UNITED STATES 
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

|                                                       |                                                                                          
|------------------------------------------------------ | -----------------------------------------------------------------------------------------
|x                                                      | ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|                                                       |                                                                                          
|For the fiscal year ended September 30, 2010          
|                                                       |                                                                                          
|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: 000-21377                     
|                                                      
|ROFIN-SINAR
 TECHNOLOGIES INC.                        
|                                                      
|(Exact name of Registrant as specified in its charter)

|                                         |  |                    
|---------------------------------------- |  | -------------------
|Delaware                                 |  | 38-3306461         
|                                         |  |                    
|(State or other jurisdiction of          |  | (I.R.S. Employer   
|incorporation or organization)           |  | Identification No.)
|                                         |  |                    
|40984 Concept Drive, Plymouth, MI        |  | 48170              
|                                         |  |                    
|(Address of principal executive offices) |  | (Zip Code)         

Registrants
telephone number, including area code: (734) 455-5400

Securities
registered pursuant to Section 12(b) of the Act:

|                                               |  |                                          
|---------------------------------------------- |  | -----------------------------------------
|Title of each class                            |  | Name of each exchange on which registered
|                                               |  |                                          
|                                               |  |                                          
|Common stock, par value $0.01 per Share        |  | The NASDAQ Global Select Market          
|Rights Associated with common stock, par value |  |                                          
|$0.01 per Share                                |  |                                          

Securities
registered pursuant to Section 12(g) of the Act: NONE

Indicate by
check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities

Act. Yes o No x

Indicate by
check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the

Act. Yes o No x

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 such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes x No o

---



Indicate by
check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes o No o

Indicate by
check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment
to this Form 10-K. o

Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting Company. See definition
of accelerated filer, large accelerated filer, and smaller reporting
company in Rule 12b-2 of the Exchange Act.

|                           |  |                      |  |                          |  |                             
|-------------------------- |  | -------------------- |  | ------------------------ |  | ----------------------------
|Large
 accelerated filer o |  | Accelerated
 filer o |  | Non-accelerated
 filer x |  | Smaller
 reporting company o

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act). Yes o No x

The aggregate
market value of the voting and non-voting common equity held by non-affiliates
of the registrant based upon the closing price of the common stock on March 30,
2010 (the last business day of the most recently completed second fiscal
quarter) as reported by the NASDAQ Global Select Market was approximately
$653,218,528. For the purposes hereof, affiliates include all executive
officers and directors of the registrant.

28,397,796
shares of the registrants common stock, par value $0.01 per share, were
outstanding as of November 29, 2010.

Certain
sections of the Companys Proxy Statement to be filed in connection with the
Companys 2011 Annual Meeting of Stockholders to be held in March 2011 are
incorporated by reference herein at Part III, Items 10-14.

2

---



ROFIN-SINAR TECHNOLOGIES INC.

TABLE OF CONTENTS

|          |          |  |                                                                                                                     |      |   
|--------- | -------- |  | ------------------------------------------------------------------------------------------------------------------- | ---- | --
|          |          |  |                                                                                                                     | Page |   
|PART
 I   |          |  |                                                                                                                     |     
|          |          |  |                                                                                                                     |      |   
|          | ITEM 1.  |  | BUSINESS                                                                                                            |      | 4 
|          |          |  |                                                                                                                     |      |   
|          | ITEM 1A. |  | RISK FACTORS                                                                                                        |      | 24
|          |          |  |                                                                                                                     |      |   
|          | ITEM 1B. |  | UNRESOLVED STAFF COMMENTS                                                                                           |      | 30
|          |          |  |                                                                                                                     |      |   
|          | ITEM 2.  |  | PROPERTIES                                                                                                          |      | 31
|          |          |  |                                                                                                                     |      |   
|          | ITEM 3.  |  | LEGAL PROCEEDINGS                                                                                                   |      | 32
|          |          |  |                                                                                                                     |      |   
|          | ITEM 4.  |  | REMOVED AND RESERVED                                                                                                |      | 32
|          |          |  |                                                                                                                     |      |   
|PART
 II  |          |  |                                                                                                                     |     
|          |          |  |                                                                                                                     |      |   
|          | ITEM 5.  |  | MARKET PRICE FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
 MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |      | 33
|          |          |  |                                                                                                                     |      |   
|          | ITEM 6.  |  | SELECTED FINANCIAL DATA                                                                                             |      | 35
|          |          |  |                                                                                                                     |      |   
|          | ITEM 7.  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
 RESULTS OF OPERATIONS                              |      | 36
|          |          |  |                                                                                                                     |      |   
|          | ITEM 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                          |      | 46
|          |          |  |                                                                                                                     |      |   
|          | ITEM 8.  |  | CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                            |      | 46
|          |          |  |                                                                                                                     |      |   
|          | ITEM 9.  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
 FINANCIAL DISCLOSURE                               |      | 46
|          |          |  |                                                                                                                     |      |   
|          | ITEM 9A. |  | CONTROLS AND PROCEDURES                                                                                             |      | 47
|          |          |  |                                                                                                                     |      |   
|          | ITEM 9B. |  | OTHER INFORMATION                                                                                                   |      | 48
|          |          |  |                                                                                                                     |      |   
|PART
 III |          |  |                                                                                                                     |     
|          |          |  |                                                                                                                     |      |   
|          | ITEM 10. |  | DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                           |      | 48
|          |          |  |                                                                                                                     |      |   
|          | ITEM 11. |  | EXECUTIVE COMPENSATION                                                                                              |      | 48
|          |          |  |                                                                                                                     |      |   
|          | ITEM 12. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
 RELATED STOCKHOLDER MATTERS                     |      | 49
|          |          |  |                                                                                                                     |      |   
|          | ITEM 13. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
 INDEPENDENCE                                           |      | 49
|          |          |  |                                                                                                                     |      |   
|          | ITEM 14. |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                              |      | 50
|          |          |  |                                                                                                                     |      |   
|PART
 IV  |          |  |                                                                                                                     |     
|          |          |  |                                                                                                                     |      |   
|          | ITEM 15. |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                          |      | 51

3

---



PART I

Cautionary Note Regarding Forward-Looking
Statements

Certain
statements in this Annual Report on Form 10-K constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995 (the Reform Act). Forward-looking statements include all statements
that do not relate solely to historical or current facts, and can be identified
by the use of words such as may, believe, will, expect, project,
anticipate, estimate, plan or continue. These forward-looking
statements are based on the current plans and expectations of our management
and are subject to a number of uncertainties and risks that could significantly
affect our current plans and expectations, as well as future results of
operations and financial condition.

These factors
include (among others):

| |   |                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | downturns in
 the machine tool, automotive, semiconductor, electronics, and photovoltaic
 industries which may have, in the future, a material adverse effect on sales
 and profitability of the Company;
| |   |                                                                                                                                                                                                          
| |  | the ability
 of the Companys OEM-customers to incorporate its laser products into their
 systems;                                                                                                       
| |   |                                                                                                                                                                                                          
| |  | the impact
 of exchange rate fluctuations, which may be significant because a substantial
 portion of the Companys operations is located overseas;                                                      
| |   |                                                                                                                                                                                                          
| |  | the level of
 competition and the ability of the Company to compete in the markets for its
 products;                                                                                                    
| |   |                                                                                                                                                                                                          
| |  | the
 Companys ability to develop new and enhanced products to meet market demand
 or to adequately utilize its existing technology;                                                                     
| |   |                                                                                                                                                                                                          
| |  | third party
 infringement of the Companys proprietary technology or third party claims
 against the Company for the infringement or misappropriation of their
 proprietary rights;                      
| |   |                                                                                                                                                                                                          
| |  | competing
 technologies that are similar to or that serve the same uses as the Companys
 technology;                                                                                                    
| |   |                                                                                                                                                                                                          
| |  | the scope of
 patent protection that the Company is able to obtain or maintain;                                                                                                                          
| |   |                                                                                                                                                                                                          
| |  | the
 Companys ability to efficiently manage the risks associated with its
 international operations; and                                                                                                
| |   |                                                                                                                                                                                                          
| |  | the other risks
 described under ITEM 1A - Risk Factors.                                                                                                                                               

In making
these forward-looking statements, we claim the protection of the safe-harbor
for forward-looking statements contained in the Reform Act. We do not assume
any obligation to update these forward-looking statements to reflect actual
results, changes in assumptions, or changes in other factors affecting such
forward-looking statements.

|        |         
|------- | --------
|ITEM 1. | BUSINESS

COMPANY OVERVIEW AND HISTORY

Rofin-Sinar Technologies Inc. was
incorporated in 1996 under the laws of the State of Delaware and
is a NASDAQ listed Company. We are a leader in the design, development,
engineering, manufacturing and marketing of laser-based products, primarily
used for cutting, welding and marking a wide range of materials. In this report,
the terms Company, Rofin, RSTI, we, us, and our mean Rofin-Sinar
Technologies Inc., and all entities included in our consolidated financial
statements.

Lasers are a
non-contact technology for material processing, which have several advantages
compared to conventional manufacturing tools that are desirable in industrial
applications. The Companys lasers all deliver a high-quality beam at
guaranteed power outputs and feature compact design, high processing speed,
flexibility, low operating and maintenance costs and easy integration into the
customers production process. As a technological leader in CO2 lasers,
solid-state lasers, fiber lasers, and diode lasers, the Company is able to meet
a broad range of its customers material processing requirements.

4

---



The results of the fiscal year ended September 30, 2010, reflect the
overall improved macro economic climate, especially throughout the Asian
markets. In additition, many of the industries that we serve, recovered faster
than we expected. The
heightened visibility and improved confidence in the markets point to more
optimistic outlook for industrial material processing after the repercussions
of the financial crisis in the last fiscal year.

According to the Industrial Laser Solutions magazines 2010 forecast
for industry data, worldwide laser revenues for industrial applications
(excluding lithography, inspection, measurement, research, medical, etc.) will
reach approximately $1.4 billion for the year. Based on this data, the Company
estimates that it has currently a market share in the relevant industrial laser
sector of approximately 20% (based on sales volume).The Company has sold
more than 52,000 laser sources since 1975 and currently has over 3,000 active
customers (including multinational companies with multiple facilities
purchasing from the Company). During fiscal 2010, 2009, and 2008,
approximately 41%, 40%, and 41%, respectively, of the Companys revenues
related to sales of laser products for macro applications, approximately 10%,
12%, and 10% respectively, related to sales of components, and approximately
49%, 48%, and 49%, respectively, related to sales of laser products for marking
and micro applications.

Through its
global manufacturing, distribution and service network, the Company provides a
comprehensive range of laser sources and laser-based system solutions to the
following principal target markets: the machine tool, automotive,
semiconductor, electronics, and photovoltaic industries. The Company sells
directly to end-users and to original equipment manufacturers (OEMs)
(principally in the machine tool industry) that integrate Rofins laser sources
with other system components. Many of Rofins customers are among the largest
global participants in their respective industries. During fiscal 2010, 2009,
and 2008, 19%, 20%, and 25%, respectively, of the Companys sales were in North
America, 46%, 57%, and 51%, respectively, were in Europe, and 35%, 23%, and
24%, respectively, were in Asia.

Share buyback
programs and stock splits

On November 7,
2007, the Board of Directors approved a 2-for-1 stock split. The stock split
was in the form of a dividend of one share of common stock on each outstanding
share and the distribution date was December 5, 2007, for shareholders of
record as of November 22, 2007. All share and per share amounts disclosed in
the Consolidated Balance Sheet and Statement of Operations and Notes 13, 18,
and 19 to the Consolidated Financial Statements have been adjusted to reflect
the 2-for-1 stock split. The Board also approved a stock buyback plan. The
stock buyback program was completed May 19, 2008. The Company bought back
approximately 2.8 million shares for an amount of $120.0 million.

On May 5, 2010, the Board of
Directors authorized the Company to initiate a share buyback of up to $30.0
million of the Companys common stock over twelve months, subject to market
conditions. The shares may be repurchased from time to time in open market
transactions or privately negotiated transactions at the Companys discretion. As
of September 30, 2010, the Company has bought approximately 0.85 million shares
of common stock, at an average price of $22.79, under the stock buyback program
for a total amount of $19.5 million, with $10.5 million remaining to be spent
on the repurchase of shares.

Acquisitions

On December 2,
2005, the Company purchased an additional 4% of the share capital of
Rofin-Sinar UK Ltd. (RS UK) through Rofin-Sinar Technologies Europe S.L.
(RSTE) under an option agreement. The Company held 80% of the share capital
of RS UK as a result of this purchase. This purchase resulted in goodwill of
$0.5 million. On December 2, 2006, the Company purchased an additional 1% of
the share capital of RS UK through RSTE under this option agreement. This
purchase resulted in goodwill of $0.2 million. Finally, effective December 3,
2007, the Company purchased the remaining 19% of the share capital of RS UK
through RSTE under this option agreement. The Company now holds 100% of the
share capital of RS UK. This purchase resulted in goodwill of $5.6 million.

Effective
October 1, 2005, the Company formed DILAS Diode Laser, Inc. in Tucson, Arizona,
as a wholly-owned subsidiary of the Companys wholly-owned subsidiary,
Rofin-Sinar, Inc.

5

---



On March 23,
2006, the Company acquired 40% of the share capital of H2B Photonics GmbH,
Garbsen (Germany) through its wholly-owned subsidiary Rofin-Baasel Lasertech
GmbH & Co. KG (formerly Carl Baasel Lasertechnik GmbH & Co. KG)
(CBL). H2B Photonics GmbH specializes in the development, manufacturing and
sales of laser-based systems used to cut brittle materials, such as glass, to
produce perfectly cut edges. Effective May 14, 2007, the Company purchased an
additional 45% of the share capital of H2B Photonics GmbH, Garbsen (Germany)
through its wholly-owned subsidiary Rofin-Baasel Lasertech GmbH & Co. KG.
The Company currently holds 85% of the share capital of H2B Photonics GmbH.
This purchase resulted in goodwill of approximately $0.1 million.

Effective May
1, 2006, the Company formed Rofin-Baasel Canada Ltd. in Mississauga (Canada) as
a wholly-owned subsidiary of the Companys wholly-owned subsidiary,
Rofin-Sinar, Inc.

Effective
February 28, 2007, the Company acquired 80% of the common stock of m2k-laser
GmbH, Freiburg (Germany), through its wholly-owned subsidiary Rofin-Sinar Laser
GmbH. m2k-laser GmbH develops and manufactures semiconductor lasers based on
the III-V compounds GaAs and GaSb for use predominantly in the scientific
industry. The same components can also be used for pumping solid-state lasers,
which are used for material processing. Additionally the parties have agreed on
a put/call option exercisable beginning in 2012 for the remaining 20% of the
common stock. Accordingly, the Companys financial statements present m2k-laser
GmbH as if it was 100%-owned. This purchase resulted in goodwill of
approximately $0.6 million.

Effective
March 28, 2007, the Company acquired 100% of the common stock of Corelase Oy,
Tampere (Finland). Corelase Oy has considerable experience in semiconductors,
optics, and fiber technology. Its product lines include fiber-coupled diode
laser systems, continuous-wave and ultra short pulse mode-locked fiber laser
systems, and components such as diode lasers for a wide range of material
processing applications. The terms of the purchase include payment of deferred
purchase price based on Corelase Oy achieving certain financial targets. This
purchase resulted in goodwill of $6.9 million.

Effective
April 05, 2007, the Company acquired 100% of the common stock of ES Technology
Ltd., Oxford (UK), through its wholly-owned subsidiary Rofin-Baasel UK Ltd. ES
Technology Ltd. develops customized laser marking system solutions based on
various laser technologies and distributes a number of optical devices and
components into Northern European territories from several American suppliers
via its subsidiary, Laser Service Ltd, Oxford (UK). This purchase resulted in
goodwill of approximately $0.7 million.

Effective
January 24, 2008, the Company purchased Nufern, one of the worlds largest
independent manufacturers of specialty fibers and fiber laser modules serving a
wide range of industries, as a wholly-owned subsidiary of Rofin-Sinar
Technologies Inc. During fiscal year 2009, the Company settled an earn-out
agreement with the former Nufern owners for an aggregate of $5.0 million and
finalized its valuation of the identified intangible assets related to this
acquisition. As a result, a total adjustment amounting to a net decrease of
$3.7 million was made to the amount of goodwill recorded. This purchase
resulted in final goodwill of $2.9 million.

In fiscal year
2008, the Company formed Dilas Diodelaser China Co., Ltd. in Nanjing (China)
through its 95%-owned subsidiary Dilas Diodenlaser GmbH as a 95%-owned
subsidiary.

In fiscal year
2008, the Company formed Nanjing Eastern Technologies Company Ltd. in Nanjing
(China) as an 80%-owned subsidiary.

Effective July
1, 2008, the Company formed Rofin-Baasel Swiss AG in Biel (Switzerland) as a
wholly- owned subsidiary through its wholly-owned subsidiary Rofin-Sinar
Technologies Europe S.L.

Effective
March 11, 2009, the Company made the final payment for the outstanding
earn-out, and acquired the remaining 10% of the share capital of Optoskand AB
through its wholly-owned subsidiary Rofin-Sinar Laser GmbH under an option
agreement. This purchase resulted in additional goodwill of $0.7 million.

6

---



Effective
April 9, 2009, the Company acquired 80% of the equity of China-based Nanjing
Eastern Laser Company, Ltd. (NELC) through two separate cash transactions.
NELCs product lines are largely comprised of high power, fast-axial flow CO2
lasers, with a power range up to 3 kW as well as NC-based laser processing
equipment. This purchase resulted in goodwill of $4.3 million.

Effective
April 12, 2010, the Company, through its wholly-owned subsidiary Nufern,
purchased the Electro Optics fiber optic gyroscope coil winding business of
Optelecom-NKF, Inc. This purchase resulted in additional goodwill of
approximately $0.4 million.

BUSINESS STRATEGY

The Companys
business strategy is to maximize shareholder value by (i) strengthening its
position as a leading supplier to the global market for macro (cutting and
welding) applications; (ii) capitalizing on its leadership position in marking
applications; (iii) extending its position in micro (fine cutting, fine
welding, perforating and structuring applications); (iv) cross-selling its
various laser products to its existing large customer base; (v) enlarging its
market coverage geographically and by developing new applications, and (vi)
strengthening its product portfolio and customer base through acquisitions.

The Company
believes that the major sources of its future growth will be the following:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Developing
 New Laser Products through Technological Innovation: Product innovation in
 response to evolving customer needs for increased output power, greater
 penetration and higher processing speeds is a key component of the Companys
 strategy. The Company is currently focusing its research and development
 activity on expanding the output power range of its CO2, diffusion
 cooled, wave-guide Slab lasers and enhancing the performance of its line of
 high power, fast-flow CO2 lasers. The Company is also expanding
 its series of end and side pumped, solid-state lasers for marking and micro
 applications. In addition, the Company is actively engaged in the research
 and development of its low- and high-power fiber laser family to further
 expand its solid-state laser range for marking, micro and macro applications.
 In addition, R&D is focused on expanding our component product range,
 especially in the field of passive and active fibers, laser diodes, power
 supplies and fiber delivery systems.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Focusing on
 Cross-Selling to Existing Customers in Target Markets: The Company intends to
 continue to focus its sales and marketing activities on its traditional
 target markets (the machine tool, automotive, semiconductor and electronics
 industries) as well as those markets it has entered more recently (the
 medical device, flexible packaging and photovoltaic industries). The Company
 has targeted and will continue to target these industries because they use
 advanced manufacturing processes that require continuing investments to
 improve production efficiency and because the Company has significant market
 presence in these sectors. To exploit its opportunities by developing new
 applications for existing laser technologies, the Company is further
 exploring the potential for use of its high-power, Q-Switch, diode pumped,
 solid-state laser for edge ablation in the photovoltaic industry or surface
 applications such as cleaning of materials. In addition, building on the
 success of its laser marking of small integrated circuits, the Company
 intends to develop new applications, such as fine welding, cutting and
 drilling for the semiconductor and electronics industry. In the packaging
 industry, the Company is seeking new opportunities for foil perforation based
 on its extensive knowledge of paper perforation with lasers. In the
 photovoltaic industry the Company intends to further exploit structuring
 applications for its macro and micro laser products such as scribing of thin
 film solar cells.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Capitalizing
 on Global Presence to Attract New Customers: The Company intends to
 capitalize on its customer base and the presence of its manufacturing, sales
 and service operations in the three principal geographic markets in which its
 customers operate (North America, Europe and the Asia/Pacific region) to
 increase market share in its existing industrial and geographic markets. The
 Company believes its global manufacturing, distribution and service network
 allows it to be more responsive to customers needs and positions it to
 expand into additional promising markets which offer high long-term potential
 for growth.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Offering
 Customized Solutions based on Standard Platforms: While the Company offers a
 wide range of laser applications and develops customized solutions for its
 customers, these applications and solutions are built on a focused number of product
 families comprised of standardized laser sources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

7

---



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | For example,
 for its OEM-customers in the machine tool industry, the Company provides
 customized power supply packaging services. For its marking customers, the
 Company combines its standard laser marker with customized parts handling and
 software. For its micro applications customers, the Company delivers its
 standard laser sources in different customized packages. The Company believes
 that this product strategy has contributed to increases in product sales and
 intends to continue offering focused customization services and pursuing its
 initiatives to standardize its core products so as to lower its production
 costs and continue to improve its profitability.                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Acquiring
 Complementary Business Operations or Products: Since 1997 the Company has
 successfully completed and integrated fourteeen acquisitions, including its
 acquisitions of Dilas (1997), assets of Palomar Technologies UK Ltd. (1998),
 Rasant-Alcotec Beschichtungstechnik GmbH (1999), Baasel Lasertech (2000),
 Z-Laser S.A. (2001), Optoskand AB (2004), PRC Laser Corporation and Lee
 Laser, Inc. (2004), H2B Photonics GmbH (2006 and 2007), ES Technologies Ltd.
 (2007), Corelase Oy (2007), m2k-laser GmbH (2007), Nufern (2008), NELC (2009)
 and the coil winding business from Optelecom-NKF, Inc. (2010). Management
 believes that, collectively, these acquisitions have advanced the Companys
 worldwide expansion, consolidated the Companys position in the industrial
 laser material processing market and contributed to the Companys financial
 performance during the last several years. The Company will continue to seek
 opportunities to make value-based acquisitions that complement its business
 operations, broaden its product offerings or provide access to new
 geographical markets.

THE INDUSTRIAL LASER MARKET FOR MATERIAL
PROCESSING

Over the past
35 years, lasers have revolutionized industrial manufacturing and have been
used increasingly to provide reliable, flexible, non-contact, compact and high-speed
alternatives to conventional technologies for processing various kinds of metal
and non-metal materials in a broad range of advanced manufacturing
applications. The industrial laser market is generally considered to be made up
of laser sources sold for industrial applications including material
processing, medical therapeutic, instrumentation, research, telecommunications,
optical storage, entertainment, image recording, inspection, measurement and
control, bar-code scanning, and other end-uses.

LASER TECHNOLOGY

The term
laser is an acronym for Light Amplification by Stimulated Emission of
Radiation. Lasers were first developed in the early 1960s in the United
States. A laser consists of an active lasing medium that gives off its own
light (radiation) when excited, an optical resonator with a
partially-reflective output mirror at one end, a fully-reflective rear mirror
at the other that permits the light to bounce back and forth between the
mirrors through the lasing medium, and an external energy source used to excite
the lasing medium. A laser works by causing the energy source to excite (pump)
the lasing medium, which converts the energy from the source into an emission
consisting of particles of light (photons). These photons stimulate the release
of more photons, as they are reflected between the two mirrors, which form the
resonator. The resulting build-up in the number of photons is emitted in the
form of a laser beam through an output port or window. By changing the energy
and the lasing medium, different wavelengths and types of laser light can be
produced. The laser produces light from the lasing medium to achieve the
desired intensity, uniformity and wavelength through a series of reflective
mirrors. The heat generated by the excitation of the lasing medium is
dissipated through a cooling mechanism, which varies according to the type of
laser technology.

Lasers are
used for material processing because of the excellent focusability of laser
beams. When focused through lenses and mirrors, the energy density in the focus
spot is so high that metals and other materials can be melted and vaporized.
The principal factors that distinguish different types of lasers and determine
the particular laser suitable for a specific application are pulse duration,
wavelength, output power, spatial coherence and cost per watt of laser power.

The principal
types of laser technologies currently used for material processing are CO2
lasers, solid-state lasers, including fiber lasers, and diode lasers.

8

---



CO2
lasers, which use CO2 gas as the lasing medium, are divided into
high-power (above 500 watts) and low-power (below 500 watts) applications.
There are two methods for CO2 excitation, radio frequency (RF or
HF) and direct current (DC) excitation. Most high-power CO2
lasers are based on gas flow, in which a continuous supply of fresh laser gas
flows through the laser cavity to create the energy necessary for excitation.
Due to their ability to generate comparatively high levels of continuous-wave
(CW) power, CO2 lasers are a particularly attractive laser medium
for material processing applications. Material processing applications for CO2
laser sources vary according to the power output and configuration of the laser
system. The primary applications for high-power CO2 lasers are
cutting and welding of metal. Low-power CO2 lasers are used
principally for marking, cutting and engraving of non-metal materials. While
both low- and high-power CO2 lasers are used for cutting, the
materials they are used to process and their physical size can vary
significantly.

Solid-state lasers use flash lamps or laser
diodes as source of excitation and are referred to as flash-lamp- pumped or
diode-pumped lasers. The lasing medium is a solid-state crystal, generally in
the form of a rod or a disc. Widely used crystal rod material is either
Neodymium Yttrium Aluminium Garnet (Nd:YAG) or Neodymium Vanadate (Nd:YVO4).
The rod is positioned in a cavity, which is either a gold or ceramic reflector,
and pumped using flash lamps or laser diodes from the side, or alternatively
the rod is pumped from its ends with laser diodes. Typical output powers vary
from 3 to 1,000 watts from a single rod and output powers in the multiple
kilowatt range can be achieved by combining several cavities within a
resonator. In the disc design the lasing medium is a thin crystal (typically
Ytterbium:YAG) disc, which is excited by laser diodes in an optical multi-pass
configuration. By using multiple thin disc laser heads within one resonator,
several kilowatts of power can be generated.

Fiber lasers
have their origin in low-power information and communication applications and
since 2003 have undergone a rapid development towards higher output powers,
which makes this technology also interesting for higher-power material
processing applications. The lasing medium, typically Ytterbium, is contained
in a waveguide (the fiber itself) and surrounded by a cladding which guides the
pump light to the lasing medium. With in-fiber components like fiber bragg gratings
(mirrors), tapered fiber bundles (pump light couplers), power combiners and
delivery fibers, from the generation of the light to the delivery of the light
to the work piece, can be realized in an all-in-fiber technology. Today, a
kilowatt of laser power can be generated from a single fiber not bigger in
diameter than a human hair. Higher power can be generated by bundeling multiple
fibers.

Diode lasers
or laser diodes are based on special semiconductor structures on a Gallium
Arsenide (GaAs) die to generate laser light. A typical 10 mm long laser diode
bar contains approximately 25 single laser emitters. When mounted on a
specially designed, highly-efficient heat sink, a laser diode bar is able to
produce up to 100 watts of laser output power. A single high-power laser diode
module consists of: (1) a semiconductor laser diode bar; (2) a
high-efficient heat sink, on which the laser bar is mounted; and optional (3) a
micro-lens system, which is mounted in front of the laser bar to collimate or
focus the light. Optical output power can be increased by combining the
beamlets of several laser diode modules on top of each other. Through optical
combination of such modules, output powers in the kilowatt range can be
achieved. Diode lasers typically have larger spot diameters when focused, and
are typically used for surface treatment, micro-hardening, soldering, and
plastic welding.

THE COMPANYS LASER PRODUCTS

The Company
distinguishes itself from the majority of its competitors who specialize in
only one or two of the three principal laser technologies for material
processing by offering its customers CO2, solid-state, including
fiber lasers, and diode laser sources and solutions in a variety of
configurations and options. As a technological leader in CO2,
solid-state, fiber and diode lasers, the Company is able to meet a broad range
of its customers cutting, welding, and marking requirements. The Companys
lasers all deliver a high-quality beam at guaranteed power outputs and feature
compact design, high processing speed, flexibility, low operating and
maintenance costs, and easy integration into the customers production process.
The Companys engineers and other technical experts work directly with the
customer in the Companys applications centers to develop and customize the
optimal solution for the customers manufacturing requirements.

9

---



The Company
currently offers a comprehensive range of laser products and related services
for three principal material processing applications:

|                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                                                                  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                          |  | cutting, welding,
 and surface treatment (macro applications);                                                                                                                                   
|                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                          |  | marking; and                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                          |  | fine
 cutting, fine welding, micro drilling, and micro structuring (micro
 applications).                                                                                                        
|                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                                                                  
|Besides
 offering laser systems for some specialized niche applications, the Company
 works directly with its customers to develop and customize optimal solutions
 for their unique manufacturing requirements. In developing its laser-based
 solutions, the Company offers customers its expertise in:
|                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                          |  | product
 development and manufacturing services based on 35 years of laser technology
 experience and applications know-how;                                                                     
|                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                          |  | application
 and process development, which means developing new laser-based applications
 for manufacturing customers and assisting them in integrating lasers into
 their production processes;
|                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                          |  | system
 engineering, which means advising customers on machine design, including
 tooling, automation and controls for customers in need of turn-key
 solutions; and                           
|                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                          |  | extensive
 after-sales support of its laser products, including technical support, field
 service, maintenance and training programs, and rapid spare parts delivery.                            

The following
table sets forth the Companys net sales of laser products used for macro
applications, laser products used for marking and micro applications, and
components in fiscal 2010, 2009, and 2008:

|                                  |  |                |         |      |   |         |  |   |         | 
|--------------------------------- |  | -------------- | ------- | ---- | - | ------- |  | - | ------- | 
|                                  |  | September 30,  |        
|                                  |  |                |        
|Product Category*                 |  | 2010           |         | 2009 |   | 2008    | 
|                                  |  |                |         |      |   |         | 
|                                  |  | (in thousands) |        
|                                  |  |                |         |      |   |         |  |   |         | 
|Laser macro
 products             |  | $              | 172,877 |      | $ | 140,362 |  | $ | 238,518 | 
|Laser marking
 and micro products |  |                | 206,535 |      |   | 168,131 |  |   | 279,123 | 
|Components                        |  |                | 44,158  |      |   | 41,086  |  |   | 57,637  | 
|                                  |  |                |         |      |   |         |  |   |         | 
|                                  |  | $              | 423,570 |      | $ | 349,579 |  | $ | 575,278 | 
|                                  |  |                |         |      |   |         |  |   |         | 

|  |                                                                                                                                     | 
|- | ----------------------------------------------------------------------------------------------------------------------------------- | 
|  |                                                                                                                                    
|* | For each
 laser product category, net sales include sales of service (including
 training, maintenance and repair) and spare parts.

The laser
sources sold by the Company consist of a laser head (containing the lasing
medium, resonator, source of excitation, resonator mirrors and cooling
mechanism), power supply, and microcontroller (for control and monitoring).
Selected laser systems provided by our Company are equipped with the uniform
operating concept ROFIN Control Unit (RCU). RCU is a real-time laser and
handling control device, which allows control of any laser mode. The user
interface allows full access from a terminal (for instance a touch screen) that
is located directly on the machines, or via a preceding PC with an Ethernet
connection. The standardized ROFIN Control Network allows the extended
diagnosis of all laser components via the Intranet, the Internet, or WLAN. With
the open PLC programming system customers can individually adapt the process
sequence.

For a more
detailed discussion of the components of a laser source, see Laser
Technology. Products are offered in different configurations and utilize
different design principles according to the desired application.

10

---



The following
table sets forth the Companys product categories by principal markets and
principal applications:

|                        |  |                                                                                   |  |                                                                                              
|----------------------- |  | --------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------
|PRODUCT CATEGORY        |  | PRINCIPAL MARKETS                                                                 |  | PRINCIPAL APPLICATIONS                                                                       
|                        |  |                                                                                   |  |                                                                                              
|                        |  |                                                                                   |  |                                                                                              
|Laser macro
 products   |  | Machine tool                                                                      |  | Cutting and
 welding of metals                                                               
|                        |  |                                                                                   |  |                                                                                              
|                        |  | Automotive                                                                        |  | Cutting and
 welding of metals                                                               
|                        |  |                                                                                   |  |                                                                                              
|Laser
 marking products |  | Semiconductor
 and electronics                                                    |  | Marking of
 integrated circuits, wafers, solar cells, electronic components, and smart
 cards
|                        |  |                                                                                   |  |                                                                                              
|                        |  | Automotive                                                                        |  | Marking of
 labels and car components                                                        
|                        |  |                                                                                   |  |                                                                                              
|Laser micro
 products   |  | Medical
 devices, semiconductor and electronics, photovoltaic, dental and jewelry |  | Spot
 welding, fine cutting, micro structuring and drilling                                  
|                        |  |                                                                                   |  |                                                                                              
|                        |  | Packaging
 and paper industry                                                     |  | Perforating
 of cigarette tip paper and plastic foils                                        
|                        |  |                                                                                   |  |                                                                                              
|Components              |  | Laser
 industry                                                                   |  |                                                                                              

LASER MACRO PRODUCTS

The Companys
business strategy for its macro laser business is to grow its revenues by:

| |   |                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increasing
 its market share in its existing CO2 laser market through
 increased sales of its low and high power, diffusion cooled, wave-guide Slab
 lasers and fast-axial flow CO2 lasers;                          
| |   |                                                                                                                                                                                                                      
| |  | developing
 fiber lasers with higher output powers to achieve higher cutting speeds and
 deeper welding depths in order to broaden its addressable markets;                                                          
| |   |                                                                                                                                                                                                                      
| |  | further
 developing the Remote Welding, Tube Welding, Profile Welding, and Scanner
 Welding System concepts;                                                                                                         
| |   |                                                                                                                                                                                                                      
| |  | continuing
 research and product engineering for its solid-state and fiber laser series
 to further penetrate the market and to further increase the output power or
 vary the wavelengths for specific applications.

The Companys
family of CO2 laser products for macro applications, and their
principal markets and applications, are discussed below.

|               |  |                 |  |                      |  |                                       |  |                        
|-------------- |  | --------------- |  | -------------------- |  | ------------------------------------- |  | -----------------------
|LASER SERIES   |  | POWER RANGE     |  | MODE OF 
 EXCITATION |  | PRINCIPAL 
 MARKETS                   |  | PRINCIPAL
 APPLICATIONS
|               |  |                 |  |                      |  |                                       |  |                        
|DC Slab Series |  | 1.0 kW - 8.0 kW |  | High frequency       |  | Machine tool 
 Automotive             |  | Cutting and welding    
|SC Series      |  | 100 W - 600 W   |  | High frequency       |  | Machine tool 
 Automotive 
 Packaging |  | Cutting and structuring
|XL Series      |  | 1.0 kW - 1.5 kW |  | Direct current       |  | Machine tool                          |  | Cutting and welding    
|STS Series     |  | 2.0 kW - 5.0 kW |  | Direct current       |  | Machine tool                          |  | Cutting and welding    
|FH Series      |  | 6.0 kW - 8.0 kW |  | Direct current       |  | Machine tool                          |  | Cutting and welding    
|SM Series      |  | 1.0 kW - 3.0 kW |  | Direct current       |  | Machine tool                          |  | Cutting and welding    

11

---



The Company
believes that it is the only laser manufacturer of diffusion cooled, Slab-based
lasers in the high-power range. In the DC Slab Series laser design, a
radio-frequency excited gas discharge occurs between two water-cooled
electrodes that have a large surface area that permits maximum heat dissipation.
Principal markets for the Slab Series lasers are the machine tool and
automotive industries.

The Companys
XL, STS, FH, and SM Series fast-axial flow CO2 lasers are used for
both cutting and welding applications and are marketed under the PRC and NELC
brand. In the fast-axial flow principle, the gas discharge occurs in a tube in
the same direction as the resonator, through which the laser gas mixture flows
at a high speed. XL, STS, FH, and SM Series products are used primarily by the
machine tool industry.

The Companys
SC Series diffusion cooled, wave-guide CO2 lasers are developed and
produced by Rofin-Sinar UK Ltd. The SC Series are sealed-off lasers, which are
also based on the Slab laser principle used for the DC Slab Series. These
lasers are used mainly for cutting and structuring applications. Principal
markets are the machine tool, automotive, and packaging industries.

The Companys
family of solid-state and fiber laser products for macro applications, and
their principal markets, are discussed below.

|             |  |                 |  |                      |  |                                                    |  |                        
|------------ |  | --------------- |  | -------------------- |  | -------------------------------------------------- |  | -----------------------
|LASER SERIES |  | POWER RANGE     |  | MODE OF 
 EXCITATION |  | PRINCIPAL 
 MARKETS                                |  | PRINCIPAL
 APPLICATIONS
|             |  |                 |  |                      |  |                                                    |  |                        
|DS Series    |  | 1.0 kW - 3.0 kW |  | Laser diodes         |  | Automotive                                         |  | Cutting and welding    
|             |  |                 |  |                      |  |                                                    |  |                        
|DQ Series    |  | 500 W - 1.0 W   |  | Laser diodes         |  | Automotive, 
 Consumer 
 electronics, Photovoltaic |  | Surface treatment      
|             |  |                 |  |                      |  |                                                    |  |                        
|FL Series    |  | 500 W - 2.0 kW  |  | Laser diodes         |  | Automotive 
 Machine tool                          |  | Cutting and welding    

Rofins DS
Series of continuous wave, solid-state lasers are designed exclusively for use
with flexible fiber-optic beam delivery systems, making them particularly
well-suited for integration into complex production systems for cutting and
welding applications. The key competitive advantages of the DS Series lasers
are the fact that they are diode-pumped and that they are designed to allow
multiple power output configurations. These configurations include
continuous-wave, pulsed and power ramping modes, which allow Rofin to address a
wide range of customer applications. In addition, several features of the DS
Series laser are designed for easy maintenance, such as the simple modular
resonator design, easily accessed power supply and PC-based controller equipped
with a modem, which allows communication with a remote service center. The
diode pumping technology is characterized by high beam quality and high
efficiency. These lasers are used principally in the automotive industry.

The Companys
DQ Series of Q switched, solid-state lasers are designed for applications such
as removal, cleaning, and insulation of various materials in the automotive,
consumer electronics, and photovoltaic markets. To meet the different demands
of these target markets, DQ Series lasers offer a couple of set up options
which differ in power, pulse energy, and number of laser sources per unit.

The Companys FL Series of
high-brightness single or multi-mode fiber lasers use special fiber optics as
the active medium. These fiber lasers are suitable for classic cutting and
welding applications as well as for new applications such as remote cutting. In
contrast to common laser concepts in which the created laser beam switches
repeatedly between air and the active medium, this laser beam does not leave
the fiber optic before entering the working process optic or the beam switch
with subsequent launching into the working process. Due to this all-in-fiber
technology the risk of contamination can be eliminated. Beam switches and
energy splitters are available options allowing up to four work cells to be
operated with only one laser.

12

---



The Companys
family of diode laser products for welding, soldering and surface treatment
applications, and their principal markets, are discussed below.

|             |  |               |  |                      |  |                                                                         |  |                                                                                                   
|------------ |  | ------------- |  | -------------------- |  | ----------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------
|LASER SERIES |  | POWER RANGE   |  | MODE OF 
 EXCITATION |  | PRINCIPAL 
 MARKETS                                                     |  | PRINCIPALAPPLICATIONS                                                                             
|             |  |               |  |                      |  |                                                                         |  |                                                                                                   
|Diode Lasers |  | 10 W - 3.6 kW |  | Direct current       |  | Electronics 
 Machine tool 
 Medical device 
 Automotive 
 Photovoltaic |  | Soldering 
 Surface treatment 
 Plastic welding 
 Plastic welding 
 Soldering, surface 
 treatment

The Companys
diode lasers are designed to meet the requirements of a wide range of welding,
soldering, and surface treatment applications. The Companys high-power laser
diodes can be stacked into arrays achieving output powers in the multiple
kilowatt range. In addition to their use in the automotive, machine tool, and
electronics markets, these lasers are also sold into the medical device and
research markets.

LASER
MARKING PRODUCTS

The Company
entered the laser-marking business in 1989 when it acquired Laser Optronic GmbH
from Coherent General, Inc. and designed and introduced the PowerLine laser
marker. Since then the Company has developed a broad line of market leading
laser markers that deliver optimal results in terms of quality and speed on a
wide range of materials. Based on its vast experience, Rofin offers
standardized and customized laser marking systems in different power ranges and
wavelengths for use in various industrial segments. Strength and experience in
research and development, application and software ensure innovative,
standardized and tailored solutions which meet most exigent customer demands.
The Companys laser marking products incorporate high value-added software 
VisualLaserMarker and LaserCAD  that provide the customer full control of the
laser marking process.

|                                                                                                                                        |   |                                                                                                                                                                                                                                       
|--------------------------------------------------------------------------------------------------------------------------------------- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Company
 believes that the following factors have contributed to the growth that it
 has experienced in the laser marking business:
|                                                                                                                                        |   |                                                                                                                                                                                                                                       
|                                                                                                                                        |  | the
 Companys ability to tailor its laser marking solutions to the customers
 requirements;                                                                                                                                         
|                                                                                                                                        |   |                                                                                                                                                                                                                                       
|                                                                                                                                        |  | the
 Companys expertise in solid-state laser beam power, mode structure and
 high-frequency switching capability which provides optimal quality in terms
 of marking contrast and speed on a wide variety of materials;              
|                                                                                                                                        |   |                                                                                                                                                                                                                                       
|                                                                                                                                        |  | the
 Companys proprietary software  VisualLaserMarker and LaserCAD  which
 provides an interface between the laser marking products and the customers
 computers and supports a broad range of network communication software; and
|                                                                                                                                        |   |                                                                                                                                                                                                                                       
|                                                                                                                                        |  | the
 Companys focus on innovation, which is reflected in cutting-edge products
 that satisfy standard as well as complex market requirements.                                                                                        
|                                                                                                                                        |   |                                                                                                                                                                                                                                       
|The
 Companys business strategy for its laser marking business is four-fold:                                                          
|                                                                                                                                        |   |                                                                                                                                                                                                                                       
|                                                                                                                                        |  | to expand
 its position in worldwide laser marking markets with particular focus on the
 semiconductor, electronics, automotive, and smart card industries;                                                                           
|                                                                                                                                        |   |                                                                                                                                                                                                                                       
|                                                                                                                                        |  | to offer a
 balanced product portfolio covering different technologies and wavelengths
 (i.e. CO2, fiber, green, infrared and UV lasers) that addresses high-end and
 general application markets;                                    
|                                                                                                                                        |   |                                                                                                                                                                                                                                       
|                                                                                                                                        |  | to pursue
 application development for existing and new products; and                                                                                                                                                                 
|                                                                                                                                        |   |                                                                                                                                                                                                                                       
|                                                                                                                                        |  | to
 capitalize on its installed base of lasers by cross-selling the Companys
 products to its existing customers.                                                                                                                    

13

---



The Companys
family of laser marking products is as follows:

|                            |  |                                                                            |  |                                                                      |  |                                                                |  |                                                                                                                         
|--------------------------- |  | -------------------------------------------------------------------------- |  | -------------------------------------------------------------------- |  | -------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------
|LASER SERIES                |  | POWER RANGE                                                                |  | MODE OF 
 EXCITATION                                                 |  | PRINCIPAL 
 MARKETS                                            |  | PRINCIPAL
 APPLICATIONS                                                                                                 
|                            |  |                                                                            |  |                                                                      |  |                                                                |  |                                                                                                                         
|PowerLine 
 StarMark Series |  | 2 W  100 W                                                                |  | Laser diodes, Flash 
 lamps or CO2                                   |  | Semiconductor, 
 Electronics, 
 General marking 
 applications |  | Integrated circuit 
 marking, Marking of 
 metals plastics and 
 organic materials, 
 Day and Night 
 design, Smart card
|MultiScan                   |  | 100 W                                                                      |  | High frequency                                                       |  | Packaging                                                      |  | Consumer goods 
 marking                                                                                                
|LabelMarker Series          |  | Stand-alone laser based system                                             |  | Automotive                                                           |  | Label marking                                                 
|                            |  |                                                                            |  |                                                                      |  |                                                                |  |                                                                                                                         
|EasyMark                    |  | Laser workstation                                                          |  | General marking 
 applications, Medical
 components, Tool 
 industry |  | Metal and plastics 
 marking                                  
|                            |  |                                                                            |  |                                                                      |  |                                                                |  |                                                                                                                         
|EasyJewel                   |  | Laser workstation                                                          |  | Jewelry marking                                                      |  | Metal marking                                                 
|                            |  |                                                                            |  |                                                                      |  |                                                                |  |                                                                                                                         
|CombiLine Series            |  | Laser workstation for integration of a wide 
 range of Rofin laser markers |  | General marking 
 applications                                       |  | Metal and plastics 
 marking                                  

PowerLine/StarMark
Series  The Companys standard PowerLine and StarMark laser marking products
consist of a range of lasers with output power from 2 watts to 100 watts with a
galvo-head, a personal computer with state-of-the-art processor and Rofins
proprietary VisualLaserMarker and LaserCAD software. The modular design of the
PowerLine and StarMark markers with 19 components enable the customers to
order the most suitable configuration for their production processes or systems
(e.g. OEM-customers may order the laser head and 19 modules, for easy
integration into the system specified by the end-user). The PowerLine and
StarMark solid-state lasers incorporate either diode modules or a dual or
single lamp ceramic cavity design both of which result in higher output power
(and therefore higher marking speeds), and high beam quality (and therefore
constant and reliable marking quality), and longer service intervals.
New-generation, completely air-cooled solutions ensure further increase in
efficiency in addition to a compact size. PowerLine marking products are also
available with fiber lasers with output power of 20 watts or higher (i.e. with
PowerLine F 20), ensuring higher energy efficiency and therefore reduced
operating costs. The Companys proprietary VisualLaserMarker and LaserCAD
software provide customers with a user-friendly software environment that allows
them to select fonts, import graphics, preview marking and control all laser
parameters and job programs. Special options and accessories include a double
marking head allowing speeds of up to 1,600 characters per second in certain
applications (most notably marking of integrated circuits), as well as
beam-switching and -splitting options for marking of products in multiple
production lines using a single laser. Their main application - among a wide
variety of possible applications - is marking in the semiconductor and
electronics industries.

MultiScan VS 
This vector scanning marker utilizes a 100 watts sealed-off CO2
laser and features the ability to mark components that are moving at high
speeds. The main application is the marking of consumer goods in the packaging
industry.

LabelMarker
Advanced  This stand alone, laser-based system is Rofins state-of-the art
solution when it comes to high demands concerning speed and reliability in the
process of label marking. The LabelMarker Advanced ensures high efficiency and
a short marking time due to an integrated, powerful laser. As a comprehensive
all-in-one solution, the LabelMarker Advanced is compact and comfortable. This
laser system with a class 1 safety rating can be used in any production area
without additional safety requirements.

EasyMark  The
EasyMark is a class 1 safety rated transportable desktop device. The 110 V to
230 V connection and integrated cooling based on thermo-electrical technology
guarantee quick and easy initial operation. The EasyMark offers a
program-controlled z-axis and a rotary axis which can optionally be integrated.
An aluminum T-slot plate facilitates mounting of customer-specific work piece
carriers. Processing of work pieces of different size and shape is thus
possible.

14

---



EasyJewel 
The EasyJewel is a transportable desktop device with a class 1 safety rating
specially developed to mark jewelry. The laser system offers the benefits of
non-contact, abrasion-resistant, permanent marking onto almost any type of
precious material with high speed and precision. Special machine features
include quick and exact loading of regular and special shapes, jogging function
to reach optimum marking position and various software capabilities.

CombiLine
Cube/CombiLine Advanced  These compact laser workstations have been designed
for small and medium-size batches. They integrate a wide range of Rofin laser
markers depending on the customers specific application. Supply units are
incorporated in the housing to provide efficient use of the floor space.
Different versions either with rotary or work table with various axes enable
exact adaptation to the required tasks.

LASER MICRO PRODUCTS

After the
acquisition of Baasel Lasertech in 2000, the Company formed a separate sales
and marketing group focused on micro applications. This group markets and sells
a broad range of laser products, including lamp pumped, pulsed, fiber and other
solid-state lasers for various spot welding and fine cutting applications, CO2
Slab lasers for perforating applications, Q switched, solid-state lasers for
surface structuring and diode lasers for soldering and plastic welding
applications. The Companys business strategy for its micro applications
business is to:

| |   |                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | further
 increase its share of the spot welding market in the jewelry industry and
 develop customers in other industries, such as the consumer electronics
 industry that use a similar product and technology for industrial
 applications;
| |   |                                                                                                                                                                                                                                              
| |  | focus on
 manufacturers of medical instruments and implants within the medical device
 industry using mainly the applications cutting and welding;                                                                                           
| |   |                                                                                                                                                                                                                                              
| |  | increase its
 sales of perforating systems to the packaging industry for applications like
 easy-tear and special perforated foils for food packaging that allow the
 transfer of air and keep moisture in packaged goods;                   
| |   |                                                                                                                                                                                                                                              
| |  | further
 broadening its existing portfolio through expanding the output power range
 and offering different wavelengths (i.e. UV, infrared, green);                                                                                          
| |   |                                                                                                                                                                                                                                              
| |  | increase its
 sales in the photovoltaic market with different applications; and                                                                                                                                                              
| |   |                                                                                                                                                                                                                                              
| |  | develop new
 markets for drilling applications.                                                                                                                                                                                              

15

---



The Companys
family of laser products for micro applications is as follows:

|                  |  |                 |  |                     |  |                    |  |                         | 
|----------------- |  | --------------- |  | ------------------- |  | ------------------ |  | ----------------------- | 
|LASER SERIES      |  | POWER RANGE     |  | MODE OF
 EXCITATION |  | PRINCIPAL
 MARKETS |  | PRINCIPAL
 APPLICATIONS | 
|                  |  |                 |  |                     |  |                    |  |                         | 
|StarWeld Series   |  | 40 W - 100 W    |  | Flash lamp          |  | Jewelry,           |  | Spot and seam           | 
|                  |  |                 |  |                     |  | Mold making,       |  | welding                 | 
|                  |  |                 |  |                     |  | Automotive         |  |                         | 
|StarPulse         |  | 40 W - 500 W    |  | Flash lamp          |  | Medical device,    |  | Spot and seam           | 
|                  |  |                 |  |                     |  | Electronics        |  | welding                 | 
|StarFiber         |  | 100 W  600 W   |  | Diode               |  | Electronics,       |  | Fine cutting            | 
|                  |  |                 |  |                     |  | Medical device     |  | Fine welding            | 
|X-Lase            |  | 1 W  24 W      |  | Diode               |  | Semiconductor,     |  | Micro structuring       | 
|                  |  |                 |  |                     |  | Electronics        |  |                         | 
|                  |  |                 |  |                     |  |                    |  |                         | 
|DS Disc Series    |  | 60 W  100 W    |  | Diode               |  | Electronics        |  | Cutting                 | 
|                  |  |                 |  |                     |  |                    |  | Structuring             | 
|StarCut Series    |  | 12 W  150 W    |  | Flash lamp/Diode    |  | Medical            |  | Fine cutting            | 
|PerfoLas Systems  |  | 1,000  2,000 W |  | Direct current      |  | Paper              |  | Perforating             | 
|StarShape Systems |  | 100  600 W     |  | Direct current      |  | Packaging          |  | Cutting                 | 
|                  |  |                 |  |                     |  |                    |  | Drilling                | 
|                  |  |                 |  |                     |  |                    |  | Structuring             | 
|UW Laser Systems  |  | n.a.            |  | n.a.                |  | Electronics,       |  | Cutting                 | 
|                  |  |                 |  |                     |  | Medical Device,    |  | Welding                 | 
|                  |  |                 |  |                     |  | Automotive,        |  | Structuring             | 
|                  |  |                 |  |                     |  | Semiconductor      |  |                         | 
|Series 800        |  | 4 W  1,000 W   |  | Flash lamp          |  | OEM                |  | Micro/Marking           | 
|Series LDP        |  | 10 W - 800 W    |  | Diode               |  | OEM                |  | Micro/Marking           | 
|Series LEP        |  | 2 W  20 W      |  | Diode               |  | OEM                |  | Micro/Marking           | 
|Series LDPP       |  | 8 W  200 W     |  | Diode               |  | OEM                |  | Fine cutting            | 
|Series LLP        |  | 500 W  1,000 W |  | Flash lamp          |  | OEM                |  | Welding                 | 
|                  |  |                 |  |                     |  |                    |  | Cutting                 | 

StarWeld
Series  Rofins standard StarWeld laser products consist of pulsed solid-state
lasers in the range of 40 watts to 100 watts. Although the StarWeld Series has
a wide variety of possible applications, its main application is the fine
welding of jewelry, electronics, molds and dental parts.

StarPulse
Series  The StarPulse Series consists of pulsed Nd:YAG rod lasers with power
ratings from 40 to 500 watts. StarPulse lasers provide high peak powers and
high pulse-to-pulse stability and are designed for use in fine welding
applications such as laser welding of highly reflective materials in the
medical device and electronics industry.

StarFiber
Series  The robust and compact fiber laser systems of the StarFiber Series
achieve nominal powers of 100 watts up to 600 watts. The lasers can be operated
in either pulse-modulated or continuous wave mode. The StarFiber Series is
designed for a broad range of applications for fine welding and fine cutting,
such as welding of electromechanic components or fine cutting, e.g. in the
production of medical devices.

X-Lase  The
X-Lase Series comprise of picosecond pulse mode-locked fiber laser systems with
a maximal output power of 24 watts. Main markets are in the semiconductor,
electronics, and display industries. In these industries the X-Lase products
can be used for thin film patterning, ablation, and scribing applications.

DS Disc Series
 Rofins Disc laser products use laser diodes as the source of excitation to
pump a thin crystal (disc). The output power is in the range of 60 watts to 100
watts and the main application is structuring or cutting of electronics.

StarCut Series
 Rofins StarCut laser products use pulsed solid-state lasers in the range of
12 watts to 150 watts. Their main application is the fine cutting of medical
devices.

16

---



PerfoLas Systems  The
PerfoLas Systems consist of a high-power CO2 laser and a specially
designed beam delivery and paper handling system that includes a laser beam
splitter (PerfoLas Multiplexer) which allows customers to drill more than
500,000 holes per second into paper or foils. The main application for these
lasers is perforation of cigarette tip paper.

StarShape Systems  Each
StarShape System consists of a CO2 laser in combination with a galvo scanning
head and is used for precise cutting, drilling, and surface structuring.

The UW
(Universal Workstation) Series are modular, standard laser-based systems that
have been designed to meet a variety of applications including welding,
cutting, surface modification and ablation. Depending on the application, the UW Systems can be equipped
with different laser sources (CO2 or solid-state) and modified for specific
handlings.

Series 800 are flash-lamp pumped, solid-state lasers sold to OEM-customers and system
integrators for various micro and marking applications.

Series LDP and
LEP are diode pumped, solid-state lasers sold to OEM-customers and system
integrators for various micro and marking applications.

Series LDPP
are diode pulse-pumped Nd:YAG lasers that are designed specifically to
precision cut thin metals. Main market is the medical devices industry.

Series LLP are
lamp pumped, solid-state lasers designed for welding and cutting applications.

COMPONENT PRODUCTS

Power Supplies  The Company
offers power supplies for pulsed and continuous wave solid-state lasers, CO2 lasers,
diode lasers, as well as RF generators for acousto-optic Q-switches through its
wholly-owned subsidiary PMB Elektronik GmbH.

Fiber and
Optics Technology  Special fiber lasers, fiber coupling products and optical
engines for primary use in fiber lasers are manufactured and marketed by the
Companys Finland-based subsidiary Corelase Oy.

Laser Diodes
and Modules  High-power semiconductor components such as high power,
high-brightness laser diodes and modules are manufactured and marketed by the
Companys subsidiaries Dilas Diodenlaser GmbH, Dilas Diodelaser Inc., Dilas
Diodelaser China, and m2k-laser GmbH.

Fibers and
Fiber Optic Beam Deliveries - Fibers, fiber components, beam splitters or
switches and beam combiners designed for use in industrial lasers or as beam
delivery systems are manufactured and marketed by Optoskand AB.

Active and
Passive Fibers and Amplifiers - Fibers and fiber laser technology components
are developed, manufactured and marketed by Nufern, East Granby.

The Companys
high-technology components are either integrated by other laser manufacturers
into their products or are used for the Companys own product portfolio.

APPLICATIONS DEVELOPMENT

In addition to
manufacturing and selling laser sources for macro applications and marking and
micro applications, Rofin operates application centers in twelve countries
where it develops laser-based solutions for customers seeking alternatives to
conventional manufacturing techniques. Revenues derived from application
development are not a significant component of total revenues. Applications
development is generally a support service to the sales and marketing function
and is performed to customize the laser to the particular needs of the
customer. The Company currently has approximately 40 employees in applications
development.

17

---



MARKETS AND CUSTOMERS

Rofin sells
its laser products and laser-based system solutions to a wide range of
industries. Our principal markets are the machine tool, semiconductor,
electronics, photovoltaic, and automotive industries. The following table sets
forth the allocation of the Companys total laser sales among our principal
markets:

|                            |  |              |     |      |  |      |  |                       |     |  |                                 | 
|--------------------------- |  | ------------ | --- | ---- |  | ---- |  | --------------------- | --- |  | ------------------------------- | 
|                            |  | Fiscal Years |     |     
|                            |  |              |     |     
|Principal
 Market           |  | 2010         |     | 2009 |  | 2008 |  | Primary
 Applications
|                            |  |              |     |      |  |      |  |                      
|Machine Tool                |  |              | 39% |      |  | 34%  |  |                       | 33% |  | Cutting and
 welding           
|                            |  |              |     |      |  |      |  |                       |     |  |                                 | 
|Semiconductor, Electronics, |  |              | 26% |      |  | 24%  |  |                       | 27% |  | Marking of
 integrated         
|and Photovoltaic            |  |              |     |      |  |      |  |                       |     |  | circuits,
 electronic          
|                            |  |              |     |      |  |      |  |                       |     |  | components,
 smart cards,      
|                            |  |              |     |      |  |      |  |                       |     |  | and
 structuring of solar cells
|                            |  |              |     |      |  |      |  |                       |     |  |                                 | 
|                            |  |              |     |      |  |      |  |                       |     |  | Cutting,
 welding and          
|Automotive
 & Sub-Supplier  |  |              | 5%  |      |  | 8%   |  |                       | 11% |  | component
 marking             
|                            |  |              |     |      |  |      |  |                       |     |  |                                 | 
|                            |  |              | 70% |      |  | 66%  |  |                       | 71% |  |                                 | 

The remaining
30%, 34%, and 29%, of total laser sales in fiscal 2010, 2009, and 2008,
respectively, were attributable to customers in a wide variety of other
industries including aerospace, consumer goods, medical device manufacturing,
flexible packaging, job shops, jewelry, universities, and institutes. No one
customer accounted for over 10% of total sales in any of these periods.

SALES, MARKETING AND DISTRIBUTION

Rofin sells
its products in approximately 70 countries to OEMs, systems integrators and
industrial end-users who have in-house engineering resources capable of
integrating Rofins products into their own production systems. Lasers for
cutting applications are marketed and sold principally to OEMs in the machine
tool industry who sell laser cutting machines incorporating Rofins products
without any substantial involvement by Rofin. Lasers for welding applications
are marketed and sold both to systems integrators and to end-users. Laser
marking products are marketed and sold directly to end-users and to OEMs for
integration into their handling systems (mainly for integrated circuit, solar
cell, and smart card marking applications). Laser micro products are marketed
and sold directly to end-users and to OEM-customers (mainly for solar cell and
jewelry applications). In the case of both welding lasers and laser marking
products, the end-user is significantly involved in the selection of the laser
component. In these cases, Rofins application engineers work directly with the
end-user to optimize the applications performance and demonstrate the
advantages of the Companys products.

Rofin has
approximately 140 direct sales engineers operating in 24 countries,
approximately 40 of whom are dedicated to marketing lasers for macro
applications and approximately 100 of whom are dedicated to marketing lasers
for marking and micro applications. Rofin sales engineers work either in a
well-defined geographic territory or are dedicated to specific industries or
applications. In addition, Rofin has 26 independent representatives marketing
the Companys laser products in Australia, Austria, Argentina, Brazil, China,
Denmark, Eastern Europe, Finland, France, Germany, India, Israel, Italy, Korea,
Northern Africa, Norway, the Middle East, the Philippines, Russia, Singapore,
South Africa, Slovenia, Sweden, Switzerland, Thailand, Turkey, and the United
Kingdom. These independent representatives provide Rofin with sales leads and
opportunities, but do not distribute Rofins products. All sales and delivery
of product are conducted by the Company. Eighteen of the independent
representative agreements are on an exclusive basis, with the other eight on a
non-exclusive basis. These agreements provide for a standard percentage of the
net sales price to be paid as commissions to the representatives. The duration
of the agreements is usually one year (with an automatic one-year extension) and
a six-month cancellation clause.

18

---



Rofin directs
its worldwide sales and marketing of lasers for macro applications from its
offices in Hamburg (Germany), and of laser diode components, from Mainz
(Germany), Tucson, Arizona, and Freiburg (Germany). Worldwide sales and
marketing of laser marking products is directed from Rofins offices in
Gunding-Munich (Germany) and, for laser micro products and power supplies, from
Starnberg (Germany). Optical engines for fiber lasers for the worldwide market
are sold and marketed from Tampere (Finland) and East Granby (USA), and fiber
optics and beam delivery systems are sold and marketed from Gothenburg
(Sweden). In Europe, Rofin also maintains sales and service offices in Belgium,
France, Italy, the Netherlands, Spain, Switzerland, and the United Kingdom.

North American
sales of Rofins macro and micro laser products are managed out of the
Companys Plymouth, Michigan, facility and of its marking products are managed
out of its Devens, Massachusetts, facility. The
Company also maintains sales offices in Chandler, Arizona, and Santa Clara,
California, to support the expansion of Rofins laser business in the North
American market and a sales and service office in Mississauga (Canada) to
support the Canadian market.

PRC Laser
directs its worldwide sales and marketing of lasers for macro applications from
its office in Landing, New Jersey, while Lee Laser directs its worldwide sales
and marketing of laser for micro applications from its office in Orlando,
Florida. Both companies sell their products independently under their own
brands.

The Company
maintains sales and service offices in Japan, Singapore, South Korea, Taiwan,
and China, as well as a liaison-office in India to cover the Asia/Pacific
region. Over the next five years, the Company expects demand for industrial
lasers to increase in the Asia/Pacific region. The Company believes that the
geographic markets with the greatest long-term potential in the future are
China and India, principally due to the expansion of domestic machine tool,
automobile, semiconductor, electronic, and photovoltaic production in these
countries.

CUSTOMER SERVICE, REPLACEMENT PARTS AND
COMPONENTS

During fiscal
2010, 2009, and 2008, approximately 40%, 42%, and 35% of the Companys revenues
were generated from sales of after-sales services, replacement parts and
components for laser products. The Company believes that a high level of
customer support is necessary to successfully develop and maintain long-term
relationships with its OEM and end-user customers. This close relationship is
maintained as customers needs change and evolve.

Recognizing
the importance of its existing and growing installed multinational customer
base, the Company has expanded its local service and support platform into new
geographic regions. Rofin has 354 customer service personnel. The Companys
field service and in-house technical support personnel receive ongoing training
with respect to the Companys laser products, maintenance procedures,
laser-operating techniques, and processing technology. Most of the Companys
OEM-customers also provide customer service and support to end-users.

Many of
Rofins laser products are operated 24 hours a day in high speed,
quality-oriented manufacturing operations. Accordingly, the Company provides 24
hour, year-round service support to its customers in the United States,
Germany, and the majority of other countries in which it operates. The Company
plans to continue adopting similar service support elsewhere. In addition, eight-hour
response time is provided to certain key customers. This support includes field
service personnel who reside in close proximity to the Companys installed
base. The Company provides customers with process diagnostic and verification
techniques, as well as specialized training in the operation and maintenance of
its systems. The Company also offers regularly scheduled and intensive training
programs and customized maintenance contracts for its customers.

Of Rofins 354
customer service personnel, approximately 210 employees operate in the field in
about 50 countries. Field service personnel are also involved in the
installation of the Companys systems.

19

---



Rofins
approach to the sale of replacement parts is closely linked to the Companys
strategic focus on rapid customer response. The Company provides
around-the-clock order entry and provides same or next day delivery of parts
worldwide in order to minimize disruption to customers manufacturing
operations. Rofin typically provides a minimum one-year warranty for its
products with warranty extensions negotiated on a case-by-case basis. It agrees
to after-sales service and parts supply up to a period of 10 years, if
requested by a customer. The Companys growing base of installed laser sources
and laser-based systems is expected to continue to generate a stable source of
parts and service sales.

In addition,
the Company offers components such as OEM laser modules, optical engines, laser
diodes, active and passive fibers, fiber optic delivery systems, and power
supplies. These high-technology components are mainly sold to other laser
manufacturers for use in their products.

COMPETITION

Laser Macro Products

The market for
laser macro products and systems is fragmented and includes a large number of
competitors, many of which are small or privately owned or which compete with
Rofin on a limited geographic, industry-specific or application-specific basis.
The Company also competes in certain target markets with competitors that are
part of large industrial groups and have access to substantially greater
financial and other resources than Rofin. The overall competitive position of
the Company will depend upon a number of factors, including product performance
and reliability, price, customer support, manufacturing quality, the
compatibility of its products with existing laser systems, and the continued
development of products utilizing the technologies of diode lasers, diode
pumped, solid-state lasers and fiber lasers. Competition among laser manufacturers
is also based on attracting and retaining qualified engineering and technical
personnel.

Rofin believes
it is among the top three suppliers of laser sources in the worldwide market
for macro applications.
Companies such as Trumpf and Fanuc (for high-power CO2 lasers), Synrad and
Coherent (for low-power CO2 lasers), Trumpf and IPG (for solid-state or
fiber lasers), and Laserline and Jenoptik (for diode lasers and laser diodes)
compete in certain of the markets in which Rofin operates. However, in the Companys
opinion, none of these companies compete in all of the industries, applications
and geographic markets currently served by Rofin. We believe that only Trumpf
has a product range and worldwide presence similar to that of the Company.

Laser Marking and Micro Products

Significant
competitive factors in the laser marking and micro market include system
performance and flexibility, cost, the size of each manufacturers installed
base, capability for customer support and breadth of product line. Because many
of the required components to develop and produce a laser product for marking
applications are commercially available, barriers to entry into this market are
low and the Company expects new competitive products to enter this market. The
Company believes that its product range for marking and micro applications will compete
favorably in this market primarily due to the performance and price
characteristics of such products.

The Companys
laser marking products compete with conventional ink-based and acid-etching
technologies, as well as with laser mask-marking. The Companys micro products
compete with conventional welding, etching and spark erosion technologies. The
Company believes that its principal competitors in the laser marking and micro
market include Trumpf, GSI Group, Unitek Miyachi, Hans Laser, and IPG.

Rofin also
competes with manufacturers of conventional non-laser products in applications
such as welding, drilling, soldering, cutting, and marking. The Company
believes that as manufacturing industries continue to modernize, seek to reduce
production costs and require more precise and flexible production, the features
of laser-based systems will become more desirable than systems incorporating
conventional material processing techniques and processes. The increased
acceptance of these laser applications by industrial users will be enhanced by laser product line expansion to
include lower and higher power CO2 lasers, variations in wavelength,
advancements in fiber-optic beam delivery systems, improvements in reliability,
and the introduction of lower and higher power diode lasers and diode pumped,
solid-state lasers, and fiber lasers, capable of performing heavy industrial
material processing and marking and micro applications.

20

---



MANUFACTURING AND ASSEMBLY

Rofin manufactures and tests
its high-power CO2, solid-state and fiber laser macro products at its Hamburg (Germany),
Plymouth, Michigan, Landing, New Jersey, and Nanjing (China) facilities. The
Companys laser marking products are manufactured and tested at its facilities
in Gunding-Munich (Germany), Starnberg (Germany), Oxford (UK), Singapore, and
Devens, Massachusetts. Rofins micro application products are manufactured and
tested in Starnberg (Germany), Tampere (Finland), and Orlando, Florida. The
Companys diode laser products are manufactured and tested at its Mainz
(Germany), Freiburg (Germany), Nanjing (China), and Tucson, Arizona, facilities. The Companys
low-power CO2 laser products are manufactured and tested in Kingston upon
Hull (UK). Coating of Rofins Slab laser electrodes is performed at the Overath
(Germany) facility. The Companys fiber optics and beam delivery systems are
manufactured and tested in Gothenburg (Sweden), and power supplies are
manufactured and tested in Starnberg (Germany). The Companys active and
passive fibers and amplifiers are manufactured and tested in East Granby,
Connecticut. Optical engines for fiber lasers and fiber lasers modules are
manufactured in Tampere (Finland).

Given the
competitive nature of the laser business, the Company focuses substantial
efforts on maintaining and enhancing the efficiency and quality of its
manufacturing operations. The Company utilizes just-in-time and cell-based
manufacturing techniques to reduce manufacturing cycle times and inventory
levels, thus enabling it to offer on-time delivery and high-quality products to
its customers.

Rofins
in-house manufacturing includes only those manufacturing operations that are
critical to achieve quality standards or protect intellectual property. These
manufacturing activities consist primarily of product development, testing of
components and subassemblies (some of which are supplied from within the
Company and others of which are supplied by third party vendors and then
integrated into the Companys finished products), assembly and final testing of
the completed product, as well as proprietary software design and
hardware/software integration. Although the Company minimizes the number of
suppliers and component types wherever practicable it has at least two sources
of supply for key items. Rofin has a qualifying program for its vendors and
generally seeks to build long-term relationships with such vendors. The Company
purchases certain major components from single suppliers. The Company estimates
that 17% of its revenues are from the sale of products that require specialized
components currently only available from single sources. Rofin has written
agreements with such suppliers and has not had material delays in supplies from
these sources. The Company believes that it could, if necessary, purchase such
components from alternative sources, within four to six months, following
appropriate qualification of such new vendors.

Rofin is
committed to meeting internationally recognized manufacturing standards. Its
Hamburg, Gunding-Munich, Starnberg, Mainz (all Germany), East Granby,
Connecticut, and Tucson, Arizona facilities are ISO 9001 certified. In
addition, the following facilities are ISO 9002 certified: Pamplona (Spain),
Milan (Italy), Paris (France), Willerby (UK), Gothenburg (Sweden), and
Singapore.

RESEARCH AND DEVELOPMENT

During fiscal
2010, 2009, and 2008, Rofins net spending on research and development was
$30.1 million, $31.5 million, and $41.1 million, respectively. The Companys
net spending on research and development reflects receipt of funding under
German government and European Union grants totaling $2.6 million, $2.0
million, and $1.3 million in fiscal 2010, 2009, and 2008, respectively. Rofin
has approximately 237 employees engaged in product research and development.

Rofins
research and development activities are directed at meeting customers
manufacturing needs and application processes. Core competencies include CO2 gas lasers,
solid-state lasers, fiber lasers, diode lasers, precision optics, electronic
power supplies, fibers, fiber optics, beam delivery, control interfaces,
software programming and systems integration. The Company strives for
customer-driven development activities and promotes the use of alliances with
key customers and joint development programs in a wide range of its target
markets.

21

---



The Companys
research and development activities are carried out in fourteen centers in
Hamburg, Gunding-Munich, Starnberg, Freiburg, and Mainz (all Germany), Kingston
upon Hull (UK), Gothenburg (Sweden), Tampere (Finland), Plymouth, Michigan,
Landing, New Jersey, Orlando, Florida, Tucson, Arizona, East Granby,
Connecticut (all USA), and Nanjing (China) and are centrally coordinated and
managed. Rofin maintains close working relationships with the leading
industrial, government and university research laboratories in Germany,
including the Fraunhofer Institute for Laser Technology in Aachen, the
Institute for Technische Physik of the German Space and Aerospace Research
Center in Stuttgart, the Institute for Strahlwerkzeuge of the University of
Stuttgart, the Fraunhofer Institute for Material Science in Dresden, the Laser
Center in Hanover, and elsewhere around the world, including the University of
Edinburgh in the United Kingdom. These relationships include funding of
research, joint development programs, personnel exchange programs, and
licensing of patents developed at these institutes.

INTELLECTUAL PROPERTY

Rofin owns
intellectual property, which includes patents, proprietary software, technical
know-how and expertise, designs, process techniques, and inventions.

While policies
and procedures are in place to protect critical intellectual property rights,
Rofin believes that its success depends to a larger extent on the innovative
skills, know-how, technical competence and abilities of Rofins personnel.

Rofin protects
its intellectual property in a number of ways including, in certain
circumstances, patents. Rofin has sought patent protection primarily in the
United States, Europe, and Japan. Rofin currently holds 153 patents for
inventions relating to lasers, processes and power supplies with expiration
dates ranging from 2013 to 2027. In addition, 67 patent applications have been
filed and are under review by the relevant patent authorities. The Company
holds 66 exclusive and non-exclusive licenses of patents and pending patent
applications with relevance to its products and laser technology. Rofin
requires its employees and certain of its customers, suppliers,
representatives, agents, and consultants to enter into confidentiality
agreements to further safeguard Rofins intellectual property.

Rofin, from
time to time, receives notices from third parties alleging infringement of such
parties patent or other intellectual property rights by Rofins products.
While these notices are common in the laser industry and Rofin has in the past
been able to develop non-infringing technology or license necessary patents or
technology on commercially reasonable terms, Rofin cannot assure that it would
in the future prevail in any litigation seeking damages or expenses from Rofin
or to enjoin Rofin from selling its products on the basis of such alleged
infringement. Nor can Rofin assure that it would be able to develop any
non-infringing technology or to license any valid and infringed patents on
commercially reasonable terms. In the event any third party made a valid claim
against Rofin or its customers and a license were not made available to Rofin
on commercially reasonable terms, Rofin would be adversely affected.

From time to
time, Rofin files notices of opposition to certain patents on laser
technologies held by others, including academic institutions and competitors of
Rofin, which the Company believes could inhibit its ability to develop laser
products for industrial material processing applications.

22

---



ORDER BACKLOG

The Companys
order backlog was $138.9 million, $87.6 million, and $143.4 million, as of
September 30, 2010, 2009, and 2008, respectively. The Companys order backlog,
which contains relatively little service, training and spare parts, represents
approximately three months of laser shipments. The increase in the Companys
order backlog from September 30, 2009, to September 30, 2010, was attributable
to 60% higher orders for macro applications, 71% higher orders for micro and
marking applications and 32% higher orders for components. The fluctuation of
the U.S. dollar in fiscal 2010 had a negligible effect on year-to-year order
backlog. The decrease in the Companys order backlog, from September 30, 2008,
to September 30, 2009, was attributable to 49% lower orders for macro
applications, 54% lower orders for micro and marking applications, and 46%
lower orders for components. The fluctuation of the U.S. dollar in fiscal 2009
had an unfavorable effect of approximately $11.2 million on year-to-year order
backlog.

An order is
entered into backlog by Rofin when a purchase order with an assigned delivery
date has been received. Delivery schedules range from one week to six months,
depending on the size, complexity and availability of the product or system
ordered, although typical delivery dates for laser source products range
between 6-12 weeks from the date an order is placed. Although there is a risk
that customers may cancel or delay delivery of their orders, orders for
standard non-customized lasers can typically be allocated to other customers
without significant additional costs. The Company also manages this risk by
establishing the right to charge a cancellation fee that covers any material
and developmental costs incurred prior to the order being cancelled.
Enforcement of this right is dependent on many factors including, but not
limited to, the customers requested length of delay, the number of other
outstanding orders with the same customer, and the ability to quickly convert
the canceled order to another sale.

The Company
anticipates shipping the present backlog during fiscal 2011. However, the
Companys backlog at any given date is not necessarily indicative of actual
sales for any future period.

EMPLOYEES

At September
30, 2010, Rofin had 1,822 full-time employees, of which 918 were in Germany,
311 in the United States, 4 in Canada, 35 in France, 42 in Italy, 137 in the
United Kingdom, 31 in Spain, 10 in the Netherlands, 39 in Sweden, 29 in
Finland, 11 in Belgium, 31 in Singapore, 15 in Korea, 17 in Taiwan, 156 in
China, 5 in Switzerland, and 31 in Japan, whereas at September 30, 2009, Rofin
had 1,726 full-time employees, of which 903 were in Germany, 267 in the United
States, 5 in Canada, 37 in France, 47 in Italy, 130 in the United Kingdom, 31
in Spain, 9 in the Netherlands, 32 in Sweden, 23 in Finland, 12 in Belgium, 28
in Singapore, 14 in Korea, 15 in Taiwan, 138 in China, 4 in Switzerland, and 31
in Japan. The average number of employees for the fiscal year ended September
30, 2010, was 1,751.

While the
Companys employees are not covered by collective bargaining agreements and the
Company has never experienced a work stoppage, slowdown or strike, the
Companys employees at its Hamburg and Starnberg facilities are each
represented by a nine-person works council and in Gunding-Munich by a
seven-person works council. Additionally, Hamburg and Gunding-Munich are
represented by a four-person central works council. Matters relating to
compensation, benefits and work rules are negotiated and resolved between
management and the works council for the relevant location. The Company
considers its relations with its employees to be good.

GOVERNMENT REGULATION

The majority
of the Companys laser products sold in the United States are classified as
Class IV Laser Products under applicable rules and regulations of the Center
for Devices and Radiological Health (CDRH) of the U.S. Food and Drug
Administration. The same classification system is applied in the European
markets. Safety rules are formulated with Deutsche Industrie Norm (i.e.,
German Industrial Standards) or ISO standards, which are internationally
harmonized.

23

---



CDRH
regulations generally require a self-certification procedure pursuant to which
a manufacturer must file with the CDRH with respect to each product
incorporating a laser device, periodic reporting of sales and purchases, and
compliance with product labeling standards. The Companys laser products for
macro, micro and laser marking applications can result in injury to human
tissue if directed at an individual or otherwise misused.

The Company
believes that its laser products for macro, micro and marking applications, and
components are in substantial compliance with all applicable laws for the
manufacture of laser devices.

AVAILABLE INFORMATION

The Company
makes available, free of charge on its internet website, its Annual Report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Exchange Act, as soon as reasonably practicable after they are
electronically filed with, or furnished to, the Securities and Exchange Commission
(the SEC). You can find these reports on the Companys website at www.rofin.com under the heading Investor
Relations. The information on the Companys website is not incorporated by
reference in this Annual Report on Form 10-K.

These reports may
also be obtained at the SECs Public Reference Room at 100 F Street NE,
Washington, D.C. 20549. Information on the operation of the Public Reference
Room is available by calling the SEC at (202) 942-8090. You may also access
this information at the SECs website (http://www.sec.gov).
This site contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC.

|         |             
|-------- | ------------
|ITEM 1A. | RISK FACTORS

THE GLOBAL
ECONOMY, CAPITAL MARKETS, CREDIT DISRUPTIONS AND POLITICAL ENVIRONMENT CHANGES
CAN ADVERSELY IMPACT OUR RESULTS OF OPERATIONS.

Our business,
operating results or financial condition can be impacted by a number of
macroeconomic factors, which could in turn affect our stock price. These
macroeconomic factors include but are not limited to consumer confidence and
spending levels, unemployment, consumer credit availability, global factory
production, and credit market conditions. Additionally, changes in the
political environment in the markets in which we operate can adversely impact
our business, such as foreign exchange import and export controls, tariffs and
other trade barriers and price or exchange controls.

DOWNTURNS IN
THE INDUSTRIES WE SERVE, PARTICULARLY IN THE MACHINE TOOL, AUTOMOTIVE, SEMICONDUCTOR,
ELECTRONICS AND PHOTOVOLTAIC INDUSTRIES MAY HAVE A MATERIAL ADVERSE EFFECT ON
OUR SALES AND PROFITABILITY.

Our business
depends substantially upon capital expenditures particularly by manufacturers
in the machine tool, automotive, semiconductor, electronics, and photovoltaic
industries. Approximately 70% of our laser sales during fiscal
year 2010 were to these industry markets. These industries are cyclical and
have historically experienced periods of oversupply, resulting in significantly
reduced demand for capital equipment, including the products manufactured and
marketed by us. For the foreseeable future, our operations will continue to
depend upon capital expenditures in these industries, which, in turn, depend
upon the market demand for their products. Decreased demand from manufacturers
in these industries, for example, during a downturn, may lead to decreased
demand for our products. Although such decreased demand would reduce our sales,
we may not be able to reduce expenses quickly, due in part to the need for
continual investment in research and development and the need to maintain
extensive ongoing customer service and support capability. Although we order
materials for assembly in response to firm orders, the lead time for assembly
and delivery of some of our products creates a risk that we may incur
expenditures or purchase inventories for products which we cannot sell.

24

---



Accordingly,
any downturn or slowdown in the machine tool, automotive, semiconductor,
electronics, and photovoltaic industries could have a material adverse effect
on our financial condition and results of operations.

A HIGH
PERCENTAGE OF OUR SALES ARE OVERSEAS AND OUR RESULTS ARE THEREFORE SUBJECT TO
THE IMPACT OF EXCHANGE RATE FLUCTUATIONS.

Although we
report our results in U.S. dollars, approximately 64% of our current sales are
denominated in other currencies, including the Euro, Swedish krona, Swiss
francs, British pound, Singapore dollar, Japanese yen, Korean won, Taiwanese
dollar, Canadian dollar, and Chinese RMB. The fluctuation of the Euro, and the
other functional currencies, against the U.S. dollar has had the effect of
increasing and decreasing (as applicable) reported net sales as well as cost of
goods sold, gross margin, and selling, general and administrative expenses
denominated in such foreign currencies when translated into U.S. dollars as
compared to prior periods. Our subsidiaries will, from time to time, pay
dividends in their respective functional currencies, thus presenting another
area of potential currency exposure for us in the future.

We also face
transaction risk from fluctuations in exchange rates between the various
currencies in which we do business. We believe that a certain portion of the
transaction risk of our operations in multiple currencies is mitigated by our
hedging activities, utilizing forward exchange contracts and forward exchange
options. We also continue to borrow in each operating subsidiarys functional
currency to reduce exposure to exchange gains and losses. However, there can be
no assurance that changes in currency exchange rates will not have a material
adverse effect on our business, financial condition, and results of operations.

OUR INABILITY
TO MANAGE THE RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS COULD
ADVERSELY AFFECT OUR BUSINESS.

Our products
are currently marketed in approximately 70 countries, with Germany, the rest of
Europe, the United States, and the Asia/Pacific region being our principal
markets. Our operations and sales in our principal markets are subject to risks
inherent in international business activities, including:

| |   |                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the general
 political and economic conditions in each such country or region;                                                                                                         
| |   |                                                                                                                                                                                        
| |  | overlap of
 differing tax structures;                                                                                                                                                  
| |   |                                                                                                                                                                                        
| |  | management of
 an organization spread over various jurisdictions; and                                                                                                                  
| |   |                                                                                                                                                                                        
| |  | unexpected changes in regulatory requirements and compliance
 with a variety of foreign laws and regulations, such as import and export
 licensing requirements and trade restrictions.

Any failure to
manage the risks associated with our international business operations could
have a material adverse effect on our financial condition and results of
operations.

Our
profitability may be adversely affected by economic slowdowns in the United States,
Europe, or the Asia/Pacific region. A recession in these economies could
trigger a decline in laser sales to the machine tool, automotive,
semiconductor, electronics or photovoltaic industries, and any related
weaknesses in their respective currencies could adversely affect customer
demand for our products, the U.S. dollar value of our foreign currency
denominated sales, and ultimately our consolidated results of operations.

25

---



WE DEPEND ON THE ABILITY OF OUR OEM-CUSTOMERS TO INCORPORATE OUR LASER
PRODUCTS INTO THEIR SYSTEMS.

Our sales
depend in part upon the ability of our OEM-customers to develop and sell
systems that incorporate our laser products. Adverse economic conditions,
inadequate liquidity, large inventory positions, limited marketing resources,
and other factors affecting these OEM-customers could subject us to risks of
business failure by such customers and potential credit and inventory risks,
and thus could have a substantial impact upon our financial results. We cannot
provide assurances that our OEM-customers will not experience financial or
other difficulties that could adversely affect their operations and, in turn,
our financial condition or results of operations.

WE EXPERIENCED IN THE PAST, AND EXPECT TO EXPERIENCE IN THE FUTURE,
FLUCTUATIONS IN OUR QUARTERLY RESULTS. THESE FLUCTUATIONS MAY INCREASE THE
VOLATILITY OF OUR STOCK PRICE.

We have
experienced and expect to continue to experience some fluctuations in our
quarterly results. We believe that fluctuations in quarterly results may cause
the market prices of our common stock, on the NASDAQ Global Select Market and
the Frankfurt Stock Exchange, to fluctuate, perhaps substantially. Factors
which may have an influence on the Companys operating results in a particular
quarter include:

| |   |                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | general
 economic uncertainties;                                                                                                                                                                     
| |   |                                                                                                                                                                                                      
| |  | fluctuations
 in demand for, and sales of, our products or prolonged downturns in the
 industries that we serve;                                                                                     
| |   |                                                                                                                                                                                                      
| |  | the timing
 of the receipt of orders from major customers;                                                                                                                                           
| |   |                                                                                                                                                                                                      
| |  | product mix;                                                                                                                                                                                         
| |   |                                                                                                                                                                                                      
| |  | competitive
 pricing pressures;                                                                                                                                                                      
| |   |                                                                                                                                                                                                      
| |  | the relative
 proportions of domestic and international sales;                                                                                                                                       
| |   |                                                                                                                                                                                                      
| |  | our ability
 to design, manufacture and introduce new products on a cost-effective and
 timely basis;                                                                                                
| |   |                                                                                                                                                                                                      
| |  | the delayed
 effect of incurrence of expenses to develop and improve marketing and service
 capabilities;                                                                                            
| |   |                                                                                                                                                                                                      
| |  | foreign
 currency fluctuations;                                                                                                                                                                      
| |   |                                                                                                                                                                                                      
| |  | ability of
 our suppliers to produce and deliver components and parts, including sole or
 limited source components, in a timely manner, in the quantity desired and at
 the prices we have budgeted;
| |   |                                                                                                                                                                                                      
| |  | our ability
 to control expenses; and                                                                                                                                                                
| |   |                                                                                                                                                                                                      
| |  | costs
 related to acquisitions of businesses.                                                                                                                                                        

These and
other factors make it difficult for us to release precise predictions regarding
the results and the development of our business. In addition, current
conditions in the domestic and global economies are uncertain. As a
result, it is difficult to estimate the level of growth for the economy as a
whole or of capital expenditures in the industrial markets we serve. Because
all of the components of our budgeting and forecasting are dependent on
estimates of spending within these markets, the prevailing economic uncertainty
renders estimates of future revenue and expenses even more difficult than usual
to make. In addition, our backlog at any given time is not necessarily
indicative of actual sales for any succeeding period. As our delivery schedule
typically ranges from one week to six months, our sales will often reflect
orders shipped in the same quarter that they are received. Moreover, customers
may cancel or reschedule shipments and production difficulties could delay
shipments. Accordingly, the Companys results of operations are subject to
significant fluctuations from quarter to quarter. See also Business - Order
Backlog.

26

---



Other factors
that we believe may cause the market price of our common stock to fluctuate,
perhaps substantially, include announcements of new products, technologies or
customers by us or our competitors, developments with respect to intellectual
property and shortfalls in our operations relative to analysts expectations.
In addition, in recent years, the stock market in general, and the shares of
technology companies in particular, have experienced wide price fluctuations.
These broad market and industry fluctuations, particularly in the
semiconductor, electronics, photovoltaics, machine tool, and automotive
industries, may adversely affect the market prices of our common stock on the
NASDAQ Global Select Market and the Frankfurt Stock Exchange.

THE MARKETS FOR OUR PRODUCTS ARE HIGHLY COMPETITIVE AND INCREASED
COMPETITION COULD INCREASE OUR COSTS, REDUCE OUR SALES OR CAUSE US TO LOSE
MARKET SHARE.

The laser
industry is characterized by significant price and technical competition. Our
current and proposed laser products for macro, marking and micro applications,
and components compete with those of several well-established companies, some
of which are larger and have substantially greater financial, managerial and
technical resources, more extensive distribution and service networks, and
larger installed customer bases than us.

We believe
that competition will be particularly intense in the CO2, diode
laser, and solid-state laser markets, including fiber lasers, as many companies
have committed significant research and development resources to pursue
opportunities in these markets. There can be no assurance that we will
successfully differentiate our current and proposed products from the products
of our competitors or that the marketplace will consider our products to be
superior to competing products. Because many of the components required to
develop and produce a laser-based marking system are commercially available,
barriers to entry into this market are relatively low, and we expect new
competitive product entries in this market. To maintain our competitive
position in these markets, we believe that we will be required to continue a
high level of investment in engineering, research and development, marketing,
and customer service and support. There can be no assurance that we will have
sufficient resources to continue to make these investments, that we will be
able to make the technological advances necessary to maintain our competitive
position, or that our products will receive market acceptance. See also
Business - Competition.

OUR FUTURE GROWTH AND COMPETITIVENESS DEPEND UPON OUR ABILITY TO
DEVELOP NEW AND ENHANCED PRODUCTS TO MEET MARKET DEMAND AND TO INCREASE OUR
MARKET SHARE FOR LASER MARKING AND MICRO PRODUCTS.

If we are to
increase our laser sales in the near term, these sales will have to come
through increases in market share for our existing products, through the
development of new products, or through the acquisition of competitors or their
products. To date, a substantial portion of our revenues has been derived from
sales of high-powered CO2 laser sources, solid-state laser sources,
and diode lasers. In order to increase market demand for these products, we
will need to devote substantial resources to:

| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | continuing
 to broaden our CO2, solid-sate laser and fiber laser product
 range;                       
| |   |                                                                                                        
| |  | continuing
 to increase the output power and vary the laser wavelength of our product portfolio;
 and  
| |   |                                                                                                        
| |  | continuing
 to reduce the manufacturing costs of our product range to achieve more
 attractive pricing.

A large part
of our growth strategy depends upon being able to increase our worldwide market
share for laser marking and micro products.

27

---



Our future
success depends on our ability to anticipate our customers needs and develop
products that address those needs. Our ability to control costs is limited by
our need to invest in research and development. If we are unable to implement
our strategy to develop new and enhanced products, our business, operating
results and financial condition could be adversely affected. We cannot provide
assurance that we will successfully implement our business strategy or that any
of the newly developed or enhanced products will achieve market acceptance or
not be rendered obsolete or uncompetitive by products of other companies. See
also Managements Discussion and Analysis of Financial Condition and Results
of Operations and Business - The Companys Laser Products.

IF WE LOSE OUR
KEY MANAGEMENT PERSONNEL, WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR
BUSINESS OR ACHIEVE OUR OBJECTIVES.

Our future
success depends in large part upon the leadership and performance of our
executive management team and key employees at the operating level. These key
employees include technical, sales and support personnel for our operations on
a worldwide basis. If we lose the services of one or more of our executive
officers or key employees, or if one or more of them decides to join a
competitor or otherwise compete directly or indirectly with us, we may not be
able to successfully manage our business or achieve our business objectives. If
we lose the services of any of our key employees at the operating or regional level,
we may not be able to replace them with similarly qualified personnel, which
could harm our business.

WE MAY NOT BE
ABLE TO SUCCESSFULLY ACQUIRE NEW OPERATIONS OR INTEGRATE FUTURE ACQUISITIONS,
WHICH COULD CAUSE OUR BUSINESS TO SUFFER.

An important
part of our growth strategy is making strategic acquisitions of companies with
complementary operations, technologies, or products. We regularly review
potential acquisitions and periodically engage in discussions regarding such
possible acquisitions. We may be unable to successfully complete potential
strategic acquisitions if we cannot reach agreement on acceptable terms or for
other reasons. Future acquisitions may require us to obtain additional debt or
equity financing, which may not be available on terms acceptable to us, if at
all. In connection with future acquisitions, we may assume the liabilities of
the companies we acquire. Any debt that we incur to pay for future acquisition
could contain covenants that restrict the manner in which we operate our business.
Any new equity securities that we issue for this purpose would be dilutive to
our existing stockholders. If we buy a company or a division of a company, we
may experience difficulty integrating that company or divisions personnel and
operations, which could negatively affect our operating results.

In addition:

| |   |                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the key
 personnel of the acquired company may decide not to work for us;                                                                                                                  
| |   |                                                                                                                                                                                            
| |  | we may
 experience additional financial and accounting challenges and complexities in
 areas such as tax planning, treasury management and financial reporting;                            
| |   |                                                                                                                                                                                            
| |  | we may be
 held liable for risks and liabilities (including for environmental-related
 costs) as a result of our acquisitions, some of which we may not discover
 during our due diligence;
| |   |                                                                                                                                                                                            
| |  | our ongoing
 business may be disrupted or receive insufficient management attention; and                                                                                                   
| |   |                                                                                                                                                                                            
| |  | we may not
 be able to realize the synergies, cost savings, or other financial benefits
 we anticipated.                                                                                   

28

---



WE DEPEND ON
LIMITED SOURCE SUPPLIERS THAT COULD CAUSE SUBSTANTIAL MANUFACTURING DELAYS AND
INCREASE OUR COSTS IF A DISRUPTION IN SUPPLY OCCURS.

We estimate
that 17% of our revenues are derived from sales of products that require
specialized components only available from single sources. We also rely on a
limited number of independent contractors to manufacture subassemblies for some
of our products. There can be no assurance that, in the future, our current or
alternative sources will be able to meet all of our demands on a timely basis.
If one or more of our suppliers or subcontractors experiences difficulties that
result in a reduction or interruption in supply to us, or if they fail to meet
any of our manufacturing requirements, our business could be harmed until we
are able to secure alternative sources, if any. If we are unable to find
necessary parts or components on commercially reasonable terms, we could be
required to reengineer our products to accommodate available substitutions
which would increase our costs and/or have a material adverse effect on
manufacturing schedules, product performance, and market acceptance.

The
manufacturing of our solid-state lasers require elements of rare earth in small
quantities. There can be no assurance that shortages of rare earth deliveries
and therewith an increase of the market price might have an adverse effect on
our production costs.

OUR FAILURE TO PROTECT OUR PROPRIETARY TECHNOLOGY OR TO AVOID
LITIGATION FOR INFRINGEMENT OR MISAPPROPRIATION OF PROPRIETARY RIGHTS OF THIRD
PARTIES COULD RESULT IN A LOSS OF REVENUES AND PROFITS.

Our future
success depends in part upon our intellectual property rights, including trade
secrets, know-how and continuing technological innovation. There can be no
assurance that the steps taken by us to protect our intellectual property
rights will be adequate to prevent misappropriation or that others will not
develop competitive technologies or products.

We currently
hold 153 United States and foreign patents on our laser sources, with
expiration dates ranging from 2013 to 2027. We have also obtained licenses
under certain patents covering lasers and related technology incorporated into
our products. Of particular importance was the license of three patents related
to the sales of our Slab-based CO2 lasers, which we estimate to account
for approximately 21% of our revenue in fiscal year 2010. Two of these licenses
expired in 2009 and one expired in 2010. In addition, 67 patent applications
have been filed and are under review by the relevant patent authorities. There
can be no assurance that other companies are not investigating or developing
other technologies that are similar to ours, that any patents will issue from
any application filed by us or that, if patents do issue, the claims allowed
will be sufficiently broad to deter or prohibit others from marketing similar
products. In addition, there can be no assurance that any patents issued to us
will not be challenged, invalidated or circumvented, or that the rights
thereunder will provide a competitive advantage to us. See also Business -
Intellectual Property.

From time to
time, we receive notices from third parties alleging infringement of such
parties patent or other proprietary rights by our products. While these
notices are common in the laser industry and we have in the past been able to
develop non-infringing technology or license necessary patents or technology on
commercially reasonable terms, there can be no assurance that we would in the
future prevail in any litigation seeking damages or expenses from us or to
enjoin us from selling products on the basis of such alleged infringement, or
that we would be able to develop any non-infringing technology or license any
valid and infringed patents on commercially reasonable terms. In the event any
third party made a valid claim against us or our customers and a license was
not made available to us on commercially reasonable terms, we would be
adversely affected.

29

---



CHANGES IN TAX
RATES, TAX LIABILITIES OR TAX ACCOUNTING RULES COULD AFFECT FUTURE RESULTS.

As a global
company, we are subject to taxation in the United States and various other
countries and jurisdictions. Significant judgment is required to determine
worldwide tax liabilities. Our future tax rates could be affected by changes in
the composition of earnings in countries with differing tax rates, changes in
the valuation of our deferred tax assets and liabilities, or changes in the tax
laws. In addition, we are subject to regular examination of our income tax
returns by the Internal Revenue Service and other tax authorities. We regularly
assess the likelihood of favorable or unfavorable outcomes resulting from these
examinations to determine the adequacy of our provision for income taxes.
Although we believe our tax estimates are reasonable, there can be no assurance
that any final determination will not be materially different than the
treatment reflected in our historical income tax provisions and accruals, which
could materially and adversely affect our operating results and financial
condition.

ANY DEFECTS IN
OUR PRODUCTS OR CUSTOMER PROBLEMS ARISING FROM THE USE OF OUR PRODUCTS MAY
SERIOUSLY HARM OUR BUSINESS AND REPUTATION.

Our laser
products are technologically complex and may contain known and undetected
errors or performance problems. In addition, performance problems can also be
caused by the improper installation of our products by a customer. These errors
or performance problems could result in customer dissatisfaction, which could
harm our sales or customer relationships. In addition, these problems may cause
us to incur significant warranty and repair costs and divert the attention of
our engineering personnel from our product development efforts.

|         |                          
|-------- | -------------------------
|ITEM 1B. | UNRESOLVED STAFF COMMENTS
|         |                          
|None.   

30

---



|        |           
|------- | ----------
|ITEM 2. | PROPERTIES

The Companys
manufacturing facilities include the following:

|                          |  |                  |  |                   |         |                  |                                                           
|------------------------- |  | ---------------- |  | ----------------- | ------- | ---------------- | ----------------------------------------------------------
|Location of Facility      |  | Owned or
 Leased |  | Size**
 (sq. ft.) |         | Primary Activity
|                          |  |                  |  |                   |         |                 
|Hamburg, Germany          |  | Owned*           |  |                   | 165,015 |                  | CO2 lasers, solid-state lasers, diode lasers, fiber lasers
|Starnberg,
 Germany       |  | Leased           |  |                   | 117,047 |                  | Laser
 marking and micro products, power supplies         
|Gunding-Munich,
 Germany  |  | Leased           |  |                   | 83,390  |                  | Solid-state
 lasers, laser marking products               
|Plymouth,
 Michigan       |  | Leased           |  |                   | 52,128  |                  | CO2
 lasers, laser micro and marking systems              
|Kingston
 upon Hull,      |  |                  |  |                   |         |                  |                                                           
|United Kingdom            |  | Leased           |  |                   | 48,485  |                  | Low-power CO2lasers                                       
|Orlando,
 Florida         |  | Owned            |  |                   | 35,207  |                  | Solid-state
 lasers                                       
|Landing, New
 Jersey      |  | Owned            |  |                   | 34,292  |                  | CO2
 lasers                                               
|Mainz,
 Germany           |  | Leased           |  |                   | 52,993  |                  | Diode lasers and components                               
|Devens,
 Massachusetts    |  | Leased           |  |                   | 22,512  |                  | Laser
 marking systems                                    
|Gothenburg,
 Sweden       |  | Leased           |  |                   | 21,337  |                  | Fiber optic
 production                                   
|Overath,
 Germany         |  | Leased           |  |                   | 12,417  |                  | Coating of
 materials                                     
|Oxford,
 United Kingdom   |  | Leased           |  |                   | 11,578  |                  | Laser
 marking systems                                    
|Tampere, Finland          |  | Leased           |  |                   | 9,964   |                  | Fiber lasers, optical
 engines                            
|Pamplona,
 Spain          |  | Owned            |  |                   | 12,654  |                  | Laser
 marking systems                                    
|Singapore                 |  | Leased           |  |                   | 7,812   |                  | Laser
 marking products                                   
|Freiburg,
 Germany        |  | Leased           |  |                   | 12,164  |                  | Laser diodes                                              
|Tucson,
 Arizona          |  | Leased           |  |                   | 6,218   |                  | Components                                                
|East Granby,
 Connecticut |  | Leased           |  |                   | 57,000  |                  | Fibers, fiber lasers                                      
|Nanjing,
 China           |  | Leased           |  |                   | 25,394  |                  | CO2 lasers, laser marking products, diode components      
|Nanjing,
 China           |  | Owned            |  |                   | 6,757   |                  | CO2 lasers                                                

|                                                                                                                                                        | 
|------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|* The facility
 is owned by Rofin-Sinar Laser GmbH (RSL); the real property on which the
 facility is located is leased by RSL under a 99-year lease.
|                                                                                                                                                        | 
|** Includes
 sales, administration and research and development facilities where
 applicable.                                                          

The Kingston
upon Hull (United Kingdom) facility lease expires in 2017. The Gunding-Munich
(Germany) main facility is leased until 2017. The Mainz (Germany) facility
lease expires in 2024. The Overath (Germany) facility leases expire in 2013,
and the Freiburg (Germany) facility leases expire in 2012. The Singapore
facility lease expires in 2012. The Starnberg (Germany) main facility is leased
until 2017 from a member of the Companys Board of Directors and includes a
clause to terminate the lease contract within a two-year notice period during
the contract. The leases on its U.S. facilities in Devens, Massachusetts,
Plymouth, Michigan, Tucson, Arizona, and East Granby, Connecticut, expire in
2017, 2012, 2013, and 2020, respectively. The Gothenburg (Sweden) main facility
leases expire in 2011 and 2012, with a renewal option for three years. The
Tampere (Finland) facility is leased with no expiration date but can be
terminated upon three months notice from the landlord and a one month notice
from the lessee. The Oxford (United Kingdom) facility lease expires in 2019.
The Nanjing (China) facility lease expires in 2010. In addition, NELC owns land
rights and the construction of manufacturing facilities is actually in process.

The Company
maintains sales, administration and research and development facilities at each
of the Hamburg, Starnberg, Gunding-Munich, Mainz, Freiburg, Kingston upon Hull,
Gothenburg, Tampere, East Granby, Plymouth, Landing, Orlando, and Nanjing
(China) locations. The Company also maintains sales and service offices
worldwide, all of which are leased, with the exception of the Pamplona (Spain)
and Seoul (South Korea) properties which are owned.

The Company
believes that its existing facilities are adequate to meet its currently
projected needs for the next 12 months and that suitable additional or
alternative space would be available, if necessary, in the future on
commercially reasonable terms.

31

---



|        |                  
|------- | -----------------
|ITEM 3. | LEGAL PROCEEDINGS

The Company
has been and is likely to be involved from time to time in litigation involving
its intellectual property and ordinary routine litigation arising in the
ordinary course of business.

A licensor of
patents covering the technology used in certain of the Companys CO2
lasers has asserted that the Company has calculated royalties due in respect of
certain sales of such CO2 lasers in a manner that is not consistent
with the applicable license agreement. In addition, the licensor claims that it
has not been provided with copies of invoices and other documentation relating
to such sales, to which it asserts it is entitled under the license agreement.
The Company disputes these and related allegations and believes that it is in
compliance with all of its obligations under the license agreement. Following
discussions with the licensor in order to resolve these disagreements, the
parties have reached an agreement in principle that an independent auditor
should be appointed to review the calculations made by the Company in
connection with the royalties it has paid in the past. To date the audit has
not commenced. In February 2008, the Company contacted the licensor in writing
in order to proceed with the appointment of an independent auditor and agree on
parameters to apply to the conduct of the audit and a response from the
licensor was received in January 2009. The Company and the licensor are
continuing the process of selecting a mutually agreeable independent auditor.
Management believes that it will achieve a resolution of this matter that will
not have a material adverse impact on the Companys financial condition or
results of operations or cash flows. The patents, and therefore the license
rights, have already expired and there are no further license fees to be
calculated and paid.

|        |                     
|------- | --------------------
|ITEM 4. | REMOVED AND RESERVED

32

---



PART II

|        |                                                                                                                    
|------- | -------------------------------------------------------------------------------------------------------------------
|ITEM 5. | MARKET PRICE FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
 MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Companys
common stock is traded on the NASDAQ Global Select Market and also on the Prime
Standard Segment of the Frankfurt Stock Exchange, under the symbol RSTI and
international securities identification number (ISIN) US7750431022,
respectively. The table below sets forth the high and low closing sales prices
of the Companys common stock for each quarter ended during the last two fiscal
years as reported by NASDAQ:

|                    |  |                           |       |     |   |       | 
|------------------- |  | ------------------------- | ----- | --- | - | ----- | 
|                    |  | Common Stock Trade Prices |      
|                    |  |                           |      
|Quarter ended       |  | High                      |       | Low |  
|                    |  |                           |       |     |  
|December 31,
 2008  |  | $                         | 30.47 |     | $ | 17.17 | 
|March 31,
 2009     |  | $                         | 21.75 |     | $ | 12.57 | 
|June 30,
 2009      |  | $                         | 23.96 |     | $ | 16.78 | 
|September
 30, 2009 |  | $                         | 25.68 |     | $ | 17.76 | 
|December 31,
 2009  |  | $                         | 24.60 |     | $ | 21.01 | 
|March 31,
 2010     |  | $                         | 24.96 |     | $ | 19.59 | 
|June 30, 2010       |  | $                         | 27.05 |     | $ | 20.82 | 
|September
 30, 2010 |  | $                         | 25.39 |     | $ | 19.96 | 

At November
29, 2010, the Company had 9 holders of record of its common stock and
28,397,796 shares outstanding. A significantly greater number of holders of the
Companys common stock are street name or beneficial holders, whose shares
are held of record by bankers, brokers, and other financial institutions. The
Company has not paid dividends on its common stock and does not anticipate
paying dividends in the foreseeable future.

During the fiscal
year 2010, the Company did not sell any equity securities that were not
registered under the Securities Act.

There were no
purchases of common stock of the Company made by the Company or any affiliated
purchaser of the Company as defined in Rule 10b-18(a)(3) under the Exchange
Act during the fourth fiscal quarter of the fiscal year 2010.

On November 7,
2007, the Board of Directors approved a stock buyback plan which authorized the
repurchase of up to $120 million of the Companys common stock, or approximately
10% of the shares of common stock then outstanding based on then current market
prices. The share buyback program was authorized to begin November 15, 2007.
The shares were repurchased from time to time in open market transactions or
privately negotiated transactions at the Companys discretion, including the
quantity, timing, and price thereof. The program was completed in May 2008.

On May 5,
2010, the Board of Directors authorized the Company to initiate a share buyback
of up to $30.0 million of the Companys common stock over twelve months,
subject to market conditions. The shares may be repurchased from time to time
in open market transactions or privately negotiated transactions at the
Companys discretion. As of September 30, 2010, the Company has bought
approximately 0.85 million shares of common stock, at an average price of
$22.79, under the stock buyback program for a total amount of $19.5 million,
with $10.5 million remaining to be spent on the repurchase of shares.

33

---



STOCK PRICE PERFORMANCE GRAPH

The following
Stock Price Performance Graph includes comparisons required by the SEC. The
Graph does not constitute soliciting material and should not be deemed filed or
incorporated by reference into any other Company filings under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically incorporates this
information by reference therein.

The following
graph presents the one-year total return for Rofin-Sinar Technologies Inc.
common stock compared with the NASDAQ Stock Market Index and the S&P
Technology Sector Index. Rofin-Sinar selected these comparative groups due to
industry similarities and the fact that they contain several direct
competitors.

The graph
assumes that the value of the investment in Rofin-Sinar Technologies Inc.
common stock, the NASDAQ Stock Market Index, and the S&P Technology Sector
Index each was $100 on September 30, 2005, and that all dividends were
reinvested. The S&P Technology Sector Index is weighted by market
capitalization. The stock price performance shown in this graph is not
necessarily indicative of, and not intended to suggest future stock price
performance.

COMPARISON OF 5 YEAR CUMULATIVE
TOTAL RETURN*Among Rofin-Sinar Technologies Inc., the NASDAQ Composite
Index 
and the S&P Information Technology Index

(LINE GRAPH)

| |                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------
| | *$100 invested on 9/30/05 in
 stock or index, including reinvestment of dividends. Fiscal year ending
 September 30.
| |                                                                                                                     
| | Copyright© 2010 S&P, a
 division of The McGraw-Hill Companies Inc. All rights reserved.                             

EDGAR
REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

|        |  |                                 |        |                              |  |                                |  |  |        | 
|------- |  | ------------------------------- | ------ | ---------------------------- |  | ------------------------------ |  |  | ------ | 
|        |  | Rofin-Sinar 
 Technologies Inc. |        | NASDAQ Stock
 
 Market Index |  | S&P
 Technology 
 Sector Index | 
|        |  |                                 |        |                              |  |                                | 
|9/30/05 |  |                                 | 100    |                              |  | 100                            |  |  | 100    | 
|9/30/06 |  |                                 | 159.96 |                              |  | 106.39                         |  |  | 103.26 | 
|9/30/07 |  |                                 | 184.81 |                              |  | 127.37                         |  |  | 127.35 | 
|9/30/08 |  |                                 | 161.15 |                              |  | 96.70                          |  |  | 97.58  | 
|9/30/09 |  |                                 | 120.87 |                              |  | 100.00                         |  |  | 105.87 | 
|9/30/10 |  |                                 | 133.61 |                              |  | 112.86                         |  |  | 117.15 | 

34

---



|        |                        
|------- | -----------------------
|ITEM 6. | SELECTED FINANCIAL DATA

The following
table sets forth selected consolidated financial data for the five fiscal years
ended September 30, 2010. The information set forth below should be read in
conjunction with the consolidated financial statements and notes and
Managements Discussion and Analysis of Financial Condition and Results of
Operations contained elsewhere in this Annual Report on Form 10-K.

|                                                       |  |                                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|------------------------------------------------------ |  | ---------------------------------------- | ------- | ---- | - | ------- | - | ---- | ------- | ---- | - | ------- | - | - | ------- | -
|                                                       |  | Year ended September 30,                 |        
|                                                       |  |                                          |        
|                                                       |  | 2010                                     |         | 2009 |   | 2008    |   | 2007 |         | 2006 |  
|                                                       |  |                                          |         |      |   |         |   |      |         |      |  
|                                                       |  | (in thousands, except per share amounts) |        
|STATEMENT OF OPERATIONS DATA:                          |  |                                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|Net sales                                              |  | $                                        | 423,570 |      | $ | 349,579 |   | $    | 575,278 |      | $ | 479,675 |   | $ | 420,890 |  
|Cost of goods sold*                                    |  |                                          | 257,316 |      |   | 217,532 |   |      | 326,861 |      |   | 276,320 |   |   | 242,472 |  
|Gross profit                                           |  |                                          | 166,254 |      |   | 132,047 |   |      | 248,417 |      |   | 203,355 |   |   | 178,418 |  
|Selling, general & administrative
 expenses*           |  |                                          | 89,908  |      |   | 88,906  |   |      | 105,077 |      |   | 84,675  |   |   | 75,928  |  
|Research & development expenses                        |  |                                          | 30,137  |      |   | 31,500  |   |      | 41,113  |      |   | 27,830  |   |   | 23,914  |  
|Amortization expense                                   |  |                                          | 2,250   |      |   | 3,559   |   |      | 6,769   |      |   | 4,251   |   |   | 3,532   |  
|Income from operations                                 |  |                                          | 43,959  |      |   | 8,082   |   |      | 95,458  |      |   | 86,599  |   |   | 75,044  |  
|Net interest expense (income)                          |  |                                          | 375     |      |   | 309     |   |      | (2,960  | )    |   | (5,028  | ) |   | (2,588  | )
|Income before income taxes                             |  |                                          | 45,901  |      |   | 14,700  |   |      | 97,799  |      |   | 88,241  |   |   | 77,554  |  
|Income tax expense                                     |  |                                          | 15,442  |      |   | 5,197   |   |      | 33,466  |      |   | 31,838  |   |   | 27,041  |  
|Net income attributable to RSTI                        |  |                                          | 29,840  |      |   | 9,163   |   |      | 63,759  |      |   | 55,277  |   |   | 49,623  |  
|Earnings per common share  Basic                      |  | $                                        | 1.04    |      | $ | 0.32    |   | $    | 2.15    |      | $ | 1.78    |   | $ | 1.62    |  
|Earnings per common share  Diluted                    |  | $                                        | 1.02    |      | $ | 0.31    |   | $    | 2.09    |      | $ | 1.74    |   | $ | 1.58    |  
|Shares used in computing earnings per share
  Basic   |  |                                          | 28,807  |      |   | 28,912  |   |      | 29,640  |      |   | 30,975  |   |   | 30,568  |  
|Shares used in computing earnings per share
  Diluted |  |                                          | 29,212  |      |   | 29,194  |   |      | 30,446  |      |   | 31,806  |   |   | 31,374  |  
|                                                       |  |                                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|OPERATING DATA (as percentage of sales):               |  |                                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|Gross profit                                           |  |                                          | 39.3    | %    |   | 37.8    | % |      | 43.2    | %    |   | 42.4    | % |   | 42.4    | %
|Selling, general & administrative
 expenses            |  |                                          | 21.2    | %    |   | 25.4    | % |      | 18.3    | %    |   | 17.7    | % |   | 18.0    | %
|Research & development expenses                        |  |                                          | 7.1     | %    |   | 9.0     | % |      | 7.1     | %    |   | 5.8     | % |   | 5.7     | %
|Income from operations                                 |  |                                          | 10.4    | %    |   | 2.3     | % |      | 16.6    | %    |   | 18.1    | % |   | 17.8    | %
|Income before income taxes                             |  |                                          | 10.8    | %    |   | 4.2     | % |      | 17.0    | %    |   | 18.4    | % |   | 18.4    | %
|                                                       |  |                                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|BALANCE SHEET DATA:                                    |  |                                          |         |      |   |         |   |      |         |      |   |         |   |   |         |  
|Working capital                                        |  | $                                        | 287,793 |      | $ | 274,279 |   | $    | 257,954 |      | $ | 344,907 |   | $ | 282,659 |  
|Total assets                                           |  |                                          | 558,192 |      |   | 539,507 |   |      | 583,660 |      |   | 626,224 |   |   | 501,521 |  
|Line of credit and loans                               |  |                                          | 20,661  |      |   | 31,409  |   |      | 66,674  |      |   | 40,592  |   |   | 35,416  |  
|Long-term debt                                         |  |                                          | 15,488  |      |   | 12,426  |   |      | 11,968  |      |   | 12,639  |   |   | 18,089  |  
|Stockholders equity**                                 |  |                                          | 417,476 |      |   | 421,694 |   |      | 404,545 |      |   | 452,717 |   |   | 361,227 |  

|   |                                                                                                                                                                                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*  | Prior period
 amounts have been recast to conform to the current period presentation, in
 which foreign currency transaction gains and losses have been presented as a
 component of other expense (income).
|   |                                                                                                                                                                                                             
|** | Prior period
 amounts have been recast in accordance with the new accounting guidance for
 noncontrolling interests implemented in fiscal year 2010.                                                        

35

---



|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Rofin-Sinar
Technologies Inc. is a leader in the design, development, engineering,
manufacture, and marketing of laser-based products, primarily used for cutting,
welding, and marking a wide range of materials.

Lasers are a
non-contact technology for material processing, which have several advantages
compared to conventional manufacturing tools that are desirable in industrial
applications. The Companys lasers all deliver a high-quality beam at
guaranteed power outputs and feature compact design, high processing speed,
flexibility, low operating and maintenance costs, and easy integration into the
customers production process. As a technological leader in CO2, solid-state
lasers (including fiber lasers), and diode lasers, the Company is able
to meet a broad range of its customers material processing requirements.

According to
the Industrial Laser Solutions magazines 2010 forecast for industry data,
worldwide laser revenues for industrial applications (excluding lithography,
inspection, measurement, research, medical, etc.) will reach approximately $1.4
billion for the year. Based on this data, the Company estimates that it has
currently a market share in the relevant industrial laser sector of
approximately 20% (based on sales volume). The Company has sold more than
52,000 laser sources since 1975 and currently has over 3,000 active customers
(including multinational companies with multiple facilities purchasing from the
Company). During fiscal 2010, 2009, and 2008, approximately 41%, 40%, and 41%,
respectively, of the Companys revenues related to sales of laser products for
macro applications, approximately 10%, 12%, and 10%, respectively, related to
sales of components, and approximately 49%, 48%, and 49%, respectively, related
to sales of laser products for marking and micro applications.

Through its
global manufacturing, distribution and service network, the Company provides a
comprehensive range of laser sources and laser-based system solutions to the
following principal target markets: the machine tool, automotive, the
semiconductor, electronics, and photovoltaic industries. The Company sells
directly to end-users and to original equipment manufacturers (OEMs)
(principally in the machine tool industry) that integrate Rofins laser sources
with other system components. Many of Rofins customers are among the largest
global participants in their respective industries. During fiscal 2010, 2009, and
2008, 19%, 20%, and 25%, respectively, of the Companys sales were in North
America, 46%, 57%, and 51%, respectively, were in Europe and 35%, 23%, and 24%,
respectively, were in Asia. See note 15, Geographic Information, to the
consolidated financial statements for further information.

The results of
the fiscal year ended September 30, 2010, reflect the overall improved macro
economic climate, especially throughout the Asian markets. In additition, many
of the industries we serve recovered faster than we expected. The heightened
visibility and improved confidence in the markets point to a more optimistic
outlook for industrial material processing after the repercussions of the
financial crisis in the last fiscal year. As a result of the higher business
levels with the corresponding better fixed costs absorption as well as a
favorable product mix we improved our operating margin.

Outlook

Management
believes that based on the improved overall economic conditions, the strong
demand for our products in Asia and the diversification of industries we serve,
Rofin will be able to build a sequential revenue growth in fiscal year 2011. In
addition, the Companys focus on broadening its product portfolio for dedicated
applications, the expansion of its fiber laser range as well as the
contributions from the newly acquired Swiss specialist for laser micro
processing, LASAG AG, acquired in October 2010, should support the Companys
further growth.

36

---



Acquisitions and Formation of New Entities

Effective
December 3, 2007, the Company purchased the remaining 19% of the share capital
of Rofin-Sinar UK Ltd. through Rofin-Sinar Technologies Europe S.L. under an
option agreement between the Company and the former minority shareholders. The
Company now holds 100% of the share capital of Rofin-Sinar UK Ltd. This
purchase resulted in goodwill of $5.6 million.

Effective
January 24, 2008, the Company purchased Nufern, one of the worlds largest
independent manufacturers of specialty fibers and fiber laser modules serving a
wide range of industries, as a wholly-owned subsidiary of Rofin-Sinar
Technologies Inc. During fiscal year 2009, the Company settled an earn-out
agreement with the former Nufern owners for an aggregate of $5.0 million and
finalized its valuation of the identified intangible assets related to this
acquisition. As a result, a total adjustment amounting to a net decrease of
$3.7 million was made to the amount of goodwill recorded. This purchase
resulted in final goodwill of $2.9 million.

In fiscal year 2008, the Company formed Dilas Diodelaser China Co.,
Ltd. in Nanjing (China) through its 95%-owned
subsidiary Dilas Diodenlaser GmbH as a 95%-owned subsidiary.

In fiscal year 2008, the Company formed Nanjing Eastern Technologies
Company, Ltd. in Nanjing (China) as an 80%-owned subsidiary.

Effective July
1, 2008, the Company formed Rofin-Baasel Swiss AG in Biel (Switzerland) as a
wholly-owned subsidiary through its wholly-owned subsidiary Rofin-Sinar
Technologies Europe S.L.

Effective
March 11, 2009, the Company made the final payment for the outstanding
earn-out, and acquired the remaining 10% of share capital of Optoskand AB
through its wholly-owned subsidiary Rofin-Sinar Laser GmbH under an option
agreement. This purchase resulted in additional goodwill of $0.7 million.

Effective
April 9, 2009, the Company acquired 80% of the equity of China-based Nanjing
Eastern Laser Company, Ltd. (NELC) through two separate cash transactions.
NELCs product lines are largely comprised of high power, fast-axial flow CO2
lasers, with a power range up to 3 kW as well as NC-based laser processing
equipment. This purchase resulted in goodwill of $4.3 million.

Effective
April 12, 2010, the Company, through its wholly-owned subsidiary Nufern,
purchased the Electro Optics fiber optic gyroscope coil winding business of
Optelecom-NKF, Inc. This purchase resulted in additional goodwill of
approximately $0.4 million.

RESULTS OF OPERATIONS

For the
periods indicated, the following table sets forth the percentage of net sales
represented by the respective line items in the Companys consolidated
statements of operations:

|                                              |  |                                 |       |      |  |       |   |  |       |  
|--------------------------------------------- |  | ------------------------------- | ----- | ---- |  | ----- | - |  | ----- | -
|                                              |  | Fiscal Year ended September 30, |      
|                                              |  |                                 |      
|                                              |  | 2010                            |       | 2009 |  | 2008  |  
|                                              |  |                                 |       |      |  |       |  
|Net sales                                     |  |                                 | 100.0 | %    |  | 100.0 | % |  | 100.0 | %
|Cost of
 goods sold                           |  |                                 | 60.7  | %    |  | 62.2  | % |  | 56.8  | %
|Gross profit                                  |  |                                 | 39.3  | %    |  | 37.8  | % |  | 43.2  | %
|Selling,
 general and administrative expenses |  |                                 | 21.2  | %    |  | 25.4  | % |  | 18.3  | %
|Research
 & development expenses              |  |                                 | 7.1   | %    |  | 9.0   | % |  | 7.1   | %
|Intangibles
 amortization                     |  |                                 | 0.5   | %    |  | 1.0   | % |  | 1.2   | %
|Income from
 operations                       |  |                                 | 10.4  | %    |  | 2.3   | % |  | 16.6  | %
|Income
 before income taxes                   |  |                                 | 10.8  | %    |  | 4.2   | % |  | 17.0  | %
|Net income
 attributable to RSTI              |  |                                 | 7.0   | %    |  | 2.6   | % |  | 11.1  | %

37

---



Fiscal Year 2010 Compared to Fiscal Year 2009

Net Sales 
Net sales of $423.6 million represents an increase of $74.0 million, or 21%,
over the prior year. Net sales increased $65.3 million, or 23%, in Europe/Asia
and $8.7 million, or 12%, in North America, compared to the prior year. The
U.S. dollar fluctuated against foreign currencies, which had a favorable effect
on net sales of $1.4 million. Net sales of laser products for macro
applications increased by 23% to $172.9 million, primarily due to the higher demand for
our lower and higher power CO2 lasers from OEM-customers in the machine
tool industry. Net
sales of lasers for marking and micro applications increased by 23% to $206.5
million compared to fiscal year 2009, mainly due to the higher demand for our
lasers for micro and marking applications principally from the semiconductor
and electronics industries. Revenues for the component business increased by 8%
to $44.2 million, primarily due to higher sales related to fiber optics.

Gross Profit 
The Companys gross profit of $166.3 million increased by $34.2 million, or
26%, over the prior year. As a percentage of sales, gross profit increased to
39%. The increased percentage margin in fiscal year 2010 was primarily a result
of better fixed cost absorption, a favorable product mix, and an increase in our
service and spare parts business. Gross profit was favorably affected by $1.2
million in fiscal year 2010 due to the fluctuation of the U.S. dollar against
foreign currencies.

Selling,
General and Administrative Expenses  Selling, general and administrative
expenses increased by $1.0 million, or 1%, to $89.9 million, compared to fiscal
year 2009 primarily as a result of our increased selling and marketing
activities, mainly in Asia and higher commissions related to our higher
revenues. Fiscal year 2009 included one-time costs related to headcount
reductions of $1.8 million. As a percentage of net sales, selling, general and
administrative expenses decreased to 21%. Selling, general and administrative
expenses were unfavorably affected by $0.4 million due to the fluctuation of
the U.S. dollar against foreign currencies in fiscal year 2010.

Research and
Development  The Companys net expenses for research and development amounted
to $30.1 million, which represents a decrease of $1.4 million, or 4%, primarily
due to higher R&D grants compared to fiscal year 2009 where, additionally,
one-time costs for headcount reduction of $0.5 million were included. Gross
research and development expenses for fiscal years 2010 and 2009 were $32.7
million and $33.5million, respectively, and were reduced by $2.6 million and
$2.0 million of government grants during the respective periods. The Company
will continue to apply for, and expects to continue receiving, government
grants towards research and development, especially in Europe. Research and
development expenses were not materially affected by the fluctuation of the
U.S. dollar against foreign currencies in fiscal year 2010.

Other Income  Net other income of $1.9 million
fiscal year 2010 represents a decrease of $4.7 million compared to the prior
year. Mainly as a result of additional short-term borrowings to finance our
share buyback program, net interest expense increased to $0.4 million in fiscal
year 2010, compared to $0.3 million in fiscal year 2009. The interest expense
is offset by $1.5 million of foreign currency gains in fiscal 2010 compared to
$4.2 million in fiscal 2009 and lower other miscellaneous income of $ 0.8
million compared to $2.7 million in fical 2009 which included $2.0 million
compensation for the cancellation of orders received in fiscal year 2008.

Income Tax
Expense  Income tax expense of $15.4 million in fiscal year 2010 and $5.2
million in fiscal year 2009, represent effective tax rates of 33.6% and 35.4%
for the respective periods. The lower effective income tax rate in fiscal year
2010 is mainly due to an improved business in locations with lower marginal
income tax rates which contributed to a normalized effective tax rate during
fiscal year 2010. Income tax expense, a significant portion of which is
incurred in foreign currencies, was not materially affected by the weakening of
the U.S. dollar against foreign currencies.

Net Income
Attributable to RSTI  As a result of the foregoing factors, the Companys net
income attributable to RSTI of $29.8 million ($1.02 per diluted share, based on
29.2 million weighted average common shares outstanding) in fiscal year 2010
increased by $20.6 million over the prior years net income attributable to
RSTI of $9.2 million ($0.31 per diluted share, based on 29.2 million weighted
average common shares outstanding). Net income attributable to RSTI was
favorably affected by $0.8 million in fiscal 2010 due to the fluctuation of the
U.S. dollar against foreign currencies.

38

---



Fiscal Year 2009 Compared to Fiscal Year 2008

Net Sales 
Primarily as a result of the financial crisis and the severe economic downturn,
net sales decreased by $225.7 million, or 39%, compared to the prior year and
amounted to $349.6 million in fiscal year 2009. Compared to fiscal year 2008,
net sales decreased $153.7 million, or 36%, in Europe/Asia and $72.0 million,
or 51%, in North America. The U.S. dollar fluctuated against foreign
currencies, which had an unfavorable effect on net sales of $28.5 million. Net
sales of laser products for macro applications decreased by 41% to $140.4 million, primarily due to the
lower demand for our low and high power CO2 lasers from OEM-customers
and diminished
demand from the automotive industry. Net sales of lasers for marking and micro
applications decreased by 40% to $168.1 million compared to fiscal year 2008,
mainly due to the lower demand principally from the photovoltaic,
semiconductor, consumer electronics, and jewelry industries. Due to the
economic downturn, component business revenue decreased by 29% to $41.1 million

Gross Profit 
The Companys gross profit of $132.0 million decreased by $116.4 million, or
47%, compared to the prior year. As a percentage of sales, gross profit
decreased to 38%. The decrease in our gross margins was mainly the result of
the low level of business with the corresponding lower absorption of fixed
costs, a decrease in our service and spare parts revenue and in our components
business, as well as the one-time costs associated with the headcount
reductions amounting to $1.0 million. Gross profit was unfavorably affected by
$8.7 million in fiscal year 2009 due to the fluctuation of the U.S. dollar
against foreign currencies, primarily the Euro.

Selling,
General and Administrative Expenses  Selling, general and administrative
expenses decreased by $16.2 million, or 15%, to $88.9 million, compared to
fiscal year 2008, primarily as a result of cost reductions in labor, travelling
and marketing, as well as lower commissions related to the lower level of
revenues, partially offset by one-time costs related to headcount reductions of
$1.8 million. Due to decreased sales, selling, general and administrative
expenses as a percentage of net sales, increased to 25%, compared to 18% in
fiscal year 2008. Selling, general and administrative expenses were favorably
affected by $6.1 million in fiscal year 2009 due to the fluctuation of the U.S.
dollar against foreign currencies, primarily the Euro.

Research and
Development  The Companys net expenses for research and development amounted
to $31.5 million, which represents a decrease of $9.6 million, or 23%, compared
to fiscal year 2008. Gross research and development expenses for fiscal years
2009 and 2008 were $33.5 million and $42.3 million, respectively, and were
reduced by $2.0 million and $1.2 million of government grants during the
respective periods. The Company will continue to apply for, and expects to
continue receiving, government grants towards research and development,
especially in Europe. The decrease in research and development expenses is
mainly a result of lower labor and material costs, partially offset by one-time
costs associated with headcount reductions amounting to $0.4 million. Research
and development expenses were favorably affected by $3.5 million in fiscal year
2009 due to the fluctuation of the U.S. dollar against foreign currencies,
primarily the Euro.

Other Income  Net other income of $6.6 million
fiscal year 2009 represents an increase of $4.3 million compared to the prior
year. The increase in net other income is primarily attributable to net
exchange gains of $4.2 million compared to net exchange losses of $1.0 million
in fiscal year 2008 and to net miscellaneous income of $2.7 million compared to
net miscellaneous income of $0.4 million in fiscal year 2008. Miscellaneous
income includes $2.0 million compensation for the cancellation of orders
received in the prior fiscal year.

Income Tax
Expense  Income tax expense of $5.2 million in fiscal year 2009 and $33.5
million in fiscal year 2008, represent effective tax rates of 36.1% and 34.4%
for the respective periods. The higher effective income tax rate is primarily
due to additional income taxes related to the repatriation of foreign income
but the remainder is permanently reinvested in combination with low level of
taxable income in countries with lower income tax rates. Income tax expense, a
significant portion of which is incurred in foreign currencies, was favorably
affected by $0.9 million in fiscal year 2009 due to the fluctuation of the U.S.
dollar against foreign currencies, primarily the Euro.

Net Income
Attributable to RSTI  Despite the challenging macroeconomic conditions but as
a result of the already implemented cost reductions, the Company achieved net
income attributable to RSTI of $9.2 million ($0.31 per diluted share, based on
29.2 million weighted average common shares outstanding) in fiscal year 2009.
Net income attributable to RSTI decreased by $54.6 million, compared to the
prior years net income attributable to RSTI of $63.8 million ($2.09 per
diluted share, based on 30.4 million weighted average common shares
outstanding). Net income attributable to RSTI was favorably affected by $1.4
million in fiscal year 2009 due to the fluctuation of the U.S. dollar against
foreign currencies, primarily the Euro.

39

---



LIQUIDITY AND CAPITAL RESOURCES

The Companys
primary sources of liquidity at September 30, 2010, were cash and cash
equivalents of $110.6 million, short-term investments of $5.7 million,
short-term credit lines of $76.7 million and long-term credit lines of $16.6
million. As of September 30, 2010, $4.1 million was outstanding under the
short-term lines of credit and $3.3 million was used for bank guarantees under
these lines of credit. $16.6 million was outstanding from the long-term credit
lines. Additionally, the Company maintained credit lines specific to bank
guarantees for $13.2 million, of which $2.2 million was used. Therefore, $11.0
million was unused and available under these lines of credit. The Company is
subject to financial covenants under some of these facilities and lines of
credit, which could restrict the Company from drawing money under them. At
September 30, 2010, the Company was in compliance with these covenants.

Cash and cash
equivalents decreased by $5.5 million during fiscal year 2010. Approximately
$36.8 million in cash and cash equivalents were provided by operating
activities, primarily as the result of the increased net income and other
non-cash items, principally depreciation and amortization and the increase in
accrued liabilities and pension obligations, accounts payable and income tax
payable. Operating cash flow was negatively affected by the increase in
accounts receivable and inventories, mainly as a result of the fast business
growth experienced during the second half of fiscal year 2010.

Net cash used
in investing activities totaled $8.3 million for fiscal year 2010, and was primarily related to various additions to property and equipment
($8.6 million), business acquisitions ($1.4 million) and purchase of short-term
investments ($10.9 million), partially offset by proceeds from the sale of short-term
investments ($12.4 million).

Net cash used
in financing activities totaled $26.5 million and was primarily related to the
stock buyback program ($19.5 million) and loan repayments of $39.9 million,
partly offset by $30.2 million in borrowings from banks and $3.0 million
generated through issuance of new shares from the exercise of stock options.

The Company
expects that its capital expenditures will be approximately $13.1 million in
fiscal year 2011.

Management
believes that cash flows from operations, along with existing cash and cash
equivalents and availability under our credit facilities and lines of credit,
will provide adequate resources to meet the Companys capital requirements and
operational needs on both a current and a long-term basis.

The following
table illustrates the Companys contractual obligations as of September 30,
2010:

|                                        |  |       |         |                                       |   |            |  |            |        |                    |   |        |  |   |        | 
|--------------------------------------- |  | ----- | ------- | ------------------------------------- | - | ---------- |  | ---------- | ------ | ------------------ | - | ------ |  | - | ------ | 
|                                        |  |       |         | Payments due by period (in thousands) |   |            | 
|                                        |  |       |         |                                       |   |            | 
|Contractual
 Obligations                |  | Total |         | Less than
 1 Year                     |   | 1-3
 Years |  | 3-5
 Years |        | More than
 5 Years |  
|                                        |  |       |         |                                       |   |            |  |            |        |                    |  
|                                        |  |       |         |                                       |   |            |  |            |        |                    |   |        |  |   |        | 
|Long and
 short-term debt               |  | $     | 20,661  |                                       | $ | 5,173      |  | $          | 11,060 |                    | $ | 4,428  |  | $ |       | 
|Pension
 obligations                    |  |       | 18,461  |                                       |   | 518        |  |            | 1,533  |                    |   | 1,771  |  |   | 14,639 | 
|Operating
 lease obligations            |  |       | 29,970  |                                       |   | 8,228      |  |            | 9,457  |                    |   | 4,667  |  |   | 7,618  | 
|Purchase
 obligations *                 |  |       | 99,854  |                                       |   | 82,306     |  |            | 17,548 |                    |   |       |  |   |       | 
|Interest
 obligation                    |  |       | 2,085   |                                       |   | 733        |  |            | 1,103  |                    |   | 249    |  |   |       | 
|Other short-
 and long-term obligations |  |       | 3,389   |                                       |   | 1,173      |  |            | 551    |                    |   | 230    |  |   | 1,435  | 
|                                        |  |       |         |                                       |   |            |  |            |        |                    |   |        |  |   |        | 
|Total                                   |  | $     | 174,420 |                                       | $ | 98,131     |  | $          | 41,252 |                    | $ | 11,345 |  | $ | 23,692 | 
|                                        |  |       |         |                                       |   |            |  |            |        |                    |   |        |  |   |        | 

|  |                                                                                                                        
|- | -----------------------------------------------------------------------------------------------------------------------
|* | Purchase
 obligations include payments due under various types of agreements to
 purchase raw materials or other goods.

Note 
Uncertain tax benefit liabilities of $ 0.6 million are not incuded in the
Companys contractual obligation tabe, as we can not make reasonable estimates
about the timing of any required payments related to these liabilities.

40

---



Off-Balance Sheet Arrangements

The Company
has no off-balance sheet arrangements or financing arrangements involving
variable interest entities, except for the remaining unused credit lines
amounting $80.3 million.

CURRENCY EXCHANGE RATE FLUCTUATIONS

Although the
Company prepares its consolidated financial statements in U.S. dollars,
approximately 64% of its net sales are denominated in other currencies,
primarily the Euro, Swedish krona, Swiss francs, British pound, Singapore
dollar, Taiwanese dollar, Korean won, Japanese yen, Canadian dollar, and
Chinese RMB. Net sales and costs and related assets and liabilities are
generally denominated in the functional currencies of the operations, thereby
serving to reduce the Companys exposure to exchange gains and losses.

Exchange
differences upon translation from each operations functional currency to U.S.
dollars are accumulated as a separate component of equity. The currency
translation adjustment component of shareholders equity had the effect of increasing
total equity by $17.6 million at September 30, 2010, as compared to $40.6
million at September 30, 2009.

The
fluctuation of the Euro and the other relevant functional currencies against
the U.S. dollar has had the effect of increasing or decreasing (as applicable)
reported net sales, as well as cost of goods sold, gross margin, selling,
general and administrative expenses, and research and development expenses,
denominated in such foreign currencies when translated into U.S. dollars as
compared to prior periods.

The Company
defines the term constant currency to mean that financial data for a period
are translated into U.S. dollars using the same foreign currency exchange rates
that were used to translate financial data for the previously reported period.
Changes in sales, gross profit and income from operations include the effect of
fluctuations in foreign currency exchange rates. The Companys management
reviews and analyzes business results on a constant currency basis and believes
these results represent the Companys underlying business trends without
distortion due to currency fluctuations. The Company believes that this
constant currency financial information is a useful measure for investors
because it reflects actual changes in operations.

The following
chart compares our net sales, gross profit, and income from operations for each
of fiscal years 2010, 2009, and 2008, to the equivalent financial results
calculated on a constant currency basis. Because this constant currency
financial information does not conform to Generally Accepted Accounting
Principles, it is presented under the caption Non-GAAP Constant Currency:

|                        |  |                  |       |                                |   |                  |  |                                |       |              |   |                                |  |   |       |  |   |       | 
|----------------------- |  | ---------------- | ----- | ------------------------------ | - | ---------------- |  | ------------------------------ | ----- | ------------ | - | ------------------------------ |  | - | ----- |  | - | ----- | 
|                        |  |                  |       |                                |   |                  | 
|                        |  | Fiscal Year 2010 |       | Fiscal Year 2009               |   | Fiscal Year 2008 | 
|                        |  |                  |       |                                |   |                  | 
|                        |  | GAAP
 Actual     |       | Non-
 GAAP
 Constant
 Currency |   | GAAP
 Actual     |  | Non-
 GAAP
 Constant
 Currency |       | GAAP
 Actual |   | Non-
 GAAP
 Constant
 Currency | 
|                        |  |                  |       |                                |   |                  |  |                                |       |              |   |                                | 
|                        |  | (in millions)    |      
|Net sales               |  | $                | 423.6 |                                | $ | 422.2            |  | $                              | 349.6 |              | $ | 378.1                          |  | $ | 575.3 |  | $ | 530.2 | 
|Gross profit            |  |                  | 166.3 |                                |   | 165.1            |  |                                | 131.2 |              |   | 139.9                          |  |   | 248.0 |  |   | 232.5 | 
|Income from
 operations |  |                  | 44.0  |                                |   | 43.2             |  |                                | 8.7   |              |   | 7.7                            |  |   | 96.3  |  |   | 92.1  | 

Between fiscal
year 2009 and 2010, the average exchange rate for the Euro weakened against the
U.S. dollar by approximately 0.3%. The impact of fluctuations in exchanges
rates of foreign currencies against the U.S. dollar was to increase net sales
and gross profit by $1.4 million and $1.2 million, respectively, because
approximately 64% of fiscal year 2010 sales were denominated in other
currencies, primarily the Euro. These exchange rate fluctuations had the effect
of increasing operating expense by $0.4 million, thereby increasing income from
operations by $0.8 million.

41

---



Between fiscal
year 2009 and 2008, the average exchange rate for the Euro weakened against the
U.S. dollar by approximately 10.5%. The impact of this weakening was to
decrease net sales and gross profit by $28.5 million and $8.7 million,
respectively, because approximately 72% of sales were denominated in other
currencies, primarily the Euro. This weakening of the Euro had the effect of
decreasing operating expenses by $29.5 million, thereby increasing income from
operations only by $1.0 million.

Between fiscal
year 2008 and 2007, the average exchange rate for the Euro strengthened against
the U.S. dollar by approximately 11.3%. The impact of this strengthening was to
increase net sales and gross profit by $45.1 million and $15.8 million,
respectively, because approximately 69% of fiscal year 2008 sales were
denominated in other currencies, primarily the Euro. However, because more than
69% of operating expenses were also denominated in these other currencies, this
same strengthening of the Euro had the effect of increasing operating expenses
and thereby reducing the overall exchange rate effect on income from operations
to an increase of $4.2 million.

CRITICAL ACCOUNTING POLICIES

The Companys
significant accounting policies are also described in Note 1 of the
consolidated financial statements. Certain of the accounting policies require
the application of significant judgment by management in selecting appropriate
assumptions for calculating financial estimates. By their nature, these
judgments are subject to an inherent degree of uncertainty.

Allowance for
Doubtful Accounts

The Company
records allowances for uncollectible customer accounts receivable based on
historical experience. Additionally, an allowance is made based on an
assessment of specific customers financial condition and liquidity. If the
financial condition of the Companys customers were to deteriorate, additional
allowances may be required. No individual customer represents more than 10% of
total accounts receivable. Any increase in allowance will impact operating
income during a given period.

Inventory Valuation

Inventories are
stated at the lower of cost or market, after provisions for excess and obsolete
inventory salable at prices below cost. Provisions for slow moving and obsolete
inventories are provided based on current assessments about historical
experience and future product demand and production requirements for the next
twelve months. These factors are impacted by market conditions, technology
changes, and changes in strategic direction, and require estimates and
management judgment that may include elements that are uncertain. The Company
evaluates the adequacy of these provisions quarterly. Although the Company
strives to achieve a balance between market demands and risk of inventory
excess or obsolescence, it is possible that, should conditions change,
additional provisions may be needed. Any changes in provisions will impact
operating income during a given period.

Warranty Reserves

The Company
provides reserves for the estimated costs of product warranties when revenue is
recognized. The Company relies upon historical experience, expectations of
future conditions, and its service data to estimate its warranty reserve. The
Company continuously monitors these data to ensure that the reserve is
sufficient. Warranty costs have historically been within our expectations. To
the extent we experience increased warranty claim activity or increased costs
associated with servicing those claims (such costs may include material, labor,
and travel costs), revisions to the estimated warranty liability would be
required. Increases in reserves will impact operating income during the period.

42

---



Pension Obligations

The
determination of the Companys obligation and expense for pension is dependent
on the selection of certain actuarial assumptions in calculating those amounts.
Assumptions are made about interest rates, expected investment return on plan
assets, total turnover rates, and rates of future compensation increases. In
addition, the Company provides the actuarial consultants with subjective
factors such as withdrawal rates and mortality rates to develop their
calculations of these amounts. The Company generally reviews these assumptions
at the beginning of each fiscal year. The Company is required to consider
current market conditions, including changes in interest rates, in making these
assumptions. The actuarial assumptions that the Company uses may differ
materially from actual results due to changing market and economic conditions,
higher or lower withdrawal rates or longer or shorter life spans of
participants. These differences may result in a significant impact on the
amount of pension benefits expense the Company has recorded or may record.

The discount
rate enables the Company to state expected future cash flows at a present value
on the measurement date. The Company has little latitude in selecting this rate
and it must represent the market rate of high-quality fixed income investments.
A lower discount rate increases the present value of benefit obligations and
increases pension expense.

To determine
the expected long-term rate of return on plan assets, the Company considers the
current and expected asset allocations, as well as historical and expected
returns on various categories of plan assets.

Income Taxes

We estimate
our income tax provision in each of the jurisdictions in which we operate, a
process that includes estimating exposures related to examinations by taxing
authorities. We must also make judgments regarding the ability to realize the
deferred tax assets. The carrying value of our net deferred tax assets is based
on our belief that it is more likely than not that we will generate sufficient
future taxable income in certain jurisdictions to realize these deferred tax
assets. A valuation allowance has been established for deferred tax assets that
we do not believe meet the more likely than not criteria. We assess whether
an uncertain tax position taken or expected to be taken in a tax return meets
the threshold for recognition and measurement in the consolidated financial
statements. Our judgments regarding future taxable income as well as tax
positions taken or expected to be taken in a tax return may change due to
changes in market conditions, changes in tax laws or other factors. If our
assumptions and consequently our estimates change in the future, the valuation
allowances and/or tax reserves established may be increased or decreased,
resulting in a respective increase or decrease in income tax expense.

Share-Based Payment

Stock-based
compensation cost is measured at grant date, based on the fair value of the
award, and is recognized as expense over the employee requisite vesting period.
We make judgments about the fair value of the awards, including the expected
term of the award, volatility of the underlying stock and estimated
forfeitures, which impact the amount of compensation expense recognized in the
financial statements. Such amounts may change as a result of additional grants,
forfeitures, modifications in assumptions and other factors. The income tax
effects of share-based payments are recognized in the financial statements for
those awards which will normally result in tax deductions under existing tax
law. Under current U.S. federal tax laws, we receive a compensation expense
deduction related to stock options only when those options are exercised and
vested shares are received. Accordingly, the financial statement recognition of
compensation cost for stock options creates a deductible temporary difference
which results in a deferred tax asset and a corresponding deferred tax benefit
in the income statement for all U.S.-based employees. Stock compensation
expense related to non-U.S. employees is treated as a permanent difference for
income tax purposes.

43

---



Accounting Pronouncements Recently Adopted

In January
2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and
Disclosures (ASU 2010-06) which provides amendments to Subtopic 820-10 that
require new disclosures regarding (1) transfers in and out of Levels 1 and 2
fair value measurements and (2) activity in Level 3 fair value measurements.
Additionally, ASU 2010-06 clarifies existing fair value disclosures about the
level of disaggregation and about inputs and valuation techniques used to
measure fair value. The guidance in ASU 2010-06 became effective for the
Companys second quarter of fiscal year 2010 and the disclosures required by
this adoption are included in Note 2 Fair Value Measurements, except for
disclosures about purchases, sales, issuances, and settlements in the roll
forward activity in Level 3 fair value measurements which are effective for
fiscal years beginning after December 15, 2010, and for interim periods within
those fiscal years. The adoption of this guidance did not have an impact on the
Companys consolidated financial statements.

In December
2008, the FASB issued new accounting guidance that requires enhanced annual
disclosures about the plan assets of a Companys defined benefit pension and
other postretirement plans intended to provide users of financial statements
with a greater understanding of: (1) how investment allocation decisions are
made, including the factors that are pertinent to an understanding of
investment policies and strategies; (2) the major categories of plan assets;
(3) the inputs and valuation techniques used to measure the fair value of plan
assets; (4) the effect of fair value measurements, using significant
unobservable inputs (Level 3) on changes in plan assets for the period; and (5)
significant concentrations of risk within plan assets. The new guidance
resulted in enhanced disclosures beginning with the Companys Form 10-K for the
year ended September 30, 2010 included herein.

In December
2007, the FASB issued new accounting and disclosure guidance related to
noncontrolling interests in subsidiaries (previously referred to as minority
interests), which was effective for the Company on October 1, 2009. Among other
things, the new guidance requires that a noncontrolling interest in a
subsidiary be presented as a component of equity separate from the parents
equity. It also requires that consolidated net income be reported at amounts
that include the amounts attributable to both the parent and the noncontrolling
interests. The new guidance has been applied prospectively, except for the
presentation and disclosure requirements, which have been applied
retrospectively to all periods presented herein.

In June 2008,
ASC Topic 260, Earnings Per Share, was amended to require that unvested
share-based payment awards that contain nonforfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) be treated as participating
securities and shall be included in the computation of earnings per share
pursuant to the two-class method. This amendment became effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those years, and requires that all prior period earnings
per share data presented (including interim financial statements, summaries of
earnings and selected financial data) be adjusted retrospectively to conform to
its provisions. This Topic became effective October 1, 2009, and did not have
an impact on the Companys consolidated financial statements.

In April 2008,
ASC Topic 350, Intangibles  Goodwill and Other, was amended to include a
list of factors an entity should consider in developing renewal or extension
assumptions used in determining the useful life of recognized intangible
assets. The new guidance applies to (1) intangible assets that are acquired
individually or with a group of other assets and (2) intangible assets acquired
in both business combinations and asset acquisitions. Under this amendment,
entities estimating the useful life of a recognized intangible asset must
consider their historical experience in renewing or extending similar
arrangements or, in the absence of historical experience, must consider
assumptions that market participants would use about renewal or extension. This
amendment required certain additional disclosures beginning October 1, 2009,
and prospective application to useful life estimates prospectively for
intangible assets acquired after September 30, 2009. This Topic became
effective October 1, 2009, and did not have an impact on the Companys
consolidated financial statements.

44

---



In December
2007, the FASB amended its guidance on accounting for business combinations.
The new accounting guidance was effective for the company on October 1, 2009,
and is being applied prospectively to all business combinations subsequent to
the effective date. Among other things, the new guidance amends the principles
and requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed and any
noncontrolling interest in the acquiree and the goodwill acquired. It also
establishes new disclosure requirements to enable the evaluation of the nature
and financial effects of the business combination. The adoption of this
accounting guidance did not have a significant impact on the Companys
consolidated financial statements, and the impact it will have on the Companys
consolidated financial statements in future periods will depend on the nature
and size of business combinations completed subsequent to the date of adoption.

In February
2010, the FASB issued ASU No. 2010-09, Subsequent Events (Topic 855) (ASU
2010-09) which provides an update to Topic 855, Subsequent Events. This
update clarifies that an SEC filer is required to evaluate subsequent events
through the date that the financial statements are issued and removes the
requirement for SEC filers to disclose the date through which subsequent events
have been evaluated. This guidance became effective upon issuance and has been
adopted by the Company.

Recent Accounting Pronouncements Not Yet Adopted
as of September 30, 2010

In April 2010, the FASB issued ASU No.
2010-17, Revenue Recognition - Milestone Method (Topic 605) (ASU 2010-17)
which provides guidance on defining a milestone and determining when it may be
appropriate to apply the milestone method of revenue recognition for certain
revenue transactions. This guidance is effective on a prospective basis for
milestones achieved in fiscal years, and interim periods within those years,
beginning on or after June 15, 2010 (fiscal year 2011 for the Company). This
accounting guidance is not expected to have a material impact on the Companys
consolidated financial statements.

In June 2009,
ASC Topic 810 was amended to improve financial reporting by enterprises
involved with variable interest entities. This Topic addresses (1) the effects
on certain provisions regarding the consolidation of variable interest
entities, as a result of the elimination of the qualifying special-purpose
entity concept in ASC Topic 860 regarding the accounting for transfers of
financial assets, and (2) concern about the application of certain key
provisions of FASB Interpretation No. 46(R), including those in which the
accounting and disclosures under the Interpretation do not always provide
timely and useful information about an enterprises involvement in a variable
interest entity. This guidance is effective as of the beginning of each
reporting entitys first annual reporting period that begins after November 15,
2009 (fiscal year 2011 for the Company), for interim periods within that first
annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. The adoption of this statement
is not expected to have a material effect on the Companys consolidated
financial statements.

In October
2009, the FASB issued new accounting guidance for revenue recognition with
multiple deliverables. This guidance impacts the determination of when the
individual deliverables included in a multiple-element arrangement may be
treated as separate units of accounting. Additionally, this new accounting
guidance modifies the manner in which the transaction consideration is
allocated across the separately identified deliverables by no longer permitting
the residual method of allocating arrangement consideration. The new guidance
is effective for the Company prospectively for revenue arrangements entered
into or materially modified beginning in the first quarter of fiscal 2011.
Early adoption is permitted. This accounting guidance is not expected to have a
significant impact on the Companys consolidated financial statements.

In July 2010,
the FASB issued ASU No. 2010-20, Receivables (Topic 310) - Disclosures about
the Credit Quality of Financing Receivables and the Allowance for Credit Losses
(ASU 2010-20) which requires additional disclosures about an entitys
allowance for credit losses and the credit quality of its financing
receivables. These amendments affect all entities with financing receivables,
excluding short-term accounts receivable or receivables measured at fair value
or lower of cost or fair value. The guidance on disclosures as of the end of a
reporting period will be effective for the Company on December 31, 2010. The
disclosures about activity that occurs during a reporting period are effective
for the Companys second quarter of fiscal year 2011. The Company does not
expect the adoption of this guidance to have a material impact on its financial
statements.

45

---



|         |                                                            
|-------- | -----------------------------------------------------------
|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES
 ABOUT MARKET RISK

The following
discussion about the Companys market risk disclosures involves forward-looking
statements. Actual results could differ materially from those projected in the
forward-looking statements. The Company is exposed to market risk related to
changes in interest rates and foreign currency exchange rates. The Company does
not use derivative financial instruments for trading purposes.

Interest Rate Sensitivity

As of
September 30, 2010, the Company maintained cash equivalents and short-term
investments of $116.3 million, consisting mainly of non-taxable interest
bearing securities and demand deposits all with maturities of less than one
year. If short-term interest rates were to increase or decrease by 10%, the
impact on interest income would be less than $0.1 million.

As of
September 30, 2010, the Company had $5.2 million of variable rate debt on which
the interest rate is reset every three months, $2.8 million of variable rate
debt on which the interest rate is reset every six months, $2.4 million of
variable rate debt on which the interest rate is reset every twelve months and
$10.3 million of fixed rate debt. Maturities of this debt are as follows: $5.2
million is due in 2011, $3.1 million is due in 2012, $7.9 million is due in
2013, $1.5 million is due in 2014, and $3.0 million is due in 2015. A 10%
change in the variable interest rates of the Companys debt would result in an
increase or decrease in interest expense of less than $0.1 million.

The Company
has entered into an interest rate swap agreement of total notional amount of
Euro 3.8 million (equivalent to $5.2 million based on the exchange rate at
September 30, 2010) to minimize the interest expenses on short-term debt by
shifting from variable to fixed interest rates, that is included in the
previous paragraph as variable debt.

Foreign Currency Exchange Risk

The Company
enters into foreign currency forward contracts and forward exchange options
generally of less than one year duration to hedge a portion of its foreign
currency risk on sales transactions. At September 30, 2010, the Company held
Japanese yen forward exchange options with notional amounts of less than Euro
0.1 million and Japanese yen forward exchange options with notional amount of
less than $0.2 million. The gains or losses resulting from a 10% change in
currency exchange rates would be approximately less than $0.1 and $0.1 million,
respectively.

|        |                                                          
|------- | ---------------------------------------------------------
|ITEM 8. | CONSOLIDATED FINANCIAL STATEMENTS AND
 SUPPLEMENTARY DATA

See Item 15(a)
for an index to the consolidated financial statements.

|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH
 ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

46

---



|         |                        
|-------- | -----------------------
|ITEM 9A. | CONTROLS AND PROCEDURES

Attached as
exhibits to this Form 10-K are certifications of the Companys Chief Executive
Officer and Chief Financial Officer, which are required in accordance with Rule
13a-14 of the Securities Exchange Act of 1934, as amended (the Exchange Act).
This Controls and Procedures section includes information concerning the
controls and controls evaluation referred to in the certifications. Part IV,
Item 15 of this Form 10-K, sets forth the report of Deloitte & Touche LLP,
our independent registered public accounting firm, regarding its audit of the
Companys internal control over financial reporting set forth below in this
section. This section should be read in conjunction with the certifications and
the Deloitte & Touche LLP report for a more complete understanding of the
topics presented.

Evaluation of Disclosure Controls and
Procedures

The Company,
under the supervision and with the participation of its management, including
the Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the design and operation of the Companys disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange
Act) as of September 30, 2010. Based on the evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that the Companys disclosure
controls and procedures were effective as of September 30, 2010.

There has been
no change in the Companys internal control over financial reporting during the
fourth quarter of our fiscal year ended September 30, 2010, that has materially
affected, or is reasonably likely to materially affect, the Companys internal
control over financial reporting.

Management Report on Internal Control Over
Financial Reporting

The Companys
management is responsible for establishing and maintaining adequate internal
control over financial reporting to provide reasonable assurance regarding the
reliability of the Companys financial reporting and the preparation of
financial statements for external purposes in accordance with Generally
Accepted Accounting Principles. Internal control over financial reporting includes
those policies and procedures that (i) pertain to the maintenance of records,
that in reasonable detail accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with Generally Accepted Accounting Principles, and
that receipts and expenditures of the Company are being made only in accordance
with authorizations of management and directors of the Company; and (iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Companys assets that could
have a material effect on the financial statements.

Management assessed
the Companys internal control over financial reporting as of September 30,
2010, the end of its fiscal year. Management based its assessment on criteria
established in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Managements
assessment included evaluation of such elements as the design and operating
effectiveness of key financial reporting controls, process documentation,
accounting policies, and the Companys overall control environment. This
assessment is supported by testing and monitoring performed by the Companys
Internal Audit organization.

Based on its
assessment, management has concluded that the Companys internal control over
financial reporting was effective as of the end of the fiscal year to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external reporting purposes in
accordance with Generally Accepted Accounting Principles. Management reviewed
the results of its assessment with the Audit Committee of the Companys Board
of Directors.

The Companys
independent registered public accounting firm, Deloitte & Touche LLP,
independently assessed the effectiveness of the Companys internal control over
financial reporting. Deloitte & Touche LLP has issued an attestation report
concurring with managements assessment, which is included at the beginning of
Part IV, Item 15 of this Annual Report on Form 10-K.

47

---



The Companys
management does not expect that the internal controls over financial reporting
will prevent or detect all errors and all fraud. A control system, no matter
how well designed and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Due to the inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues, errors and
instances of fraud, if any, within the Company have been or will be detected.

|         |                  
|-------- | -----------------
|ITEM 9B. | OTHER INFORMATION

None.

PART III

|         |                                                           
|-------- | ----------------------------------------------------------
|ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS AND
 CORPORATE GOVERNANCE

The
information required by this item is included in the Election of Directors,
Directors and Executive Officers, Section 16(a) Beneficial Ownership
Reporting Compliance, and Committees of the Board of Directors; Meetings and
Compensation of Directors, sections of the Companys Proxy Statement to be
filed in connection with the Companys 2011 Annual Meeting of Stockholders
to be held in March 2011, and is incorporated by reference herein.

|         |                       
|-------- | ----------------------
|ITEM 11. | EXECUTIVE COMPENSATION

The
information required by this item is included in the Executive Compensation
and Related Information section of the Companys Proxy Statement to be filed
in connection with the Companys 2011 Annual Meeting of Stockholders to be held
in March 2011, and is incorporated by reference herein.

48

---



|         |                                                                                                
|-------- | -----------------------------------------------------------------------------------------------
|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
 OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following
table sets forth the number of securities authorized for issuance under our
equity compensation plans at September 30, 2010:

|                                                              |  |                                                                                                 |  |                                                                                 |   |                                                                                                                                                   |  |  |        |  |  |  |  |         |  | 
|------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ------ |  |  |  |  | ------- |  | 
|                                                              |  | Number of securities
 to be issued upon
 exercise of
 outstanding options,
 warrants and rights |  | Weighted-average
 exercise price of
 outstanding
 options, warrants
 and rights |   | Number of securities
 remaining available for
 future issuance under
 equity compensation
 plans (excluding
 securities reflected in
 column (a)) | 
|                                                              |  |                                                                                                 |  |                                                                                 |   |                                                                                                                                                   | 
|                                                              |  | (a)                                                                                             |  | (b)                                                                             |   | (c)                                                                                                                                               | 
|Equity
 compensation plans approved by security holders:      |  |                                                                                                 |  |                                                                                 |   |                                                                                                                                                   |  |  |        |  |  |  |  |         |  | 
|2002 Equity Incentive Plan                                    |  |                                                                                                 |  | 2,030,200                                                                       |   |                                                                                                                                                   |  |  | 21 1/4 |  |  |  |  |        |  | 
|2007 Incentive Stock Plan                                     |  |                                                                                                 |  | 933,000                                                                         | * |                                                                                                                                                   |  |  | 26 1/5 |  |  |  |  | 318,750 |  | 
|                                                              |  |                                                                                                 |  |                                                                                 |   |                                                                                                                                                   |  |  |        |  |  |  |  |         |  | 
|Total equity
 compensation plans approved by security holders |  |                                                                                                 |  | 2,963,200                                                                       |   |                                                                                                                                                   |  |  | 22 4/5 |  |  |  |  | 318,750 |  | 
|Equity
 compensation plans not approved by security holders   |  |                                                                                                 |  |                                                                                |   |                                                                                                                                                   |  |  |       |  |  |  |  |        |  | 
|                                                              |  |                                                                                                 |  |                                                                                 |   |                                                                                                                                                   |  |  |        |  |  |  |  |         |  | 
|Total                                                         |  |                                                                                                 |  | 2,963,200                                                                       |   |                                                                                                                                                   |  |  | 22 4/5 |  |  |  |  | 318,750 |  | 
|                                                              |  |                                                                                                 |  |                                                                                 |   |                                                                                                                                                   |  |  |        |  |  |  |  |         |  | 

The remaining
information required by this is included in the Security Ownership of Certain
Beneficial Owners and Management sections of the Companys Proxy Statement
to be filed in connection with the Companys 2011 Annual Meeting of
Stockholders to be held in March 2011, and is incorporated by reference herein.

* Does not
included 36,000 shares that were issued as the annual grants of shares of
common stock to outside Board of Directors.

|         |                                                                          
|-------- | -------------------------------------------------------------------------
|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED
 TRANSACTIONS AND DIRECTOR INDEPENDENCE

The
information required by this item is included in the Compensation Committee,
Compensation Committee Interlocks and Insider Participation, and Certain
Relationships and Related Transactions sections of the Companys Proxy
Statement to be filed in connection with the Companys 2011 Annual Meeting of
Stockholders to be held in March 2011, and is incorporated by reference herein.

The main
facility in Starnberg is rented under a 25-year operating lease from the former
minority shareholder of CBL, Mr. Baasel, who is also a member of the Board of
Directors of the Company, and includes a clause to terminate the lease contract
upon two-year notice. The Company paid expenses, mainly for rental expenses,
$0.9 million, $0.9 million, and $1 million, to Mr. Baasel during fiscal years
2010, 2009, and 2008, respectively.

The Company
believes that all transactions noted above, have been executed on an
arms-length basis. Except for the foregoing, no director, officer, nominee
director, 5% holder of the Companys shares, or immediate family member,
associate or affiliate thereof, had any material interest, direct or indirect,
in any transaction since the beginning of fiscal year 2010 or has any material
interest, direct or indirect, in any proposed transaction, having a value of
$60,000 or more.

49

---



Indebtedness of Officers and Directors

Since the
beginning of fiscal year 2004, there has been no indebtedness to the Company by
any director or officer or associates of any such person, other than
reimbursements for purchases, for ordinary travel and expense advances and for
other transactions in the ordinary course of business.

|         |                                       
|-------- | --------------------------------------
|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES

The
information set forth under Independent Public Accountants in the definitive
form of the Companys Proxy Statement to be filed in connection with the
Companys 2011 Annual Meeting of Stockholders to be held in March 2011,
is incorporated by reference herein.

50

---



PART IV

|         |                                            
|-------- | -------------------------------------------
|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT
 SCHEDULES

|   |    |                                                                                                                                                                                                                   |  |     
|-- | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|a. | 1. | Consolidated
 Financial Statements                                                                                                                                                                                |  |     
|   |    |                                                                                                                                                                                                                   |  |     
|   |    | The
 following financial statements are filed as part of this Form 10-K:                                                                                                                                          |  |     
|   |    |                                                                                                                                                                                                                   |  |     
|   |    | Report of Independent Registered Public Accounting Firm                                                                                                                                                           |  | F-1 
|   |    |                                                                                                                                                                                                                   |  |     
|   |    | Consolidated Balance Sheets as of September 30, 2010, and 2009                                                                                                                                                    |  | F-3 
|   |    |                                                                                                                                                                                                                   |  |     
|   |    | Consolidated Statements of Operations for the years ended September
 30, 2010, 2009, and 2008                                                                                                                     |  | F-4 
|   |    |                                                                                                                                                                                                                   |  |     
|   |    | Consolidated Statements of Stockholders Equity and Comprehensive
 Income for the years ended September 30, 2010, 2009, and 2008                                                                                  |  | F-5 
|   |    |                                                                                                                                                                                                                   |  |     
|   |    | Consolidated Statements of Cash Flows for the years ended September
 30, 2010, 2009, and 2008                                                                                                                     |  | F-7 
|   |    |                                                                                                                                                                                                                   |  |     
|   |    | Notes to Consolidated Financial Statements                                                                                                                                                                        |  | F-8 
|   |    |                                                                                                                                                                                                                   |  |     
|   | 2. | Financial
 Statement Schedules                                                                                                                                                                                    |  |     
|   |    |                                                                                                                                                                                                                   |  |     
|   |    | Schedule II  Valuation and Qualifying Accounts                                                                                                                                                                   |  | F-32
|   |    |                                                                                                                                                                                                                   |  |     
|   |    | Schedules
 not listed above have been omitted because the matter or conditions are not
 present or the information required to be set forth therein is included in the
 Consolidated Financial Statements hereto. |  |     
|   |    |                                                                                                                                                                                                                   |  |     
|   | 3. | Exhibits                                                                                                                                                                                                          |  |     
|   |    |                                                                                                                                                                                                                   |  |     
|   |    | The exhibits
 listed in the accompanying index to exhibits are filed or incorporated by
 reference as part of this Annual Report.                                                                                 |  |     

51

---



|                 |  |                                                                                                                                                                                             
|---------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT 
 NUMBER |  | DESCRIPTION                                                                                                                                                                                 
|                 |  |                                                                                                                                                                                             
|                 |  |                                                                                                                                                                                             
|3.1              |  | Certificate
 of Incorporation of the Company and Form of Certificate of Amendment thereto
 (*)                                                                                              
|                 |  |                                                                                                                                                                                             
|3.2              |  | By-Laws of
 the Company (**)                                                                                                                                                                
|                 |  |                                                                                                                                                                                             
|4.1              |  | Form of
 Rights Agreement (*)                                                                                                                                                               
|                 |  |                                                                                                                                                                                             
|10.1             |  | Form of Sale
 and Transfer Agreement between Siemens Aktiengesellschaft and Rofin-Sinar
 Technologies Inc. (*)                                                                              
|                 |  |                                                                                                                                                                                             
|10.2             |  | Form of Sale
 and Transfer Agreement by and among Siemens Power Corporation and Rofin-
 Sinar Technologies Inc. (*)                                                                         
|                 |  |                                                                                                                                                                                             
|10.3             |  | Form of Tax
 Allocation and Indemnification Agreement among Rofin-Sinar Technologies Inc.,
 Rofin-Sinar, Inc., Siemens Corporation, and Siemens Power Corporation (*)                       
|                 |  |                                                                                                                                                                                             
|10.4             |  | Joint
 Venture Agreement, dated as of May 27, 1992, by and among Rofin-Sinar Laser
 GmbH, Marubeni Corporation and Nippei Toyama Corporation (*)                                            
|                 |  |                                                                                                                                                                                             
|10.5             |  | Cooperation
 Agreement, dated as of May 27, 1992, among Nippei Toyama Corporation,
 Rofin-Sinar Laser GmbH, and Marubeni Corporation (*)                                                    
|                 |  |                                                                                                                                                                                             
|10.6             |  | Cooperation
 Agreement, dated as of May 27, 1992, among Rofin-Sinar Laser GmbH, Marubeni
 Corporation, and Nippei Toyama Corporation (*)                                                    
|                 |  |                                                                                                                                                                                             
|10.7             |  | Inheritable
 Building Right (Erbbaurecht), dated as of March 1, 1990, between Rofin-Sinar
 Laser GmbH and Lohss GmbH (in German, English summary provided) (*)                              
|                 |  |                                                                                                                                                                                             
|10.8             |  | Lease
 Agreement, dated August 10, 1990, between Josef and Maria Kranz and
 Rofin-Sinar Laser GmbH (in German, English summary provided) (*)                                                
|                 |  |                                                                                                                                                                                             
|10.9             |  | Lease
 Agreement, dated March 25, 1993, between DR Group and Rofin-Sinar,
 Incorporated (Concept Drive property) (*)                                                                        
|                 |  |                                                                                                                                                                                             
|10.10            |  | Rofin-Sinar
 Laser GmbH Pension Plan (in German, English summary provided) (*) (a)                                                                                                          
|                 |  |                                                                                                                                                                                             
|10.11            |  | Form of 1996
 Equity Incentive Plan (*) (a)                                                                                                                                                 
|                 |  |                                                                                                                                                                                             
|10.12            |  | Form of 1996
 Non-Employee Directors Stock Plan (*) (a)                                                                                                                                    
|                 |  |                                                                                                                                                                                             
|10.13            |  | Deutsche
 Bank AG Commitment Letter dated August 22, 1996 (*)                                                                                                                               
|                 |  |                                                                                                                                                                                             
|10.14            |  | Form of
 Employment Agreement, dated as of September 2, 1996, among Peter Wirth,
 Rofin- Sinar Laser GmbH, and Rofin-Sinar Technologies Inc. (in German,
 English summary provided) (a)     
|                 |  |                                                                                                                                                                                             
|10.15            |  | Form of
 Employment Agreement, dated as of September 2, 1996, among Gunther Braun,
 Rofin-Sinar Laser GmbH, and Rofin-Sinar Technologies Inc. (in German, English
 summary provided) (*) (a)
|                 |  |                                                                                                                                                                                             
|10.16            |  | English
 Translation of Acquisition Agreement, dated as of April 29, 2000, by and
 between Mannesmann Demag Krauss-Maffei AG and Rofin-Sinar Laser GmbH (****)                              
|                 |  |                                                                                                                                                                                             
|10.17            |  | English
 Translation of Option Agreement between Carl Baasel and Rofin-Sinar Laser
 GmbH (***)                                                                                              

52

---



|                 |                                                                                                                                                                                   |             |                                                                                 
|---------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | --------------------------------------------------------------------------------
|EXHIBIT 
 NUMBER |                                                                                                                                                                                   | DESCRIPTION
|                 |                                                                                                                                                                                   |            
|                 |                                                                                                                                                                                   |             |                                                                                 
|10.18            |                                                                                                                                                                                   |             | Lease
 Agreement between Carl Baasel and Rofin-Sinar Laser GmbH (***)           
|                 |                                                                                                                                                                                   |             |                                                                                 
|10.19            |                                                                                                                                                                                   |             | 2002 Equity
 Incentive Plan (*****) (a)                                         
|                 |                                                                                                                                                                                   |             |                                                                                 
|10.20            |                                                                                                                                                                                   |             | 2007
 Incentive Stock Plan (*******) (a)                                        
|                 |                                                                                                                                                                                   |             |                                                                                 
|14.1             |                                                                                                                                                                                   |             | Code of
 Business Ethics (******)                                               
|                 |                                                                                                                                                                                   |             |                                                                                 
|21.1             |                                                                                                                                                                                   |             | List of
 Subsidiaries of the Registrant                                         
|                 |                                                                                                                                                                                   |             |                                                                                 
|23.1             |                                                                                                                                                                                   |             | Consent of
 Deloitte & Touche, LLP Independent Registered Public Accounting Firm
|                 |                                                                                                                                                                                   |             |                                                                                 
|31.1             |                                                                                                                                                                                   |             | Rule
 13a-14(a)/15d-14(a) Certification of Chief Executive Officer              
|                 |                                                                                                                                                                                   |             |                                                                                 
|31.2             |                                                                                                                                                                                   |             | Rule
 13a-14(a)/15d-14(a) Certification of Chief Financial Officer              
|                 |                                                                                                                                                                                   |             |                                                                                 
|32.1             |                                                                                                                                                                                   |             | Section 1350
 Certification of Chief Executive Officer                          
|                 |                                                                                                                                                                                   |             |                                                                                 
|32.2             |                                                                                                                                                                                   |             | Section 1350
 Certification of Chief Financial Officer                          
|                 |                                                                                                                                                                                   |             |                                                                                 
|(*)              | Incorporated
 by reference to the exhibits filed with the Companys Registration Statement
 on Form S-1 (File No. 333-09539) which was declared effective on September
 25, 1996.
|                 |                                                                                                                                                                                  
|(**)             | Incorporated
 by reference to the exhibit filed with the Companys Quarterly Report for the
 period ended March 31, 1998.                                                        
|                 |                                                                                                                                                                                   |             |                                                                                 
|(***)            | Incorporated
 by reference to the exhibit filed with the Companys Current Report on Form
 8-K filed with the Securities and Exchange Commission on May 24, 2000.                
|                 |                                                                                                                                                                                   |             |                                                                                 
|(****)           | Incorporated
 by reference to the exhibit filed with the Companys Annual Report on Form
 10-K/A filed with the Securities and Exchange Commission on January 18, 2001.          
|                 |                                                                                                                                                                                   |             |                                                                                 
|(*****)          | Incorporated
 by reference to the exhibit filed with the Companys Annual Report on Form
 10-K filed with the Securities and Exchange Commission on December 23, 2003.           
|                 |                                                                                                                                                                                   |             |                                                                                 
|(******)         | Incorporated
 by reference to the exhibit filed with the Companys Proxy Statement on
 Schedule 14A filed with the Securities and Exchange Commission on January 30,
 2004.      
|                 |                                                                                                                                                                                   |             |                                                                                 
|(*******)        | Incorporated
 by reference to the exhibit filed with the Companys Proxy Statement on
 Schedule 14A filed with the Securities and Exchange Commission on January 25,
 2007.      
|                 |                                                                                                                                                                                   |             |                                                                                 
|(a)              | Management
 contracts and compensatory plans and arrangements required to be filed as
 exhibits pursuant to Item 15(c) of this Report.                                           

53

---



SIGNATURES

Pursuant to
the requirements of Section 13 or 15(d) 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.

|                                  |                                                   |     |              
|--------------------------------- | ------------------------------------------------- | --- | -------------
|Date:          November
 30, 2010 | ROFIN-SINAR
 TECHNOLOGIES INC.                   
|                                 
|                                  | By:                                               | /s/ | Günther Braun
|                                  |                                                   |     |              
|                                  |                                                   |     | Günther Braun
|                                  | President,
 Chief Executive Officer, and Director

Pursuant to
the requirements of the Securities Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

|          |                      |       |                                      |      |                   
|--------- | -------------------- | ----- | ------------------------------------ | ---- | ------------------
|SIGNATURE |                      | TITLE |                                      | DATE
|          |                      |       |                                      |     
|          |                      |       |                                      |      |                   
|/s/       | Peter Wirth          |       | Chairman of
 the Board               |      | November 30,
 2010
|          |                      |       |                                      |      |                   
|          | Peter Wirth          |       |                                      |      |                   
|          |                      |       |                                      |      |                   
|/s/       | Günther
 Braun       |       | President,
 Chief Executive Officer, |      | November 30,
 2010
|          |                      |       | and Director                         |      |                   
|          | Günther Braun        |       |                                      |      |                   
|          |                      |       |                                      |      |                   
|/s/       | Ingrid
 Mittelstaedt |       | Chief
 Financial Officer             |      | November 30,
 2010
|          |                      |       |                                      |      |                   
|          | Ingrid
 Mittelstaedt |       |                                      |      |                   
|          |                      |       |                                      |      |                   
|/s/       | Ralph Reins          |       | Director                             |      | November 30,
 2010
|          |                      |       |                                      |      |                   
|          | Ralph Reins          |       |                                      |      |                   
|          |                      |       |                                      |      |                   
|/s/       | Gary Willis          |       | Director                             |      | November 30,
 2010
|          |                      |       |                                      |      |                   
|          | Gary Willis          |       |                                      |      |                   
|          |                      |       |                                      |      |                   
|/s/       | Carl F.
 Baasel      |       | Director                             |      | November 30,
 2010
|          |                      |       |                                      |      |                   
|          | Carl F.
 Baasel      |       |                                      |      |                   
|          |                      |       |                                      |      |                   
|/s/       | Daniel Smoke         |       | Director                             |      | November 30,
 2010
|          |                      |       |                                      |      |                   
|          | Daniel Smoke         |       |                                      |      |                   
|          |                      |       |                                      |      |                   
|/s/       | Stephen
 Fantone     |       | Director                             |      | November 30,
 2010
|          |                      |       |                                      |      |                   
|          | Stephen
 Fantone     |       |                                      |      |                   

54

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board
of Directors and Stockholders of 
Rofin-Sinar Technologies Inc. and Subsidiaries 
Plymouth, Michigan

We have
audited the accompanying consolidated balance sheets of Rofin-Sinar
Technologies Inc. and subsidiaries (the Company) as of September 30, 2010 and
2009, and the related consolidated statements of operations, stockholders
equity and comprehensive income, and cash flows for each of the three years in
the period ended September 30, 2010. Our audits also included the financial
statement schedule listed in the Index at Item 15 (the financial statement
schedule). We also have audited the Companys internal control over financial
reporting as of September 30, 2010, based on criteria established in Internal Control  Integrated Frameworkissued
by the Committee of Sponsoring Organizations of the Treadway Commission. The
Companys management is responsible for these financial statements and
financial statement schedule, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Management
Report on Internal Control Over Financial Reporting. Our responsibility is to
express an opinion on these financial statements and financial statement
schedule and an opinion on the Companys internal control over financial
reporting based on our audits.

We conducted
our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement and whether effective internal
control over financial reporting was maintained in all material respects. Our
audits of the financial statements included examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. Our
audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audits provide a reasonable basis for
our opinions.

A companys
internal control over financial reporting is a process designed by, or under
the supervision of, the companys principal executive and principal financial
officers, or persons performing similar functions, and effected by the
companys board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A companys internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors
of the company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the financial statements.

Because of the
inherent limitations of internal control over financial reporting, including
the possibility of collusion or improper management override of controls,
material misstatements due to error or fraud may not be prevented or detected
on a timely basis. Also, projections of any evaluation of the effectiveness of
the internal control over financial reporting to future periods are subject to
the risk that the controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures
may deteriorate.

F-1

---



In our
opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
September 30, 2010 and 2009, and the results of their operations and their cash
flows for each of the three years in the period ended September 30, 2010, in
conformity with accounting principles generally accepted in the United States
of America. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the information set forth
therein. Also, in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of September
30, 2010, based on the criteria established in Internal
Control  Integrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission.

/s/ Deloitte & Touche LLPDetroit, MINovember 30, 2010

F-2

---



ROFIN-SINAR TECHNOLOGIES INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)

|                                                                                                                                                             |  |               |          |      |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | -------- | ---- | - | -------- | -
|                                                                                                                                                             |  | September 30, |         
|                                                                                                                                                             |  |               |         
|                                                                                                                                                             |  | 2010          |          | 2009 |  
|                                                                                                                                                             |  |               |          |      |  
|ASSETS                                                                                                                                                       |  |               |          |      |   |          |  
|Current assets:                                                                                                                                              |  |               |          |      |   |          |  
|Cash and cash equivalents                                                                                                                                    |  | $             | 110,628  |      | $ | 116,128  |  
|Short-term investments                                                                                                                                       |  |               | 5,691    |      |   | 2,856    |  
|Refundable income taxes                                                                                                                                      |  |               |         |      |   | 214      |  
|Accounts receivable, trade                                                                                                                                   |  |               | 100,659  |      |   | 82,890   |  
|Less allowance for doubtful accounts                                                                                                                         |  |               | (3,020   | )    |   | (3,533   | )
|                                                                                                                                                             |  |               |          |      |   |          |  
|Trade accounts receivable, net                                                                                                                               |  |               | 97,639   |      |   | 79,357   |  
|Accounts receivable from related party
 (note 14)                                                                                                            |  |               | 294      |      |   | 625      |  
|Other accounts receivable                                                                                                                                    |  |               | 3,886    |      |   | 2,640    |  
|Inventories, net (note 3)                                                                                                                                    |  |               | 151,759  |      |   | 136,448  |  
|Prepaid expenses                                                                                                                                             |  |               | 3,801    |      |   | 2,685    |  
|Deferred income tax assets (note 11)                                                                                                                         |  |               | 13,657   |      |   | 13,962   |  
|                                                                                                                                                             |  |               |          |      |   |          |  
|Total current assets                                                                                                                                         |  |               | 387,355  |      |   | 354,915  |  
|Long-term investments (note 4)                                                                                                                               |  |               | 4,950    |      |   | 9,350    |  
|Property and equipment, at cost (note 5)                                                                                                                     |  |               | 121,114  |      |   | 122,298  |  
|Less accumulated depreciation                                                                                                                                |  |               | (68,463  | )    |   | (66,563  | )
|                                                                                                                                                             |  |               |          |      |   |          |  
|Property and equipment, net                                                                                                                                  |  |               | 52,651   |      |   | 55,735   |  
|Deferred income tax assets (note 11)                                                                                                                         |  |               | 12,865   |      |   | 14,249   |  
|Goodwill (note 6)                                                                                                                                            |  |               | 89,796   |      |   | 93,790   |  
|Intangibles, net (note 6)                                                                                                                                    |  |               | 10,178   |      |   | 11,177   |  
|Other assets                                                                                                                                                 |  |               | 397      |      |   | 291      |  
|                                                                                                                                                             |  |               |          |      |   |          |  
|Total assets                                                                                                                                                 |  | $             | 558,192  |      | $ | 539,507  |  
|                                                                                                                                                             |  |               |          |      |   |          |  
|LIABILITIES AND EQUITY                                                                                                                                       |  |               |          |      |   |          |  
|Current liabilities:                                                                                                                                         |  |               |          |      |   |          |  
|Line of credit and short-term borrowings
 (note 8 and 9)                                                                                                     |  | $             | 5,173    |      | $ | 18,983   |  
|Accounts payable, trade                                                                                                                                      |  |               | 23,173   |      |   | 13,146   |  
|Accounts payable to related party (note 14)                                                                                                                  |  |               | 566      |      |   | 551      |  
|Income taxes payable (note 11)                                                                                                                               |  |               | 7,114    |      |   |         |  
|Deferred income tax liabilities (note 11)                                                                                                                    |  |               | 1,722    |      |   | 1,567    |  
|Accrued liabilities (note 7)                                                                                                                                 |  |               | 62,164   |      |   | 46,389   |  
|                                                                                                                                                             |  |               |          |      |   |          |  
|Total current liabilities                                                                                                                                    |  |               | 99,912   |      |   | 80,636   |  
|Long-term debt (note 9)                                                                                                                                      |  |               | 15,488   |      |   | 12,426   |  
|Pension obligations (note 12)                                                                                                                                |  |               | 18,163   |      |   | 17,097   |  
|Deferred income tax liabilities (note 11)                                                                                                                    |  |               | 4,196    |      |   | 4,643    |  
|Other long-term liabilities                                                                                                                                  |  |               | 2,957    |      |   | 3,011    |  
|                                                                                                                                                             |  |               |          |      |   |          |  
|Total liabilities                                                                                                                                            |  |               | 140,716  |      |   | 117,813  |  
|Commitments (note 10)                                                                                                                                        |  |               |          |      |   |          |  
|Stockholders equity:                                                                                                                                        |  |               |          |      |   |          |  
|Preferred stock, 5,000,000 shares
 authorized, none issued or outstanding                                                                                    |  |               |         |      |   |         |  
|Common stock, $0.01 par value, 50,000,000
 shares authorized,31,951,500 shares issued at September 30, 2010(31,749,400
 shares issued at September 30, 2009) |  |               | 320      |      |   | 318      |  
|Additional paid-in capital                                                                                                                                   |  |               | 205,100  |      |   | 196,185  |  
|Retained earnings                                                                                                                                            |  |               | 333,491  |      |   | 303,651  |  
|Accumulated other comprehensive income                                                                                                                       |  |               | 14,399   |      |   | 38,176   |  
|Treasury shares, at cost, 3,683,504 shares
 at September 30, 2010(2,829,581 at September 30, 2009)                                                           |  |               | (139,453 | )    |   | (119,996 | )
|                                                                                                                                                             |  |               |          |      |   |          |  
|Total Rofin-Sinar Technologies Inc.
 stockholders equity                                                                                                    |  |               | 413,857  |      |   | 418,334  |  
|Noncontrolling interest in subsidiaries                                                                                                                      |  |               | 3,619    |      |   | 3,360    |  
|                                                                                                                                                             |  |               |          |      |   |          |  
|Total equity                                                                                                                                                 |  |               | 417,476  |      |   | 421,694  |  
|                                                                                                                                                             |  |               |          |      |   |          |  
|Total liabilities and equity                                                                                                                                 |  | $             | 558,192  |      | $ | 539,507  |  
|                                                                                                                                                             |  |               |          |      |   |          |  

See accompanying notes to consolidated
financial statements

F-3

---



ROFIN-SINAR TECHNOLOGIES INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 2010, 2009, AND 2008
(dollars in thousands, except share and per share amounts)

|                                                                         |  |                           |            |      |   |            |   |   |            |  
|------------------------------------------------------------------------ |  | ------------------------- | ---------- | ---- | - | ---------- | - | - | ---------- | -
|                                                                         |  | Years ended September 30, |           
|                                                                         |  |                           |           
|                                                                         |  | 2010                      |            | 2009 |   | 2008       |  
|                                                                         |  |                           |            |      |   |            |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Net sales                                                                |  | $                         | 423,570    |      | $ | 349,579    |   | $ | 575,278    |  
|Cost of
 goods sold                                                      |  |                           | 257,316    |      |   | 217,532    |   |   | 326,861    |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Gross profit                                                             |  |                           | 166,254    |      |   | 132,047    |   |   | 248,417    |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Selling,
 general and administrative expenses                            |  |                           | 89,908     |      |   | 88,906     |   |   | 105,077    |  
|Research and
 development expenses                                       |  |                           | 30,137     |      |   | 31,500     |   |   | 41,113     |  
|Amortization
 expense                                                    |  |                           | 2,250      |      |   | 3,559      |   |   | 6,769      |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Income from operations                                                   |  |                           | 43,959     |      |   | 8,082      |   |   | 95,458     |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Other
 expense (income):                                                 |  |                           |            |      |   |            |   |   |            |  
|Interest income                                                          |  |                           | (601       | )    |   | (1,442     | ) |   | (5,291     | )
|Interest expense                                                         |  |                           | 976        |      |   | 1,751      |   |   | 2,331      |  
|Foreign currency losses (gains)                                          |  |                           | (1,490     | )    |   | (4,178     | ) |   | 1,011      |  
|Miscellaneous                                                            |  |                           | (827       | )    |   | (2,749     | ) |   | (392       | )
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Total other expense (income), net                                        |  |                           | (1,942     | )    |   | (6,618     | ) |   | (2,341     | )
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Income before income taxes                                               |  |                           | 45,901     |      |   | 14,700     |   |   | 97,799     |  
|Income tax
 expense (note 11)                                            |  |                           | 15,442     |      |   | 5,197      |   |   | 33,466     |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Net income                                                               |  |                           | 30,459     |      |   | 9,503      |   |   | 64,333     |  
|Less: net income attributable to the
 noncontrolling interest            |  |                           | 619        |      |   | 340        |   |   | 574        |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Net income attributable to RSTI                                          |  | $                         | 29,840     |      | $ | 9,163      |   | $ | 63,759     |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Net income
 attributable to RSTI per share (note 13):                    |  |                           |            |      |   |            |   |   |            |  
|Basic                                                                    |  | $                         | 1.04       |      | $ | 0.32       |   | $ | 2.15       |  
|Diluted                                                                  |  | $                         | 1.02       |      | $ | 0.31       |   | $ | 2.09       |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Weighted
 average shares used in computing earnings per share (note 13): |  |                           |            |      |   |            |   |   |            |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Basic                                                                    |  |                           | 28,807,130 |      |   | 28,911,559 |   |   | 29,639,876 |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  
|Diluted                                                                  |  |                           | 29,211,850 |      |   | 29,193,771 |   |   | 30,446,319 |  
|                                                                         |  |                           |            |      |   |            |   |   |            |  

See accompanying notes to consolidated
financial statements

F-4

---



ROFIN-SINAR TECHNOLOGIES INC. AND
SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND
COMPREHENSIVE INCOME
YEARS ENDED SEPTEMBER 30, 2010, 2009, AND 2008
(dollars in thousands)

|                                                     |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  
|---------------------------------------------------- |  | --------------------------------------- | ---------- | ------------------------ | - | ---------------------------- |  | ------------------ | ------- | ------------------------------------------------ | - | --------------- |  | ------------------------------------------------ | ------ | ---------------------------- | - | ------------- | - | - | -------- | - | - | ------ | - | - | -------- | -
|                                                     |  | Number
 of
 Common
 Shares
 Outstanding |            | Common
 Stock
 Par Value |   | Additional
 Paid-in
 Capital |  | Retained
 Earnings |         | Accumulated
 Other
 Comprehensive
 Income (Loss) |   | Treasury
 Stock |  | Rofin-Sinar
 Technologies
 Stockholders
 Equity |        | Non-
 Controlling
 Interests |   | Total
 Equity |  
|                                                     |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |  
|BALANCES at September 30, 2007                       |  |                                         | 31,141,600 |                          | $ | 312                          |  | $                  | 177,048 |                                                  | $ | 229,815         |  | $                                                | 41,748 |                              |   |              |   | $ | 448,923  |   | $ | 3,794  |   | $ | 452,717  |  
|Uncertain tax positions                              |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   | 914             |  |                                                  |       |                              |   |              |   |   | 914      |   |   |       |   |   | 914      |  
|Comprehensive income:                                |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  
|Fair value of interest swap agreement                |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   |                |  |                                                  | (147   | )                            |   |              |   |   | (147     | ) |   |       |   |   | (147     | )
|Defined benefit pension plan:                        |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  
|Net gain arising during period (net of taxes $690)   |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   |                |  |                                                  | 1,588  |                              |   |              |   |   | 1,588    |   |   |       |   |   | 1,588    |  
|Foreign currency translation adjustment              |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   |                |  |                                                  | (4,831 | )                            |   |              |   |   | (4,831   | ) |   |       |   |   | (4,831   | )
|Net income                                           |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   | 63,759          |  |                                                  |       |                              |   |              |   |   | 63,759   |   |   | 574    |   |   | 64,333   |  
|                                                     |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  
|Total comprehensive income                           |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   | 60,369   |   |   | 574    |   |   | 60,943   |  
|Common stock issued in connection with:              |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  
|Stock incentive plans                                |  |                                         | 584,600    |                          |   | 5                            |  |                    | 12,043  |                                                  |   |                |  |                                                  |       |                              |   |              |   |   | 12,048   |   |   |       |   |   | 12,048   |  
|Purchase of noncontrolling interests                 |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   |                |  |                                                  |       |                              |   |              |   |   |         |   |   | (1,973 | ) |   | (1,973   | )
|Dividend payments                                    |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   |                |  |                                                  |       |                              |   |              |   |   |         |   |   | (108   | ) |   | (108     | )
|Less common shares held in treasury, at cost         |  |                                         | (2,829,581 | )                        |   |                             |  |                    |        |                                                  |   |                |  |                                                  |       |                              |   | (119,996      | ) |   | (119,996 | ) |   |       |   |   | (119,996 | )
|                                                     |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  
|BALANCES at September 30, 2008                       |  |                                         | 28,896,619 |                          | $ | 317                          |  | $                  | 189,091 |                                                  | $ | 294,488         |  | $                                                | 38,358 |                              | $ | (119,996      | ) | $ | 402,258  |   | $ | 2,287  |   | $ | 404,545  |  
|                                                     |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  
|Comprehensive income:                                |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  
|Fair value of interest swap agreement                |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   |                |  |                                                  | (216   | )                            |   |              |   |   | (216     | ) |   |       |   |   | (216     | )
|Defined benefit pension plan:                        |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  
|Net loss arising during period (net of taxes $1,585) |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   |                |  |                                                  | (3,176 | )                            |   |              |   |   | (3,176   | ) |   |       |   |   | (3,176   | )
|Foreign currency translation adjustment              |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   |                |  |                                                  | 3,210  |                              |   |              |   |   | 3,210    |   |   |       |   |   | 3,210    |  
|Net income                                           |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   | 9,163           |  |                                                  |       |                              |   |              |   |   | 9,163    |   |   | 340    |   |   | 9,503    |  
|                                                     |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  
|Total comprehensive income                           |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   | 8,981    |   |   | 340    |   |   | 9,321    |  
|Acquisition of NELC                                  |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   | 733    |   |   | 733      |  
|Common stock issued in connection with:              |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  
|Stock incentive plans                                |  |                                         | 23,200     |                          |   | 1                            |  |                    | 7,094   |                                                  |   |                |  |                                                  |       |                              |   |              |   |   | 7,095    |   |   |       |   |   | 7,095    |  
|                                                     |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  
|BALANCES at September 30, 2009                       |  |                                         | 28,919,819 |                          | $ | 318                          |  | $                  | 196,185 |                                                  | $ | 303,651         |  | $                                                | 38,176 |                              | $ | (119,996      | ) | $ | 418,334  |   |   | 3,360  |   | $ | 421,694  |  
|                                                     |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |        |                              |   |               |   |   |          |   |   |        |   |   |          |  

F-5

---



ROFIN-SINAR TECHNOLOGIES INC. AND
SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME,
CONTINUED
YEARS ENDED SEPTEMBER 30, 2010, 2009, AND 2008
(dollars in thousands)

|                                                   |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |         |                              |   |               |   |   |         |   |   |       |   |   |         |  
|-------------------------------------------------- |  | --------------------------------------- | ---------- | ------------------------ | - | ---------------------------- |  | ------------------ | ------- | ------------------------------------------------ | - | --------------- |  | ------------------------------------------------ | ------- | ---------------------------- | - | ------------- | - | - | ------- | - | - | ----- | - | - | ------- | -
|                                                   |  | Number
 of
 Common
 Shares
 Outstanding |            | Common
 Stock
 Par Value |   | Additional
 Paid-in
 Capital |  | Retained
 Earnings |         | Accumulated
 Other
 Comprehensive
 Income (Loss) |   | Treasury
 Stock |  | Rofin-Sinar
 Technologies
 Stockholders
 Equity |         | Non-
 Controlling
 Interests |   | Total
 Equity |  
|                                                   |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |         |                              |   |               |  
|BALANCES at September 30,
 2009                    |  |                                         | 28,919,819 |                          | $ | 318                          |  | $                  | 196,185 |                                                  | $ | 303,651         |  | $                                                | 38,176  |                              | $ | (119,996      | ) | $ | 418,334 |   | $ | 3,360 |   | $ | 421,694 |  
|Comprehensive income:                              |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |         |                              |   |               |   |   |         |   |   |       |   |   |         |  
|Fair value of interest swap agreement              |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   |                |  |                                                  | 31      |                              |   |              |   |   | 31      |   |   |      |   |   | 31      |  
|Defined benefit pension plan:                      |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |         |                              |   |               |   |   |         |   |   |       |   |   |         |  
|Net loss arising during period (net of taxes $290) |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   |                |  |                                                  | (825    | )                            |   |              |   |   | (825    | ) |   |      |   |   | (825    | )
|Foreign currency translation adjustment            |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   |                |  |                                                  | (22,983 | )                            |   |              |   |   | (22,983 | ) |   |       |   |   | (22,983 | )
|Net income                                         |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   | 29,840          |  |                                                  |        |                              |   |              |   |   | 29,840  |   |   | 619   |   |   | 30,459  |  
|                                                   |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |         |                              |   |               |   |   |         |   |   |       |   |   |         |  
|Total comprehensive income                         |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |         |                              |   |               |   |   | 6,063   |   |   | 619   |   |   | 6,682   |  
|Common stock issued in connection
 with:           |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |         |                              |   |               |   |   |         |   |   |       |   |   |         |  
|Stock incentive plans                              |  |                                         | 202,100    |                          |   | 2                            |  |                    | 8,915   |                                                  |   |                |  |                                                  |        |                              |   |              |   |   | 8,917   |   |   |      |   |   | 8,917   |  
|Dividend payments                                  |  |                                         |            |                          |   |                             |  |                    |        |                                                  |   |                |  |                                                  |        |                              |   |              |   |   |        |   |   | (360  | ) |   | (360    | )
|Less common shares held in
 treasury, at cost      |  |                                         | (853,923   | )                        |   |                             |  |                    |        |                                                  |   |                |  |                                                  |        |                              |   | (19,457       | ) |   | (19,457 | ) |   |      |   |   | (19,457 | )
|                                                   |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |         |                              |   |               |   |   |         |   |   |       |   |   |         |  
|BALANCES at September 30,
 2010                    |  |                                         | 28,267,996 |                          | $ | 320                          |  | $                  | 205,100 |                                                  | $ | 333,491         |  | $                                                | 14,399  |                              | $ | (139,453      | ) |   | 413,857 |   | $ | 3,619 |   | $ | 417,476 |  
|                                                   |  |                                         |            |                          |   |                              |  |                    |         |                                                  |   |                 |  |                                                  |         |                              |   |               |   |   |         |   |   |       |   |   |         |  

See accompanying notes to consolidated
financial statements

F-6

---



ROFIN-SINAR TECHNOLOGIES INC. AND
SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
YEARS ENDED SEPTEMBER 30, 2010, 2009, AND 2008 
(dollars in thousands)

|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|---------------------------------------------------------------------------------- |  | ------------------------- | ------- | ---- | - | ------- | - | - | -------- | -
|                                                                                   |  | Years ended September 30, |        
|                                                                                   |  |                           |        
|                                                                                   |  | 2010                      |         | 2009 |   | 2008    |  
|                                                                                   |  |                           |         |      |   |         |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                              |  |                           |         |      |   |         |   |   |          |  
|Net income                                                                         |  | $                         | 30,459  |      | $ | 9,503   |   | $ | 64,333   |  
|Adjustments to reconcile net income to net
 cash provided by operating activities: |  |                           |         |      |   |         |   |   |          |  
|Depreciation and amortization                                                      |  |                           | 11,646  |      |   | 12,984  |   |   | 16,362   |  
|Issuance of restricted stock                                                       |  |                           | 260     |      |   | 366     |   |   | 439      |  
|Provision for doubtful accounts                                                    |  |                           | 421     |      |   | 1,004   |   |   | 730      |  
|Exchange rate gains                                                                |  |                           | (1,864  | )    |   | (171    | ) |   | (1,804   | )
|(Gain) Loss on disposal of property and
 equipment                                 |  |                           | 49      |      |   | (35     | ) |   | (32      | )
|Stock-based compensation expenses                                                  |  |                           | 5,647   |      |   | 6,089   |   |   | 5,863    |  
|Deferred income taxes                                                              |  |                           | 206     |      |   | (2,715  | ) |   | (177     | )
|Change in operating assets and liabilities:                                        |  |                           |         |      |   |         |   |   |          |  
|Accounts receivable, trade                                                         |  |                           | (21,761 | )    |   | 38,041  |   |   | (13,134  | )
|Other accounts receivable                                                          |  |                           | (1,441  | )    |   | 756     |   |   | 1,001    |  
|Inventories                                                                        |  |                           | (21,203 | )    |   | 21,026  |   |   | (15,355  | )
|Prepaid expenses and other                                                         |  |                           | (2,030  | )    |   | 667     |   |   | (1,096   | )
|Accounts payable                                                                   |  |                           | 10,773  |      |   | (9,235  | ) |   | 2,040    |  
|Income taxes payable                                                               |  |                           | 7,269   |      |   | (6,241  | ) |   | (27,522  | )
|Accrued liabilities and pension obligations                                        |  |                           | 18,413  |      |   | (16,634 | ) |   | 914      |  
|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|Net cash provided by operating activities                                          |  |                           | 36,844  |      |   | 55,405  |   |   | 32,562   |  
|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                              |  |                           |         |      |   |         |   |   |          |  
|Additions to property and equipment                                                |  |                           | (8,617  | )    |   | (7,791  | ) |   | (14,485  | )
|Proceeds from the sale of property and
 equipment                                  |  |                           | 234     |      |   | 531     |   |   | 741      |  
|Purchases of short-term investments                                                |  |                           | (10,913 | )    |   | (2,335  | ) |   | (128,506 | )
|Sales of short-term and long-term
 investments                                     |  |                           | 12,441  |      |   | 3,675   |   |   | 224,650  |  
|Acquisition of businesses, net of cash
 acquired                                   |  |                           | (1,400  | )    |   | (12,293 | ) |   | (30,153  | )
|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|Net cash provided by (used in) investing activities                                |  |                           | (8,255  | )    |   | (18,213 | ) |   | 52,247   |  
|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                              |  |                           |         |      |   |         |   |   |          |  
|Borrowings from bank                                                               |  |                           | 30,206  |      |   | 11,833  |   |   | 53,704   |  
|Repayments to bank                                                                 |  |                           | (39,948 | )    |   | (48,024 | ) |   | (29,122  | )
|Purchase of treasury stock                                                         |  |                           | (19,457 | )    |   |        |   |   | (119,996 | )
|Issuance of common stock                                                           |  |                           | 3,006   |      |   | 176     |   |   | 5,180    |  
|Excess tax benefit from stock options                                              |  |                           | 4       |      |   | 464     |   |   |         |  
|Payments to subsidiarys minority
 shareholders                                    |  |                           | (360    | )    |   |        |   |   | (223     | )
|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|Net cash used in financing activities                                              |  |                           | (26,549 | )    |   | (35,551 | ) |   | (90,457  | )
|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|Effect of foreign currency translation on
 cash                                    |  |                           | (7,540  | )    |   | 1       |   |   | 1,676    |  
|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|Net increase (decrease) in cash and cash
 equivalents                              |  |                           | (5,500  | )    |   | 1,642   |   |   | (3,972   | )
|Cash and cash equivalents at beginning of
 year                                    |  |                           | 116,128 |      |   | 114,486 |   |   | 118,458  |  
|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|Cash and cash equivalents at end of year                                           |  | $                         | 110,628 |      | $ | 116,128 |   | $ | 114,486  |  
|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|Cash paid during the year for interest                                             |  | $                         | 814     |      | $ | 1,949   |   | $ | 2,046    |  
|                                                                                   |  |                           |         |      |   |         |   |   |          |  
|Cash paid during the year for income taxes                                         |  | $                         | 5,237   |      | $ | 13,651  |   | $ | 63,118   |  
|                                                                                   |  |                           |         |      |   |         |   |   |          |  

Non-cash
investing and financing activities: 
Investments of $11,550 that were previously recorded as short-term were
reclassified to long-term in fiscal 2008.

See
accompanying notes to consolidated financial statements

F-7

---



ROFIN-SINAR TECHNOLOGIES INC. AND
SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
September 30, 2010, 2009, and 2008 
(dollars in thousands, except per share amounts)

1.     SUMMARY OF ACCOUNTING POLICIES

Description of the Company and Business

The primary
business of Rofin-Sinar Technologies Inc. (Rofin or RSTI or the Company)
is to develop, manufacture, and market industrial lasers and supplies used for
material processing applications. The majority of the Companys customers are
in the machine tool, automotive and semiconductor and electronics industries
and are located in the United States, Europe, and Asia. For the years ended
September 30, 2010, 2009, and 2008, Rofin generated approximately 60%, 58%, and
65%, respectively, of its revenues from the sale of lasers and laser systems.
For the years ended September 30, 2010, 2009, and 2008, approximately 40%, 42%,
and 35%, respectively, were generated from aftermarket support for the
Companys existing laser products and from its components business.

The
accompanying financial statements present the historical financial information
of Rofin-Sinar Technologies Inc., its wholly-owned subsidiaries Rofin-Sinar,
Inc. (RS Inc.), PRC Laser Corp. (PRC), Lee Laser, Inc. (Lee),
Rofin-Baasel Canada Ltd., Dilas Diodelaser, Inc., Corelase Oy, Nufern,
Rofin-Sinar Technologies Europe S.L. (RSTE) and its 80%-owned subsidiaries
Nanjing Eastern Laser Company, Ltd. (NELC) and Nanjing Eastern Technologies
Company, Ltd. (NET). RSTE, a European holding company formed in 1999, owns
100% of Rofin-Sinar Laser GmbH (RSL), 95% of Dilas Diodenlaser GmbH
(Dilas), 100% of Rofin-Baasel Italiana S.r.l., 100% of Rofin-Baasel France
S.A., 100% of Rofin-Sinar UK Ltd., 100% of Rofin-Baasel UK Ltd., 100% of
Rofin-Baasel Benelux B.V., 100% of Rofin-Baasel Singapore Pte., Ltd., 100% of
Rofin-Baasel Espana S.L. (RBE), 100% of Rofin-Baasel Taiwan Ltd., 100% of Rofin-Baasel
Korea Co., Ltd., and 100% of Rofin-Baasel Swiss AG.

Rofin Baasel
UK Ltd. owns 100% of ES Technology Ltd. (EST). The financial statements of
EST include the consolidated accounts of Laser Service Ltd.

The financial
statements of PRC include the consolidated accounts of PRC Laser Europe N.V.,
Belgium.

RSL includes
the consolidated accounts of its 88%-owned subsidiary, Rofin-Baasel Japan
Corporation, its 100%-owned subsidiary, Rasant-Alcotec Beschichtungstechnik
GmbH (Rasant), its 100%-owned subsidiary, Rofin-Baasel Lasertech GmbH &
Co. KG (formerly Carl Baasel Lasertechnik GmbH & Co. KG) (CBL), its
100%-owned subsidiary Optoskand AB (Optoskand), its 100%-owned subsidiary,
CBL Verwaltungsgesellschaft GmbH, its 80%-owned subsidiary m2k-laser GmbH
(m2k), and its 80%-owned subsidiary Rofin-Baasel China Co., Ltd.

CBL includes
the consolidated accounts of its wholly-owned subsidiaries, Rofin-Baasel, Inc.,
WB-PRC Laser Service GmbH, and PMB Elektronik GmbH, and its 85%-owned
subsidiary H2B Photonics GmbH.

Dilas includes
the consolidated accounts of its 95%-owned subsidiary Dilas Diodelaser China
Co., Ltd.

All
intercompany balances and transactions have been eliminated in consolidation.

Acquisitions and Formation of New Entities

The Company
uses the acquisition method of accounting for its acquisitions with the
respective results of operations included in the consolidated results from the
date of acquisition.

| |   |                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | On December
 3, 2007, the Company purchased the remaining 19% of the share capital of
 Rofin-Sinar UK Ltd. through RSTE under an option agreement between the
 Company and the former minority shareholders. The Company now holds 100% of
 the share capital of Rofin-Sinar UK Ltd. This purchase resulted in goodwill
 of $5.6 million.

F-8

---



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Effective
 January 24, 2008, the Company purchased Nufern, one of the worlds largest
 independent manufacturers of specialty fibers and fiber laser modules serving
 a wide range of industries, as a wholly-owned subsidiary of Rofin-Sinar
 Technologies Inc. During fiscal year 2009, the Company settled an earn-out
 agreement with the former Nufern owners for an aggregate of $5.0 million and
 finalized its valuation of the identified intangible assets related to this
 acquisition. As a result, a total adjustment amounting to a net decrease of
 $3.7 million was made to the amount of goodwill recorded. This purchase
 resulted in final goodwill of $2.9 million.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | In fiscal
 year 2008, the Company formed Dilas Diodelaser China Co., Ltd. in Nanjing
 (China) through its 95%-owned subsidiary Dilas Diodenlaser GmbH as a
 95%-owned subsidiary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | In fiscal
 year 2008, the Company formed Nanjing Eastern Technologies Company, Ltd. in
 Nanjing (China) as an 80%-owned subsidiary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Effective
 July 1, 2008, the Company formed Rofin-Baasel Swiss AG in Biel (Switzerland)
 as a wholly-owned subsidiary through its wholly-owned subsidiary RSTE.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Effective
 March 11, 2009, the Company made the final payment for the outstanding
 earn-out, and acquired the remaining 10% of share capital of Optoskand AB
 through its wholly-owned subsidiary Rofin-Sinar Laser GmbH under an option
 agreement. This purchase resulted in additional goodwill of $0.7 million.                                                                                                                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Effective
April 9, 2009, the Company acquired 80% of the equity of China-based Nanjing
Eastern Laser Company, Ltd. (NELC) through two separate cash transactions.
NELCs product lines are largely comprised of high power, fast-axial flow CO2 lasers, with a power range up to 3
kW as well as NC-based laser processing equipment. This purchase resulted in
goodwill of $4.3 million.                                                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | Effective
 April 12, 2010, the Company, through its wholly-owned subsidiary Nufern,
 purchased the Electro Optics fiber optic gyroscope coil winding business of
 Optelecom-NKF, Inc. This purchase resulted in additional goodwill of
 approximately $0.4 million.                                                                                                                                                                                                                                                                                                                                                                                                                    

None of these
acquisitions were material for the purpose of proforma presentation.

Fair Value

The Companys
cash, investments, accounts receivable, other assets,
accrued liabilities and other liabilities are carried at amounts, which
reasonably approximate their fair value due to their short-term nature. The
Companys notes payable are at variable interest rates that approximate
market. Fair value is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. Where available, fair value is based on
observable market prices or parameters or derived from such prices or
parameters. Where observable prices or inputs are not available, valuation
models may be applied.

Assets and
liabilities recorded at fair value in our balance sheet are categorized based
upon the level of judgment associated with the inputs used to measure their
fair values. Hierarchical levels directly related to the amount of subjectivity
associated with the inputs to fair valuation of these assets and liabilities
are as follows:

| |   |                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Level 1 -
 Unadjusted observable quoted prices for identical instruments in active
 markets.                                                                                                                                 
| |  | Level 2 -
 Observable inputs other than those included in Level 1. For example, quoted
 prices for similar assets or liabilities in active markets or quoted prices
 for identical assets or liabilities in inactive markets.
| |  | Level 3 -
 Unobservable inputs reflecting managements own assumptions about the inputs
 used in pricing the asset or liability.                                                                                             

Cash Equivalents

Cash
equivalents consist of financial instruments that are readily convertible into
cash and have original maturities of three months or less at the time of
acquisition.

F-9

---



Inventories

Inventories
are stated at the lower of cost or market, after provisions for excess and
obsolete inventory salable at prices below cost. Costs are determined using the
first-in, first-out and weighted average cost methods.

The Company
writes down inventory for estimated obsolescence or unmarketable inventory
equal to the difference between the cost of inventory and the estimated market
value based upon assumptions about future demand and market conditions. If
actual market conditions are less favorable than those projected by management,
additional inventory write-downs may be required.

Property and Equipment

Property and
equipment are recorded at cost and depreciated over their estimated useful
lives, except for leasehold improvements, which are amortized over the lesser
of their estimated useful lives or the term of the lease. The methods of
depreciation are straight line for financial reporting purposes and accelerated
for income tax purposes. Depreciable lives for financial reporting purposes are
as follows:

|                                   |  |               | 
|---------------------------------- |  | ------------- | 
|                                   |  | Useful Lives  | 
|                                   |  |               | 
|Buildings                          |  | 40 Years      | 
|Technical
 machinery and equipment |  | 3-10 Years    | 
|Furniture
 and fixtures            |  | 3-10 Years    | 
|Computers
 and software            |  | 3-4 Years     | 
|Leasehold
 improvements            |  | Term of lease | 

Total
depreciation expense for the years ended September 30, 2010, 2009, and 2008,
amounted to $9.4 million, $9.4 million, and $9.6 million, respectively.

The Company
reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future undiscounted net cash
flows expected to be generated by the asset. If such assets are considered to
be impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or fair
value less costs to sell.

Goodwill and Other Intangible Assets

Goodwill
represents the excess purchase price over the fair value of the assets acquired
in connection with the Companys acquisitions.

Goodwill is
required to be tested on an annual basis for potential impairment at the
reporting unit level. A reporting unit is defined as the lowest level of an
entity that is a business and that can be distinguished, physically and
operationally and for internal reporting purposes, from other activities,
operations, and assets of the entity. A reporting unit can be no higher than an
operating segment and would generally be lower than that level of reporting.
The Company manages its business under one operating and reportable segment,
and has one reporting unit.

In testing for
impairment, the fair value of the reporting unit, that is determined based on
market data, is compared to its carrying amount. If the carrying value is below
the fair value assessment, there will be no impairment loss. If the fair value
is below the carrying value, then the Company is required to perform an
additional test to determine the implied fair value of the goodwill.

The Company
performed its annual goodwill impairment testing as of September 30th
and determined that the fair value of its reporting unit exceeds its carrying
value and accordingly, the second step of the impairment test was not required
to be performed.

F-10

---



Revenue Recognition and Accounts Receivable
Valuation

Revenue is
recognized when persuasive evidence of an arrangement exists, the product has
been delivered, the price is fixed or determinable and collection is probable.
Terms under these arrangements are generally free on board (FOB) shipping
point, or ex works factory (EXW), at which time legal title passes from the
Company to the customer. Therefore, delivery is generally considered to have
occurred upon shipment. In certain circumstances customers may negotiate
different terms. In these situations, delivery is considered to have occurred
once legal title has passed from the Company to the customer. This may be at
delivery to the customers destination or acceptance by the Companys customer.

Sales to
end-user customers and resellers typically do not have customer acceptance
provisions and only certain of the original equipment manufacturer (OEM)
customer sales have customer acceptance provisions. Customer acceptance is
generally limited to performance under published product specifications. For
the few product sales that have customer acceptance provisions because of
higher than published specifications, (1) the products are tested and accepted
by the customer at a Company site or by the customers acceptance of the
results of a testing program prior to shipment to the customer, or (2) the
revenue is deferred until customer acceptance occurs. The Company records
revenues net of volume discount rebates that are earned by certain OEM-customers,
based on sales levels, pursuant to contractual agreements.

The vast
majority of our sales are made to OEMs, resellers, and end-users in the
industrial market. Sales made to OEMs and resellers in the industrial market do
not require installation of the products by the Company, as installation is
performed by the customer and are not subject to other post-delivery
obligations. For end-users, where the Company has agreed to perform
installation or provide training, the Company defers revenue related to
installation or training services until installation is completed or training
is provided, measured based on the fair value of such services.

The Company
records allowances for uncollectible customer accounts receivable based on
historical experience. Additionally, an allowance is made based on an
assessment of specific customers financial condition and liquidity. If the
financial condition of the Companys customers were to deteriorate, additional
allowances may be required.

Income and Other Taxes

Income taxes
are accounted for under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss tax
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates that apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred
taxes of a change in tax rates is recognized in income in the period that
includes the enactment date. In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized.

The Company
recognizes certain tax liabilities for anticipated tax audit findings in the
U.S. and other tax jurisdictions based on its estimate of whether, and to the
extent to which additional taxes would be due. If the audit finding results in
actual taxes owed more or less than what the Company anticipated, its income
tax expense would increase or decrease in the period of determination.

Revenue and
expenses are presented net of sales, use and value added taxes, as the case may
be.

Accounting for Warranties

The Company
issues a standard warranty of one to two years for parts and labor on lasers
that are sold. Additionally, extended warranties are negotiated on a
contract-by-contract basis. The Company provides for estimated warranty costs
as products are shipped.

The Companys
estimate of costs to fulfill its warranty obligations is based on historical
experience and expectation of future conditions. To the extent the Company
experiences increased warranty claim activity or increased costs associated
with servicing those claims, revisions to the estimated warranty liability
would be required.

F-11

---



Foreign Currency Translation

The assets and
liabilities of the Companys operations outside the United States are
translated into U.S. dollars at exchange rates in effect on the balance sheet
date, and revenues and expenses are translated using a weighted average
exchange rate during the period. Gains or losses resulting from the translation
of foreign currency financial statements are recorded as a separate component
of stockholders equity. Effective October 1, 2009, we began presenting gains
and losses resulting from the remeasurement of foreign currency transactions as
a component of Other expense (income). Prior to October 1, 2009, we included
gains and losses resulting from the remeasurement of foreign currency
transactions as a component of cost of sales and sales and marketing expense.
We changed our presentation because this better reflects how we manage these
foreign currency exposures, as such gains and losses arising from the
remeasurement of foreign currency transactions are incidental to our
operations. Prior period amounts have been recast to conform to the current
period presentation as follows: $0.9 million net exchange losses and $1.5
million of net exchange gains for the period ended September 30, 2009, and $0.4
million net exchange losses and $1.3 million of net exchange gains for the
period ended September 30, 2008, were reclassified to Foreign currency losses
(gains) within Other expense (income) from Cost of Goods Sold and
SG&A expenses, respectively.

Earnings per Share (EPS)

Basic EPS is
computed by dividing net income attributable to RSTI by the weighted average
number of common shares outstanding during the period. Diluted EPS reflects the
potential dilution from common stock equivalents (stock options).

Comprehensive Income

Comprehensive
income consists of net income, foreign currency translation adjustments,
pension liability adjustments, and fair value of interest rate swap agreements,
and is presented in the consolidated statements of stockholders equity and
comprehensive income. Accumulated other comprehensive income is comprised of
the following:

|                                                                                                         |  |               |        |      |   |        |   |   |        | 
|-------------------------------------------------------------------------------------------------------- |  | ------------- | ------ | ---- | - | ------ | - | - | ------ | 
|                                                                                                         |  | September 30, |       
|                                                                                                         |  |               |       
|                                                                                                         |  | 2010          |        | 2009 |   | 2008   |  
|                                                                                                         |  |               |        |      |   |        |  
|Foreign currency translation adjustment                                                                  |  | $             | 17,614 |      | $ | 40,597 |   | $ | 37,388 | 
|Defined benefit pension plans (net of tax
 effect of $1,553 in 2010, $1,263 in 2009, and $323 in 2008)   |  |               | (3,187 | )    |   | (2,362 | ) |   | 814    | 
|Fair value of interest swap agreements (net
 of tax effect of $11 in 2010, $22 in 2009, and $59 in 2008) |  |               | (28    | )    |   | (59    | ) |   | 156    | 
|                                                                                                         |  |               |        |      |   |        |   |   |        | 
|Total accumulated other comprehensive
 income                                                            |  | $             | 14,399 |      | $ | 38,176 |   | $ | 38,358 | 
|                                                                                                         |  |               |        |      |   |        |   |   |        | 

Research and Development Expenses

Research and
development costs are expensed when incurred and are net of German government
and European grants of $2,586, $1,991, and $1,276, received for the years ended
September 30, 2010, 2009, and 2008, respectively. The Company has no future
obligations under such grants.

Derivative Financial Instruments

The Company
uses derivative financial instruments to manage funding costs and exposures
arising from fluctuations in interest rates. These derivative financial instruments
consist primarily of interest rate swaps. The Company does not use derivative
financial instruments for trading purposes.

On the date
the derivative contract is entered into, the Company designates the derivative
as a hedge of the variability of cash flows to be paid related to a recognized
liability (cash flow hedge). Changes in the fair value of a derivative that
is highly effective and that is designated and qualifies as a cash flow hedge
are recorded in other comprehensive income, until earnings are affected by the
variability in cash flows of the designated hedged item.

F-12

---



Interest rate
swap agreements designated as hedges of the Companys financial liabilities are
recorded in the consolidated balance sheet at fair value. Adjustments to the
fair value of the derivative asset or liability are recorded as an adjustment
to other comprehensive income.

From time to
time, the Company enters into foreign currency forward contracts and forward
exchange options generally of less than one year duration to hedge a portion of
its sales transactions denominated in foreign currencies. At September 30,
2010, the Company held Japanese yen forward exchange options with notional
amounts of Euro 0.1 million and Japanese yen forward exchange options with notional
amount of $0.2 million.

Operating Leases

The Company
leases facilities under operating leases. Building lease agreements generally
include rent escalation clauses. Most of the Companys lease agreements include
renewal periods at the Companys option. The Company recognizes scheduled rent
increases on a straight-line basis over the lease term beginning with the date
the Company takes possession of the leased space.

Use of Estimates

Management of
the Company makes a number of estimates and assumptions relating to the
reporting of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reporting of revenues and expenses, to prepare these
financial statements in conformity with generally accepted U.S. accounting
principles. Significant items subject to such estimates and assumptions include
the valuation allowance for receivables, inventory valuation, warranty
liabilities, the valuation allowance for deferred tax assets, assets and
obligations related to employee benefits, and share based payment awards.
Actual results could differ from these estimates.

Stock Incentive Plans

The Company
measures share-based payments to employees, including grants of employee stock
options, at fair value and expenses them in the consolidated statement of
operations over the service period (generally the vesting period) of the grant.

Shipping and Handling Costs

The Company
accounts for shipping and handling fees and costs by recording revenue from
shipping and handling fees in net sales and shipping and handling costs in cost
of sales.

Recent Accounting Pronouncements Adopted

In January
2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and
Disclosures (ASU 2010-06), which provides amendments to Subtopic 820-10 that
require new disclosures regarding (1) transfers in and out of Levels 1 and 2
fair value measurements and (2) activity in Level 3 fair value measurements.
Additionally, ASU 2010-06 clarifies existing fair value disclosures about the
level of disaggregation and about inputs and valuation techniques used to
measure fair value. The guidance in ASU 2010-06 became effective for the
Companys second quarter of fiscal year 2010 and the disclosures required by
this adoption are included in Note 2 Fair Value Measurements, except for
disclosures about purchases, sales, issuances, and settlements in the roll
forward activity in Level 3 fair value measurements which are effective for
fiscal years beginning after December 15, 2010, and for interim periods within
those fiscal years. The adoption of this guidance did not have an impact on the
Companys consolidated financial statements.

In December
2008, the FASB issued new accounting guidance that requires enhanced annual
disclosures about the plan assets of a companys defined benefit pension and
other postretirement plans intended to provide users of financial statements
with a greater understanding of: (1) how investment allocation decisions are
made, including the factors that are pertinent to an understanding of
investment policies and strategies; (2) the major categories of plan assets;
(3) the inputs and valuation techniques used to measure the fair value of plan
assets; (4) the effect of fair value measurements, using significant
unobservable inputs (Level 3) on changes in plan assets for the period; and (5)
significant concentrations of risk within plan assets. The new guidance
resulted in enhanced disclosures beginning with the Companys Form 10-K for the
year ended September 30, 2010, included herein.

F-13

---



In December 2007,
the FASB issued new accounting and disclosure guidance related to
noncontrolling interests in subsidiaries (previously referred to as minority
interests), which was effective for the Company on October 1, 2009. Among other
things, the new guidance requires that a noncontrolling interest in a
subsidiary be presented as a component of equity separate from the parents
equity. It also requires that consolidated net income be reported at amounts
that include the amounts attributable to both the parent and the noncontrolling
interests. The new guidance has been applied prospectively, except for the
presentation and disclosure requirements, which have been applied
retrospectively to all periods presented herein.

In June 2008,
ASC Topic 260, Earnings Per Share, was amended to require that unvested
share-based payment awards that contain nonforfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) be treated as participating
securities and shall be included in the computation of earnings per share
pursuant to the two-class method. This amendment became effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those years, and requires that all prior period earnings
per share data presented (including interim financial statements, summaries of
earnings and selected financial data) be adjusted retrospectively to conform to
its provisions. This Topic became effective October 1, 2009, and did not have
an impact on the Companys consolidated financial statements.

In April 2008,
ASC Topic 350, Intangibles  Goodwill and Other, was amended to include a
list of factors an entity should consider in developing renewal or extension
assumptions used in determining the useful life of recognized intangible
assets. The new guidance applies to (1) intangible assets that are acquired
individually or with a group of other assets and (2) intangible assets acquired
in both business combinations and asset acquisitions. Under this amendment, entities
estimating the useful life of a recognized intangible asset must consider their
historical experience in renewing or extending similar arrangements or, in the
absence of historical experience, must consider assumptions that market
participants would use about renewal or extension. This amendment required
certain additional disclosures beginning October 1, 2009, and prospective
application to useful life estimates prospectively for intangible assets
acquired after September 30, 2009. This Topic became effective October 1, 2009,
and did not have an impact on the Companys consolidated financial statements.

In December
2007, the FASB amended its guidance on accounting for business combinations.
The new accounting guidance was effective for the company on October 1, 2009,
and is being applied prospectively to all business combinations subsequent to
the effective date. Among other things, the new guidance amends the principles
and requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed and any
noncontrolling interest in the acquiree and the goodwill acquired. It also
establishes new disclosure requirements to enable the evaluation of the nature
and financial effects of the business combination. The adoption of this
accounting guidance did not have a significant impact on the Companys
consolidated financial statements, and the impact it will have on the Companys
consolidated financial statements in future periods will depend on the nature
and size of business combinations completed subsequent to the date of adoption.

In February
2010, the FASB issued ASU No. 2010-09, Subsequent Events (Topic 855) (ASU
2010-09), which provides an update to Topic 855, Subsequent Events. This
update clarifies that an SEC filer is required to evaluate subsequent events
through the date that the financial statements are issued and removes the
requirement for SEC filers to disclose the date through which subsequent events
have been evaluated. This guidance became effective upon issuance and has been
adopted by the Company.

Recent Accounting Pronouncements Not Yet
Adopted as of September 30, 2010

In April 2010,
the FASB issued ASU No. 2010-17, Revenue Recognition - Milestone Method (Topic
605) (ASU 2010-17), which provides guidance on defining a milestone and
determining when it may be appropriate to apply the milestone method of revenue
recognition for certain revenue transactions. This guidance is effective on a
prospective basis for milestones achieved in fiscal years, and interim periods
within those years, beginning on or after June 15, 2010 (fiscal year 2011 for
the company). This accounting guidance is not expected to have a material
impact on the Companys consolidated financial statements.

F-14

---



In June 2009,
ASC Topic 810 was amended to improve financial reporting by enterprises
involved with variable interest entities. This Topic addresses (1) the effects
on certain provisions regarding the consolidation of variable interest entities,
as a result of the elimination of the qualifying special-purpose entity concept
in ASC Topic 860 regarding the accounting for transfers of financial assets,
and (2) concern about the application of certain key provisions of FASB
Interpretation No. 46(R), including those in which the accounting and
disclosures under the Interpretation do not. Earlier application is prohibited.
The adoption of this statement is not expected to have a material effect on the
Companys consolidated financial statements.

In October
2009, the FASB issued new accounting guidance for revenue recognition with
multiple deliverables. This guidance impacts the determination of when the
individual deliverables included in a multiple-element arrangement may be
treated as separate units of accounting. Additionally, this new accounting
guidance modifies the manner in which the transaction consideration is
allocated across the separately identified deliverables by no longer permitting
the residual method of allocating arrangement consideration. The new guidance
is effective for the Company prospectively for revenue arrangements entered
into or materially modified beginning in the first quarter of fiscal 2011.
Early adoption is permitted. This accounting guidance is not expected to have a
significant impact on the Companys consolidated financial statements.

In July 2010,
the FASB issued ASU No. 2010-20, Receivables (Topic 310) - Disclosures about
the Credit Quality of Financing Receivables and the Allowance for Credit
Losses (ASU 2010-20) which requires additional disclosures about an entitys
allowance for credit losses and the credit quality of its financing
receivables. These amendments affect all entities with financing receivables,
excluding short-term accounts receivable or receivables measured at fair value
or lower of cost or fair value. The guidance on disclosures as of the end of a
reporting period will be effective for the Company on December 31, 2010. The
disclosures about activity that occurs during a reporting period are effective
for the Companys second quarter of fiscal year 2011. The Company does not
expect the adoption of this guidance to have a material impact on its financial
statements

2.     FAIR VALUE MEASUREMENTS

Financial
assets and liabilities, measured at fair value on a recurring basis, are
classified on the valuation hierarchy in the table below:

|                                           |  |       |         |         |   |         |  |         |     |   |   |       | 
|------------------------------------------ |  | ----- | ------- | ------- | - | ------- |  | ------- | --- | - | - | ----- | 
|September
 30, 2010                        |  | Total |         | Level 1 |   | Level 2 |  | Level 3 |    
|                                           |  |       |         |         |   |         |  |         |    
|Cash and cash equivalents                  |  | $     | 110,628 |         | $ | 110,628 |  | $       |    |   | $ |      | 
|Short-term investments                     |  |       | 5,691   |         |   | 5,691   |  |         |    |   |   |      | 
|Derivatives                                |  |       | (43     | )       |   |        |  |         | (43 | ) |   |      | 
|Non-current auction rate securities        |  |       | 4,950   |         |   |        |  |         |    |   |   | 4,950 | 
|                                           |  |       |         |         |   |         |  |         |     |   |   |       | 
|Total assets and liabilities at fair value |  | $     | 121,226 |         | $ | 116,319 |  | $       | (43 | ) | $ | 4,950 | 
|                                           |  |       |         |         |   |         |  |         |     |   |   |       | 

|                                           |  |       |         |         |   |         |  |         |     |   |   |       | 
|------------------------------------------ |  | ----- | ------- | ------- | - | ------- |  | ------- | --- | - | - | ----- | 
|September
 30, 2009                        |  | Total |         | Level 1 |   | Level 2 |  | Level 3 |    
|                                           |  |       |         |         |   |         |  |         |    
|Cash and cash equivalents                  |  | $     | 116,128 |         | $ | 116,128 |  | $       |    |   | $ |      | 
|Short-term investments                     |  |       | 2,856   |         |   | 2,856   |  |         |    |   |   |      | 
|Derivatives                                |  |       | (83     | )       |   |        |  |         | (83 | ) |   |      | 
|Non-current auction rate securities        |  |       | 9,350   |         |   |        |  |         |    |   |   | 9,350 | 
|                                           |  |       |         |         |   |         |  |         |     |   |   |       | 
|Total assets and liabilities at fair value |  | $     | 128,251 |         | $ | 118,984 |  | $       | (83 | ) | $ | 9,350 | 
|                                           |  |       |         |         |   |         |  |         |     |   |   |       | 

F-15

---



The changes in
the fair value measurement of investments using significant unobservable inputs
(level 3) for the year ended September 30, 2010, are as follows:

|                    |  |                                                                            |        |  
|------------------- |  | -------------------------------------------------------------------------- | ------ | -
|                    |  | Fair Value
 Measurements Using
 Significant Unobservable
 Inputs (Level 3) |       
|                    |  |                                                                            |       
|September
 30, 2008 |  | $                                                                          | 11,550 |  
|Settlements         |  |                                                                            | (2,200 | )
|                    |  |                                                                            |        |  
|September
 30, 2009 |  | $                                                                          | 9,350  |  
|Settlements         |  |                                                                            | (4,400 | )
|                    |  |                                                                            |        |  
|September
 30, 2010 |  | $                                                                          | 4,950  |  
|                    |  |                                                                            |        |  

3.     INVENTORIES

Inventories,
net of obsolescence and lower of cost or market reserves, are summarized as
follows:

|                            |  |               |         |      |   |         | 
|--------------------------- |  | ------------- | ------- | ---- | - | ------- | 
|                            |  | September 30, |        
|                            |  |               |        
|                            |  | 2010          |         | 2009 |  
|                            |  |               |         |      |  
|Finished
 goods             |  | $             | 22,518  |      | $ | 18,078  | 
|Work in progress            |  |               | 36,163  |      |   | 29,266  | 
|Raw
 materials and supplies |  |               | 50,704  |      |   | 46,699  | 
|Demo
 inventory             |  |               | 14,686  |      |   | 16,030  | 
|Service
 parts              |  |               | 27,688  |      |   | 26,375  | 
|                            |  |               |         |      |   |         | 
|Total
 inventories          |  | $             | 151,759 |      | $ | 136,448 | 
|                            |  |               |         |      |   |         | 

4.     LONG-TERM
INVESTMENTS

Long-term investments
include auction rate securities which are variable rate securities tied to
short-term interest rates with maturities on the face of the securities in
excess of 90 days. Auction rate securities have rate resets through a modified
Dutch auction, at predetermined short-term intervals, usually every 7, 28, 35,
or 49 days. The securities trade at par, and are callable at par on any payment
date at the option of the issuer. Investment earnings paid during a given
period are based upon the reset rate determined during the prior auction.

Through sales,
the Company reduced its holdings of auction rate securities to approximately
$5.0 million at September 30, 2010. All sales were settled, for cash, at par
value. At September 30, 2010, the Company held five individual auction rate
securities. The Company does not believe that the remaining balance of auction
rate securities represent a significant portion of the Companys total
liquidity. The Company has historically used a discounted cash flow model to determine the fair
market value of these investments. This model included
estimates for interest rates, discount rates, the amount of cash flows, and
expected holding periods. As a result, the Company concluded that the par value
of these investments approximates fair market value. Additionally, the Company
has the ability and intent to hold these investments until a resumption of the
auction process or until maturity. Although the Company believes these
investments will become liquid within the next twelve months, it is uncertain
what impact the current economic environment will have on this position and
therefore, they have been classified as long-term assets on the consolidated
balance sheet.

F-16

---



|   |                        
|-- | -----------------------
|5. | PROPERTY AND
 EQUIPMENT

Property and
equipment include the following:

|                                       |  |               |         |      |   |         | 
|-------------------------------------- |  | ------------- | ------- | ---- | - | ------- | 
|                                       |  | September 30, |        
|                                       |  |               |        
|                                       |  | 2010          |         | 2009 |  
|                                       |  |               |         |      |  
|Buildings                              |  | $             | 34,273  |      | $ | 36,152  | 
|Technical
 machinery and equipment     |  |               | 37,531  |      |   | 37,410  | 
|Construction
 in progress              |  |               | 2,857   |      |   | 1,759   | 
|Furniture
 and fixtures                |  |               | 21,421  |      |   | 21,916  | 
|Computers
 and software                |  |               | 8,506   |      |   | 8,370   | 
|Leasehold
 improvements                |  |               | 16,526  |      |   | 16,691  | 
|                                       |  |               |         |      |   |         | 
|Total
 property and equipment, at cost |  | $             | 121,114 |      | $ | 122,298 | 
|                                       |  |               |         |      |   |         | 

|   |                                      
|-- | -------------------------------------
|6. | GOODWILL AND
 OTHER INTANGIBLE ASSETS

The changes in
the carrying amount of goodwill for the years ended September 30, 2010 and
2009, are as follows:

|                                                             |  |         |        |               |   |               |   |       |        |   |   |        |  
|------------------------------------------------------------ |  | ------- | ------ | ------------- | - | ------------- | - | ----- | ------ | - | - | ------ | -
|                                                             |  | Germany |        | United States |   | Rest of World |   | Total |       
|                                                             |  |         |        |               |   |               |   |       |       
|Balance as
 of September 30, 2008                            |  | $       | 46,019 |               | $ | 16,862        |   | $     | 28,874 |   | $ | 91,755 |  
|Additional goodwill from acquisitions                        |  |         |       |               |   | 5,045         |   |       | 5,087  |   |   | 10,132 |  
|Currency exchange differences                                |  |         | 976    |               |   | 73            |   |       | (406   | ) |   | 643    |  
|                                                             |  |         |        |               |   |               |   |       |        |   |   |        |  
|Balance as
 of September 30, 2009                            |  | $       | 46,995 |               | $ | 13,240        |   | $     | 33,555 |   | $ | 93,790 |  
|                                                             |  |         |        |               |   |               |   |       |        |   |   |        |  
|Additional goodwill from acquisitions                        |  |         |       |               |   | 430           |   |       |       |   |   | 430    |  
|Adjustment to goodwill from final purchase
 price allocation |  |         |       |               |   |              |   |       |       |   |   |       |  
|Currency exchange differences                                |  |         | (2,998 | )             |   | (225          | ) |       | (1,201 | ) |   | (4,424 | )
|                                                             |  |         |        |               |   |               |   |       |        |   |   |        |  
|Balance as
 of September 30, 2010                            |  | $       | 43,997 |               | $ | 13,445        |   | $     | 32,354 |   | $ | 89,796 |  
|                                                             |  |         |        |               |   |               |   |       |        |   |   |        |  

The carrying
values of other intangible assets are as follows:

|                              |  |                        |        |                           |   |                        |  |                           |        |  |   |        | 
|----------------------------- |  | ---------------------- | ------ | ------------------------- | - | ---------------------- |  | ------------------------- | ------ |  | - | ------ | 
|                              |  | September 30, 2010     |        | September 30, 2009        |  
|                              |  |                        |        |                           |  
|                              |  | Gross Carrying
 Amount |        | Accumulated
 Amortization |   | Gross Carrying
 Amount |  | Accumulated
 Amortization |       
|                              |  |                        |        |                           |   |                        |  |                           |       
|Amortized
 intangible assets: |  |                        |        |                           |   |                        |  |                           |        |  |   |        | 
|Patents                       |  | $                      | 10,293 |                           | $ | 5,983                  |  | $                         | 10,577 |  | $ | 5,477  | 
|Customer base                 |  |                        | 16,310 |                           |   | 14,842                 |  |                           | 17,289 |  |   | 15,174 | 
|Other                         |  |                        | 19,275 |                           |   | 14,875                 |  |                           | 18,132 |  |   | 14,170 | 
|                              |  |                        |        |                           |   |                        |  |                           |        |  |   |        | 
|Total                         |  | $                      | 45,878 |                           | $ | 35,700                 |  | $                         | 45,998 |  | $ | 34,821 | 
|                              |  |                        |        |                           |   |                        |  |                           |        |  |   |        | 

Patents are
amortized on a straight-line basis over the life of the patent which ranges
from 1 to 20 years. Customer base is amortized on a straight-line basis over
seven years. Other intangible assets mainly comprised of software and
unpatented technology are amortized on a straight-line basis between 1 and 16
years. Amortization expense for the years ended September 30, 2010, 2009, and
2008, was $2,250, $3,559, and $6,769, respectively. At September 30, 2010,
estimated amortization expense for the next five fiscal years based on the
average exchange rates as of September 30, 2010, is as follows:

|     |  |   |       | 
|---- |  | - | ----- | 
|2011 |  | $ | 1,900 | 
|2012 |  |   | 1,900 | 
|2013 |  |   | 1,900 | 
|2014 |  |   | 1,700 | 
|2015 |  |   | 1,400 | 

F-17

---



|   |                     
|-- | --------------------
|7. | ACCRUED
 LIABILITIES

Accrued
liabilities are comprised of the following:

|                           |  |               |        |      |   |        | 
|-------------------------- |  | ------------- | ------ | ---- | - | ------ | 
|                           |  | September 30, |       
|                           |  |               |       
|                           |  | 2010          |        | 2009 |  
|                           |  |               |        |      |  
|Employee
 compensation     |  | $             | 20,814 |      | $ | 14,375 | 
|Warranty
 reserves         |  |               | 10,417 |      |   | 8,962  | 
|Other taxes
 payable       |  |               | 181    |      |   | 108    | 
|Customer
 deposits         |  |               | 16,531 |      |   | 8,973  | 
|Other                      |  |               | 14,221 |      |   | 13,971 | 
|                           |  |               |        |      |   |        | 
|Total
 accrued liabilities |  | $             | 62,164 |      | $ | 46,389 | 
|                           |  |               |        |      |   |        | 

The Company
provides for the estimated costs of product warranties when revenue is recognized.
The estimate of costs to fulfill warranty obligations is based on historical
experience and expectation of future conditions. The change in warranty
reserves for the years ended September 30, 2010 and 2009, are as follows:

|                                                      |  |   |        |  
|----------------------------------------------------- |  | - | ------ | -
|Balance at
 September 30, 2008                        |  | $ | 12,337 |  
|Additional accruals for warranties during
 the period |  |   | 439    |  
|Usage during the period                               |  |   | (3,774 | )
|Currency translation                                  |  |   | (40    | )
|                                                      |  |   |        |  
|Balance at
 September 30, 2009                        |  | $ | 8,962  |  
|Additional accruals for warranties during
 the period |  |   | 5,872  |  
|Usage during the period                               |  |   | (3,918 | )
|Currency translation                                  |  |   | (499   | )
|                                                      |  |   |        |  
|Balance at
 September 30, 2010                        |  | $ | 10,417 |  
|                                                      |  |   |        |  

|   |                 
|-- | ----------------
|8. | LINES OF
 CREDIT

The Company
maintains $25,000 in short-term lines of credit in the U.S. As of September 30,
2010, $25,000 remained unused and available for future use. As of September 30,
    2009, $10,000 was used under these lines of credit.

In addition,
the Companys non-U.S. subsidiaries have short-term credit lines amounting
to $51,670, which allow them to borrow in the applicable local currency. At
September 30, 2010 and 2009, direct borrowings under these agreements totaled
$4,081 and $8,983, respectively. Additionally $3,300 and $4,184 were used for
bank guarantees under those lines of credit as of September 30, 2010 and 2009,
respectively. The remaining unused portion of the lines of credit at September
30, 2010, was $44,289, in aggregate. Interest rates vary from 0.95% to 2.53%,
depending upon the country and the usage made of the available credit.

Furthermore,
the Company also maintains credit lines specific to bank guarantees amounting
to $13,219 and $2,933 as of September 30, 2010 and 2009, respectively, of which
$2,168 and $331 was used as of September 30, 2010 and 2009, respectively.

|   |                
|-- | ---------------
|9. | LONG-TERM
 DEBT

CBL maintains
a loan amounting to $5,189. This loan will be repaid evenly over the next five
years. The current portion of $1,092 is classified in Line of credit and short
term borrowings in the consolidated balance sheet as of September 30, 2010.

In addition,
CBL maintains long-term credit facilities of $6,828, which expire in 2013.
Corelase Oy maintains long-term credit facilities of $2,047 which expire in
2012, $366 which expire in 2014, and $2,150 which expire in 2015.

F-18

---



As of
September 30, 2010, $15,488 was borrowed under such facilities at an average
interest rate of 4.52%. As of September 30, 2009, $12,426 was borrowed under
such facilities at an average interest rate of 5.2%.

The Company is
subject to financial covenants under some of these credit facilities and lines
of credit, which could restrict the Company from drawing money under them. At
September 30, 2010, the Company was in compliance with these covenants.

|    |            
|--- | -----------
|10. | COMMITMENTS

The Company
leases operating facilities and equipment under operating leases, which expire
at various dates through 2017 (see note 14). The lease agreements require
payment of real estate taxes, insurance and maintenance expenses by the
Company.

Minimum lease
payments for future fiscal years under non-cancelable operating leases as of
September 30, 2010, are:

|                                 |  |       |       | 
|-------------------------------- |  | ----- | ----- | 
|Fiscal year ending September 30, |  | Total |      
|                                 |  |       |      
|2011                             |  | $     | 8,228 | 
|2012                             |  |       | 6,140 | 
|2013                             |  |       | 3,317 | 
|2014                             |  |       | 2,458 | 
|2015                             |  |       | 2,209 | 
|2016 and
 thereafter             |  |       | 7,618 | 

Rent expense
charged to operations for the years ended September 30, 2010, 2009, and 2008,
approximated $9,066, $8,732, and $8,452, respectively.

Purchase
obligations for payments due under various types of agreements to purchase raw
materials and other goods as of September 30, 2010, are:

|                  |  |  |        | 
|----------------- |  |  | ------ | 
|Less than 1
 Year |  |  | 82,306 | 
|1 - 3 Years       |  |  | 17,548 | 
|3 - 5 Years       |  |  |       | 

|    |             
|--- | ------------
|11. | INCOME TAXES

Significant
components of the income tax provision are as follows:

|                         |  |                           |        |      |   |        |   |   |        |  
|------------------------ |  | ------------------------- | ------ | ---- | - | ------ | - | - | ------ | -
|                         |  | Years ended September 30, |       
|                         |  |                           |       
|                         |  | 2010                      |        | 2009 |   | 2008   |  
|                         |  |                           |        |      |   |        |  
|Current:                 |  |                           |        |      |   |        |   |   |        |  
|United States            |  | $                         | 247    |      | $ | 306    |   | $ | 2,784  |  
|Foreign                  |  |                           | 12,799 |      |   | 7,605  |   |   | 30,859 |  
|                         |  |                           |        |      |   |        |   |   |        |  
|Total current            |  |                           | 13,046 |      |   | 7,911  |   |   | 33,643 |  
|                         |  |                           |        |      |   |        |   |   |        |  
|Deferred:                |  |                           |        |      |   |        |   |   |        |  
|United States            |  |                           | 2,875  |      |   | (2,596 | ) |   | (350   | )
|Foreign                  |  |                           | (479   | )    |   | (118   | ) |   | 173    |  
|                         |  |                           |        |      |   |        |   |   |        |  
|Total deferred           |  |                           | 2,396  |      |   | (2,714 | ) |   | (177   | )
|                         |  |                           |        |      |   |        |   |   |        |  
|Total income tax expense |  | $                         | 15,442 |      | $ | 5,197  |   | $ | 33,466 |  
|                         |  |                           |        |      |   |        |   |   |        |  

F-19

---



Income (Loss)
before income taxes is attributable to the following geographic regions:

|                                  |  |                           |        |      |   |         |   |   |        |  
|--------------------------------- |  | ------------------------- | ------ | ---- | - | ------- | - | - | ------ | -
|                                  |  | Years ended September 30, |       
|                                  |  |                           |       
|                                  |  | 2010                      |        | 2009 |   | 2008    |  
|                                  |  |                           |        |      |   |         |  
|United
 States                    |  | $                         | 2,179  |      | $ | (11,766 | ) | $ | (3,077 | )
|Germany                           |  |                           | 35,019 |      |   | 21,058  |   |   | 87,630 |  
|France                            |  |                           | (31    | )    |   | 175     |   |   | 1,112  |  
|Italy                             |  |                           | 950    |      |   | 107     |   |   | 2,846  |  
|Singapore                         |  |                           | 554    |      |   | 298     |   |   | 2,315  |  
|United
 Kingdom                   |  |                           | 4,656  |      |   | 4,069   |   |   | 5,776  |  
|Japan                             |  |                           | 169    |      |   | 76      |   |   | 217    |  
|Other                             |  |                           | 2,405  |      |   | 683     |   |   | 980    |  
|                                  |  |                           |        |      |   |         |   |   |        |  
|Total income
 before income taxes |  | $                         | 45,901 |      | $ | 14,700  |   | $ | 97,799 |  
|                                  |  |                           |        |      |   |         |   |   |        |  

The difference
between actual income tax expense and the amount computed by applying the U.S.
federal income tax rate is as follows:

|                                                     |  |                           |        |      |   |        |   |   |        |  
|---------------------------------------------------- |  | ------------------------- | ------ | ---- | - | ------ | - | - | ------ | -
|                                                     |  | Years ended September 30, |       
|                                                     |  |                           |       
|                                                     |  | 2010                      |        | 2009 |   | 2008   |  
|                                                     |  |                           |        |      |   |        |  
|U.S. federal
 statutory tax rate                     |  |                           | 35     | %    |   | 35     | % |   | 35     | %
|                                                     |  |                           |        |      |   |        |   |   |        |  
|Computed
 expected tax expense                     |  | $                         | 16,066 |      | $ | 5,145  |   | $ | 34,230 |  
|Difference
 between U.S. and foreign statutory rates |  |                           | (2,296 | )    |   | (1,594 | ) |   | (5,048 | )
|Other permanent differences                          |  |                           | 402    |      |   | 202    |   |   | 1,342  |  
|Adjustment
 of valuation allowance                   |  |                           | 149    |      |   | 456    |   |   | (10    | )
|Change in
 statutory tax rates                       |  |                           | (112   | )    |   | (80    | ) |   | 276    |  
|Other                                                |  |                           | 1,233  |      |   | 1,068  |   |   | 2,676  |  
|                                                     |  |                           |        |      |   |        |   |   |        |  
|Actual tax
 expense                                  |  | $                         | 15,442 |      | $ | 5,197  |   | $ | 33,466 |  
|                                                     |  |                           |        |      |   |        |   |   |        |  

Total income
taxes for the years ended September 30, 2010, 2009, and 2008, were allocated as
follows:

|                                                                                |  |                           |        |      |   |        |   |   |        |  
|------------------------------------------------------------------------------- |  | ------------------------- | ------ | ---- | - | ------ | - | - | ------ | -
|                                                                                |  | Years ended September 30, |       
|                                                                                |  |                           |       
|                                                                                |  | 2010                      |        | 2009 |   | 2008   |  
|                                                                                |  |                           |        |      |   |        |  
|Income taxes
 from operations                                                   |  | $                         | 15,442 |      | $ | 5,197  |   | $ | 33,466 |  
|Stockholders
 equity:                                                          |  |                           |        |      |   |        |   |   |        |  
|Tax benefit
 applicable to the exercise of stock options                        |  |                           | (4     | )    |   | (464   | ) |   | (567   | )
|                                                                                |  |                           |        |      |   |        |   |   |        |  
|Tax (benefit) expense applicable to defined benefit pension plan                |  |                           | (290   | )    |   | (1,585 | ) |   | 690    |  
|Tax (benefit)
 expense applicable to the fair value of interest swap agreements |  |                           | 11     |      |   | (81    | ) |   | (118   | )
|                                                                                |  |                           |        |      |   |        |   |   |        |  
|                                                                                |  |                           |        |      |   |        |   |   |        |  
|Total income
 tax                                                               |  | $                         | 15,159 |      | $ | 3,067  |   | $ | 33,471 |  
|                                                                                |  |                           |        |      |   |        |   |   |        |  

F-20

---



Deferred
income taxes result from temporary differences between the amount of assets and
liabilities recognized for financial reporting and tax purposes. The components
of net deferred income taxes are as follows:

|                                      |  |               |        |      |   |        |  
|------------------------------------- |  | ------------- | ------ | ---- | - | ------ | -
|                                      |  | September 30, |       
|                                      |  |               |       
|                                      |  | 2010          |        | 2009 |  
|                                      |  |               |        |      |  
|Deferred
 income tax assets:          |  |               |        |      |   |        |  
|Foreign                               |  |               |        |      |   |        |  
|Net operating loss carryforwards      |  | $             | 4,291  |      | $ | 3,966  |  
|Pension obligations                   |  |               | 1,641  |      |   | 1,039  |  
|Inventories                           |  |               | 3,992  |      |   | 3,418  |  
|Accounts payable                      |  |               | 206    |      |   | 213    |  
|Other                                 |  |               | 780    |      |   | 644    |  
|                                      |  |               |        |      |   |        |  
|Total Foreign                         |  |               | 10,910 |      |   | 9,280  |  
|                                      |  |               |        |      |   |        |  
|United States:                        |  |               |        |      |   |        |  
|Net operating loss carryforwards      |  |               | 9,548  |      |   | 10,423 |  
|Tax credits                           |  |               | 122    |      |   | 1,663  |  
|Warranty reserve                      |  |               | 488    |      |   | 375    |  
|Inventories                           |  |               | 4,219  |      |   | 4,567  |  
|Allowance for doubtful accounts       |  |               | 380    |      |   | 452    |  
|Accrued liabilities                   |  |               | 724    |      |   | 392    |  
|Pension obligations                   |  |               | 777    |      |   | 981    |  
|Property & equipment                  |  |               | 424    |      |   | 101    |  
|Stock-based compensation expense      |  |               | 1,552  |      |   | 1,143  |  
|Other                                 |  |               | 269    |      |   | 315    |  
|                                      |  |               |        |      |   |        |  
|Total United States                   |  |               | 18,503 |      |   | 20,412 |  
|                                      |  |               |        |      |   |        |  
|Gross deferred income tax assets      |  |               | 29,413 |      |   | 29,692 |  
|Less: Valuation allowance             |  |               | (3,568 | )    |   | (3,318 | )
|                                      |  |               |        |      |   |        |  
|Net deferred income tax assets        |  | $             | 25,845 |      | $ | 26,374 |  
|                                      |  |               |        |      |   |        |  
|Deferred
 income tax liabilities:     |  |               |        |      |   |        |  
|Foreign:                              |  |               |        |      |   |        |  
|Property & equipment                  |  |               | (1,418 | )    |   | (1,761 | )
|Intangibles                           |  |               | (2,843 | )    |   | (2,495 | )
|Accounts receivable                   |  |               | (387   | )    |   | (110   | )
|Other                                 |  |               | (311   | )    |   | 85     |  
|                                      |  |               |        |      |   |        |  
|                                      |  |               |        |      |   |        |  
|Total Foreign                         |  |               | (4,959 | )    |   | (4,281 | )
|                                      |  |               |        |      |   |        |  
|United States:                        |  |               |        |      |   |        |  
|Accounts receivable                   |  |               |       |      |   | (92    | )
|Other current assets                  |  |               | (282   | )    |   |       |  
|Non-US earnings                       |  |               |       |      |   |       |  
|                                      |  |               |        |      |   |        |  
|Total United States                   |  |               | (282   | )    |   | (92    | )
|                                      |  |               |        |      |   |        |  
|Gross deferred income tax liabilities |  |               | (5,241 | )    |   | (4,373 | )
|                                      |  |               |        |      |   |        |  
|Net deferred income tax assets        |  | $             | 20,604 |      | $ | 22,001 |  
|                                      |  |               |        |      |   |        |  

The total
deferred income tax assets (liabilities) are included in the accompanying
consolidated balance sheet as follows:

|                                               |  |               |        |      |   |        |  
|---------------------------------------------- |  | ------------- | ------ | ---- | - | ------ | -
|                                               |  | September 30, |       
|                                               |  |               |       
|                                               |  | 2010          |        | 2009 |  
|                                               |  |               |        |      |  
|Deferred
 income tax assets  current          |  | $             | 13,657 |      | $ | 13,962 |  
|Deferred
 income tax assets  non current      |  |               | 12,865 |      |   | 14,249 |  
|Deferred income
 tax liabilities  current     |  |               | (1,722 | )    |   | (1,567 | )
|Deferred
 income tax liabilities  non current |  |               | (4,196 | )    |   | (4,643 | )
|                                               |  |               |        |      |   |        |  
|Net deferred income tax assets                 |  | $             | 20,604 |      | $ | 22,001 |  
|                                               |  |               |        |      |   |        |  

F-21

---



In assessing
the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets will
not be realized. The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the periods in which those
temporary differences become deductible, as well as limitations imposed by the
relevant taxing jurisdictions on the future benefits of those deductions.
Management considers the scheduled reversal of deferred tax liabilities,
projected future taxable income, the relevant statutory and regulatory
limitations, and tax planning strategies in making this assessment. Based upon
the level of historical taxable income and projections for future taxable
income over the periods in which the deferred tax assets are deductible,
management believes it is more likely than not that the Company will realize
the benefits of these deductible differences.

In its initial
purchase price allocation in fiscal 2008, the Company had established a
valuation allowance related to net operating loss carryforwards and tax credits
at Nufern due to uncertainty regarding the Companys ability to utilize these
carryforwards and tax credits. As a result of further analysis of the statutory
and regulatory limitations in fiscal 2009 at the federal level, the Company
concluded that a portion of these carryforward amounts will be unavailable to
the Company. These amounts have been removed from the amount of deferred income
tax asset, and have likewise been removed from the related valuation allowance.
Furthermore, as a result of analysis of projected future taxable income
eligible to be offset by the remaining carryforwards, the Company concluded
that a valuation allowance against the remaining federal carryforwards was not
required. The adjustment to deferred taxes resulting from this analysis reduced
the goodwill recorded as part of the Nufern purchase price allocation, and this
analysis was performed as part of the finalization of the Nufern purchase price
allocation in fiscal 2009.

At September
30, 2010, the Company had federal net operating tax loss carryforwards
available of $18.5 million and state net operating tax loss carryforwards
available of $43.5 million in the United States (which start to expire in
2028), $1.1 million in Germany, and $15.3 million in other European countries
(which start to expire in 2013). As of September 30, 2010, deferred tax assets,
net of valuation allowances related to these operating tax losses and tax
credits, amounted to $10.8 million.

We have
accumulated undistributed earnings of foreign subsidiaries aggregating
approximately $330 million at September 30, 2010. These earnings are expected
to be indefinitely reinvested outside of the United States. If those earnings
were distributed in the form of dividends or otherwise, they would be subject
to United States federal income taxes (subject to an adjustment for foreign tax
credits), state income taxes and withholding taxes payable to the various
foreign countries. It is not currently practicable to estimate the tax
liability that might be payable on the repatriation of these foreign earnings.

The Company
adopted the amended provisions of ASC Topic, 740 Income Taxes, in fiscal year
2008. As a result of the implementation of this amendment, the Company recorded
a decrease of $0.9 million to reserves for income taxes, with a corresponding
increase to retained earnings as of October 1, 2007. As of the date of adoption
and after recognizing these amendments, the Companys gross unrecognized tax
benefits totaled $0.2 million.

The Companys
policy is to recognize interest and penalties accrued on any unrecognized tax
benefits as interest expense and SG&A, respectively. The Company classified
the unrecognized tax benefit as non-current because payment is not anticipated
within one year of the balance sheet date. As of September 30, 2010, the
Companys gross unrecognized tax benefits totaled $0.6 million, which includes
approximately $0.1 million of interest and penalties. Approximately $0.5
million of unrecognized tax benefits would impact the effective tax rate, if
recognized. The Company estimates that the unrecognized tax benefits will not
change significantly within the next year.

F-22

---



A reconciliation of the
beginning and ending amount of gross unrecognized tax benefits, excluding the
related accrual for interest, is as follows:

|                                              |  |   |     |  
|--------------------------------------------- |  | - | --- | -
|                                              |  |   |     |  
|Balance at
 September 30, 2007                |  | $ | 242 |  
|Increases in tax positions for prior years    |  |   | 434 |  
|Increases in tax positions for current
 years |  |   |    |  
|Settlements with taxing authorities           |  |   |    |  
|                                              |  |   |     |  
|Balance at
 September 30, 2008                |  |   | 676 |  
|Increases in tax positions for prior years    |  |   |    |  
|Increases in tax positions for current
 years |  |   |    |  
|Settlements with taxing authorities           |  |   | (39 | )
|                                              |  |   |     |  
|Balance at
 September 30, 2009                |  |   | 637 |  
|Decreases in tax positions for prior years    |  |   | (22 | )
|Increases in tax positions for current
 years |  |   |    |  
|Settlements with taxing authorities           |  |   |    |  
|                                              |  |   |     |  
|Balance at
 September 30, 2010                |  | $ | 615 |  
|                                              |  |   |     |  

The Company
files federal and state income tax returns in several domestic and foreign
jurisdictions. In most tax jurisdictions, returns are subject to examination by
the relevant tax authorities for a number of years after the returns have been
filed. With limited exceptions, the Company is no longer subject to examination
by the United States Internal Revenue Service for years through 2005. With
respect to state and local tax jurisdictions and countries outside the United
States, with limited exceptions, the Company is no longer subject to income tax
audits for years before 2004.

|    |                        
|--- | -----------------------
|12. | EMPLOYEE
 BENEFIT PLANS

The Company
has defined benefit pension plans for the RSL, RBE and RS Inc. employees. The
Companys U.S. plan began in fiscal year 1995 and is funded. Any new employees
hired after January 1, 2005, are not eligible for the RS Inc. pension plan. As
is the normal practice with German companies, the German pension plan is
unfunded. Any new employees, hired after the acquisition of CBL, are not eligible
for the RSL pension plan. The Companys Spanish plan began in fiscal year 2009
and is funded. The measurement date of the Companys pension plans is September
30.

The
determination of the Companys obligation and expense for pension is dependent
on the selection of certain actuarial assumptions in calculating those amounts.
Assumptions are made about interest rates, expected investment return on plan
assets, total turnover rates, and rates of future compensation increases. In
addition, the Companys actuarial consultants use subjective factors such as
withdrawal rates and mortality rates to develop their calculations of these
amounts. The Company generally reviews these assumptions at the beginning of
each fiscal year. The Company is required to consider current market
conditions, including changes in interest rates, in making these assumptions.
The actuarial assumptions that the Company uses may differ materially from
actual results due to changing market and economic conditions, higher or lower
withdrawal rates or longer or shorter life spans of participants. These
differences may result in a significant impact on the amount of pension
benefits expense the Company has recorded or may record.

The discount
rate enables the Company to state expected future cash flows at a present value
on the measurement date. The Company has little latitude in selecting this rate
and it must represent the market rate of high-quality fixed income investments.
A lower discount rate increases the present value of benefit obligations and
increases pension expense.

To determine
the expected long-term rate of return on plan assets, the Company considers the
current and expected asset allocations, as well as historical and expected
returns on various categories of plan assets.

F-23

---



The following table sets forth
the funded status of the plans at the balance sheet dates:

|                                                     |  |               |         |      |   |         |   
|---------------------------------------------------- |  | ------------- | ------- | ---- | - | ------- | --
|                                                     |  | September 30, |        
|                                                     |  |               |        
|                                                     |  | 2010          |         | 2009 |  
|                                                     |  |               |         |      |  
|Change in benefit obligation:                        |  |               |         |      |   |         |   
|Projected benefit obligation at beginning
 of year   |  | $             | 23,055  |      | $ | 16,642  |   
|Service cost                                         |  |               | 811     |      |   | 730     |   
|Interest cost                                        |  |               | 1,201   |      |   | 1,130   |   
|Actuarial losses                                     |  |               | 1,366   |      |   | 4,636   |   
|Foreign exchange rate impacts                        |  |               | (967    | )    |   | 263     |   
|Benefits paid  total                                |  |               | (458    | )    |   | (346    | ) 
|                                                     |  |               |         |      |   |         |   
|Projected benefit obligation at end of year          |  |               | 25,008  |      |   | 23,055  |   
|                                                     |  |               |         |      |   |         |   
|Change in plan assets:                               |  |               |         |      |   |         |   
|Fair value of plan assets at beginning of
 year      |  |               | 5,659   |      |   | 4,367   |   
|Actual return on plan assets                         |  |               | 570     |      |   | 264     |   
|Employer contributions                               |  |               | 510     |      |   | 1,150   |   
|Foreign exchange rate impacts                        |  |               | (2      | )    |   |        |   
|Benefits paid  funded plans                         |  |               | (190    | )    |   | (122    | ) 
|                                                     |  |               |         |      |   |         |   
|Fair value of plan assets at end of year             |  |               | 6,547   |      |   | 5,659   |   
|                                                     |  |               |         |      |   |         |   
|Funded status at end of year                         |  | $             | (18,461 | )*   | $ | (17,396 | )*
|                                                     |  |               |         |      |   |         |   
|                                                     |  |               |         |      |   |         |   
|Amounts recognized in the consolidated balance sheet |  |               |         |      |   |         |   
|Accrued benefit liability                            |  | $             | (18,461 | )    | $ | (17,396 | ) 
|Accumulated other comprehensive loss
 (pre-tax)      |  |               | 4,740   |      |   | 3,625   |   
|                                                     |  |               |         |      |   |         |   
|Net amount recognized                                |  | $             | (13,721 | )    | $ | (13,771 | ) 
|                                                     |  |               |         |      |   |         |   

*$298 and $299
relate to expected payments in the following twelve months for the Companys
unfunded non-US plans and are therefore classified in current Accrued
liabilities in the consolidated balance sheet as of September 30, 2010 and
2009, respectively.

The
accumulated benefit obligation for defined benefit pension plans was $22,733
and $20,587 at September 30, 2010 and 2009, respectively.

|                                                                                                         |  |               |        |      |   |        |  
|-------------------------------------------------------------------------------------------------------- |  | ------------- | ------ | ---- | - | ------ | -
|                                                                                                         |  | September 30, |       
|                                                                                                         |  |               |       
|                                                                                                         |  | 2010          |        | 2009 |  
|                                                                                                         |  |               |        |      |  
|Information for pension plans with an
 accumulated benefit obligation in excess of plan assets           |  |               |        |      |   |        |  
|Projected benefit obligation                                                                             |  | $             | 25,008 |      | $ | 23,055 |  
|Accumulated benefit obligation                                                                           |  |               | 22,733 |      |   | 20,587 |  
|Fair value of plan assets                                                                                |  |               | 6,547  |      |   | 5,659  |  
|                                                                                                         |  |               |        |      |   |        |  
|                                                                                                         |  |               |        |      |   |        |  
|Components of net periodic benefit cost and
 other amounts recognized in other comprehensive income      |  |               |        |      |   |        |  
|Net periodic benefit cost                                                                                |  |               |        |      |   |        |  
|Service Cost                                                                                             |  | $             | 811    |      | $ | 730    |  
|Interest Cost                                                                                            |  |               | 1,201  |      |   | 1,130  |  
|Expected return on plan assets                                                                           |  |               | (459   | )    |   | (389   | )
|Amortization of net loss                                                                                 |  |               | 140    |      |   |       |  
|                                                                                                         |  |               |        |      |   |        |  
|Net periodic benefit cost                                                                                |  | $             | 1,693  |      | $ | 1,471  |  
|                                                                                                         |  |               |        |      |   |        |  
|                                                                                                         |  |               |        |      |   |        |  
|Other changes in plan assets and benefit
 obligations recognized in other comprehensive income (pre-tax) |  |               |        |      |   |        |  
|Net loss                                                                                                 |  |               | 1,115  |      |   | 4,761  |  
|                                                                                                         |  |               |        |      |   |        |  
|Total recognized in other comprehensive
 income                                                          |  | $             | 1,115  |      | $ | 4,761  |  
|                                                                                                         |  |               |        |      |   |        |  
|Total recognized in net periodic benefit
 cost and other comprehensive income                            |  | $             | 2,808  |      | $ | 6,232  |  
|                                                                                                         |  |               |        |      |   |        |  

F-24

---



The
assumptions used in the valuation of the plan are as follows:

|                                |  |               |      |      |  |      |  
|------------------------------- |  | ------------- | ---- | ---- |  | ---- | -
|                                |  | September 30, |     
|                                |  |               |     
|                                |  | 2010          |      | 2009 | 
|                                |  |               |      |      | 
|Discount
 rate:                 |  |               |      |      |  |      |  
|United States                   |  |               | 5.50 | %    |  | 5.75 | %
|Foreign                         |  |               | 4.60 | %    |  | 5.40 | %
|Expected
 return on plan assets |  |               |      |      |  |      |  
|United States                   |  |               | 7.75 | %    |  | 7.75 | %
|Foreign                         |  |               | 3.75 | %    |  | 4.0  | %
|Rate of
 compensation increase  |  |               |      |      |  |      |  
|United States                   |  |               | 3.0  | %    |  | 3.0  | %
|Foreign                         |  |               | 3.0  | %    |  | 3.0  | %

The Company
recognizes the over (under) funded status of the defined benefit plans in the
statement of financial position. The Company also recognizes, in other
comprehensive income, certain gains and losses that arise during the period but
are deferred under current pension accounting rules.

Expected
benefit payments for each of the next five fiscal years and for the five years
aggregated thereafter is as follows: $518 in 2011, $792 in 2012, $741 in 2013,
$817 in 2014, $954 in 2015, and $5,862 thereafter.

The Companys
pension plan asset allocations at September 30, 2010 and 2009, by asset
category are as follows:

|                         |  |              |       |            |  |                    |   |              |     |            |   |       |  |  |     |  
|------------------------ |  | ------------ | ----- | ---------- |  | ------------------ | - | ------------ | --- | ---------- | - | ----- |  |  | --- | -
|                         |  | 2010         |       | 2009       | 
|                         |  |              |       |            | 
|                         |  | Dollar Value |       | Percentage |  | Target
 Allocation |   | Dollar Value |     | Percentage |  
|                         |  |              |       |            |  |                    |   |              |     |            |  
|Certificates
 of Deposit |  | $            | 359   |            |  | 6                  | % |              | 5   | %          | $ | 327   |  |  | 6   | %
|Equity
 Securities       |  |              | 3,016 |            |  | 46                 | % |              | 50  | %          |   | 2,858 |  |  | 50  | %
|Debt
 Securities         |  |              | 3,172 |            |  | 48                 | % |              | 45  | %          |   | 2,474 |  |  | 44  | %
|                         |  |              |       |            |  |                    |   |              |     |            |   |       |  |  |     |  
|Total Plan
 Assets       |  | $            | 6,547 |            |  | 100                | % |              | 100 | %          | $ | 5,659 |  |  | 100 | %
|                         |  |              |       |            |  |                    |   |              |     |            |   |       |  |  |     |  

The Company
employs a total return investment approach whereby a mix of equity, debt
securities, and government securities are used to maximize the long-term return
of plan assets for a prudent level of risk. The intent of this strategy is to
minimize plan expenses by maximizing investment returns within that prudent
level of risk. Furthermore, equity investments are diversified across U.S. and
non-U.S. stocks as well as growth, value, and small and large capitalizations.
Additionally, cash balances are maintained at levels adequate to meet near-term
plan expenses and benefit payments. Investment risk is measured and monitored
on an ongoing basis through semi-annual investment portfolio reviews.

Investments in
our defined benefit plan are stated at fair value. Level 1 assets are valued
using quoted market prices that represent the asset value of the shares held by
the trusts. The level 2 assets are investments in pooled funds, which are
valued using a model to reflect the valuation of their underlying assets that
are publicly traded with observable values. The fair value of our level 3
postretirement benefit plan assets are measured by compiling the portfolio
holdings and independently valuing the securities in those portfolios.

F-25

---



The fair
values of our pension plan assets, by level within the fair value hierarchy, as
of September 30, 2010, are as follows:

|                        |  |         |   |         |   |         |  |       |   |  |   |       | 
|----------------------- |  | ------- | - | ------- | - | ------- |  | ----- | - |  | - | ----- | 
|Asset
 Categories       |  | Level 1 |   | Level 2 |   | Level 3 |  | Total |  
|                        |  |         |   |         |   |         |  |       |  
|Certificates of Deposit |  | $       |  |         | $ | 359     |  | $     |  |  | $ | 359   | 
|Equity Securities       |  |         |   |         |   |         |  |       |   |  |   |       | 
|Small Cap               |  |         |  |         |   | 123     |  |       |  |  |   | 123   | 
|Mid Cap                 |  |         |  |         |   | 269     |  |       |  |  |   | 269   | 
|Large Cap               |  |         |  |         |   | 960     |  |       |  |  |   | 960   | 
|Total Market Stock      |  |         |  |         |   | 583     |  |       |  |  |   | 583   | 
|International           |  |         |  |         |   | 917     |  |       |  |  |   | 917   | 
|Emerging Markets        |  |         |  |         |   | 164     |  |       |  |  |   | 164   | 
|Debt Securities         |  |         |   |         |   |         |  |       |   |  |   |       | 
|Bonds & Mortgages       |  |         |  |         |   | 2,295   |  |       |  |  |   | 2,295 | 
|Inflation Protected     |  |         |  |         |   | 325     |  |       |  |  |   | 325   | 
|High Yield              |  |         |  |         |   | 323     |  |       |  |  |   | 323   | 
|Money Market            |  |         |  |         |   | 200     |  |       |  |  |   | 200   | 
|Other                   |  |         |  |         |   | 29      |  |       |  |  |   | 29    | 
|                        |  |         |   |         |   |         |  |       |   |  |   |       | 
|Total Plan
 Assets      |  | $       |  |         | $ | 6,547   |  | $     |  |  | $ | 6,547 | 
|                        |  |         |   |         |   |         |  |       |   |  |   |       | 

RS Inc., RB
Inc., PRC, Lee Laser, Rofin-Baasel Canada Ltd., Dilas Diodelaser Inc., and
Nufern have 401(k) plans for the benefit of all eligible U.S. employees, as
defined by the plan. Participating employees may contribute up to 16% of their
qualified annual compensation. Those subsidiaries match 50% of the first 5 to
6% of the employees compensation contributed as a salary deferral. Company
contributions for the years ended September 30, 2010, 2009, and 2008, were
$402, $334, and $559, respectively.

|    |                           
|--- | --------------------------
|13. | EARNINGS PER
 COMMON SHARE

The
calculation of the weighted average number of common shares outstanding for
each period is as follows:

|                                                                       |  |                           |            |      |  |            |  |  |            | 
|---------------------------------------------------------------------- |  | ------------------------- | ---------- | ---- |  | ---------- |  |  | ---------- | 
|                                                                       |  | Years ended September 30, |           
|                                                                       |  |                           |           
|                                                                       |  | 2010                      |            | 2009 |  | 2008       | 
|                                                                       |  |                           |            |      |  |            | 
|Weighted number of shares for basic
 earnings per common share         |  |                           | 28,807,130 |      |  | 28,911,559 |  |  | 29,639,876 | 
|Potential additional shares due to
 outstanding dilutive stock options |  |                           | 404,720    |      |  | 282,212    |  |  | 806,444    | 
|                                                                       |  |                           |            |      |  |            |  |  |            | 
|Weighted number of shares for diluted
 earnings per common share       |  |                           | 29,211,850 |      |  | 29,193,771 |  |  | 30,446,319 | 
|                                                                       |  |                           |            |      |  |            |  |  |            | 

The
weighted-average diluted shares outstanding for the years ended September 30,
2010, 2009, and 2008, excludes the dilutive effect of approximately 1.6
million, 1.8 million, and 0.9 million stock options, respectively, since the
impact of including these options in diluted earnings per share for these years
was antidilutive.

|    |                            
|--- | ---------------------------
|14. | RELATED
 PARTY TRANSACTIONS

The Company
had sales to its minority shareholder in Japan amounting to $584, $1,352, and
$1,292, in fiscal years 2010, 2009, and 2008, respectively. The Company had
purchases from its minority shareholder in Japan amounting to $48, only in
fiscal year 2010. As of September 30, 2010 and 2009, the accounts receivable
with the minority shareholder in Japan amounted to $294 and $625, respectively.

The Company
maintains other accounts payable to related party in China amounting to $135
and in Japan amounting to $16 as of September 30, 2010.

F-26

---



The Company
has accrued $342 at September 30, 2010, for the option to purchase the
remaining interests in m2k and $73 was accrued for accumulated interest on
these obligations as of September 30, 2010. In fiscal year 2010, the Company
had expenses of $573, compared to $580 in fiscal year 2009, mainly for
purchases of materials and services, to the minority shareholder of m2k.

The main
facility in Starnberg is rented under a 25-year operating lease from the former
minority shareholder of CBL, Mr. Baasel, who is also a member of the Board of
Directors of the Company, and includes a clause to terminate the lease upon
two-year notice. The Company paid expenses, mainly for rental expense of $871,
$902, and $957, to Mr. Baasel during fiscal years 2010, 2009, and 2008,
respectively.

|    |                       
|--- | ----------------------
|15. | GEOGRAPHIC INFORMATION

Assets,
revenues, and income before taxes, by geographic region attributed based on the
geographic location of the RSTI entity are summarized below:

|                             |                           |  |               |          |      |   |          |  
|---------------------------- | ------------------------- |  | ------------- | -------- | ---- | - | -------- | -
|ASSETS                      
|                            
|                             |                           |  | September 30, |         
|                             |                           |  |               |         
|                             |                           |  | 2010          |          | 2009 |  
|                             |                           |  |               |          |      |  
|                             | North America             |  | $             | 209,677  |      | $ | 181,612  |  
|                             | Germany                   |  |               | 367,855  |      |   | 377,667  |  
|                             | Other                     |  |               | 231,809  |      |   | 210,186  |  
|                             | Intercompany eliminations |  |               | (251,149 | )    |   | (229,958 | )
|                             |                           |  |               |          |      |   |          |  
|                             | Total assets              |  | $             | 558,192  |      | $ | 539,507  |  
|                             |                           |  |               |          |      |   |          |  
|                             |                           |  |               |          |      |   |          |  
|PROPERTY AND
 EQUIPMENT, NET |                           |  |               |          |      |   |         
|                             |                           |  |               |          |      |   |          |  
|                             |                           |  | September 30, |         
|                             |                           |  |               |         
|                             |                           |  | 2010          |          | 2009 |  
|                             |                           |  |               |          |      |  
|                             | North America             |  | $             | 11,714   |      | $ | 12,926   |  
|                             | Germany                   |  |               | 33,752   |      |   | 35,312   |  
|                             | Other                     |  |               | 7,234    |      |   | 7,548    |  
|                             | Intercompany eliminations |  |               | (49      | )    |   | (51      | )
|                             |                           |  |               |          |      |   |          |  
|                             | Total long-lived assets   |  | $             | 52,651   |      | $ | 55,735   |  
|                             |                           |  |               |          |      |   |          |  
|                             |                           |  |               |          |      |   |          |  

|                           |                           |  |                           |          |      |   |          |   |   |          |  
|-------------------------- | ------------------------- |  | ------------------------- | -------- | ---- | - | -------- | - | - | -------- | -
|REVENUES -
 TOTAL BUSINESS |                           |  |                           |          |      |   |          |   |   |         
|                           |                           |  |                           |          |      |   |          |   |   |          |  
|                           |                           |  | Years ended September 30, |         
|                           |                           |  |                           |         
|                           |                           |  | 2010                      |          | 2009 |   | 2008     |  
|                           |                           |  |                           |          |      |   |          |  
|                           | North America             |  | $                         | 113,186  |      | $ | 89,203   |   | $ | 146,828  |  
|                           | Germany                   |  |                           | 306,739  |      |   | 244,025  |   |   | 463,725  |  
|                           | Other                     |  |                           | 158,864  |      |   | 131,322  |   |   | 181,556  |  
|                           | Intercompany eliminations |  |                           | (155,219 | )    |   | (114,971 | ) |   | (216,831 | )
|                           |                           |  |                           |          |      |   |          |   |   |          |  
|                           |                           |  | $                         | 423,570  |      | $ | 349,579  |   | $ | 575,278  |  
|                           |                           |  |                           |          |      |   |          |   |   |          |  
|                           |                           |  |                           |          |      |   |          |   |   |          |  
|INTERCOMPANY
 REVENUES     |                           |  |                           |          |      |   |          |   |   |         
|                           |                           |  |                           |          |      |   |          |   |   |          |  
|                           |                           |  | Years ended September 30, |         
|                           |                           |  |                           |         
|                           |                           |  | 2010                      |          | 2009 |   | 2008     |  
|                           |                           |  |                           |          |      |   |          |  
|                           | North America             |  | $                         | 6,514    |      | $ | 4,106    |   | $ | 4,795    |  
|                           | Germany                   |  |                           | 115,000  |      |   | 86,639   |   |   | 171,084  |  
|                           | Other                     |  |                           | 33,705   |      |   | 24,226   |   |   | 40,952   |  
|                           | Intercompany eliminations |  |                           | (155,219 | )    |   | (114,971 | ) |   | (216,831 | )
|                           |                           |  |                           |          |      |   |          |   |   |          |  
|                           |                           |  | $                         |         |      | $ |         |   | $ |         |  
|                           |                           |  |                           |          |      |   |          |   |   |          |  

F-27

---



EXTERNAL
 REVENUES  Years ended September 30,2010
 
 2009
 
 2008North America
 
 $
 106,672
 
 $
 85,097
 
 $
 142,033Germany
 
 
 191,739
 
 
 157,386
 
 
 292,640Other
 
 
 125,159
 
 
 107,096
 
 
 140,605$
 423,570
 
 $
 349,579
 
 $
 575,278


INCOME
 BEFORE INCOME TAXES  Years ended September 30,2010
 
 2009
 
 2008North America
 
 $
 2,414
 
 $
 (11,809
 )
 $
 (2,804
 )Germany
 
 
 35,019
 
 
 21,058
 
 
 87,630Other
 
 
 8,468
 
 
 5,451
 
 
 12,973$
 45,901
 
 $
 14,700
 
 $
 97,799


16.     ENTERPRISE
WIDE INFORMATION

The Company
derives revenues from the sale and servicing of laser products used for macro
applications, from the sale and servicing of laser products for marking and
micro applications, and from the sale of components products. Product sales are
summarized below:

|                                  |  |               |         |      |   |         |  |   |         | 
|--------------------------------- |  | ------------- | ------- | ---- | - | ------- |  | - | ------- | 
|                                  |  | September 30, |        
|                                  |  |               |        
|Product
 Category                 |  | 2010          |         | 2009 |   | 2008    | 
|                                  |  |               |         |      |   |         | 
|                                 
|Laser macro
 products             |  | $             | 172,877 |      | $ | 140,362 |  | $ | 238,518 | 
|Laser
 marking and micro products |  |               | 206,535 |      |   | 168,131 |  |   | 279,123 | 
|Components                        |  |               | 44,158  |      |   | 41,086  |  |   | 57,637  | 
|                                  |  |               |         |      |   |         |  |   |         | 
|                                  |  | $             | 423,570 |      | $ | 349,579 |  | $ | 575,278 | 
|                                  |  |               |         |      |   |         |  |   |         | 

17.     SELECTED
QUARTERLY FINANCIAL DATA (Unaudited)

The following
represents the Companys quarterly results (millions of dollars, except per
share amounts):

|                                 |  |                |      |                 |   |                |  |                 |       |  |   |       | 
|-------------------------------- |  | -------------- | ---- | --------------- | - | -------------- |  | --------------- | ----- |  | - | ----- | 
|                                 |  | Quarters ended |     
|                                 |  |                |     
|                                 |  | Dec. 31,
 2009 |      | March 31,
 2010 |   | June 30,
 2010 |  | Sept. 30,
 2010 |      
|                                 |  |                |      |                 |   |                |  |                 |      
|Net sales                        |  | $              | 93.0 |                 | $ | 95.9           |  | $               | 110.3 |  | $ | 124.4 | 
|Gross profit                     |  |                | 35.9 |                 |   | 37.2           |  |                 | 42.9  |  |   | 50.3  | 
|Net income                       |  |                | 3.7  |                 |   | 4.7            |  |                 | 9.8   |  |   | 12.2  | 
|Net income
 attributable to RSTI |  |                | 3.6  |                 |   | 4.7            |  |                 | 9.7   |  |   | 11.9  | 
|Earnings per
 share  Basic      |  |                | 0.12 |                 |   | 0.16           |  |                 | 0.34  |  |   | 0.42  | 
|Earnings per
 share  Diluted    |  |                | 0.12 |                 |   | 0.16           |  |                 | 0.33  |  |   | 0.42  | 

F-28

---



|                                        |  |                |       |                 |   |                |  |                 |       |   |   |      | 
|--------------------------------------- |  | -------------- | ----- | --------------- | - | -------------- |  | --------------- | ----- | - | - | ---- | 
|                                        |  | Quarters ended |      
|                                        |  |                |      
|                                        |  | Dec. 31,
 2008 |       | March 31,
 2009 |   | June 30,
 2009 |  | Sept. 30,
 2009 |      
|                                        |  |                |       |                 |   |                |  |                 |      
|Net sales                               |  | $              | 107.0 |                 | $ | 75.6           |  | $               | 76.6  |   | $ | 90.5 | 
|Gross profit                            |  |                | 42.7  |                 |   | 27.9           |  |                 | 26.6  |   |   | 34.8 | 
|Net income
 (loss)                      |  |                | 7.8   |                 |   | 1.2            |  |                 | (4.8  | ) |   | 5.4  | 
|Net income
 (loss) attributable to RSTI |  |                | 7.6   |                 |   | 1.2            |  |                 | (4.9  | ) |   | 5.3  | 
|Earnings
 (loss) per share  Basic      |  |                | 0.26  |                 |   | 0.04           |  |                 | (0.17 | ) |   | 0.18 | 
|Earnings
 (loss) per share  Diluted    |  |                | 0.26  |                 |   | 0.04           |  |                 | (0.17 | ) |   | 0.18 | 

18.     TREASURY
STOCK

On November 7,
2007, the Board of Directors approved a 2-for-1 stock split and a stock buyback
plan. The stock split was in the form of a dividend of one share of common
stock on each outstanding share and the distribution date was December 5, 2007,
for shareholders of record as of November 22, 2007. The buyback program
authorized the repurchase of up to $120 million of the Companys common stock,
or approximately 10% of the shares of common stock then outstanding based on
then current market prices. The share buyback program was authorized to begin
November 15, 2007. The shares were repurchased from time to time in open market
transactions or privately negotiated transactions at the Companys discretion,
including the quantity, timing and price thereof. As of May 19, 2008, the
Company had bought approximately 2.8 million shares of common stock, at an
average price of $42.41, under the stock buyback program for a total amount of
$120.0 million.

On May 5,
2010, the Board of Directors authorized the Company to initiate a share buyback
of up to $30.0 million of Companys Common Stock over twelve months, subject to
market conditions. The shares may be repurchased from time to time in open
market transactions or privately negotiated transactions at the Companys
discretion. As of September 30, 2010, the Company has bought approximately 0.85
million shares of common stock, at an average price of $22.79, under the stock
buyback program for a total amount of $19.5 million, with $10.5 million remaining
to be spent on the repurchase of shares.

19.     STOCK
INCENTIVE PLANS

Effective
March 15, 2008, the stockholders approved the Rofin-Sinar Technologies Inc.
2007 Incentive Stock Plan (the 2007 Incentive Plan). The 2007 Incentive Plan
supersedes the Rofin-Sinar Technologies Inc. 1996 Non-Employee Directors Stock
Plan and the Rofin-Sinar Technologies Inc. 2002 Equity Incentive Plan. Under
the 2007 Incentive Plan, the Company has reserved 1,600,000 shares of common
stock to provide for the grant of options to purchase common stock (options),
grants of shares of common stock (stock grants), stock units, and stock
appreciation rights (SARs) to certain eligible employees and to outside
directors. There were no incentive stock options, restricted stock or
performance shares granted in fiscal years 2010 or 2009, under this Plan.
Non-qualified stock options were granted to officers and other key employees in
fiscal years 2010 and 2009. During fiscal year 2010, outside directors each
received 3,000 shares of common stock and 317,750 non-qualified stock options
were granted to officers and other key employees. The terms of these issuances
are the same as those described below.

F-29

---



Directors
Plan

The Company
had reserved 100,000 shares of common stock for the Directors Plan, which
covered non-employee members of the Board of Directors. Under this plan each
member of the Board of Directors who was not an employee of the Company and who
was elected or continued as a member of the Board of Directors was entitled to
receive an initial grant of 1,500 shares of common stock and thereafter an
annual grant of 1,500 shares of common stock. The Directors Plan also provided
that non-employee directors aged 65 or older, upon their appointment or
election to the Board of Directors, will receive, in lieu of such initial and
annual grants of shares of common stock, 7,500 shares of restricted stock which
shall vest in five equal installments from the date of grant and each of the
following four anniversaries thereof. Prior to vesting, no shares of restricted
stock may be sold, transferred, assigned, pledged, encumbered or otherwise
disposed of, subject to certain exceptions. The Company records compensation
expense based on the fair market value of the common stock, as determined by
the closing price at the date of issuance. A total of 40,500 shares are issued
and outstanding under the plan at September 30, 2010. On March 15, 2008, this
plan was superseded by the 2007 Incentive Plan, as discussed above.

Equity
Incentive Plan

The Company
also maintained the previous Equity Incentive Plans, whereby incentive and
non-qualified stock options, restricted stock and performance shares were
granted to officers and other key employees to purchase a specified number of
shares of common stock at a price not less than the fair market value on the
date of grant. The term of the Equity Incentive Plans continues through 2011.
Options generally vest over five years and expire not later than ten years
after the date on which they are granted. On March 15, 2008, these Plans were
superseded by the 2007 Incentive Plan, as discussed above.

The fair value
of our stock options was estimated based on the date of grant using the
Black-Scholes option pricing model. The following assumptions were used in
these calculations:

|                                        |  |               |         |              |   |              |   |   |         |  
|--------------------------------------- |  | ------------- | ------- | ------------ | - | ------------ | - | - | ------- | -
|                                        |  | September 30, |        
|                                        |  |               |        
|                                        |  | 2010
 Grants  |         | 2009
 Grants |   | 2008
 Grants |  
|                                        |  |               |         |              |   |              |  
|Weighted
 average grant date fair value |  | $             | 10.42   |              | $ | 6.87         |   | $ | 18.51   |  
|Expected
 life                          |  |               | 5 Years |              |   | 5 Years      |   |   | 5 Years |  
|Volatility                              |  |               | 47.23   | %            |   | 50.3         | % |   | 48.1    | %
|Risk-free
 interest rate                |  |               | 2.52    | %            |   | 1.65         | % |   | 2.36    | %
|Dividend
 yield                         |  |               | 0       | %            |   | 0            | % |   | 0       | %
|Annual
 forfeiture rate                 |  |               | 2       | %            |   | 2            | % |   | 2       | %

For purposes
of the Black Scholes model, the Company uses historical data to estimate the
expected life, volatility, and estimated forfeitures of an option. The
risk-free interest rate is based on the U.S. Treasury yield curve in effect at
the time of grant.

F-30

---



The balance of
outstanding stock options and all options activity for the three-year period
ended September 30, 2010, are as follows:

|                                   |  |                   |           |                                   |   |                                                        |     |                                         |      |  |   |      | 
|---------------------------------- |  | ----------------- | --------- | --------------------------------- | - | ------------------------------------------------------ | --- | --------------------------------------- | ---- |  | - | ---- | 
|                                   |  | Number of
 Shares |           | Weighted
 Average
 Exercise Price |   | Weighted Average
 Remaining
 Contractual Term
 (Years) |     | Aggregate
 Intrinsic
 Value
 (Millions) |     
|                                   |  |                   |           |                                   |   |                                                        |     |                                         |     
|Outstanding
 at September 30, 2007 |  |                   | 2,824,000 |                                   | $ | 36                                                     | 6/7 |                                         | 7.22 |  |   |      | 
|                                   |  |                   |           |                                   |   |                                                        |     |                                         |      |  |   |      | 
|Granted                            |  |                   | 321,250   |                                   | $ | 40                                                     | 1/5 |                                         |      |  |   |      | 
|Exercised                          |  |                   | (572,600  | )                                 | $ | 9                                                      |     |                                         |      |  |   |      | 
|Forfeited                          |  |                   | (5,350    | )                                 | $ | 26                                                     | 2/5 |                                         |      |  |   |      | 
|                                   |  |                   |           |                                   |   |                                                        |     |                                         |      |  |   |      | 
|Outstanding
 at September 30, 2008 |  |                   | 2,567,300 |                                   | $ | 23                                                     | 2/9 |                                         | 7.13 |  |   |      | 
|                                   |  |                   |           |                                   |   |                                                        |     |                                         |      |  |   |      | 
|Granted                            |  |                   | 306,250   |                                   | $ | 15                                                     |     |                                         |      |  |   |      | 
|Exercised                          |  |                   | (11,200   | )                                 | $ | 15                                                     | 3/4 |                                         |      |  |   |      | 
|Forfeited                          |  |                   | (5,800    | )                                 | $ | 17                                                     | 2/3 |                                         |      |  |   |      | 
|                                   |  |                   |           |                                   |   |                                                        |     |                                         |      |  |   |      | 
|Outstanding
 at September 30, 2009 |  |                   | 2,856,550 |                                   | $ | 22                                                     | 2/5 |                                         | 6.50 |  |   |      | 
|                                   |  |                   |           |                                   |   |                                                        |     |                                         |      |  |   |      | 
|Granted                            |  |                   | 317,750   |                                   | $ | 22                                                     | 5/6 |                                         |      |  |   |      | 
|Exercised                          |  |                   | (190,100  | )                                 | $ | 15                                                     | 7/8 |                                         |      |  |   |      | 
|Forfeited                          |  |                   | (21,000   | )                                 | $ | 28                                                     |     |                                         |      |  |   |      | 
|                                   |  |                   |           |                                   |   |                                                        |     |                                         |      |  |   |      | 
|Outstanding
 at September 30, 2010 |  |                   | 2,963,200 |                                   | $ | 22                                                     | 4/5 |                                         | 6.02 |  | $ | 14.5 | 
|                                   |  |                   |           |                                   |   |                                                        |     |                                         |      |  |   |      | 
|                                   |  |                   |           |                                   |   |                                                        |     |                                         |      |  |   |      | 
|Exercisable
 at September 30, 2010 |  |                   | 1,868,450 |                                   | $ | 21                                                     | 1/7 |                                         | 4.95 |  | $ | 11.2 | 
|                                   |  |                   |           |                                   |   |                                                        |     |                                         |      |  |   |      | 

As of
September 30, 2010, there was $10.5 million of total unrecognized compensation
cost related to stock options. These costs are expected to be recognized over a
weighted average period of 2.79 years. The total fair value of shares vested
during the years ended September 30, 2010, 2009, and 2008, was $5.9 million,
$5.1 million, and $5.3 million, respectively.

|                                                  |  |                           |     |      |   |      |  |   |      | 
|------------------------------------------------- |  | ------------------------- | --- | ---- | - | ---- |  | - | ---- | 
|                                                  |  | Years ended September 30, |    
|                                                  |  |                           |    
|                                                  |  | 2010                      |     | 2009 |   | 2008 | 
|                                                  |  |                           |     |      |   |      | 
|Total
 intrinsic value of stock options exercised |  | $                         | 1.5 |      | $ | 0.1  |  | $ | 19.0 | 

Cash received
from stock option exercises for the years ended September 30, 2010, 2009, and
2008, was $3.0 million, $0.2 million, and $5.2 million, respectively.

20.     SUBSEQUENT
EVENTS

Effective
October 15, 2010, the Company acquired LASAG AG in Thun (Switzerland), including the
worldwide LASAG operations from The Swatch Group Ltd. in a cash transaction. As
of the date of this Form 10-K filing the purchase price allocation is
incomplete.

F-31

---



SCHEDULE II

ROFIN-SINAR TECHNOLOGIES INC. AND
SUBSIDIARIES 
Valuation and Qualifying Accounts - Allowance for Doubtful Accounts 
Years ended September 30, 2010, 2009, and 2008 
(dollars in thousands)

|                    |  |                                  |       |                   |   |                                             |  |              |       |                           |   |        |   |   |       | 
|------------------- |  | -------------------------------- | ----- | ----------------- | - | ------------------------------------------- |  | ------------ | ----- | ------------------------- | - | ------ | - | - | ----- | 
|                    |  | Balance at
 Beginning of
 Period |       | Acquired
 Reserve |   | Additions-
 Charged to
 Costs and
 Expenses |  | (Deductions) |       | Balance at End of
 Period |  
|                    |  |                                  |       |                   |   |                                             |  |              |       |                           |  
|September
 30, 2008 |  | $                                | 3,206 |                   | $ | 43                                          |  | $            | 730   |                           | $ | (332   | ) | $ | 3,647 | 
|                    |  |                                  |       |                   |   |                                             |  |              |       |                           |   |        |   |   |       | 
|September
 30, 2009 |  | $                                | 3,647 |                   | $ | 7                                           |  | $            | 1,004 |                           | $ | (1,125 | ) | $ | 3,533 | 
|                    |  |                                  |       |                   |   |                                             |  |              |       |                           |   |        |   |   |       | 
|September
 30, 2010 |  | $                                | 3,533 |                   | $ |                                            |  | $            | 422   |                           | $ | (935   | ) | $ | 3,020 | 

Allowance for Inventory Reserve
Years ended September 30, 2010, 2009, and 2008
(dollars in thousands)

|                    |  |                                  |        |                   |   |           |  |                                 |       |                           |   |        |   |   |        | 
|------------------- |  | -------------------------------- | ------ | ----------------- | - | --------- |  | ------------------------------- | ----- | ------------------------- | - | ------ | - | - | ------ | 
|                    |  | Balance at
 Beginning of
 Period |        | Acquired
 Reserve |   | Additions |  | Usage for
 Disposals
 and Scrap |       | Balance at End of
 Period |  
|                    |  |                                  |        |                   |   |           |  |                                 |       |                           |  
|September
 30, 2008 |  | $                                | 14,717 |                   | $ | 450       |  | $                               | 6,012 |                           | $ | (3,495 | ) | $ | 17,720 | 
|                    |  |                                  |        |                   |   |           |  |                                 |       |                           |   |        |   |   |        | 
|September
 30, 2009 |  | $                                | 17,720 |                   |   |          |  | $                               | 4,844 |                           | $ | (3,688 | ) | $ | 18,876 | 
|                    |  |                                  |        |                   |   |           |  |                                 |       |                           |   |        |   |   |        | 
|September
 30, 2010 |  | $                                | 18,876 |                   |   |          |  | $                               | 5,413 |                           | $ | (4,344 | ) | $ | 19,945 | 

F-32

---



INDEX TO EXHIBITS

|            |  |                                                                                  
|----------- |  | ---------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit                                                                          
|            |  |                                                                                  
|            |  |                                                                                  
|21.1        |  | List of
 Subsidiaries of the Registrant                                          
|            |  |                                                                                  
|23.1        |  | Consent of
 Deloitte & Touche, LLP Independent Registered Public Accounting Firm,
|            |  |                                                                                  
|31.1        |  | Rule
 13a-14(a)/15d-14(a) Certification of Chief Executive Officer               
|            |  |                                                                                  
|31.2        |  | Rule
 13a-14(a)/15d-14(a) Certification of Chief Financial Officer               
|            |  |                                                                                  
|32.1        |  | Section 1350
 Certification of Chief Executive Officer                           
|            |  |                                                                                  
|32.2        |  | Section 1356
 Certification of Chief Financial Officer                           

F-33

---