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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-33452
 TomoTherapy Incorporated
 (Exact name of Registrant as specified in its charter)
 Wisconsin(State or Other Jurisdiction of 
Incorporation or Organization)
    
    39-1914727(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
 Yes o No þ
 Yes o No þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TomoTherapy Incorporated
 INDEX
 PagePART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    20Item 1B. Unresolved Staff Comments
    
    
    34Item 2. Properties
    
    
    34Item 3. Legal Proceedings
    
    
    34Item 4. [Reserved]
    
    
    34PART IIItem 5. Market for the Registrants Common Equity, Related Shareholder Matters and Issuer
Purchases of Equity Securities
    
    
    35Item 6. Selected Financial Data
    
    
    39Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    40Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    59Item 8. Financial Statements and Supplementary Data
    
    
    61Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    89Item 9A. Controls and Procedures
    
    
    89Item 9B. Other Information
    
    
    89PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    90Item 11. Executive Compensation
    
    
    90Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Shareholder Matters
    
    
    90Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    91Item 14. Principal Accountant Fees and Services
    
    
    91PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    92Signatures
    
    
    96Exhibit 10.12Exhibit 21Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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FORWARD-LOOKING STATEMENTS
 You should read the following discussion together with our audited consolidated financial
statements and 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 (the Securities Act), and
Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). 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. 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 or implied by 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
 General
  Overview
    3




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Market Overview
      4




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Radiation Treatment
   
    
    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.
    
    Adaptive radiation therapy.Adaptive radiation therapy
involves adjusting a patients radiation therapy plan
during or 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 monitoring and adjustments to the
treatment plan facilitated by both the regular acquisition
of updated quantitative images showing the location, size,
shape and density of the tumor, as well as verification of
the radiation dose received by the patient throughout the
entire course of treatment.
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
    
    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, lung and prostate,
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.
    
    Advanced delivery.Ultimately, clinicians are seeking an
advanced treatment delivery system that includes
image-guided IMRT with advanced plan adaptation
capabilities that can deliver treatments more effectively
and efficiently than possible in conventional systems
available today. From the patients standpoint, shorter
treatment times can mean greater comfort since treatments
often involve the patient being immobilized on a rigid
treatment couch. Shorter treatment sessions decrease
waiting times and, since treatments are delivered in
fractions over the course of many days, can mean fewer
disruptions to a patients daily routine. From the
clinicians standpoint, shorter treatment times can lessen
the chance of a tumor moving during treatment and can
increase the number of patients treated per day. Shorter
treatment times and increased patient throughput means
increased clinical capacity (which is a particular concern
in countries with lower numbers of treatment machines per
capita), helping to decrease the cost per treatment and
opening greater access to advanced care for more patients.
An advanced delivery system that is capable of dynamically
modifying the shape of the beam and couch speed within a
single treatment fraction will allow better tracking and
treatment of targeted tumor volumes with greater overall
efficiency.
  
    
    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 anatomic 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. 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 received by the patient
or what tissue within the patients body
received any particular amount of
radiation. In addition, many radiation
therapy systems have imaging subsystems
that are not suited to use for daily
imaging of the patient due to concerns
about the additional radiation exposure.
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
subsequently have 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 architectural
approach can have safety and accuracy implications because
the onus for checking proper data transmission and receipt
often falls back to manual methods forced upon the user.
This can mean a user reconfigures and recalibrates the
system between patient imaging, treatment planning,
radiation delivery and quality assurance. In addition to
imposing manual intervention and safety concerns, this
approach unfortunately can also mean more time is required
to plan and deliver treatments, thus reducing patient
throughput.
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The TomoTherapy Solution
  
    
    More versatile treatment capabilities.The TomoTherapy
treatment systems rigid ring gantry platform enables more
precise and more efficient treatments by eliminating the
need for the repeated adjustment and re-calibration steps
necessitated by imaging and treating the patient on
different systems and mechanically adjusting the C-arm to
treat from different angles. The high-speed MLC is
integrated with the linear accelerator and consists of 64
individual low leakage tungsten leaves that move across the
beam in less than 20 milliseconds to either block or allow
the passage of radiation, effectively shaping the beam as
it is emitted. The shape of the treatment field is defined
by the pattern of all of the highly modulated beamlets. The
TomoTherapy treatment systems are capable of quickly
delivering tens of thousands of beamlets. The combination
of the ring gantry and the high-speed MLC allow treatment
to be delivered continuously in a helical pattern 360
degrees around the patients body, allowing radiation
delivery from all angles to improve radiation dose
distributions for some of the most challenging cases (which
we refer to as TomoHelical). Moreover, with our recent
release of the TomoDirect product, we believe the
TomoTherapy treatment systems gain new versatility to
provide high quality, fixed angle beams for those cases
suited to simple tangential beam radiation delivery.
Versatility in delivery modes effectively means efficient
coverage of a wide range of patient cases, while still
maintaining high quality plans throughout. In addition, all
TomoTherapy treatment systems enable an operator to provide
3D conformal image-guided IMRT or stereotactic treatments
within a typical cylindrical volume of 80 centimeters in
diameter and up to 135 centimeters in length. This
expansive treatment field allows large areas of the body to
be treated 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 TomoTherapy treatment systems
precision and versatility offers clinicians an extensive
range of treatment possibilities, which we believe are
beyond those offered by other commercially available
radiation systems.
    
    Daily, quantitative imaging for better identification of
tumors, dose verification and treatment planning.The
TomoTherapy treatment systems offer 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, uses a low-intensity, fan beam CT
to collect quantitative images prior to each treatment.
These images allow lung tissue, fat, muscle and bone to be
clearly distinguished. In addition, because of the low
radiation dose involved, the clinician can collect daily,
quantitative images, which can be used to monitor changes
in the patients internal anatomy and quickly adapt the
plan if deemed clinically necessary. In addition to being
prone to certain imaging artifacts, the higher doses of
radiation associated with the typical cone beam imaging
subsystems in many competing radiation delivery devices may
lead clinicians to avoid daily imaging, making those
imaging systems less useful for identifying subtle changes
to the tumor or internal patient anatomy. We believe that
daily, quantitative, relatively low dose images are
essential to optimizing patient treatment by enabling
clinicians to adapt the treatment plan in response to
anatomical changes.
    
    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 adaptive software allows clinicians to
establish at the time of treatment the precise contours of
a tumor and any sensitive structures at risk. TomoTherapy
treatment systems use 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 while reducing damage to
nearby healthy tissues. In addition, because the
TomoTherapy treatment systems can precisely deliver a high
dose of targeted radiation, we believe that our systems
reduce 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 dose delivered to tumor cells in fewer fractions.
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
    
    Efficient clinical workflow for IGRT and adaptive radiation
therapy.The TomoTherapy treatment systems integrate 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 and safety of treatment.
Conversely, the integrated imaging and treatment features
of the TomoTherapy treatment systems 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 TomoTherapy
treatment systems. 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, our StatRT software allows the full
radiation therapy process  CT scanning, treatment
planning and treatment delivery  to be completed much
more rapidly than when using other less-integrated 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 software option is not available for
competitors systems which lack full integration, 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 TomoTherapy
treatment systems size and self-contained design allow
customers to retrofit it 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 often required to install many other
radiation therapy systems. With both imaging and radiation
delivery capabilities in its ring gantry, the TomoTherapy
treatment system requires less space than other linear
accelerator systems, which use large moving arms to
position the linear accelerator or incorporate adjacent
imaging equipment used for treatment planning. In addition,
because the TomoTherapy treatment 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 TomoTherapy treatment system at our
manufacturing facility, and ship the system almost fully
assembled. This assembly process typically allows radiation
beam on within four days after delivery and first patient
treatments to begin within 30 to 45 days after delivery.
    
    Platform for further technological advancements in adaptive
radiation therapy.We believe that the TomoTherapy
treatment systems are the only commercially available
treatment devices that enable truly adaptive radiation
therapy because of their 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 TomoTherapy treatment systems adaptive capabilities to
a point where clinicians will routinely and easily adjust a
patients treatment as needed, thereby remaining true to
the intent of the original treatment plan.
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Our Strategy
  
    
    Expand penetration into both currently served markets and
the largely unserved, single linear accelerator facility
market.We remain committed to introducing our treatment
systems to a broad array of targeted market segments while
also reducing technology adoption barriers. 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. In order to expand our installed base, we
intend to continue to position both the Hi Art system and
our fully featured TomoHD treatment system as the most
advanced radiation therapy systems for treating a wide
range of cancer types effectively, efficiently and safely.
With the addition of the TomoDirect option, which is
standard on the TomoHD treatment system and optional on the
Hi Art treatment system, we believe we are 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 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
TomoTherapy treatment systems at sites with multiple
radiation treatment systems. In addition, we believe this
expanded versatility will make the TomoTherapy treatment
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 2010 Radiation Oncology Market
Summary Report published by IMV in October of 2010, 53% 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 available in our TomoTherapy
treatment systems will help us to more effectively
penetrate this large and important market. In addition, our
TomoMobile relocatable radiation therapy system enables
technology upgrades at single and dual linear accelerator
sites without losing patient referrals, and also allows a
customer to market-test new radiation therapy centers with
minimal facilities investments.
 
    
    Expand our worldwide sales presence.Our early sales and
marketing efforts were primarily focused on the Americas.
As of December 31, 2010, 61% of our installed systems were
in the Americas. We have established both direct and
indirect sales capabilities in Western and Eastern Europe,
Asia-Pacific and the Middle East. We intend to continue to
invest selectively in direct and indirect sales and
marketing capabilities in international markets. Our most
recent geographic expansions were the addition of a new
distributor in Australia and New Zealand, which led to our
first installation in Australia in 2010, and expansion into
Latin America with our first installation in El Salvador in
January 2011. In particular, we plan to focus on enhancing
our capabilities in our current markets and on expanding
our sales capabilities in other select countries in Eastern
Europe and Latin America.
    
    Increase our service profitability and enhance our customer
support capabilities.We provide extensive 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 for remedial
repairs and value-added preventive maintenance services. In
the past several years, however, our operating margins have
been adversely impacted by our investments in our global
service and support infrastructure to support single
installation market centers, as well as the failure rates
of certain components of our treatment systems. In order to
improve our service profitability, we are continuing to
decrease our reliance on single-source suppliers of key
components, enabling us to negotiate better prices with a
wider range of suppliers and to improve component
reliability. We are also seeking to increase our
profitability by focusing our sales efforts to develop
concentrations of placements in new and existing geographic
markets, thereby facilitating scalable efficiencies of our
existing service employees and regional storage locations
for service spare parts. We believe this improved asset
utilization will help us to reduce the service
infrastructure costs normally associated with increased
global sales volumes. In addition, we are taking a number
of important steps to provide more efficient and
cost-effective service, including installing remote
diagnostics, proactive system monitoring and service
restoration capabilities so that we may perform these
functions without dispatching a local engineer. Another
important service initiative was our Fast Track program.
This program is targeted toward certain systems in the
field for technology upgrades, which we believe will reduce
future service costs related to these systems. We continue
to outsource certain functions that are not core
competencies, and cross train our field engineers with our
installation support personnel, as well as implement
regional training programs to augment and refine our
customer service.
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
    
    Enhance the TomoTherapy treatment systems capabilities and
diversify our product portfolio through ongoing research
and development initiatives.In order to improve clinical
quality, increase patient throughput and increase our
customers return on their investment, our research and
development initiatives are focused on more fully
automating the integrated treatment optimization and
adaptive therapy processes, thereby decreasing the time
necessary for clinicians to develop and adapt treatment
plans. For example, in late 2009 we began installing our
new TomoDirect option, which we believe will enable us to
compete more effectively with the traditional radiation
therapy systems by providing a high quality fixed beam
angle delivery mode for simpler, routine treatment cases.
We also recently introduced our TomoHD treatment system,
which includes both the helical and fixed beam treatment
modalities, along with a variety of other standard features
and functional enhancements. We are currently engaged in
initiatives to accommodate real-time patient movements
during treatment, as well as real-time adaptive software
and dose verification software. We believe that these
developments will further improve the quality of treatment
offered by the TomoTherapy treatment systems 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 routine
system verification and maintenance.
    
    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 workflow capabilities or expand our growth
opportunities into new markets. For example, in April 2008,
we formed Compact Particle Acceleration Corporation (CPAC)
to focus on the development of a compact, lower-cost,
intensity modulated proton therapy system. We continue to
provide support to CPAC as it develops the proton
accelerator for that system.
 Marketing and Sales
   Years ended December 31,2010
    
    
    2009
    
    
    2008Americas (1)
    
    $
    88,996
    
    
    
    45.6
    %
    
    $
    90,057
    
    
    
    54.9
    %
    
    $
    135,977
    
    
    
    66.5
    %Europe and Middle
East
    
    
    67,891
    
    
    
    34.7
    %
    
    
    35,448
    
    
    
    21.6
    %
    
    
    49,588
    
    
    
    24.2
    %Asia-Pacific
    
    
    38,476
    
    
    
    19.7
    %
    
    
    38,526
    
    
    
    23.5
    %
    
    
    19,024
    
    
    
    9.3
    %$
    195,363
    
    
    
    100.0
    %
    
    $
    164,031
    
    
    
    100.0
    %
    
    $
    204,589
    
    
    
    100.0
    %
 (1)
    
    The Americas region contains revenue from the United States of
$81.2 million, $82.0 million and $134.7 million for the years ended December
31, 2010, 2009 and 2008, respectively.    10




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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.
 Customer Service and Support
  Site planning and installation.
 Training.
 Standard warranty and support services.
 Tomo Lifecycle Care.
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Online resources.
 Competition
    Research and Development
    12




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Manufacturing and Suppliers
      13




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Reimbursement
 United States Reimbursement Regulation
    Foreign Reimbursement Regulations
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Government Regulation
 United States Medical Device Regulation
     United States Privacy and Security Laws
   15




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United States Fraud and Abuse Laws and Regulations
  State Certificate of Need Laws
  Foreign Regulation of Medical Devices
    Intellectual Property
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Employees
  Information Available to Investors
 www.sec.gov
 http://www.tomotherapy.com
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Executive Officers of the Registrant
  Name
    
    Age
    
    
    PositionFrederick A. Robertson
    
    
    55
    
    
    Chief Executive Officer, President and DirectorThomas E. Powell
    
    
    49
    
    
    Chief Financial Officer and TreasurerThomas Rockwell Mackie
    
    
    56
    
    
    Chairman of the Board of Directors and Co-FounderBrenda S. Furlow
    
    
    52
    
    
    Vice President, General Counsel and Corporate SecretaryEric A. Schloesser
    
    
    38
    
    
    Vice President, Operations and Business DevelopmentRafael L. Vaello
    
    
    47
    
    
    Chief Commercial Officer
 Frederick A. Robertson, M.D.
 Thomas E. Powell
 Thomas Rockwell Mackie, Ph.D.
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Brenda S. Furlow, J.D.,
 Eric A. Schloesser
 Rafael L. Vaello
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Item 1A.
    
    Risk Factors
  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 and other radiation therapy systems
we have recently introduced, we may not generate sufficient revenue to support our business.
  Because the substantial majority of our revenue currently is derived from sales of TomoTherapy
treatment systems, and because of the long sales cycle and high unit price of such systems, 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.
  Our sales and receivables may be adversely impacted if economic conditions worsen, or credit
becomes more difficult to obtain on reasonable terms.
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If our backlog, which is an important measure of future revenue, declines further, our future
financial performance will be adversely affected.
  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.
  Sales of the TomoTherapy treatment systems may be adversely affected if clinicians do not
widely adopt IGRT and adaptive radiotherapy, which is an emerging cancer treatment technique.
   21




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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 efficacy of
the TomoTherapy treatment systems.
  We may be unable to sell our products if we fail to educate clinicians and patients about the
benefits of the TomoTherapy treatment systems and to implement enhancements to the systems in a
timely manner.
    22




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Our reliance on single-source suppliers for critical components of the TomoTherapy treatment
systems could harm our ability to meet demand for our products in a timely and cost-effective
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.
  Our ability to increase our profitability depends in part on reducing our warranty and service
costs for the TomoTherapy treatment systems and improving our economies of scale in service
operations, which we may not be able to achieve.
   23




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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 TomoTherapy treatment systems may be adversely affected.
    24




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##### Table of Contents



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.
  Changes in reimbursement to healthcare providers for use of the TomoTherapy treatment system
could adversely affect sales of the TomoTherapy treatment system.
   Changes in healthcare policies and laws resulting from recent passage of the new healthcare law in
the United States could adversely affect our business.
   25




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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 our products in
key markets.
  Technological breakthroughs in cancer treatment could render the TomoTherapy treatment systems
obsolete.
  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.
   26




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##### Table of Contents




    
    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 TomoTherapy treatment
systems on a timely basis or at all;
    
    availability of, and changes in, reimbursement within prevailing foreign health care payment systems;
    
    compliance with the U.S. Foreign Corrupt Practices Act and comparable foreign anti-bribery laws;
    
    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 valid, could be brought against us due to an alleged
defective component of a TomoTherapy treatment system or for the misuse of our products. These
suits could result in expensive and time-consuming litigation, payment of substantial damages and
an increase in our insurance rates.
   27




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We are subject to federal, state and foreign laws governing our business practices, which, if
investigated or violated, could subject us to substantial costs and penalties, and cause adverse
publicity.
    Our success will depend on our ability to attract and retain qualified personnel while also
managing employee costs.
  In April 2008, we invested in the continued development of a new compact proton therapy system
through a separate entity, Compact Particle Acceleration Corporation (CPAC). Our business, results
of operations and financial condition could be adversely affected if CPAC is unable to obtain
additional funding or if CPAC otherwise fails to successfully develop and commercialize this
technology.
   28




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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 (WARF) we could lose access to the technologies licensed thereunder and be
unable to manufacture, market or sell the TomoTherapy treatment systems.
  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.
   29




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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.
   30




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##### Table of Contents



Risks Related to Regulatory Matters
 Modifications, upgrades and future products related to the TomoTherapy treatment systems may
require new FDA premarket approvals or 510(k) clearances, and such modifications or new products
may also require us to recall or cease marketing one or more existing products until approvals or
clearances are obtained.
   Our products are subject to recalls even after receiving FDA clearance or approval, which
would harm our reputation, business and financial results.
  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 our products in that country.
   31




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We must manufacture our products 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.
    32




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##### Table of Contents



We are subject to environmental laws and regulations in the United States and other countries
that, if violated, could subject us to penalties and fines, which could increase our liabilities
and harm our reputation or our business.
  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 our products;
    
    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.
   33




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##### Table of Contents



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 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 1B.
    
    Unresolved Staff Comments
  
 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
  
 Item 4.
    
    [Reserved]
  34




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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
  High
    
    
    LowFiscal Year 2009First Quarter
    
    $
    3.26
    
    
    $
    1.97Second Quarter
    
    $
    3.40
    
    
    $
    2.08Third Quarter
    
    $
    4.67
    
    
    $
    2.43Fourth Quarter
    
    $
    4.50
    
    
    $
    2.89Fiscal Year 2010First Quarter
    
    $
    4.44
    
    
    $
    3.11Second Quarter
    
    $
    3.94
    
    
    $
    2.59Third Quarter
    
    $
    3.58
    
    
    $
    2.91Fourth Quarter
    
    $
    4.18
    
    
    $
    3.36
 Holders
  Dividends
  Securities Authorized for Issuance under Equity Compensation Plans
  Number of SecuritiesRemaining Available forFuture Issuance underNumber of Securities
    
    
    
    
    
    
    Equity Compensationto be Issued Upon
    
    
    Weighted-Average
    
    
    Plans (ExcludingExercise of
    
    
    Exercise Price of
    
    
    Securities Reflected inOutstanding Options
    
    
    Outstanding Options
    
    
    the First Column)Equity compensation plans
approved by security
holders
    
    $
    4,315,088
    
    
    $
    5.04
    
    
    $
    2,157,646Equity compensation plans not
approved by security holders
    
    
    
    
    
    
    
    
    
    
    $
    4,315,088
    
    
    $
    5.04
    
    
    $
    2,157,646
  35




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##### Table of Contents



Performance Graph
   
 *
    
    $100 invested on May 9, 2007 in stock or in index, including reinvestment of dividends. Recent Sales of Unregistered Securities
      36




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##### Table of Contents



Use of Proceeds from Public Offering of Common Stock
    Working capital
    
    $
    74.9Purchases of property and equipment
    
    
    21.8Purchases of test equipment
    
    
    5.7Purchases of intangible assets
    
    
    4.8Acquisition of Chengdu Twin Peak Accelerator Technology, Inc.
    
    
    2.0Repayment of debt
    
    
    0.4$
    109.6
   37




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##### Table of Contents



Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  Total Number
    
    
    Maximum Numberof Shares
    
    
    of SharesTotal Number
    
    
    Average
    
    
    Purchased as Part of
    
    
    that May Yet Beof Shares
    
    
    Price Paid
    
    
    Publicly Announced
    
    
    Purchased Under thePeriod
    
    Purchased (1)
    
    
    per Share
    
    
    Plans or Programs
    
    
    Plans or Programs (2)October 1, 2010 - October 31, 2010
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    November 1, 2010 - November 30, 2010
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    December 1, 2010 - December 31, 2010
    
    
    1,984
    
    
    $
    3.50
    
    
    
    
    
    
    
    Total
    
    
    1,984
    
    
    $
    3.50
    
    
    
    
    
    
    
    
 (1)
    
    Consists of shares surrendered to us from employees to satisfy income
tax withholding obligations that arose upon the vesting of restricted stock
awards.(2)
    
    Pursuant to our 2007 Equity Incentive Plan, as amended (the Plan), we may
occasionally repurchase shares of our common stock from recipients of
restricted stock awards under the Plan in order to permit such participants to
satisfy income tax obligations arising upon the vesting of such restricted
stock awards. The amount of such future share repurchases, if any, is
unascertainable as of the date of this Annual Report on Form 10-K.  38




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##### Table of Contents



Item 6.
    
    Selected Financial Data
  Consolidated Balance Sheet data (in thousands):
 As of December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Cash and cash equivalents
    
    $
    123,905
    
    
    $
    76,108
    
    
    $
    65,967
    
    
    $
    191,780
    
    
    $
    20,137Short-term investments
    
    
    28,150
    
    
    
    78,225
    
    
    
    88,825
    
    
    
    
    
    
    
    Receivables, net
    
    
    32,850
    
    
    
    33,559
    
    
    
    41,259
    
    
    
    44,108
    
    
    
    19,050Inventories, net
    
    
    49,270
    
    
    
    47,669
    
    
    
    63,983
    
    
    
    53,171
    
    
    
    40,026Working capital
    
    
    135,107
    
    
    
    161,753
    
    
    
    189,834
    
    
    
    211,449
    
    
    
    7,446Total assets
    
    
    269,562
    
    
    
    270,251
    
    
    
    296,428
    
    
    
    325,142
    
    
    
    109,314Deferred revenue and customer deposits
    
    
    51,516
    
    
    
    47,411
    
    
    
    39,027
    
    
    
    35,338
    
    
    
    43,307Long-term debt and notes payable
(including current maturities)
    
    
    987
    
    
    
    593
    
    
    
    727
    
    
    
    841
    
    
    
    875Redeemable convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    212,663Total shareholders equity (deficit)
    
    
    162,593
    
    
    
    183,424
    
    
    
    213,594
    
    
    
    239,657
    
    
    
    (184,117
    )
 Consolidated Statement of Operations data (in thousands except per share data):
 Years Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Revenue
    
    $
    195,363
    
    
    $
    164,031
    
    
    $
    204,589
    
    
    $
    232,810
    
    
    $
    156,102Income (loss) before income tax and cumulative effect of
change in accounting principle
    
    
    (36,699
    )
    
    
    (42,765
    )
    
    
    (33,659
    )
    
    
    16,450
    
    
    
    7,731Income tax expense (benefit)
    
    
    142
    
    
    
    (288
    )
    
    
    6,931
    
    
    
    5,788
    
    
    
    (7,184
    )Cumulative effect of change in accounting principle (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,140
    )Net income (loss)
    
    
    (36,841
    )
    
    
    (42,477
    )
    
    
    (40,590
    )
    
    
    10,662
    
    
    
    12,775Noncontrolling interests
    
    
    6,917
    
    
    
    5,107
    
    
    
    7,102
    
    
    
    
    
    
    
    Accretion of redeemable convertible preferred stock (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (237,582
    )
    
    
    (46,253
    )Net loss attributable to shareholders
    
    $
    (29,924
    )
    
    $
    (37,370
    )
    
    $
    (33,488
    )
    
    $
    (226,920
    )
    
    $
    (33,478
    )Basic and diluted net loss per share attributable to
shareholders
    
    $
    (0.58
    )
    
    $
    (0.74
    )
    
    $
    (0.67
    )
    
    $
    (6.35
    )
    
    $
    (3.78
    )Weighted average common shares used in computing basic
and diluted net loss per share attributable to
shareholders
    
    
    52,034
    
    
    
    50,777
    
    
    
    50,199
    
    
    
    35,731
    
    
    
    8,856
 (1)
    
    Represents the impact of the adoption of new accounting guidance
on the accounting for freestanding warrants and other similar
instruments on shares that are redeemable. Pursuant to the new
accounting guidance, 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 $2.1. million cumulative effect adjustment for
the change in accounting principle as of January 1, 2006, when we
adopted the new accounting guidance, 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
our 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 sell 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 sell 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.  39




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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 and Section 21E of the Exchange Act. 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 differ materially from any future results,
performance or achievements expressed in 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
      40




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##### Table of Contents



Factors Affecting Our Financial Performance
  Incoming orders
    Backlog
    41




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##### Table of Contents



Revenue
 Product revenue
    
    
    On average, the Systems are shipped to customers within 12
months after we receive the order. However, individual
orders may take longer than 12 months to ship. Timing of
deliveries can be affected by factors outside of our
control, such as construction delays at customer project
sites and customer credit issues. For direct and
non-certified distributor sales, we recognize revenue upon
end customer acceptance of the System, which usually occurs
three to four weeks after its delivery. For certified
distributor sales, we recognize revenue upon title transfer
of the System to the certified distributor, as the
Companys only remaining obligation is its
post-installation warranty services to the distributor.
Each System installation represents a significant
percentage of our revenue for the period in which it
occurs.
    
    Our geographic mix of customers may impact our average
selling prices. We intend to continue to expand our
international selling efforts, although we cannot be
certain about the impact this will have on pricing. As of
December 31, 2010, we did not have a hedging program in
place to offset foreign exchange risk and, therefore,
cannot 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
Systems compared to competing systems is an important
factor in our ability to increase market demand for the
Systems. To compete effectively, we may need to offer
additional features that could require substantial
additional resources to develop.
    
    Our focus on sales to group purchasing organizations (GPOs)
and multi-center customers may result in our lowering
selling prices, as these customers tend to negotiate
quantity discounts. 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 Systems are major capital equipment items that
represent a significant purchase for most of our customers.
While we believe macroeconomic conditions are improving,
our customers remain cautious and, as a result, may choose
to delay some of their capital spending or may not have or
be able to obtain the funds necessary to purchase equipment
such as the Systems. These factors may have a material
adverse effect on our incoming orders and subsequent
revenue recognition.
   42




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##### Table of Contents



Service revenue
   Cost of revenue
   
    
    Service and support expenses.We have certain individual
service contracts that produce negative gross profit
margins for which we have recorded a reserve for the
related estimated future losses. We anticipate the number
of contracts producing negative margins will decline as we
further our efforts to reduce the overall average direct
service costs per installed System. We expect to continue
to improve service contract margins by leveraging our
service infrastructure costs over a larger installed base,
implementing remote diagnostic functionalities, outsourcing
certain tasks when cost-effective and feasible, introducing
component design changes aimed at reducing costs,
increasing longevity and improving serviceability of our
components, increasing the price for some of our older
annual service contracts, and training our personnel to
improve their problem-solving capabilities. Additionally,
we invested $2.4 million in our Fast Track program during
2010. This program targeted selected systems in the field
for upgrades of certain technology. While it increased our
cost of revenue in 2010, this program is expected to reduce
the cost to service the targeted systems in future periods.
We believe that achieving success in these initiatives
should also lead to reduced warranty costs and improved
System performance.
    
    Component supply and cost.Our cost of revenue continues
to be impacted by high component costs and high replacement
rates. We continue efforts to develop alternate components
and implement enhancements to increase the performance of
components used in the System. We are also seeking to
identify lower-priced components of comparable or improved
performance and quality, as well as making engineering
improvements to the Systems in order to reduce costs. We
believe that achieving these goals will result in reduced
manufacturing, warranty and service support costs in the
long term.
   43




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##### Table of Contents



Research and development expenses
   Selling, general and administrative expenses
   Other income (expense)
  Interest income
  Income tax expense (benefit)
    44




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##### Table of Contents



Noncontrolling interests
  Results of Operations
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Revenue:Product
    
    
    72.4
    %
    
    
    73.5
    %
    
    
    85.5
    %Service and other
    
    
    27.6
    
    
    
    26.5
    
    
    
    14.5Total revenue
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Cost of revenue:Product
    
    
    35.6
    
    
    
    38.3
    
    
    
    40.2Service and other
    
    
    40.4
    
    
    
    42.8
    
    
    
    35.6Total cost of revenue
    
    
    76.0
    
    
    
    81.1
    
    
    
    75.8Gross profit
    
    
    24.0
    
    
    
    18.9
    
    
    
    24.2Operating expenses:Research and development
    
    
    17.2
    
    
    
    16.9
    
    
    
    20.8Selling, general and
administrative
    
    
    26.5
    
    
    
    29.4
    
    
    
    22.7Total operating expenses
    
    
    43.7
    
    
    
    46.3
    
    
    
    43.5Loss from operations
    
    
    (19.7
    )
    
    
    (27.4
    )
    
    
    (19.3
    )Other income
    
    
    0.9
    
    
    
    1.3
    
    
    
    2.8Loss before income tax
    
    
    (18.8
    )
    
    
    (26.1
    )
    
    
    (16.5
    )Income tax expense (benefit)
    
    
    0.1
    
    
    
    (0.2
    )
    
    
    3.4Net loss
    
    
    (18.9)
    %
    
    
    (25.9)
    %
    
    
    (19.9)
    %
  45




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##### Table of Contents



Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
 Revenue
  Years Ended December 31,2010
    
    
    2009Americas (1)
    
    $
    88,996
    
    
    
    45.6
    %
    
    $
    90,057
    
    
    
    54.9
    %Europe and Middle East
    
    
    67,891
    
    
    
    34.7
    
    
    
    35,448
    
    
    
    21.6Asia-Pacific
    
    
    38,476
    
    
    
    19.7
    
    
    
    38,526
    
    
    
    23.5$
    195,363
    
    
    
    100.0
    %
    
    $
    164,031
    
    
    
    100.0
    %
 (1)
    
    Americas contains revenue from the United States of $81.2 million and $82.0 million for
the years ended December 31, 2010 and 2009, respectively.    Cost of revenue
     46




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##### Table of Contents



Research and development expenses
  Years Ended December 31,2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeSystem R&D
    
    $
    28,374
    
    
    $
    23,018
    
    
    $
    5,356
    
    
    
    23.3
    %Proton Project / CPAC R&D
    
    
    5,156
    
    
    
    4,621
    
    
    
    535
    
    
    
    11.6$
    33,530
    
    
    $
    27,639
    
    
    $
    5,891
    
    
    
    21.3
    %
  Selling, general and administrative expenses
  Other income (expense)
  Income tax expense (benefit)
   47




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##### Table of Contents



Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
 Revenue
  Years Ended December 31,2009
    
    
    2008Americas (1)
    
    $
    90,057
    
    
    
    54.9
    %
    
    $
    135,977
    
    
    
    66.5
    %Europe and Middle East
    
    
    35,448
    
    
    
    21.6
    
    
    
    49,588
    
    
    
    24.2Asia-Pacific
    
    
    38,526
    
    
    
    23.5
    
    
    
    19,024
    
    
    
    9.3$
    164,031
    
    
    
    100.0
    %
    
    $
    204,589
    
    
    
    100.0
    %
 (1)
    
    Americas contains revenue from the United States of $82.0 million and $134.7 million for
the years ended December 31, 2009 and 2008, respectively.    Cost of revenue
     48




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##### Table of Contents



Research and development expenses
  Years Ended December 31,2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeSystem R&D
    
    $
    23,018
    
    
    $
    33,616
    
    
    $
    (10,598
    )
    
    
    (31.5
    )%Proton Project / CPAC R&D
    
    
    4,621
    
    
    
    8,941
    
    
    
    (4,320
    )
    
    
    (48.3
    )$
    27,639
    
    
    $
    42,557
    
    
    $
    (14,918
    )
    
    
    (35.1
    )%
  Selling, general and administrative expenses
   49




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##### Table of Contents



Other income (expense)
  Income tax expense (benefit)
  Liquidity and Capital Resources
  Financial Condition
  December 31, 2010Unrealized
    
    
    UnrealizedCost basis
    
    
    gains
    
    
    losses
    
    
    Fair valueU.S. government and U.S. governmental agency securities
    
    $
    20,049
    
    
    $
    429
    
    
    $
    
    
    
    $
    20,478Corporate bonds
    
    
    7,568
    
    
    
    104
    
    
    
    
    
    
    
    7,672$
    27,617
    
    
    $
    533
    
    
    $
    
    
    
    $
    28,150
    50




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##### Table of Contents



Cash Flows
 Cash flows from operating activities
    Cash flows from investing activities
    51




---



##### Table of Contents



Cash flows from financing activities
     Loans and Available Borrowings
   52




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##### Table of Contents



Contractual Obligations and Commitments
  Payment Due by PeriodLess Than
    
    
    1-3
    
    
    4-5
    
    
    More ThanTotal
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 YearsOperating lease obligations
    
    $
    16,064
    
    
    $
    3,985
    
    
    $
    6,900
    
    
    $
    2,881
    
    
    $
    2,298Notes payable
    
    
    987
    
    
    
    861
    
    
    
    126
    
    
    
    
    
    
    
    Twin Peak acquisition payments
    
    
    1,399
    
    
    
    1,399
    
    
    
    
    
    
    
    
    
    
    
    Minimum purchase agreement (1)
    
    
    4,868
    
    
    
    3,246
    
    
    
    1,622
    
    
    
    
    
    
    
    Minimum royalties
    
    
    1,996
    
    
    
    715
    
    
    
    1,281
    
    
    
    
    
    
    
    $
    25,314
    
    
    $
    10,206
    
    
    $
    9,929
    
    
    $
    2,881
    
    
    $
    2,298
 (1)
    
    Included in Minimum purchase agreement amounts are future purchase obligations
underlying a supply agreement for the purchase of xenon gas detectors from Hitachi Medical
Corporation on a non-exclusive basis; the agreement expires in June 2012. Refer to our
Current Report on Form 8-K, dated September 10, 2010, for more information.   Pending Litigation
 Securities Litigation
 et
al.
   53




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##### Table of Contents



Stockholder Derivative Actions
      54




---



##### Table of Contents



Reserve for Contingency
    Operating Capital and Capital Expenditure Requirements
  
    
    Revenue generated from sales of Systems and service contracts;
    
    The performance of the Systems operating in the field and corresponding service costs;
    
    The level of investment required by our service and support organization;
    
    The level of investment required for research and development activities;
    
    Costs associated with our manufacturing, sales and marketing and general and
administrative activities, CPAC spending; and
    
    Effects of competing technological and market developments.
  Off-Balance Sheet Arrangements
   55




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##### Table of Contents



Critical Accounting Policies and Estimates
   Revenue Recognition
        56




---



##### Table of Contents



Inventories
  Warranty Obligations
  Income Taxes
   57




---



##### Table of Contents



Investment in CPAC
  Share-Based Compensation
  Capitalized Software Development Costs
   58




---



##### Table of Contents



Recent Accounting Pronouncements
    
 Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
  Interest Rate Risk
    59




---



##### Table of Contents



Foreign Currency Exchange Rate Risk
  Inflation Risk
   60




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##### Table of Contents



Item 8.
    
    Financial Statements and Supplementary Data
 TomoTherapy Incorporated and Subsidiaries
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReports of Independent Registered Public Accounting Firms
    
    
    62Consolidated Balance Sheets
    
    
    64Consolidated Statements of Operations
    
    
    65Consolidated Statements of Cash Flows
    
    
    66Consolidated Statements of Shareholders Equity (Deficit)
    
    
    67Notes to Consolidated Financial Statements
    
    
    68
  61




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    PricewaterhouseCoopers LLP
  62




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
  63




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share amounts)
 December 31,
    
    
    December 31,2010
    
    
    2009ASSETSCash and cash equivalents (CPAC balances of $333 and $1,590)
    
    $
    123,905
    
    
    $
    76,108Short-term investments
    
    
    28,150
    
    
    
    78,225Receivables, net of allowances of $340 and $736 (CPAC balances of $244 and $0)
    
    
    32,850
    
    
    
    33,559Inventories, net
    
    
    49,270
    
    
    
    47,669Prepaid expenses and other current assets (CPAC balances of $74 and $494)
    
    
    1,816
    
    
    
    3,633Total current assets
    
    
    235,991
    
    
    
    239,194Property and equipment, net (CPAC balances of $2,941 and $555)
    
    
    22,026
    
    
    
    18,628Other non-current assets, net (CPAC balances of $106 and $30)
    
    
    11,545
    
    
    
    12,429TOTAL ASSETS
    
    $
    269,562
    
    
    $
    270,251LIABILITIES AND EQUITYAccounts payable (CPAC balances of $103 and $24)
    
    $
    13,405
    
    
    $
    6,269Notes payable (CPAC balances of $530 and $0)
    
    
    530
    
    
    
    Accrued expenses (CPAC balances of $647 and $20)
    
    
    30,388
    
    
    
    19,588Accrued warranty
    
    
    5,045
    
    
    
    4,173Deferred revenue
    
    
    34,033
    
    
    
    34,145Customer deposits
    
    
    17,483
    
    
    
    13,266Total current liabilities
    
    
    100,884
    
    
    
    77,441Other non-current liabilities (CPAC balances of $16 and $18)
    
    
    2,477
    
    
    
    5,475TOTAL LIABILITIES
    
    
    103,361
    
    
    
    82,916COMMITMENTS AND CONTINGENCIES (NOTE H)Preferred stock, authorized 10,000,000 shares of $1 par value; no shares issued and outstanding
    
    
    
    
    
    
    Common stock, authorized 200,000,000 shares of $0.01 par value; 56,210,249 and 53,980,728
shares
issued; 56,076,124 and 53,938,955 shares outstanding
    
    
    531
    
    
    
    515Additional paid-in capital
    
    
    677,106
    
    
    
    667,177Treasury stock, at cost; 134,125 and 41,773 shares
    
    
    (454
    )
    
    
    (137
    )Accumulated other comprehensive loss
    
    
    (803
    )
    
    
    (268
    )Accumulated deficit
    
    
    (513,787
    )
    
    
    (483,863
    )Total shareholders equity
    
    
    162,593
    
    
    
    183,424Noncontrolling interests
    
    
    3,608
    
    
    
    3,911TOTAL EQUITY
    
    
    166,201
    
    
    
    187,335TOTAL LIABILITIES AND EQUITY
    
    $
    269,562
    
    
    $
    270,251
   64




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)
 Years Ended December 31,2010
    
    
    2009
    
    
    2008Revenue:Product
    
    $
    141,353
    
    
    $
    120,571
    
    
    $
    174,929Service and other
    
    
    54,010
    
    
    
    43,460
    
    
    
    29,660Total revenue
    
    
    195,363
    
    
    
    164,031
    
    
    
    204,589Cost of revenue:Product
    
    
    69,561
    
    
    
    62,801
    
    
    
    82,224Service and other
    
    
    78,865
    
    
    
    70,284
    
    
    
    72,859Total cost of revenue
    
    
    148,426
    
    
    
    133,085
    
    
    
    155,083Gross profit
    
    
    46,937
    
    
    
    30,946
    
    
    
    49,506Operating expenses:Research and development
    
    
    33,530
    
    
    
    27,639
    
    
    
    42,557Selling, general and administrative
    
    
    51,791
    
    
    
    48,180
    
    
    
    46,336Total operating expenses
    
    
    85,321
    
    
    
    75,819
    
    
    
    88,893Loss from operations
    
    
    (38,384
    )
    
    
    (44,873
    )
    
    
    (39,387
    )Other income (expense):Interest income
    
    
    1,492
    
    
    
    2,586
    
    
    
    4,754Interest expense
    
    
    (36
    )
    
    
    (58
    )
    
    
    (49
    )Other income (expense), net
    
    
    229
    
    
    
    (420
    )
    
    
    1,023Total other income
    
    
    1,685
    
    
    
    2,108
    
    
    
    5,728Loss before income tax
    
    
    (36,699
    )
    
    
    (42,765
    )
    
    
    (33,659
    )Income tax expense (benefit)
    
    
    142
    
    
    
    (288
    )
    
    
    6,931Net loss
    
    
    (36,841
    )
    
    
    (42,477
    )
    
    
    (40,590
    )Noncontrolling interests
    
    
    6,917
    
    
    
    5,107
    
    
    
    7,102Net loss attributable to shareholders
    
    $
    (29,924
    )
    
    $
    (37,370
    )
    
    $
    (33,488
    )Weighted-average common shares
outstanding 
basic and diluted
    
    
    52,034
    
    
    
    50,777
    
    
    
    50,199Loss per common share  basic and diluted
    
    $
    (0.58
    )
    
    $
    (0.74
    )
    
    $
    (0.67
    )
   65




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TOMOTHERAPY INCORPORATED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 Years Ended December 31,2010
    
    
    2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (36,841
    )
    
    $
    (42,477
    )
    
    $
    (40,590
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    9,746
    
    
    
    10,664
    
    
    
    8,682Share-based compensation
    
    
    7,921
    
    
    
    6,271
    
    
    
    4,731Deferred income tax expense (benefit)
    
    
    10
    
    
    
    (402
    )
    
    
    7,269Other noncash items
    
    
    10
    
    
    
    175
    
    
    
    167Changes in operating assets and liabilities:Receivables, net
    
    
    1,712
    
    
    
    8,782
    
    
    
    1,868Inventories, net
    
    
    (2,957
    )
    
    
    14,492
    
    
    
    (10,269
    )Other assets
    
    
    (577
    )
    
    
    (1,214
    )
    
    
    (416
    )Accounts payable
    
    
    7,134
    
    
    
    (1,536
    )
    
    
    (9,836
    )Accrued expenses
    
    
    9,382
    
    
    
    1,137
    
    
    
    (4,718
    )Accrued warranty
    
    
    872
    
    
    
    (3,258
    )
    
    
    (542
    )Deferred revenue
    
    
    (2,468
    )
    
    
    8,580
    
    
    
    12,466Customer deposits
    
    
    4,216
    
    
    
    (2,228
    )
    
    
    (4,815
    )Other liabilities
    
    
    47
    
    
    
    54
    
    
    
    295Net cash used in operating activities
    
    
    (1,793
    )
    
    
    (960
    )
    
    
    (35,708
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (5,856
    )
    
    
    (1,987
    )
    
    
    (7,596
    )Purchases of test systems
    
    
    
    
    
    
    
    
    
    
    (2,777
    )Purchases of short-term investments
    
    
    
    
    
    
    (7,499
    )
    
    
    (131,881
    )Proceeds from sales and maturities of short-term investments
    
    
    48,952
    
    
    
    17,376
    
    
    
    44,416Other investing activities
    
    
    (1,032
    )
    
    
    (4,222
    )
    
    
    (2,217
    )Net cash provided by (used in) investing activities
    
    
    42,064
    
    
    
    3,668
    
    
    
    (100,055
    )Cash flows from financing activities:Payments on notes payable
    
    
    (136
    )
    
    
    (135
    )
    
    
    (114
    )Proceeds from employee stock purchase plan
    
    
    619
    
    
    
    560
    
    
    
    540Repurchases of common stock
    
    
    (317
    )
    
    
    (137
    )
    
    
    Proceeds from exercises of stock options and warrants
    
    
    1,385
    
    
    
    423
    
    
    
    1,429Proceeds from issuance of CPAC notes payable
    
    
    530
    
    
    
    
    
    
    
    Proceeds from issuance of CPAC common stock
    
    
    6,586
    
    
    
    6,863
    
    
    
    9,257Net cash provided by financing activities
    
    
    8,667
    
    
    
    7,574
    
    
    
    11,112Effect of exchange rate changes on cash and cash equivalents
    
    
    (1,141
    )
    
    
    (141
    )
    
    
    (1,162
    )Increase (decrease) in cash and cash equivalents
    
    
    47,797
    
    
    
    10,141
    
    
    
    (125,813
    )Cash and cash equivalents at beginning of year
    
    
    76,108
    
    
    
    65,967
    
    
    
    191,780Cash and cash equivalents at end of year
    
    $
    123,905
    
    
    $
    76,108
    
    
    $
    65,967Supplemental disclosure of cash flow information:Interest paid
    
    $
    39
    
    
    $
    56
    
    
    $
    70Income taxes paid
    
    
    713
    
    
    
    296
    
    
    
    386Supplemental disclosure of noncash investing activities and financing
activities:Leasehold improvements funded by landlord
    
    $
    113
    
    
    $
    228
    
    
    $
    143
   66




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT)
 (In thousands)
 Shareholders Equity (Deficit)AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-in
    
    
    Treasury Stock
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Noncontrolling
    
    
    TotalShares
    
    
    Amount
    
    
    Capital
    
    
    Shares
    
    
    Amount
    
    
    Income (Loss)
    
    
    Deficit
    
    
    Interests
    
    
    EquityBalance at December 31, 2007
    
    
    49,741
    
    
    $
    497
    
    
    $
    652,688
    
    
    
    2
    
    
    $
    
    
    
    $
    (523
    )
    
    $
    (413,005
    )
    
    $
    
    
    
    $
    239,657Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,488
    )
    
    
    (7,102
    )
    
    
    (40,590
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    725
    
    
    
    
    
    
    
    
    
    
    
    725Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,865
    )Issuance of common stock
    
    
    270
    
    
    
    3
    
    
    
    537
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,257
    
    
    
    9,797Issuance of restricted stock
    
    
    1,494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options and
common stock warrants
    
    
    559
    
    
    
    6
    
    
    
    1,423
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,429Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    4,731
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,731Balance at December 31, 2008
    
    
    52,064
    
    
    $
    506
    
    
    $
    659,379
    
    
    
    2
    
    
    $
    
    
    
    $
    202
    
    
    $
    (446,493
    )
    
    $
    2,155
    
    
    $
    215,749Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,370
    )
    
    
    (5,107
    )
    
    
    (42,477
    )Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (470
    )
    
    
    
    
    
    
    
    
    
    
    (470
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,947
    )Issuance of common stock
    
    
    262
    
    
    
    3
    
    
    
    557
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,863
    
    
    
    7,423Repurchases of common stock
    
    
    (40
    )
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    (137
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137
    )Issuance of restricted stock
    
    
    1,493
    
    
    
    4
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options and
common stock warrants
    
    
    160
    
    
    
    2
    
    
    
    421
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    423Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    6,271
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,271Income tax benefit related to
stock options
    
    
    
    
    
    
    
    
    
    
    553
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    553Balance at December 31, 2009
    
    
    53,939
    
    
    $
    515
    
    
    $
    667,177
    
    
    
    42
    
    
    $
    (137
    )
    
    $
    (268
    )
    
    $
    (483,863
    )
    
    $
    3,911
    
    
    $
    187,335Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,924
    )
    
    
    (6,917
    )
    
    
    (36,841
    )Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (535
    )
    
    
    
    
    
    
    
    
    
    
    (535
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,376
    )Issuance of common stock
    
    
    209
    
    
    
    2
    
    
    
    617
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,586
    
    
    
    7,205Repurchases of common stock
    
    
    (92
    )
    
    
    (1
    )
    
    
    1
    
    
    
    92
    
    
    
    (317
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (317
    )Issuance of restricted stock
    
    
    1,550
    
    
    
    10
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options
    
    
    470
    
    
    
    5
    
    
    
    1,352
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,357Issuance of stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    28Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    7,921
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,921Income tax benefit related to
stock options
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48Balance at December 31, 2010
    
    
    56,076
    
    
    $
    531
    
    
    $
    677,106
    
    
    
    134
    
    
    $
    (454
    )
    
    $
    (803
    )
    
    $
    (513,787
    )
    
    $
    3,608
    
    
    $
    166,201
   67




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE A  DESCRIPTION OF BUSINESS
  NOTE B  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation
  Use of Estimates
  Fair Value of Financial Instruments
  Receivables, net
   68




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Revenue Recognition
           69




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Shipping and Handling Costs
  Capitalized Software Development Costs
  Share-Based Compensation
  Income Taxes
   Concentration of Credit Risk and Other Risks and Uncertainties
    70




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Recent Accounting Pronouncements
    NOTE C  SUPPLEMENTAL FINANCIAL INFORMATION
 Cash and Cash Equivalents
   71




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Short-term Investments
   December 31, 2010Unrealized
    
    
    UnrealizedCost basis
    
    
    gains
    
    
    losses
    
    
    Fair valueU.S. government and U.S. governmental agency securities
    
    $
    20,049
    
    
    $
    429
    
    
    $
    
    
    
    $
    20,478Corporate bonds
    
    
    7,568
    
    
    
    104
    
    
    
    
    
    
    
    7,672$
    27,617
    
    
    $
    533
    
    
    $
    
    
    
    $
    28,150
 December 31, 2009Unrealized
    
    
    UnrealizedCost basis
    
    
    gains
    
    
    losses
    
    
    Fair valueU.S. government and U.S. governmental agency securities
    
    $
    60,531
    
    
    $
    1,043
    
    
    $
    
    
    
    $
    61,574Corporate bonds
    
    
    16,334
    
    
    
    317
    
    
    
    
    
    
    
    16,651$
    76,865
    
    
    $
    1,360
    
    
    $
    
    
    
    $
    78,225
  December 31, 2010
    
    
    December 31, 2009Cost basis
    
    
    Fair value
    
    
    Cost basis
    
    
    Fair valueDue in one year or less
    
    $
    18,658
    
    
    $
    18,884
    
    
    $
    48,345
    
    
    $
    48,809Due after one year through five years
    
    
    8,959
    
    
    
    9,266
    
    
    
    28,520
    
    
    
    29,416$
    27,617
    
    
    $
    28,150
    
    
    $
    76,865
    
    
    $
    78,225
  
    
    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.
    72




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Inventories, net
      December 31,2010
    
    
    2009Raw materials
    
    $
    38,479
    
    
    $
    40,091Work-in-process
    
    
    4,004
    
    
    
    1,847Finished goods
    
    
    6,787
    
    
    
    5,731$
    49,270
    
    
    $
    47,669
 Property and Equipment, net
  December 31,2010
    
    
    2009Furniture and equipment
    
    $
    17,594
    
    
    $
    12,497Computer equipment
    
    
    6,780
    
    
    
    6,290Computer software
    
    
    8,569
    
    
    
    8,460Leasehold improvements
    
    
    10,038
    
    
    
    9,785In process
    
    
    2,801
    
    
    
    1445,782
    
    
    
    37,046Less: Accumulated depreciation and amortization
    
    
    (23,756
    )
    
    
    (18,418
    )$
    22,026
    
    
    $
    18,628
  Furniture and equipment
    
    5 to 10 yearsComputer equipment and software
    
    3 to 5 yearsLeasehold improvements
    
    Lesser of useful life or the remaining lease term
   73




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Intangible Assets
  December 31,2010
    
    
    2009
    
    
    EstimatedAccumulated
    
    
    
    
    
    
    Accumulated
    
    
    UsefulCost
    
    
    Amortization
    
    
    Cost
    
    
    Amortization
    
    
    Life-YearsCapitalized software
    
    $
    4,341
    
    
    $
    1,484
    
    
    $
    4,204
    
    
    $
    311
    
    
    2-4Patents
    
    
    2,199
    
    
    
    684
    
    
    
    1,647
    
    
    
    359
    
    
    10Purchased intellectual property
    
    
    1,097
    
    
    
    238
    
    
    
    1,059
    
    
    
    124
    
    
    10Japanese sales license
    
    
    3,640
    
    
    
    1,456
    
    
    
    3,640
    
    
    
    728
    
    
    5Other
    
    
    270
    
    
    
    211
    
    
    
    261
    
    
    
    95
    
    
    2-5$
    11,547
    
    
    $
    4,073
    
    
    $
    10,811
    
    
    $
    1,617
    Years Ended December 31,2011
    
    $
    2,4612012
    
    
    2,4372013
    
    
    1,2582014
    
    
    3522015
    
    
    342Thereafter
    
    
    624$
    7,474
 Long-lived Assets
     74




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Accrued Expenses
  December 31,2010
    
    
    2009Commissions, severance and payroll-related
    
    $
    3,835
    
    
    $
    4,531Bonuses
    
    
    6,161
    
    
    
    1,705Distributor-related costs
    
    
    7,879
    
    
    
    5,343Tax related
    
    
    6,093
    
    
    
    3,388Other
    
    
    6,420
    
    
    
    4,621$
    30,388
    
    
    $
    19,588
 Accrued Warranty
   Years Ended December 31,2010
    
    
    2009
    
    
    2008Balance, beginning of period
    
    $
    4,173
    
    
    $
    7,431
    
    
    $
    7,973Charged to cost of revenue
    
    
    7,480
    
    
    
    7,801
    
    
    
    11,049Charged to selling, general and administrative
    
    
    
    
    
    
    282
    
    
    
    Adjustments related to change in estimate
    
    
    (1,521
    )
    
    
    (3,112
    )
    
    
    1,180Actual product warranty expenditures
    
    
    (5,087
    )
    
    
    (8,229
    )
    
    
    (12,771
    )Balance, end of period
    
    $
    5,045
    
    
    $
    4,173
    
    
    $
    7,431
 Deferred Revenue
    Research and Development Expenses
   75




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Advertising Expenses
  Foreign Currency
  Other Comprehensive Income (Loss)
   Years Ended December 31,2010
    
    
    2009
    
    
    2008Foreign currency translation adjustments
    
    $
    291
    
    
    $
    (14
    )
    
    $
    (401
    )Net unrealized investment gain (loss), net of tax
    
    
    (826
    )
    
    
    (456
    )
    
    
    1,126$
    (535
    )
    
    $
    (470
    )
    
    $
    725
 NOTE D   LOSS PER COMMON SHARE
    76




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Stock options and warrants
    
    
    4,315
    
    
    
    5,347
    
    
    
    5,776Restricted stock
    
    
    2,998
    
    
    
    2,488
    
    
    
    1,4727,313
    
    
    
    7,835
    
    
    
    7,248
 NOTE E   SEGMENT INFORMATION
   Years Ended December 31,2010
    
    
    2009
    
    
    2008Americas (1)
    
    $
    88,996
    
    
    $
    90,057
    
    
    $
    135,977Europe and Middle East
    
    
    67,891
    
    
    
    35,448
    
    
    
    49,588Asia-Pacific
    
    
    38,476
    
    
    
    38,526
    
    
    
    19,024$
    195,363
    
    
    $
    164,031
    
    
    $
    204,589
 (1)
    
    Americas contains revenue from the United States of $81.2
million, $82.0 million and $134.7 million for the years ended
December 31, 2010, 2009 and 2008, respectively. NOTE F  LONG-TERM DEBT AND NOTES PAYABLE
     Years Ended December 31,2011
    
    $
    8612012
    
    
    1022013
    
    
    24$
    987
  77




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  NOTE G  INCOME TAXES
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Current:Federal
    
    $
    
    
    
    $
    (90
    )
    
    $
    12State
    
    
    (35
    )
    
    
    103
    
    
    
    (396
    )Foreign
    
    
    167
    
    
    
    101
    
    
    
    46Total current
    
    
    132
    
    
    
    114
    
    
    
    (338
    )Deferred
    
    
    10
    
    
    
    (402
    )
    
    
    7,269Total expense (benefit) for income tax
    
    $
    142
    
    
    $
    (288
    )
    
    $
    6,931A reconciliation of the United States federal statutory tax rate to the effective income
tax rate is as follows:Years Ended December 31,2010
    
    
    2009
    
    
    2008Provision at statutory rate
    
    
    (35.0
    )%
    
    
    (35.0
    )%
    
    
    (35.0
    )%State income taxes, net of federal effect
    
    
    (0.3
    )
    
    
    0.1
    
    
    
    0.3Valuation allowance
    
    
    33.2
    
    
    
    28.9
    
    
    
    57.8Share-based compensation
    
    
    1.5
    
    
    
    1.5
    
    
    
    1.9Foreign rate differential
    
    
    1.6
    
    
    
    2.5
    
    
    
    (1.6
    )Federal research and development credits
    
    
    (1.5
    )
    
    
    0.1
    
    
    
    (2.0
    )Other
    
    
    0.9
    
    
    
    1.2
    
    
    
    (0.8
    )Effective income tax rate
    
    
    0.4
    %
    
    
    (0.7
    )%
    
    
    20.6
    %
  78




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Years Ended December 31,2010
    
    
    2009Deferred tax assets:Federal and state operating loss carryforwards
    
    $
    36,072
    
    
    $
    24,392Tax credit carryforwards
    
    
    2,451
    
    
    
    1,841Warranty and bad debt reserves
    
    
    2,039
    
    
    
    1,907Inventory
    
    
    3,857
    
    
    
    3,533Employee benefits
    
    
    2,377
    
    
    
    2,337Accrued expenses
    
    
    588
    
    
    
    1,972Other
    
    
    2,260
    
    
    
    1,498Total deferred tax assets
    
    
    49,644
    
    
    
    37,480Deferred tax liabilities:Tax depreciation in excess of book depreciation
    
    
    169
    
    
    
    260Unrealized gains on foreign currency translation and
available for sale securities
    
    
    1,350
    
    
    
    517Patents
    
    
    637
    
    
    
    488Software
    
    
    1,086
    
    
    
    1,479Other
    
    
    245
    
    
    
    397Total deferred tax liabilities
    
    
    3,487
    
    
    
    3,141Net deferred tax asset
    
    
    46,157
    
    
    
    34,339Valuation allowance
    
    
    (46,274
    )
    
    
    (34,443
    )$
    (117
    )
    
    $
    (104
    )
     79




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Years Ended December 31,2010
    
    
    2009
    
    
    2008Balance, beginning of period
    
    $
    4,316
    
    
    $
    4,062
    
    
    $
    3,009Additions based on tax positions related to the period
    
    
    709
    
    
    
    254
    
    
    
    1,053Balance, end of period
    
    $
    5,025
    
    
    $
    4,316
    
    
    $
    4,062
  NOTE H  COMMITMENTS AND CONTINGENCIES
  Pending Litigation
 Securities Litigation
 et al.
  80




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    Stockholder Derivative Actions
     81




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Reserve for Contingency
    Purchase Commitment
  Operating Leases
     82




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Years Ended December 31,2011
    
    $
    3,9852012
    
    
    3,8082013
    
    
    3,0922014
    
    
    1,9422015
    
    
    939Thereafter
    
    
    2,298$
    16,064
 NOTE I  WARRANTS
  NOTE J  STOCK INCENTIVE PLANS
    83




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Stock Options
    
    
    Restricted StockWeighted-Shares
    
    
    Number of
    
    
    Weighted-
    
    
    
    
    
    
    AverageAvailable
    
    
    Options
    
    
    Average
    
    
    Number of
    
    
    Fair Valuefor Grant
    
    
    Outstanding
    
    
    Exercise Price
    
    
    Shares
    
    
    at Grant DateBalance at December 31, 2007
    
    
    2,077
    
    
    
    6,331
    
    
    $
    4.24
    
    
    
    
    
    
    $
    Granted
    
    
    (1,860
    )
    
    
    340
    
    
    
    8.26
    
    
    
    1,520
    
    
    
    6.02Exercised
    
    
    
    
    
    
    (555
    )
    
    
    2.56
    
    
    
    (32
    )
    
    
    6.10Cancelled
    
    
    49
    
    
    
    (342
    )
    
    
    6.95
    
    
    
    (16
    )
    
    
    6.10Balance at December 31, 2008
    
    
    266
    
    
    
    5,774
    
    
    
    5.17
    
    
    
    1,472
    
    
    
    6.02Authorized
    
    
    5,033
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    (1,861
    )
    
    
    204
    
    
    
    2.62
    
    
    
    1,657
    
    
    
    4.50Exercised
    
    
    
    
    
    
    (160
    )
    
    
    2.64
    
    
    
    (467
    )
    
    
    6.03Cancelled
    
    
    229
    
    
    
    (471
    )
    
    
    6.65
    
    
    
    (174
    )
    
    
    5.95Balance at December 31, 2009
    
    
    3,667
    
    
    
    5,347
    
    
    
    5.02
    
    
    
    2,488
    
    
    
    5.01Granted
    
    
    (1,769
    )
    
    
    
    
    
    
    
    
    
    
    1,769
    
    
    
    3.18Exercised
    
    
    
    
    
    
    (470
    )
    
    
    2.89
    
    
    
    (1,040
    )
    
    
    5.15Cancelled
    
    
    259
    
    
    
    (562
    )
    
    
    6.63
    
    
    
    (219
    )
    
    
    4.89Balance at December 31, 2010
    
    
    2,157
    
    
    
    4,315
    
    
    $
    5.04
    
    
    
    2,998
    
    
    $
    3.89Exercisable at December 31, 2010
    
    
    
    
    
    
    4,067
    
    
    $
    4.90
    
    
    
    
    
    
    $
    
  Stock Options
    
    
    Restricted StockWeighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageNumber of
    
    
    Fair Value
    
    
    Number of
    
    
    Fair ValueShares
    
    
    at Grant Date
    
    
    Shares
    
    
    at Grant DateBalance 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
    
    
    
    6.02Granted
    
    
    204
    
    
    
    2.62
    
    
    
    1,657
    
    
    
    4.50Vested
    
    
    (1,497
    )
    
    
    4.90
    
    
    
    (467
    )
    
    
    6.03Forfeited
    
    
    (222
    )
    
    
    7.91
    
    
    
    (174
    )
    
    
    5.95Balance at December 31, 2009
    
    
    822
    
    
    
    7.67
    
    
    
    2,488
    
    
    
    5.01Granted
    
    
    
    
    
    
    
    
    
    
    1,769
    
    
    
    3.18Vested
    
    
    (476
    )
    
    
    7.70
    
    
    
    (1,040
    )
    
    
    5.15Forfeited
    
    
    (99
    )
    
    
    8.32
    
    
    
    (219
    )
    
    
    4.89Balance at December 31, 2010
    
    
    247
    
    
    $
    7.35
    
    
    
    2,998
    
    
    $
    3.89
  84




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
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
    
    
    191
    
    
    
    3.15
    
    
    
    191
    
    
    $
    1.01$2.56 - $2.70
    
    
    204
    
    
    
    4.38
    
    
    
    84
    
    
    
    2.60$2.82
    
    
    1,184
    
    
    
    4.01
    
    
    
    1,184
    
    
    
    2.82$3.46
    
    
    948
    
    
    
    1.20
    
    
    
    948
    
    
    
    3.46$4.50 - $6.10
    
    
    235
    
    
    
    2.35
    
    
    
    203
    
    
    
    5.54$6.75
    
    
    1,270
    
    
    
    1.92
    
    
    
    1,270
    
    
    
    6.75$9.76 - $27.20
    
    
    283
    
    
    
    2.98
    
    
    
    187
    
    
    
    17.174,315
    
    
    
    2.60
    
    
    
    4,067
    
    
    $
    4.90Aggregate intrinsic value
    
    $
    1,781
    
    
    
    
    
    
    $
    1,665
     Years Ended December 31,2010
    
    
    2009
    
    
    2008Expected term (years)
    
    
    N/A
    
    
    
    4.25
    
    
    
    4.25Risk-free interest rate
    
    
    N/A
    
    
    
    1.9-2.8
    %
    
    
    1.6-3.1
    %Expected volatility
    
    
    N/A
    
    
    
    53-55
    %
    
    
    46-53
    %Expected dividend
    
    
    N/A
    
    
    
    0
    %
    
    
    0
    %Expected forfeiture rate
    
    
    N/A
    
    
    
    5.5
    %
    
    
    5.5
    %Weighted-average fair value at grant date
    
    
    N/A
    
    
    $
    2.62
    
    
    $
    8.26
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Cost of revenue
    
    $
    1,445
    
    
    $
    1,242
    
    
    $
    820Research and development
    
    
    1,781
    
    
    
    1,658
    
    
    
    1,464Selling, general and administrative
    
    
    4,695
    
    
    
    3,371
    
    
    
    2,447$
    7,921
    
    
    $
    6,271
    
    
    $
    4,731
 NOTE K  RETIREMENT PLANS
   85




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE L  EMPLOYEE STOCK PURCHASE PLAN
   NOTE M  RELATED PARTY TRANSACTIONS
  NOTE N  INVESTMENT IN COMPACT PARTICLE ACCELERATION CORPORATION
      86




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE O  ACQUISITION
   Purchase PriceAllocationTangible assets
    
    $
    883Intangible assets
    
    
    1,315Goodwill
    
    
    352Total assets acquired
    
    
    2,550Liabilities
    
    
    (578
    )Net assets acquired
    
    $
    1,972
  NOTE P  RESTRUCTURING
    87




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##### Table of Contents



TOMOTHERAPY INCORPORATED AND SUBSIDIAIRES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 NOTE Q  QUARTERLY FINANCIAL DATA (unaudited)
 (In thousands, except per share amounts)
 Fiscal Year 2010First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TotalRevenue
    
    $
    42,080
    
    
    $
    47,630
    
    
    $
    43,582
    
    
    $
    62,071
    
    
    $
    195,363Gross profit
    
    
    12,604
    
    
    
    12,458
    
    
    
    7,010
    
    
    
    14,865
    
    
    
    46,937Loss from operations
    
    
    (5,970
    )
    
    
    (8,412
    )
    
    
    (15,608
    )
    
    
    (8,394
    )
    
    
    (38,384
    )Net loss attributable to shareholders
    
    
    (4,678
    )
    
    
    (6,923
    )
    
    
    (11,936
    )
    
    
    (6,387
    )
    
    
    (29,924
    )Loss per common share
    
    $
    (0.09
    )
    
    $
    (0.13
    )
    
    $
    (0.23
    )
    
    $
    (0.12
    )
    
    $
    (0.58
    )Weighted-average common shares outstanding
    
    
    51,566
    
    
    
    51,713
    
    
    
    51,934
    
    
    
    52,909
    
    
    
    52,034
 Fiscal Year 2009First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TotalRevenue
    
    $
    30,623
    
    
    $
    41,080
    
    
    $
    34,378
    
    
    $
    57,950
    
    
    $
    164,031Gross profit
    
    
    2,539
    
    
    
    8,515
    
    
    
    3,558
    
    
    
    16,334
    
    
    
    30,946Loss from operations
    
    
    (13,962
    )
    
    
    (9,729
    )
    
    
    (16,130
    )
    
    
    (5,052
    )
    
    
    (44,873
    )Net loss attributable to shareholders
    
    
    (12,999
    )
    
    
    (7,123
    )
    
    
    (13,880
    )
    
    
    (3,368
    )
    
    
    (37,370
    )Loss per common share
    
    $
    (0.26
    )
    
    $
    (0.14
    )
    
    $
    (0.27
    )
    
    $
    (0.07
    )
    
    $
    (0.74
    )Weighted-average common shares outstanding
    
    
    50,592
    
    
    
    50,592
    
    
    
    50,748
    
    
    
    51,170
    
    
    
    50,777
  88




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##### 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
   Managements Report on Internal Control over Financial Reporting
   Internal Control 
Integrated Framework Internal Control  Integrated
Framework,
  Changes in Internal Control over Financial Reporting
  
 Item 9B.
    
    Other Information
   89




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##### Table of Contents



PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
  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 forFuture Issuance underNumber of Securities
    
    
    
    
    
    
    Equity Compensationto be Issued Upon
    
    
    Weighted-Average
    
    
    Plans (ExcludingExercise of
    
    
    Exercise Price of
    
    
    Securities Reflected inOutstanding Options
    
    
    Outstanding Options
    
    
    the First Column)Equity compensation plans
approved by security holders
    
    $
    4,315,088
    
    
    $
    5.04
    
    
    $
    2,157,646Equity compensation plans not
approved by security holders
    
    
    
    
    
    
    
    
    
    
    $
    4,315,088
    
    
    $
    5.04
    
    
    $
    2,157,646
   90




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##### Table of Contents



Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
  
 Item 14.
    
    Principal Accountant Fees and Services
   91




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##### Table of Contents



PART IV
 
 Item 15.
    
    Exhibits and Financial Statement Schedules
 1. Financial Statements
  2. Financial Statement Schedule (in thousands)
 SCHEDULE IIValuation and Qualifying AccountsBalance at
    
    
    
    
    
    
    
    
    
    
    Balance atbeginning of
    
    
    
    
    
    
    
    
    
    
    end ofDescription
    
    year
    
    
    Increases
    
    
    Deductions
    
    
    yearYear Ended December 31, 2010Valuation allowance for deferred tax assets
    
    $
    34,443
    
    
    $
    11,831
    
    
    $
    
    
    
    $
    46,274Reserve for excess and obsolete inventory
    
    $
    5,056
    
    
    $
    904
    
    
    $
    1,258
    
    
    $
    4,702Allowance for doubtful accounts receivable
    
    $
    736
    
    
    $
    799
    
    
    $
    1,195
    
    
    $
    340Year Ended December 31, 2009Valuation allowance for deferred tax assets
    
    $
    22,672
    
    
    $
    11,771
    
    
    $
    
    
    
    $
    34,443Reserve for excess and obsolete inventory
    
    $
    8,353
    
    
    $
    750
    
    
    $
    4,047
    
    
    $
    5,056Allowance for doubtful accounts receivable
    
    $
    928
    
    
    $
    97
    
    
    $
    289
    
    
    $
    736Year Ended December 31, 2008Valuation allowance for deferred tax assets
    
    $
    1,526
    
    
    $
    21,194
    
    
    $
    48
    
    
    $
    22,672Reserve for excess and obsolete inventory
    
    $
    9,243
    
    
    $
    1,549
    
    
    $
    2,439
    
    
    $
    8,353Allowance for doubtful accounts receivable
    
    $
    
    
    
    $
    928
    
    
    $
    
    
    
    $
    928
  3. Exhibits
 EXHIBIT INDEX
 ExhibitNumber

    
    Description3.1
    
    
    Amended and Restated Articles of Incorporation of the Company  Incorporated herein by reference
to Exhibit 3.1 to the Companys quarterly report on Form 10-Q filed with the SEC on November 7,
2008, File No. 001-33452.3.2
    
    
    Amended and Restated Bylaws of the Company  Incorporated herein by reference to Exhibit 3.2 to
the Companys quarterly report on Form 10-Q filed with the SEC on November 7, 2008, File No.
001-33452.4.1
    
    
    Form of the Companys Common Stock Certificate  Incorporated herein by reference to Exhibit 4.1
to Amendment No. 2 to the Companys registration statement on Form S-1 filed with the SEC on
April 16, 2007, File No. 333-140600.10.1
    
    
    Lease Agreement, dated January 26, 2005, between the Company and Old Sauk Trails Park Limited
Partnership  Incorporated herein by reference to Exhibit 10.13 to the Companys registration
statement on Form S-1 filed with the SEC on February 12, 2007, File No. 333-140600.10.2
    
    
    Lease Agreement, dated October 28, 2005, between the Company and Adelphia, LLC  Incorporated
herein by reference to Exhibit 10.14 to the Companys registration statement on Form S-1 filed
with the SEC on February 12, 2007, File No. 333-140600.10.3
    +
    
    Incentive Stock Option Plan, as amended, and forms of option agreements thereunder 
Incorporated herein by reference to Exhibit 10.16 to the Companys registration statement on Form
S-1 filed with the SEC on February 12, 2007, File No. 333-140600.
  92




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##### Table of Contents



ExhibitNumber

    
    Description10.4
    +
    
    2000 Stock Option Plan, as amended, and forms of option agreements thereunder  Incorporated
herein by reference to Exhibit 10.17 to the Companys registration statement on Form S-1 filed
with the SEC on February 12, 2007, File No. 333-140600.10.5
    +
    
    2002 Stock Option Plan, as amended, and forms of option agreements thereunder  Incorporated
herein by reference to Exhibit 10.18 to the Companys registration statement on Form S-1 filed
with the SEC on February 12, 2007, File No. 333-140600.10.6
    
    
    Standard Terms and Conditions of Sale  Incorporated herein by reference to Exhibit 10.19 to the
Companys registration statement on Form S-1 filed with the SEC on February 12, 2007, File No.
333-140600.10.7
    
    
    International Standard Terms and Conditions of Sale  Incorporated herein by reference to
Exhibit 10.20 to the Companys registration statement on Form S-1 filed with the SEC on February
12, 2007, File No. 333-140600.10.8
    
    
    Tomo Lifecycle Care and Partnership Terms and Conditions  Incorporated herein by reference to
Exhibit 10.21 to the Companys registration statement on Form S-1 filed with the SEC on February
12, 2007, File No. 333-140600.10.9
    
    
    Development and OEM Supply Agreement, dated January 27, 2003, between the Company and Analogic
Corporation  Incorporated herein by reference to Exhibit 10.11 to Amendment No. 2 to the
Companys registration statement on Form S-1 filed with the SEC on April 16, 2007, File No.
333-140600.10.10
    +
    
    2007 Equity Incentive Plan  Incorporated herein by reference to Exhibit 10.19 to Amendment No.
2 to the Companys registration statement on Form S-1 filed with the SEC on April 16, 2007, File
No. 333-140600.10.11
    +
    
    First Amendment to 2007 Equity Incentive Plan, dated May 1, 2009  Incorporated herein by
reference to Exhibit 99.1 to the Companys current report on Form 8-K filed with the SEC on May
5, 2009, File No. 001-33452.10.12
    +*
    
    Second Amendment to 2007 Equity Incentive Plan, dated December 9, 2010.10.13
    +
    
    2007 Employee Stock Purchase Plan, as amended  Incorporated herein by reference to Exhibit
10.20 to Amendment No. 2 to the Companys registration statement on Form S-1 filed with the SEC
on April 16, 2007, File No. 333-140600.10.14
    
    
    Form of Noncompetition Agreement  Incorporated herein by reference to Exhibit 10.27 to
Amendment No. 2 to the Companys registration statement on Form S-1 filed with the SEC on April
16, 2007, File No. 333-140600.10.15
    
    
    Form of Assignment of Inventions Agreement  Incorporated herein by reference to Exhibit 10.28
to Amendment No. 2 to the Companys registration statement on Form S-1 filed with the SEC on
April 16, 2007, File No. 333-140600.10.16
    
    
    Form of Confidentiality Agreement  Incorporated herein by reference to Exhibit 10.29 to
Amendment No. 2 to the Companys registration statement on Form S-1 filed with the SEC on April
16, 2007, File No. 333-140600.10.17
    
    
    License Agreement 98-0228, dated February 22, 1999, between the Company and Wisconsin Alumni
Research Foundation  Incorporated herein by reference to Exhibit 10.4 to Amendment No. 3 to the
Companys registration statement on Form S-1 filed with the SEC on April 19, 2007, File No.
333-140600.10.18
    
    
    Amendment to License Agreement 98-0228, dated April 16, 2007, between the Company and Wisconsin
Alumni Research Foundation  Incorporated herein by reference to Exhibit 10.31 to the Companys
registration statement on Form S-1 filed with the SEC on September 21, 2007, File No. 333-146219.
  93




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##### Table of Contents



ExhibitNumber

    
    Description10.19
    
    
    Amendment to License Agreement 98-0228, dated December 16, 2008, between the Company and
Wisconsin Alumni Research Foundation  Incorporated herein by reference to Exhibit 10.2 to the
Companys current report on Form 8-K filed with the SEC on December 30, 2008, File No. 001-33452.10.20
    
    
    Stock Purchase Agreement, dated April 25, 2008, between Compact Particle Acceleration Corporation
and its investors  Incorporated herein by reference to Exhibit 10.1 to the Companys current
report on Form 8-K filed with the SEC on April 28, 2008, File No. 001-33452.10.21
    
    
    Shareholder Agreement, dated April 25, 2008, between Compact Particle Acceleration Corporation
and its investors  Incorporated herein by reference to Exhibit 10.2 to the Companys current
report on Form 8-K filed with the SEC on April 28, 2008, File No. 001-33452.10.22
    
    
    Investors Rights Agreement, dated April 25, 2008, between Compact Particle Acceleration
Corporation and its investors  Incorporated herein by reference to Exhibit 10.3 to the
Companys current report on Form 8-K filed with the SEC on April 28, 2008, File No. 001-33452.10.23
    
    
    Limited Exclusive License Agreement, dated February 23, 2007, between the Company and Regents of
the University of California  Incorporated herein by reference to Exhibit 10.4 to the Companys
current report on Form 8-K filed with the SEC on April 28, 2008, File No. 001-33452.10.24
    
    
    Amendment One to Limited Exclusive License Agreement, dated April 8, 2008, between the Company
and Lawrence Livermore National Security, LLC  Incorporated herein by reference to Exhibit 10.5
to the Companys current report on Form 8-K filed with the SEC on April 28, 2008, File No.
001-33452.10.25
    
    
    Limited Exclusive Sublicense Agreement, dated April 25, 2008, between the Company and Compact
Particle Acceleration Corporation  Incorporated herein by reference to Exhibit 10.6 to the
Companys current report on Form 8-K filed with the SEC on April 28, 2008, File No. 001-33452.10.26
    
    
    Supply Agreement, dated June 25, 2008, between the Company and Hitachi Medical Corporation 
Incorporated herein by reference to Exhibit 10.1 to the Companys current report on Form 8-K
filed with the SEC on June 30, 2008, File No. 001-33452.10.27
    
    
    Form of Indemnification Agreement for Directors, Executive Officers, and Controller 
Incorporated herein by reference to Exhibit 10.3 to the Companys quarterly report on Form 10-Q
filed with the SEC on November 7, 2008, File No. 001-33452.10.28
    +
    
    Form of Employment Agreement, dated November 5, 2008, between the Company and Brenda S. Furlow
and Rafael L. Vaello  Incorporated herein by reference to Exhibit 10.37 to the Companys annual
report on Form 10-K filed with the SEC on March 12, 2009, File No. 001-33452.10.29
    
    
    Long-term Purchase Agreement, dated December 22, 2008, among the Company, e2v, Inc. and e2v
Technologies (UK) Limited  Incorporated herein by reference to Exhibit 10.1 to the Companys
current report on Form 8-K filed with the SEC on December 30, 2008, File No. 001-33452.10.30
    
    
    Manufacture and Supply Agreement, dated January 13, 2009 and effective October 8, 2008, between
the Company and Siemens AG Healthcare Sector, Components & Vacuum Technology  Incorporated
herein by reference to Exhibit 10.1 to the Companys current report on Form 8-K filed with the
SEC on January 16, 2009, File No. 001-33452.10.31
    
    
    Amendment One to Manufacture and Supply Agreement, dated April 13, 2009, between the Company and
Siemens AG Healthcare Sector, Components & Vacuum Technology  Incorporated herein by reference
to Exhibit 10.1 to the Companys current report on Form 8-K filed with the SEC on April 13, 2009,
File No. 001-33452.10.32
    +
    
    Form of First Amendment to Employment Agreement, dated July 1, 2009, between the Company and
Brenda S. Furlow and Eric A. Schloesser  Incorporated herein by reference to Exhibit 10.33 to
the Companys annual report on Form 10-K filed with the SEC on March 11, 2010, File No.
001-33452.10.33
    
    
    Magnetron Subscription Agreement, dated April 24, 2009 and effective May 1, 2009, between the
Company and e2v, Inc. and e2v Technologies (UK) Limited  Incorporated herein by reference to
Exhibit 10.1 to the Companys current report on Form 8-K filed with the SEC on April 29, 2009,
File No. 001-33452.
  94




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ExhibitNumber

    
    Description10.34
    +
    
    Employment Agreement, dated June 10, 2009 and effective June 22, 2009, between the Company and
Thomas E. Powell  Incorporated herein by reference to Exhibit 10.1 to the Companys current
report on Form 8-K filed with the SEC on June 11, 2009, File No. 001-33452.10.35
    +
    
    Form of First Amendment to Employment Agreement, dated July 1, 2009, between the Company and T.
Rockwell Mackie and Thomas E. Powell  Incorporated herein by reference to Exhibit 10.6 to the
Companys quarterly report on Form 10-Q filed with the SEC on August 6, 2009, File No. 001-33452.10.36
    +
    
    First Amendment to Employment Agreement, dated July 1, 2009, between the Company and Rafael L.
Vaello  Incorporated herein by reference to Exhibit 10.38 to the Companys annual report on
Form 10-K filed with the SEC on March 11, 2010, File No. 001-33452.10.37
    
    
    Magnetron Subscription Agreement (revised redaction), dated April 24, 2009 and effective May 1,
2009, between the Company and e2v, Inc. and e2v Technologies (UK) Limited  Incorporated herein
by reference to Exhibit 10.1 to the Companys current report on Form 8-K filed with the SEC on
October 28, 2009, File No. 001-33452.10.38
    
    
    Amended and Restated Equity Interest Transfer Agreement, dated November 18, 2009, between the
Company and Chengdu Twin-Peak Accelerator Technology Inc., Sichuan Nanguang Vacuum Technology
Incorporated Ltd. and Yao Chongguo   Incorporated herein by reference to Exhibit 2.1 to the
Companys current report on Form 8-K filed with the SEC on November 23, 2009, File No. 001-33452.10.39
    +
    
    Amended and Restated Employment Agreement, dated March 9, 2010, between the Company and Frederick
A. Robertson   Incorporated herein by reference to Exhibit 10.45 to the Companys annual report
on Form 10-K filed with the SEC on March 11, 2010, File No. 001-33452.10.40
    
    
    Termination of Avalon Agreement, dated May 28, 2010, between the company and Avalon Capital
Group, Inc., Avalon Technology, LLC and Avalon Portfolio, LLC  Incorporated herein by reference
to Exhibit 10.1 to the Companys current report on Form 8-K filed with the SEC on June 1, 2010,
File No. 001-33452.10.41
    
    
    Amendment to Supply Agreement, dated September 10, 2010, between the Company and Hitachi Medical
Corporation  Incorporated herein by reference to Exhibit 10.1 to the Companys current report
on Form 8-K filed with the SEC on September 10, 2010, File No. 001-33452.10.42
    
    
    Second Amended and Restated Loan Agreement, dated November 30, 2010, between the Company and M&I
Marshall & Ilsley Bank   Incorporated herein by reference to Exhibit 10.1 to the Companys
current report on Form 8-K filed with the SEC on December 2, 2010 (File No. 001-33452).10.43
    
    
    Second Amended and Restated Promissory Note, dated November 30, 2010, between the Company and M&I
Marshall & Ilsley Bank   Incorporated herein by reference to Exhibit 10.2 to the Companys
current report on Form 8-K filed with the SEC on December 2, 2010 (File No. 001-33452).21
    *
    

Subsidiaries
of TomoTherapy Incorporated23.1
    *
    
    Consent of PricewaterhouseCoopers LLP, independent registered accounting firm23.2
    *
    
    Consent of Grant Thornton LLP, independent registered public accounting firm31.1
    *
    
    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
 
 *
    
    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.  95




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##### Table of Contents



SIGNATURES
  TomoTherapy IncorporatedBy:
    /s/  Frederick A. RobertsonFrederick A. Robertson, M.D.Chief Executive Officer and PresidentDated: March 3, 2011 POWER OF ATTORNEY
   Name
    
    Position/s/ Frederick A. Robertson

Frederick A. Robertson, M.D.
    
    Chief Executive Officer, President and
Director (principal executive officer)/s/ Thomas E. Powell

Thomas E. Powell
    
    Chief Financial Officer and Treasurer
(principal financial and accounting officer)/s/ T. Rockwell Mackie

T. Rockwell Mackie, Ph.D.
    
    Chairman of the Board, Director/s/ Lance C. Balk
    
    DirectorLance C. Balk
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##### Table of Contents



Name
    
    Position/s/ Sam R. Leno
    
    DirectorSam R. Leno/s/ H. Jonathan McCloskey
    
    DirectorH. Jonathan McCloskey/s/ John J. McDonough
    
    DirectorJohn J. McDonough/s/ Cary J. Nolan
    
    DirectorCary J. Nolan/s/ Carlos A. Perez
    
    DirectorCarlos A. Perez/s/ Roy T. Tanaka
    
    DirectorRoy T. Tanaka/s/ Frances S. Taylor
    
    DirectorFrances S. Taylor
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EXHIBIT INDEX
 ExhibitNumber

    
    Description3.1
    
    
    Amended and Restated Articles of Incorporation of the Company  Incorporated herein by reference
to Exhibit 3.1 to the Companys quarterly report on Form 10-Q filed with the SEC on November 7,
2008, File No. 001-33452.3.2
    
    
    Amended and Restated Bylaws of the Company  Incorporated herein by reference to Exhibit 3.2 to
the Companys quarterly report on Form 10-Q filed with the SEC on November 7, 2008, File No.
001-33452.4.1
    
    
    Form of the Companys Common Stock Certificate  Incorporated herein by reference to Exhibit 4.1
to Amendment No. 2 to the Companys registration statement on Form S-1 filed with the SEC on
April 16, 2007, File No. 333-140600.10.1
    
    
    Lease Agreement, dated January 26, 2005, between the Company and Old Sauk Trails Park Limited
Partnership  Incorporated herein by reference to Exhibit 10.13 to the Companys registration
statement on Form S-1 filed with the SEC on February 12, 2007, File No. 333-140600.10.2
    
    
    Lease Agreement, dated October 28, 2005, between the Company and Adelphia, LLC  Incorporated
herein by reference to Exhibit 10.14 to the Companys registration statement on Form S-1 filed
with the SEC on February 12, 2007, File No. 333-140600.10.3
    +
    
    Incentive Stock Option Plan, as amended, and forms of option agreements thereunder 
Incorporated herein by reference to Exhibit 10.16 to the Companys registration statement on Form
S-1 filed with the SEC on February 12, 2007, File No. 333-140600.10.4
    +
    
    2000 Stock Option Plan, as amended, and forms of option agreements thereunder  Incorporated
herein by reference to Exhibit 10.17 to the Companys registration statement on Form S-1 filed
with the SEC on February 12, 2007, File No. 333-140600.10.5
    +
    
    2002 Stock Option Plan, as amended, and forms of option agreements thereunder  Incorporated
herein by reference to Exhibit 10.18 to the Companys registration statement on Form S-1 filed
with the SEC on February 12, 2007, File No. 333-140600.10.6
    
    
    Standard Terms and Conditions of Sale  Incorporated herein by reference to Exhibit 10.19 to the
Companys registration statement on Form S-1 filed with the SEC on February 12, 2007, File No.
333-140600.10.7
    
    
    International Standard Terms and Conditions of Sale  Incorporated herein by reference to
Exhibit 10.20 to the Companys registration statement on Form S-1 filed with the SEC on February
12, 2007, File No. 333-140600.10.8
    
    
    Tomo Lifecycle Care and Partnership Terms and Conditions  Incorporated herein by reference to
Exhibit 10.21 to the Companys registration statement on Form S-1 filed with the SEC on February
12, 2007, File No. 333-140600.10.9
    
    
    Development and OEM Supply Agreement, dated January 27, 2003, between the Company and Analogic
Corporation  Incorporated herein by reference to Exhibit 10.11 to Amendment No. 2 to the
Companys registration statement on Form S-1 filed with the SEC on April 16, 2007, File No.
333-140600.10.10
    +
    
    2007 Equity Incentive Plan  Incorporated herein by reference to Exhibit 10.19 to Amendment No.
2 to the Companys registration statement on Form S-1 filed with the SEC on April 16, 2007, File
No. 333-140600.10.11
    +
    
    First Amendment to 2007 Equity Incentive Plan, dated May 1, 2009  Incorporated herein by
reference to Exhibit 99.1 to the Companys current report on Form 8-K filed with the SEC on May
5, 2009, File No. 001-33452.10.12
    +*
    
    Second Amendment to 2007 Equity Incentive Plan, dated December 9, 2010.10.13
    +
    
    2007 Employee Stock Purchase Plan, as amended  Incorporated herein by reference to Exhibit
10.20 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.
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##### Table of Contents



ExhibitNumber

    
    Description10.14
    
    
    Form of Noncompetition Agreement  Incorporated herein by reference to Exhibit 10.27 to
Amendment No. 2 to the Companys registration statement on Form S-1 filed with the SEC on April
16, 2007, File No. 333-140600.10.15
    
    
    Form of Assignment of Inventions Agreement  Incorporated herein by reference to Exhibit 10.28
to Amendment No. 2 to the Companys registration statement on Form S-1 filed with the SEC on
April 16, 2007, File No. 333-140600.10.16
    
    
    Form of Confidentiality Agreement  Incorporated herein by reference to Exhibit 10.29 to
Amendment No. 2 to the Companys registration statement on Form S-1 filed with the SEC on April
16, 2007, File No. 333-140600.10.17
    
    
    License Agreement 98-0228, dated February 22, 1999, between the Company and Wisconsin Alumni
Research Foundation  Incorporated herein by reference to Exhibit 10.4 to Amendment No. 3 to the
Companys registration statement on Form S-1 filed with the SEC on April 19, 2007, File No.
333-140600.10.18
    
    
    Amendment to License Agreement 98-0228, dated April 16, 2007, between the Company and Wisconsin
Alumni Research Foundation  Incorporated herein by reference to Exhibit 10.31 to the Companys
registration statement on Form S-1 filed with the SEC on September 21, 2007, File No. 333-146219.10.19
    
    
    Amendment to License Agreement 98-0228, dated December 16, 2008, between the Company and
Wisconsin Alumni Research Foundation  Incorporated herein by reference to Exhibit 10.2 to the
Companys current report on Form 8-K filed with the SEC on December 30, 2008, File No. 001-33452.10.20
    
    
    Stock Purchase Agreement, dated April 25, 2008, between Compact Particle Acceleration Corporation
and its investors  Incorporated herein by reference to Exhibit 10.1 to the Companys current
report on Form 8-K filed with the SEC on April 28, 2008, File No. 001-33452.10.21
    
    
    Shareholder Agreement, dated April 25, 2008, between Compact Particle Acceleration Corporation
and its investors  Incorporated herein by reference to Exhibit 10.2 to the Companys current
report on Form 8-K filed with the SEC on April 28, 2008, File No. 001-33452.10.22
    
    
    Investors Rights Agreement, dated April 25, 2008, between Compact Particle Acceleration
Corporation and its investors  Incorporated herein by reference to Exhibit 10.3 to the
Companys current report on Form 8-K filed with the SEC on April 28, 2008, File No. 001-33452.10.23
    
    
    Limited Exclusive License Agreement, dated February 23, 2007, between the Company and Regents of
the University of California  Incorporated herein by reference to Exhibit 10.4 to the Companys
current report on Form 8-K filed with the SEC on April 28, 2008, File No. 001-33452.10.24
    
    
    Amendment One to Limited Exclusive License Agreement, dated April 8, 2008, between the Company
and Lawrence Livermore National Security, LLC  Incorporated herein by reference to Exhibit 10.5
to the Companys current report on Form 8-K filed with the SEC on April 28, 2008, File No.
001-33452.10.25
    
    
    Limited Exclusive Sublicense Agreement, dated April 25, 2008, between the Company and Compact
Particle Acceleration Corporation  Incorporated herein by reference to Exhibit 10.6 to the
Companys current report on Form 8-K filed with the SEC on April 28, 2008, File No. 001-33452.10.26
    
    
    Supply Agreement, dated June 25, 2008, between the Company and Hitachi Medical Corporation 
Incorporated herein by reference to Exhibit 10.1 to the Companys current report on Form 8-K
filed with the SEC on June 30, 2008, File No. 001-33452.10.27
    
    
    Form of Indemnification Agreement for Directors, Executive Officers, and Controller 
Incorporated herein by reference to Exhibit 10.3 to the Companys quarterly report on Form 10-Q
filed with the SEC on November 7, 2008, File No. 001-33452.10.28
    +
    
    Form of Employment Agreement, dated November 5, 2008, between the Company and Brenda S. Furlow
and Rafael L. Vaello  Incorporated herein by reference to Exhibit 10.37 to the Companys annual
report on Form 10-K filed with the SEC on March 12, 2009, File No. 001-33452.
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##### Table of Contents



ExhibitNumber

    
    Description10.29
    
    
    Long-term Purchase Agreement, dated December 22, 2008, among the Company, e2v, Inc. and e2v
Technologies (UK) Limited  Incorporated herein by reference to Exhibit 10.1 to the Companys
current report on Form 8-K filed with the SEC on December 30, 2008, File No. 001-33452.10.30
    
    
    Manufacture and Supply Agreement, dated January 13, 2009 and effective October 8, 2008, between
the Company and Siemens AG Healthcare Sector, Components & Vacuum Technology  Incorporated
herein by reference to Exhibit 10.1 to the Companys current report on Form 8-K filed with the
SEC on January 16, 2009, File No. 001-33452.10.31
    
    
    Amendment One to Manufacture and Supply Agreement, dated April 13, 2009, between the Company and
Siemens AG Healthcare Sector, Components & Vacuum Technology  Incorporated herein by reference
to Exhibit 10.1 to the Companys current report on Form 8-K filed with the SEC on April 13, 2009,
File No. 001-33452.10.32
    +
    
    Form of First Amendment to Employment Agreement, dated July 1, 2009, between the Company and
Brenda S. Furlow and Eric A. Schloesser  Incorporated herein by reference to Exhibit 10.33 to
the Companys annual report on Form 10-K filed with the SEC on March 11, 2010, File No.
001-33452.10.33
    
    
    Magnetron Subscription Agreement, dated April 24, 2009 and effective May 1, 2009, between the
Company and e2v, Inc. and e2v Technologies (UK) Limited  Incorporated herein by reference to
Exhibit 10.1 to the Companys current report on Form 8-K filed with the SEC on April 29, 2009,
File No. 001-33452.10.34
    +
    
    Employment Agreement, dated June 10, 2009 and effective June 22, 2009, between the Company and
Thomas E. Powell  Incorporated herein by reference to Exhibit 10.1 to the Companys current
report on Form 8-K filed with the SEC on June 11, 2009, File No. 001-33452.10.35
    +
    
    Form of First Amendment to Employment Agreement, dated July 1, 2009, between the Company and T.
Rockwell Mackie and Thomas E. Powell  Incorporated herein by reference to Exhibit 10.6 to the
Companys quarterly report on Form 10-Q filed with the SEC on August 6, 2009, File No. 001-33452.10.36
    +
    
    First Amendment to Employment Agreement, dated July 1, 2009, between the Company and Rafael L.
Vaello  Incorporated herein by reference to Exhibit 10.38 to the Companys annual report on
Form 10-K filed with the SEC on March 11, 2010, File No. 001-33452.10.37
    
    
    Magnetron Subscription Agreement (revised redaction), dated April 24, 2009 and effective May 1,
2009, between the Company and e2v, Inc. and e2v Technologies (UK) Limited  Incorporated herein
by reference to Exhibit 10.1 to the Companys current report on Form 8-K filed with the SEC on
October 28, 2009, File No. 001-33452.10.38
    
    
    Amended and Restated Equity Interest Transfer Agreement, dated November 18, 2009, between the
Company and Chengdu Twin-Peak Accelerator Technology Inc., Sichuan Nanguang Vacuum Technology
Incorporated Ltd. and Yao Chongguo   Incorporated herein by reference to Exhibit 2.1 to the
Companys current report on Form 8-K filed with the SEC on November 23, 2009, File No. 001-33452.10.39
    +
    
    Amended and Restated Employment Agreement, dated March 9, 2010, between the Company and Frederick
A. Robertson   Incorporated herein by reference to Exhibit 10.45 to the Companys annual report
on Form 10-K filed with the SEC on March 11, 2010, File No. 001-33452.10.40
    
    
    Termination of Avalon Agreement, dated May 28, 2010, between the company and Avalon Capital
Group, Inc., Avalon Technology, LLC and Avalon Portfolio, LLC  Incorporated herein by reference
to Exhibit 10.1 to the Companys current report on Form 8-K filed with the SEC on June 1, 2010,
File No. 001-33452.10.41
    
    
    Amendment to Supply Agreement, dated September 10, 2010, between the Company and Hitachi Medical
Corporation  Incorporated herein by reference to Exhibit 10.1 to the Companys current report
on Form 8-K filed with the SEC on September 10, 2010, File No. 001-33452.10.42
    
    
    Second Amended and Restated Loan Agreement, dated November 30, 2010, between the Company and M&I
Marshall & Ilsley Bank   Incorporated herein by reference to Exhibit 10.1 to the Companys
current report on Form 8-K filed with the SEC on December 2, 2010 (File No. 001-33452).
  100




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##### Table of Contents



ExhibitNumber

    
    Description10.43
    
    
    Second Amended and Restated Promissory Note, dated November 30, 2010, between the Company and M&I
Marshall & Ilsley Bank   Incorporated herein by reference to Exhibit 10.2 to the Companys
current report on Form 8-K filed with the SEC on December 2, 2010 (File No. 001-33452).21
    *
    

Subsidiaries
of TomoTherapy
Incorporated23.1
    *
    
    Consent of PricewaterhouseCoopers LLP, independent registered accounting firm23.2
    *
    
    Consent of Grant Thornton LLP, independent registered public accounting firm31.1
    *
    
    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
 
 *
    
    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.  101