UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

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[X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2007

OR

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

For the transition period from ________to _________

Commission file number 000-24838

Mattson Technology, Inc.(Exact name of Registrant as Specified in its Charter)



|Delaware                                                       | 77-0208119                             
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

47131 Bayside Parkway
Fremont, California      94538

(510) 657-5900

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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file reports), and (2) has been subject to such filing
requirements for the past 90 days.  YES    x NO     ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer      ̈ Accelerated filer    x Non-accelerated filer     ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES     ̈ NO    x Number of shares of common stock outstanding as of May 2, 2007: 52,683,680.
Note:PDF provided as a courtesy
MATTSON TECHNOLOGY, INC.TABLE OF CONTENTS

PART I.   FINANCIAL INFORMATION

PageItem 1.   Financial Statements (Unaudited):Condensed Consolidated Balance Sheets — at April 1, 2007 and December 31, 2006

3Condensed Consolidated Income Statements — for the Three Months Ended April 1, 2007 and April 2, 2006

4Condensed Consolidated Statements of Cash Flows — for the Three Months Ended April 1, 2007 and April 2, 2006

5Notes to Condensed Consolidated Financial Statements

6Item 2.     Management's Discussion and Analysis of Financial
                      Condition and Results of Operations

16Item 3.    Quantitative and Qualitative Disclosures About Market Risk

21Item 4.    Controls and Procedures

22PART II.  OTHER INFORMATIONItem 1.    Legal Proceedings

23Item 1A.    Risk Factors

23Item 6.     Exhibits

23Signatures

24

2

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Part I -- FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)



|MATTSON TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except par value)                               
|-----------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                         
|                                                                                                                                         
|                                                                                                                                         
|ASSETS                                                                                                                                   
|Current assets:                                                                                                                          
|Cash and cash equivalents                                                                                                                
|Short-term investments                                                                                                                   
|Accounts receivable, net                                                                                                                 
|Advance billings                                                                                                                         
|Inventories                                                                                                                              
|Inventories - delivered systems                                                                                                          
|Prepaid expenses and other current assets                                                                                                
|Total current assets                                                                                                                     
|Property and equipment, net                                                                                                              
|Goodwill                                                                                                                                 
|Intangibles, net                                                                                                                         
|Other assets                                                                                                                             
|Total assets                                                                                                                             
|                                                                                                                                         
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                     
|Current liabilities:                                                                                                                     
|Accounts payable                                                                                                                         
|Accrued liabilities                                                                                                                      
|Deferred revenue                                                                                                                         
|Total current liabilities                                                                                                                
|Income taxes payable, noncurrent                                                                                                         
|Other liabilities                                                                                                                        
|Total liabilities                                                                                                                        
|                                                                                                                                         
|Commitments and contingencies (Note 5)                                                                                                   
|                                                                                                                                         
|Stockholders' equity:                                                                                                                    
|Preferred stock, 2,000 shares authorized; none issued and outstanding                                                                    
|Common stock, par value $0.001, 120,000 authorized shares; 
                  52,945 shares issued and 52,570 shares outstanding in 2007;
|52,930 shares issued and 52,555 shares outstanding in 2006                                                                               
|Additional paid-in capital                                                                                                               
|Accumulated other comprehensive income                                                                                                   
|Treasury stock, 375 shares in 2007 and 2006, at cost                                                                                     
|Accumulated deficit                                                                                                                      
|Total stockholders' equity                                                                                                               
|Total liabilities and stockholders' equity                                                                                               

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

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|MATTSON TECHNOLOGY, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited, in thousands, except per share amounts)
|---------------------------------------------------------------------------------------------------------------------
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|Net sales                                                                                                            
|Cost of sales                                                                                                        
|Gross profit                                                                                                         
|                                                                                                                     
|Operating expenses:                                                                                                  
|Research, development and engineering                                                                                
|Selling, general and administrative                                                                                  
|Amortization of intangibles                                                                                          
|Total operating expenses                                                                                             
|                                                                                                                     
|Income from operations                                                                                               
|                                                                                                                     
|Interest income                                                                                                      
|Interest expense                                                                                                     
|Other income (expense), net                                                                                          
|Income before income taxes                                                                                           
|                                                                                                                     
|Provision for income taxes                                                                                           
|                                                                                                                     
|Net income                                                                                                           
|                                                                                                                     
|Net income per share:                                                                                                
|Basic                                                                                                                
|Diluted                                                                                                              
|                                                                                                                     
|Shares used in computing net income per share:                                                                       
|Basic                                                                                                                
|Diluted                                                                                                              

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

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|MATTSON TECHNOLOGY, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
|----------------------------------------------------------------------------------------------------
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Cash flows from operating activities:                                                               
|Net income                                                                                          
|Adjustments to reconcile net income to net cash provided by                                         
|(used in) operating activities:                                                                     
|Allowance for doubtful accounts                                                                     
|Amortization of intangibles                                                                         
|Depreciation                                                                                        
|Inventory valuation charge                                                                          
|Stock-based compensation                                                                            
|Other non-cash items                                                                                
|Changes in assets and liabilities:                                                                  
|Accounts receivable                                                                                 
|Advance billings                                                                                    
|Inventories                                                                                         
|Inventories - delivered systems                                                                     
|Prepaid expenses and other current assets                                                           
|Other assets                                                                                        
|Accounts payable                                                                                    
|Accrued liabilities                                                                                 
|Deferred revenue                                                                                    
|Other liabilities                                                                                   
|Net cash provided by (used in) operating activities                                                 
|                                                                                                    
|Cash flows from investing activities:                                                               
|Purchases of available-for-sale investments                                                         
|Sales and maturities of available-for-sale investments                                              
|Purchases of property and equipment                                                                 
|Net cash provided by (used in) investing activities                                                 
|                                                                                                    
|Cash flows from financing activities:                                                               
|Proceeds from stock plans                                                                           
|Net cash provided by financing activities                                                           
|                                                                                                    
|Effect of exchange rate changes on cash and cash equivalents                                        
|Net increase (decrease) in cash and cash equivalents                                                
|Cash and cash equivalents, beginning of period                                                      
|Cash and cash equivalents, end of period                                                            

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

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MATTSON TECHNOLOGY, INC.
                  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
                  APRIL 1, 2007  (unaudited)

Note 1.	Basis of PresentationBasis of Presentation 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by such accounting principles for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position and operations have been included.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of
Mattson Technology, Inc. (the Company or Mattson) for the year ended December 31, 2006, which are included in the Company's Annual Report on Form 10-K.

The Company's current year will end December 31, 2007 and include 52 weeks. The Company closes its fiscal quarters on the Sunday closest to
March 31, June 30, and September 30, and on December 31.  The latest fiscal quarter ended April 1, 2007.  The results of operations for the three months
ended April 1, 2007 are not necessarily indicative of results that may be expected for future quarters or for the entire year ending December 31,
2007.

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.
Management EstimatesThe preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the
condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from
those estimates.
 ReclassificationsFor presentation purposes, certain prior period amounts have been reclassified to conform to the reporting in the current
period financial statements. These reclassifications do not affect the Company's net income, cash flows or net stockholders' equity.  Depreciation expense
associated with customer evaluation tools was previously classified as a component of cost of goods sold. Effective July 3, 2006, the Company classifies this
depreciation expense as a selling expense, which is included in selling, general and administrative expenses in the accompanying income statements.

 Recent Accounting PronouncementsIn February 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities (SFAS No. 159), which permits entities to elect to measure many financial instruments and certain other items at fair value
that are not currently required to be measured at fair value. This election is irrevocable. SFAS No. 159 will be effective for the Company on
January 1, 2008. The Company is currently assessing the potential impact that the adoption of SFAS No. 159 will have on its financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157),which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair
value measurements. SFAS No. 157 does not require any new fair value measurements, but provides guidance on how to measure fair value by
providing a fair value hierarchy used to classify the source of the information. This statement is effective for the Company beginning January 1, 2008. The
Company is currently assessing the potential impact that the adoption of SFAS No. 157 will have on its financial statements.

6In June 2006, the FASB ratified the Emerging Issues Task Force (EITF) conclusion on Issue No. 06-02, Accounting for Sabbatical Leave and Other
Similar Benefits Pursuant to FASB Statement No. 43, `Accounting for Compensated Absences' (EITF No. 06-02). The EITF concluded that companies
should accrue for employee sabbatical leave over the service period in which employees earn the right to sabbatical leave. The Company adopted EITF No.
06-02 on January 1, 2007 as a change in accounting principle, and it has recorded the cumulative effect of adoption of approximately $0.4 million as an increase in
the accumulated deficit in the first quarter of 2007, as permitted by the transition provisions of EITF No. 06-02.

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes: An Interpretation of FASB
Statement No. 109(FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in
accordance with SFAS No. 109. This interpretation defines the minimum recognition threshold a tax position is required to meet before being recognized
in the financial statements. The Company adopted FIN 48 on January 1, 2007 as a change in accounting principle, and it has recorded the cumulative
effect of adoption of $0.7 million as an increase in the accumulated deficit in the first quarter of 2007, as permitted by the transition provisions of FIN 48. See
Note 10.

Note 2.	Balance Sheet Details


April 1,

December 31,2007

2006(thousands)Cash and cash equivalents:Cash in bank

$        38,831

$          38,006Money market funds

42,746

17,483Commercial paper

44,390

35,927$      125,967

$          91,416Short-term investments:United States agency securities

$          7,916

$          37,114United States corporate bonds

12,828

10,355$        20,744

$          47,469All short-term investments are marked to market with unrealized gains (losses) recorded under other comprehensive income. See Note 12. The
maturities of short-term investments as of April 1, 2007 and December 31, 2006 are shown below:

April 1,

December 31,2007

2006(thousands)Inventories, net:Purchased parts and raw materials

$        23,553

$          22,964Work-in-process

6,916

9,803Finished goods

8,640

7,765$        39,109

$          40,532As of April 1, 2007 and December 31, 2006, the reserve for excess and obsolete inventories was $17.2 million and $16.6 million,
respectively.

7April 1,

December 31,2007

2006(thousands)Property and equipment, net:Machinery and equipment

$        47,843

$          47,990Furniture and fixtures

11,616

11,597Leasehold improvements

12,970

12,85572,429

72,442Less: accumulated depreciation

(45,799)

(44,604)$        26,630

$          27,838Accrued liabilities:Warranty

$        14,304

$          15,113Accrued compensation and benefits

9,709

7,633Other

12,288

14,889$        36,301

$          37,635The number of shares of common stock outstanding at the end of each of the periods presented was reduced by approximately 100,000 shares to reflect an
adjustment for certain unredeemed shares related to the acquisition of CFM Technologies, Inc. in January 2001. Since the error occurred in 2001, and is not
material to any of the periods presented, an adjustment was made to reduce accumulated deficit and additional paid-in capital at the end of each
of the periods presented by approximately $3.5 million.

Note 3.	Accrued Restructuring Charges

At December 31, 2006, the Company had a restructuring accrual balance of $375,000 for consolidation of excess facilities related to its 2002
restructuring plan. During the three months ended April 1, 2007, the Company made payments of $205,000 and no new charges were incurred in connection
with our restructuring activities, resulting in a balance of $170,000 at April 1, 2007.


Note 4. 	Guarantees

The warranty offered by the Company on its system sales generally ranges from 12 months to 36 months depending on the product. A
provision for the estimated cost of warranty, based on historical costs, is recorded as cost of sales when the revenue is recognized. The Company's warranty
obligations require it to repair or replace defective products or parts, generally at a customer's site, during the warranty period at no cost to the customer. The
actual system performance and/or field expense profiles may differ from historical experience, and in those cases, the Company adjusts its warranty accruals
accordingly.





The following table summarizes changes in the product warranty accrual for the three months ended April 1, 2007 and April 2, 2006:

Three Months EndedApril 1,

April 2,2007

2006(thousands)Balance at beginning of period

$          15,113

$          13,458Accrual for warranties issued during the period

2,881

5,284Settlements made during the period

(3,690)

(4,892)Balance at end of period

$          14,304

$          13,850During the ordinary course of business, the Company's bank provides standby letters of credit or other guarantee instruments on behalf of the
Company to certain parties as required. The maximum potential amount that the Company could be required to pay is $1.6 million, representing standby letters
of credit outstanding as of April 1, 2007. The Company has not recorded any liability in connection with these guarantee arrangements beyond that required to
appropriately account for the underlying transaction being guaranteed. The Company does not believe, based on8historical experience and information currently
available, that it is probable that any amounts will be required to be paid under these guarantee arrangements.

The Company is a party to a variety of agreements, pursuant to which it may be obligated to indemnify the other party with respect to certain matters.
Typically, these obligations arise in the context of contracts under which the Company may agree to hold the other party harmless against losses arising from a
breach of representations or with respect to certain intellectual property, operations or tax-related matters. The Company's obligations under these agreements
may be limited in terms of time and/or amount, and in some instances the Company may have defenses to asserted claims and/or recourse against third parties
for payments made by the Company. It is not possible to predict the maximum potential amount of future payments under these or similar agreements due to
the conditional nature of the Company's obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made
by the Company under these agreements have not had a material effect on the Company's financial position or results of operations. The Company believes if it
were to incur a loss in any of these matters, such loss would not have a material effect on the Company's financial position or results of operations.


Note 5.	Commitments and Contingencies

In 2005, the Company entered into a new lease agreement for its existing corporate headquarters building in Fremont, California. The lease is for a
period of 10 years, commencing upon expiration of the current sublease on May 31, 2007, and has an initial annual base rent cost of approximately $1.4 million,
with annual base rent increases of approximately 3.5%. The Company has one five-year option to extend the lease at market lease rates in effect on the
expiration date. Additionally, insurance, real property taxes and operating expenses are to be paid by the Company. The Company is responsible for an
additional minimum lease payment at the end of the lease term of approximately $1.5 million, subject to adjustment, which is being accounted for in accordance
with SFAS No. 13 Accounting for Leases, and will be accrued on a straight-line basis over the lease term. The Company has provided the landlord
a letter of credit for $1.5 million to secure this obligation. The letter of credit amount may be increased to reflect any adjustments made to a restoration cost
obligation provision included in the lease.

The Company leases two buildings previously used to house its manufacturing and administrative functions related to wet surface preparation products
in Exton, Pennsylvania. The lease for both buildings will expire March 31, 2019 with a current combined rental cost of approximately $1.5 million
annually. The Company expects to make payments related to the above noted leases over the next twelve years, less any sublet amounts. The lease
agreement for both buildings allows for subleasing the premises without the approval of the landlord. In June 2002, the administrative building was sublet
for a period of approximately five years, until December 2007, with an option for the subtenant to extend for an additional five years. Total lease payments
of approximately $7.2 million are expected to cover all related costs on the administrative building during the sublease period.  The sublessee for the
manufacturing building location vacated the premises in September 2006 and the Company is currently marketing the property to prospective tenants.  In
determining the facilities lease loss, various assumptions were made, including the time period over which the
buildings will be vacant, expected sublease terms
and expected sublease rates. As of April 1, 2007, the Company had an accrual balance of $1.2 million related to these leases. Adjustments to the accrual for
these leases will be made in future periods, if necessary, as soon as evidence of any adjustment can be reasonably estimated as future events and
circumstances become known.

In connection with the acquisition of Vortek Industries, Ltd. (Vortek), the Company became party to an agreement between Vortek and the Canadian
Minister of Industry (the Minister) relating to an investment in Vortek by Technology Partnerships Canada. Under that agreement, as amended, the Company or
Vortek agreed to various covenants, including (a) payment by the Company of a royalty to the Minister of 1.4% of revenues from Flash RTP products, up
to a total of CAD14,269,290 (approximately $12.3 million at April 1, 2007), and (b) Vortek maintaining a specified average workforce of employees
in Canada through October 27, 2009. If the Company, or Vortek, does not satisfy its obligations, the Minister may demand payment of liquidated damages
in the amount of CAD14,269,290 less any royalties paid by Vortek or the Company to the Minister.

In the ordinary course of business, the Company is subject to claims and litigation, including claims that it infringes third party patents, trademarks and
other intellectual property rights. Although the Company believes that it is unlikely that any current claims or actions will have a material adverse impact on its
operating results or its financial position, given the uncertainty of litigation, the Company cannot be certain of this. Moreover, the defense of claims or9actions against the Company, even if not meritorious, could result in the expenditure of significant financial and managerial resources.

The Company is currently party to legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. While
the outcome of these matters is not presently determinable and cannot be predicted with certainty, management does not believe that the outcome of any of
these matters or any of the above mentioned legal claims will have a material adverse effect on the Company's financial position, results of operations or cash
flows.

Note 6.	Common Stock Repurchase Program

In March 2007, the Company's Board of Directors authorized the repurchase of up to $20 million of the Company's shares of common stock through
open-market purchases or private transactions. The repurchase program will be effected pursuant to a plan in conformity with Rule 10(b)5-1, and repurchases
may be made from time to time, depending on price, market and business conditions, among other factors. As of April 1, 2007, no shares had been repurchased
under this program.


Note 7.	Stock-Based Compensation

Effective January 1, 2006, Mattson adopted the provisions of SFAS No. 123(R), Share-Based Payment. SFAS No. 123(R) establishes
accounting for stock-based awards exchanged for employee services. Accordingly, stock-based compensation cost is measured at grant date, based on the fair
value of the award, and is recognized as expense over the requisite service period for the employee.


The effect of recording stock-based compensation for the three months ended April 1, 2007 and April 2, 2006 were as follows:

Three Months EndedApril 1,

April 2,2007

2006(thousands, except per share amounts)Stock-based compensation by type of award:Stock options

$                  811

$                  224Restricted stock units

160

2Employee stock purchase plan

8

-Total stock-based compensation

979

226Tax effect on stock-based compensation

-

-Effect on net income

$                  979

$                  226Stock-based compensation by category of expense:Cost of sales

$                    28

$                      4Research, development and engineering

110

37Selling, general and administrative

841

185Effect on net income

$                  979

$                  226Effect on net income per share:Basic

$                 0.02

$                    -Diluted

$                 0.02

$                    -The Company has not capitalized any stock-based compensation as inventory or deferred system profit at April 1, 2007 and December 31, 2006, as
such amounts were inconsequential.

10Stock OptionsAs of December 31, 2006, the Company had an unrecorded deferred stock-based compensation balance related to stock options of $6.5 million after
estimated forfeitures.  SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised if necessary in subsequent periods if actual
forfeitures differ from those estimates. During the three months ended April 1, 2007 and April 2, 2006, the Company's Board of Directors approved the grant of
approximately 704,000 and 32,000 stock options, respectively, with an estimated total grant-date fair value of $3.5 million and $0.2 million, respectively, after
estimated forfeitures. As of April 1, 2007, the unrecorded deferred stock-based compensation balance related to stock options was $9.2 million after estimated
forfeitures and will be recognized over an estimated weighted average amortization period of 3.1 years.
Restricted Stock UnitsAs of December 31, 2006, the Company had an unrecorded deferred stock-based compensation balance related to restricted stock units of $1.2 million
after estimated forfeitures.  During the three months ended April 1, 2007 and April 2, 2006, the Company's Board of Directors approved the grant of
approximately 72,000 and 9,000 restricted stock units, respectively, with an estimated total grant-date fair value of $0.6 million and  $0.1 million, respectively,
after estimated forfeitures. The grant-date fair value of the restricted stock units was based on the closing market price of the Company's common stock on the
date of award. As of April 1, 2007, the unrecorded deferred stock-based compensation balance related to nonvested restricted stock units was $1.6 million after
estimated forfeitures and will be recognized over an estimated weighted average amortization period of 3.1 years.

 Valuation AssumptionsThe Company estimates the fair value of stock options using a Black-Scholes valuation model, consistent with the provisions of SFAS No. 123(R).
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option valuation model and the straight-line attribution
approach with the following weighted-average assumptions:

Three Months EndedApril 1,

April 2,2007

2006Expected dividend yield

-

-Expected stock price volatility

75%

88%Risk-free interest rate

4.6%

4.4%Expected life of options

5 years

5 yearsOption-pricing models require the input of highly subjective assumptions, including the option's expected life and the price volatility of the underlying
stock. The expected life of each option was determined by analyzing historical exercise and post-vest forfeiture patterns. The risk-free interest rate was
determined using the rates for United States Treasury notes for similar terms. The expected stock price volatility assumption was determined using the historical
volatility of the Company's common stock.

11The following table summarizes the combined activity under all of the Company's equity incentive plans for the indicated periods, including 10,000
shares outstanding under the Company's CFM plans as of April 1, 2007:

Weighted-

Restricted

Weighted-Awards

Stock

Average

Stock

AverageAvailable

Options

Exercise

Units

Grant DateFor Grant

Outstanding

Price

Outstanding

Fair Value(thousands)

(thousands)



(thousands)Balances at December 31, 2006

1,486

6,036

$          9.27

150

$        11.39Stock options:Granted


(704)

704

8.83

-

-Exercised


-

(29)

3.09

-

-Cancelled or forfeited


96

(103)

14.82

-

-Restricted stock units:Granted


(127)

-

-

72

8.81Cancelled or forfeited


3

-

-

(2)

11.35Balances at April 1, 2007

754

6,608

$          9.16

220

$        10.55Restricted stock units generally vest 1/4 of the units granted on the first anniversary of the date of
grant, and 1/16 of the initial units granted per quarter thereafter. 2005 Plan awards of restricted stock units are counted against the total number of shares of
common stock available for grant under the plan at 1.75 shares for every one share subject thereto. At April 1, 2007, no shares of restricted stock units had
vested. The value of the restricted stock units was based on the closing market price of the Company's common stock on the date of award.


The options outstanding and exercisable at April 1, 2007 were in the following exercise price ranges:

Options Outstanding

Options ExercisableWeighted-







Weighted-Average

Weighted-





Average

Weighted-Remaining

Average

Aggregate



Remaining

Average

AggregateRange of



Contractual

Exercise

Intrinsic



Contractual

Exercise

IntrinsicExercise Prices

Number

Life

Price

Value

Number

Life

Price

Value(thousands)

(in years)



(thousands)

(thousands)

(in years)



(thousands)$   1.55
-
$    5.12

854

5.6

$     2.74

$    5,435

816

5.6

$     2.73

$    5,199$   5.13
-
$    8.32

1,544

4.9

$     7.36

2,690

1,143

4.3

$     7.26

2,104$   8.33
-
$    9.10

955

6.5

$     8.78

308

101

4.7

$     8.43

68$   9.11
-
$  10.35

988

6.9

$     9.43

-

857

7.0

$     9.40

-$ 10.36
-
$  11.91

1,099

5.5

$   10.79

-

1,088

5.5

$   10.78

-$ 11.92
-
$  59.10

1,168

5.4

$   14.80

-

664

4.9

$   16.98

-$   1.55
-
$  59.10

6,608

5.7

$     9.16

$    8,433

4,669

5.4

$     9.09

$    7,371The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on the Company's closing stock price of $9.10 as of
March 30, 2007, which would have been received by the option holders had all option holders exercised their options as of that date. The total numbers of
shares of common stock subject to in-the-money options exercisable as of April 1, 2007 were 2.1 million. The weighted-average grant date fair value of stock
options granted during the three months ended April 1, 2007 and April 2, 2006 was $5.67 and $8.42 per share, respectively.

The total intrinsic value of options exercised during the three months ended April 1, 2007 and April 2, 2006 was $0.1 million and $1.6 million,
respectively. The total cash received from employees as a result of employee stock option exercises during the three months ended April 1, 2007 and April 2,
2006 was approximately $0.1 million and $2.5 million, respectively. The Company settles employee stock option exercises with newly issued common
shares.

12Note 8.	Reportable Segments

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for reporting information
about operating segments, geographic areas and major customers in financial statements. Operating segments are defined as components of an enterprise
about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources
and in assessing performance. The Chief Executive Officer of the Company is the Company's chief decision maker. As the Company's business is completely
focused on one industry segment, the design, manufacturing and marketing of advanced fabrication equipment for the semiconductor manufacturing industry,
management believes that the Company has one reportable segment. The Company's revenues and profits are generated through the sales of products and
services for this one segment.

The following shows net sales by geographic areas based on the installation locations of the systems and the location of services rendered:

Three Months EndedApril 1, 2007

April 2, 2006(thousands)

%

(thousands)

%United States

$            5,175

8

$            7,323

13Korea

16,627

24

18,720

32Japan

15,416

22

6,855

12Taiwan

12,837

18

12,931

22Europe and others

10,737

15

3,577

6Other Asia

9,149

13

9,007

15$          69,941

100

$          58,413

100In the three months ended April 1, 2007, three customers accounted for 22%, 11% and 10% of net sales, respectively. In the three months ended April
2, 2006, two customers accounted for 21% and 15%, respectively, of net sales.

Geographical information relating to the Company's property and equipment, net, as of April 1, 2007 and December 31, 2006 is as follows:

April 1, 2007

December 31, 2006(thousands)

%

(thousands)

%United States

$          15,011

57

$          15,616

56Germany

6,459

24

6,248

23Canada

4,858

18

5,613

20Others

302

1

361

1$          26,630

100

$          27,838

100Note 9.	Derivative Instruments and Hedging Activities

The Company utilizes foreign currency forward exchange contracts to hedge against future movements in foreign exchange rates that affect certain
existing and forecasted foreign currency denominated sales and purchase transactions. The Company does not use derivative financial instruments for
speculative or trading purposes. With respect to forward foreign currency exchange contracts, the Company recorded a net loss of $0.2 million in other income
(expense), net for the three months ended April 1, 2007, and did not have any hedging activities for the three months ended April 2, 2006.
As of April 1, 2007, the Company had two outstanding forward foreign exchange contracts for the purchase in total of US$10.9 million in exchange for 1.4 billion Japanese Yen. Recording
the fair value of these contracts as of April 1, 2007 resulted in an unrealized loss of $0.5 million, which was charged to other income (expense), net in the first quarter of 2007.

13Note 10.	Income Taxes

The provision for income taxes in the first quarter of 2007 primarily consisted of a $0.8 million provision for Federal and state income taxes and a
$0.1 million provision for taxes in Germany. The Company reduced its current tax liability by $0.3 million through the utilization of certain acquired tax assets,
largely consisting of net operating loss carryforwards resulting from the acquisition of STEAG in 2001. The Federal and state tax provision for the first quarter of
2007, however, does not reflect a benefit for the utilization of these net operating losses, as it was used to reduce the goodwill originally recorded in the
acquisition. The provision for income taxes reflected a tax provision of $0.2 million for the quarter ended April 2, 2006.  The tax provision was primarily due to
foreign taxes of $0.2 million. On a quarterly basis, the Company evaluates its expected income tax expense or benefit based on its year to date operations, and
records an adjustment in the current quarter. The net tax provision is the result of the mix of profits earned by the Company and its subsidiaries in tax
jurisdictions with a broad range of income tax rates.

The
Company adopted FIN 48 on January 1, 2007. As a result of the adoption of FIN 48, the Company recognized a $0.7 million increase in the
liability for unrecognized tax benefits, which  was accounted for as an increase to the beginning balance of accumulated deficit in the condensed consolidated
balance sheet, as permitted by the transition provisions of FIN 48.
Upon adoption, the Company had $25.8 million of unrecognized tax benefits. Of this total, $9.3 million represents the amount of unrecognized tax benefits that,
if recognized, would favorably affect the effective income tax rate in any future periods. In accordance with FIN 48, at the beginning of fiscal year 2007 the
Company reclassified $9.3 million of income tax liabilities from current liabilities to long-term deferred tax liabilities in the condensed consolidated balance sheet,
as payment of the liabilities is not anticipated within the next 12 months. For the three months ended April 1, 2007, there have been
no material changes to the amount of unrecognized tax benefits. The Company does not anticipate that total unrecognized tax benefits will significantly change
prior to March 30, 2008.

The Company's practice is to recognize interest and/or
penalties related to unrecognized tax benefits in income tax expense. At December 31, 2006, the Company had $0.6 million accrued for estimated interest and
$0.1 million accrued for estimated penalties. For the three months ended April 1, 2007, recorded income tax expense included
estimated interest of $41,000.
Included in the balance of unrecognized tax benefits at January 1, 2007 is $1.4 million related to tax positions and estimated interest and penalties for which it is reasonably possible that
the statute of limitations will expire in various foreign jurisdictions within the next twelve months.The Company and its subsidiaries are subject to United States federal income tax as well as to income taxes in Germany and various other foreign and state jurisdictions.
The Company's Federal and state income tax returns are generally not subject to examination by tax authorities for years before 2002. The Company's German
income tax returns are currently under examination for the tax years 2001 to 2003. The final outcome of this examination is not yet known. Management does
not anticipate any adjustments, however, which would result in material changes to the Company's financial position, results of operations, or cash flows.

14Note 11.	Net Income Per Share

Net income per share is calculated in accordance with SFAS No. 128, Earnings Per Share, which requires dual presentation of basic and
diluted net income per share on the face of the income statement. Basic earnings per share is computed by dividing income available to common stockholders
by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share is computed using the weighted-average
number of shares of common stock outstanding plus the effect of all dilutive securities representing potential shares of common stock outstanding during the
period.

The following table summarizes the incremental shares of common stock from these potentially dilutive securities, calculated using
the treasury stock method:

Three Months EndedApril 1,

April 2,2007

2006(thousands)Weighted average shares outstanding - Basic

52,562

52,171Diluted potential common shares from stock optionsand restricted stock units

978

1,538Weighted average shares outstanding - Diluted

53,540

53,709Total stock options outstanding of 4.4 million and 1.0 million for the three months ended April 1, 2007 and April 2, 2006, respectively, were excluded
from the computations, as their exercise price exceeded the average closing price during the respective periods and their inclusion would be antidilutive.


Note 12.	Comprehensive Income

The balance of accumulated comprehensive income is as follows:

April 1,

December 31,2007

2006(thousands)Cumulative translation adjustments

$             14,357

$             13,480Unrealized investment gain

54

45$             14,411

$             13,525The following are the components of comprehensive income:


Three Months EndedApril 1,

April 2,2007

2006(thousands)Net income

$               7,651

$               3,693Cumulative translation adjustments

877

715Unrealized investment gain (loss)

9

(42)Comprehensive income

$               8,537

$               4,36615Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q contains forward-looking statements, which are subject to the Safe Harbor provisions created by the Private
Securities Litigation Reform Act of 1995.  These forward-looking statements are based on management's current expectations and beliefs, including estimates
and projections about our industry.  Our forward-looking statements may include statements that relate to our future revenue, customer demand, market share,
competitiveness, margins, product development plans and levels of research and development (R&D activity), outsourcing plans and operating expenses,
tax expenses, the expected effects, cost and timing of restructurings and consolidation of operations and facilities, economic conditions in general and in our
industry, and the sufficiency of our financial resources to support future operations and capital expenditures.  Forward-looking statements typically are identified
by use of terms such as "anticipates," "expects," "intends," "plans," "seeks," "estimates,"
"believes," and similar expressions, although some forward-looking statements are expressed differently.  These statements are not guarantees of
future performance and are subject to numerous risks, uncertainties, and assumptions that are difficult to predict.  Such risks and uncertainties include those set
forth in Part II, Item 1A under "Risk Factors" and Item 2 under "Management's Discussion and Analysis of Financial Condition and Results of
Operations."  Our actual results could differ materially from those anticipated by these forward-looking statements. The forward-looking statements in this
report speak only as of the time they are made and do not necessarily reflect our outlook at any other point in time.  We undertake no obligation to update
publicly any forward-looking statements, whether as a result of new information, future events, or for any other reason.
Documents to Review In Connection With Management's Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with the Condensed Consolidated Financial
Statements and Notes presented in this Form 10-Q and the consolidated financial statements and notes in our last filed Annual Report on Form 10-K, for the
year ended December 31, 2006.
Overview

In 2006, we were the leading supplier of dry strip equipment and the second largest supplier of rapid thermal processing (RTP) equipment in the global
semiconductor industry, according to estimates by Gartner Dataquest, an independent research firm. Our manufacturing equipment is used for transistor level,
or front-end-of-line manufacturing, and also in specialized applications for processing the interconnect layer, or back-end-of-line processing. Our manufacturing
equipment utilizes innovative technology to deliver advanced processing capabilities and high productivity for the fabrication of current and next-generation
integrated circuits (ICs). Our tools, technologies and expertise are enablers in the semiconductor industry's transition to larger 300 millimeter wafers, sub-90
nanometer design rules and the use of new materials, such as copper, low capacitance (low-k) dielectrics and barrier metals.

Our business depends upon capital expenditures by manufacturers of semiconductor devices. The level of capital expenditures by these manufacturers
depends upon the current and anticipated market demand for such devices. Because the demand for semiconductor devices is highly cyclical, the demand for
wafer processing equipment is also highly cyclical.  The cyclicality and uncertainties regarding overall market conditions continue to present significant
challenges to us and impair our ability to forecast near-term revenue. Given that many of our costs are fixed in the short-term, our ability to quickly modify our
operations in response to changes in market conditions is limited. Part of our strategy is to outsource selected non-critical functions in manufacturing, spare
parts logistics, subsystem design and other areas to third parties specializing in these areas. This allows us to concentrate our resources on our core
technologies in strip and RTP, reduce our cost structure and achieve greater flexibility to expand and contract manufacturing capacity as market conditions
require.

Going forward, the success of our business will be dependent on numerous factors, including, but not limited to, the market demand for semiconductors
and semiconductor wafer processing equipment and our ability to (a) significantly grow the Company, either organically or through acquisitions, in order to
enhance our competitiveness and profitability, (b) develop and bring to market new products that address our customers' needs, (c) grow customer loyalty
through collaboration with and support of our customers and (d) maintain a cost structure that will enable us to operate effectively and profitably
throughout changing industry cycles.

16For the three months ended April 1, 2007, our net sales were $69.9 million, an increase of 19.7% from $58.4 million for the same period last year,
primarily due to a $12.4 million increase in system sales and a $0.5 million increase in sales of service and spare parts, partially offset be a reduction from $1.4
million to zero of royalty revenues from Dainippon Screen Company (DNS). Gross profit margin for the three months ended April 1, 2007 was 44.6%, an
increase of 2.9 percentage points from 41.7% for the same period of 2006.

Operating expenses for the three months ended April 1, 2007 were $25.2 million, $3.3 million higher than the $21.9 million
reported for the same period of 2006. Operating expenses as a percentage of net sales were 36.0% for the three months ended April 1, 2007, compared with
37.4% for the same period of 2006.

For the three months ended April 1, 2007, net cash provided by operating activities was $7.8 million.  Cash, cash equivalents, and short-term
investments totaled $146.7 million as of April 1, 2007.

Results of Operations

The following table sets forth our condensed consolidated results of operations for the periods indicated, along with amounts expressed as a
percentage of net sales, and comparative information regarding the absolute and percentage changes in these amounts:

Three Months Ended

Increase (Decrease)April 1, 2007

April 2, 2006(thousands)

%

(thousands)

%

(thousands)

%Net sales

$   69,941

100.0

$       58,413

100.0

$   11,528

19.7Cost of sales

38,713

55.4

34,031

58.3

4,682

13.8Gross profit

31,228

44.6

24,382

41.7

6,846

28.1Operating expenses:Research, development and engineering

9,111

13.0

6,607

11.3

2,504

37.9Selling, general and administrative

15,979

22.8

15,096

25.8

883

5.8Amortization of intangibles

127

0.2

172

0.3

(45)

(26.2)Total operating expenses

25,217

36.0

21,875

37.4

3,342

15.3Income from operations

6,011

8.6

2,507

4.3

3,504

139.8Interest income

1,595

2.3

1,103

1.9

492

44.6Interest expense

(44)

(0.1)

-

-

(44)

n/m(1)Other income (expense), net

1,051

1.5

273

0.4

778

285.0Income before income taxes

8,613

12.3

3,883

6.6

4,730

121.8Provision for income taxes

962

1.4

190

0.3

772

406.3Net income

$     7,651

10.9

$         3,693

6.3

$     3,958

107.2(1) not meaningfulNet Sales and Deferred RevenueNet sales for the first quarter of 2007 increased from the same period of 2006, primarily due to a $12.4 million increase in system sales and a $0.5
million increase in sales of service and spare parts. Net sales for the first quarter of 2007 were also $1.4 million lower as they did not include any royalty income
from DNS, compared to the first quarter of 2006.

International sales, predominantly to customers based in Europe and Asia, including China, Japan, Korea, Singapore and Taiwan, accounted for 92%
of net sales in the first quarter of 2007, compared to 87% for the first quarter of 2006. We anticipate that international sales will continue to account for a
significant portion of our net sales.

Deferred revenue at April 1, 2007 decreased to $9.0 million from $16.8 million at December 31, 2006, primarily due to a $4.2 million decrease in
deferred revenue for system shipments which were fully deferred in accordance with our policy at December 31, 2006, which were recognized in 2007; a $3.0
million net decrease in
deferred revenue for the recognition of a portion of system shipments in accordance with our revenue recognition policy and a $0.6
million decrease in deferred service contract revenue.

17Gross Profit and Gross Profit MarginGross profit in the first quarter of 2007 increased by $6.8 million compared to the first quarter of 2006, primarily due to an increase of $4.8 million due to
net deferral of systems revenue, higher gross profit of $2.7 million from systems sales and lower warranty expenses of $1.2 million, partially offset by a $1.4
million decrease in royalty revenue from DNS, higher inventory valuation charges of $0.3 million and lower gross profit of $0.2 million from service and spare
parts sales.

Gross profit margin in the first quarter of 2007 increased by 2.9 percentage points compared to the first quarter of 2006, primarily due to higher
gross profit margin from net recognition of previously deferred systems revenue of 6.7 percentage points and lower warranty expenses of 3.1 percentage points,
partially offset by lower gross profit margin from system sales of 2.4 percentage points, lower gross margin from service and spare parts sales of 1.8 percentage
points and a reduction of 0.4 percentage points due to higher inventory valuation charges. Gross margin was also reduced 2.3 percentage points as there was
no DNS royalty revenue recognized in the first quarter of 2007.

Due to intense competition, we continue to face pricing pressure that can affect our gross profit margin. Our gross profit margin has varied over the
years and will continue to be affected by many factors, including competitive pressures, product mix, economies of scale, material costs and other costs,
overhead absorption levels and our revenue recognition requirements.
 Research, Development and EngineeringResearch, development and engineering expenses increased in amount for the
first quarter of 2007 compared to the same period of 2006, primarily due to activities in 2007 to expand our product portfolio to accommodate sub-65 nanometer
design rules.

Selling, General and Administrative

Selling, general and administrative (SG&A) expenses for the first quarter of 2007 increased compared to the same period of 2006, primarily as the
result of a $1.4 million increase in employee compensation which related to higher levels of business activity, a $0.7 million increase in 2007 related to stock-
based compensation as determined in accordance with SFAS No. 123(R); and a $0.7 million increase in outside service expenses which primarily related to
increased business activity in our foreign service operations,  partially offset by a $1.6 million decrease which related to the release of amounts previously
accrued as we completed all remaining obligations under a foreign government-funded capital development project, and a net decrease in other miscellaneous
expenses of $0.3 million. As a percentage of net sales, our SG&A expenses decreased in the first quarter of 2007 compared to the same period of 2006
because of the increase in net sales in 2007.

Amortization of Intangibles

Amortization of intangibles for the three months ended April 1, 2007 decreased compared to the same period of 2006 due to the writeoff of the
remaining net book value of Radiant technology of $2.6 million in the fourth quarter of 2006, which resulted from our acquisition of the Vortek Technology, Ltd. in
October 2004.

Interest and Other Income (Expense), Net

Interest income increased in the first quarter of 2007 compared with the same period of 2006, primarily due to higher average cash balances. Other
income, net for the first quarter of 2007 included $1.0 million of income from certain payments and legal settlements related to two previous lines of business, as
well as realized and unrealized foreign currency exchange gains of $0.4 million, which were partially offset by a realized foreign exchange loss of
$0.2 million on forward foreign exchange contracts settled during the first quarter of 2007 and other miscellaneous expenses of $0.1 million.

18

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Provision for Income Taxes

The provision for income taxes in the first quarter of 2007 primarily consisted of a $0.8 million provision for Federal and state income taxes and a $0.1
million provision for taxes in Germany. We reduced our current tax liability by $0.3 million through the utilization of certain acquired tax assets, largely consisting
of net operating loss carryforwards resulting from the acquisition of STEAG in 2001. The Federal and state tax provision for the first quarter of 2007, however,
does not reflect a benefit for the utilization of these net operating losses, as it was used to reduce the goodwill originally recorded in the acquisition. The
provision for income taxes reflected a tax provision of $0.2 million for the quarter ended April 2, 2006.  The tax provision was primarily due to foreign taxes of
$0.2 million. On a quarterly basis, we evaluate our expected income tax expense or benefit based on our year to date operations and record an adjustment in
the current quarter. The net tax provision is the result of the mix of profits earned by us and our subsidiaries in tax jurisdictions with a broad range of income tax
rates.

Our valuation allowance at April 1, 2007 is primarily attributable to Federal and state deferred tax assets, as well as certain foreign deferred tax assets.
We believe that sufficient uncertainty exists with regard to the realizability of these tax assets such that a valuation allowance is necessary. Factors considered
in providing a valuation allowance include the lack of a significant history of consistent profits and the lack of carry-back capacity to realize these assets. Based
on the absence of objective evidence, we are unable to assert that it is more likely than not that we will generate sufficient taxable income to realize these
remaining net deferred tax assets.

Critical Accounting Policies

Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis,
management evaluates its estimates and judgments, including those related to reserves for excess and obsolete inventory, warranty obligations, bad debts,
intangible assets, income taxes, restructuring costs, contingencies and litigation. Management bases its estimates and judgments on historical experience and
on various other factors that are believed to be reasonable under the circumstances. These form the basis for making judgment about the carrying values of
assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or
conditions.

Consistent with the previous year, we consider certain accounting policies for the following areas as critical to our business operations and an
understanding of our results of operations:

- Inventories and Inventory Valuation
- Goodwill and Other Intangible Assets
- Impairment of Long-Lived Assets
- Warranty
- Stock-based Compensation
- Income Taxes
- Revenue Recognition

Except for income taxes, there have been no material changes from the methodology applied by management for critical accounting estimates
previously disclosed in our most recent Annual Report on Form 10-K. The methodology applied to management's estimate for income taxes has changed due to
the implementation of a new accounting pronouncement as described below.

Income Taxes.  In June 2006, the FASB issued FASB Interpretation (FIN) 48, Accounting for Uncertainty in Income Taxes: An
Interpretation of FASB Statement No. 109(FIN 48). FIN 48 became effective for Mattson beginning in 2007. FIN 48 addressed the determination of
how tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, we must recognize the tax benefit from an
uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the

19

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taxing authorities, based on the
technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has
a greater than fifty percent likelihood of being realized upon ultimate resolution. The impact of our reassessment of our tax positions in accordance with FIN 48
resulted in a cumulative effect of adoption of $0.7 million, which was recorded as an increase in our accumulated deficit in the first quarter of 2007.

For additional information regarding the adoption of FIN 48, see Note 10 to the accompanying condensed consolidated financial statements. For further
discussion of our critical accounting estimates related to income taxes, see our 2006 Annual Report on Form 10-K.

Liquidity and Capital Resources

Our cash, cash equivalents and short-term investments were $146.7 million at April 1, 2007, an increase of $7.8 million from
$138.9 million as of December 31, 2006.  Stockholders' equity at April 1, 2007 was $247.5 million. We believe that these balances, including
interest to be earned thereon, and anticipated cash flows from operating activities will be sufficient to fund our working and other capital requirements over the
course of the next twelve months and for the foreseeable future. In the normal course of business, we evaluate the merits of acquiring technology or businesses,
or establishing strategic relationships with or investing in these businesses. We may use available cash, cash equivalents and marketable security investments
to fund such activities in the future. In the event additional needs for cash arise, we may raise additional funds from a combination of sources, including the
potential issuance of debt or equity securities.

Cash Flows from Operating Activities

Net cash provided by operations during the first quarter of 2007 was $7.8 million, primarily due to net income of $7.7 million, decreases in
accounts receivable and advanced billings of $8.0 million due to lower revenue compared to the previous quarter, decreases in inventories and inventories -
delivered systems of $3.2 million, depreciation of $1.5 million and stock-based compensation of $1.0 million, partially offset by a $7.8 million decrease in
deferred revenue, a $3.4 million decrease in accounts payable, a $1.5 million decrease in accrued liabilities and a $1.2 million increase in prepaid expenses and
other current assets.

Net cash used in operations during the first quarter of 2006 was $3.9 million, primarily due to an increase in inventories of $6.3 million and an increase
in accounts receivable of $5.4 million, partially offset by net income of $3.7 million, an increase in accrued liabilities of $3.5 million and depreciation of $1.5
million.

We expect that cash provided by operating activities may fluctuate in future periods as a result of a number of factors including fluctuations in our net
sales and operating results, amount of revenue deferred, collection of accounts receivable and timing of payments.

Cash Flows from Investing Activities

Net cash provided by investing activities during the first quarter of 2007 was $26.1 million, due to proceeds of $35.1 million from sales
and maturities of available-for-sale investments, partially offset by purchases of $8.3 million of available-for-sale investments and capital spending of $0.7
million.

Net cash used in investing activities during the first quarter of 2006 was $8.0 million, due to purchases of $13.0 million of available-for-sale
investments and capital spending of $0.4 million, partially offset by proceeds of $5.4 million from sales and maturities of available-for-sale investments.

Cash Flows from Financing Activities

Net cash provided by financing activities during the first quarter of 2007 was $0.1 million, attributable to net proceeds of $0.1 million from
stock options exercised.

Net cash provided by financing activities during the first quarter of 2006 was $2.5 million, attributable to net proceeds of $2.5 million from
stock options exercised.

20

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Off-Balance-Sheet Arrangements

As of April 1, 2007, we did not have any significant "off-balance-sheet" arrangements, as defined in Item 303 (a)(4)(ii) of
Regulation S-K.

Contractual Obligations

Under accounting principles generally accepted in the United States of America, certain obligations and commitments are not required to be
included in our consolidated balance sheets. These obligations and commitments, while entered into in the normal course of business, may have a material
impact on our liquidity. For further discussion of our contractual obligations, see our 2006 Annual Report on Form 10-K.

Recent Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
(SFAS No. 159), which permits entities to elect to measure many financial instruments and certain other items at fair value that are not currently required
to be measured at fair value. This election is irrevocable. SFAS No. 159 will be effective for us on January 1, 2008. We are currently assessing the
potential impact that the adoption of SFAS No. 159 will have on our financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements(SFAS No. 157),which defines fair value,
establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS
No. 157 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used
to classify the source of the information. This statement is effective for us beginning January 1, 2008. We are currently assessing the potential impact that the
adoption of SFAS No. 157 will have on our financial statements.

In June 2006,the FASB ratified the Emerging Issues Task Force (EITF) conclusion on Issue No. 06-02, Accounting for Sabbatical Leave and Other
Similar Benefits Pursuant to FASB Statement No. 43, `Accounting for Compensated Absences'(EITF No. 06-02). The EITF concluded that companies
should accrue for employee sabbatical leave over the service period in which employees earn the right to sabbatical leave. We adopted EITF No. 06-02 on
January 1, 2007 as a change in accounting principle, and we have recorded the cumulative effect of adoption of approximately $0.4 million as an increase in our
accumulated deficit in the first quarter of 2007, as permitted by the transition provisions of EITF No. 06-02.

In June 2006, the FASB issued FASB Interpretation (FIN) 48, Accounting for Uncertainty in Income Taxes: An Interpretation of FASB
Statement No. 109(FIN 48).FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements
in accordance with SFAS No. 109, Accounting for Income Taxes. This Interpretation defines the minimum recognition threshold a tax position is
required to meet before being recognized in the financial statements. We adopted FIN 48 on January 1, 2007 as a change in accounting principle, and we
have recorded the cumulative effect of adoption of $0.7 million as an increase in our accumulated deficit in the first quarter of 2007, as permitted by the
transition provisions of FIN 48. See Note 10 to the accompanying condensed consolidated financial statements.

Item 3.   	Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We are exposed to financial market risks, including changes in foreign currency exchange rates and interest rates. Historically, much of our revenues
and capital spending has been transacted in U.S. dollars.

Our exposure to market risk for changes in interest rates relates to our investment portfolio. We do not currently use derivative financial instruments in
our investment portfolio, or hedge for these interest rate exposures. We place our investments with high credit quality issuers and, by policy, limit the amount of
credit exposure to any one issuer.
The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity.

21

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Our interest rate risk relates primarily to our investment portfolio, which consisted of $126.0 million in cash equivalents and $20.7 million in short-term
marketable securities as of April 1, 2007. An immediate sharp increase in interest rates could have a material adverse affect on the fair value of our investment
portfolio. Conversely, immediate sharp declines in interest rates could seriously harm interest earnings of our investment portfolio. By policy, we limit our
exposure to longer-term investments.

Foreign Currency Risk

The functional currency of our foreign subsidiaries is their local currencies. Accordingly, all assets and liabilities of these foreign operations are
translated using exchange rates in effect at the end of the period, and revenues and costs are translated using average exchange rates for the period. Gains or
losses from translation of foreign operations where the local currencies are the functional currency are included as a component of accumulated other
comprehensive income. Foreign currency transaction gains and losses are recognized in the consolidated income statements as they are incurred.  Because
much of our revenues and capital spending are transacted in U.S. dollars, we believe that foreign currency exchange rates should not materially adversely affect
our overall financial position, results of operations or cash flows.

During January 2007, we settled one forward foreign exchange contract outstanding as of December 31, 2006 for the purchase in total of
US$23.7 million in exchange for 2.8 billion Japanese Yen (weighted average contract rate of 118 Yen to US$1.00) upon maturity and realized a total
foreign exchange gain of $0.6 million, which was recorded in the first quarter of 2007 under other income, net. In total, we recorded a net loss of $0.2
million in other income (expense), net for the three months ended April 1, 2007, and did not have any hedging activities for the three months ended April 2,
2006. There were no forward foreign exchange contracts outstanding as of April 1, 2007.

Item 4.   	Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosure controls
and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of the end of
the quarterly period covered by this report. Our disclosure controls and procedures are intended to ensure that the information we are required to disclose in the
reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms and (ii) accumulated and communicated to our management, including the
Chief Executive Officer and Chief Financial Officer, as the principal executive and financial officers, respectively, to allow final decisions regarding required
disclosures.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
effective as of the end of the period covered by this report.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system will be met.  In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future
events.

Quarterly Evaluation of Changes in Internal Control over Financial Reporting

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of our internal control
over financial reporting to determine whether any change occurred during the first quarter of 2007 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.  Based on that evaluation, our management concluded that there was no such change during that
quarter.

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PART II.  OTHER INFORMATION

Item 1.  	Legal Proceedings

In the ordinary course of business, we are subject to claims and litigation, including claims that we infringe third party patents, trademarks and other
intellectual property rights. Although we believe that it is unlikely that any current claims or actions will have a material adverse impact on our operating results
or our financial position, given the uncertainty of litigation, we cannot be certain of this. Moreover, the defense of claims or actions against us, even if not
meritorious, could result in the expenditure of significant financial and managerial resources.

Our involvement in any patent dispute, other intellectual property dispute or action to protect trade secrets and know-how could result in a material
adverse effect on our business. Adverse determinations in current litigation or any other litigation in which we may become involved could subject us to
significant liabilities to third parties, require us to grant licenses to or seek licenses from third parties and prevent us from manufacturing and selling our
products. Any of these situations could have a material adverse effect on our business.

Item 1A.  	Risk Factors

Other Items in this Quarterly Report on Form 10-Q describe risks and uncertainties associated with our business, including risks and
uncertainties that could cause actual results to differ materially from the results expressed or implied by forward-looking statements contained in this Quarterly
Report and in other statements we make publicly.  A more complete description of a number of primary risk factors associated with our business, and which
could cause our results to differ materially from the results expressed or implied by our forward-looking statements contained in this Quarterly Report on Form
10-Q or elsewhere, is set forth in our Annual Report on Form 10-K for the year ended December 31, 2006, filed with the SEC on March 2, 2007.

Item 6.  Exhibits



|Exhibit
                                  Number | Description                                                                                    
|------------------------------------------------ | -----------------------------------------------------------------------------------------------
|3.1(1)                                           | Amended and Restated Certificate of Incorporation of the Company.                              
|3.2(2)                                           | Third Amended and Restated Bylaws of the Company.                                              
|31.1                                             | Certification of Chief Executive Officer Pursuant to Sarbanes-Oxley Act Section 302(a).
    PDF
|31.2                                             | Certification of Chief Financial Officer Pursuant to Sarbanes-Oxley Act Section 302(a).
    PDF
|32.1                                             | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
    PDF           
|32.2                                             | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
    PDF           

_________________

(1)  Incorporated by reference from Mattson Technology, Inc. Current Report on Form 8-K filed on January 30, 2001.
                   (2)  Incorporated by reference from Mattson Technology, Inc. Quarterly Report on Form 10-Q filed on August 14, 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.

| |                                     
| | ------------------------------------
| | Mattson Technology, Inc.(Registrant)

Dated: May 11, 2007

| |                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------
| | By: /s/ DAVID DUTTON
               David DuttonChief Executive Officer
                  (Principal Executive Officer)

Dated: May 11, 2007

| |                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | By: /s/ WILLIAM TURNER
               William TurnerExecutive Vice President — Finance and Chief Financial Officer
                  (Principal Financial and Accounting Officer)

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