENTS LAW"):

      Under this law, results for tax purposes are measured on a real basis -
      adjusted to the increase in the Israeli CPI. These financial statements
      are presented in dollars. The difference between the change in the Israeli
      CPI and in the exchange rate of the dollar, both on annual and cumulative
      bases, will cause a difference between taxable income and income reflected
      in these financial statements.

(c)   TAX BENEFITS UNDER THE LAW FOR THE ENCOURAGEMENT OF INDUSTRY
      (TAXES), 1969:

      The Company is an "industrial company" as defined by this law and as such
      is entitled to certain tax benefits, mainly accelerated depreciation as
      prescribed by regulations published under the Inflationary Adjustments Law
      and the right to claim public issuance expenses as a deduction for tax
      purposes.

(d)   LOSS OF NON-ISRAELI SUBSIDIARIES:

      Non-Israeli subsidiaries are taxed according to tax laws in their
      countries of residence.

(e)   TAXES ON INCOME INCLUDED IN THE INCOME STATEMENTS:

      The following is a reconciliation of the theoretical tax expense
      (benefit), assuming all income is taxed at the regular tax rate applicable
      to Israeli companies, and the actual tax expense:

<Table>
<Caption>
                                                                                                YEAR ENDED DECEMBER 31,
                                                                                         -------------------------------------
                                                                                            1999          2000         2001
                                                                                         ----------   ----------    ----------
       <S>                                                                               <C>          <C>           <C>
       Income (loss) before income taxes (a)                                             $      625   $   11,739    $   (3,559)
                                                                                         ==========   ==========    ==========

       Theoretical tax provision (benefit) on the above amount at 36%                    $      225   $    4,226        (1,281)

       Tax benefits arising from "approved enterprises"                                        (482)      (3,323)       (1,151)
                                                                                         ----------   ----------    ----------

                                                                                               (257)         903        (2,432)
       Increase (decrease) in taxes resulting from:
          Losses of subsidiaries for which no tax benefit has been recognized                   256          488           612
          Permanent differences, including difference between
             Israeli CPI-adjusted tax returns and dollar-adjusted financial
             statements - net                                                                  (110)        (385)        1,201
          Other                                                                                 111           91           (20)
          Acquired in-process research and development expense,
             not deductible for tax purposes                                                                             1,308
          Nondeductible expenses                                                                                            49
          Interest income not subject to tax                                                                              (566)
          Decrease in taxes resulting from utilization of carryforward tax
             losses in the United States for which deferred tax benefits
             were not provided in previous years                                                            (249)
                                                                                         ----------   ----------    ----------

       Actual tax expense                                                                $        0   $      848    $      152
                                                                                         ==========   ==========    ==========
       (a) Consists of income (loss) as follows:
             Israel                                                                      $    2,307   $   12,403        (2,180)
             Outside of Israel                                                               (1,682)        (664)       (1,379)
                                                                                         ----------   ----------    ----------

                                                                                         $      625   $   11,739    $   (3,559)
                                                                                         ==========   ==========    ==========

       Per share effect of tax benefits from "approved enterprises":
          Basic                                                                          $      .03   $      .14    $      .05
          Diluted                                                                        $      .03   $      .14    $      .05
</Table>

                                                                            F-18
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 16 - TAXES ON INCOME  (CONTINUED)

(e)   TAXES ON INCOME INCLUDED IN THE INCOME STATEMENTS: (CONTINUED)

      Deferred tax assets consist of the following at December 31:

<Table>
<Caption>
                                                                                     2000       2001
                                                                                   -------   ---------
          <S>                                                                      <C>       <C>
          Current:
             Provision for doubtful debts, returns and rejections                  $   101   $     240
             Accrued warranty                                                          110         161
             Unearned revenue                                                           93         158
             Net operating losses of subsidiaries                                      750       2,106
             Accrued vacation                                                           37          45
                                                                                   -------   ---------

                                                                                     1,091       2,710
             Valuation allowance                                                      (912)     (2,466)
                                                                                   -------   ---------

             Current deferred tax asset, net of allowance                              179         244
                                                                                   -------   ---------

          Long-term:
             Offering costs                                                            428         256
             Other                                                                      20          50
                                                                                   -------   ---------

                                                                                       448         306
                                                                                   -------   ---------

                                                                                   $   627   $     550
                                                                                   =======   =========
</Table>

      The valuation allowance increased by $256 in 1999, decreased by $120 in
      2000 and increased by $1,554 in 2001.

      As of December 31, 2001, the Company has a net operating loss ("NOL")
      carryover of approximately $9,000, principally applicable to losses of
      Inspectech prior to acquisition (see Note 3), which is available to offset
      income taxable in Israel, subject to annual limitations. Such NOL has no
      expiration date. In addition, foreign subsidiaries have NOL carryovers
      aggregating approximately $3,800 of which approximately $1,700 expires in
      2006, approximately $1,100 expires in 2021 and approximately $1,000 has no
      expiration date. The related deferred tax assets have been fully offset by
      valuation allowances and any future recognized tax benefits related to
      such NOL's will reduce income tax expense.

NOTE 17 - TRANSACTIONS WITH RELATED PARTIES

<Table>
<Caption>
                                                                                 YEAR ENDED DECEMBER 31,
                                                                            --------------------------------
                                                                              1999        2000        2001
                                                                            --------    --------    --------
      <S>                                                                   <C>         <C>         <C>
      Rent expense to Priortech Ltd. (Note 10(b)(1))                        $     48    $     77    $     70
      Royalty expense to Priortech Ltd. (Note 10(a)(1))                          119
      Purchases from Priortech Ltd.                                               96       1,636       1,712
      Interest expense to Priortech Ltd.                                          75          44          55
      Participation of Priortech Ltd. in expenses of the Company                (100)       (100)
      Sales to Priortech Ltd.                                                   (824)       (698)       (521)
</Table>

                                                                            F-19
<Page>

CAMTEK LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 2001
(Dollars in thousands)

NOTE 17 - TRANSACTIONS WITH RELATED PARTIES  (CONTINUED)

On January 1, 1998, the Company and Priortech Ltd. entered into a Management
Services Agreement under which the Company provides to Priortech Ltd. management
services of Rafi Amit and Yotam Stern, Chief Executive Officer and Executive
Vice President, Business and Strategy and former Chief Financial Officer of the
Company, respectively. Prior to such date, such individuals were employed by
Priortech Ltd. Priortech shall pay monthly to the Company a portion of
compensation costs with respect to Mr. Amit's and Mr. Stern's employment, which
portion shall be calculated on the basis of the actual amount of time spent in
rendering such services in relation to the Company's total monthly compensation
costs with respect to Mr. Amit's and Mr. Stern's employment. Effective January
2001, the Management Services Agreement was terminated and Priortech Ltd.
employs these individuals in a part time position.

On January 1, 1998, the Company entered into a loan agreement with Priortech
Ltd. with respect to the repayment of loans granted to the Company, beginning in
1995. On December 31, 1998, amounts previously owed to affiliates were assumed
by Priortech Ltd. and were also to be repaid pursuant to the terms of the loan
agreement. The $1,685 outstanding principal amount of the loan as of December
31, 1999 was linked to the Israeli CPI since January 1, 2000 and provided for
annual interest of 4%. Since June 2000 the loan was linked to the differences
between the US dollar and the NIS currency exchange rate and provided for annual
interest of 6.5%. According to the agreement, the loan was repaid after
completion of the company's initial public offering, in year 2000.

                                                                            F-20