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 July 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 July 27, 2007: 51,861,099.
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 July 1, 2007 and December 31, 2006

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

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

5Notes to Condensed Consolidated Financial Statements

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

17Item 3.    Quantitative and Qualitative Disclosures About Market Risk

24Item 4.    Controls and Procedures

25PART II.  OTHER INFORMATIONItem 1.    Legal Proceedings

26Item 1A.    Risk Factors

26Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

26Item 4.     Submission of Matters to a Vote of Security Holders

27Item 6.     Exhibits

27Signatures

28

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 6)                                                                    
|                                                                                                          
|Stockholders' equity:                                                                                     
|Preferred stock, 2,000 shares authorized; none issued and outstanding                                     
|Common stock, par value $0.001, 120,000 authorized shares;                                                
|53,226 shares issued and 51,849 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, 1,377 shares in 2007 and 375 shares in 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                                                                 
|Sales of property and equipment                                                                     
|Net cash provided by (used in) investing activities                                                 
|                                                                                                    
|Cash flows from financing activities:                                                               
|Proceeds from stock plans                                                                           
|Purchases of treasury stock                                                                         
|Net cash provided by (used in) 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 
                  July 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 July 1,
2007.  The results of operations for the three and six months ended July 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 Pronouncements 

In February 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards 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.

6In 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.

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. 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), which 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 12.
Note 2.	Balance Sheet Details


July 1,

December 31,2007

2006Cash and cash equivalents:

(thousands)Cash in bank

$          39,961

$          38,006Money market funds

42,889

17,483Commercial paper

34,879

35,927$        117,729

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

$          19,710

$          37,114United States corporate bonds

15,840

10,355$          35,550

$          47,469All short-term investments are marked to market with unrealized gains (losses) recorded under other comprehensive
income. See Note 14. The maturities of short-term investments as of July 1, 2007 and December 31, 2006 are shown below:

July 1,

December 31,2007

2006(thousands)Due within one year

$          23,296

$          34,644Due in one to two years

12,254

12,825$          35,550

$          47,4697July 1,

December 31,2007

2006Inventories, net:

(thousands)Purchased parts and raw materials

$          23,276

$          22,964Work-in-process

6,349

9,803Finished goods

6,196

7,765$          35,821

$          40,532As of July 1, 2007 and December 31, 2006, the reserve for excess and obsolete inventories was $13.8
million and $16.6 million, respectively.

July 1,

December 31,2007

2006Property and equipment, net:

(thousands)Machinery and equipment

$          48,757

$          47,990Furniture and fixtures

11,543

11,597Leasehold improvements

13,319

12,85573,619

72,442Less: accumulated depreciation

(46,872)

(44,604)$          26,747

$          27,838Accrued liabilities:Warranty

$          13,550

$          15,113Accrued compensation and benefits

10,396

7,633Other

9,426

14,889$          33,372

$          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. (CFM)
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 and six months ended July 1, 2007, the Company made payments of $170,000
and $375,000, respectively, which concluded the Company's restructuring activities related to its consolidation of excess facilities. The Company
does have ongoing commitments related to two buildings previously used to house its manufacturing and administrative functions related to wet
surface preparation products in Exton, Pennsylvania. The Company maintains accruals related to its estimated future obligations for these
properties. See Note 6.

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.

8

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

|                                                |  | Three Months Ended |  | Six Months Ended
|----------------------------------------------- |  | ------------------ |  | ----------------
|                                                |  | July 1,            |  | July 2,         
|                                                |  | 2007               |  | 2006            
|                                                |  | (thousands)       
|Balance at beginning of period                  |  | $  14,304          |  | $  13,850       
|Accrual for warranties issued during the period |  | 2,341              |  | 4,140           
|Settlements made during the period              |  | (3,095)            |  | (4,112)         
|Balance at end of period                        |  | $  13,550          |  | $  13,878       

During 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 July 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 on historical 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.	Borrowing Facilities

The Company has a $10 million revolving line of credit with a bank, which may be increased to $20 million
at the option of the Company. The revolving line of credit was renewed in June 2007, expires in June 2009 and has an annual commitment
fee of $25,000.  All borrowings under this credit line bear interest at a per annum rate equal to either the bank's prime rate minus 50 basis points
or the London Interbank Offered Rate (LIBOR) plus 200 basis points, at the option of the Company. The line of credit is collateralized by a blanket
lien on all of the Company's domestic assets including intellectual property. The line of credit requires the Company to satisfy certain quarterly
financial covenants, including maintaining certain minimum financial ratios.  At July 1, 2007, the Company was in compliance with the covenants,
and there was no borrowing under this credit line.

Note 6.	Commitments and Contingencies

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. In June 2007, the tenant entered into a new three-year sublease, which will commence upon the expiration of the current
sublease and will expire in December 2010, with an option for the subtenant to extend for an additional three years. Total lease payments of

9

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approximately $11.9 million are expected to cover all related costs on the administrative building during the sublease periods.  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 July 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 $13.3 million at July 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 or actions against the Company, even if not meritorious, could result in the expenditure of
significant financial and managerial resources.

From time to time, the Company is 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 7.	Common Stock Repurchase Program

In March 2007, the Company's Board of Directors authorized the repurchase of up to $20.0 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 10b5-1. The size and timing of the repurchases will depend on Mattson's share price. For the three and six months ended
July 1, 2007, approximately 1.0 million shares had been repurchased under this program at a weighted-average purchase price of $9.98. As of
July 1, 2007, approximately $10.0 million remains available under the program for future repurchases.

10

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Note 8.	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 effects of recording stock-based compensation for the three and six months ended July 1, 2007 and July 2,
2006 were as follows:

|                                                 |  | Three Months Ended                    |  | Six Months Ended
|------------------------------------------------ |  | ------------------------------------- |  | ----------------
|                                                 |  | July 1,                               |  | July 2,         
|                                                 |  | 2007                                  |  | 2006            
|                                                 |  | (thousands, except per share amounts)
|Stock-based compensation by type of award:       |  |                                       |  |                 
|Stock options                                    |  | $        824                          |  | $        485    
|Restricted stock units                           |  | 153                                   |  | 100             
|Employee stock purchase plan                     |  | 16                                    |  | 17              
|Total stock-based compensation                   |  | 993                                   |  | 602             
|Tax effect on stock-based compensation           |  | -                                     |  | -               
|Effect on net income                             |  | $        993                          |  | $        602    
|                                                 |  |                                       |  |                 
|Stock-based compensation by category of expense: |  |                                       |  |                 
|Cost of sales                                    |  | $          37                         |  | $          16   
|Research, development and engineering            |  | 125                                   |  | 78              
|Selling, general and administrative              |  | 831                                   |  | 508             
|Effect on net income                             |  | $        993                          |  | $        602    
|                                                 |  |                                       |  |                 
|Effect on net income per share:                  |  |                                       |  |                 
|Basic                                            |  | $       0.02                          |  | $       0.01    
|Diluted                                          |  | $       0.02                          |  | $       0.01    

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

Stock Options

As 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 July 1, 2007 and July 2, 2006,
the Company's Board of Directors approved the grant of approximately 85,000 and 617,000 stock options, respectively, with an estimated total
grant-date fair value of $0.5 million and $4.4 million, respectively, after estimated forfeitures. During the six months ended July 1, 2007 and July
2, 2006, the Company's Board of Directors approved the grant of approximately 789,000 and 649,000 stock options, respectively, with an
estimated total grant-date fair value of $4.0 million and $4.6 million, respectively, after estimated forfeitures. As of July 1, 2007, the unrecorded
deferred stock-based compensation balance related to stock options was $8.8 million after estimated forfeitures and will be recognized over an
estimated weighted average amortization period of 3.1 years.

Restricted Stock Units

As 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 July 1, 2007 and July 2, 2006, the Company's
Board of Directors approved the grant of approximately 21,000 and 142,000 restricted

11

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stock units, respectively, with an estimated total grant-date
fair value of $0.2 million and  $1.4 million, respectively, after estimated forfeitures. During the six months ended July 1, 2007 and July 2, 2006, the
Company's Board of Directors approved the grant of approximately 93,000 and 151,000 restricted stock units, respectively, with an estimated
total grant-date fair value of $0.7 million and  $1.5 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 July 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 3.2 years.

Valuation Assumptions

The 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 Ended |  | Six Months Ended
|------------------------------- |  | ------------------ |  | ----------------
|                                |  | July 1,            |  | July 2,         
|                                |  | 2007               |  | 2006            
|Expected dividend yield         |  | -                  |  | -               
|Expected stock price volatility |  | 72%                |  | 88%             
|Risk-free interest rate         |  | 5.0%               |  | 4.4%            
|Expected life of options        |  | 5 years            |  | 5 years         

Option-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.

The 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 plans assumed by the Company from CFM as of July 1, 2007:

|                              |  |             |  |             |  | Weighted-       |  | Restricted  |  | Weighted-     
|----------------------------- |  | ----------- |  | ----------- |  | --------------- |  | ----------- |  | --------------
|                              |  | Awards      |  | Stock       |  | Average         |  | Stock       |  | Average       
|                              |  | Available   |  | Options     |  | Exercise        |  | Units       |  | Grant Date    
|                              |  | For Grant   |  | Outstanding |  | Price           |  | Outstanding |  | Fair Value    
|                              |  | (thousands) |  | (thousands) |  |                 |  | (thousands) |  |               
|Balances at December 31, 2006 |  | 1,486       |  | 6,036       |  | $          9.27 |  | 150         |  | $        11.39
|Stock options:                |  |             |  |             |  |                 |  |             |  |               
|Authorized June 4, 2007       |  | 2,500       |  | -           |  | -               |  | -           |  | -             
|Granted                       |  | (789)       |  | 789         |  | 8.94            |  | -           |  | -             
|Exercised                     |  | -           |  | (228)       |  | 5.39            |  | -           |  | -             
|Cancelled or forfeited        |  | 157         |  | (164)       |  | 12.90           |  | -           |  | -             
|Restricted stock units:       |  |             |  |             |  |                 |  |             |  |               
|Granted                       |  | (163)       |  | -           |  | -               |  | 93          |  | 9.08          
|Released                      |  | -           |  | -           |  | -               |  | (41)        |  | 9.97          
|Cancelled or forfeited        |  | 8           |  | -           |  | -               |  | (5)         |  | 11.07         
|Balances at July 1, 2007      |  | 3,199       |  | 6,433       |  | $          9.27 |  | 197         |  | $        10.61

12

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

|                |   |           |  | Options Outstanding |  | Options Exercisable
|--------------- | - | --------- |  | ------------------- |  | -------------------
|                |   |           |  |                     |  | Weighted-          
|                |   |           |  |                     |  | Average            
|                |   |           |  |                     |  | Remaining          
|Range of        |   |           |  | Contractual         |  | Exercise           
|Exercise Prices |   | Number    |  | Life                |  | Price              
|                |   |           |  | (thousands)         |  | (in years)         
|$   1.55        | - | $    6.95 |  | 1,100               |  | 4.8                
|6.96            | - | 7.90      |  | 1,048               |  | 4.8                
|7.91            | - | 8.81      |  | 943                 |  | 6.3                
|8.82            | - | 9.70      |  | 923                 |  | 7.0                
|9.71            | - | 10.44     |  | 657                 |  | 4.4                
|10.45           | - | 11.92     |  | 1,085               |  | 6.2                
|11.93           | - | 49.13     |  | 677                 |  | 4.6                
|$   1.55        | - | $  49.13  |  | 6,433               |  | 5.5                

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on the Company's
closing stock price of $9.70 as of June 29, 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 July 1, 2007 were 2.7
million. The weighted-average grant date fair value of stock options granted during the six months ended July 1, 2007 and July 2, 2006 was $5.73
and $8.05 per share, respectively.

The total intrinsic value of options exercised during the six months ended July 1, 2007 and July 2, 2006 was $1.0
million and $1.9 million, respectively. The total cash received from employees as a result of employee stock option exercises during the six
months ended July 1, 2007 and July 2, 2006 was approximately $1.2 million and $2.7 million, respectively. The Company settles employee stock
option exercises with newly issued common shares.

Note 9.	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.

13

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

|                  |  | Three Months Ended |  | Six Months Ended
|----------------- |  | ------------------ |  | ----------------
|                  |  | July 1, 2007       |  | July 2, 2006    
|                  |  | (thousands)        |  | %               
|United States     |  | $      4,539       |  | 5               
|Taiwan            |  | 28,415             |  | 33              
|Korea             |  | 20,480             |  | 24              
|Japan             |  | 18,718             |  | 21              
|Other Asia        |  | 7,720              |  | 9               
|Europe and others |  | 6,672              |  | 8               
|                  |  | $    86,544        |  | 100             

In the three months ended July 1, 2007, three customers accounted for 18%, 14% and 13% of net sales,
respectively. In the three months ended July 2, 2006, three customers accounted for 15%, 13% and 12% of net sales, respectively.   In the six
months ended July 1, 2007, two customers accounted for 17% and 13% of net sales, respectively. In the six months ended July 2, 2006, one
customer accounted for 17% of net sales.

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

|              |  | July 1, 2007      |  | December 31, 2006
|------------- |  | ----------------- |  | -----------------
|              |  | (thousands)       |  | %                
|United States |  | $          14,029 |  | 52               
|Germany       |  | 7,432             |  | 28               
|Canada        |  | 5,017             |  | 19               
|Others        |  | 269               |  | 1                
|              |  | $          26,747 |  | 100              

Note 10.	DNS Patent Infringement Suit Settlement

On June 24, 2002, the Company entered into a settlement agreement and a license agreement with
Dainippon Screen Manufacturing Co., Ltd. (DNS), under which DNS agreed to make payments to the Company totaling between
$75 million (minimum) and $105 million (maximum), relating to past damages, partial reimbursement of attorney fees and costs, and
license fees.

In April 2006, DNS paid the Company the final minimum annual royalty payment of $6.0 million.  In June 2006, DNS
paid the Company an additional royalty payment of $2.4 million for royalties due through March 31, 2006. In June 2007, DNS reported to the
Company an additional royalty payment due of $8.6 million for royalties through March 31, 2007. Royalty payments received by the Company in
excess of the minimum annual payments are recorded as royalty revenue and recognized as net sales in the period they are reported to the
Company by DNS, which is generally in June of each year. The last royalty payment to be paid by DNS under the license agreement will be due
in June 2008.

As of July 1, 2007, DNS has made payments aggregating $85.8 million under the terms of the settlement and license
agreements. The Company recognized $8.6 million and $3.8 million of royalty revenue for the three months ended July 1, 2007 and July 2, 2006,
respectively.  The Company recognized $8.6 million and $5.1 million of royalty revenue for the six months ended July 1, 2007 and July 2, 2006,
respectively.

14

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Note 11.	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, for the
three and six months ended July 1, 2007, the Company recorded a net gain of $0.3 million and $0.2 million, respectively, in other income
(expense), net and did not have any hedging activities for the three and six months ended July 2, 2006. As of July 1, 2007, the Company had no
outstanding forward foreign exchange contracts.

Note 12.	Income Taxes

The provision for income taxes in the six months ended July 1, 2007 included a $1.6 million provision for
Federal and state income taxes and a $1.6 million provision for foreign taxes. Additionally, in the second quarter, the Company recorded $3.8
million in income tax expense related to a ruling in the second quarter on the applicability of tax law in one of the Company's foreign locations.
The Company reduced its current tax liability by $1.0 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 six months ended July
1, 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 in the six months ended July 2, 2006 primarily consisted of a $0.1 million provision for
Federal and state income taxes and a $0.7 million provision for foreign taxes. 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.

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 and six months ended July 1, 2007, recorded income tax expense included estimated interest of $0.3
million and $0.3 million, respectively. 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.

15

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Note 13.	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 Ended |  | Six Months Ended
|--------------------------------------------- |  | ------------------ |  | ----------------
|                                              |  | July 1,            |  | July 2,         
|                                              |  | 2007               |  | 2006            
|                                              |  | (thousands)       
|Weighted average shares outstanding - Basic   |  | 52,531             |  | 52,356          
|Diluted potential common shares from stock    |  |                    |  |                 
|options and restricted stock units            |  | 1,096              |  | 1,087           
|Weighted average shares outstanding - Diluted |  | 53,627             |  | 53,443          

Total stock options outstanding of 3.8 million for the three and six months ended July 1, 2007, and 2.9 million and 1.9
million for the three and six months ended July 2, 2006, respectively, were excluded from the computations, as their inclusion would be
antidilutive.

Note 14.	Comprehensive Income

The balance of accumulated comprehensive income is as follows:

|                                   |  |               |  |                  |  | July 1,       |  | December 31,    
|---------------------------------- |  | ------------- |  | ---------------- |  | ------------- |  | ----------------
|                                   |  |               |  |                  |  | 2007          |  | 2006            
|                                   |  |               |  |                  |  | (thousands)  
|Cumulative translation adjustments |  | $      15,077 |  | $         13,480
|Unrealized investment gain         |  | 54            |  | 45              
|                                   |  |               |  |                  |  | $      15,131 |  | $         13,525

The following are the components of comprehensive income:

|                                   |  | Three Months Ended |  | Six Months Ended
|---------------------------------- |  | ------------------ |  | ----------------
|                                   |  | July 1,            |  | July 2,         
|                                   |  | 2007               |  | 2006            
|                                   |  | (thousands)       
|Net income                         |  | $      11,547      |  | $        5,152  
|Cumulative translation adjustments |  | 720                |  | 2,228           
|Unrealized investment gain (loss)  |  | -                  |  | (86)            
|Comprehensive income               |  | $      12,267      |  | $        7,294  

16

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Item 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, (d) maintain a
cost structure that will enable us to operate effectively and profitably throughout changing industry cycles and (e) generate the gross margins
necessary to enable us to make the necessary investments in our business.

17

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For the three months ended July 1, 2007, our net sales were $86.5 million, an increase of 36.7% from $63.3 million
for the same period last year, primarily due to an $18.4 million increase in system sales and an increase in royalty revenues from Dainippon
Screen Company (DNS) of $4.8 million. Gross profit margin for the three months ended July 1, 2007 was 48.1%, an increase of 6.9 percentage
points from 41.2% for the same period of 2006.

For the six months ended July 1, 2007, our net sales were $156.5 million, an increase of 28.6% from $121.7 million
for the same period last year, primarily due to an increase in system sales of $30.8 million, an increase in sales of service and spare parts of $0.5
million and an increase in royalty revenues from DNS of $3.5 million. Gross profit margin for the six months ended July 1, 2007 was 46.6%, an
increase of 5.2 percentage points from 41.4% for the same period of 2006.

Operating expenses for the three months ended July 1, 2007 were $26.1 million, $4.5 million higher than the
$21.6 million reported for the same period of 2006. Operating expenses as a percentage of net sales were 30.2% for the three months
ended July 1, 2007, compared with 34.1% for the same period of 2006.

Operating expenses for the six months ended July 1, 2007 were $51.3 million, $7.9 million higher than the
$43.5 million reported for the same period of 2006. Operating expenses as a percentage of net sales were 32.8% for the six months ended
July 1, 2007, compared with 35.7% for the same period of 2006.

For the six months ended July 1, 2007, net cash provided by operating activities was $24.5 million.  Cash,
cash equivalents, and short-term investments totaled $153.3 million as of July 1, 2007.

18

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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 |  |              |  |                    
|------------------------------------- |  | ------------------ |  | ------------ |  | -------------------
|                                      |  | July 1, 2007       |  | July 2, 2006 |  | Increase (Decrease)
|                                      |  | (thousands)        |  | %            |  | (thousands)        
|Net sales                             |  | $   86,544         |  | 100.0        |  | $       63,304     
|Cost of sales                         |  | 44,909             |  | 51.9         |  | 37,249             
|Gross profit                          |  | 41,635             |  | 48.1         |  | 26,055             
|Operating expenses:                   |  |                    |  |              |  |                    
|Research, development and engineering |  | 8,893              |  | 10.3         |  | 6,691              
|Selling, general and administrative   |  | 17,090             |  | 19.8         |  | 14,728             
|Amortization of intangibles           |  | 128                |  | 0.1          |  | 172                
|Total operating expenses              |  | 26,111             |  | 30.2         |  | 21,591             
|Income from operations                |  | 15,524             |  | 17.9         |  | 4,464              
|Interest income                       |  | 1,775              |  | 2.0          |  | 1,363              
|Interest expense                      |  | -                  |  | -            |  | (85)               
|Other income (expense), net           |  | 248                |  | 0.3          |  | 4                  
|Income before income taxes            |  | 17,547             |  | 20.2         |  | 5,746              
|Provision for income taxes            |  | 6,000              |  | 6.9          |  | 594                
|Net income                            |  | $   11,547         |  | 13.3         |  | $         5,152    
|                                      |  |                    |  |              |  |                    
|                                      |  | Six Months Ended   |  |              |  |                    
|                                      |  | July 1, 2007       |  | July 2, 2006 |  | Increase (Decrease)
|                                      |  | (thousands)        |  | %            |  | (thousands)        
|Net sales                             |  | $ 156,485          |  | 100.0        |  | $     121,717      
|Cost of sales                         |  | 83,622             |  | 53.4         |  | 71,280             
|Gross profit                          |  | 72,863             |  | 46.6         |  | 50,437             
|Operating expenses:                   |  |                    |  |              |  |                    
|Research, development and engineering |  | 18,004             |  | 11.5         |  | 13,298             
|Selling, general and administrative   |  | 33,069             |  | 21.1         |  | 29,824             
|Amortization of intangibles           |  | 255                |  | 0.2          |  | 344                
|Total operating expenses              |  | 51,328             |  | 32.8         |  | 43,466             
|Income from operations                |  | 21,535             |  | 13.8         |  | 6,971              
|Interest income                       |  | 3,370              |  | 2.1          |  | 2,466              
|Interest expense                      |  | (44)               |  | -            |  | (85)               
|Other income (expense), net           |  | 1,299              |  | 0.8          |  | 277                
|Income before income taxes            |  | 26,160             |  | 16.7         |  | 9,629              
|Provision for income taxes            |  | 6,962              |  | 4.4          |  | 784                
|Net income                            |  | $   19,198         |  | 12.3         |  | $         8,845    

Net Sales and Deferred Revenue

Net sales for the three months ended July 1, 2007 increased from the same period of 2006, primarily due to an
increase in system sales of $18.4 million and an increase in royalty revenues from DNS of $4.8 million. Net sales for the second quarters of 2007
and 2006 included royalty income from DNS of $8.6 million and $3.8 million, respectively.

19

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Net sales for the six months ended July 1, 2007 increased from the same period of 2006, primarily due to an
increase in system sales of $30.8 million, an increase in sales of service and spare parts of $0.5 million and an increase in royalty revenues from
DNS of $3.5 million. Net sales for the first six months of 2007 and 2006 included royalty income from DNS of $8.6 million and $5.1 million,
respectively.

International sales as a percentage of total net sales are set forth in the table below.  We anticipate that international
sales, predominantly to customers based in Europe and the Pacific Rim, including China, Japan, Korea, Singapore and Taiwan, will continue to
account for a significant portion of our sales.

|                         |  | Three Months Ended |  | Six Months Ended
|------------------------ |  | ------------------ |  | ----------------
|                         |  | July 1,            |  | July 2,         
|                         |  | 2007               |  | 2006            
|International sales      |  | 95%                |  | 87%             
|Sales to the Pacific Rim |  | 87%                |  | 84%             

Deferred revenue at July 1, 2007 decreased to $9.3 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 revenue recognition
policy at December 31, 2006, and were recognized in 2007; a $2.8 million net decrease in deferred revenue for the recognition of a portion of
system shipments in accordance with our revenue recognition policy and a $0.5 million decrease in deferred service contract revenue.

Gross Profit and Gross Profit Margin

Gross profit for the three months ended July 1, 2007 increased by $15.6 million compared to the same period of
2006, primarily due to higher gross profit of $9.2 million from systems sales, a $4.8 million increase in royalty revenue from DNS, an increase of
$1.2 million due to net recognition of previously deferred systems revenue, and higher gross profit of $0.3 million from service and spare parts
sales.

Gross profit margin for the three months ended July 1, 2007 increased by 6.9 percentage points compared to the
same period of 2006, primarily due to higher gross profit margin from system sales of 2.8 percentage points, higher gross profit margin from DNS
royalty revenue of 4.0 percentage points and higher gross profit margin from net recognition of previously deferred systems revenue of 2.1
percentage points, partially offset by lower gross margin from service and spare parts sales of 2.0 percentage points.

Gross profit for the six months ended July 1, 2007 increased by $22.4 million compared to the same period of 2006,
primarily due to higher gross profit of $14.7 million from systems sales, a $3.5 million increase in royalty revenue from DNS, an increase of $4.0
million due to net recognition of previously deferred systems revenue, and higher gross profit of $0.2 million from service and spare parts
sales.

Gross profit margin for the six months ended July 1, 2007 increased by 5.2 percentage points compared to the
same period of 2006, primarily due to higher gross profit margin from system sales of 2.9 percentage points, higher gross profit margin from DNS
royalty revenue of 1.3 percentage points and higher gross profit margin from net recognition of previously deferred systems revenue of 2.9
percentage points, partially offset by lower gross margin from service and spare parts sales of 1.9 percentage points.

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 Engineering



20

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Selling, General and Administrative

Selling, general and administrative (SG&A) expenses for the three months ended July 1, 2007 increased
compared to the same period of 2006, primarily as the result of a $3.0 million increase in employee compensation which related to higher levels
of business activity, a $0.3 million increase in 2007 related to stock-based compensation as determined in accordance with SFAS No. 123(R) and
an increase in miscellaneous expenses of $0.6 million; which were partially offset by a $1.1 million decrease related to the release of previously
reserved accounts receivable that were collected during the quarter and a decrease of $0.4 million in outside service expenses. As a percentage
of net sales, our SG&A expenses decreased in the three months ended July 1, 2007 compared to the same period of 2006 because of the
increase in net sales in 2007.

Selling, general and administrative (SG&A) expenses for the six months ended July 1, 2007 increased
compared to the same period of 2006, primarily as the result of a $4.4 million increase in employee compensation which related to higher levels
of business activity, a $1.0 million increase in 2007 related to stock-based compensation as determined in accordance with SFAS No. 123(R) and
a net increase in other miscellaneous expenses of $0.6 million; which were 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
$1.2 million decrease related to the release of previously reserved accounts receivable that were collected during the period. As a percentage of
net sales, our SG&A expenses decreased in the six months ended July 1, 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 and six months ended July 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. The Radiant
technology was acquired in our acquisition of Vortek Technology, Ltd. in October 2004.

Interest and Other Income (Expense), Net

Interest income increased in the three and six months ended July 1, 2007 compared with the same period of 2006,
primarily due to higher average cash balances.

Other income, net for the six months ended July 1, 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 $0.5 million and
a realized foreign exchange gain of $0.2 million on forward foreign exchange contracts settled in 2007, which was partially offset by other
miscellaneous expenses of $0.4 million.

Provision for Income Taxes

The provision for income taxes for the six months ended July 1, 2007 primarily consisted of a $3.8 million non-
recurring charge recorded in the second quarter related to a ruling in the second quarter on the applicability of tax law in one of our foreign
locations, a $1.6 million provision for Federal and state income taxes and a $1.6 million provision for foreign taxes. We reduced our current tax
liability by $1.0 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 six months ended July 1, 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 for the six months ended July 2, 2006 primarily consisted of a $0.1 million provision for Federal and state income taxes and a $0.7
million provision for foreign taxes. 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 July 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

21

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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, and 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 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 12 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.

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Liquidity and Capital Resources

Our cash, cash equivalents and short-term investments were $153.3 million at July 1, 2007, an increase of
$14.4 million from $138.9 million as of December 31, 2006.  Stockholders' equity at July 1, 2007 was $252.1 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 six months ended July 1, 2007 was $24.5 million, primarily due
to net income of $19.2 million, decreases in accounts receivable and advanced billings of $4.2 million due to increased collection efforts
compared to the previous quarter, decreases in inventories and inventories - delivered systems of $7.0 million, a $3.0 million increase in
accounts payable, depreciation of $3.1 million and stock-based compensation of $2.0 million, partially offset by an $8.1 million increase in prepaid
expenses and other current assets, a $7.5 million decrease in deferred revenue, a $2.3 million decrease in accrued liabilities and a reduction in
allowance for doubtful accounts of $1.2 million.

Net cash used in operations during the six months ended July 2, 2006 was $0.3 million, primarily due to an
increase in inventories and inventories - delivered systems of $11.3 million and an increase in accounts receivable of $12.6 million, partially
offset by net income of $8.8 million, an increase in accrued liabilities of $4.7 million, an increase in deferred revenue of $3.2 million and
depreciation of $3.0 million. The increase in accounts receivable was primarily due to higher shipments toward the end of the fiscal quarter, and
an increase in sales from the fourth quarter of 2005. The increase in inventories is primarily due to the increase in system sales in 2006.

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 six months ended July 1, 2007 was $9.4 million,
due to proceeds of $36.1 million from sales and maturities of available-for-sale investments and proceeds of $0.5 million from sales of property
and equipment, partially offset by purchases of available-for-sale investments of $24.0 million and capital spending of $3.2 million.

Net cash used in investing activities during the six months ended July 2, 2006 was $28.5 million, primarily due
to purchases of $33.5 million of available-for-sale investments and capital spending of $2.8 million, partially offset by proceeds of $7.8 million
from sales and maturities of available-for-sale investments.

Cash Flows from Financing Activities

Net cash used in financing activities during the six months ended July 1, 2007 was $8.6 million, attributable
to purchases of treasury stock of $10.0 million, which was partially offset by net proceeds of $1.4 million from stock plans.

Net cash provided by financing activities during the six months ended July 2, 2006 was $2.8 million,
attributable to net proceeds of $2.8 million from stock options exercised.

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Off-Balance-Sheet Arrangements

As of July 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 12 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 have 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.

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The portfolio includes only marketable securities with active
secondary or resale markets to ensure portfolio liquidity.

Our interest rate risk relates primarily to our investment portfolio, which consisted of $117.7 million in cash
equivalents and $35.6 million in short-term marketable securities as of July 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, for the three and six months ended July 1, 2007, we recorded a net gain of $0.3 million and $0.2 million, respectively, in
other income (expense), net. We did not have any hedging activities for the three and six months ended July 2, 2006. There were no forward
foreign exchange contracts outstanding as of July 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 second 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

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 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Repurchases of Equity Securities

On April 25, 2007, we announced that our Board of Directors had approved a stock repurchase plan that authorized the
repurchase of up to $20.0 million of our outstanding shares of common stock through open-market purchases or private transactions
pursuant to a plan in conformity with Rule 10(b)5-1. The size and timing of the repurchases will depend on Mattson's share price. There is no set
expiration date for this plan. During the three months ended July 1, 2007, we repurchased shares of common stock under the stock repurchase
plan as follows:

|                               |  | Total Number                             |  |              |  |  | Total Number of Shares |  |  |  | Remaining Amount    | 
|------------------------------ |  | ---------------------------------------- |  | ------------ |  |  | ---------------------- |  |  |  | ------------------- | 
|                               |  | of Shares                                |  | Average      |  |  | Purchased as Part of   |  |  |  | Available Under     | 
|                               |  | Repurchased                              |  | Price Paid   |  |  | Publicly Announced     |  |  |  | the Repurchase      | 
|Period                         |  | (1)                                      |  | Per Share    |  |  | Plans or Programs (2)  |  |  |  | Programs            | 
|                               |  | (in thousands, except per share amounts)
|As of April 1, 2007            |  | -                                        |  | $          - |  |  | -                      |  |  |  | $            20,000 | 
|April 2, 2007 - April 30, 2007 |  | -                                        |  | -            |  |  | -                      |  |  |  | 20,000              | 
|May 1, 2007 - May 31, 2007     |  | 120                                      |  | 9.71         |  |  | 120                    |  |  |  | 18,837              | 
|June 1, 2007 - July 1, 2007    |  | 882                                      |  | 10.01        |  |  | 882                    |  |  |  | 10,000              | 
|As of July 1, 2007             |  | 1,002                                    |  | $      9.98  |  |  | 1,002                  |  |  |  | $            10,000 | 

______________________________



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Item 4. Submission of Matters to a Vote of Security Holders

Our Annual Meeting of Stockholders was held on June 4, 2007. Out of 52,613,848 shares of Common
Stock (as of the record date of April 13, 2007) entitled to vote at the meeting, 45,368,442 shares were present in person or by proxy.

At the meeting, our stockholders elected John Bolger and Kenneth Kannappan as Class I directors to hold office for
a three-year term and until their successors are elected and qualified. The nominees received the following votes:

|Nominee           |  | For        |  | Withheld 
|----------------- |  | ---------- |  | ---------
|                  |  |            |  |          
|John Bolger       |  | 42,563,672 |  | 2,804,770
|Kenneth Kannappan |  | 42,728,128 |  | 2,640,314

At the meeting, our stockholders approved a proposal to amend the Company's 2005 Equity Incentive Plan to
increase the number of shares reserved for issuance thereunder by 2,500,000 shares. The proposal received the following votes:

|For        |  | Against   |  | Abstain |  | Broker Non-Vote
|---------- |  | --------- |  | ------- |  | ---------------
|           |  |           |  |         |  |                
|30,778,581 |  | 8,257,819 |  | 40,994  |  | 6,291,048      

At the meeting, our stockholders approved a proposal to ratify the appointment of PricewaterhouseCoopers LLP as
the Company's independent registered public accountants for the year ending December 31, 2007. The proposal received the following
votes:

|For        |  | Against |  | Abstain |  | Broker Non-Vote
|---------- |  | ------- |  | ------- |  | ---------------
|           |  |         |  |         |  |                
|45,243,865 |  | 112,537 |  | 12,040  |  | -              

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.                                              
|4.1(3)                                           | Amendment No. 1 to the 2005 Equity Incentive Plan.                                             
|23.1                                             | Consent of Independent Registered Public Accounting Firm.
    PDF                              
|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.
                   (3)  Incorporated by reference from Mattson Technology, Inc. Definitive Proxy Statement on Schedule 14A filed on April 26, 2007.

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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: August 3, 2007

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

Dated: August 3, 2007

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

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