##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 29, 2007
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                    to
 Commission File Number 0-22248
 ULTRATECH, INC.
  DELAWARE
    
    94-3169580(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 3050 Zanker Road, San Jose, California
    
    95134(Address of principal executive offices)
    
    (Zip Code)
 (408) 321-8835
  þ o
  o þ o
 o þ
  Class
    
    Outstanding as of October 26, 2007common stock, $.001 par value
    
    23,366,319




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##### 



ULTRATECH, INC.
 INDEX
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets as of September 29, 2007 and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations for the three and nine months ended
September 29, 2007 and September 30, 2006
    
    
    4Condensed Consolidated Statements of Cash Flows for the nine months ended September 29,
2007 and September 30, 2006
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    21PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3. Defaults Upon Senior Securities
    
    
    30Item 4. Submission of Matters to a Vote of Security Holders
    
    
    30Item 5. Other Information
    
    
    31Item 6. Exhibits
    
    
    32SIGNATURES
    
    
    33EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 ULTRATECH, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 September 29,
    
    
    December 31,(In thousands )
    
    2007
    
    
    2006*ASSETS
    
    (Unaudited)Current assets:Cash and cash equivalents
    
    $
    48,051
    
    
    $
    23,883Short-term investments
    
    
    60,997
    
    
    
    54,207Accounts receivable, net
    
    
    13,243
    
    
    
    18,054Inventories
    
    
    35,674
    
    
    
    40,988Prepaid expenses and other current assets
    
    
    3,163
    
    
    
    2,181Total current assets
    
    
    161,128
    
    
    
    139,313Long-term investments
    
    
    23,374
    
    
    
    48,328Equipment and leasehold improvements, net
    
    
    18,225
    
    
    
    20,326Demonstration inventories
    
    
    4,032
    
    
    
    4,717Other assets
    
    
    2,193
    
    
    
    3,366Total assets
    
    $
    208,952
    
    
    $
    216,050LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Notes payable
    
    $
    6,558
    
    
    $
    6,974Accounts payable
    
    
    7,684
    
    
    
    10,440Deferred product and services income
    
    
    2,609
    
    
    
    2,950Other current liabilities
    
    
    10,488
    
    
    
    13,998Total current liabilities
    
    
    27,339
    
    
    
    34,362Other liabilities
    
    
    7,186
    
    
    
    7,580Stockholders equity
    
    
    174,427
    
    
    
    174,108Total liabilities and stockholders equity
    
    $
    208,952
    
    
    $
    216,050
 
 *
    
    The Balance Sheet as of December 31, 2006 has been derived from the audited financial
statements at that date. See accompanying notes to unaudited condensed consolidated financial statements
 3




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ULTRATECH, INC.
 
 CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,(In thousands, except per share amounts)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales:Products
    
    $
    20,909
    
    
    $
    30,017
    
    
    $
    70,712
    
    
    $
    83,788Services
    
    
    4,279
    
    
    
    3,826
    
    
    
    11,755
    
    
    
    10,942Licenses
    
    
    
    
    
    
    100
    
    
    
    100
    
    
    
    200Total net sales
    
    
    25,188
    
    
    
    33,943
    
    
    
    82,567
    
    
    
    94,930Cost of sales:Cost of products sold
    
    
    12,363
    
    
    
    18,713
    
    
    
    41,236
    
    
    
    49,650Cost of services
    
    
    2,464
    
    
    
    2,780
    
    
    
    6,994
    
    
    
    7,362Total cost of sales
    
    
    14,827
    
    
    
    21,493
    
    
    
    48,230
    
    
    
    57,012Gross profit
    
    
    10,361
    
    
    
    12,450
    
    
    
    34,337
    
    
    
    37,918Operating expenses:Research, development, and engineering
    
    
    5,981
    
    
    
    7,146
    
    
    
    17,781
    
    
    
    19,649Selling, general, and administrative
    
    
    7,026
    
    
    
    8,872
    
    
    
    23,889
    
    
    
    24,514Operating loss
    
    
    (2,646
    )
    
    
    (3,568
    )
    
    
    (7,333
    )
    
    
    (6,245
    )Interest expense
    
    
    (123
    )
    
    
    (95
    )
    
    
    (594
    )
    
    
    (139
    )Interest and other income, net
    
    
    1,696
    
    
    
    1,545
    
    
    
    4,811
    
    
    
    4,774Loss before income tax
    
    
    (1,073
    )
    
    
    (2,118
    )
    
    
    (3,116
    )
    
    
    (1,610
    )Provision (benefit) for income taxes
    
    
    (189
    )
    
    
    450
    
    
    
    (7
    )
    
    
    552Net loss
    
    $
    (884
    )
    
    $
    (2,568
    )
    
    $
    (3,109
    )
    
    $
    (2,162
    )Net loss per share  basic and diluted
    
    $
    (0.04
    )
    
    $
    (0.11
    )
    
    $
    (0.13
    )
    
    $
    (0.09
    )Number of shares used in per share computations  basic and
diluted
    
    
    23,394
    
    
    
    23,477
    
    
    
    23,344
    
    
    
    23,747
 See accompanying notes to unaudited condensed consolidated financial statements
 4




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ULTRATECH, INC.
 
 CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months EndedSeptember 29,
    
    
    September 30,(In thousands)
    
    2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (3,109
    )
    
    $
    (2,162
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation
    
    
    4,778
    
    
    
    4,498Amortization
    
    
    811
    
    
    
    892Accretion of asset retirement obligations
    
    
    112
    
    
    
    146(Gain) loss on disposal of equipment
    
    
    4
    
    
    
    (5
    )Stock-based compensation
    
    
    1,097
    
    
    
    1,431Deferred income taxes
    
    
    
    
    
    
    172Charge for uncollectible receivable
    
    
    222
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    4,811
    
    
    
    2,233Inventories
    
    
    3,958
    
    
    
    (9,826
    )Prepaid expenses and other current assets
    
    
    211
    
    
    
    (961
    )Demonstration inventory
    
    
    
    
    
    
    (208
    )Other assets
    
    
    1,006
    
    
    
    (162
    )Accounts payable
    
    
    (2,756
    )
    
    
    2,753Deferred product and services income
    
    
    (341
    )
    
    
    2,963Other current liabilities
    
    
    (3,316
    )
    
    
    1,394Other liabilities
    
    
    (1,236
    )
    
    
    (678
    )Net cash provided by operating activities
    
    
    6,252
    
    
    
    2,480Cash flows from investing activities:Capital expenditures
    
    
    (860
    )
    
    
    (2,538
    )Proceeds from sale of fixed assets
    
    
    
    
    
    
    79Purchase of investments
    
    
    (26,951
    )
    
    
    (33,355
    )Proceeds from sales and maturities of investments
    
    
    44,558
    
    
    
    37,438Net cash provided by investing activities
    
    
    16,747
    
    
    
    1,624Cash flows from financing activities:Proceeds from notes payable
    
    
    21,647
    
    
    
    52,865Repayment of notes payable
    
    
    (22,064
    )
    
    
    (47,314
    )Proceeds from issuance of common stock
    
    
    1,760
    
    
    
    2,639Repurchse of common stock
    
    
    
    
    
    
    (10,766
    )Net cash provided by (used in) financing activities
    
    
    1,343
    
    
    
    (2,576
    )Net effect of exchange rate changes on cash and cash equivalents
    
    
    (174
    )
    
    
    (100
    )Net increase in cash and cash equivalents
    
    
    24,168
    
    
    
    1,428Cash and cash equivalents at beginning of period
    
    
    23,883
    
    
    
    36,344Cash and cash equivalents at end of period
    
    $
    48,051
    
    
    $
    37,772Supplemental disclosures of cash flow information:Other non-cash activities:Systems transferred from inventory to equipment and other assets
    
    $
    1,356
    
    
    $
    797Capital lease of phone system
    
    $
    562
    
    
    $
    
 See accompanying notes to unaudited condensed consolidated financial statements
 5




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##### Table of Contents



Ultratech, Inc.
 
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 September 29, 2007
 (1) Description of Business
    (2) Basis of Presentation
    USE OF ESTIMATES
 IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS Fair
Value Measurements ,
 6




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The Fair Value Option for Financial Assets and
Financial LiabilitiesIncluding an amendment of FASB Statement No.
 (3) Stock-Based Compensation
 Share-Based Payment
 Three Months Ended
    
    
    Nine Months EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,(In thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Cost of Sales
    
    $
    26
    
    
    $
    40
    
    
    $
    109
    
    
    $
    109Research, development, and engineering
    
    
    61
    
    
    
    70
    
    
    
    217
    
    
    
    178Selling, general and administrative expenses
    
    
    248
    
    
    
    361
    
    
    
    770
    
    
    
    1,144Total stock-based compensation expense
    
    
    335
    
    
    
    471
    
    
    
    1,096
    
    
    
    1,431Tax benefit related to stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net effect on net loss
    
    $
    335
    
    
    $
    471
    
    
    $
    1,096
    
    
    $
    1,431Effect on net loss per basic and diluted share
    
    $
    0.01
    
    
    $
    0.02
    
    
    $
    0.05
    
    
    $
    0.06
     7




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Three Months Ended
    
    Nine Months EndedSeptember 29,
    
    September 30,
    
    September 29,
    
    September 30,2007
    
    2006
    
    2007
    
    2006Expected life (in years)
    
    
    *
    
    
    
    4.69
    
    
    
    4.95
    
    
    
    4.75Risk-free interest rate
    
    
    *
    
    
    
    5.06
    %
    
    
    4.78
    %
    
    
    5.02
    %Volatility factor
    
    
    *
    
    
    
    0.56
    
    
    
    0.48
    
    
    
    0.55Dividend yield
    
    
    *
    
    
    
    
    
    
    
    
    
    
    
    
 
 *
    
    Not presented as we did not grant any stock options during the three-month period ended
September 29, 2007. (4) Net Loss Per Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,(In thousands, except per share amounts)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Net loss
    
    $
    (884
    )
    
    $
    (2,568
    )
    
    $
    (3,109
    )
    
    $
    (2,162
    )Denominator:Basic weighted-average shares outstanding
    
    
    23,394
    
    
    
    23,477
    
    
    
    23,344
    
    
    
    23,747Effect of dilutive employee stock options
and restricted stock units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted weighted-average shares outstanding
    
    
    23,394
    
    
    
    23,477
    
    
    
    23,344
    
    
    
    23,747Net loss per share  basic:Net loss
    
    
    ($0.04
    )
    
    
    ($0.11
    )
    
    
    ($0.13
    )
    
    
    ($0.09
    )Net loss per share  diluted:Net loss
    
    
    ($0.04
    )
    
    
    ($0.11
    )
    
    
    ($0.13
    )
    
    
    ($0.09
    )
  (5) Inventories
  September 29,
    
    
    December 31,(In thousands)
    
    2007
    
    
    2006Raw materials
    
    $
    18,462
    
    
    $
    18,067Work-in-process
    
    
    8,689
    
    
    
    9,952Finished products
    
    
    8,523
    
    
    
    12,969$
    35,674
    
    
    $
    40,988
 8




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##### Table of Contents



(6) Notes Payable
  (7) Other Current Liabilities
  September 29,
    
    
    December 31,(In thousands)
    
    2007
    
    
    2006Salaries and benefits
    
    $
    4,034
    
    
    $
    3,632Warranty accrual
    
    
    2,222
    
    
    
    2,264Advance billings
    
    
    190
    
    
    
    2,713Accrued taxes-other
    
    
    1,784
    
    
    
    2,076Reserve for losses on purchase order commitments
    
    
    473
    
    
    
    623Capital lease, current portion
    
    
    99
    
    
    
    Other
    
    
    1,686
    
    
    
    2,690$
    10,488
    
    
    $
    13,998
 Warranty Accrual
  Three Months Ended
    
    
    Nine Months EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,(In thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Balance, beginning of the period
    
    $
    2,218
    
    
    $
    2,198
    
    
    $
    2,264
    
    
    $
    2,397Warranties issued during the period
    
    
    987
    
    
    
    1,535
    
    
    
    2,834
    
    
    
    2,848Settlements made during the period
    
    
    (923
    )
    
    
    (1,529
    )
    
    
    (2,615
    )
    
    
    (3,799
    )Changes in liability for pre-existing warranties
    
    
    (60
    )
    
    
    538
    
    
    
    (261
    )
    
    
    1,296Balance, end of the period
    
    $
    2,222
    
    
    $
    2,742
    
    
    $
    2,222
    
    
    $
    2,742
 Deferred Services Revenue
  9




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,(In thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Balance, beginning of the period
    
    $
    2,694
    
    
    $
    2,709
    
    
    $
    2,444
    
    
    $
    1,970Service contracts sold during the period
    
    
    496
    
    
    
    2,288
    
    
    
    2,891
    
    
    
    8,367Service contract revenue recognized during the period
    
    
    (1,097
    )
    
    
    (2,448
    )
    
    
    (3,242
    )
    
    
    (7,788
    )Balance, end of the period
    
    $
    2,093
    
    
    $
    2,549
    
    
    $
    2,093
    
    
    $
    2,549
 (8) Other Liabilities
  September 29,
    
    
    December 31,(In thousands)
    
    2007
    
    
    2006Deferred rent
    
    $
    2,233
    
    
    $
    2,737Deferred compensation
    
    
    1,252
    
    
    
    2,160Long-term income taxes payable
    
    
    267
    
    
    
    Asset retirement obligation
    
    
    2,093
    
    
    
    1,982Postretirement medical obligation
    
    
    713
    
    
    
    701Long-term capital lease
    
    
    463
    
    
    
    Other
    
    
    165
    
    
    
    $
    7,186
    
    
    $
    7,580
 (9) Accumulated Other Comprehensive Loss
  Three Months Ended
    
    
    Nine Months EndedSeptember 29,
    
    
    September 30,
    
    
    September 29,
    
    
    September 30,(In thousands)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Net loss
    
    $
    (884
    )
    
    $
    (2,568
    )
    
    $
    (3,109
    )
    
    $
    (2,162
    )Other comprehensive income:Unrealized gain (loss) on
available-for-sale
investments
    
    
    678
    
    
    
    898
    
    
    
    690
    
    
    
    269Unrealized gain (loss) on
foreign exchange forward
contracts
    
    
    (40
    )
    
    
    123
    
    
    
    (173
    )
    
    
    (100
    )Change in minimum
postretirement medical
obligation
    
    
    9
    
    
    
    
    
    
    
    28
    
    
    
    Comprehensive income
    
    $
    (237
    )
    
    $
    (1,547
    )
    
    $
    (2,564
    )
    
    $
    (1,993
    )
  September 29,
    
    
    December 31,(In thousands)
    
    2007
    
    
    2006Unrealized gain (loss) on:Available-for-sale investments
    
    $
    (157
    )
    
    $
    (847
    )Foreign exchange forward contracts
    
    
    (41
    )
    
    
    132Change in minimum postretirement medical obligation
    
    
    (172
    )
    
    
    (200
    )Accumulated other comprehensive loss at end of period
    
    $
    (370
    )
    
    $
    (915
    )
 10




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##### Table of Contents



(10) Exit Activities
  Balance at
    
    
    
    
    
    
    
    
    
    
    Balance at
    
    
    
    
    
    
    
    
    
    
    Balance at
    
    
    
    
    
    
    
    
    
    
    Balance atDecember 31,
    
    
    
    
    
    
    
    
    
    
    March 31,
    
    
    
    
    
    
    
    
    
    
    June 30,
    
    
    
    
    
    
    
    
    
    
    September 29,(In thousands)
    
    2006
    
    
    Expenses
    
    
    Payments
    
    
    2007
    
    
    Expenses
    
    
    Payments
    
    
    2007
    
    
    Expenses
    
    
    Payments
    
    
    2007Severance
and benefits (fourth quarter
2006)
    
    $
    918
    
    
    $
    
    
    
    $
    (330
    )
    
    $
    588
    
    
    $
    
    
    
    $
    (173
    )
    
    $
    415
    
    
    $
    
    
    
    $
    (248
    )
    
    $
    167Severance
and benefits (first quarter 2007)
    
    
    
    
    
    
    727
    
    
    
    (480
    )
    
    
    247
    
    
    
    
    
    
    
    (247
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Severance
and benefits (second quarter
2007)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    493
    
    
    
    (179
    )
    
    
    314
    
    
    
    131
    
    
    
    (201
    )
    
    
    244Severance
and benefits (third quarter 2007)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    
    
    
    
    137Total
    
    $
    918
    
    
    $
    727
    
    
    $
    (810
    )
    
    $
    835
    
    
    $
    493
    
    
    $
    (599
    )
    
    $
    729
    
    
    $
    268
    
    
    $
    (449
    )
    
    $
    548
 Accounting for Costs Associated with Exit or Disposal
Activities
  (11) Stock Repurchase Program
  (12) Employee Benefit Plans
 Employee bonus plans
  Employee savings and retirement plans
  11




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##### Table of Contents



Postretirement benefits
  (13) Income Taxes
 Accounting for
Uncertainty in Income Taxes
   (14) Commitments and Contingencies
 Lease Commitments
  (In thousands)For the years:2007 (remaining three months)
    
    $
    222008
    
    
    1302009
    
    
    1302010
    
    
    1302011
    
    
    1302012
    
    
    108Total minimum lease payments
    
    
    650Amount representing interest
    
    
    (88
    )Present value of total minimum lease payments
    
    
    562Current portion
    
    
    (99
    )Capital lease obligation, net of current portion
    
    $
    463
 12




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##### Table of Contents



Legal Proceedings
    
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  13




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OVERVIEW
   RESULTS OF OPERATIONS
   14




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Net Sales
 Third Quarter
 Three Months EndedSeptember 29,
    
    
    September 30,
    
    
    Amount of
    
    
    Percentage(In thousands)
    
    2007
    
    
    2006
    
    
    Change
    
    
    ChangeSales of:Products
    
    $
    20,909
    
    
    $
    30,017
    
    
    $
    (9,108
    )
    
    
    -30
    %Services
    
    
    4,279
    
    
    
    3,826
    
    
    
    453
    
    
    
    12
    %Licenses
    
    
    
    
    
    
    100
    
    
    
    (100
    )
    
    
    -100
    %Total net sales
    
    $
    25,188
    
    
    $
    33,943
    
    
    $
    (8,755
    )
    
    
    -26
    %
        15




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Year-To-Date
 Nine Months EndedSeptember 29,
    
    
    September 30,
    
    
    Amount of
    
    
    Percentage(In thousands)
    
    2007
    
    
    2006
    
    
    Change
    
    
    ChangeSales of:Products
    
    $
    70,712
    
    
    $
    83,788
    
    
    $
    (13,076
    )
    
    
    -16
    %Services
    
    
    11,755
    
    
    
    10,942
    
    
    
    813
    
    
    
    7
    %Licenses
    
    
    100
    
    
    
    200
    
    
    
    (100
    )
    
    
    -50
    %Total net sales
    
    $
    82,567
    
    
    $
    94,930
    
    
    $
    (12,363
    )
    
    
    -13
    %
    Gross Profit
   16




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##### Table of Contents



Operating Expenses
 Third Quarter
 Three Months EndedSeptember 29,
    
    
    September 30,
    
    
    Amount of
    
    
    Percentage(In thousands)
    
    2007
    
    
    2006
    
    
    Change
    
    
    ChangeResearch, development, and
engineering
    
    $
    5,981
    
    
    $
    7,146
    
    
    $
    (1,165
    )
    
    
    -16
    %Selling, general, and administrative
    
    
    7,026
    
    
    
    8,872
    
    
    
    (1,846
    )
    
    
    -21
    %Total operating expenses
    
    $
    13,007
    
    
    $
    16,018
    
    
    $
    (3,011
    )
    
    
    -19
    %
   Year-To-Date
 Nine Months EndedSeptember 29,
    
    
    September 30,
    
    
    Amount of
    
    
    Percentage(In thousands)
    
    2007
    
    
    2006
    
    
    Change
    
    
    ChangeResearch, development, and
engineering
    
    
    17,781
    
    
    
    19,649
    
    
    
    ($1,868.0
    )
    
    
    -10
    %Selling, general, and administrative
    
    
    23,889
    
    
    
    24,514
    
    
    
    (625.0
    )
    
    
    -3
    %Total operating expenses
    
    $
    41,670
    
    
    $
    44,163
    
    
    
    ($2,493
    )
    
    
    -6
    %
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Interest and Other Income, Net
  Provision (Benefit) for Income Taxes
    Accounting for
Uncertainty in Income Taxes
   Outlook
  18




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LIQUIDITY AND CAPITAL RESOURCES
    19




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Foreign Currency
  20




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Information Available on Company Website
 www.ultratech.com
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  Interest Rate Risk
   Foreign Currency Risk Management
   
 Item 4. Controls and Procedures
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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
    
 Item 1A. Risk Factors
 In addition to risks described in the foregoing discussions, the following risks apply to our
business and us
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We currently spend, and expect to continue to spend, significant resources to develop, introduce
and commercialize our laser processing systems and AP wafer stepper products, and we may not be
successful in achieving or increasing sales of these products.
   Our sales cycle is typically lengthy and involves a significant commitment of capital by our
customers, which has subjected us, and is likely to continue to subject us, to delays in customer
acceptances of our products and other risks, any of which could adversely impact our results of
operations by, among other things, delaying recognition of revenue with respect to those orders and
resulting in increased installation, qualification and similar costs.
  The semiconductor industry historically has been highly cyclical and has experienced periods of
oversupply, which has in turn affected the market for semiconductor equipment such as ours and
which can adversely affect our results of operations during such periods.
  23




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We may not be successful in protecting our intellectual property rights or we could be found to
have infringed the intellectual property rights of others, either of which could weaken our
competitive position and adversely affect our results of operations.
     24




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We operate in a highly competitive industry in which customers are required to invest substantial
resources in each product, which makes it difficult to achieve significant sales to a particular
customer once another vendors equipment has been purchased by that customer.
     25




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We sell our products primarily to a limited number of customers and to customers in a limited
number of industries, which subjects us to increased risks related to the business performance of
our customers, and therefore their need for our products, and the business cycles of the markets
into which we sell.
    We rely on a limited number of outside suppliers and subcontractors to manufacture certain
components and subassemblies, and on single or a limited group of outside suppliers for certain
materials for our products, which could result in a potential inability to obtain an adequate
supply of required components due to the suppliers failure or inability to provide such components
in a timely manner, or at all, and reduced control over pricing and timely delivery of components
and materials, any of which could adversely affect our results of operations.
  26




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Our industry is subject to rapid technological change and product innovation, which could result in
our technologies and products being replaced by those of our competitors, which would adversely
affect our business and results of operations.
    27




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##### Table of Contents



A substantial portion of our sales are outside of the United States, which subjects us to risks
related to customer service, installation, foreign economic and political stability, uncertain
regulatory and tax rules, and foreign exchange rate fluctuations, all of which make it more
difficult to operate our business.
   We are dependent on our key personnel, especially Mr. Zafiropoulo, our Chief Executive Officer, and
our business and results of operations would be adversely affected if we were to lose our key
employees.
  Changes in financial accounting standards or policies in the past have affected, and in the future
may, affect, our reported results of operations.
   28




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##### Table of Contents



Changes in securities laws and listing standards, in particular those that have resulted from the
passage of the Sarbanes-Oxley Act of 2002 and related rules and regulations, have increased our
legal and financial costs, and we expect to continue to spend significant resources to comply with
these requirements.
  Our equity incentive plans, certain provisions of our Certificate of Incorporation and Bylaws, and
Delaware law may discourage third parties from pursuing a change of control transaction with us.
  Our stock price has experienced significant volatility in the past and we expect this to continue
in the future as a result of many factors, some of which could be unrelated to our operating
performance, and such volatility can have a major impact on the number of shares subject to
outstanding stock options and restricted stock units that are included in calculating our earnings
per share.
   29




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##### Table of Contents



Our results of operations and business could be adversely affected by wars and other military
action, as well as terrorist attacks and threats and government responses thereto, especially if
any such actions were directed at us or our facilities or customers.
  If we acquire companies, products, or technologies, we may face risks associated with those
acquisitions.
  Our long-term expenses reduction programs may result in an increase in short-term expenses.
 Accounting for Costs Associated with Exit or Disposal Activities
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  1.
    
    The following persons were elected as members of our Board of Directors to serve for a term
ending upon the Annual Stockholders Meeting indicated beside their respective names and until
their successors are elected and qualified.
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##### Table of Contents



Terms Ending Upon theAnnual StockholdersMeeting
    
    Votes for
    
    Votes withheldDennis R. Raney
    
    
    2009
    
    
    
    20,271,640
    
    
    
    478,520Henri Richard
    
    
    2009
    
    
    
    20,156,936
    
    
    
    593,224Vincent F. Sollitto, Jr.
    
    
    2009
    
    
    
    18,146,543
    
    
    
    2,603,617
 The other directors whose terms of office as a director continued after the Annual
Stockholders Meeting were Arthur W. Zafiropoulo, Joel F. Gemunder, Nicholas Konidaris and
Rick Timmins.2.
    
    A proposal to ratify the appointment of Ernst & Young LLP as our independent registered
public accounting firm for the fiscal year ending December 31, 2007 was approved by the vote
of 20,711,416 shares for; 28,655 shares against; and 10,089 shares abstained.3.
    
    A proposal to amend the automatic option grant program in effect for non-employee members of our
Board of Directors under our 1993 Stock Option/Stock Issuance Plan by substituting a restricted
stock unit award for each stock option grant a non-employee director would otherwise receive under
the terms of the existing automatic stock option grant program. This proposal was approved by the
vote of 10,526,401 shares for; 5,426,458 shares against; and 31,330 shares abstained.4.
    
    A proposal to request the Company to take action to declassify the Board of Directors and
establish annual elections of directors, whereby directors would be elected annually and not by
classes. This proposal was approved by the vote of 11,637,660 shares for; 4,322,522 shares against;
and 24,007 shares abstained.
  
 Item 5. Other Information.
  31




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##### Table of Contents



Item 6. Exhibits.
 3.1(a)
    
    Amended and Restated Certificate of Incorporation of the Registrant, filed October 6, 1993.3.1.1(a)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Company, dated May
17, 1995.3.1.2(a)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Company, dated
June 17, 1998.3.1.3(a)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Company, dated
June 20, 2003.3.2(b)
    
    Bylaws of the Registrant, as amended.10.1(c)
    
    Ultratech, Inc. 1993 Stock Option/Stock Issuance Plan (Amended and Restated as of January 30, 2007).31.1
    
    Certification of Chief Executive Officer required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (a)
    
    Previously filed with our Quarterly Report on Form 10-Q for the quarter ended June 28, 2003
(Commission File No. 0-22248) and incorporated herein by reference.(b)
    
    Previously filed with our Current Report on Form 8-K filed on February 2, 2007 (Commission
File No. 0-22248) and incorporated herein by reference.(c)
    
    Previously filed with our Current Report on Form 8-K filed on July 30, 2007 (Commission File
No. 0-22248) and incorporated herein by reference. 32




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##### Table of Contents



SIGNATURES
  ULTRATECH, INC.
(Registrant)Date: October 29, 2007
    By:
    /s/ BRUCE WRIGHTBruce WrightSenior Vice President, Finance and Chief
Financial
Officer (Duly Authorized Officer and Principal
Financial and Accounting Officer) 33




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EXHIBIT INDEX
 3.1(a)
    
    Amended and Restated Certificate of Incorporation of the Registrant, filed October 6, 1993.3.1.1(a)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Company, dated May
17, 1995.3.1.2(a)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Company, dated
June 17, 1998.3.1.3(a)
    
    Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Company, dated
June 20, 2003.3.2(b)
    
    Bylaws of the Registrant, as amended.10.1(c)
    
    Ultratech, Inc. 1993 Stock Option/Stock Issuance Plan (Amended and Restated as of January 30, 2007).31.1
    
    Certification of Chief Executive Officer required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (a)
    
    Previously filed with our Quarterly Report on Form 10-Q for the quarter ended June 28, 2003
(Commission File No. 0-22248) and incorporated herein by reference.(b)
    
    Previously filed with out Current Report on Form 8-K on February 2, 2007 (Commission File No.
0-22248) and incorporated herein by reference.(c)
    
    Previously filed with our Current Report on Form 8-K filed on July 30, 2007 (Commission File
No. 0-22248) and incorporated herein by reference.