##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark one)
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Fiscal Year Ended December 31, 2007
 Or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the transition period from                    to
 Commission File Number: 0-22248
 ULTRATECH, INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    94-3169580
(I.R.S. Employer
Identification No.)3050 Zanker Road 
San Jose, California
(Address of principal executive offices)
    
    95134
(Zip Code)
 (408) 321-8835
 None
 Common Stock, $0.001 Par Value Per Share;
Preferred Stock Purchase Rights
 o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



PART I
 ITEM 1. BUSINESS
  The Company
  Lithography
   Laser Anneal Technology
   2




---



##### 



General Background
       3




---



##### 



Products
  TM
    4




---



##### 



MinimumFeature SizeProduct Line
    
    Wavelength
    
    (microns)1X Steppers:1000 Series:Star 100
    
    i-line, gh-line
    
    0.8 - 1.0NanoTech
    
    i-line, gh-line
    
    1.0 - 2.0Prisma-ghi
    
    ghi-line
    
    2.0 - 4.0Saturn Spectrum 300e2
    
    ghi-line
    
    2.0AP200
    
    ghi-line
    
    2.0AP300
    
    ghi-line
    
    2.0Laser Processing:LSA100A
    
    NA
    
    NA
 Research, Development and Engineering
  5




---



##### 



Sales and Service
    Manufacturing
   6




---



##### 



Competition
  Advanced Packaging
   7




---



##### 



Laser Processing
   Intellectual Property Rights
   8




---



##### 



Environmental Regulations
  Customers, Applications and Markets
   9




---



##### 



Backlog
  Employees
  10




---



##### 



Information Available on Our Web-site
 www.ultratech.com
 Item 1A Risk Factors
  We currently spend, and expect to continue to spend, significant resources to develop,
introduce and commercialize our laser processing systems and AP wafer stepper products, and we may
not be successful in achieving or increasing sales of these products.
   Our sales cycle is typically lengthy and involves a significant commitment of capital by our
customers, which has subjected us, and is likely to continue to subject us, to delays in customer
acceptances of our products and other risks, any of which could adversely impact our results of
operations by, among other things, delaying recognition of revenue with respect to those orders and
resulting in increased installation, qualification and similar costs.
  11




---



##### 



The semiconductor industry historically has been highly cyclical and has experienced periods
of oversupply, which has in turn affected the market for semiconductor equipment such as ours and
which can adversely affect our results of operations during such periods.
  We may not be successful in protecting our intellectual property rights or we could be found
to have infringed the intellectual property rights of others, either of which could weaken our
competitive position and adversely affect our results of operations.
   12




---



##### 



We operate in a highly competitive industry in which customers are required to invest
substantial resources in each product, which makes it difficult to achieve significant sales to a
particular customer once another vendors equipment has been purchased by that customer.
   13




---



##### 



We sell our products primarily to a limited number of customers and to customers in a limited
number of industries, which subjects us to increased risks related to the business performance of
our customers, and therefore their need for our products, and the business cycles of the markets
into which we sell.
  14




---



##### 



We rely on a limited number of outside suppliers and subcontractors to manufacture certain
components and subassemblies, and on single or a limited group of outside suppliers for certain
materials for our products, which could result in a potential inability to obtain an adequate
supply of required components due to the suppliers failure or inability to provide such components
in a timely manner, or at all, and reduced control over pricing and timely delivery of components
and materials, any of which could adversely affect our results of operations.
   Our industry is subject to rapid technological change and product innovation, which could
result in our technologies and products being replaced by those of our competitors, which would
adversely affect our business and results of operations.
  15




---



##### 



A substantial portion of our sales are outside of the United States, which subjects us to
risks related to customer service, installation, foreign economic and political stability,
uncertain regulatory and tax rules, and foreign exchange rate fluctuations, all of which make it
more difficult to operate our business.
   We are dependent on our key personnel, especially Mr. Zafiropoulo our Chief Executive Officer,
and our business and results of operations would be adversely affected if we were to lose our key
employees.
  16




---



##### 



Changes in financial accounting standards or policies in the past have affected, and in the
future may, affect, our reported results of operations.
   Changes in securities laws and listing standards, in particular those that have resulted from
the passage of the Sarbanes-Oxley Act of 2002 and related rules and regulations, have increased our
legal and financial costs, and we expect to continue to spend significant resources to comply with
these requirements.
  17




---



##### 



Our equity incentive plans, certain provisions of our Certificate of Incorporation and Bylaws,
and Delaware law may discourage third parties from pursuing a change of control transaction with
us.
  Our stock price has experienced significant volatility in the past and we expect this to
continue in the future as a result of many factors, some of which could be unrelated to our
operating performance, and such volatility can have a major impact on the number of shares subject
to outstanding stock options and restricted stock units that are included in calculating our
earnings per share.
   Our results of operations and business could be adversely affected by wars and other military
action, as well as terrorist attacks and threats and government responses thereto, especially if
any such actions were directed at us or our facilities or customers.
  If we acquire companies, products, or technologies, we may face risks associated with those
acquisitions.
  18




---



##### 



Our long-term expenses reduction programs may result in an increase in short-term expenses.
 Accounting for Costs Associated with Exit or Disposal Activities
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  ITEM 2. PROPERTIES
    ITEM 3. LEGAL PROCEEDINGS
  19




---



##### 



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Executive Officers of the Registrant
  Name
    
    Age
    
    Position with the CompanyArthur W. Zafiropoulo
    
    68
    
    Chairman of the Board of Directors, Chief Executive Officer and PresidentBruce R. Wright
    
    59
    
    Senior Vice President, Finance, Chief Financial Officer and Secretary
  20




---



##### 



PART II
 ITEM 5.
    
    MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
  Fiscal 2007Fiscal Quarter Ended
    
    March 31
    
    June 30
    
    September 30
    
    December 31Market Price:
    
    High
    
    $
    14.37
    
    
    $
    14.71
    
    
    $
    16.78
    
    
    $
    14.94Low
    
    $
    11.75
    
    
    $
    12.00
    
    
    $
    12.25
    
    
    $
    10.79
 Fiscal 2006Fiscal Quarter Ended
    
    March 31
    
    June 30
    
    September 30
    
    December 31Market Price:
    
    High
    
    $
    25.01
    
    
    $
    25.03
    
    
    $
    15.96
    
    
    $
    15.04Low
    
    $
    15.76
    
    
    $
    14.65
    
    
    $
    12.75
    
    
    $
    10.56
     Stock Performance Graph
  21




---



##### 



Comparison of Cumulative Total Returns(1)(2)(3)
 
 
 (1)
    
    The graph covers the period from December 31, 2002 to December 31, 2007.(2)
    
    No cash dividends have been declared on our common stock.(3)
    
    Stockholder returns over the indicated period should not be considered indicative of future
stockholder returns. Notwithstanding anything to the contrary set forth in any of our previous filings under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, which might
incorporate our future filings under those statutes, the preceding Stock Performance Graph will not
be incorporated by reference into any of those prior filings, nor will such report or graph be
incorporated by reference into any our future filings under those statutes.
 22




---



##### 



ITEM 6. SELECTED FINANCIAL DATA
 In thousands, except per share data and percentage information
    
    2007(c)
    
    2006(b)
    
    2005
    
    2004
    
    2003(a)Operations:Net sales
    
    $
    112,310
    
    
    $
    119,633
    
    
    $
    122,366
    
    
    $
    109,892
    
    
    $
    100,121Gross profit
    
    
    48,859
    
    
    
    46,024
    
    
    
    52,047
    
    
    
    52,693
    
    
    
    46,611Gross profit as a percentage of net sales
    
    
    44
    %
    
    
    38
    %
    
    
    43
    %
    
    
    48
    %
    
    
    47
    %Operating income (loss)
    
    
    (5,767
    )
    
    
    (14,371
    )
    
    
    (4,875
    )
    
    
    (2,429
    )
    
    
    2,972Income (loss) before income taxes and cumulative
effect of a change in accounting principle
    
    
    (758
    )
    
    
    (8,014
    )
    
    
    (522
    )
    
    
    1,069
    
    
    
    6,996Pre-tax income (loss) as a percentage of net sales
    
    
    (0.7
    %)
    
    
    (6.7
    %)
    
    
    (0.4
    %)
    
    
    1.0
    %
    
    
    7.0
    %Provision (benefit) for income taxes
    
    
    286
    
    
    
    954
    
    
    
    699
    
    
    
    445
    
    
    
    (570
    )Income (loss) before cumulative effect of a change in
accounting principle
    
    
    (1,044
    )
    
    
    (8,968
    )
    
    
    (1,221
    )
    
    
    624
    
    
    
    7,566Cumulative effect of the adoption of FIN 47
    
    
    
    
    
    
    
    
    
    
    (1,122
    )
    
    
    
    
    
    
    Net income (loss)
    
    
    (1,044
    )
    
    
    (8,968
    )
    
    
    (2,343
    )
    
    
    624
    
    
    
    7,566Income (loss) before cumulative effect of a change in
accounting principle per share  basic
    
    
    (0.04
    )
    
    
    (0.38
    )
    
    
    (0.05
    )
    
    
    0.03
    
    
    
    0.33Cumulative effect of the adoption of FIN 47 per sharebasic
    
    
    
    
    
    
    
    
    
    
    (0.05
    )
    
    
    
    
    
    
    Net income (loss) per share  basic
    
    
    (0.04
    )
    
    
    (0.38
    )
    
    
    (0.10
    )
    
    
    0.03
    
    
    
    0.33Number of shares used in per share computation  basic
    
    
    23,354
    
    
    
    23,764
    
    
    
    23,964
    
    
    
    23,733
    
    
    
    23,017Income (loss) before cumulative effect of a change in
accounting principle per share  diluted
    
    
    (0.04
    )
    
    
    (0.38
    )
    
    
    (0.05
    )
    
    
    0.03
    
    
    
    0.31Cumulative effect of the adoption of FIN 47 per share 
diluted
    
    
    
    
    
    
    
    
    
    
    (0.05
    )
    
    
    
    
    
    
    Net income (loss) per share  diluted
    
    
    (0.04
    )
    
    
    (0.38
    )
    
    
    (0.10
    )
    
    
    0.03
    
    
    
    0.31Number of shares used in per share computation  diluted
    
    
    23,354
    
    
    
    23,764
    
    
    
    23,964
    
    
    
    24,734
    
    
    
    24,476Balance sheet:Cash, cash equivalents and short-term investments (Note 8)
    
    $
    131,998
    
    
    $
    78,090
    
    
    $
    141,067
    
    
    $
    151,627
    
    
    $
    165,902Working capital
    
    
    161,855
    
    
    
    104,951
    
    
    
    165,181
    
    
    
    169,621
    
    
    
    170,501Total assets
    
    
    218,641
    
    
    
    216,050
    
    
    
    222,309
    
    
    
    230,546
    
    
    
    220,748Long-term
obligations
    
    
    7,534
    
    
    
    7,580
    
    
    
    7,805
    
    
    
    5,338
    
    
    
    3,725Stockholders equity
    
    
    177,400
    
    
    
    174,108
    
    
    
    188,950
    
    
    
    193,290
    
    
    
    190,739
 23




---



##### 



Quarterly Data
 Unaudited, in thousands, except per share data
    
    1st
    
    2nd
    
    3rd
    
    4th2007Net sales
    
    $
    27,368
    
    
    $
    30,011
    
    
    $
    25,188
    
    
    $
    29,743Gross profit
    
    
    10,800
    
    
    
    13,176
    
    
    
    10,361
    
    
    
    14,522Operating income (loss)
    
    
    (4,466
    )
    
    
    (221
    )
    
    
    (2,646
    )
    
    
    1,566Net income (loss)
    
    
    (3,245
    )
    
    
    1,020
    
    
    
    (884
    )
    
    
    2,065Net income (loss) per sharebasic
    
    
    (0.14
    )
    
    
    0.04
    
    
    
    (0.04
    )
    
    
    0.09Number of shares used in per share computationbasic
    
    
    23,285
    
    
    
    23,368
    
    
    
    23,394
    
    
    
    23,413Net income (loss) per sharediluted
    
    
    (0.14
    )
    
    
    0.04
    
    
    
    (0.04
    )
    
    
    0.09Number of shares used in per share computationdiluted
    
    
    23,285
    
    
    
    23,467
    
    
    
    23,394
    
    
    
    23,5142006Net sales
    
    $
    34,944
    
    
    $
    26,043
    
    
    $
    33,943
    
    
    $
    24,703Gross profit
    
    
    13,657
    
    
    
    11,811
    
    
    
    12,450
    
    
    
    8,106Operating income (loss)
    
    
    207
    
    
    
    (2,884
    )
    
    
    (3,568
    )
    
    
    (8,126
    )Net income (loss)
    
    
    1,582
    
    
    
    (1,176
    )
    
    
    (2,568
    )
    
    
    (6,806
    )Net income (loss) per sharebasic
    
    
    0.07
    
    
    
    (0.05
    )
    
    
    (0.11
    )
    
    
    (0.29
    )Number of shares used in per share computationbasic
    
    
    23,830
    
    
    
    23,927
    
    
    
    23,477
    
    
    
    23,213Net income (loss) per sharediluted
    
    
    0.06
    
    
    
    (0.05
    )
    
    
    (0.11
    )
    
    
    (0.29
    )Number of shares used in per share computationdiluted
    
    
    25,127
    
    
    
    23,927
    
    
    
    23,477
    
    
    
    23,213
 
 (a)
    
    Operating income in 2003 includes the favorable impact of selling inventory and discontinued
products previously written down of $1.7 million. Operating income in 2003 also includes the
favorable impact of reducing accruals established in prior years for the restructuring of
operations of $0.8 million.(b)
    
    Operating loss in 2006 includes a charge of $1.9 million related to certain exit activities
(of which $0.1 million relating to the acceleration of restricted stock units and options is
included in stock-based compensation expenses) and $2.0 million of stock-based compensation
expenses. Refer to Notes 5 and 11 of our consolidated financial statements herein for further
disclosures related to these items.(c)
    
    Operating loss in 2007 includes a charge of $1.6 million related to certain exit
activities, a credit of $0.9 million which resulted from a refund of employee health insurance
premiums paid previously, a benefit of $0.5 million related to sale of previously written down
inventory and a credit of $0.3 million due to change in estimate related to collectibility of
certain accounts receivable. Refer to Note 11 of our consolidated financial statements herein
for further disclosures related to the exit activities. ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  24




---



##### 



OVERVIEW
    CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   25




---



##### 



Revenue Recognition
        Inventories and Purchase Order Commitments
  26




---



##### 



Warranty Obligations
  Allowance for Bad Debts
  Deferred Income Taxes
  Stock-Based Compensation
  RESULTS OF OPERATIONS
  27




---



##### 



Net Sales
 2007 vs. 2006
 Amount of
    
    
    Percentage(in millions)
    
    2007
    
    
    2006
    
    
    Change
    
    
    ChangeSales of:Systems
    
    $
    80.7
    
    
    $
    87.9
    
    
    $
    (7.2
    )
    
    
    -8
    %Spare parts
    
    
    15.9
    
    
    
    17.3
    
    
    
    (1.4
    )
    
    
    -8
    %Services
    
    
    15.6
    
    
    
    14.2
    
    
    
    1.4
    
    
    
    10
    %Licenses
    
    
    0.1
    
    
    
    0.2
    
    
    
    (0.1
    )
    
    
    -50
    %Total Net Sales
    
    $
    112.3
    
    
    $
    119.6
    
    
    $
    (7.3
    )
    
    
    -6
    %
     28




---



##### 



2006 vs. 2005
 Amount of
    
    
    Percentage(in millions)
    
    2006
    
    
    2005
    
    
    Change
    
    
    ChangeSales of:Systems
    
    $
    87.9
    
    
    $
    93.2
    
    
    $
    (5.3
    )
    
    
    -6
    %Spare parts
    
    
    17.3
    
    
    
    15.2
    
    
    
    2.1
    
    
    
    14
    %Services
    
    
    14.2
    
    
    
    12.5
    
    
    
    1.7
    
    
    
    13
    %Licenses
    
    
    0.2
    
    
    
    1.5
    
    
    
    (1.3
    )
    
    
    -87
    %Total Net Sales
    
    $
    119.6
    
    
    $
    122.4
    
    
    $
    (2.8
    )
    
    
    -2
    %
   29




---



##### 



Gross Profit
 2007 vs. 2006
   2006 vs. 2005
  30




---



##### 



Research, Development and Engineering Expenses
 2007 vs. 2006
 Amount of
    
    Percentage(in millions)
    
    2007
    
    2006
    
    Change
    
    changeResearch, development and engineering expenses
    
    $
    23.4
    
    
    $
    26.2
    
    
    $
    (2.8
    )
    
    
    -11
    %
  2006 vs. 2005
 Amount of
    
    Percentage(in millions)
    
    2006
    
    2005
    
    Change
    
    changeResearch, development and engineering expenses
    
    $
    26.2
    
    
    $
    27.0
    
    
    $
    (0.8
    )
    
    
    -3
    %
  Selling, General and Administrative Expenses
 2007 vs. 2006
 Amount of
    
    Percentage(in millions)
    
    2007
    
    2006
    
    Change
    
    changeSelling, general and administrative expenses
    
    $
    31.2
    
    
    $
    34.2
    
    
    $
    (3.0
    )
    
    
    -9
    %
  2006 vs. 2005
 Amount of
    
    Percentage(in millions)
    
    2006
    
    2005
    
    Change
    
    changeSelling, general and administrative expenses
    
    $
    34.2
    
    
    $
    30.0
    
    
    $
    4.2
    
    
    
    14
    %
  31




---



##### 



Interest and Other Income, Net
 (in thousands)
    
    2007
    
    
    2006
    
    
    2005Interest income
    
    $
    5,697
    
    
    $
    6,273
    
    
    $
    4,752Other income (expense), net
    
    
    13
    
    
    
    321
    
    
    
    (19
    )Interest and other income, net
    
    $
    5,710
    
    
    $
    6,594
    
    
    $
    4,733
  Provision for Income Taxes
   Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No.
109
    32




---



##### 



Cumulative Effect of the Adoption of FIN 47
  Outlook
    LIQUIDITY AND CAPITAL RESOURCES
  33




---



##### 



34




---



##### 



Less than
    
    
    
    
    
    
    
    
    
    
    After(in millions)
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsNotes payable obligations
    
    $
    5.8
    
    
    $
    5.8
    
    
    $
    
    
    
    $
    
    
    
    $
    Non-cancelable capital lease obligations
    
    
    0.7
    
    
    
    0.1
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    Non-cancelable operating lease obligations
    
    
    12.4
    
    
    
    4.8
    
    
    
    7.3
    
    
    
    0.3
    
    
    
    Long-term payables
    
    
    2.5
    
    
    
    
    
    
    
    0.2
    
    
    
    0.1
    
    
    
    2.2Asset retirement obligations
    
    
    2.2
    
    
    
    
    
    
    
    1.1
    
    
    
    1.1
    
    
    
    Open purchase order commitments
    
    
    46.2
    
    
    
    27.5
    
    
    
    18.7
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    
    69.8
    
    
    
    38.2
    
    
    
    27.6
    
    
    
    1.8
    
    
    
    2.2Sublessor agreement
    
    
    (1.4
    )
    
    
    (0.7
    )
    
    
    (0.7
    )
    
    
    
    
    
    
    Net
    
    $
    68.4
    
    
    $
    37.5
    
    
    $
    26.9
    
    
    $
    1.8
    
    
    $
    2.2
    Off-Balance Sheet Transactions
  Foreign Currency
  35




---



##### 



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
    Cash equivalents and
    
    Valuation of securities
    
    
    
    
    
    
    Valuation of securitiesAvailable-for-sale
    
    given an interest rate
    
    
    No change in
    
    
    given an interest rateInvestments
    
    decrease of X basis points
    
    
    interest rate
    
    
    increase of X basis points(in thousands)
    
    (150 BPS)
    
    
    (100 BPS)
    
    
    (50 BPS)
    
    
    0 BPS
    
    
    50 BPS
    
    
    100 BPS
    
    
    150 BPSU.S. Treasury securities and
obligations of U.S.
government agencies
    
    $
    88,723
    
    
    $
    88,365
    
    
    $
    88,012
    
    
    $
    87,663
    
    
    $
    87,317
    
    
    $
    86,976
    
    
    $
    86,639U.S. corporate debt securities
    
    
    8,946
    
    
    
    8,867
    
    
    
    8,789
    
    
    
    8,713
    
    
    
    8,638
    
    
    
    8,563
    
    
    
    8,490Money market funds and
commercial papers
    
    
    30,343
    
    
    
    30,341
    
    
    
    30,338
    
    
    
    30,335
    
    
    
    30,332
    
    
    
    30,330
    
    
    
    30,327Total investments
    
    $
    128,012
    
    
    $
    127,573
    
    
    $
    127,139
    
    
    $
    126,711
    
    
    $
    126,287
    
    
    $
    125,869
    
    
    $
    125,456
  Credit Risk
   36




---



##### 



Foreign Exchange Risk
   37




---



##### 



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  ULTRATECH, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  Page NumberConsolidated Balance SheetsDecember 31, 2007 and 2006
    
    39Consolidated Statements of OperationsYears ended December 31,
2007, 2006, and 2005
    
    40Consolidated Statements of Cash FlowsYears ended December 31,
2007, 2006, and 2005
    
    41Consolidated Statements of Stockholders EquityYears ended
December 31, 2007, 2006, and 2005
    
    42Notes to Consolidated Financial Statements
    

43-64Reports of Ernst & Young LLP, Independent Registered Public Accounting
Firm
    
    65
  38




---



##### 



ULTRATECH , INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,In thousands, except share and per share amounts
    
    2007
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    54,586
    
    
    $
    23,883Short-term investments
    
    
    77,412
    
    
    
    54,207Accounts receivable, less allowance for doubtful accounts
of $306 in 2007 and $466 in 2006
    
    
    30,562
    
    
    
    18,054Inventories
    
    
    29,128
    
    
    
    40,988Prepaid expenses and other current assets
    
    
    3,874
    
    
    
    2,181Total current assets
    
    
    195,562
    
    
    
    139,313Long-term investments
    
    
    
    
    
    
    48,328Equipment and leasehold improvements, net
    
    
    16,826
    
    
    
    20,326Demonstration inventory
    
    
    3,652
    
    
    
    4,717Other assets
    
    
    2,601
    
    
    
    3,366Total assets
    
    $
    218,641
    
    
    $
    216,050Liabilities and Stockholders EquityCurrent liabilities:Notes payable
    
    $
    5,794
    
    
    $
    6,974Accounts payable
    
    
    8,200
    
    
    
    10,440Accrued expenses
    
    
    8,891
    
    
    
    10,409Deferred product and services income
    
    
    10,161
    
    
    
    2,950Advance billings
    
    
    115
    
    
    
    2,713Income taxes payable
    
    
    546
    
    
    
    876Total current liabilities
    
    
    33,707
    
    
    
    34,362Accrued rent
    
    
    2,093
    
    
    
    2,737Other liabilities
    
    
    5,441
    
    
    
    4,843Commitments and contingenciesStockholders equity:Preferred Stock, $0.001 par value:2,000,000 shares authorized; none issued
    
    
    
    
    
    
    Common Stock, $0.001 par value:40,000,000 shares authorized; issued and outstanding:23,371,055 at December 31, 2007 and 23,218,722 at
December 31, 2006
    
    
    25
    
    
    
    25Additional paid-in capital
    
    
    229,412
    
    
    
    226,146Treasury stock, 1,845,301 shares at December 31, 2007
and 1,847,801 shares at December 31, 2006
    
    
    (26,634
    )
    
    
    (26,670
    )Accumulated other comprehensive loss, net
    
    
    91
    
    
    
    (915
    )Accumulated deficit
    
    
    (25,494
    )
    
    
    (24,478
    )Total stockholders equity
    
    
    177,400
    
    
    
    174,108Total liabilities and stockholders equity
    
    $
    218,641
    
    
    $
    216,050
  39




---



##### 



ULTRATECH , INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended December 31,In thousands, except per share amounts
    
    2007
    
    
    2006
    
    
    2005Net salesProducts
    
    $
    96,583
    
    
    $
    105,277
    
    
    $
    108,377Services
    
    
    15,627
    
    
    
    14,156
    
    
    
    12,472Licenses
    
    
    100
    
    
    
    200
    
    
    
    1,517Total net sales
    
    
    112,310
    
    
    
    119,633
    
    
    
    122,366Cost of salesCost of products sold
    
    
    53,834
    
    
    
    64,256
    
    
    
    60,647Cost of services
    
    
    9,617
    
    
    
    9,353
    
    
    
    9,672Gross profit
    
    
    48,859
    
    
    
    46,024
    
    
    
    52,047Research, development, and engineering
    
    
    23,435
    
    
    
    26,206
    
    
    
    26,963Selling, general, and administrative
    
    
    31,191
    
    
    
    34,189
    
    
    
    29,959Operating loss
    
    
    (5,767
    )
    
    
    (14,371
    )
    
    
    (4,875
    )Interest expense
    
    
    (701
    )
    
    
    (237
    )
    
    
    (380
    )Interest and other income, net
    
    
    5,710
    
    
    
    6,594
    
    
    
    4,733Loss before income taxes and cumulative effect of change in
accounting principle
    
    
    (758
    )
    
    
    (8,014
    )
    
    
    (522
    )Provision for income taxes
    
    
    286
    
    
    
    954
    
    
    
    699Loss before cumulative effect of change in accounting principle
    
    
    (1,044
    )
    
    
    (8,968
    )
    
    
    (1,221
    )Cumulative effect of the adoption of FIN 47 Accounting forConditional Asset Retirement Obligations
    
    
    
    
    
    
    
    
    
    
    (1,122
    )Net loss
    
    $
    (1,044
    )
    
    $
    (8,968
    )
    
    $
    (2,343
    )Net loss per share  basic and dilutedLoss before cumulative effect of change in accounting principle
    
    $
    (0.04
    )
    
    $
    (0.38
    )
    
    $
    (0.05
    )Cumulative effect of the adoption of FIN 47 Accounting forConditional Asset Retirement Obligations
    
    $
    
    
    
    $
    
    
    
    $
    (0.05
    )Net loss
    
    $
    (0.04
    )
    
    $
    (0.38
    )
    
    $
    (0.10
    )Number of shares used in per share computations  basic and diluted
    
    
    23,354
    
    
    
    23,764
    
    
    
    23,964
  40




---



##### 



ULTRATECH, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,In thousands
    
    2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net income (loss)
    
    $
    (1,044
    )
    
    $
    (8,968
    )
    
    $
    (2,343
    )Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:Cumulative effect of adoption of FIN 47
    
    
    
    
    
    
    
    
    
    
    1,122Depreciation
    
    
    6,350
    
    
    
    5,846
    
    
    
    6,413Amortization
    
    
    1,215
    
    
    
    1,344
    
    
    
    1,118Accretion of asset retirement obligations
    
    
    240
    
    
    
    179
    
    
    
    (Gain)/loss on disposal of equipment and settlement of asset retirement
obligations
    
    
    217
    
    
    
    (217
    )
    
    
    1Stock-based compensation
    
    
    1,552
    
    
    
    1,957
    
    
    
    77Deferred income taxes
    
    
    40
    
    
    
    (26
    )
    
    
    46Changes in operating assets and liabilities:Accounts receivable
    
    
    (12,508
    )
    
    
    1,056
    
    
    
    797Inventories
    
    
    10,324
    
    
    
    (11,955
    )
    
    
    (1,127
    )Prepaid expenses and other current assets
    
    
    129
    
    
    
    (593
    )
    
    
    574Demonstration Inventory
    
    
    
    
    
    
    (486
    )
    
    
    191Other assets
    
    
    464
    
    
    
    (249
    )
    
    
    (439
    )Accounts payable
    
    
    (2,240
    )
    
    
    2,037
    
    
    
    (5,184
    )Accrued expenses
    
    
    (1,617
    )
    
    
    1,139
    
    
    
    1,570Deferred license revenue
    
    
    
    
    
    
    
    
    
    
    (1,041
    )Deferred product and services income
    
    
    7,211
    
    
    
    980
    
    
    
    726Advance billings
    
    
    (2,598
    )
    
    
    1,859
    
    
    
    439Income taxes payable
    
    
    (308
    )
    
    
    108
    
    
    
    737Accrued rent
    
    
    (644
    )
    
    
    (420
    )
    
    
    (137
    )Other liabilities
    
    
    (468
    )
    
    
    28
    
    
    
    540Net cash provided by (used in) operating activities
    
    
    6,315
    
    
    
    (6,381
    )
    
    
    4,080Cash flows from investing activities:Capital expenditures
    
    
    (1,112
    )
    
    
    (3,317
    )
    
    
    (8,596
    )Proceeds from sales of fixed assets
    
    
    
    
    
    
    79Investments in securities
    
    
    (60,010
    )
    
    
    (42,155
    )
    
    
    (95,994
    )Proceeds from maturities of investments
    
    
    84,994
    
    
    
    44,612
    
    
    
    93,549Net cash provided by (used in) investing activities
    
    
    23,872
    
    
    
    (781
    )
    
    
    (11,041
    )Cash flows from financing activities:Proceeds from notes payable
    
    
    27,456
    
    
    
    62,954
    
    
    
    108,929Repayment of notes payable
    
    
    (28,636
    )
    
    
    (60,269
    )
    
    
    (112,541
    )Proceeds from issuance of common stock
    
    
    1,750
    
    
    
    2,992
    
    
    
    7,511Repurchase of common stock
    
    
    
    
    
    
    (10,794
    )
    
    
    (9,188
    )Net cash provided by (used in) financing activities
    
    
    570
    
    
    
    (5,117
    )
    
    
    (5,289
    )Net effect of exchange rate changes on cash
    
    
    (54
    )
    
    
    (182
    )
    
    
    609Net increase (decrease) in cash and cash equivalents
    
    
    30,703
    
    
    
    (12,461
    )
    
    
    (11,641
    )Cash and cash equivalents at beginning of period
    
    
    23,883
    
    
    
    36,344
    
    
    
    47,985Cash and cash equivalents at end of period
    
    $
    54,586
    
    
    $
    23,883
    
    
    $
    36,344Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    332
    
    
    $
    201
    
    
    $
    312Income taxes paid (tax refund received)
    
    $
    590
    
    
    $
    936
    
    
    $
    (154
    )Other non-cash changes:Capital lease of phone system
    
    $
    562
    
    
    
    
    
    
    
    Systems transferred from (to) inventory to (from) equipment and demonstration
inventory
    
    $
    1,535
    
    
    $
    60
    
    
    $
    5,782Systems transferred from (to) equipment to (from) demonstration inventory
    
    
    
    
    
    
    
    
    
    $
    952Increase/(decrease) in net equipment and leasehold improvements due to adoption
of FIN 47
    
    
    
    
    
    $
    (229
    )
    
    $
    943Increase/(decrease) in asset retirement obligations resulting from
adoption of FIN 47
    
    $
    240
    
    
    $
    (82
    )
    
    $
    2,064
  41




---



##### 



ULTRATECH, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Stockholders EquityAdditional
    
    
    
    
    
    
    Accumulated Other
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Treasury
    
    
    Comprehensive
    
    
    Accumulated
    
    
    StockholdersIn thousands
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stock
    
    
    Income (Loss)
    
    
    (Deficit)
    
    
    EquityBalance at December 31, 2004
    
    
    23,854
    
    
    $
    24
    
    
    $
    213,660
    
    
    $
    (6,738
    )
    
    $
    (489
    )
    
    $
    (13,167
    )
    
    $
    193,290Net issuance of common stock under stock option plans
    
    
    541
    
    
    
    1
    
    
    
    7,488
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    7,511Repurchase of common stock
    
    
    (645
    )
    
    
    
    
    
    
    
    
    
    
    (9,188
    )
    
    
    
    
    
    
    
    
    
    
    (9,188
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77Components of comprehensive loss:Change in net unrealized gains (losses) on:Available-for-sale investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,006
    )
    
    
    
    
    
    
    (1,006
    )Foreign exchange contracts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    609
    
    
    
    
    
    
    
    609Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,343
    )
    
    
    (2,343
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,740
    )Balance at December 31, 2005
    
    
    23,750
    
    
    
    25
    
    
    
    221,225
    
    
    
    (15,904
    )
    
    
    (886
    )
    
    
    (15,510
    )
    
    
    188,950Net issuance of common stock under stock option plans
    
    
    211
    
    
    
    
    
    
    
    2,964
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    2,992Repurchase of common stock
    
    
    (742
    )
    
    
    
    
    
    
    
    
    
    
    (10,794
    )
    
    
    
    
    
    
    
    
    
    
    (10,794
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,957
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,957Minimum postretirement medical obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (200
    )
    
    
    
    
    
    
    (200
    )Components of comprehensive loss:Change in net unrealized gains (losses) on:Available-for-sale investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    353
    
    
    
    
    
    
    
    353Foreign exchange contracts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (182
    )
    
    
    
    
    
    
    (182
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,968
    )
    
    
    (8,968
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,797
    )Balance at December 31, 2006
    
    
    23,219
    
    
    
    25
    
    
    
    226,146
    
    
    
    (26,670
    )
    
    
    (915
    )
    
    
    (24,478
    )
    
    
    174,108Net issuance of common stock under stock option plans
    
    
    152
    
    
    
    
    
    
    
    1,714
    
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    1,750Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,552
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,552Impact of adjustment on adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    28Components of comprehensive loss:Change in net unrealized gains (losses) on:Available-for-sale investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,051
    
    
    
    
    
    
    
    1,051Foreign exchange contracts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53
    )
    
    
    
    
    
    
    (53
    )Minimum
postretirement medical obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,044
    )
    
    
    (1,044
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38
    )Balance at December 31, 2007
    
    
    23,371
    
    
    $
    25
    
    
    $
    229,412
    
    
    $
    (26,634
    )
    
    $
    91
    
    
    $
    (25,494
    )
    
    $
    177,400
  42




---



##### 



ULTRATECH, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. COMPANY AND INDUSTRY INFORMATION
 Nature of Operations
   Major Customers
  Business Segments
  Enterprise-Wide Disclosures
  In thousands
    
    2007
    
    
    2006
    
    
    2005Net sales:United States of America
    
    $
    38,739
    
    
    $
    43,064
    
    
    $
    37,506Japan
    
    
    23,267
    
    
    
    31,482
    
    
    
    16,081Europe
    
    
    17,962
    
    
    
    10,698
    
    
    
    21,156Taiwan
    
    
    14,753
    
    
    
    15,936
    
    
    
    20,890Rest of world
    
    
    17,588
    
    
    
    18,453
    
    
    
    26,733Total
    
    $
    112,309
    
    
    $
    119,633
    
    
    $
    122,366Long-lived assets:United States of America
    
    $
    22,351
    
    
    $
    27,598
    
    
    $
    30,494Rest of world
    
    
    728
    
    
    
    811
    
    
    
    1,080Total
    
    $
    23,079
    
    
    $
    28,409
    
    
    $
    31,574
  43




---



##### 



2. CONCENTRATIONS OF RISKS
    3. BASIS OF PRESENTATION
   Use of Estimates
  4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Cash Equivalents
  44




---



##### 



Investments
   Allowances for Bad Debts
  Inventories
  Long-lived Assets
    Related-Party Transactions
   45




---



##### 



Derivative Instruments and Hedging
   Cash Flow Hedging
    Balance Sheet Hedging
  46




---



##### 



Revenue Recognition
        Warranty Accrual
  Research, Development, and Engineering Expenses
  47




---



##### 



Deferred Income Taxes
  Taxes Collected from Customers
  Reclassifications
  Impact of Recently Issued Accounting Standards
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial LiabilitiesIncluding an amendment of FASB Statement No. 115
 5. STOCK-BASED COMPENSATION
 Accounting for Stock Issued to Employees Accounting for Certain Transactions Involving Stock Compensation Accounting for Stock-Based Compensation Share-Based Payment
 48




---



##### 



Years Ended December 31,In thousands
    
    2007
    
    
    2006Cost of Sales
    
    $
    97
    
    
    $
    140Research, development, and engineering
    
    
    378
    
    
    
    264Selling, general and administrative expenses
    
    
    1,077
    
    
    
    1,553Total stock-based compensation expense
    
    
    1,552
    
    
    
    1,957Tax benefit related to stock-based compensation expense
    
    
    
    
    
    
    Net effect on net loss
    
    $
    1,552
    
    
    $
    1,957Effect on net loss per basic and diluted share
    
    $
    0.07
    
    
    $
    0.08
     2007
    
    2006
    
    2005Expected life (in years)
    
    
    5.0
    
    
    
    4.8
    
    
    
    4.1Risk-free interest rate
    
    
    4.11
    %
    
    
    4.93
    %
    
    
    3.90
    %Volatility factor
    
    
    0.47
    
    
    
    0.55
    
    
    
    0.51Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
  49




---



##### 



Year EndedDecember 31,In thousands, except per share amounts
    
    2005Net loss as reported
    
    $
    (2,343
    )Deduct: SFAS No. 123 compensation expense, net of tax
    
    
    (10,045
    )Pro forma net loss
    
    $
    (12,388
    )Net loss per sharebasic and diluted, as reported
    
    $
    (0.10
    )Pro forma net loss per sharebasic and diluted
    
    $
    (0.52
    )
 1993 Stock Option Plan/Stock Issuance Plan
   1998 Supplemental Stock Option/Stock Issuance Plan
   50




---



##### 



Stock Option Activity
  AggregateWeighted-
    
    Weighted Average
    
    Intrinsic ValueAverage
    
    Remaining
    
    as of December 31,Options
    
    Exercise Price
    
    Contractual Term
    
    2007Outstanding at January 1, 2007
    
    
    6,107,636
    
    
    $
    17.68Granted
    
    
    398,000
    
    
    $
    11.90Exercised
    
    
    (140,456
    )
    
    $
    12.51Forfeited and expired
    
    
    (988,403
    )
    
    $
    17.82Outstanding at December 31, 2007
    
    
    5,376,777
    
    
    $
    17.36
    
    
    
    4.82
    
    
    $
    33,940Exercisable at December 31, 2007
    
    
    4,967,577
    
    
    $
    17.77
    
    
    
    4.42
    
    
    $
    33,940
   2006
    
    2005Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    AverageOptions
    
    Exercise Price
    
    Options
    
    Exercise PriceOutstanding at January 1
    
    
    6,443,948
    
    
    $
    17.71
    
    
    
    6,128,142
    
    
    $
    18.22Granted
    
    
    153,000
    
    
    $
    15.13
    
    
    
    1,388,500
    
    
    $
    16.17Exercised
    
    
    (206,478
    )
    
    $
    14.37
    
    
    
    (539,286
    )
    
    $
    13.86Forfeited and expired
    
    
    (282,834
    )
    
    $
    19.40
    
    
    
    (533,408
    )
    
    $
    23.41Outstanding at December 31
    
    
    6,107,636
    
    
    $
    17.68
    
    
    
    6,443,948
    
    
    $
    17.71
  Options Outstanding
    
    Options ExercisableWeighted-AverageRemaining
    
    Weighted-
    
    
    
    
    
    Weighted-Contractual Life
    
    Average
    
    
    
    
    
    AverageRange of Exercise Prices
    
    Options
    
    (Years)
    
    Exercise Price
    
    Options
    
    Exercise Price$  8.41 - $11.88
    
    
    915,488
    
    
    
    6.21
    
    
    $
    11.58
    
    
    
    600,488
    
    
    $
    11.44$11.96 - $13.96
    
    
    1,081,630
    
    
    
    4.22
    
    
    $
    13.70
    
    
    
    1,024,750
    
    
    $
    13.77$14.11 - $15.00
    
    
    924,898
    
    
    
    4.18
    
    
    $
    14.59
    
    
    
    901,078
    
    
    $
    14.58$15.25 - $19.75
    
    
    898,241
    
    
    
    5.02
    
    
    $
    17.37
    
    
    
    898,241
    
    
    $
    17.37$19.85 - $23.82
    
    
    929,917
    
    
    
    4.38
    
    
    $
    22.10
    
    
    
    916,417
    
    
    $
    22.12$24.38 - $31.38
    
    
    626,603
    
    
    
    5.12
    
    
    $
    29.18
    
    
    
    626,603
    
    
    $
    29.18$8.41 - $31.38
    
    
    5,376,777
    
    
    
    4.82
    
    
    $
    17.36
    
    
    
    4,967,577
    
    
    $
    17.77
  51




---



##### 



Restricted Stock Unit Activity
  2007
    
    2006Weighted-Average
    
    
    
    
    
    Weighted-AverageGrant Date
    
    
    
    
    
    Grant DateShares
    
    Fair Value
    
    Shares
    
    Fair ValueNonvested stock at January 1
    
    
    93,681
    
    
    $
    19.20
    
    
    
    
    
    
    $
    Granted
    
    
    55,000
    
    
    $
    12.29
    
    
    
    167,500
    
    
    $
    19.20Vested
    
    
    (46,404
    )
    
    $
    18.68
    
    
    
    (53,694
    )
    
    $
    19.20Forfeited
    
    
    (15,089
    )
    
    $
    16.80
    
    
    
    (20,125
    )
    
    $
    19.20Nonvested stock at December 31
    
    
    87,188
    
    
    $
    15.53
    
    
    
    93,681
    
    
    $
    19.20
  Treasury Stock
  6. BASIC AND DILUTED NET INCOME (LOSS) PER SHARE
  Years Ended December 31,In thousands, except per share amounts
    
    2007
    
    
    2006
    
    
    2005Numerator:Loss before cumulative effect of change in
accounting principle
    
    $
    (1,044
    )
    
    $
    (8,968
    )
    
    $
    (1,221
    )Cumulative effect of the adoption of FIN 47
    
    
    
    
    
    
    
    
    
    
    (1,122
    )Net loss
    
    $
    (1,044
    )
    
    $
    (8,968
    )
    
    $
    (2,343
    )Denominator:Basic weighted-average shares outstanding
    
    
    23,354
    
    
    
    23,764
    
    
    
    23,964Effect of dilutive employee stock options
and restricted stock units
    
    
    
    
    
    
    
    
    
    
    Diluted weighted-average shares outstanding
    
    
    23,354
    
    
    
    23,764
    
    
    
    23,964Net loss per sharebasic and diluted:Loss before cumulative effect of change in
accounting principle
    
    $
    (0.04
    )
    
    $
    (0.38
    )
    
    $
    (0.05
    )Cumulative effect of the adoption of FIN 47
    
    
    
    
    
    
    
    
    
    $
    (0.05
    )Net loss
    
    $
    (0.04
    )
    
    $
    (0.38
    )
    
    $
    (0.10
    )
  52




---



##### 



7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
  In thousands
    
    December 31,
2007
    
    December 31,2006Unrealized gains (losses) on:Available-for-sale investments
    
    $
    204
    
    
    $
    (847
    )Foreign exchange contracts
    
    
    79
    
    
    
    132Unrealized component of postretirement medical obligations
    
    
    (192
    )
    
    
    (200
    )Accumulated other comprehensive income (loss) at end of year
    
    $
    91
    
    
    $
    (915
    )
   8. INVESTMENTS
   December 31, 2007
    
    
    December 31, 2006Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedOther
    
    
    
    
    
    
    
    
    
    
    OtherCash equivalents and Available-
    
    Amortized
    
    
    Comprehensive
    
    
    Estimated
    
    
    Amortized
    
    
    Comprehensive
    
    
    Estimatedfor-sale Investments, in thousands
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Treasury securities and
obligations of U.S. government
agencies
    
    $
    87,424
    
    
    $
    264
    
    
    $
    25
    
    
    $
    87,663
    
    
    $
    82,804
    
    
    $
    1
    
    
    $
    679
    
    
    $
    82,126U.S. corporate debt securities
    
    
    8,690
    
    
    
    23
    
    
    
    
    
    
    
    8,713
    
    
    
    20,599
    
    
    
    
    
    
    
    172
    
    
    
    20,427Money market funds and commercial
papers
    
    
    30,335
    
    
    
    
    
    
    
    
    
    
    
    30,335
    
    
    
    20,008
    
    
    
    3
    
    
    
    
    
    
    
    20,011$
    126,449
    
    
    $
    287
    
    
    $
    25
    
    
    $
    126,711
    
    
    $
    123,411
    
    
    $
    4
    
    
    $
    851
    
    
    $
    122,564
  In thousands
    
    2007
    
    
    2006Cash equivalents
    
    $
    49,299
    
    
    $
    20,029Short-term investments
    
    
    77,412
    
    
    
    54,207Long-term investments
    
    
    
    
    
    
    48,328Investments, at estimated fair value
    
    $
    126,711
    
    
    $
    122,564
 53




---



##### 



GrossAmortized
    
    
    FairIn thousands
    
    Cost
    
    
    ValueDue in one year or less
    
    $
    89,990
    
    
    $
    89,976Due after one year through five years
    
    
    36,459
    
    
    
    36,735$
    126,449
    
    
    $
    126,711
  In Loss Position for
    
    
    In Loss Position forLess Than 12 Months
    
    
    More Than 12 Months
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedInvestments, in thousands
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Treasury securities and
obligations of U.S.
government agencies
    
    $
    21,996
    
    
    $
    5
    
    
    $
    10,480
    
    
    $
    20
    
    
    $
    32,476
    
    
    $
    25U.S. corporate debt securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Money market funds and
commercial papers
    
    
    3,588
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,588
    
    
    
    $
    25,584
    
    
    $
    5
    
    
    $
    10,480
    
    
    $
    20
    
    
    $
    36,064
    
    
    $
    25
  In Loss Position for
    
    
    In Loss Position forLess Than 12 Months
    
    
    More Than 12 Months
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedShort-term investments, in thousands
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesU.S. Treasury securities and
obligations of U.S.
government agencies
    
    $
    20,884
    
    
    $
    32
    
    
    $
    51,089
    
    
    $
    647
    
    
    $
    71,973
    
    
    $
    679U.S. corporate debt securities
    
    
    
    
    
    
    
    
    
    
    12,374
    
    
    
    172
    
    
    
    12,374
    
    
    
    172Money market funds and
commercial papers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    20,884
    
    
    $
    32
    
    
    $
    63,464
    
    
    $
    819
    
    
    $
    84,347
    
    
    $
    851
  54




---



##### 



9. BALANCE SHEET DETAIL
 In thousands
    
    December 31,
2007
    
    December 31,
2006Inventories:Raw materials
    
    $
    18,016
    
    
    $
    18,067Work-in-process
    
    
    6,938
    
    
    
    9,952Finished products
    
    
    4,174
    
    
    
    12,969Total
    
    $
    29,128
    
    
    $
    40,988Equipment and leasehold improvements, net:Machinery and equipment
    
    $
    41,722
    
    
    $
    41,011Leasehold Improvements
    
    
    8,180
    
    
    
    8,106Office equipment and furniture(a)
    
    
    14,371
    
    
    
    14,38264,273
    
    
    
    63,499Accumulated depreciation and amortization
    
    
    (47,447
    )
    
    
    (43,173
    )Total
    
    $
    16,826
    
    
    $
    20,326Accrued expenses:Salaries and benefits
    
    $
    3,545
    
    
    $
    3,632Warranty accrual
    
    
    2,112
    
    
    
    2,264Accrued taxes-other
    
    
    863
    
    
    
    2,076Reserve for losses on purchase order commitments
    
    
    508
    
    
    
    623Capital lease, current portion
    
    
    99
    
    
    
    Other
    
    
    1,764
    
    
    
    1,814Total
    
    $
    8,891
    
    
    $
    10,409Other Liabilities:Deferred compensation
    
    $
    1,287
    
    
    $
    2,160Asset retirement obligations
    
    
    2,222
    
    
    
    1,982Postretirement medical obligation
    
    
    773
    
    
    
    701Capital lease
    
    
    463
    
    
    
    Deferred income tax credit
    
    
    363
    
    
    
    Other
    
    
    333
    
    
    
    $
    5,441
    
    
    $
    4,843
 
 (a)
    
    As of December 31, 2007, office equipment and furniture included $0.6 million of cost
capitalized under a capital lease with accumulated depreciation of $56,000. During 2006,
we did not have any equipment and leasehold improvements under capital lease. Warranty Accrual
  55




---



##### 



In thousands
    
    December 31,
2007
    
    December 31,
2006Balance, beginning of year
    
    $
    2,264
    
    
    $
    2,397Warranties issued during year
    
    
    3,171
    
    
    
    3,416Settlements during year
    
    
    (2,916
    )
    
    
    (5,028
    )Changes in liability for pre-existing
warranties during year, including
expirations
    
    
    (407
    )
    
    
    1,479Balance, end of year
    
    $
    2,112
    
    
    $
    2,264
 Deferred Service Income
  In thousands
    
    December 31,
2007
    
    December 31,
2006Balance, beginning of year
    
    
    $2,444
    
    
    
    $1,970Service contracts sold during year
    
    
    3,621
    
    
    
    10,673Service contract revenue recognized during year
    
    
    (3,978
    )
    
    
    (10,199
    )Balance, end of year
    
    
    $2,087
    
    
    
    $2,444
 10. NOTES PAYABLE
  11. EXIT ACTIVITIES
  Balance at
    
    
    
    
    
    
    
    
    
    
    Balance at
    
    
    
    
    
    
    
    
    
    
    Balance atJanuary 1,
    
    
    
    
    
    
    
    
    
    
    December 31,
    
    
    
    
    
    
    
    
    
    
    December 31,In thousands
    
    2006
    
    
    Expenses
    
    
    Payments
    
    
    2006
    
    
    Expenses
    
    
    Payments
    
    
    2007Severance and benefits (2006)
    
    $
    
    
    
    $
    1,612
    
    
    $
    (694
    )
    
    $
    918
    
    
    $
    
    
    
    $
    (872
    )
    
    $
    46Facilities (2006)
    
    
    
    
    
    
    294
    
    
    
    (294
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Severance and benefits (2007)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,588
    
    
    
    (1,206
    )
    
    
    382Total
    
    $
    
    
    
    $
    1,906
    
    
    $
    (988
    )
    
    $
    918
    
    
    $
    1,588
    
    
    $
    (2,078
    )
    
    $
    428
 Accounting for Costs Associated with Exit or Disposal Activities
 56




---



##### 



12. EMPLOYEE BENEFIT PLANS
 Employee Savings and Retirement Plans
  Postretirement Benefits
    57




---



##### 



In thousands
    
    December 31, 2007
    
    
    December 31, 2006Prior service cost
    
    $
    202
    
    
    $
    210Net actuarial gain
    
    
    (10
    )
    
    
    (10
    )Amount recognized in other comprehensive income
    
    $
    192
    
    
    $
    200
   In thousands
    
    December 31, 2007
    
    
    December 31, 2006Benefit obligation at beginning of year.
    
    $
    701
    
    
    $
    475Interest cost
    
    
    43
    
    
    
    39Additions
    
    
    29
    
    
    
    240Actuarial gain
    
    
    
    
    
    
    (53
    )Benefit obligation at end of year
    
    
    773
    
    
    
    701Fair value of plan assets at end of year
    
    
    
    
    
    
    Funded status at end of year
    
    $
    (773
    )
    
    $
    (701
    )
  In thousands
    
    December 31, 2007
    
    
    December 31, 2006Noncurrent assets
    
    $
    
    
    
    $
    Current liabilities
    
    
    
    
    
    
    Noncurrent liabilities
    
    
    (773
    )
    
    
    (701
    )$
    (773
    )
    
    $
    (701
    )
    In thousands
    
    December 31, 2007
    
    
    December 31, 2006Interest cost
    
    $
    43
    
    
    $
    40Amortization of prior service cost
    
    
    37
    
    
    
    30Amortization of net gain
    
    
    
    
    
    
    (43
    )Net periodic benefit cost
    
    $
    80
    
    
    $
    27
 58




---



##### 



In thousands
    
    December 31, 2007
    
    
    December 31, 2006Net actuarial gain
    
    $
    
    
    
    $
    (10
    )Prior service cost
    
    
    29
    
    
    
    240Amortization of prior service cost
    
    
    (37
    )
    
    
    (30
    )Total recognized from other comprehensive
income (loss)
    
    $
    (8
    )
    
    $
    200Total recognized in net periodic benefit cost
and from other comprehensive income
    
    $
    72
    
    
    $
    227
  In thousands2008
    
    $
    202009
    
    
    222010
    
    
    242011
    
    
    412012
    
    
    442013-2017
    
    
    256$
    407
  At December 31, 20071-Percentage-
    
    
    1-Percentage-In thousands
    
    Point Increase
    
    
    Point DecreaseEffect on total of service and interest cost components
    
    $
    7
    
    
    $
    (6
    )Effect on postretirement benefit obligation
    
    
    105
    
    
    
    (87
    )
 13.INCOME TAXES
  Years Ended December 31,In thousands
    
    2007
    
    
    2006
    
    
    2005Domestic
    
    $
    (1,288
    )
    
    $
    (10,941
    )
    
    $
    (480
    )Foreign
    
    
    530
    
    
    
    2,927
    
    
    
    (42
    )Loss before income taxes
    
    $
    (758
    )
    
    $
    ( 8,014
    )
    
    $
    (522
    )
  Years Ended December 31,In thousands
    
    2007
    
    
    2006
    
    
    2005Federal:Current
    
    $
    
    
    
    $
    
    
    
    $
    Deferred
    
    
    (52
    )
    
    
    
    
    
    
    (52
    )
    
    
    
    
    
    
    State:Current
    
    
    
    
    
    
    3
    
    
    
    51Deferred
    
    
    (6
    )
    
    
    
    
    
    
    (6
    )
    
    
    3
    
    
    
    51Foreign:Current
    
    
    246
    
    
    
    979
    
    
    
    691Deferred
    
    
    98
    
    
    
    (28
    )
    
    
    (43
    )344
    
    
    
    951
    
    
    
    648Total income tax provision
    
    $
    286
    
    
    $
    954
    
    
    $
    699
 59




---



##### 



Years Ended December 31,In thousands
    
    2007
    
    
    2006
    
    
    2005Tax computed at statutory rate
    
    $
    (265
    )
    
    $
    (2,805
    )
    
    $
    (183
    )State income taxes, net of federal benefit
    
    
    (4
    )
    
    
    2
    
    
    
    33Foreign taxes
    
    
    158
    
    
    
    (73
    )
    
    
    663U.S. losses not benefited
    
    
    397
    
    
    
    3,830
    
    
    
    186Income tax provision
    
    $
    286
    
    
    $
    954
    
    
    $
    699
  In thousands
    
    2007
    
    
    2006
    
    
    2005Deferred tax assets:Net operating loss carryforwards
    
    $
    29,639
    
    
    $
    40,965
    
    
    $
    39,941Inventory valuation
    
    
    3,143
    
    
    
    3,257
    
    
    
    3,123Bad debt reserve
    
    
    118
    
    
    
    181
    
    
    
    223Basis difference in assets
    
    
    13,450
    
    
    
    3,326
    
    
    
    4,334Tax credit carryforwards
    
    
    21,418
    
    
    
    24,777
    
    
    
    25,428Warranty reserves
    
    
    825
    
    
    
    876
    
    
    
    926Deferred license income
    
    
    
    
    
    
    
    
    
    
    Deferred product and services income
    
    
    1,417
    
    
    
    1,133
    
    
    
    753Other non-deductible accruals and reserves
    
    
    6,746
    
    
    
    6,966
    
    
    
    5,916Stock compensation
    
    
    1,022
    
    
    
    540Total deferred tax assets
    
    
    77,778
    
    
    
    82,021
    
    
    
    80,644Valuation allowance
    
    
    (74,821
    )
    
    
    (77,726
    )
    
    
    (74,034
    )Net deferred tax assets
    
    
    2,957
    
    
    
    4,295
    
    
    
    6,610Deferred tax liabilities:Unremitted earnings of foreign subsidiaries
    
    $
    (2,581
    )
    
    $
    (3,827
    )
    
    $
    (6,170
    )Other
    
    
    (109
    )
    
    
    (109
    )
    
    
    (109
    )Total deferred tax liabilities
    
    
    (2,690
    )
    
    
    (3,936
    )
    
    
    (6,279
    )Net deferred tax assets
    
    $
    267
    
    
    $
    359
    
    
    $
    331
    60




---



##### 



Accounting for Uncertainty in
Income Taxes  an Interpretation of FASB Statement No. 109
     In thousandsBalance at January 1, 2007
    
    $
    2,842Tax positions related to the current year:Additions
    
    
    502Reductions
    
    
    Tax positions related to the prior years:Additions
    
    
    Reductions
    
    
    Settlements
    
    
    Lapses in statutes of limitations
    
    
    (15
    )Balance at December 31, 2007
    
    $
    3,329
 61




---



##### 



14. COMMITMENTS AND CONTINGENCIES
 Commitments
    CapitalIn thousands
    
    Lease
    
    
    Operating LeaseFor the years:2008
    
    $
    130
    
    
    $
    4,7532009
    
    
    130
    
    
    
    4,5702010
    
    
    130
    
    
    
    2,7362011
    
    
    130
    
    
    
    2732012
    
    
    130
    
    
    
    Thereafter
    
    
    
    
    
    
    Total minimum lease payments
    
    
    650
    
    
    
    12,332Total noncancelable sublease income to be received
    
    
    
    
    
    
    (1,456
    )Total minimum lease payments net of sublease income
    
    
    650
    
    
    $
    10,876Amount representing interest
    
    
    (88
    )Present value of total minimum lease payments
    
    
    562Current portion
    
    
    (99
    )Capital lease obligation, net of current portion
    
    $
    463
   Legal Proceedings
  62




---



##### 



15. FINANCIAL GUARANTEES
  16. ASSET RETIREMENT OBLIGATIONS
  63




---



##### 



In thousands
    
    2007
    
    
    2006Balance as of January 1
    
    $
    1,982
    
    
    $
    2,064Accretion expense
    
    
    240
    
    
    
    179Liabilities incurred
    
    
    
    
    
    
    3Liabilities settled
    
    
    
    
    
    
    (264
    )Balance as of December 31
    
    $
    2,222
    
    
    $
    1,982
  Years EndedDecember 31,In thousands, except per share amounts
    
    2005Results of operations, as reported:Net income (loss)*
    
    $
    (1,221
    )Net income (loss) per sharebasic*
    
    $
    (0.05
    )Net income (loss) per sharediluted*
    
    $
    (0.05
    )Pro forma results of operation, assuming the
retroactive application of FIN 47:Net income (loss)
    
    $
    (1,571
    )Net income (loss) per sharebasic
    
    $
    (0.07
    )Net income (loss) per sharediluted
    
    $
    (0.07
    )
 
 *
    
    Prior to the cumulative effect of change in accounting principle 64




---



##### 



REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       Ernst & Young LLP
 
 65




---



##### 



REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal ControlIntegrated Framework
    .
  Ernst & Young LLP
 
 66




---



##### 



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  ITEM 9A. CONTROLS AND PROCEDURES
 Controls and Procedures
   Managements Report on Internal Control Over Financial Reporting
  Internal ControlIntegrated
Framework
  Changes in Internal Control Over Financial Reporting
  ITEM 9B. OTHER INFORMATION
  67




---



##### 



PART III
  ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  ITEM 11 . EXECUTIVE COMPENSATION
  ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND ANAGEMENT AND
                  RELATED STOCKHOLDER MATTERS
  ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  PART IV
 ITEM 15. FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES, AND EXHIBITS
      Page NumberSchedule II Valuation and Qualifying Accounts
    
    
    S-1
  68




---



##### 



Exhibit
    
    Description3.1(1)
    
    Amended and Restated Certificate of Incorporation of the Registrant, filed October 6, 1993.3.1.1(1)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Company,
dated May 17, 1995.3.1.2(1)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the
Registrant, filed June 17, 1998.3.1.3(1)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the
Registrant, filed June 20, 2003.3.2(2)
    
    Bylaws of Registrant, as amended.4.1(3)
    
    Specimen Common Stock Certificate of Registrant.4.2(4)
    
    Shareholder Rights Agreement between Registrant and the First National Bank of Boston, filed on
February 11, 1997, as amended on March 18, 1998.4.2.1(5)
    
    Second Amendment to Shareholder Rights Agreement dated February 11, 1997 between Registrant and
BankBoston, N.A. (formerly known as the First National Bank of Boston) as of October 12, 1998,
and Certification of Compliance with Section 27 thereof.10.1(6)
    
    1993 Stock Option/Stock Issuance Plan (Amended and Restated as of January 30, 2007).10.2(3)
    
    Form of Indemnification Agreement entered into between the Registrant and each of its officers
and directors.10.3(7)
    
    Form of Indemnification Agreement entered into between the Registrant and certain officers.10.4(3)
    
    Standard Industrial LeaseSingle Tenant, Full Net between The Equitable Life Assurance Society of
the United States, as Landlord, and Registrant, as Tenant, dated August 27, 1993.10.4.1(7)
    
    First Amendment to Lease between The Equitable Life Assurance Society of the United States, as
Landlord, and Registrant, as Tenant, dated November 1999.10.5(8)
    
    Profit Sharing Plan.10.6(9)
    
    1998 Supplemental Stock Option/ Stock Issuance Plan (Amended and Restated effective January 29,
2002).10.7(10)
    
    Brokerage Line of Credit Agreement with Morgan Stanley, dated December 16, 2004.10.8(11)
    
    Lease Agreement between Montague LLC, As Landlord, and Registrant, As Tenant dated November 22,
1999.10.9(12)
    
    Employment agreement between Registrant and Mr. Arthur Zafiropoulo, chief Executive Officer.10.10(13)
    
    Amended and Restated Employment Agreement between Registrant and Mr. John Denzel, former
President and Chief Operating Officer.10.11(13)
    
    Separation and General Release Agreement between Registrant and Mr. John Denzel, former President
and Chief Operating Officer.10.12(14)
    
    Amended and Restated Employment Agreement between Registrant and Mr. Bruce Wright, Chief
Financial Officer.10.13(15)
    
    Employment agreement between Registrant and Mr. Rick Friedman, former Senior Vice President,
World-Wide Sales and Customer Service.
 69




---



##### 



Exhibit
    
    Description10.13.1(14)
    
    Amendment to Employment Agreement between Registrant and Mr. Rick Friedman, former Senior Vice
President, World-Wide Sales and Customer Service.10.14(14)
    
    Separation and General Release Agreement between Registrant and Mr. Rick Friedman, former Senior
Vice President, World-Wide Sales and Customer Service.10.15(16)
    
    Form of Restricted Stock Unit Issuance Agreement for Executive Officers with Employment
Agreements.10.16(16)
    
    Form of Restricted Stock Unit Issuance Agreement for Other Employees.10.17(17)
    
    Description of 2005 Cash Bonus Plan.10.18(18)
    
    Description of 2006 Long-Term Incentive Plan, as amended.10.19(19)
    
    Description of 2007 Management Incentive Compensation Plan.21
    
    Subsidiaries of Registrant.23
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.24
    
    Power of Attorney (contained in Signature page hereto).31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Previously filed with our Quarterly Report on Form 10-Q for the quarter ended June 28, 2003
(Commission File No. 0-22248).(2)
    
    Incorporated by reference to Item 5.03 of our Current Report on Form 8-K filed on February 2,
2007 (Commission File No. 0-22248).(3)
    
    Previously filed with our Registration Statement on Form S-1 declared effective with the
Securities and Exchange Commission on September 28, 1993. File No. 33-66522.(4)
    
    Previously filed with our 1997 Annual Report on Form 10-K (Commission File No. 0-22248).(5)
    
    Previously filed with our Quarterly Report on Form 10-Q for the quarter ended September 30,
1998 (Commission File No. 0-22248).(6)
    
    Incorporated by reference to Item 5.02 of our Current Report on Form 8-K filed on July 30,
2007 (Commission File No. 0-22248).(7)
    
    Previously filed with our Annual Report on Form 10-K for the year ended December 31, 2002
(Commission File No. 0-22248).(8)
    
    Previously filed with our 1993 Annual Report on Form 10-K (Commission File No. 0-22248).(9)
    
    Previously filed with our Quarterly Report on Form 10-Q for the quarter ended March 31, 2002
(Commission File No. 0-22248).(10)
    
    Previously filed with our Annual Report on Form 10-K for the year ended December 31, 2004
(Commission File No. 0-22248).(11)
    
    Previously filed with our 2000 Annual Report on Form 10-K (Commission File No. 0-22248).(12)
    
    Previously filed with our Annual Report on Form 10-K for the year ended December 31, 2003
(Commission File No. 0-22248). 70




---



##### 



(13)
    
    Incorporated by reference to Item 5.02 of our Current Report on Form 8-K filed on
November 8, 2006 (Commission File No. 0-22248).(14)
    
    Incorporated by reference to Item 5.02 of our Current Report on Form 8-K filed on January 19,
2007 (Commission File No. 0-22248).(15)
    
    Incorporated by reference to Item 1.01 of our Current Report on Form 8-K filed on February 3,
2006 (Commission File No. 0-22248).(16)
    
    Previously filed with our Quarterly Report on Form 10-Q filed on May 5, 2006 (Commission File
No. 0-22248).(17)
    
    Incorporated by reference to Item 1.01 of our Current Report on Form 8-K filed on January 27,
2005 (Commission File No. 0-22248).(18)
    
    Incorporated by reference to Item 1.01 of our Current Report on Form 8-K filed on February 3,
2006 (Commission File No. 0-22248) and to Item 1.01 of our Current Report on Form 8-K filed on
March 20, 2006 (Commission File No. 0-22248).(19)
    
    Incorporated herein by reference to Item 5.02 of the Registrants Current Report on Form 8-K
filed with the Commission on February 2, 2007.(b)
    
    Exhibits. See list of exhibits under (a)(3) above.(c)
    
    Financial Statement Schedules. See list of schedules under (a)(2) above. 71




---



##### 



SIGNATURES
  Ultratech, Inc.Date:  February 29, 2008
    By:
    /s/ Arthur ZafiropouloArthur ZafiropouloChairman of the Board of Directors and

Chief Executive Officer   Signature
    
    Title
    
    Date/s/ Arthur Zafiropoulo

Arthur Zafiropoulo
    
    Chairman of the Board of Directors and Chief
Executive Officer (Principal Executive Officer)
    
    February 29, 2008/s/ Bruce Wright

Bruce Wright
    
    Senior Vice President, Finance, Chief Financial
Officer and Secretary (Principal Financial and
Accounting Officer)
    
    February 29, 2008/s/ Dennis Raney

Dennis Raney
    
    Director
    
    February 29, 2008/s/ Rick Timmins

Rick Timmins
    
    Director
    
    February 29, 2008/s/ Henri Richard

Henri P Richard
    
    Director
    
    February 29, 2008/s/ Joel Gemunder

Joel Gemunder
    
    Director
    
    February 29, 2008/s/ Nicholas Konidaris

Nicholas Konidaris
    
    Director
    
    February 29, 2008/s/ Vincent F. Sollitto

Vincent F. Sollitto
    
    Director
    
    February 29, 2008
 72




---



##### 



SCHEDULE II
 ULTRATECH, INC.
 VALUATION AND QUALIFYING ACCOUNTS
 (in thousands)
 Charged(Credited)Balance at
    
    
    to Costs
    
    
    Charged to
    
    
    
    
    
    
    Balance atBeginning
    
    
    and
    
    
    Other
    
    
    
    
    
    
    End ofDescription
    
    of Year
    
    
    Expenses
    
    
    Accounts
    
    
    Deductions(1)
    
    
    YearAllowance for doubtful accounts:Year ended December 31, 2005Trade accounts receivable
    
    $
    237
    
    
    $
    339
    
    
    $
    
    
    
    $
    1
    
    
    $
    577$
    237
    
    
    $
    339
    
    
    $
    
    
    
    $
    1
    
    
    $
    577Year ended December 31, 2006Trade accounts receivable
    
    $
    577
    
    
    $
    (112
    )
    
    $
    1
    
    
    $
    
    
    
    $
    466$
    577
    
    
    $
    (112
    )
    
    $
    1
    
    
    $
    
    
    
    $
    466Year ended December 31, 2007Trade accounts receivable
    
    $
    466
    
    
    $
    (160
    )
    
    $
    
    
    
    $
    
    
    
    $
    306$
    466
    
    
    $
    (160
    )
    
    $
    
    
    
    $
    
    
    
    $
    306
 
 (1)
    
    Deductions represent write-offs against reserve account balances. S-1




---



##### 



Exhibit
    
    Description3.1(1)
    
    Amended and Restated Certificate of Incorporation of the Registrant, filed October 6, 1993.3.1.1(1)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Company,
dated May 17, 1995.3.1.2(1)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the
Registrant, filed June 17, 1998.3.1.3(1)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the
Registrant, filed June 20, 2003.3.2(2)
    
    Bylaws of Registrant, as amended.4.1(3)
    
    Specimen Common Stock Certificate of Registrant.4.2(4)
    
    Shareholder Rights Agreement between Registrant and the First National Bank of Boston, filed on
February 11, 1997, as amended on March 18, 1998.4.2.1(5)
    
    Second Amendment to Shareholder Rights Agreement dated February 11, 1997 between Registrant and
BankBoston, N.A. (formerly known as the First National Bank of Boston) as of October 12, 1998, and
Certification of Compliance with Section 27 thereof.10.1(6)
    
    1993 Stock Option/Stock Issuance Plan (Amended and Restated as of January 30, 2007).10.2(3)
    
    Form of Indemnification Agreement entered into between the Registrant and each of its officers and
directors.10.3(7)
    
    Form of Indemnification Agreement entered into between the Registrant and certain officers.10.4(3)
    
    Standard Industrial LeaseSingle Tenant, Full Net between The Equitable Life Assurance Society of
the United States, as Landlord, and Registrant, as Tenant, dated August 27, 1993.10.4.1(7)
    
    First Amendment to Lease between The Equitable Life Assurance Society of the United States, as
Landlord, and Registrant, as Tenant, dated November 1999.10.5(8)
    
    Profit Sharing Plan.10.6(9)
    
    1998 Supplemental Stock Option/ Stock Issuance Plan (Amended and Restated effective January 29,
2002).10.7(10)
    
    Brokerage Line of Credit Agreement with Morgan Stanley, dated December 16, 2004.10.8(11)
    
    Lease Agreement between Montague LLC, As Landlord, and Registrant, As Tenant dated November 22,
1999.10.9(12)
    
    Employment agreement between Registrant and Mr. Arthur Zafiropoulo, chief Executive Officer.10.10(13)
    
    Amended and Restated Employment Agreement between Registrant and Mr. John Denzel, former President
and Chief Operating Officer.10.11(13)
    
    Separation and General Release Agreement between Registrant and Mr. John Denzel, former President
and Chief Operating Officer.10.12(14)
    
    Amended and Restated Employment Agreement between Registrant and Mr. Bruce Wright, Chief Financial
Officer.10.13(15)
    
    Employment agreement between Registrant and Mr. Rick Friedman, former Senior Vice President,
World-Wide Sales and Customer Service.10.13.1(14)
    
    Amendment to Employment Agreement between Registrant and Mr. Rick Friedman, former Senior Vice
President, World-Wide Sales and Customer Service.10.14(14)
    
    Separation and General Release Agreement between Registrant and Mr. Rick Friedman, former Senior
Vice President, World-Wide Sales and Customer Service.




---



##### 



Exhibit
    
    Description10.15(16)
    
    Form of Restricted Stock Unit Issuance Agreement for Executive Officers with Employment Agreements.10.16(16)
    
    Form of Restricted Stock Unit Issuance Agreement for Other Employees.10.17(17)
    
    Description of 2005 Cash Bonus Plan.10.18(18)
    
    Description of 2006 Long-Term Incentive Plan, as amended.10.19(19)
    
    Description of 2007 Management Incentive Compensation Plan.21
    
    Subsidiaries of Registrant.23
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.24
    
    Power of Attorney (contained in Signature page hereto).31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Previously filed with our Quarterly Report on Form 10-Q for the quarter ended June 28, 2003
(Commission File No. 0-22248).(2)
    
    Incorporated by reference to Item 5.03 of our Current Report on Form 8-K filed on February 2,
2007 (Commission File No. 0-22248).(3)
    
    Previously filed with our Registration Statement on Form S-1 declared effective with the
Securities and Exchange Commission on September 28, 1993. File No. 33-66522.(4)
    
    Previously filed with our 1997 Annual Report on Form 10-K (Commission File No. 0-22248).(5)
    
    Previously filed with our Quarterly Report on Form 10-Q for the quarter ended September 30,
1998 (Commission File No. 0-22248).(6)
    
    Incorporated by reference to Item 5.02 of our Current Report on Form 8-K filed on July 30,
2007 (Commission File No. 0-22248).(7)
    
    Previously filed with our Annual Report on Form 10-K for the year ended December 31, 2002
(Commission File No. 0-22248).(8)
    
    Previously filed with our 1993 Annual Report on Form 10-K (Commission File No. 0-22248).(9)
    
    Previously filed with our Quarterly Report on Form 10-Q for the quarter ended March 31, 2002
(Commission File No. 0-22248).(10)
    
    Previously filed with our Annual Report on Form 10-K for the year ended December 31, 2004
(Commission File No. 0-22248).(11)
    
    Previously filed with our 2000 Annual Report on Form 10-K (Commission File No. 0-22248).(12)
    
    Previously filed with our Annual Report on Form 10-K for the year ended December 31, 2003
(Commission File No. 0-22248).(13)
    
    Incorporated by reference to Item 5.02 of our Current Report on Form 8-K filed on November 8,
2006 (Commission File No. 0-22248).(14)
    
    Incorporated by reference to Item 5.02 of our Current Report on Form 8-K filed on January 19,
2007 (Commission File No. 0-22248).(15)
    
    Incorporated by reference to Item 1.01 of our Current Report on Form 8-K filed on February 3,
2006 (Commission File No. 0-22248).(16)
    
    Previously filed with our Quarterly Report on Form 10-Q filed on May 5, 2006 (Commission File
No. 0-22248).(17)
    
    Incorporated by reference to Item 1.01 of our Current Report on Form 8-K filed on January 27,
2005 (Commission File No. 0-22248).(18)
    
    Incorporated by reference to Item 1.01 of our Current Report on Form 8-K filed on February 3,
2006 (Commission File No. 0-22248) and to Item 1.01 of our Current Report on Form 8-K filed on
March 20, 2006 (Commission File No. 0-22248).(19)
    
    Incorporated herein by reference to Item 5.02 of the Registrants Current Report on Form 8-K
filed with the Commission on February 2, 2007.