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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
 Form
    10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number:
    001-33452
 TomoTherapy
    Incorporated
 (Exact name of Registrant as
    specified in its charter)
  Wisconsin

39-1914727(State of Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)1240 Deming Way, Madison, Wisconsin(Address of principal
    executive offices)

53717(Zip Code)   (608) 824-2800
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock

NASDAQ Global Select Market   Securities registered pursuant to section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





TomoTherapy
    Incorporated
  INDEX
  
  PagePART IItem 1.


Business


3Item 1A.


Risk Factors


22Item 1B.


Unresolved Staff CommentsItem 2.


Properties


38Item 3.


Legal Proceedings


38Item 4.


Submission of Matters to a Vote of Security
    Holders


38PART IIItem 5.


Market for the Registrants Common Equity,
    Related Shareholder Matters and Issuer Purchases of Equity
    Securities


39Item 6.


Selected Financial Data


43Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


45Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


66Item 8.


Financial Statements and Supplementary Data


68Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


100Item 9A.


Controls and Procedures


100Item 9B.


Other Information


100PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


101Item 11.


Executive Compensation


101Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Shareholder Matters


101Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


102Item 14.


Principal Accountant Fees and Services


102PART IVItem 15.


Exhibits and Financial Statement Schedules


103Signatures


106EMPLOYMENT AGREEMENT WITH BRENDA S. FURLOW DATED NOVEMBER 5, 2008LOAN AGREEMENT WITH M&I MARSHALL & ILSLEY BANKPROMISSORY NOTE IN FAVOR OF M&I MARSHALL & ILSLEY BANK DATED DECEMBER 1, 2008FIRST AMENDMENT TO EMPLOYMENT AGREEMENT FOR STEPHEN C. HATHAWAYCONSENT OF GRANT THORNTON LLPCONSENT OF VIRCHOW KRAUSE VALUATION, LLCCERTIFICATION OF CHIEF EXECUTIVE OFFICER SEC 302CERTIFICATION OF CHIEF FINANCIAL OFFICER SEC 302CERTIFICATION OF CHIEF EXECUTIVE OFFICER SEC 906CERTIFICATION OF CHIEF FINANCIAL OFFICER SEC 906   2




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FORWARD-LOOKING
    STATEMENTS
  You should read the following discussion together with our
    consolidated financial statements and notes to those financial
    statements, which are included in this report. This report
    contains forward-looking statements made pursuant to the safe
    harbor provisions of Section 27A of the Securities Act of
    1933, as amended (the Securities Act), and
    Section 21E of the Securities Exchange Act of 1934, as
    amended (the Exchange Act). The words
    anticipates, intends,
    expects, could, should,
    plans, believes, estimates
    or words or phrases of similar import generally identify
    forward-looking statements. You are cautioned that
    forward-looking statements are subject to risks, trends and
    uncertainties that could cause actual results, performance or
    achievements to differ materially from those expressed in any
    forward-looking statements. Important factors that could cause
    our actual results, performance or achievements to be materially
    different from any future results, performance or achievements
    expressed or implied by those statements include, but are not
    limited to, those set forth below in the section entitled
    Risk Factors under Part I, Item 1A of this
    Annual Report on
    Form 10-K.
    We undertake no obligation to, and expressly disclaim any such
    obligation to, update or revise any forward-looking statements
    to reflect changed assumptions, the occurrence of anticipated or
    unanticipated events or changes to future results over time or
    otherwise, except as required by law.
 PART I  Item 1.
    Business  Overview
     3




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Recent
    Developments
           4




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Market
    Overview
        Radiation
    Treatment
   5




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
    Intensity modulated radiation
    therapy.  Intensity modulated radiation therapy,
    or IMRT, involves varying, or modulating, the radiation beam
    intensity across the treatment area. This technique attempts to
    conform the high dose region of the radiation beam more closely
    with the shape of the tumor, enabling the delivery of higher
    doses of radiation to tumors with a reduced impact on
    surrounding healthy tissue. Using IMRT, medical professionals
    can design a more customized treatment plan for each patient.
    Image guided radiation therapy.  Image guided
    radiation therapy, or IGRT, involves delivering radiation guided
    by images of the treatment area taken shortly before treatment
    using CT, x-ray, ultrasound or other imaging technologies. By
    combining imaging with radiation treatment, clinicians can
    adjust the patients position relative to the radiation
    source prior to each treatment to target the tumor more
    precisely. However, the precision and effectiveness of IGRT
    depends largely on the quality of the images and the degree to
    which the radiation delivery system is integrated with the
    images. Compared to traditional IMRT without image guidance,
    accurate image guidance enables clinicians to improve patient
    outcomes by concentrating higher doses of radiation at tumors
    and further reducing the exposure of healthy tissue to
    radiation. According to the 2007 Radiation Oncology Market
    Summary Report published by IMV in August of 2008, 33% of
    U.S. radiation therapy providers plan on purchasing at
    least one linear accelerator over the next three years, with 99%
    of those including an MLC to enable IMRT, and 94% including an
    electronic portal imaging capability.
    Adaptive radiation therapy.  Adaptive radiation
    therapy involves adjusting a patients radiation therapy
    plan between fractions to account for changes in the
    patients anatomy, the amount and location of the radiation
    received by the patient, and the size, shape and location of the
    tumor. While there is no widely accepted definition of adaptive
    radiation therapy, it has been characterized to include as
    little as an adjustment to the physical position of the patient
    relative to the radiation source prior to treatment, as occurs
    during IGRT, rather than adjustment to the treatment plan. We
    believe that adaptive radiation therapy requires frequent
    adjustments to the treatment plan facilitated by both the
    regular acquisition of updated quantitative images showing the
    location, geometry and density of the tumor, as well as
    verification of the actual radiation dose received by the
    patient throughout the entire course of treatment. We believe
    that achieving truly adaptive radiation therapy currently
    represents the most significant challenge for existing radiation
    therapy systems. According to the 2007 Radiation Oncology Market
    Summary Report published by IMV in August of 2008, just over 10%
    of sites located in the United States incorporate CT image
    guidance, and an estimated 510 radiation oncology departments,
    or 24%, reported plans to acquire IGRT imaging devices over the
    next three years.
    Dose escalation.  Higher doses of radiation
    have been shown to yield greater local control of the tumor. The
    advent of innovative technological features in radiation therapy
    treatment planning and delivery has allowed the clinical use of
    dose escalation, increasing the radiation dose administered to
    tumors in the patient, which has resulted in improved local
    tumor control and, in some cases, improved patient survival.
    Hypofractionation is an evolving radiation therapy technique
    that involves reducing the number of fractions and delivering
    larger doses of radiation per fraction. The benefits of
    hypofractionation include patient convenience due to fewer
    visits and more efficient use of radiation therapy systems.
    Stereotactic radiation therapy and stereotactic radiosurgery
    procedures, in which treatment is provided in one to five
    sessions, are extreme examples of hypofractionation.
    Hypofractionation has been used to date to treat only a limited
    number of tumor types. These tumors are generally small and are
    located in a few specific, sensitive regions of the body, such
    as the head and neck, spinal cord and lung, where the very high
    intensity radiation involved in dose escalation increases the
    need for a radiation delivery system that is capable of locating
    tumors and delivering radiation with high precision. 6




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
    Limited versatility and precision.  The C-arm
    configuration of traditional radiation therapy systems has a
    limited range and speed of motion due to its size and mechanical
    structure. Most existing MLCs, which modulate or shape the
    radiation beams, also have mechanical limitations that reduce
    their beam-shaping ability and the speed at which they operate.
    These design elements limit the motion and dynamic range of IMRT
    intensities capable of being delivered by traditional radiation
    therapy systems and often make it impractical to deliver
    radiation from more than five to nine treatment angles during a
    typical treatment session. These limited treatment angles reduce
    the ability to deliver precisely targeted radiation that avoids
    healthy tissue. Such imprecision may prevent clinicians from
    treating tumors near sensitive structures, such as the eye or
    the spinal cord, or from re-treating patients in an area of the
    body that was previously exposed to radiation and may be unable
    to tolerate additional exposure.
    Limited ability to provide frequent, quantitative
    images.  Precise radiation therapy requires
    frequent images that accurately depict the size, shape, location
    and density of the tumor, which we refer to as quantitative
    images. Many traditional radiation therapy systems either do not
    incorporate CT imaging functionality or use imaging technologies
    that do not have the ability to generate quantitative images.
    Lacking this data, traditional radiation therapy systems measure
    the amount of radiation emitted by the device based on the
    systems performance specifications. This calculation does
    not provide the clinician with data regarding the amount of
    radiation that was actually received by the patient or what
    tissue within the patients body received any particular
    amount of radiation. In addition, most radiation therapy systems
    that have imaging capabilities are not capable of performing
    daily imaging of the patient due to concerns about the
    additional radiation exposure associated with most imaging
    technologies. Since it is common for internal organs to shift
    and for the size of the tumor to change during the course of
    treatment, failure to obtain updated images and adapt the
    treatment plan throughout the course of treatment may result in
    a portion, or potentially all, of the radiation dose missing the
    tumor and instead being absorbed by healthy tissue.
    Failure to integrate multiple functions.  Many
    traditional radiation therapy systems were designed solely for
    the purpose of delivering radiation and therefore do not possess
    integrated imaging, treatment planning, dose verification or
    quality assurance capabilities necessary for more advanced
    treatment protocols. Some systems have subsequently been adapted
    to include certain elements of this functionality by
    incorporating modular add-on devices to legacy linear
    accelerator designs. These separate modular components can
    provide imaging, treatment planning, quality assurance
    procedures or post-treatment analysis functionality. However,
    this modular approach often requires the clinician to
    reconfigure and recalibrate the system between patient imaging,
    treatment planning, radiation delivery and quality assurance,
    which can increase the time required to plan and deliver
    treatments.  The
    TomoTherapy Solution
    
    More versatile treatment capabilities.  The Hi
    Art systems rigid ring gantry and high-speed MLC allow
    treatment to be delivered continuously in a helical pattern 360
    degrees around the patients body, allowing radiation
    delivery from thousands of angles to improve radiation dose
    distributions for some of the most challenging cases (now
    referred to as TomoHelical). Moreover, with the release of
    TomoDirect, planned for the second half of 2009, we believe the
    Hi Art system will gain new versatility to provide high quality,
    fixed beam angle delivery for those cases suited to simple
    tangential beam radiation therapy. Versatility in delivery modes
    effectively means efficient coverage of a wide range of patient
    cases, while still maintaining high quality plans throughout. In
    addition, the Hi Art system enables an operator to provide IMRT,
    IGRT or stereotactic treatments anywhere within a cylindrical
    volume of 80 centimeters (2.6 feet) in diameter and up to
    160 centimeters (5.3 feet) long. This expansive treatment
    field allows large areas of the body to be treated 7




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in a single session and facilitates complex treatments, such as
    total bone irradiation, which specifically irradiates bone
    marrow, and the treatment of widely distant tumors. The Hi Art
    systems precision and versatility offers clinicians an
    extensive range of treatment possibilities beyond those offered
    by other commercially available radiation systems.  
    Daily, quantitative imaging for better identification of
    tumors, dose verification and treatment
    planning.  The Hi Art system is the only
    commercially available radiation therapy system offering
    integrated quantitative CT imaging capabilities, which depict
    the density of tumors and healthy tissue more accurately than
    traditional radiation therapy systems. Our integrated
    mega-voltage computerized tomography, or MVCT, which we market
    as our CTrue imaging technology, enables quantitative imaging
    and delivers less radiation during the imaging process compared
    to the imaging technologies used by other commercially available
    radiation therapy systems. This lower dose allows the clinician
    to collect daily, quantitative images, which can be used to
    monitor changes in the patients internal anatomy and
    quickly and accurately quantify the amount of radiation absorbed
    by specific areas of the patients body, including both
    tumors and healthy tissue. We believe that daily, quantitative
    images are essential to optimizing patient treatment by enabling
    clinicians to adapt the treatment plan in response to anatomical
    changes and the cumulative amount of radiation received by
    specific areas within the patient over time. We believe that
    both of these factors can have a significant impact on the
    targeting and amount of the radiation dose to be delivered.
    Integrated treatment system for more precise radiation
    delivery.  We believe that the integration of our
    CTrue imaging technology, treatment planning and helical
    delivery mode of radiation beams enables highly precise
    radiation delivery. Our planned adaptive software allows
    clinicians to establish at the time of treatment the precise
    contours of a tumor and any sensitive structures at risk. The Hi
    Art system uses a highly efficient dose computation algorithm to
    ensure that the radiation beam conforms to the patients
    tumor and avoids sensitive structures, providing a
    highly-targeted dose distribution. These features significantly
    benefit patients by increasing the radiation delivered to
    cancerous tissues and reducing damage to nearby healthy tissues.
    In addition, because the Hi Art system can precisely deliver a
    high dose of targeted radiation, we believe that our system
    reduces the temporary side effects and permanent damage to
    healthy tissue associated with traditional radiation therapy
    systems. This capability allows clinicians to accelerate the
    treatment regimen by increasing the radiation delivered to tumor
    cells in fewer fractions.
    Efficient clinical workflow for IGRT and adaptive radiation
    therapy.  The Hi Art system integrates into a
    single system all of the key elements for radiation therapy,
    including treatment planning, CT image-guided patient
    positioning, treatment delivery, quality assurance and adaptive
    planning. The imaging and treatment planning capabilities of
    many traditional systems are more modular or require cumbersome
    add-ons or separate treatment planning systems that result in
    clinicians taking more steps between scanning, planning and
    treatment of patients, and may reduce the precision of
    treatment. Conversely, the integrated imaging and treatment
    features of the Hi Art system allow clinicians to scan, plan and
    treat cancer patients easily and efficiently. This capability
    enables healthcare providers to increase patient throughput for
    sophisticated IGRT and adaptive radiation therapy procedures
    using the Hi Art system. Daily images can be easily accessed
    remotely, via our TomoPortal web-enabled interface, to verify
    patient positioning and collaboratively define patient treatment
    strategies. Taking advantage of this integration capability, in
    mid-2007 we introduced StatRT software to the Hi Art treatment
    system, allowing the full radiation therapy process 
    CT scanning, treatment planning and treatment
    delivery  to be completed much more rapidly than when
    using other systems. The software is currently used primarily to
    enhance the quality of care for palliative and other
    time-critical cancer cases by allowing patients to be treated
    immediately. This treatment option is not available for other
    systems which lack full integrated capabilities, where scanning
    and treatment planning are usually completed a full day or more
    prior to delivery of treatment.
    Low barriers to installation and
    implementation.  All external beam radiation
    systems must be housed in rooms which have special radiation
    shielding to capture any radiation not absorbed by the patient.
    The Hi Art systems size and self-contained design allow
    customers to retrofit the Hi Art system into existing treatment
    rooms previously used for legacy radiation therapy systems and
    avoid, or reduce, the significant construction costs that can be
    associated with building new, larger treatment rooms, which are
    required to install many other radiation therapy systems. With
    both imaging and radiation delivery capabilities in its ring
    gantry, the 8




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Hi Art system requires less space than other systems, which use
    large moving arms to position the linear accelerator or
    incorporate adjacent imaging equipment used for treatment
    planning. In addition, because the Hi Art system has an
    integrated radiation beam stop, which captures radiation that
    passes through the patient, it requires less radiation shielding
    in treatment room walls as compared to the shielding required by
    a traditional system. We also preassemble, test and commission
    each Hi Art system at our manufacturing facility, and ship the
    system almost fully assembled. This assembly process typically
    allows radiation beam on within four days and
    treatments to begin within 45 days after delivery.  
    Platform for further technological advancements in adaptive
    radiation therapy.  We believe that the Hi Art
    system is the only commercially available treatment device that
    enables truly adaptive radiation therapy because of its unique
    ability to provide daily, quantitative images, high speed
    delivery of radiation from fixed beam angles or helically from
    360 degrees around the body and real-time verification of the
    dose received by the patient. We believe that the combination of
    these design features and our integrated treatment planning and
    optimization software will allow us to continue to enhance the
    Hi Art systems adaptive capabilities to a point where
    clinicians will routinely and easily adjust a patients
    treatment as needed.    Our
    Strategy
    
    Increase market awareness of the Hi Art systems
    clinical and economic benefits.  In order to
    expand our installed base of Hi Art systems, we intend to
    continue to position the Hi Art system as the most advanced
    radiation therapy system for treating a wide range of cancer
    types effectively and efficiently. We intend to accomplish this
    through traditional sales and marketing efforts, such as
    tradeshows, educational symposia,
    e-business
    avenues, marketing materials, case studies and direct mail
    campaigns. An important aspect of our sales and marketing
    efforts is also to raise awareness of the Hi Art system among
    patient populations who are increasingly educated about
    treatment options and therefore help to drive adoption of new
    technologies by clinicians. We also intend to educate clinicians
    about using the Hi Art system to treat tumors that they may
    currently believe can be adequately treated using competing
    technologies.
    Expand penetration into both currently served markets and the
    largely unserved, single linear accelerator facility
    market.  We initially sold the Hi Art system
    primarily to customers who had multiple radiation treatment
    systems at a site. The clinicians at these customer sites have
    typically treated their most complex and difficult cases on the
    Hi Art system, while treating less complex cases using
    traditional radiation therapy systems that treat with a fixed
    beam angle delivery. With the launch of TomoDirect in the second
    half of 2009, we believe we will be able to compete more
    effectively with the traditional radiation therapy systems by
    providing a high quality fixed beam angle delivery mode for
    simpler cases. This new versatility in treatment modality will,
    we believe, allow clinics to more effectively balance dose
    delivery and patient case complexity and, thus, result in
    increased demand for the Hi Art system at sites with multiple
    radiation treatment systems. In addition, we believe this
    expanded versatility will make the Hi Art system more attractive
    for clinics and other sites with only one radiation therapy
    system. Facilities with only one linear accelerator must have
    the capacity to efficiently and effectively treat any patient,
    regardless of clinical complexity. According to the 2007
    Radiation Oncology Market Summary Report published by IMV in
    August of 2008, 55% of all radiation oncology sites located in
    the United States own only one linear accelerator. We believe
    the expanded versatility offered by the combination of
    TomoDirect and TomoHelical treatment modes will help us to more
    effectively penetrate this important market. 9




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
    Expand our worldwide sales presence.  Our early
    sales and marketing efforts were primarily focused on North
    America. As of December 31, 2008, 68% of our installed
    systems were in North America. We have established both direct
    and indirect sales capabilities in Western Europe and
    Asia-Pacific. Recently, we have established indirect sales
    capabilities in Eastern Europe and the Middle East, where we
    believe that there is significant potential to expand our
    installed base. We intend to continue to invest in direct and
    indirect sales and marketing capabilities in international
    markets. In particular, we plan to focus on optimizing
    capabilities in our current markets and expanding our sales
    capabilities in Australia, and in select countries in Eastern
    Europe.
    Increase our profitability through cost reductions, scalable
    field service efficiencies and improved operating
    leverage.  Over the last three years our operating
    margins have been impacted by our decision to invest in our
    global service and support infrastructure, including the
    establishment of spare part depots and the addition of personnel
    to support our international operations and anticipated future
    growth. In addition, we incurred increased costs due to higher
    component costs during early production and the higher failure
    rates of certain components. In order to increase our
    profitability, we are seeking to decrease our reliance on
    single-source suppliers of key components in order to enable us
    to negotiate better prices with a wider range of suppliers and
    to improve component reliability. In addition, we are
    re-engineering higher cost, higher failure components in an
    effort to improve reliability and reduce costs. We are also
    seeking to increase our profitability by focusing our sales
    efforts in geographic markets where we currently have installed
    Hi Art systems, thus leveraging scalable efficiencies of our
    existing service employees and regional spare part depots. We
    believe this improved asset utilization will position us to
    reduce the service infrastructure costs normally associated with
    increased sales volumes.
    Continue to enhance our customer service and support
    capabilities.  We believe that an important
    differentiating feature of our business is our strong customer
    support. We have invested heavily in our customer service and
    support infrastructure. We provide comprehensive customer
    support beginning with a site-planning and installation team and
    continuing through training, product technical support, access
    to physicist support that is unique among our competitors, field
    service engineering and value-added proactive/reactive
    maintenance services. We intend to enhance our technological
    advantages, infrastructure and market presence by cross
    functional training of our field engineers with our installation
    support personnel and our parts expediters with our call center
    personnel, as well as implementing regional training programs to
    augment and refine our customer service.
    Enhance the Hi Art systems treatment capabilities
    through ongoing research and development
    initiatives.  In order to increase patient
    throughput and increase our customers return on their
    investment, our research and development initiatives are focused
    on more fully automating the treatment optimization and adaptive
    therapy processes, thereby decreasing the time necessary for
    clinicians to develop and adapt treatment plans. For example, in
    the fall of 2008, we announced the launch of TomoDirect
    software, which we expect to begin installing in the second half
    of 2009. With TomoDirect, we believe we will be able to compete
    more effectively with the traditional radiation therapy systems
    by providing a high quality fixed beam angle delivery mode for
    simpler cases. We are also engaged in initiatives to accommodate
    real-time patient movements during treatment. We believe that
    these developments will further improve the precision of
    treatment offered by the Hi Art system and increase patient
    throughput. In addition, we believe that our work in remote and
    automatic quality assurance should reduce the amount of time and
    resources needed to perform system verification and maintenance.
    We believe that these developments will improve the precision of
    treatment and increase patient throughput.
    Continue to expand and protect our intellectual property
    portfolio.  The Hi Art system is comprised of
    multiple sophisticated proprietary components. We hold or
    license 27 U.S. patents, 44 pending U.S. patent
    applications, over 95 foreign patents, and over 200 foreign
    patent applications. These patents cover various components and
    techniques incorporated into the Hi Art treatment system, such
    as the MLC, the patient couch and aspects of the helical
    delivery of therapeutic radiation, or that are being
    incorporated into new technologies that we are currently
    developing, all of which we believe will allow us to maintain a
    competitive advantage in the field of radiation treatment. We
    will continue to seek patent protection for 10




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our new inventions and seek licensing rights for inventions of
    others that we believe can add substantial value to our products
    and services.  
    Increase our commercial opportunities and growth through
    investments in or collaboration with third
    parties.  We believe that we can increase our
    commercial opportunities through a combination of investments in
    and collaborations with third parties. We seek to identify
    opportunities to collaborate in the development of new
    technologies that leverage our existing operational
    infrastructure and distribution, provide our customers with
    improved or additional capabilities or expand our growth
    opportunities into new markets. For example, in April of 2008,
    we formed Compact Particle Acceleration Corporation to focus on
    the development of a compact, lower-cost, intensity modulated
    proton therapy system. We also will continue to evaluate
    opportunities to vertically integrate through investment in
    suppliers of key components.  The Hi
    Art System
    Clinical
    Workflow
    Patient imaging.
  Treatment planning and
    optimization.
  Patient positioning and treatment
    delivery.
  Dose verification.
   11




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Technology
    Ring gantry.
  Quantitative fan beam CT.
  Multi-leaf collimator.
  Treatment planning system.
  Optimizer.
  Integrated database server. Form 10-K,
 12




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Primary beam stop and radiation beam
    shielding.
  Marketing
    and Sales
        Years Ended December 31,2008


2007


2006North America

$
135,977



67
%

$
129,493



56
%

$
88,937



57
%EMEA


49,588



24
%


61,337



26
%


33,586



22
%Asia-Pacific


19,024



9
%


41,980



18
%


33,579



21
%$
204,589



100
%

$
232,810



100
%

$
156,102



100
%      13




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Customer
    Service and Support
  12-month
  Site planning and installation.
  Training.
  Standard warranty and support services.
  Tomo Lifecycle Care. on-site
 14




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Online resources.
  
    TomoGateway.  TomoGateway links our customer
    call centers directly to a customers Hi Art system over a
    secure connection. Using this direct connection, our support
    staff can perform online diagnostics, examine system log files
    and look at data immediately and easily to assist customers in
    identifying and addressing problems with their units. Such
    accessible data allows us to provide our customers with better
    support and helps our customers to maintain high levels of
    system operability. Access to TomoGateway is included at no
    additional charge during the standard one-year warranty period
    and with all Total TLC and Partnership TLC packages.
    TomoExchange.  TomoExchange is a secure,
    web-based tool that is designed to provide a communication
    portal between us and our customers and to facilitate
    communication and collaboration among all end users of Hi Art.
    The platform features
    e-mail
    integration and a product feedback tool as well as an on-line
    forum that allows customers to share information about the Hi
    Art system, learn about relevant upcoming events and review
    important announcements. TomoExchange is available to all
    customers operating the Hi Art system at no cost.  Competition
  3-D
         15




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Research
    and Development
            Manufacturing
    and Suppliers
     16




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Reimbursement
  United
    States Reimbursement Regulation
       17




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Foreign
    Reimbursement Regulations
  side-by-side.
  Government
    Regulation
  United
    States Medical Device Regulation
     18




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Form 10-K
      United
    States Privacy and Security Laws
    United
    States Fraud and Abuse Laws and Regulations
    Physician self-referral laws.
  Anti-kickback laws.
  Federal False Claims Act.
   19




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State
    Certificate of Need Laws
    Foreign
    Regulation of Medical Devices
        Intellectual
    Property
     20




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Employees
    Information
    Available to Investors
  (608) 824-2800. 1-800-SEC-0330. www.sec.gov
  http://www.tomotherapy.com Form 10-K, Form 10-Q, Form 8-K
  Executive
    Officers of the Registrant
    Name

Age

PositionFrederick A. Robertson


53


Chief Executive Officer, President and DirectorStephen C. Hathaway


53


Chief Financial Officer and TreasurerSteven G. Books


59


Chief Operating OfficerBrenda S. Furlow


50


Vice President, Secretary and General CounselThomas Rockwell Mackie


54


Chairman of the Board of Directors and Co-Founder   Frederick A. Robertson M.D.
 21




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##### Table of Contents



Stephen C. Hathaway
  Steven G. Books
  Brenda S. Furlow, J.D.,
  Thomas Rockwell Mackie, Ph.D.
  Item 1A.
    Risk
    Factors  Form 10-K
 22




---



##### Table of Contents



Risks
    Related to Our Business
  We
    currently depend on sales of the Hi Art system for substantially
    all of our revenue, and, if we are unable to grow or sustain
    sales of the Hi Art System, we may not generate sufficient
    revenue to support our business.
    Because
    substantially all of our revenue is derived from sales of the Hi
    Art system, and because of the long sales cycle and high unit
    price of the Hi Art system, our results of operations will vary
    significantly from period to period. These fluctuations in
    revenue may make it difficult to compare our results of
    operations across periods.
    We
    face competition from numerous competitors, many of whom have
    greater resources than we do, which may make it more difficult
    for us to achieve significant market penetration and maintain or
    increase our prices.
   23




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##### Table of Contents



Our
    reliance on single-source suppliers for critical components of
    the Hi Art system could harm our ability to meet demand for our
    products in a timely and cost-effective manner.
      Sales
    of the Hi Art system may be adversely affected if clinicians do
    not widely adopt IGRT and adaptive radiotherapy, which is an
    emerging cancer treatment technique.
   24




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##### Table of Contents



We may
    be unable to penetrate the market we currently serve or the
    unserved single linear accelerator facility market if we fail to
    educate clinicians and patients about the benefits of the Hi Art
    system and to implement enhancements to the system in a timely
    manner.
      Our
    ability to increase our profitability depends in part on
    maintaining our average selling prices and increasing our gross
    margins on product sales, which we may not be able to
    achieve.
   25




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##### Table of Contents



Our
    ability to increase our profitability also depends in part on
    reducing our warranty and service costs for the Hi Art system
    and improving our economies of scale, which we may not be able
    to achieve.
    Our
    sales and receivables may be materially adversely impacted if
    the global economic problems existing as of the date of this
    report on
    Form 10-K
    persist or worsen.
    If our
    backlog, which is an important measure of future revenue,
    declines further, our future financial performance will be
    adversely affected.
     26




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##### Table of Contents



We may
    be required to use more cash generated from our initial public
    offering to pay expenses, reducing our ability to use those
    proceeds for long-term investments.
    If we
    are unable to maintain existing research collaboration
    relationships, enter into new collaboration arrangements in the
    future or enter into license agreements with our collaborators
    and others, our ability to enhance the Hi Art system may be
    adversely affected.
        We
    rely on a third party to perform spare parts shipping and other
    logistics functions on our behalf. A failure or disruption at
    our logistics provider would adversely impact our
    business.
   27




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##### Table of Contents



Changes
    in healthcare policies and changes to reimbursement to
    healthcare providers for use of the Hi Art system could
    adversely affect sales of the Hi Art system.
          non-U.S. markets
 28




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##### Table of Contents



Our
    manufacturing operations are conducted at a single location, and
    any disruption at our manufacturing facility could increase our
    expenses.
    We are
    dependent upon third-party local distributors to market and
    distribute the Hi Art system in key markets.
    Our
    results of operations may be adversely affected by changes in
    foreign currency exchange rates.
  non-U.S. competitors
  Technological
    breakthroughs in cancer treatment could render the Hi Art system
    obsolete.
   29




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##### Table of Contents



A
    significant percentage of our sales are outside of North
    America, and economic, political and other risks associated with
    international sales and operations could adversely affect our
    sales or make them less predictable.
      
    difficulties in enforcing agreements and collecting receivables
    in a timely manner through the legal systems of many countries
    outside the United States;
    the potential failure to comply with foreign regulatory
    requirements to market the Hi Art system on a timely basis or at
    all;
    availability of, and changes in, reimbursement within prevailing
    foreign health care payment systems;
    difficulties in managing foreign relationships and operations,
    including any relationships that we establish with foreign
    distributors or sales or marketing agents;
    limited protection for intellectual property rights in some
    countries;
    fluctuations in currency exchange rates;
    the possibility that foreign countries may impose additional
    withholding taxes or otherwise tax our foreign income, impose
    tariffs or adopt other restrictions on foreign trade;
    the possibility of material shipping delays; and
    significant changes in the political, regulatory, safety or
    economic conditions in a country or region in which we operate.    Product
    liability suits, whether or not meritorious, could be brought
    against us due to an alleged defective component of the Hi Art
    system or for the misuse of the Hi Art system. These suits could
    result in expensive and time-consuming litigation, payment of
    substantial damages and an increase in our insurance
    rates.
   30




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##### Table of Contents



We are
    subject to federal, state and foreign laws governing our
    business practices, which, if investigated or violated, could
    subject us to costs and penalties, and cause adverse
    publicity.
        The
    effectiveness of procedures performed using conformal radiation
    therapy delivery systems like the Hi Art system are not yet
    supported by long-term clinical data, and the medical community
    has only begun to develop a large body of peer-reviewed
    literature that supports the Hi Art systems
    efficacy.
   31




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##### Table of Contents



Our
    success will depend on our ability to attract and retain
    qualified personnel, while also effectively managing employee
    costs.
    We may
    need to raise additional capital in the future and may be unable
    to do so on acceptable terms. This could limit our ability to
    grow and carry out our business plan.
    In
    April 2008, we invested in continued development of a new
    compact proton therapy system through a separate entity. If this
    development project is unsuccessful, or we are unable to raise
    the additional capital that may be necessary for this project on
    acceptable terms, our ability to diversify our business could be
    impaired.
   32




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##### Table of Contents



Risks
    Related to Our Intellectual Property
  If we
    are not able to meet the requirements of our license agreement
    with the Wisconsin Alumni Research Foundation, or WARF, we could
    lose access to the technologies licensed thereunder and be
    unable to manufacture, market or sell the Hi Art
    system.
    If we
    are not able to adequately protect our intellectual property and
    proprietary technology, our competitive position, future
    business prospects and financial performance will be adversely
    affected.
    
    current or future U.S. or foreign patent applications will
    be approved in a timely manner or at all;
    our issued patents will protect our intellectual property and
    not be challenged by third parties;
    we will develop patentable intellectual property;
    the validity of our patents will be upheld;
    the patents of others will not have an adverse effect on our
    ability to do business; or
    others will not independently develop similar or competing
    products or methods or design around any patents that may be
    issued to us.     33




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##### Table of Contents



We may
    initiate lawsuits to protect or enforce our patents or other
    intellectual property rights, which could be expensive and, if
    we lose, could cause us to lose some of our intellectual
    property rights.
      We may
    become subject to costly intellectual property litigation, which
    could affect our future business and financial
    performance.
    We may
    be subject to claims that our employees have wrongfully used or
    disclosed alleged trade secrets of their former
    employers.
   34




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##### Table of Contents



Risks
    Related to Regulatory Matters
  Modifications,
    upgrades and future products related to the Hi Art system or new
    indications may require new FDA premarket approvals or 510(k)
    clearances, and such modifications, or any defects in design or
    manufacture, may require us to recall or cease marketing the Hi
    Art system until approvals or clearances are
    obtained.
        The Hi
    Art system is subject to recalls even after receiving FDA
    clearance or approval, which would harm our reputation, business
    and financial results.
   35




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##### Table of Contents



If we
    or our distributors do not obtain and maintain the necessary
    regulatory approvals in a specific country, we will not be able
    to market and sell the Hi Art system in that
    country.
    We
    must manufacture the Hi Art system in accordance with federal
    and state regulations, and we could be forced to recall our
    installed systems or terminate production if we fail to comply
    with these regulations.
    If we
    are found to have violated laws protecting the confidentiality
    of patient health information, we could be subject to civil or
    criminal penalties, which could increase our liabilities and
    harm our reputation or our business.
   36




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##### Table of Contents



Risks
    Related to Our Common Stock
  Our
    common stock has only been publicly traded since May 2007, and
    its price may fluctuate substantially.
    
    fluctuations in quarterly revenue, net income and orders backlog;
    regulatory developments related to the manufacturing, marketing
    or sale of the Hi Art system;
    announcements of technological innovations, new services or
    service enhancements, strategic alliances or significant
    agreements by us or by our competitors;
    recruitment or departure of key personnel;
    changes in the estimates of our operating results or new orders,
    or changes in recommendations by any securities analyst that
    elects to follow our common stock;
    sales of large blocks of our common stock; and
    changes in accounting principles or changes in interpretations
    of existing principles, which could affect our financial results.    Anti-takeover
    provisions included in our amended and restated articles of
    incorporation and amended and restated bylaws could delay or
    prevent a change of control of our company, which could
    materially adversely impact the value of our common stock and
    may prevent or frustrate attempts by our shareholders to replace
    or remove our current management.
    
    our Board of Directors is authorized to issue preferred stock in
    series, with the designation, powers, preferences and rights of
    each series to be fixed by our Board of Directors;
    a requirement that special meetings of shareholders be called
    only by our president, a majority of our Board of Directors,
    such officer(s) as our Board of Directors may authorize from
    time to time or by our president or secretary if a written
    request of the holders of record of at least 25% of all the
    votes entitled to be cast upon 37




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##### Table of Contents



the matter(s) set forth as the purpose of the meeting in the
    written request is delivered to our president or secretary and
    such written requirements satisfies certain information
    requirements contained in our amended and restated bylaws;  
    advance notice requirements for shareholder proposals and
    nominations; and
    the ability of our Board of Directors to amend our bylaws except
    where our articles of incorporation or the Wisconsin Business
    Corporation Law reserves the power exclusively to our
    shareholders or our shareholders, in adopting, amending or
    repealing a particular bylaw, provide within the bylaws that our
    Board of Directors may not amend, repeal or readopt such bylaw.    Item 2.
    Properties    
    an office building totaling approximately 61,000 square
    feet under a lease expiring in 2014;
    a manufacturing facility totaling approximately
    64,000 square feet under a lease expiring in 2018; and
    a portion of an office building totaling approximately
    46,000 square feet under a lease expiring in 2014.    Item 3.
    Legal
    Proceedings  Form 10-K.
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   38




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##### Table of Contents



PART II  Item 5.
    Market
    for the Registrants Common Equity, Related Shareholder
    Matters and Issuer Purchases of Equity Securities  Market
    Information
    Fiscal Year
    2007

High


LowFirst Quarter


N/A



N/ASecond Quarter (beginning May 9, 2007)

$
24.73


$
19.51Third Quarter

$
27.58


$
21.61Fourth Quarter

$
24.24


$
15.85Fiscal Year 2008First Quarter

$
20.16


$
12.56Second Quarter

$
15.00


$
6.79Third Quarter

$
10.00


$
4.45Fourth Quarter

$
5.00


$
1.81   Holders
    Dividends
    Securities
    Authorized for Issuance under Equity Compensation
    Plans
  Form 10-K
 39




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##### Table of Contents



Performance
    Graph
      COMPARISON
    OF CUMULATIVE TOTAL RETURN*
    Among TomoTherapy Incorporated, The NASDAQ Composite Index
    and
 The S&P Healthcare Index
  
  *
    
    $100 invested on May 9, 2007 in stock or in
    index  including reinvestment of dividends.  Recent
    Sales of Unregistered Securities.
  Form 10-K,
       40




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##### Table of Contents



and/or and/or and/or
      Use of
    Proceeds from Public Offering of Common Stock
  Form S-1 No. 333-140600)
   41




---



##### Table of Contents



Working capital

$
49.9Purchases of property and equipment


14.0Purchases of test systems


5.7Acquisition of Chengdu Twin Peak Accelerator Technology
    Inc.


1.2Repayment of debt


0.1Remaining net proceeds in cash, equivalents and short-term
    investments


113.8Net proceeds from initial public offering

$
184.7  42




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
  Consolidated
    Balance Sheet data (in thousands):
  As of December 31,2008


2007


2006


2005


2004Cash and equivalents

$
65,967


$
191,780


$
20,137


$
30,396


$
1,950Short-term investments


88,825















Receivables, net


41,259



44,108



19,050



14,235



5,036Inventories, net


63,983



53,171



40,026



28,283



15,740Working capital (deficit)


184,585



211,449



7,446



7,792



(4,187
)Total assets


295,932



326,677



109,314



82,303



29,069Deferred revenue and customer deposits


43,633



35,338



43,307



49,281



16,133Long-term debt (including current maturities)


727



841



875



214



283Redeemable convertible preferred stock










212,663



166,402



84,234Total shareholders equity (deficit)


209,231



238,694



(184,117
)


(151,406
)


(83,720
)  43




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##### Table of Contents



Consolidated
    Statement of Operations data (in thousands except per share
    data):
  Years Ended December 31,2008


2007


2006


2005


2004Revenue

$
204,589


$
232,810


$
156,102


$
75,754


$
45,460Income (loss) before income tax, noncontrolling interests and
    cumulative effect of change in accounting principle


(33,659
)


16,450



7,731



317



3,032Income tax expense (benefit)


10,331



5,788



(7,184
)


78



151Noncontrolling interests


7,102















Cumulative effect of change in accounting principle(1)










(2,140
)






Net income (loss)


(36,888
)


10,662



12,775



239



2,881Accretion of redeemable convertible preferred stock(2)






(237,582
)


(46,253
)


(68,075
)


(41,960
)Net loss attributable to common shareholders

$
(36,888
)

$
(226,920
)

$
(33,478
)

$
(67,836
)

$
(39,079
)Basic and diluted net loss per share attributable to common
    shareholders

$
(0.73
)

$
(6.35
)

$
(3.78
)

$
(8.48
)

$
(5.40
)Weighted average common shares used in computing basic and
    diluted net loss per share attributable to common shareholders


50,199



35,731



8,856



7,996



7,234Pro forma basic net income per share(3)





$
0.24


$
0.36







Pro forma diluted net income per share(3)





$
0.21


$
0.32







Pro forma weighted average number of shares used in computing
    basic net income per share(3)






45,028



35,366







Pro forma weighted average number of shares used in computing
    diluted net income per share(3)






49,919



40,130







     (1)
    
    Represents impact of the adoption of Staff Position
    150-5,
    Issuers Accounting under Financial Accounting Standards
    Board (FASB) Statement No. 150 for Freestanding Warrants
    and Other Similar Instruments on Shares That Are Redeemable(FSP
    150-5).
    Pursuant to FSP
    150-5, we
    were required to classify our outstanding warrants to purchase
    preferred stock as a liability on our balance sheet and record
    adjustments to their fair value in our statements of operations
    at the end of each reporting period. For the year ended
    December 31, 2006, the impact of the change in accounting
    principle was to decrease net income by $3.1 million,
    consisting of a $2.2 million cumulative effect adjustment
    for the change in accounting principle as of January 1,
    2006, when the Company adopted FSP
    150-5, and
    $0.9 million of expense that was recorded in other income
    (expense), net to reflect the increase in fair value between
    January 1, 2006 and December 31, 2006. The warrants
    were subject to revaluation at each balance sheet date and any
    change in fair value was recognized as a component of other
    income (expense), net, until the completion of the
    Companys initial public offering when the preferred
    warrants converted to common stock warrants.(2)
    
    Accretion of redeemable convertible preferred stock represents
    the impact attributable to the increase in the fair market value
    of shares of our redeemable convertible preferred stock prior to
    their conversion into shares of our common stock upon the
    closing of our initial public offering. The holders of
    Series A, B, C and D preferred stock had the option to put
    their stock back to us at the greater of (i) the original
    purchase price plus accrued dividends, or (ii) the fair
    market value of the stock. The holders of Series E
    preferred stock had the option to put their stock back to us at
    the original purchase price plus accrued dividends. The put
    option and the related accretion of the preferred stock
    terminated upon the completion of our initial public offering
    when all of our issued and outstanding shares of preferred stock
    converted to common stock.(3)
    
    Pro forma net income per share gives effect to the conversion
    upon the closing of our initial public offering of all of our
    issued and outstanding shares of preferred stock on a
    one-for-one basis into shares of our common stock. 44




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion should be read together with our
    audited consolidated financial statements and the notes to those
    financial statements, which are included in this report. This
    report may contain or incorporate by reference forward-looking
    statements made pursuant to the safe harbor provisions of
    Section 27A of the Securities Act of 1933, as amended, and
    Section 21E of the Securities Exchange Act of 1934, as
    amended. These statements reflect managements
    expectations, estimates, and assumptions, based on information
    available at the time of the statement or, with respect to any
    document incorporated by reference, available at the time that
    such document was prepared. Forward-looking statements include,
    but are not limited to, statements regarding future events,
    plans, goals, objectives, prospects, and expectations.
    Forward-looking statements are often, but not always, made
    through the use of words such as believe,
    anticipate, should, intend,
    plan, will, likely,
    expect, estimate, project,
    and similar expressions. Forward-looking statements are not
    guarantees of future performance and involve risks,
    uncertainties, and other factors, including, but not limited to,
    those discussed below under Factors Affecting Our
    Financial Performance and those in the section entitled
    Risk Factors under Part I, Item 1A of this
    Annual Report on
    Form 10-K,
    which may cause our actual results, performance or achievements
    to be materially different from any future results, performance,
    or achievements expressed or implied by those statements. We
    undertake no obligation to, and expressly disclaim any such
    obligation to, update or revise any forward-looking statements
    to reflect changed assumptions, the occurrence of anticipated or
    unanticipated events or changes to future results over time or
    otherwise, except as required by law.
  Overview
         45




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Factors
    Affecting Our Financial Performance
    Incoming
    Orders
  12-month
          Backlog
     46




---



##### Table of Contents



Revenue
        
    Shipments of the Hi Art system generally occur 9 to
    12 months after the order is received. Timing of deliveries
    can be affected by factors out of our control such as
    construction delays at customer project sites and customer
    credit issues. We generally recognize revenue from a system sale
    upon customer acceptance, which usually occurs three to four
    weeks after delivery. Each installation represents a significant
    percentage of our revenue for a particular quarter.
    Our geographic mix of customers may impact our average selling
    prices. Increased sales of the Hi Art system outside of North
    America have tended to favorably impact our gross margins due to
    higher average selling prices in these markets. We intend to
    continue to expand our international selling efforts, although
    we cannot be certain that favorable pricing trends will continue
    nor can we be certain of how foreign currency exchange rates
    will impact our financial results in the future.
    Our ability to demonstrate the clinical benefits of the Hi Art
    system compared to competing systems is a factor in our ability
    to influence the market demand for the Hi Art system. To compete
    effectively, we may need to offer additional features that could
    require substantial internal resources to develop.
    Our focus on sales to for-profit, multi-center customers in the
    United States may require us to lower selling prices, as these
    customers tend to be more price conscious. In addition, we have
    a limited history of working with these for-profit, multi-center
    customers. Orders from these customers may remain in backlog
    longer than those from customers who place single unit orders,
    as units sold to multi-center customers tend to install
    sequentially over a longer period of time.
    The Hi Art system is a major capital equipment item that
    represents a significant purchase for most of our customers. If
    the global economy continues its downward trend, our customers
    may choose to delay some of their capital spending, and, as a
    result, our incoming orders and subsequent revenue recognition
    may be materially adversely affected.    Service revenue.
   47




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##### Table of Contents



Cost
    of revenue
      Component supply and cost.
  Service and support expenses.
  Warranty.
    Research
    and development expenses
     48




---



##### Table of Contents



Selling,
    general and administrative expenses
      Nonoperating
    expenses
    Interest
    income
    Income
    tax expense (benefit)
  Multiple taxing jurisdictions and projected financial
    earnings or losses.
  Deferred tax asset valuation allowance. Accounting for Income Taxes
  Noncontrolling
    interests
   49




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##### Table of Contents



Results
    of Operations
    Years Ended December 31,2008


2007


2006Revenue


100.0
%


100.0
%


100.0
%Cost of revenue


75.8



62.8



65.8Gross profit


24.2



37.2



34.2Operating expenses:Research and development


20.8



14.7



13.7Selling, general and administrative


22.7



18.2



14.8Total operating expenses


43.5



32.9



28.5Income (loss) from operations


(19.3
)


4.3



5.7Other income (expense)


2.8



2.8



(0.7
)Income (loss) before income tax, noncontrolling interests and
    cumulative effect of change in accounting principle


(16.5
)


7.1



5.0Income tax expense (benefit)


5.1



2.5



(4.6
)Income (loss) before noncontrolling interests and cumulative
    effect of change in accounting principle


(21.6
)


4.6



9.6Noncontrolling interests


3.5



0.0



0.0Income (loss) before cumulative effect of change in accounting
    principle


(18.1
)


4.6



9.6Cumulative effect of change in accounting principle


0.0



0.0



(1.4
)Net income (loss)


(18.1
)%


4.6
%


8.2
%   Year
    Ended December 31, 2008 Compared to Year Ended
    December 31, 2007
  Revenue
    Years Ended December 31,2008


2007Product revenue

$
174,929



86
%

$
213,900



92
%Service and other revenue


29,660



14



18,910



8$
204,589



100
%

$
232,810



100
%     Years Ended December 31,2008


2007North America

$
135,977



67
%

$
129,493



56
%Europe


49,588



24



61,337



26Asia-Pacific


19,024



9



41,980



18$
204,589



100
%

$
232,810



100
%    50




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##### Table of Contents



Cost of
    revenue
          Research
    and development expenses
    Years Ended December 31,2008


2007


$ Change


% ChangeHi Art R&D

$
33,616


$
30,304


$
3,312



11
%Proton Project / CPAC R&D


8,941



4,000



4,941



124$
42,557


$
34,304


$
8,253



24
%  51




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##### Table of Contents



Selling,
    general and administrative expenses
    Share-based
    compensation
  Share-Based Payment
  Other
    income (expense)
    Income
    tax expense
    Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  Revenue
    Years Ended December 31,2007


2006Product revenue

$
213,900



92
%

$
147,974



95
%Service and other revenue


18,910



8



8,128



5$
232,810



100
%

$
156,102



100
%  52




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##### Table of Contents



Years Ended December 31,2007


2006North America

$
129,493



56
%

$
88,937



57
%Europe


61,337



26



33,586



22Asia-Pacific


41,980



18



33,579



21$
232,810



100
%

$
156,102



100
%         Cost of
    revenue
      Research
    and development expenses
    Years Ended December 31,2007


2006


$ Change


% ChangeHi Art R&D

$
30,304


$
21,397


$
8,907



42
%Proton Project / CPAC R&D


4,000







4,000



100$
34,304


$
21,397


$
12,907



60
%    53




---



##### Table of Contents



Selling,
    general and administrative expenses
    Share-based
    compensation
    Other
    income (expense)
    Income
    tax expense (benefit)
    Liquidity
    and Capital Resources
    Financial
    Condition
   54




---



##### Table of Contents



December 31, 2008Unrealized


UnrealizedCost basis


gains


losses


Fair ValueU.S. Government and Agency securities

$
69,317


$
1,963


$



$
71,280Corporate bonds


17,692



62



(209
)


17,545$
87,009


$
2,025


$
(209
)

$
88,825     Cash
    Flows
  Cash
    flows from operating activities
       55




---



##### Table of Contents



Cash
    flows from investing activities
        Cash
    flows from financing activities
          Loans
    and Available Borrowings
   56




---



##### Table of Contents



Contractual
    Obligations and Commitments
    Payment Due by PeriodLess Than


1-3


3-5


More ThanTotal


1 Year


Years


Years


5 YearsOperating lease obligations

$
21,778


$
3,487


$
6,992


$
6,058


$
5,241Notes payable (including interest)


770



152



488



130



Twin Peak acquisition payments


2,160



810



1,350







Minimum purchase agreement


6,972



2,789



4,183







$
31,680


$
7,238


$
13,013


$
6,188


$
5,241       Pending
    Litigation
   57




---



##### Table of Contents



Form 10-K,
  Operating
    Capital and Capital Expenditure Requirements
    
    Revenue generated by sales of the Hi Art system and service
    plans;
    Costs associated with our sales and marketing initiatives and
    manufacturing activities;
    The performance of the systems operating in the field and cost
    of maintaining those systems;
    The level of investment needed in our service and support
    infrastructure;
    Costs of our research and development activities; and
    Effects of competing technological and market developments.      Off-Balance
    Sheet Arrangements
  Regulation S-K.
  Critical
    Accounting Policies and Estimates
     58




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##### Table of Contents



Revenue
    Recognition
  Revenue
    Recognition No. 00-21, Revenue Arrangements with Multiple Deliverables
          SOP No. 97-2, Software Revenue Recognition SOP No. 98-9, Software Revenue Recognition with Respect to Certain
    Agreements. SOP No. 97-2
    Allowance
    for Doubtful Accounts
   59




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##### Table of Contents



Inventories
  first-in,
  Warranty
    Obligations
    Income
    Taxes
  Accounting for Income Taxes
    ,
    Accounting for Uncertainty in Income Taxes  an
    Interpretation of FASB Statement No. 109
  Investments
  Fair Value Measurements Effective Date of FASB
    Statement No. 157 No. 157-2),
 60




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##### Table of Contents




    Level 1  Quoted prices in active markets for
    identical assets or liabilities.
    Level 2  Inputs other than Level 1 that are
    observable, either directly or indirectly, such as quoted prices
    for similar assets or liabilities; quoted prices in markets that
    are not active; or other inputs that are observable or can be
    corroborated by observable market data for substantially the
    full term of the assets or liabilities.
    Level 3  Unobservable inputs that are supported
    by little or no market activity and that are significant to the
    fair value of the assets or liabilities.    Investment
    in CPAC
  Consolidated Financial
    Statements
  Share-Based
    Compensation
  Share-Based Payment
       61




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##### Table of Contents




    The issuance price of our series of preferred shares to third
    parties;
    Recent third-party transactions in our common stock;
    Valuations performed by an independent valuation firm;
    The liquidation preference and other rights of the preferred
    shares;
    Our revenue backlog and financial performance;
    Trends in the market for public companies involved in similar
    lines of business; and
    The fact that the option grants involved illiquid securities of
    a private company.  Valuation of
    Privately-Held-Company Equity Securities Issued as
    Compensation
   62




---



##### Table of Contents



Valuation
    Methodologies Employed by Virchow Krause
         63




---



##### Table of Contents



Significant
    Factors in Determining the Fair Value as of Each Grant
    Date
    Number of





Fair Value


IntrinsicOptions


Exercise


Estimated


ValueDate of Grant

Granted


Price


per Share


per ShareJanuary 2006


34


$
4.99


$
4.99


$
May 2006


47



5.35



5.35



July 2006


109



5.35



5.35



October 2006


190



6.75



6.75



November 2006


3



6.75



6.75



December 2006


1,958



6.75



8.40



1.65       
    On December 29, 2005, we sold 2,356,435 shares of
    Series E convertible preferred stock at $5.94 per share,
    representing net proceeds of $13.9 million. We engaged
    Virchow Krause to perform an independent valuation of our common
    stock based on this preferred stock transaction. Virchow Krause
    determined that our common stock was valued at $4.99 per share
    as of December 29, 2005. This valuation was then used for
    the option grants made in January 2006.
    In the second quarter of 2006, our Board of Directors determined
    that an updated independent valuation should be obtained.
    Therefore, we engaged Virchow Krause to perform a valuation of
    all classes of our capital stock. Virchow Krause issued a report
    dated May 16, 2006, which concluded that our common stock
    was valued at $5.35 per share as of March 31, 2006. This
    valuation was then used for the option grants made in May and
    July 2006. We believe that there were no material events and no
    material changes in our financial condition or prospects during
    this period that would have resulted in a change in the
    valuation of a share of our common stock.
    On October 23, 2006, the Chairman of our Board of
    Directors, T. Rockwell Mackie, sold an aggregate of
    190,400 shares of common stock to two independent
    investors, and our then President, Paul Reckwerdt, sold 190,400
    common shares to a single independent investor. The purchase
    price of all these shares was $6.75 per share resulting in
    aggregate proceeds of $1.3 million to each seller. Given
    the significant size of the transactions and the fact that these
    shares were sold to independent third parties, we concluded that
    our common stock should be valued at $6.75 per share as of
    October 23, 2006. Both the buyers and sellers had knowledge
    of the possibility that we would undertake an initial public
    offering. Stock option grants were made based on this price in
    October and November 2006.
    Management did not obtain an independent valuation report for
    the grants made on December 7, 2006 because management did
    not believe that there had been any material change in our
    financial condition or prospects between October 23, 2006
    and December 7, 2006. However, after further consideration
    of an independent valuation study completed by Virchow Krause in
    March 2007 with respect to the fair value of our common stock as
    of December 31, 2006, management and our Board of Directors
    concluded that the stock options granted on December 7,
    2006 were granted with an exercise price of $1.65 per share less
    than the fair value of our common stock on December 7, 2006
    as established by the December 31, 2006 valuation.   64




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##### Table of Contents



Convertible
    Preferred Stock Warrant Liability
  FSP 150-5. FSP 150-5, Valuation of Privately-Held-Company Equity
    Securities Issued as Compensation.
  Redeemable
    Convertible Preferred Stock
    Recent
    Accounting Pronouncements
  No. 157-2,
 65




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##### Table of Contents



No. 157-2. No. 157-2
  The
    Fair Value Option for Financial Assets and Financial Liabilities
  Business Combinations Accounting and Reporting of
    Noncontrolling Interest in Consolidated Financial Statements, an
    amendment of ARB No. 51
  Disclosures about Derivative Instruments and Hedging
    Activities, an amendment of FASB Statement No. 133
  No. FAS 142-3, Determination of the Useful Life of Intangible Assets (SFAS No. 142-3). SFAS No. 142-3 Goodwill and Other Intangible
    Assets SFAS No. 142-3 SFAS No. 142-3
  The
    Hierarchy of Generally Accepted Accounting Principles The Meaning of Present Fairly in
    Conformity with Generally Accepted Accounting Principles
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk    Interest
    Rate Risk
   66




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##### Table of Contents



Foreign
    Currency Exchange Rate Risk
    Inflation
    Risk
   67




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  TomoTherapy
    Incorporated and Subsidiaries
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of Independent Registered Public Accounting Firm


69Consolidated Balance Sheets


71Consolidated Statements of Operations


72Consolidated Statements of Temporary Equity and
    Shareholders Equity (Deficit)


73Consolidated Statements of Cash Flows


74Notes to Consolidated Financial Statements


75  68




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   TomoTherapy Incorporated
        Internal Control  Integrated Framework )
      69




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   TomoTherapy Incorporated
  Internal Control 
    Integrated Framework
        Internal Control  Integrated Framework
         70




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
 (In
    thousands, except share amounts)
  December 31,2008


2007ASSETSCash and equivalents

$
65,967


$
191,780Short-term investments


88,825



Receivables, net


41,259



44,108Inventories, net


63,983



53,171Deferred tax assets






3,433Prepaid expenses and other current assets


1,890



1,622Total current assets


261,924



294,114Property and equipment, net


22,157



19,894Deferred tax assets






6,027Other non-current assets, net


11,851



6,642TOTAL ASSETS

$
295,932


$
326,677LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable

$
7,804


$
17,655Accrued expenses


18,471



21,699Accrued warranty


7,431



7,973Deferred revenue


28,139



15,517Customer deposits


15,494



19,821Total current liabilities


77,339



82,665Other non-current liabilities


7,207



5,318Total liabilities


84,546



87,983COMMITMENTS AND CONTINGENCIES (Note E)Noncontrolling interests


2,155



SHAREHOLDERS EQUITYPreferred stock, $1 par value, 10,000,000 shares
    authorized at December 31, 2008 and December 31, 2007;
    no shares issued and outstanding at December 31, 2008 and
    December 31, 2007






Common stock, $ .01 par value, 200,000,000 shares
    authorized at December 31, 2008 and December 31, 2007;
    52,065,400 and 52,063,768 shares issued and outstanding at
    December 31, 2008 and 49,742,209 and 49,740,577 shares
    issued and outstanding at December 31, 2007


506



497Additional paid-in capital


658,416



651,725Treasury stock, 1,632 shares at cost






Accumulated other comprehensive income (loss)


202



(523
)Accumulated deficit


(449,893
)


(413,005
)Total shareholders equity


209,231



238,694TOTAL LIABILITIES AND SHAREHOLDERS EQUITY

$
295,932


$
326,677    71




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (In
    thousands, except per share amounts)
  Years Ended December 31,2008


2007


2006Revenue

$
204,589


$
232,810


$
156,102Cost of revenue


155,083



146,137



102,653Gross profit


49,506



86,673



53,449Operating expenses:Research and development


42,557



34,304



21,397Selling, general and administrative


46,336



42,307



23,119Total operating expenses


88,893



76,611



44,516Income (loss) from operations


(39,387
)


10,062



8,933Other income (expense):Interest income


4,754



6,056



1,292Interest expense


(49
)


(221
)


(1,172
)Other income (expense), net


1,023



553



(1,322
)Total other income (expense)


5,728



6,388



(1,202
)Income (loss) before income tax, noncontrolling interests and
    cumulative effect of change in accounting principle


(33,659
)


16,450



7,731Income tax expense (benefit)


10,331



5,788



(7,184
)Income (loss) before noncontrolling interests and cumulative
    effect of change in accounting principle


(43,990
)


10,662



14,915Noncontrolling interests


7,102







Income (loss) before cumulative effect of change in accounting
    principle


(36,888
)


10,662



14,915Cumulative effect of change in accounting principle










(2,140
)Net income (loss)


(36,888
)


10,662



12,775Accretion of redeemable convertible preferred stock






(237,582
)


(46,253
)Net loss attributable to common shareholders

$
(36,888
)

$
(226,920
)

$
(33,478
)Net loss per share attributable to common shareholders:Basic and diluted

$
(0.73
)

$
(6.35
)

$
(3.78
)Weighted average common shares outstanding used in computing net
    loss per share attributable to common shareholders:Basic and diluted


50,199



35,731



8,856    72




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF TEMPORARY EQUITY
 AND
    SHAREHOLDERS EQUITY (DEFICIT)
 (In thousands)
  Temporary Equity


Shareholders Equity (Deficit)Redeemable











AccumulatedConvertible








Additional


Other





TotalPreferred Stock


Common Stock


Paid-in


Comprehensive


Accumulated


ShareholdersShares


Amount


Shares


Amount


Capital


Income (loss)


Deficit


Equity (Deficit)Balance at December 31, 2005


25,221


$
166,402



8,438


$
84


$
1,013


$



$
(152,503
)

$
(151,406
)Net income


























12,775



12,775Accretion of preferred stock to redemption value






46,253



















(46,253
)


(46,253
)Exercise of stock options










826



9



970











979Share-based compensation expense


















232











232Reclassification of warrants to liabilities


















(444
)










(444
)Issuance costs for Series E preferred stock






8























Balance at December 31, 2006


25,221



212,663



9,264



93



1,771







(185,981
)


(184,117
)Net income


























10,662



10,662Other comprehensive loss






















(523
)






(523
)Comprehensive income






























10,139Accretion of preferred stock to redemption value






237,582



















(237,582
)


(237,582
)Exercise of stock options










2,850



28



3,155











3,183Exercise of common stock warrants










3



















Exercise of preferred stock warrants


456



3,993























Issuance of contingent common shares










1,289



13



91







(104
)


Share-based compensation expense


















3,318











3,318Income tax benefit related to stock options


















3,800











3,800Reclassification of warrant liability to equity


















165











165Initial public offering, net of issuance costs of
    $2.7 million










10,603



106



184,575











184,681Issuance of common stock under employee stock purchase plan










55







869











869Conversion of redeemable convertible preferred stock


(25,677
)


(454,238
)


25,677



257



453,981











454,238Balance at December 31, 2007










49,741



497



651,725



(523
)


(413,005
)


238,694Net loss


























(36,888
)


(36,888
)Other comprehensive income






















725







725Comprehensive loss






























(36,163
)Issuance of common stock underemployee stock purchase plan










270



3



537











540Issuance of restricted stock










1,494



















Exercise of stock options










555



6



1,415











1,421Exercise of common stock warrants










4







8











8Share-based compensation expense


















4,731











4,731Balance at December 31, 2008





$




52,064


$
506


$
658,416


$
202


$
(449,893
)

$
209,231    73




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (In
    thousands)
  Years Ended December 31,2008


2007


2006Cash flows from operating activities:Net income (loss)

$
(36,888
)

$
10,662


$
12,775Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


8,682



6,503



3,053Share-based compensation


4,731



3,318



232Excess tax benefit from share-based compensation






(3,800
)


Deferred income tax provision (benefit)


9,462



3,544



(7,797
)Noncontrolling interests


(7,102
)






Other noncash items


308



877



2,995Changes in operating assets and liabilities:Receivables


1,271



(25,058
)


(4,815
)Inventories


(10,269
)


(13,145
)


(11,743
)Other assets


(416
)


(608
)


(176
)Accounts payable


(9,836
)


3,695



6,618Accrued expenses


(4,570
)


10,222



6,350Accrued warranty


(542
)


2,666



2,384Deferred revenue


12,466



(4,687
)


9,110Customer deposits


(4,815
)


(3,282
)


(15,084
)Other liabilities


1,354







Net cash provided by (used in) operating activities


(36,164
)


(9,093
)


3,902Cash flows from investing activities:Purchases of property and equipment


(7,596
)


(8,320
)


(10,974
)Purchases of test systems


(2,777
)


(2,963
)


(4,671
)Purchases of short-term investments


(87,009
)






Other investing activities


(2,217
)


(487
)


(378
)Net cash used in investing activities


(99,599
)


(11,770
)


(16,023
)Cash flows from financing activities:Proceeds from notes payable










900Payments on notes payable


(114
)


(34
)


(25
)Proceeds from initial public offering, net of issuance costs






184,681



Proceeds from issuance of preferred stock










8Proceeds from employee stock purchase plan


540



869



Proceeds from exercises of stock options and warrants


1,429



3,713



979Proceeds from issuance of CPAC common stock


9,257







Excess tax benefit from share-based compensation






3,800



Net cash provided by financing activities


11,112



193,029



1,862Effect of exchange rate changes on cash and equivalents


(1,162
)


(523
)


Increase (decrease) in cash and equivalents


(125,813
)


171,643



(10,259
)Cash and equivalents at beginning of year


191,780



20,137



30,396Cash and equivalents at end of year

$
65,967


$
191,780


$
20,137Supplemental disclosure of cash flow information:Interest paid

$
70


$
233


$
97Income taxes paid


386



1,165



172Supplemental disclosure of noncash investing activities and
    financing activities:Leasehold improvements funded by landlord

$
143


$
524


$
Reclassification of preferred stock warrants to liability










444Reclassification of preferred stock warrants to equity






3,630



    74




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
  NOTE A 
    DESCRIPTION
    OF BUSINESS  Organization
    Initial
    Public Offering
    Follow-on
    Public Offering
  30-day
  NOTE B 
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Use of
    Estimates
    Principles
    of Consolidation
  Consolidated Financial
    Statements
 75




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Reclassification
    Fair
    Value of Financial Instruments
    Cash
    and equivalents
    Investments
      December 31, 2008Unrealized


UnrealizedCost basis


gains


losses


Fair ValueU.S. Government and Agency securities

$
69,317


$
1,963


$



$
71,280Corporate bonds


17,692



62



(209
)


17,545$
87,009


$
2,025


$
(209
)

$
88,825     December 31, 2008Cost basis


Fair ValueDue in one year or less

$
16,676


$
16,815Due after one year through five years


70,333



72,010$
87,009


$
88,825   Fair
    Value Measurements Effective Date
    of FASB Statement No. 157
 76




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    Level 1  Quoted prices in active markets for
    identical assets or liabilities.
    Level 2  Inputs other than Level 1 that are
    observable, either directly or indirectly, such as quoted prices
    for similar assets or liabilities, quoted prices in markets that
    are not active, or other inputs that are observable or can be
    corroborated by observable market data for substantially the
    full term of the assets or liabilities.
    Level 3  Unobservable inputs that are supported
    by little or no market activity and that are significant to the
    fair value of the assets or liabilities.      Concentration
    of Credit Risk and Other Risks and Uncertainties
        Accounts
    Receivable
     77




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Inventories
  work-in-process first-in,
    December 31,2008


2007Raw materials

$
47,721


$
41,405Work-in-process


5,614



8,722Finished goods


10,648



3,044$
63,983


$
53,171   Property
    and Equipment
    December 31,2008


2007Furniture and equipment

$
11,019


$
8,659Computer equipment


6,292



5,533Computer software


5,140



4,867Leasehold improvements


9,784



9,150In process


2,704



12034,939



28,329Less: Accumulated depreciation and amortization


(12,782
)


(8,435
)$
22,157


$
19,894     Furniture and equipment

5 to 10 yearsComputer equipment and software

3 to 5 yearsLeasehold improvements

Lesser of useful life or the remaining lease term    78




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Long-lived
    Assets
  Accounting for the Impairment on Disposal of Long-lived
    Assets
    Accrued
    Expenses
    December 31,2008


2007Commissions, severance and payroll-related

$
6,290


$
6,597Bonuses


108



5,249Other


12,073



9,853$
18,471


$
21,699   Warranty
    Cost
      December 31,2008


2007


2006Balance, beginning of period

$
7,973


$
5,307


$
2,923Charged to cost of revenue


11,049



12,600



10,138Adjustments related to change in estimate


1,180



(86
)


(244
)Actual product warranty expenditures


(12,771
)


(9,848
)


(7,510
)Balance, end of period

$
7,431


$
7,973


$
5,307   Revenue
    Recognition
  Revenue Recognition No. 00-21, Revenue Arrangements with Multiple Deliverables
   79




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        SOP No. 97-2, Software Revenue Recognition SOP No. 98-9, Software Revenue Recognition with Respect to Certain
    Agreements. SOP No. 97-2
    Shipping
    and Handling Costs
  No. 00-10, Accounting for Shipping and Handling Fees and Costs,
 80




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Research
    and Development Costs
    Software
    Development Costs
    Advertising
    Expenses
    Share-Based
    Compensation
  Share-Based Payment
    Years Ended December 31,2008


2007


2006Cost of revenue

$
820


$
634


$
136Research and development


1,464



1,049



61Selling, general and administrative


2,447



1,635



35Income tax benefit






(449
)


(41
)$
4,731


$
2,869


$
191   Foreign
    Currency
   81




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Income
    Taxes
  Accounting for Income Taxes
  , Accounting for Uncertainty in Income
    Taxes  an Interpretation of FASB Statement
    No. 109
  Other
    Comprehensive Income (Loss)
      Years Ended December 31,2008


2007


2006Foreign currency translation adjustments

$
(401
)

$
(523
)

$
Net unrealized investment gain (loss), net of tax


1,126







$
725


$
(523
)

$
   Stock
    Split
   82




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Net
    Income (Loss) Per Share of Common Stock
    Years Ended December 31,2008


2007


2006Basic and diluted:Income (loss) before cumulative effect of change inaccounting principle

$
(0.73
)

$
0.30


$
1.68Cumulative effect of change in accounting principle










(0.24
)Net income (loss)

$
(0.73
)

$
0.30


$
1.44Net loss attributable to common shareholders

$
(0.73
)

$
(6.35
)

$
(3.78
)Weighted average common shares outstanding used incomputing net loss per share attributable to commonshareholders:Basic and diluted


50,199



35,731



8,856         Years Ended December 31,2008


2007


2006Stock options and warrants


5,776



6,338



9,622Restricted stock


1,472







Preferred stock (as if converted)










25,221Contingent common shares










1,2897,248



6,338



36,132  83




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2008


2007


2006HistoricalNumerator:Net loss attributable to common shareholders

$
(36,888
)

$
(226,920
)

$
(33,478
)Denominator for basic and diluted net loss per share:Weighted-average shares of common stock outstanding


50,199



35,731



8,856Net loss attributable to common shareholders per
    share  basic and diluted

$
(0.73
)

$
(6.35
)

$
(3.78
)Pro forma (unaudited)Numerator:Net loss attributable to common shareholders





$
(226,920
)

$
(33,478
)Pro forma adjustment to add back accretion of redeemable
    convertible preferred stock






237,582



46,253Pro forma net income





$
10,662


$
12,775Denominator for pro forma basic net income per share:Weighted-average shares of common stock outstanding






35,731



8,856Pro forma adjustments to reflect assumed conversion of preferred
    stock (as if converted)






8,845



25,221Pro forma adjustment to reflect assumed conversion of contingent
    common shares (as if converted)






452



1,289Shares used to compute pro forma basic net income per share






45,028



35,366Pro forma basic net income per share





$
0.24


$
0.36Denominator for pro forma diluted net income per share:Weighted-average shares of common stock outstanding






35,731



8,856Pro forma adjustments to reflect assumed conversion of preferred
    stock (as if converted)






8,845



25,221Pro forma adjustment to reflect assumed conversion of contingent
    common shares (as if converted)






452



1,289Pro forma adjustments to reflect assumed exercise of warrants
    and stock options using treasury stock method






4,891



4,764Shares used to compute pro forma diluted net income per share






49,919



40,130Pro forma diluted net income per share





$
0.21


$
0.32Pro forma outstanding anti-dilutive securities not included
    in diluted earnings per share calculationStock options and warrants






173



2,152  84




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Segment
    Information
  Disclosures
    about Segments of an Enterprise and Related Information,
    Years Ended December 31,2008


2007


2006Product revenue

$
174,929


$
213,900


$
147,974Service and other revenue


29,660



18,910



8,128$
204,589


$
232,810


$
156,102     Years Ended December 31,2008


2007


2006North America

$
135,977


$
129,493


$
88,937Europe


49,588



61,337



33,586Asia-Pacific


19,024



41,980



33,579$
204,589


$
232,810


$
156,102   Change
    in Accounting Principle
  150-5, Issuers Accounting under FASB Statement No. 150
    for Freestanding Warrants and Other Similar Instruments on
    Shares That Are Redeemable (FSP 150-5). FSP 150-5 FSP 150-5 FSP 150-5,
 85




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Recent
    Accounting Pronouncements
  Fair Value Measurements Effective Date of FASB
    Statement No. 157 No. 157-2), No. 157-2. No. 157-2
  The
    Fair Value Option for Financial Assets and Financial Liabilities
  Business Combinations Accounting and Reporting of
    Noncontrolling Interest in Consolidated Financial Statements, an
    amendment of ARB No. 51
  Disclosures about Derivative Instruments and Hedging
    Activities, an amendment of FASB Statement No. 133
  No. SFAS 142-3, Determination of the Useful Life of Intangible Assets (SFAS No. 142-3). SFAS No. 142-3 Goodwill and Other Intangible
    Assets SFAS No. 142-3 SFAS No. 142-3
  The
    Hierarchy of Generally Accepted Accounting Principles
 86




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  The Meaning of Present Fairly in Conformity with Generally
    Accepted Accounting Principles
  NOTE C 
    LONG-TERM
    DEBT AND NOTES PAYABLE          Years Ended December 31,2009

$
1332010


1372011


3302012


1022013


25Thereafter


$
727  87




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE D 
    INCOME
    TAXES    Years Ended December 31,2008


2007


2006Current:Federal

$
931


$
1,269


$
172State


(397
)


841



441Foreign


335



134



Total current


869



2,244



613Deferred


9,462



3,544



(7,797
)Total provision (benefit) for income tax

$
10,331


$
5,788


$
(7,184
)     Years Ended December 31,2008


2007


2006Provision at statutory rate


(35.0
)%


35.0
%


35.0
%Permanent differences


3.1



5.2



2.1State income taxes, net of federal effect


(1.8
)


2.2



5.9Change in valuation allowance includingfederal net operating losses and credits


81.6



1.7



(135.4
)Change in statutory rate for deferred taxes


0.0



0.0



(3.6
)Nondeductible warrant expense


0.0



0.0



4.3Research and development credits


(3.7
)


(6.6
)


0.0Other


(3.7
)


(2.3
)


(1.2
)Effective income tax rate


40.5
%


35.2
%


(92.9
)%     Years Ended December 31,2008


2007Deferred tax assets:Federal and state operating loss carryforwards

$
9,523


$
1,430Tax credit carryforwards


7,453



5,606Warranty and inventory reserves


6,358



6,012Total deferred tax assets


23,334



13,048Deferred tax liabilities:Tax depreciation in excess of book depreciation


694



654Prepaid insurance


120



267Other


170



1,141Total deferred tax liabilities


984



2,062Net deferred tax asset


22,350



10,986Valuation allowance


(22,350
)


(1,526
)$



$
9,460  88




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Accounting for Contingencies
  and/or
 89




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2008


2007Balance, beginning of period

$
3,009


$
1,765Additions based on tax positions related to the period


1,053



1,244Balance, end of period

$
4,062


$
3,009   NOTE E 
    COMMITMENTS
    AND CONTINGENCIES    Pending
    Litigation
      Operating
    leases
     90




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Years Ended December 31,2009

$
3,4872010


3,5712011


3,4212012


3,0862013


2,972Thereafter


5,241$
21,778   NOTE F 
    TEMPORARY
    EQUITY AND SHAREHOLDERS EQUITY (DEFICIT)  Redeemable
    Convertible Preferred Stock
    Warrants
    150-5, Issuers Accounting under FASB Statement No. 150
    for Freestanding Warrants and Other Similar Instruments on
    Shares That Are Redeemable
 91




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Contingent
    Common Shares
  EITF 00-27, Application of Issue No
    98-5 to
    Certain Convertible Instruments (EITF 00-27). EITF 00-27. paid-in-capital
  NOTE G 
    STOCK
    INCENTIVE PLANS   92




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Incentive Stock Options


Restricted StockWeighted-Shares


Number of


Weighted-





AverageAvailable


Options


Average


Number of


Grant Datefor Grant


Outstanding


Exercise Price


Shares


Fair ValueBalance at December 31, 2005


1,309



7,702


$
2.06






$
Authorized


3,264















Granted


(2,341
)


2,341



6.63







Exercised






(826
)


1.18







Cancelled


61



(61
)


3.04







Balance at December 31, 2006


2,293



9,156



3.30







Granted


(232
)


232



20.65







Exercised






(2,850
)


1.12







Cancelled


16



(207
)


4.80







Balance at December 31, 2007


2,077



6,331



4.24







Granted


(1,860
)


340



8.26



1,520



6.02Exercised or Issued






(555
)


2.56



(21
)


2.56Cancelled


49



(342
)


6.95



(27
)


6.10Balance at December 31, 2008


266



5,774


$
5.17



1,472


$
6.02Exercisable at December 31, 2008






3,437


$
4.37






$
     Incentive Stock Options


Restricted StockWeighted-





Weighted-Average





AverageNumber of


Grant Date


Number of


Grant DateShares


Fair Value


Shares


Fair ValueBalance at December 31, 2005


4,996


$
2.89






$
Granted


2,341



6.63







Vested


(1,544
)


2.55







Forfeited


(133
)


3.31







Balance at December 31, 2006


5,660



4.52







Granted


232



20.65







Vested


(1,373
)


3.28







Forfeited


(98
)


6.25







Balance at December 31, 2007


4,421



5.71







Granted


340



8.26



1,520



6.02Vested


(2,189
)


5.19



(32
)


6.10Forfeited


(235
)


7.91



(16
)


6.10Balance at December 31, 2008


2,337


$
6.36



1,472


$
6.02  93




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Number of


Remaining


Number of


Weighted-Options


Contractual Life


Options


AverageRange of Exercise Price

Outstanding


(Years)


Exercisable


Exercise Price$0.10 - $2.38


242



5.01



242


$
0.86$2.82


1,590



6.05



1,032



2.82$3.09 - $3.46


1,444



3.33



1,038



3.46$4.50 - $6.10


254



4.29



112



5.43$6.75


1,877



3.92



950



6.75$9.76 - $27.20


367



4.95



63



20.175,774



4.48



3,437



4.37Aggregate intrinsic value (in thousands)

$
368






$
368         
    On December 29, 2005, the Company sold
    2,356,435 shares of Series E convertible preferred
    stock at $5.94 per share for net proceeds of $13.9 million.
    Using this information, the Company engaged an independent
    valuation firm, Virchow Krause to perform a valuation of its
    common shares based on this preferred stock transaction. The
    independent valuation report concluded that the common stock was
    valued at $4.99 per share as of December 29, 2005. This
    valuation was then used for the option grant made in January
    2006.
    In the second quarter of 2006, the Companys Board of
    Directors determined that an updated independent valuation
    should be performed. The Company engaged the same independent
    valuation firm that completed the valuation for the January 2006
    grants to perform a valuation of all classes of stock. The
    independent valuation firm, Virchow Krause issued a report dated
    May 16, 2006, which concluded that the Companys
    common stock was valued at $5.35 per share as of March 31,
    2006. This valuation was then used for the option grants made in
    May and July 2006.
    On October 23, 2006, the Chairman of the Companys
    Board of Directors, T. Rockwell Mackie, sold an aggregate of
    190,400 shares of common stock to two third-party
    investors, and then President, Paul Reckwerdt, sold 190,400
    common shares to a single third-party investor. The purchase
    price of all these shares was $6.75 per share resulting in
    aggregate proceeds of $1.3 million to each seller. Given
    the significant size of the transactions and the fact that these
    shares were sold to third-party investors, the Company concluded
    that its common stock should be valued at $6.75 per share as of
    this date. Stock option grants were made based on this price in
    October, November and early December 2006. Subsequent to the 94




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##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 7, 2006 option grant date, the Companys
    Board of Directors determined based upon an independent
    valuation performed as of December 31, 2006, that the fair
    value per share was $8.40.      Number of





Fair Value


IntrinsicOptions


Exercise


Estimated


ValueDate of Grant

Granted


Price


per Share


per ShareJanuary 2006


34


$
4.99


$
4.99


$
May 2006


47



5.35



5.35



July 2006


109



5.35



5.35



October 2006


190



6.75



6.75



November 2006


3



6.75



6.75



December 2006


1,958



6.75



8.40



1.65   Accounting
    for Stock Issued to Employees
      Years Ended December 31,2008


2007


2006Expected term (years)


4.25



4.25



4.25Risk-free interest rate


1.6
%


3.4
%


4.5
%Expected volatility


46-53
%


45-46
%


65
%Expected dividend


0
%


0
%


0
%Expected forfeiture rate


5.5
%


5.5
%


2.9
%Weighted-average fair value at grant date

$
8.26


$
20.65


$
8.01  95




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE H 
    RETIREMENT
    PLAN    NOTE I 
    EMPLOYEE
    STOCK PURCHASE PLAN      NOTE J 
    RELATED
    PARTY TRANSACTIONS        NOTE K 
    INVESTMENT
    IN COMPACT PARTICLE ACCELERATION CORPORATION     96




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      CONSOLIDATING
    BALANCE SHEETS
    (In thousands)
 (unaudited)
  December 31, 2008TomoTherapy


CPAC


Adjustments


ConsolidatedCurrent assets

$
261,298


$
806


$
(180
)

$
261,924Investment in affiliate


1,901







(1,901
)


Other non-current assets, net


33,353



2,556



(1,901
)


34,008TOTAL ASSETS

$
296,552


$
3,362


$
(3,982
)

$
295,932Current liabilities

$
77,198


$
321


$
(180
)

$
77,339Other non-current liabilities


7,185



22







7,207Noncontrolling interests










2,155



2,155Common stock


506



178



(178
)


506Additional paid-in capital


660,317



10,980



(12,881
)


658,416Accumulated other comprehensive loss


202











202Accumulated deficit


(448,856
)


(8,139
)


7,102



(449,893
)TOTAL LIABILITIES AND SHAREHOLDERS EQUITY

$
296,552


$
3,362


$
(3,982
)

$
295,932   CONSOLIDATING
    STATEMENTS OF OPERATIONS
    (In thousands)
 (unaudited)
  Year Ended December 31, 2008TomoTherapy


CPAC


Adjustments


ConsolidatedRevenue

$
204,589


$



$



$
204,589Cost of revenue


155,083











155,083Gross profit


49,506











49,506Operating expenses:Research and development


35,316



7,241







42,557Selling, general and administrative


45,411



925







46,336Total operating expenses


80,727



8,166







88,893Loss from operations


(31,221
)


(8,166
)






(39,387
)Other income


5,701



27







5,728Loss before income tax and noncontrolling interests


(25,520
)


(8,139
)






(33,659
)Income tax expense


10,331











10,331Loss before noncontrolling interests


(35,851
)


(8,139
)






(43,990
)Noncontrolling interests










7,102



7,102Net income (loss)

$
(35,851
)

$
(8,139
)

$
7,102


$
(36,888
)  97




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE L 
    ACQUISITION    Business Combinations
  FinalPurchase PriceAllocation(In thousands)Tangible assets

$
883Intangible assets


1,315Total assets acquired

$
2,198Liabilities


(980
)Net assets acquired

$
1,218     NOTE M 
    OTHER
    EVENTS     98




---



##### Table of Contents



TOMOTHERAPY
    INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  NOTE N 
    QUARTERLY
    FINANCIAL DATA (unaudited)  Fiscal year 2008First


Second


Third


Fourth


Total(In thousands, except per share amounts)

Quarter


Quarter


Quarter


Quarter(1)


YearRevenue

$
38,900


$
52,021


$
27,374


$
86,294


$
204,589Gross profit (loss)


8,218



12,525



(907
)


29,670



49,506Income (loss) from operations


(11,975
)


(11,154
)


(23,401
)


7,143



(39,387
)Net loss


(6,172
)


(6,861
)


(12,953
)


(10,902
)


(36,888
)Basic and diluted net loss per share

$
(0.12
)

$
(0.14
)

$
(0.26
)

$
(0.22
)

$
(0.73
)Shares used in basic and diluted per share calculation


50,024



50,173



50,244



50,352



50,199   Fiscal year 2007First


Second


Third


Fourth


TotalQuarter


Quarter


Quarter


Quarter


YearRevenue

$
51,163


$
43,715


$
59,221


$
78,711


$
232,810Gross profit


21,811



14,524



22,070



28,268



86,673Income (loss) from operations


6,031



(2,261
)


1,320



4,972



10,062Net income (loss)


3,886



(653
)


2,583



4,846



10,662Net income (loss) attributable to common shareholders


(131,062
)


(103,287
)


2,583



4,846



(226,920
)Basic net income (loss) per share


(12.13
)


(3.15
)


0.05



0.10



(6.35
)Diluted net income (loss) per share

$
(12.13
)

$
(3.15
)

$
0.05


$
0.09


$
(6.35
)Shares used in basic per share calculation


10,804



32,819



49,130



49,547



35,731Shares used in diluted per share calculation


10,804



32,819



54,405



54,066



35,731     (1)
    
    During the quarter ended December 31, 2008, the Company
    established a 100% valuation allowance reserve to offset its net
    deferred tax assets of $22.4 million. 99




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation of disclosure controls and
    procedures. Rules 13a-15(e) 15d-15(e) Form 10-K,
  Report of management on internal control over financial
    reporting. Form 10-K.
  Changes in internal control over financial
    reporting.
  Certificates. Rule 13a-14(a) Form 10-K.
  Item 9B.
    Other
    Information      Form 10-K,
 100




---



##### Table of Contents



PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K
  http:// www.tomotherapy.com
          Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Shareholder Matters  Equity
    Compensation Plan Information
    Number of securitiesremaining available forNumber of securities





future issuance underto be issued upon


Weighted average


equity compensationexercise of


exercise price of


plans (excludingoutstanding options,


outstanding options,


securities reflected inwarrants and rights


warrants and rights


the first column)Equity compensation plans approved by security holders


5,776


$
5.17



266Equity compensation plans not approved by security holders










Total


5,776


$
5.17



266    101




---



##### Table of Contents



Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   102




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##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  1.
    Financial
    Statements    2.
    Financial
    Statement Schedule  SCHEDULE II(In thousands)



Valuation and Qualifying AccountsBalance at








Balance atbeginning of








end ofDecember 31,

Description

year


Increases


Deductions


year2008


Valuation allowance for deferred tax assets

$
1,526


$
20,872


$
48


$
22,3502007


Valuation allowance for deferred tax assets

$
1,253


$
297


$
24


$
1,5262006


Valuation allowance for deferred tax assets

$
13,137


$
113


$
11,997


$
1,2532008


Reserve for excess and obsolete inventory

$
9,243


$
1,549


$
2,439


$
8,3532007


Reserve for excess and obsolete inventory

$
5,261


$
5,973


$
1,991


$
9,2432006


Reserve for excess and obsolete inventory

$
1,496


$
3,945


$
180


$
5,2612008


Allowance for doubtful accounts receivable

$



$
928


$



$
9282007


Allowance for doubtful accounts receivable

$



$



$



$
2006


Allowance for doubtful accounts receivable

$



$



$



$
     3.
    Exhibits    EXHIBIT INDEX
  ExhibitNumber

Description3
.1(9)

Amended and Restated Articles of Incorporation of the Company3
.2(9)

Amended and Restated Bylaws of the Company4
.1(2)

Form of the Companys Common Stock Certificate10
.1(1)

Lease Agreement, dated January 26, 2005, between the
    Company and Old Sauk Trails Park Limited Partnership10
.2(1)

Lease Agreement, dated October 28, 2005, between the
    Company and Adelphia, LLC10
.3(1)+

Incentive Stock Option Plan, as amended, and forms of option
    agreements thereunder10
.4(1)+

2000 Stock Option Plan, as amended, and forms of option
    agreements thereunder10
.5(1)+

2002 Stock Option Plan, as amended, and forms of option
    agreements thereunder10
.6(1)

Standard Terms and Conditions of Sale10
.7(1)

International Standard Terms and Conditions of Sale10
.8(1)

Tomo Lifecycle Care and Partnership Terms and Conditions10
.9(1)

Logistics Services Agreement, dated September 7, 2005,
    between the Company and Kuehne+ Nagel, Inc.10
.10(2)

Development and OEM Supply Agreement, dated January 27,
    2003, between the Company and Analogic Corporation 103




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##### Table of Contents



ExhibitNumber

Description10
.11(2)+

2007 Equity Incentive Plan10
.12(2)+

2007 Employee Stock Purchase Plan10
.13(2)

Form of Noncompetition Agreement10
.14(2)

Form of Assignment of Inventions Agreement10
.15(2)

Form of Confidentiality Agreement10
.16(3)

License Agreement
    98-0228,
    dated February 22, 1999, between the Company and Wisconsin
    Alumni Research Foundation10
.17(4)+

Deferred Compensation Plan10
.18(5)

Amendment to License Agreement
    98-0228,
    dated April 16, 2007, between the Company and Wisconsin
    Alumni Research Foundation10
.19(6)

Stock Purchase Agreement, dated April 25, 2008, between
    Compact Particle Acceleration Corporation and its investors10
.20(6)

Shareholder Agreement, dated April 25, 2008, between
    Compact Particle Acceleration Corporation and its investors10
.21(6)

Investors Rights Agreement, dated April 25, 2008,
    between Compact Particle Acceleration Corporation and its
    investors10
.22(6)

Limited Exclusive License Agreement, dated February 23,
    2007, between the Company and Regents of the University of
    California10
.23(6)

Amendment One to Limited Exclusive License Agreement, dated
    April 8, 2008, between the Company and Lawrence Livermore
    National Security, LLC10
.24(6)

Limited Exclusive Sublicense Agreement, dated April 25,
    2008, between the Company and Compact Particle Acceleration
    Corporation10
.25(7)

Supply Agreement, dated June 25, 2008, between the Company
    and Hitachi Medical Corporation10
.26(8)

Equity Interest Transfer Agreement, dated September 11,
    2008, among the Company, Sichuan Nanguang Vacuum Technology
    Incorporated Ltd., and Yao Chongguo10
.27(9)

Form of Indemnification Agreement for Directors, Executive
    Officers, and Controller10
.28(9)+

Employment Agreement, dated November 5, 2008, between the
    Company and Frederick A. Robertson10
.29(9)+

Employment Agreement, dated November 5, 2008, between the
    Company and Stephen C. Hathaway10
.30(9)+

Employment Agreement, dated November 5, 2008, between the
    Company and Steven G. Books10
.31(9)+

Employment Agreement, dated November 5, 2008, between the
    Company and Paul J. Reckwerdt10
.32(10)+

Amendment to Noncompetition Agreement, dated December 16,
    2008, between the Company and Paul J. Reckwerdt10
.33(11)

Amendment to License Agreement
    98-0228,
    dated December 23, 2008, between the Company and Wisconsin
    Alumni Research Foundation10
.34(11)

Long-term Purchase Agreement, dated December 22, 2008,
    among the Company, e2v, Inc. and e2v Technologies (UK) Limited10
.35(12)

Manufacture and Supply Agreement, dated January 13, 2009
    and effective October 8, 2008, between the Company and
    Siemens AG Healthcare Sector, Components & Vacuum
    Technology10
.37*+

Employment Agreement dated November 5, 2008 between the
    Company and Brenda S. Furlow10
.38*

Loan Agreement dated December 1, 2007 between the Company
    and M&I Marshall & Ilsley Bank10
.39*

Promissory Note dated December 1, 2008 by the Company in
    favor of M&I Marshall & Ilsley Bank10
.40*+

First Amendment to Employment Agreement dated March 12,
    2009 between the Company and Stephen C. Hathaway23
.1*

Consent of Grant Thornton LLP, independent registered public
    accounting firm23
.2*

Consent of Virchow Krause Valuation, LLC31
.1*

Certification of Chief Executive Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 104




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##### Table of Contents



ExhibitNumber

Description31
.2*

Certification of Chief Financial Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200232
.1*

Certification of Chief Executive Officer Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200232
.2*

Certification of Chief Financial Officer Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     (1)
    
    Previously filed as an exhibit to the Companys
    registration statement on
    Form S-1
    filed with the SEC on February 12, 2007 (File
    No. 333-140600).(2)
    
    Previously filed as an exhibit to Amendment No. 2 to the
    Companys registration statement on
    Form S-1
    filed with the SEC on April 16, 2007 (File
    No. 333-140600).(3)
    
    Previously filed as an exhibit to Amendment No. 3 to the
    Companys registration statement on
    Form S-1
    filed with the SEC on April 19, 2007 (File
    No. 333-140600).(4)
    
    Previously filed as an exhibit to Amendment No. 3 to the
    Companys registration statement on
    Form S-1
    filed with the SEC on April 19, 2007 (File
    No. 333-140600)
    and terminated as reported in
    Form 8-K
    filed with the SEC on February 10, 2009 (File
    No. 001-33452).(5)
    
    Previously filed as an exhibit to the Companys
    registration statement on
    Form S-1
    filed with the SEC on September 21, 2007 (File
    No. 333-146219).(6)
    
    Previously filed as an exhibit to the Companys current
    report on Form
    8-K filed
    with the SEC on April 28, 2008 (File
    No. 001-33452).(7)
    
    Previously filed as an exhibit to the Companys current
    report on Form
    8-K filed
    with the SEC on June 30, 2008 (File
    No. 001-33452).(8)
    
    Previously filed as an exhibit to the Companys current
    report on Form
    8-K filed
    with the SEC on September 17, 2008 (File
    No. 001-33452).(9)
    
    Previously filed as an exhibit to the Companys Quarterly
    Report on Form
    10-Q filed
    with the SEC on November 7, 2008 (File
    No. 001-33452).(10)
    
    Previously filed as an exhibit to the Companys current
    report on Form
    8-K filed
    with the SEC on December 17, 2008 (File
    No. 001-33452).(11)
    
    Previously filed as an exhibit to the Companys current
    report on Form
    8-K filed
    with the SEC on December 30, 2008 (File
    No. 001-33452).(12)
    
    Previously filed as an exhibit to the Companys current
    report on Form
    8-K filed
    with the SEC on January 16, 2009 (File
    No. 001-33452).*
    
    Filed herewith.
    
    Confidential treatment has been requested for portions of this
    exhibit. These portions have been omitted from the corresponding
    filing and submitted separately to the SEC.+
    
    Executive compensation plan or arrangement. 105




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##### Table of Contents



SIGNATURES  Form 10-K
  TomoTherapy Incorporated
  By:
    /s/  Frederick
    A. Robertson       POWER OF
    ATTORNEY
  Form 10-K,
  Form 10-K
  Name

Position/s/  Frederick
    A. Robertson, M.D.Frederick
    A. Robertson, M.D.

Chief Executive Officer, President and Director
    (principal executive officer)/s/  Stephen
    C. HathawayStephen
    C. Hathaway

Chief Financial Officer and Treasurer
    (principal financial and accounting officer)/s/  T.
    Rockwell Mackie, Ph.D.T.
    Rockwell Mackie, Ph.D.

Director/s/  John
    J. GreischJohn
    J. Greisch

Director/s/  Sam
    R. LenoSam
    R. Leno

Director/s/  John
    J. McDonoughJohn
    J. McDonough

Director/s/  Cary
    J. NolanCary
    J. Nolan

Director 106




---



##### Table of Contents



Name

Position/s/  Carlos
    A. Perez, M.D.Carlos
    A. Perez, M.D.

Director/s/  Roy
    T. TanakaRoy
    T. Tanaka

Director/s/  Frances
    S. TaylorFrances
    S. Taylor

Director  107




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description3
.1(9)

Amended and Restated Articles of Incorporation of the Company3
.2(9)

Amended and Restated Bylaws of the Company4
.1(2)

Form of the Companys Common Stock Certificate10
.1(1)

Lease Agreement, dated January 26, 2005, between the
    Company and Old Sauk Trails Park Limited Partnership10
.2(1)

Lease Agreement, dated October 28, 2005, between the
    Company and Adelphia, LLC10
.3(1)+

Incentive Stock Option Plan, as amended, and forms of option
    agreements thereunder10
.4(1)+

2000 Stock Option Plan, as amended, and forms of option
    agreements thereunder10
.5(1)+

2002 Stock Option Plan, as amended, and forms of option
    agreements thereunder10
.6(1)

Standard Terms and Conditions of Sale10
.7(1)

International Standard Terms and Conditions of Sale10
.8(1)

Tomo Lifecycle Care and Partnership Terms and Conditions10
.9(1)

Logistics Services Agreement, dated September 7, 2005,
    between the Company and Kuehne+ Nagel, Inc.10
.10(2)

Development and OEM Supply Agreement, dated January 27,
    2003, between the Company and Analogic Corporation10
.11(2)+

2007 Equity Incentive Plan10
.12(2)+

2007 Employee Stock Purchase Plan10
.13(2)

Form of Noncompetition Agreement10
.14(2)

Form of Assignment of Inventions Agreement10
.15(2)

Form of Confidentiality Agreement10
.16(3)

License Agreement
    98-0228,
    dated February 22, 1999, between the Company and Wisconsin
    Alumni Research Foundation10
.17(4)+

Deferred Compensation Plan10
.18(5)

Amendment to License Agreement
    98-0228,
    dated April 16, 2007, between the Company and Wisconsin
    Alumni Research Foundation10
.19(6)

Stock Purchase Agreement, dated April 25, 2008, between
    Compact Particle Acceleration Corporation and its investors10
.20(6)

Shareholder Agreement, dated April 25, 2008, between
    Compact Particle Acceleration Corporation and its investors10
.21(6)

Investors Rights Agreement, dated April 25, 2008,
    between Compact Particle Acceleration Corporation and its
    investors10
.22(6)

Limited Exclusive License Agreement, dated February 23,
    2007, between the Company and Regents of the University of
    California10
.23(6)

Amendment One to Limited Exclusive License Agreement, dated
    April 8, 2008, between the Company and Lawrence Livermore
    National Security, LLC10
.24(6)

Limited Exclusive Sublicense Agreement, dated April 25,
    2008, between the Company and Compact Particle Acceleration
    Corporation10
.25(7)

Supply Agreement, dated June 25, 2008, between the Company
    and Hitachi Medical Corporation10
.26(8)

Equity Interest Transfer Agreement, dated September 11,
    2008, among the Company, Sichuan Nanguang Vacuum Technology
    Incorporated Ltd., and Yao Chongguo10
.27(9)

Form of Indemnification Agreement for Directors, Executive
    Officers, and Controller10
.28(9)+

Employment Agreement, dated November 5, 2008, between the
    Company and Frederick A. Robertson10
.29(9)+

Employment Agreement, dated November 5, 2008, between the
    Company and Stephen C. Hathaway10
.30(9)+

Employment Agreement, dated November 5, 2008, between the
    Company and Steven G. Books10
.31(9)+

Employment Agreement, dated November 5, 2008, between the
    Company and Paul J. Reckwerdt10
.32(10)+

Amendment to Noncompetition Agreement, dated December 16,
    2008, between the Company and Paul J. Reckwerdt 108




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##### Table of Contents



ExhibitNumber

Description10
.33(11)

Amendment to License Agreement
    98-0228,
    dated December 23, 2008, between the Company and Wisconsin
    Alumni Research Foundation10
.34(11)

Long-term Purchase Agreement, dated December 22, 2008,
    among the Company, e2v, Inc. and e2v Technologies (UK) Limited10
.35(12)

Manufacture and Supply Agreement, dated January 13, 2009
    and effective October 8, 2008, between the Company and
    Siemens AG Healthcare Sector, Components & Vacuum
    Technology10
.37*+

Employment Agreement dated November 5, 2008 between the
    Company and Brenda S. Furlow10
.38*

Loan Agreement dated December 1, 2007 between the Company
    and M&I Marshall & Ilsley Bank10
.39*

Promissory Note dated December 1, 2008 by the Company in
    favor of M&I Marshall & Ilsley Bank10
.40*+

First Amendment to Employment Agreement dated March 12,
    2009 between the Company and Stephen C. Hathaway23
.1*

Consent of Grant Thornton LLP, independent registered public
    accounting firm23
.2*

Consent of Virchow Krause Valuation, LLC31
.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*

Certification of Chief Executive Officer Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200232
.2*

Certification of Chief Financial Officer Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002    (1)
    
    Previously filed as an exhibit to the Companys
    registration statement on
    Form S-1
    filed with the SEC on February 12, 2007 (File
    No. 333-140600).(2)
    
    Previously filed as an exhibit to Amendment No. 2 to the
    Companys registration statement on
    Form S-1
    filed with the SEC on April 16, 2007 (File
    No. 333-140600).(3)
    
    Previously filed as an exhibit to Amendment No. 3 to the
    Companys registration statement on
    Form S-1
    filed with the SEC on April 19, 2007 (File
    No. 333-140600).(4)
    
    Previously filed as an exhibit to Amendment No. 3 to the
    Companys registration statement on
    Form S-1
    filed with the SEC on April 19, 2007 (File
    No. 333-140600)
    and terminated as reported in
    Form 8-K
    filed with the SEC on February 10, 2009 (File
    No. 001-33452).(5)
    
    Previously filed as an exhibit to the Companys
    registration statement on
    Form S-1
    filed with the SEC on September 21, 2007 (File
    No. 333-146219).(6)
    
    Previously filed as an exhibit to the Companys current
    report on Form
    8-K filed
    with the SEC on April 28, 2008 (File
    No. 001-33452).(7)
    
    Previously filed as an exhibit to the Companys current
    report on Form
    8-K filed
    with the SEC on June 30, 2008 (File
    No. 001-33452).(8)
    
    Previously filed as an exhibit to the Companys current
    report on Form
    8-K filed
    with the SEC on September 17, 2008 (File
    No. 001-33452).(9)
    
    Previously filed as an exhibit to the Companys Quarterly
    Report on Form
    10-Q filed
    with the SEC on November 7, 2008 (File
    No. 001-33452).(10)
    
    Previously filed as an exhibit to the Companys current
    report on Form
    8-K filed
    with the SEC on December 17, 2008 (File
    No. 001-33452).(11)
    
    Previously filed as an exhibit to the Companys current
    report on Form
    8-K filed
    with the SEC on December 30, 2008 (File
    No. 001-33452).(12)
    
    Previously filed as an exhibit to the Companys current
    report on Form
    8-K filed
    with the SEC on January 16, 2009 (File
    No. 001-33452).*
    
    Filed herewith.
    
    Confidential treatment has been requested for portions of this
    exhibit. These portions have been omitted from the corresponding
    filing and submitted separately to the SEC.+
    
    Executive compensation plan or arrangement. 109