Camtek Ltd. — Annual Report 2007

Nov 9, 2009

20-F/A 1 zk97439.htm Created by EDGAR Ease Plus (EDGAR Ease+) Project: \Backup\edgar filing\Camtek Ltd\97439\a97439.eep Control Number: 97439 Rev Number: 1 Client Name: Camtek Ltd Project Name: 20-F/A Firm Name: Zadok-Keinan Ltd 20-F/A MARKER FORMAT-SHEET="Scotch Rule Top-TNR" FSL="Workstation" MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation"

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549

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FORM 20-F/A (Amendment No. 1)

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(Mark One)

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o Registration statement pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

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or

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x Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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For the fiscal year ended December 31, 2007

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or

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o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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or

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o Shell Company pursuant to Section 13 or is (d) of the Securities Exchange Act of 1934 \ Date of event requiring this shall Company report ___________

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For the transition period from ________ to ________

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Commission file number 000-30664

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Camtek Ltd. (Exact name of Registrant as specified in its charter)

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Israel (Jurisdiction of incorporation or organization)

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Ramat Gavriel Industrial Zone, P.O. BOX 544, Migdal Ha’Emek, Israel (Address of principal executive offices)

Raanan Dekel, Telephone: (972) (4) 6048100, Facsimile: (972) (4) 6440523, E-mail: raanand@camtek.co.il, Ramat Gavriel Industrial Zone, P.O. BOX 544, Migdal Ha’Emek, Israel (Name, Telephone, Facsimile, E-Mail and Address of Company Contact Person)

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Securities registered or to be registered pursuant to Section 12(b) of the Act: Ordinary Shares, nominal value 0.01 New Israeli Shekel per share (Title of each Class)

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Nasdaq Global Market (Name of each Exchange on which registered)

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Securities registered or to be registered pursuant to Section 12(g) of the Act: None (Title of Class)

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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None (Title of Class)

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Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

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30,133,715 Ordinary Shares, par value NIS 0.01

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

o Yes x No

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If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes x No

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

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x Yes o No

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

o Large Accelerated Filer o Accelerated Filer x Non-Accelerated Filer

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Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

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US GAAP x

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International Financial Reporting Standards as issued by the International Accounting Standards Board o

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Other o

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If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

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Item 17 o Item 18 o

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If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

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EXPLANATORY NOTE

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This Amendment No. 1 to the Annual Report on Form 20-F for the fiscal year ended December 31, 2007 (the “Annual Report”) is being filed by Camtek Ltd. (the “Registrant”) with the Securities and Exchange Commission for the sole purpose of filing the audit report of Brightman Almagor & Co. and Goldstein Sabo Tevet in Item 18 of the Annual Report.

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This Amendment No. 1 consists of a cover page, this explanatory note, the financial statements, as amended, required by Item 18, the exhibit index, the signature page and the required certifications of the principal executive officer and principal financial officer of the Registrant.

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Other than expressly set forth herein, this Amendment No. 1 does not, and does not purport to, amend or restate any other information contained in the Annual Report nor does this Amendment No. 1 reflect any events that have occurred after the Annual Report was filed.

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ITEM 18. Consolidated Financial Statements.

CAMTEK LTD. and its subsidiaries

Consolidated Financial Statements As of and for the year ended December 31, 2007

CAMTEK LTD. and its subsidiaries

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered
Public Accounting Firm	F – 2
Consolidated Balance Sheets	F – 3
Consolidated Statements of
Operations	F – 4
Consolidated Statements of
Comprehensive Income (Loss)	F – 5
Consolidated Statements of
Shareholders’ Equity	F – 6
Consolidated Statements of Cash
Flows	F – 7 to F – 8
Notes to Consolidated Financial
Statements	F – 9 to F – 33

Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Camtek Ltd.

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We have audited the accompanying consolidated balance sheets of Camtek Ltd. and subsidiaries (“the Company”) as of December 31, 2007 and 2006, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

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In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Camtek Ltd. and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

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As discussed in Note 2Q to the consolidated financial statements, effective January 1, 2006, the Company adopted the fair value method of accounting for stock-based compensation as required by Statement of Financial Accounting Standard No. 123R – “Share Based Payment”.

/s/ Somekh Chaikin Somekh Chaikin Certified Public Accountants (Israel) Member firm of KPMG International

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Tel Aviv, Israel

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June 30, 2008

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REPORT OF INDEPENDENT REGISTRATED PUBLIC ACCOUNTING FIRMS

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To the Shareholders of Camtek Ltd.

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We have audited the accompanying consolidated balance sheets of Camtek Ltd. (the “Company”) and its subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, shareholders’ equity and comprehensive income (loss) and cash flows for each of the three years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes 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, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

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In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of December 31, 2005 and 2004 and the consolidated results of their operations, and their cash flows for each of the three years then ended, in conformity with U.S. generally accepted accounting principles.

●	●
Brightman Almagor & Co.	Goldstein Sabo Tevet
Certified Public Accountants	Certified Public Accountants
A member firm of Deloitte Touche Tohmatsu

Tel Aviv, Israel March 12, 2006.

F - 2

CAMTEK LTD. and its subsidiaries
Consolidated Balance Sheets
(In thousands)

2007		2006
U.S.
Dollars (In thousands)
Assets
Current
assets
Cash and cash
equivalents	18,601		23,358
Marketable
securities (Note 3)	1,395		2,099
Accounts
receivable, net (Note 11B,C)	23,500		29,434
Inventories
(Note 4)	34,243		41,414
Due from
affiliates	251		180
Other current
assets (Note 5)	2,616		2,372
Deferred tax
asset (Note 17)	124		65
Total current
assets	80,730		98,922
Fixed
assets (Note 6)
Cost	21,632		15,927
Less -
Accumulated depreciation	6,307		5,198
Fixed assets,
net	15,325		10,729
Marketable
securities (Note 3)	1,075		-
Deferred tax
asset (Note 17)	612		584
Other assets,
net (Note 7)	723		571
	2,410		1,155
Total
assets	98,465		110,806
Liabilities
and shareholder’s equity
Current
liabilities
Accounts payable
–trade	7,960		11,801
Due to
affiliates	866		814
Convertible loan
– current portion	1,667		-
Other current
liabilities (Note 8)	11,465		12,831
Total current
liabilities	21,958		25,446
Long
term liabilities
Convertible loan
(Note 9), net of current portion	3,333		5,000
Liability for
employee severance benefits (Note 10)	268		222
Total liabilities	25,559		30,668
Commitments
and contingencies (Note 11)
Shareholders’
equity
Ordinary shares
NIS 0.01 par value, authorized 100,000,000 shares, issued 31,145,334 in 2007
and 31,052,474 in 2006, outstanding 30,133,715 in 2007 and 30,040,855 in 2006	132		132
Additional
paid-in capital	59,878		59,420
Accumulated
other comprehensive loss	-		(1	)
Retained
earnings	13,889		21,580
	73,899		81,131
Treasury stock,
at cost (1,011,619 shares in 2007 and 2006)	(993	)	(993	)
Total
shareholders’ equity	72,906		80,138
Total
liabilities and shareholders’ equity	98,465		110,806

See accompanying notes to consolidated financial statements

F – 3

| CAMTEK LTD.

and its subsidiaries
Consolidated Statements of Operations

2007		2006		2005
U.S. Dollars (In thousands, except per share data)
Revenues:
Sales of products	59,654		92,470		56,987
Service fees	11,315		7,585		6,045
Total revenues (Note 15)	70,969		100,055		63,032
Cost of revenues:
Cost of products sold	32,769		42,600		28,262
Cost of services	9,171		5,842		4,519
Total cost of revenues	41,940		48,442		32,781
Gross profit	29,029		51,613		30,251
Research and development costs	12,111		11,831		8,469
Selling, general and administrative
expenses (Note 16A)	24,119		27,850		18,760
Total operating expenses	36,230		39,681		27,229
Operating (loss) income	(7,201	)	11,932		3,022
Financial expenses, net (Note 16B)	(128	)	(288	)	(320	)
Income (loss) before income taxes	(7,329	)	11,644		2,702
Income tax expense (Note 17)	(362	)	(41	)	-
Net income (loss)	(7,691	)	11,603		2,702
Earnings (loss) per ordinary share (Note
14):
Basic	(0.25	)	0.40		0.10
Diluted	(0.25	)	0.39		0.10
Weighted average number of ordinary shares
outstanding:
Basic	30,145		29,176		27,253
Diluted	30,145		29,553		27,586

See accompanying notes to consolidated financial statements

F – 4

| CAMTEK LTD.

and its subsidiaries
Consolidated Statements of Comprehensive Income (loss)

2007		2006		2005
U.S. Dollars (In thousands)
Net income (loss)	(7,691	)	11,603		2,702
Other comprehensive income:
Realization of loss on available for sale
securities, net of taxes (nil)	1		2		-
Unrealized holding loss on available for
sale securities arising during the year, net of taxes (nil)	-		(1	)	(2	)
Comprehensive income (loss)	(7,690	)	11,604		2,700

See accompanying notes to consolidated financial statements

F – 5

| CAMTEK LTD.

and its subsidiaries
Consolidated
Statements of Shareholders’ Equity

	U.S. Dollars
Shares	(In Thousands)	Shares		U.S. Dollars (In thousands)
Balances at December 31, 2004	28,085,766	125	(1,011,619	)	43,732		(363	)	-		7,275		(993	)	49,776
Exercise of share options	9,750	-	-		15		-		-		-		-		15
Cancellation of share options	-	-	-		(15	)	15		-		-		-		-
Amortization of deferred share options based compensation	-	-	-		-		127		-		-		-		127
Unrealized loss on marketable securities	-	-	-		-		-		(2	)	-		-		(2	)
Net income	-	-	-		-		-		-		2,702		-		2,702
Balances at December 31, 2005	28,095,516	125	(1,011,619	)	43,732		(221	)	(2	)	9,977		(993	)	52,618
Adoption of SFAS 123-R	-	-	-		(221	)	221		-		-		-		-
Share issuance, net of issuance expenses*	2,525,252	6	-		14,442		-		-		-		-		14,448
Exercise of share options	431,706	1	-		701		-		-		-		-		702
Share based compensation expense	-	-	-		766		-		-		-		-		766
Realization of loss on marketable securities	-	-	-		-		-		2		-		-		2
Unrealized loss on marketable securities	-	-	-		-		-		(1	)	-		-		(1	)
Net income	-	-	-		-		-		-		11,603		-		11,603
Balances at December 31, 2006	31,052,474	132	(1,011,619	)	59,420		-		(1	)	21,580		(993	)	80,138
Exercise of share options	92,860	**	-		32		-		-		-		-		32
Share based compensation expense	-	-	-		426		-		-		-		-		426
Realization of loss on marketable securities	-	-	-		-		-		1		-		-		1
Net Loss	-	-	-		-		-		-		(7,691	)	-		(7,691	)
Balances at December 31, 2007	31,145,334	132	(1,011,619	)	59,878		-		-		13,889		(993	)	72,906

| * | Net of issuance expenses of $560 thousand. | | --- | --- | | ** | Less than $ 1 thousand. |

See accompanying notes to consolidated financial statements

F – 6

| CAMTEK LTD.

and its subsidiaries
Consolidated Statements of Cash Flows

2007		2006		2005
U.S. Dollars (In thousands)
Cash flows from operating activities:
Net income (loss)	(7,691	)	11,603		2,702
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization	1,307		794		658
Loss (gain) on disposal of fixed assets	(40	)	24		(6	)
Gain from marketable securities, net	(25	)	(6	)	-
Deferred tax expense (benefit)	(59	)	(434	)	-
Share based compensation expense	426		766		127
Provision for bad debts	583		778		680
Changes in operating assets and liabilities:
Accounts receivable	5,148		(4,230	)	(4,864	)
Inventories	4,522		(16,472	)	(50	)
Due to / from affiliates	(19	)	924		189
Other current assets	(273	)	(229	)	(724	)
Accounts payable – trade	(3,841	)	3,123		463
Other current liabilities	(1,366	)	4,110		626
Liability for employee severance benefits	46		-		-
Net cash (used in) provided by operating
activities	(1,282	)	751		(199	)
Cash flows from investing activities:
Purchase of marketable securities	(6,770	)	(3,891	)	(2,103	)
Proceeds from sale of marketable securities	6,425		3,900		-
Purchase of fixed assets	(3,236	)	(1,582	)	(673	)
Purchase of intangible assets	(169	)	(114	)	-
Proceeds from disposal of fixed assets	40		-		18
Net cash used in investing activities	(3,710	)	(1,687	)	(2,758	)
Cash flows from financing activities:
Decrease in short-term bank credit	-		-		(2,335	)
Net proceeds from issuance of ordinary
shares	-		14,448		-
Proceeds from exercise of share options	32		702		15
Proceeds from long-term convertible loan	-		-		5,000
Net cash provided by financing activities	32		15,150		2,680
Effect of exchange rate changes on cash	203		430		(150	)
Net (decrease) increase in cash and cash
equivalents	(4,757	)	14,644		(427	)
Cash and cash equivalents at beginning of
the year	23,358		8,714		9,141
Cash and cash equivalents at end of the
year	18,601		23,358		8,714

See accompanying notes to consolidated financial statements

F – 7

| CAMTEK LTD.

and its subsidiaries
Consolidated Statements of Cash Flows

		Year ended December 31, — 2007	2006	2005
		U.S. Dollars (In thousands )
Supplementary cash flows information:
A.	Cash paid during the year for:
	Interest	$ 320	422	405
	Income taxes	$ 308	27	216
B.	Non-cash transactions:
	Transfer of
inventory to fixed assets	$ 2,649	-	-

See accompanying notes to consolidated financial statements.

F – 8

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 1 – BUSINESS

Camtek Ltd. (“Camtek”), an Israeli corporation, is a majority owned (61.7%) subsidiary of Priortech Ltd. (“Parent”), an Israeli corporation listed on the Tel-Aviv Stock Exchange. Camtek designs, develops manufactures and markets automatic optical inspection systems (“AOI systems”) and related products. Camtek’s AOI systems are used for yield enhancement for various applications in the electronic supply chain industry. The main applications along this supply chain are the production of Microelectronics, Printed Circuit Boards (PCB) and Electronic packaging. Camtek’s activities are conducted in one reportable business segment.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

A.	Principles of Consolidation
	The
accompanying consolidated financial statements, which include the accounts of
Camtek and its subsidiaries (collectively the “Company”), are prepared in
accordance with U.S. generally accepted accounting principles. All material
intercompany balances and transactions have been eliminated in consolidation.
B.	Use of Estimates
	The
preparation of the consolidated financial statements in conformity with U.S.
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results may differ from
those estimates.
C.	Foreign currency transactions:
	The
functional currency of the Company is the U.S. Dollar. Most of the revenue
generated by the Company is from outside of Israel and a majority thereof is
received in U.S. Dollars. In addition, materials and components purchased and
marketing expenses incurred are either paid for in U.S. Dollars or in New
Israeli Shekels (“NIS”) linked to changes in the U.S. Dollar/NIS exchange
rate. A significant portion of the Company’s expenses are incurred in Israel
and paid for in NIS. Transactions not denominated in U.S. Dollar are recorded
upon their initial recognition according to the exchange rate in effect on
the date of the transaction. Exchange rate differences arising upon the
settlement of monetary items or upon reporting the Company’s monetary items
at exchange rates different from that by which they were initially recorded
during the period, or reported in previous financial statements, are charged
to financial income or expense.
D.	Cash equivalents
	All highly
liquid investments purchased with original maturities of three months or less
are considered to be cash equivalents.
E.	Marketable securities
	The Company
accounts for its investments in marketable securities in accordance with
Statement of Financial Accounting Standard (“SFAS”) No. 115 “Accounting for
Certain Investments in Debt and Equity Securities”.
	As of
December 31, 2007 all marketable securities are designated as
available-for-sale and accordingly are recorded at fair value.

F – 9

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

E.	Marketable securities (cont’d)
	Unrealized
holding gains and losses, net of the related tax effect, on
available-for-sale securities are excluded from earnings and are reported as
a separate component of other comprehensive income (loss) until realized.
F.	Allowance for doubtful accounts
	The
allowance for doubtful accounts represent Management’s best estimate of the
probable loss inherent in existing accounts receivable balances as a result
of possible non-collection. In determining the appropriate allowance,
Management bases its estimate on information available about specific
debtors, including aging of the balance, assessment of the underlying security
received, the history of write-offs, relationships with the customers and the
overall creditworthiness of the customers.
G.	Inventories
	Inventories
consist of completed AOI systems, AOI systems partially completed and
components, and are recorded at the lower of cost, determined by the moving –
average cost method basis, or market.
	Inventory write-downs are recorded for
damaged, obsolete, excess and slow-moving inventory.
H.	Fixed assets
	Fixed assets
are stated at cost less accumulated depreciation, and are depreciated over
their estimated useful lives on a straight-line basis.
	Annual rates
of depreciation are as follows:
	Building	2%
	Machinery
and equipment	10% - 33%
	Office
furniture and equipment	6% - 20%
	Automobiles	15%
	Leasehold
improvements are amortized by the straight-line method over the lower of the
lease term or the estimated useful economic life of such improvements
I.	Intangible assets
	Intangible
assets, comprised of patents registration costs, are capitalized at cost and
amortized, beginning with the first year of utilization, over its expected
life of ten years.
J.	Long-lived assets
	The Company
applies SFAS No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets”. This Statement requires that long-lived assets be
reviewed 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 undiscounted future cash flows expected to be generated
by the asset. If the carrying amount of the long lived asset exceeds its
estimated undiscounted future cash flows, an impairment charge is recognized
as computed by subtracting the fair market value of the asset from its
carrying value.
K.	Fair values of financial instruments
	The carrying
amounts for cash and cash equivalents, accounts receivable, accounts payable,
accrued expenses and amounts due to/from affiliates approximate fair value
because of the short-term duration of those items. Marketable securities are
carried at quoted market prices, which represent fair value. The carrying
amounts of convertible loan and amounts due to or from Parent approximate
fair value because the interest rates on such amounts approximate the market
rate.

F – 10

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

L.	Revenue recognition
	The Company
recognizes revenue from sales in accordance with Securities and Exchange
Commission Staff Accounting Bulletin No. 104 “SAB 104” and Financial
Accounting Standard Board’s Emerging Issues Task Force (“EITF”) Issue No.
00-21, “Revenue Arrangements with Multiple Deliverables”. Accordingly, the
Company recognizes revenue from sales of its products when the products are
installed at the customer’s premises and are operating in accordance with its
specifications, signed documentation of the arrangement, such as a signed
contract or purchase order, has been received, the price is fixed or
determinable, and collectibility is reasonably assured.
	Service
revenues consist mainly of revenues from maintenance contracts and are
recognized ratably over the contract period.
	Revenue
under multiple element arrangements is recognized in accordance with EITF
Issue No. 00-21, “Revenue Arrangements with Multiple Deliverables”. Under
this method, if an element is determined to be a separate unit of accounting,
the revenue for the element is based on fair value and determined by vendor
objective evidence (“VOE”), accordingly, non-standard warranty, with
determined VOE, is deferred as unearned revenue and is recognized ratably as
revenue commencing with and over the applicable warranty term.
M.	Warranty
	The Company
records a liability for product warranty obligations at the time of sale
based upon historical warranty experience. The term of the warranty is
generally twelve months.
N.	Income taxes
	The Company
accounts for income taxes in accordance with SFAS No. 109, “Accounting for
Income Taxes” (“SFAS No. 109”). This Statement prescribes the use of the
asset and liability method whereby deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The Company provides a valuation allowance to reduce
deferred tax assets to the amount that is more likely than not to be
realized. Beginning with the adoption of FASB Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes” (“FIN 48”) as of January 1,
2007, the Company recognizes the effect of income tax positions only if those
positions are more likely than not of being sustained. Recognized income tax
positions are measured at the largest amount that is greater than 50% likely
of being realized. Changes in recognition or measurement are reflected in the
period in which the change in judgment occurs. The Company records interest
and penalties related to unrecognized tax benefits as a component of income
tax expense.
O.	Research and development
	Research and
development costs are expensed as incurred.

F – 11

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

P.	Earnings / Loss per ordinary share
	Basic
earnings/loss per ordinary share is calculated using only weighted average
ordinary shares outstanding. Diluted earnings per share, if relevant, gives
effect to dilutive potential ordinary shares outstanding during the year.
Such dilutive shares consist of incremental shares, using the treasury stock
method, from the assumed exercise of share options. For the year ended
December 31 2007 the effect of the exercise of all outstanding share options
is anti-dilutive and has not been included in computing dilutive earnings per
ordinary share. For the years ended December 31, 2006 and 2005 the effect of
the exercise of all outstanding share options is dilutive, and hence was
included in computing diluted earning per ordinary share. For the years ended
December 31, 2007, 2006 and 2005, the effects of warrants and conversion of
convertible loan are anti-dilutive, and have not been included in computing
dilutive earnings/loss per ordinary share.
Q.	Stock Option Plan
	Prior to
January 1, 2006, the Company applied the intrinsic value method as allowed by
FASB Statement No. 123, “Accounting for Stock-Based Compensation” and
provided pro forma net income and pro forma earnings per share disclosures
for employee stock option grants as if the fair-value based method defined in
Statement 123 had been applied.
	Effective
January 1, 2006, the Company adopted FASB Statement No. 123R, “Share-Based
Payment” (Statement 123R). This statement replaces FASB Statement No. 123,
“Accounting for Stock-Based Compensation” (Statement 123) and supersedes APB
No. 25. Statement 123R requires that all stock-based compensation be
recognized as an expense in the financial statements and that such cost be
measured at the fair value of the award. This statement was adopted using the
modified prospective method of application, which requires the Company to
recognize compensation cost on a prospective basis. Therefore, prior years’
financial statements have not been restated. Under this method, the Company
recorded stock-based compensation expense for awards granted prior to, but
not yet vested as of January 1, 2006, using the fair value amounts determined
for pro forma disclosures under Statement 123. For stock-based awards granted
after January 1, 2006, the Company recognizes compensation expense based on
estimated grant date fair value using the Black-Scholes option-pricing model.
	The
following table illustrates the effect on net income for the year ended
December 31, 2005 as if the Company had applied the fair value recognition
provisions of Statement 123. For purposes of this pro forma disclosure, the
value of the options is estimated using a Black-Scholes option-pricing model
and amortized to expense over the options’ service periods with forfeitures
recognized as they occurred.

F – 12

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

Q. Stock Option Plan (cont’d)

	2005
	U.S. Dollars (In thousands)
Net income, as reported	2,702
Share-based employee compensation expense
included in reported net income	127
Share-based employee compensation expense
determined under the fair value based method	(560	)
Pro forma net income	2,269
Earnings per share:
Basic – as reported	0.10
Basic – pro forma	0.08
Diluted – as reported	0.10
Diluted – pro forma	0.08

R.	Reclassification
	Certain
prior years amounts have been reclassified in conformity with the current
year’s financial statements presentation.
S.	Recently Issued Accounting Standards
	1.	In February
2007, the FASB issued Statement of Financial Accounting Standards No. 159,
The Fair Value Option for Financial Assets and Financial Liabilities –
including an amendment of FASB Statement No. 115 (Statement 159). Statement
159 gives the Company the irrevocable option to carry most financial assets
and liabilities at fair value that are not currently required to be measured
at fair value. If the fair value option is elected, changes in fair value
would be recorded in earnings at each subsequent reporting date. SFAS 159 is
effective for the Company’s 2008 fiscal year. The Company has evaluated the
impact of this statement and believes that adoption of SFAS No. 159
prospectively on January 1, 2008 will not have a material effect on its
consolidated financial statements.
	2.	In September
2006, the FASB issued FASB Statement No. 157, Fair Value Measurement
(Statement 157). Statement 157 defines fair value, establishes a framework
for the measurement of fair value, and enhances disclosures about fair value
measurements. The Statement does not require any new fair value measures. The
Statement is effective for fair value measures already required or permitted
by other standards for fiscal years beginning after November 15, 2007. The
Company is required to adopt Statement 157 beginning on January 1, 2008.
Statement 157 is required to be applied prospectively, except for certain
financial instruments. Any transition adjustment will be recognized as an
adjustment to opening retained earnings in the year of adoption. In February
2008, the FASB approved FSP FAS 157-2, which grants a one-year deferral of
Statement 157’s fair-value measurement requirements for nonfinancial assets
and liabilities, except for items that are measured or disclosed at fair
value in the financial statements on a recurring basis. The Company is
currently evaluating the impact of adopting Statement 157 on its results of
operations and financial position.

F – 13

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

S.
3.	In June
2007, the FASB issued EITF Issue No. 07-03 (“EITF 07-03”), Accounting for
Non-Refundable Advance Payments for Goods or Services to Be Used in Future
Research and Development Activities. EITF 07-03 provides guidance on whether
non-refundable advance payments for goods that will be used or services that
will be performed in future research and development activities should be
accounted for as research and development costs or deferred and capitalized
until the goods have been delivered or the related services have been
rendered. EITF 07-03 is effective for fiscal years beginning after December
15, 2007. The Company is currently evaluating the impact of adopting EITF
07-03 on its results of operations and financial position.
4.	In December
2007, the FASB issued FASB Statement No. 141R, Business Combinations
(Statement 141R) and FASB Statement No. 160, Noncontrolling Interests in
Consolidated Financial Statements– an amendment to ARB No. 51 (Statement
160). Statements 141R and 160 require most identifiable assets, liabilities,
noncontrolling interests, and goodwill acquired in a business combination to
be recorded at “full fair value” and require noncontrolling interests
(previously referred to as minority interests) to be reported as a component
of equity, which changes the accounting for transactions with noncontrolling
interest holders. Both Statements are effective for periods beginning on or
after December 15, 2008, and earlier adoption is prohibited. Statement 141R will
be applied to business combinations occurring after the effective date.
Statement 160 will be applied prospectively to all noncontrolling interests,
including any that arose before the effective date.

F – 14

CAMTEK LTD. and its subsidiaries

Notes to Consolidated Financial Statements As of December 31, 2007
NOTE 3 –	MARKETABLE SECURITIES

	U.S. Dollars (In thousands)
Available
for sale:
Corporate debt
securities	5	1,195	599
Auction rate
securities	6	1,275	1,500
		2,470	2,099

The carrying amount, gross unrealized holding losses, and fair value of available-for-sale debt securities by major security type and class of security at December 31, 2007 and 2006 were as follows:

U.S. Dollars (In thousands)
At December
31, 2007:
Available
for sale:
Corporate debt
securities	1,195	-		1,195
Auction rate
securities	1,275	-		1,275
	2,470	-		2,470
At December
31, 2006:
Available
for sale:
Corporate debt
securities	600	(1	)	599
Auction rate
securities	1,500	-		1,500
	2,100	(1	)	2,099

Maturities of debt securities classified as available-for-sale were as follows at December 31, 2007:

U.S. Dollars (In thousands)
Available
for sale:
First year	1,195	1,195
Due after five years through
ten years	1,275	1,275
	2,470	2,470

Proceeds from the sale of investment securities available for sale were $6,425, $3,900 and nil in 2007, 2006 and 2005, respectively; gross realized gains included in other finance income in 2007, 2006 and 2005 were $25, $6 and nil, respectively.

The marketable securities are presented in:

U.S. Dollars (In thousands)
Current
assets	1,395	2,099
Long term
assets	1,075	-
	2,470	2,099

F – 15

CAMTEK LTD. and its subsidiaries

Notes to Consolidated Financial Statements As of December 31, 2007
NOTE 4 –	INVENTORIES

2007	2006
U.S. Dollars (In thousands)
Components	14,654	17,702
Systems
partially completed	3,739	5,340
Completed
systems, including systems not yet purchased, at customer locations	15,850	18,372
	34,243	41,414

NOTE 5 – OTHER CURRENT ASSETS

2007	2006
U.S. Dollars (In thousands)
Due from
Government institution	1,265	689
Income tax
receivables	128	54
Due from
employees	146	196
Prepaid
expenses	485	480
Advances to
suppliers	6	519
Deposits for
operating leases	202	110
Other	384	324
	2,616	2,372

NOTE 6 – FIXED ASSETS

2007	2006
U.S. Dollars (In thousands)
Land	863	815
Building	9,695	7,998
Machinery
and equipment	5,885	3,102
Office
furniture and equipment	4,272	3,233
Automobiles	169	295
Leasehold
improvements	748	484
	21,632	15,927
Less
accumulated depreciation	6,307	5,198
	15,325	10,729

Depreciation expenses for the years ended December 31, 2007, 2006 and 2005 aggregated to $1,289, $792 and $658 thousand, respectively.

F – 16

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 7 – OTHER ASSETS

2007	2006
U.S. Dollars (In thousands)
Deposits for
operating leases	460	459
Intangible
assets (A)	263	112
	723	571

A. Patents registration costs

Gross carrying amount	Accumulated amortization	Intangible Assets, net	Amortization period
U.S. Dollars (In thousands)			Years
Patents
registration costs	283	20	263	10

Gross carrying amount	Accumulated amortization	Intangible Assets, net	Amortization period
U.S. Dollars (In thousands)			Years
Patents
registration costs	114	2	112	10

Amortization expense for the years ended December 31, 2007, 2006 and 2005 aggregated to $18, $2 and nil thousand, respectively.

As of December 31, 2007, the estimated aggregate amortization of intangible assets for the years 2008 to 2012 is $28 thousands for each of the years.

NOTE 8 – OTHER CURRENT LIABILITIES

2007	2006
U.S. Dollars (In thousands)
Accrued
compensation and related benefits	4,330	4,825
Government
institutions	315	383
Income tax
payables	421	460
Accrued
warranty costs	934	1,057
Commissions	2,204	2,077
Advances
from customers and deferred revenues	2,207	3,125
Other	1,054	904
	11,465	12,831

Changes in the product warranty obligation are as follows:

2007		2006		2005
U.S. Dollars (In thousands)
Beginning of
year	1,057		1,162		1,703
Change in
estimates	-		(442	)	-
New warranties	1,534		2,020		2,003
Reductions	(1,657	)	(1,683	)	(2,544	)
End of year	934		1,057		1,162

F – 17

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 9 – CONVERTIBLE LOAN

2007	2006
U.S. Dollars (In thousands)
U.S. Dollar
denominated loan	3,333	5,000

Repayment dates of convertible loan subsequent to December 31, 2008:

2009	1,667
2010	1,666
U.S. Dollar
denominated loan, bearing annual interest of Libor+2.1%	3,333

On August 23, 2005 (the “closing date”) the Company raised $5 million as a convertible loan from FIMI Opportunity Fund L.P and FIMI Israel Opportunity Fund, Limited Partnership (“FIMI”). The loan is payable in three equal annual payments starting at the third anniversary of the closing date. The lenders have the right to postpone the repayments to the end of the fifth anniversary from the closing date. The loan bears annual interest of Libor + 2.1%. The interest is payable every three months. Conversion of the loan, in a whole or in part, is at the lender’s option on any given business day after the closing date.

Conversion price per one ordinary share is $5.50, however, in the event that the average closing price of the Company’s shares as reported on Nasdaq for the sixty consecutive trading days immediately preceding the first and second anniversary of the loan agreement closing date, is lower than the conversion price in effect on such date, the conversion price in effect on such date shall be reduced to equal the higher of the average closing price and $2.00. As of December 31, 2007 the conversion price per one ordinary share is $3.19.

The Company is subject to the following main covenants:

| 1. | The shareholders’ equity should not decrease to below $45 million, or, $40 million as a result of dividend distributions. Shareholders’ equity may not decrease by more then 10%, unless such deviation is cured within three consecutive financial quarters immediately following the financial quarter in which such decrease had occurred. | | --- | --- | | 2. | The shareholder’s equity shall represent at least 55% of the total assets of the Company. | | 3. | The net loss shall not exceed an aggregate of $10 million in any single financial quarter or any year. | | 4. | No further borrowings which exceed the aggregate amount of $15 million (other than the loans and credit lines which were in effect at the closing date) and no new transactions with the Company’s affiliates. |

As of December 31, 2007 the Company was in compliance with the aforementioned covenants.

F – 18

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 10 – SEVERANCE PAY

Under Israeli law and labor agreements, the Israeli companies are required to make severance and pension payments to their retired or dismissed employees and to employees leaving employment in certain other circumstances.

| 1. | The liability in respect of most of its employees is discharged by participating in a defined contribution pension plan and making regular deposits with a pension fund. The liability deposited with the pension fund is based on salary components as prescribed in the existing labor agreement. The custody and management of the amounts so deposited are independent of the companies and accordingly such amounts funded (included in expenses on an accrual basis) and related liabilities are not reflected in the balance sheet. | | --- | --- | | 2. | In respect of the liability to other employees, individual insurance policies are purchased and deposits are made with recognized severance pay funds. The liability for severance pay is calculated on the basis of the latest salary paid to each employee multiplied by the number of years of employment. The liability is covered by the amounts deposited including accumulated income thereon as well as by the unfunded provision, which amounted to $268 and $222 thousand as of December 31, 2007 and 2006, respectively. | | 3. | Severance pay expenses were $851, $750 and $544 thousand in 2007, 2006 and 2005, respectively. |

F – 19

CAMTEK LTD. and its subsidiaries

Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 11 – COMMITMENTS AND CONTINGENCIES (cont’d)

A.
The
Company’s subsidiaries have entered into various nonconancelable operating
lease agreements, principally for office space. In May 2007, the Company
entered into a noncancelable operating lease for vehicles for a period of 36
months.
As of
December 31, 2007, minimum future rental payments under such noncancelable operating
leases are as follows:

Year Ending December 31,
2008	1,657
2009	1,182
2010	465
2011	168
Thereafter	53
	3,525

| | Aggregate office rent expenses amounted to $730, $572 and $546 thousand in 2007, 2006 and 2005, respectively. | | --- | --- | | B. | Valuation and qualifying accounts | | | The following is a summary of the allowance for doubtful accounts related to accounts receivable for the years ended December 31: |

U.S. Dollars (In thousands)
2005	2,236	680	(710	)	2,206
2006	2,206	778	(131	)	2,853
2007	2,853	583	(167	)	3,269

C.
The Company
entered into accounts receivable factoring agreements with two financial
institutions (the “banks”). Under the terms of the agreements, the Company
has the option to factor receivables, with the banks on a non-recourse basis,
provided that the banks approve the receivables in advance. In some cases,
the Company continues to be obligated in the event of commercial disputes,
(such as product defects) which are not covered under the credit insurance
policy, unrelated to the credit worthiness of the customer. The Company
accounts for the factoring of its financial assets in accordance with the
provisions of SFAS 140 “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities- a replacement of FASB
Statement No. 125” . The Company does not expect any reimbursements
to take place in the foreseeable future.
The
factoring fees of the above mentioned agreements aggregate $ 52 thousands in

1. ($ 51 thousands in 2006) | | As of December 31, 2007 trade receivables amounting to approximately $ 560 thousands, were factored. (December 31, 2006 - $ 2,500 thousands). |

F – 20

CAMTEK LTD. and its subsidiaries

Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 11 – COMMITMENTS AND CONTINGENT LIABILITIES (Cont’d)

D.
1.	On May 10,
2004, a lawsuit was filed against the Company in the District Court in
Nazareth, Israel, by a competitor, Orbotech Ltd., alleging that the Dragon
and Falcon systems infringe upon a patent held by Orbotech Ltd. and
requesting an injunctive relief and damages. Currently, the issue dealt with
by the court is the validity of the asserted patent, which expired in
February 2008. The Company based on the opinion of its legal advisors,
believes that any liability arising from the law suit is not probable.
Accordingly, no provision has been recorded by the Company.
2.	On February
23, 2005, a lawsuit was filed against the Company in the District Court in
Jerusalem by Orbotech Ltd., alleging infringement of patent held by Orbotech
Ltd. regarding a specific illumination block, seeking injunctive relief and
damages. The court ruled, based on a court’s scientific advisor opinion, that
the Company allegedly infringed the patent, and granted Orbotech a
provisional remedy. Following the grant of the provisional remedy by the
District Court, the Company filed a motion for leave to appeal. The Supreme
Court rejected the Company’s request since the provisional remedy was granted
on the basis of prime facie evidence only. The claim is currently in the
preliminary stage of discovery and only after evidence is presented and cross
examinations are conducted will a final judgment be rendered by the District
Court, subject to the right to appeal. The particular illumination block was
at the time of the preliminary ruling still in a development stage. The
Company’s temporary inability to manufacture and sell the specific
illumination block, does not affect its ability to manufacture and sell products
incorporating other illumination blocks; the Company manufactures its
products with several other illumination blocks. In February 2007 the patent
referring to the specific illumination block expired. The Company has filed
two requests for the lawsuit to be dismissed. The Company based on the
opinion of its legal advisors, believes that any liability arising from the
law suit is not probable. The Company further believes that it has claims
with respect to the validity of the asserted patent, as well as other
defenses such as estoppel and lack of good faith on the part of Orbotech.
Accordingly, no provision has been recorded by the Company.
3.	On July 14,
2005, a lawsuit was filed against the Company in the United States District
Court for the District of Minnesota by one of the Company’s competitors in
the field of semiconductor manufacturing and packaging, August Technology
Corporation (today Rudolph Technologies Inc. together with August Technology
Corporation), alleging infringement of a patent and seeking injunctive relief
and damages. The Company has filed an answer and counterclaims alleging,
inter-alia, non-infringement, invalidity and unenforceability of the patent.
The fact and expert discovery have been completed. On February 2008, the Company
filled a motion for summary judgment of invalidity of the asserted patent. A
Hearing on Camtek’s motion for summary judgment was held on April 25, 2008.
The court took the motion under advisement and will issue an order in due
course. The Company based on the opinion of its legal advisors, believes that
any liability arising from the August’s allegations is not probable.
Accordingly, no provision has been recorded by the Company.
4.	See Note 19B.

F – 21

CAMTEK LTD. and its subsidiaries

Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 12 – CONCENTRATION OF RISK

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash equivalents, short-term bank deposits, marketable securities and trade receivables. The Company’s cash equivalents and marketable securities are maintained with high-quality institutions and the composition and maturities of investments are regularly monitored by management. Generally, these securities and deposits are traded in a highly liquid market, may be redeemed upon demand and bear minimal risk.

The Company’s marketable securities include auction rate securities and highly rated corporate bonds. The trade receivables of the Company are derived from sales to a large number of customers, mainly large industrial corporations located mainly in Asia, the United States and Europe. The Company generally does not require collateral: however, in certain circumstances, the Company may require letter of credit, other collateral or additional guarantees. An allowance for doubtful accounts is determined with respect to those amounts that the Company has determined to be doubtful of collection. The Company performs ongoing credit evaluations of its customers. The carrying amounts of financial instruments approximate fair value.

NOTE 13 – SHAREHOLDERS’ EQUITY

A.	Initial Public Offering
	The Company shares are traded on the NASDAQ National Market under the
symbol of CAMT.
	In December 2005 the Company registered its shares to be listed and
traded in the Tel-Aviv stock exchange.
B.	Private Placement
	In April 2006, the Company raised $14.5 million, net of issuance
expenses, by issuing 2,525,252 ordinary shares at a price of $5.94 per share
in a private placement to Israeli institutional investors. The private
placement also included warrants that are exercisable into 1,262,626 ordinary
shares at a price of $6.83 per share during a period of four years. The
warrants issued in April 2006 have been classified in equity.
C.	Stock Option Plan
	As of December 31, 2007, the Company has five stock option plans for
employees and directors. Future options will be granted only pursuant to the
2003 Share Option Plan described below.
	In October 2003, the Company adopted a stock option plan (the Plan)
pursuant to which the Company’s board of directors may grant stock options to
officers and key employees. The total number of options, which may be granted
to directors, officers, employees and consultants under this plan, is limited
to 998,800 options. Stock options can be granted with an exercise price equal
to or less than the stock’s fair market value at the date of grant. All stock
options have 10-year terms and vest and become fully exercisable after 4
years from the date of grant with 30% to vest at the end of each of the first
three years and remaining 10% to vest at the end of the fourth year following
the grant date.
	As of December 31, 2007, there were no additional shares available
for the Company grant under the Plan. The fair value of each option award is
estimated on the date of grant using the Black-Scholes option-pricing model
that used the weighted average assumptions in the following table. The
risk-free rate for the expected term of the option is based on the U.S.
Treasury yield curve in effect at the time of grant.

F – 22

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 13 – SHAREHOLDERS’ EQUITY (Cont’d)

C. Stock Option Plan (Cont’d)

	2007 Grant	2006 Grant	2005 Grant
Dividend
yield	0	0	0
Expected
volatility *	83%-84%	86%-87%	90%
Risk-free
interest rate	5%	5%	4.2%
Expected
life (years) **	6	6	6

| * | Historical volatility | | --- | --- | | ** | The company used the simplified method to estimate the expected life as permissible under SAB 107. | | The weighted average grant date fair value of options granted during the years ended 2007, 2006 and 2005 was $3.19, $5.38 and $2.30 respectively. The total intrinsic value of options exercised during the years ended December 31, 2007, 2006 and 2005 was $101,128, $246,756 and $5,859 respectively. The total intrinsic value of options vested at December 31, 2007 is $63,151. | | | As of December 31, 2007, there was $378,143 of total unrecognized compensation cost related to nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 1.5 years. | | | Share option activity during the past three years is as follows: | |

2007			2006			2005
Number of shares		Weighted average exercise price US$	Number of shares		Weighted average exercise price US$	Number of shares		Weighted average exercise price US$
Outstanding
at January 1	929,964		2.46	1,315,650		2.06	1,250,000		1.98
Granted	45,000		4.32	60,000		5.19	144,000		3.00
Forfeited	(74,263	)	2.78	(13,980	)	2.37	(68,600	)	2.59
Exercised	(92,860	)	0.34	(431,706	)	1.63	(9,750	)	1.56
Outstanding
at year end	807,841		2.78	929,964		2.46	1,315,650		2.06
Vested at
year end	670,841		2.56	665,729		2.22	702,990		1.95

Outstanding as of December 31, 2007	807,841	2.78	6.55	244,340
Vested and expected to vest at December 31,
2007	759,371	2.78	6.55	229,680
Exercisable at December 31, 2007	670,841	2.52	6.17	176,090

F – 23

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 13 – SHAREHOLDERS’ EQUITY (Cont’d)

The following table summarizes information about share options at December 31, 2007:

Range of exercise price US$ — 0.00	116,540	5.56	0.00	116,540	0.00
2.98-3.29	461,301	5.98	2.98	461,301	2.98
3.00	125,000	7.74	3.00	75,000	3.00
5.00	50,000	8.38	5.00	15,000	5.00
6.15	10,000	8.58	6.15	3,000	6.15
4.50	30,000	9.07	4.50	-	4.50
3.95	15,000	9.24	3.95	-	3.95
	807,841	6.55	2.78	670,841	2.56

The following table summarizes information about nonvested options at December 31, 2007:

| Balance at

January 1, 2007	264,235		2.87
Granted	45,000		3.19
Vested	(157,820	)	2.06
Forfeited	(14,415	)	3.60
Balance at
December 31, 2007	137,000		3.84

D. Restricted Share Unit Plan

In August 2007, the Company adopted a Restricted Share Unit (“RSU”) Plan (the “Plan”) pursuant to which the Company’s board of directors may grant shares to officers and key employees . The total number of shares, which may be granted to directors, officers, employees and consultants under this plan, is limited to 180,000 authorized but unissued Shares.

The Exercise Price for each Grantee shall be as determined by the Board and specified in the applicable RSU Notice of Grant; provided, however, that unless otherwise determined by the Board (which determination shall not require shareholder approval unless so required in order to comply with Mandatory Law), the Exercise Price shall be no more than the underlying Share’s nominal value. For the removal of any doubt, the Board is authorized (without the need for shareholder approval unless so required in order to comply with Mandatory Law) to determine that the Exercise Price of an RSU is to be $0.00.

Unless otherwise determined by the Board with respect to any specific Grantee or to any specific grant, (which determination shall not require shareholder approval unless so required in order to comply with Mandatory Law) and provided accordingly in the applicable RSU Notice of Grant, the RSUs shall vest (become automatically exercised) according to the following 4-year vesting schedule:

a. Upon the completion of a full 12 (twelve) months of continuous Service – 25% .

b. Upon the lapse of each full additional 3 (three) month(s) of the Grantee’s continuous Service thereafter, until all the RSU are vested, i.e. 100% of the grant will be vested after 4 years. – 6.25% .

On December 27, 2007, 25,200 RSU were granted. The share price at the grant date was $1.88. The total compensation amounted to $47 thousands, which is being amortized over vesting period. All of the RSU’s are not yet vested. (see also note 19)

F – 24

CAMTEK LTD. and its subsidiaries

Notes to Consolidated Financial Statements As of December 31, 2007
NOTE 13 – SHAREHOLDERS’ EQUITY (Cont’d)

D.
As of the
balance sheet date the number of RSU’s available for grant is 154,800.
Activity
under the Restricted Share Unit Plan is as follows:

| Balance as

of January 1, 2007	-		-	Weighted- average fair value — $ -
RSU Plan	180,000		-	-
Awards
granted	(25,200	)	25,200	1.88
Balance as
of December 31, 2007	154,800		25,200	1.88

NOTE 14 – EARNINGS (LOSS) PER ORDINARY SHARE

The following table summarizes information related to the computation of basic and diluted earnings (loss) per Ordinary Share for the years indicated:

	Year ended December 31, — 2007		2006	2005
	(In thousands)
Net income (loss) attributable to Ordinary
Shares	$ (7,473	)	$ 11,603	$ 2,702
Weighted average number of Ordinary Shares
outstanding used in basic earnings per Ordinary Share calculation	30,145		29,176	27,253
Add assumed exercise of outstanding dilutive
potential Ordinary Shares	-		377	333
Weighted average number of Ordinary Shares
outstanding used in diluted earnings per Ordinary Share calculation	30,145		29,553	27,586
Basic earnings (losses) per Ordinary
Share	(0.25	)	$ 0.40	$ 0.10
Diluted earnings (losses) per Ordinary
Share	(0.25	)	$ 0.39	$ 0.10

The number of options which were not considered in computing dilutive earnings (losses) per share because their impact is anti-dilutive aggregated 176,314 in 2007.

Convertible loan which is convertible to 1,567,398 and 909,091 shares in 2007 and 2006, respectively, was not considered in computing diluted earnings (losses) because of anti-dilutive impact.

F – 25

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 15 – GEOGRAPHIC INFORMATION

Substantially all fixed assets are located in Israel and substantially all revenues are derived from shipments to other countries. Revenues are attributable to geographic areas/countries based upon the destination of shipment of products and related services as follows:

2007	2006	2005
U.S. Dollars (In thousands)
China and
Hong Kong	30,187	33,713	24,665
Asia- Other	12,676	20,413	5,036
United
States	3,983	15,622	11,484
Taiwan	12,935	12,895	12,258
Western
Europe	8,081	9,170	6,597
Japan	2,134	6,716	2,065
Rest of the
world	973	1,526	927
	70,969	100,055	63,032

NOTE 16 – SELECTED INCOME STATEMENT DATA

A. Selling, general and administrative expenses

	2007	2006	2005
	U.S. Dollars (In thousands)
	Selling (a1)	17,309	21,000	14,559
	General and
administrative	6,810	6,850	4,201
		24,119	27,850	18,760
	(a1)
Including shipping and handling costs	2,173	2,626	1,890
B.	Financial expenses, net

2007		2006		2005
U.S. Dollars (In thousands)
Interest
expense	320		422		405
Interest
income	(311	)	(795	)	(336	)
Other, net	119		661		251
	128		288		320

Other, net includes foreign currency income (expense) resulting from transactions not denominated in U.S. Dollars amounting to $ 66, $ (435) and $(238) thousand in 2007, 2006 and 2005, respectively.

F – 26

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 17 – INCOME TAXES

A.	Tax under various laws
	The Company
and its subsidiaries are assessed for tax purposes on an unconsolidated
basis. The Company is assessed under the provisions of the Income Tax Law
(Inflationary Adjustments), 1985 (the “inflationary Adjustments Law”),
pursuant to which the results for tax purposes are measured in Israeli
currency in real terms in accordance with changes in the Israeli Consumer
Price Index (“CPI”). Each of the subsidiaries is subject to the tax rules
prevailing in the country of incorporation.
B.	Tax benefits under the Law for Encouragement of Capital Investments,
1959 (“the Investment Law”)
	The
Company’s production facilities have been granted “Approved Enterprise”
status under the Investment Law. The Company participates in the Alternative
Benefits Program and, accordingly, income from its Approved Enterprises will
be tax exempt for a period of 10 years, commencing in the first year in which
the Approved Enterprise first generates taxable income due to the fact that
the Company operates in Zone “A” in Israel.
	On April 1,
2005, an amendment to the Investment Law came into effect (“the Amendment”)
and has significantly changed the provisions of the Investment Law. The
Amendment limits the scope of an enterprise, which may be approved by the
Investment Center by setting criteria for the approval of a facility as a
“Beneficiating Enterprise”, such provisions generally require that at least
25% of the Beneficiating Enterprise’s income will be derived from export.
Additionally, the Amendment enacted major changes in the manner in which tax
benefits are awarded under the Investment Law so that companies no longer
require Investment Center approval in order to qualify for the tax benefits.
	In addition,
the Amendment provides that terms and benefits included in any approval
certificate issued prior to December 31, 2004 will remain subject to the
provisions of the Investment Law as they were on the date of such prior
approval. Therefore, the Company’s existing Approved Enterprise will
generally not be subject to the provisions of the Amendment. As a result of
the Amendment, tax-exempt income generated under the provisions of the new
law, as part of a new Beneficiating Enterprise, will subject the Company to
taxes upon distribution or liquidation.
	The Company
has been granted the status of Approved Enterprises, under the Investment
Law, for investment programs for the periods ending in 2007 and 2010, and the
status of Beneficiating Enterprise according to the Amendment, for the period
ending in 2014 (“Programs”). Out of the Company’s retained earnings as of
December 31, 2007 approximately $19.4 million are tax-exempt earnings
attributable to its Approved Enterprise and approximately $ 2.8 million are
tax-exempt earnings attributable to its Beneficiating Enterprise. The
tax-exempt income attributable to the Approved and Beneficiating Enterprises
cannot be distributed to shareholders without subjecting the Company to
taxes. If these retained tax-exempt profits are distributed, the Company
would be taxed at the reduced corporate tax rate applicable to such profits
(currently - 25% pursuant to the implementation of the Investment Law;
effectively 33%). According to the Amendment, tax-exempt income generated
under the Beneficiating Enterprise will be taxed upon dividend distribution
or complete liquidation, whereas tax exempt income generated under the
Approved Enterprise will be taxed only upon dividend distribution (but not
upon complete liquidation, as the tax liability will be incurred by the
shareholders). As of December 31, 2007, if the income attributed to the
Approved Enterprise were distributed as dividend, the Company would incur a
tax liability of approximately $4.9 million. If income attributed to the
Beneficiating Enterprise were distributed as dividend, or upon liquidation,
the Company would incur a tax liability in the amount of approximately $ 0.7
million. These amounts will be recorded as an income tax expense in the
period in which the Company declares the dividend.

F – 27

| CAMTEK LTD.

and its subsidiaries
Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 17 – INCOME TAXES (Cont’d)

| B. | Tax benefits under the Law for Encouragement of Capital Investments, 1959 (“the Investments Law”) (cont’d) | | --- | --- | | | The Company intends to indefinitely reinvest the amount of its tax-exempt income and not distribute any amounts of its undistributed tax exempt income as dividend. Accordingly, no deferred tax liabilities have been provided on income attributable to the Company’s Approved and Beneficiating Enterprise Programs as the undistributed tax exempt income is essentially permanent in duration. | | | The entitlement to the above benefits is conditional upon the Company’s fulfilling the conditions stipulated by the law and the regulations published thereunder as well as the criteria set forth in the approval for the specific investments in the Approved Enterprises. In the event of failure to meet such requirements in the future, income attributable to its Programs could be subject to the statutory Israeli corporate tax rates and the Company could be required to refund a portion of the tax benefits already received, with respect to such Programs. The Company’s management believes that the Company has met the aforementioned conditions. | | C. | Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969 | | | The Company is an “industrial company” as defined by this law and as such is entitled to certain tax benefits, mainly accelerated depreciation as prescribed by regulations published under the Inflationary Adjustments Law and the right to deduct issuance costs as an expense for tax purposes. | | D. | Composition of income (loss) before income taxes and income tax expense (benefit) |

2007		2006		2005
U.S. Dollars (In thousands)
Income
(loss) before income taxes:
Israel	(9,515	)	10,256		2,399
Non-Israeli	2,186		1,388		303
	(7,329	)	11,644		2,702
Income tax
expense (benefit):
Current:
Israel	-		-		-
Non-Israeli	394		475		-
	394		475		-
Deferred:
Israel	16		(160	)	-
Non-Israeli	(48	)	(274	)	-
	(32	)	(434	)	-
	362		41		-

F – 28

CAMTEK LTD. and its subsidiaries

Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 17 – INCOME TAXES (Cont’d)

E.
The
following is a reconciliation of the theoretical income tax expense
(benefit), assuming all income is taxed at the statutory tax rate applicable
to Israeli companies, and the actual income tax expense (benefit):

	Year Ended December 31, — 2007	2006		2005
	U.S. Dollars (In thousands)
Income (loss) before income taxes	(7,329	)	11,644		2,702
Statutory tax rate	29	%	31	%	34	%
Theoretical income tax expense (benefit)	(2,125	)	3,610		918
Increase (decrease) in income tax expense
resulting from:
Tax benefits arising from “Approved and
Beneficiating Enterprises”	-		(1,641	)	(281	)
Decrease in taxes resulting from
utilization of carryforward tax losses and deductible temporary differences
for which deferred tax benefits were not provided in previous years	(1,205	)	(1,337	)	(2,066	)
Tax losses and deductible temporary
differences for which no tax benefit has been recorded	6,931		351		371
Permanent differences and nondeductible
expenses, including difference between Israeli CPI-adjusted tax returns and
dollar-adjusted financial statements-net	(2,560	)	(1,318	)	970
Nondeductible stock-based compensation	124		237		43
Prior period adjustments	138		61		-
Other *	(941	)	78		45
Actual income tax expense	362		41		-
Per share effect of the tax benefits
arising from “Approved and Beneficiating Enterprises”:
Basic	$ 0.00	$	0.06	$	0.01
Diluted	$ 0.00	$	0.06	$	0.01

• Mainly due to different tax rates.

F – 29

CAMTEK LTD. and its subsidiaries

Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 17 – INCOME TAXES (Cont’d)

F.
The tax
effects of temporary differences that give rise to significant portions of
the deferred tax assets and liabilities are presented below:

2007		2006
U.S. Dollars (In thousands)
Current:
Provision for doubtful accounts	294		194
Accrued warranty	15		97
Unearned revenue	230		185
Net operating losses carryforwards	-		91
Accrued expenses	215		134
Other temporary differences *	538		-
Total gross current deferred tax assets	1,292		701
Valuation allowance	(1,168	)	(636	)
Current deferred tax asset, net of
allowance	124		65
Long-term:
Net operating losses carryforwards	3,552		1,759
Severance pay	5		14
Fixed assets	(19	)	(53	)
Other temporary differences *	536		413
Total gross long-term deferred tax assets	4,074		2,133
Valuation allowance	(3,462	)	(1,549	)
Long-term deferred tax asset, net of
allowance	612		584
Net deferred tax assets	736		649

| * Other

temporary differences mainly relate to research and development expenses.
Under SFAS
No. 109, deferred tax assets are to be recognized for the anticipated tax
benefits associated with net operating loss carryforwards and deductible
temporary differences, unless it is more likely than not that some or all of
the deferred tax assets will not be realized. The adjustment is made by a
valuation allowance.
Since the
realization of the net operating loss carryforwards and deductible temporary
differences is uncertain and not considered more likely than not, a valuation
allowance has been established to reduce deferred tax assets to their
estimated realizable value. The net change in the total valuation allowance
was an increase of $ 2,445 thousand for the year ended December 31, 2007 and a
decrease of $ 501 thousand, and $ 1,548 thousand for the years ended December
31, 2006 and 2005, respectively.
As of
December 31, 2007, Camtek has not provided for income taxes on the
undistributed earnings of approximately US$ 1,500 thousand of one of its
foreign subsidiaries since these earnings are intended to be indefinitely
reinvested. A deferred tax liability will be recognized when the Company no
longer demonstrates that it plans to indefinitely reinvest these
undistributed earnings. It is not practicable to estimate the amount of
additional taxes that might be payable on such undistributed earnings.
As of
December 31, 2007, the Company and its subsidiary in Israel have NOL
carryforwards aggregating approximately $7,810 thousand, and NOL available
for offset from Approved and Beneficiating Enterprises aggregating
approximately $14,942 thousands.
As of
December 31, 2007, the major foreign subsidiaries have NOL carryforwards
aggregating approximately $4,842 thousand, of which approximately $2,764
thousand will expire from 2009 to 2023 and approximately $2,078 thousand can
be carried forward indefinitely.

F – 30

CAMTEK LTD. and its subsidiaries

Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 17 – INCOME TAXES (Cont’d)

G.	Reduction in corporate income tax rate in Israel
	On July 25,
2005, an amendment to the Israeli tax law was approved by the Israeli
parliament, which reduces the
tax rates imposed on Israeli companies to 31% for 2006. This amendment states that the corporate tax rate will
be further reduced in subsequent tax years as follows: in2007 29%, in 2008 27%, in 2009 26% and
thereafter 25%. This change does not have a material effect on the Company’s financial
statements.
H.	On February
26, 2008, the Israeli Income Tax Law (Inflationary Adjustments) (Amendment
No. 20) (Restriction of Period of Application) – 2008 (“the 2008 Amendment”)
was passed by the Knesset. According to the 2008 Amendment, the Inflationary
Adjustments Law will no longer be applicable subsequent to the 2007 tax year,
except for certain transitional provisions. Further, according to the 2008
Amendment, commencing with the 2008 tax year, the adjustment of income for
the effects of inflation for tax purposes will no longer be calculated.
Additionally, depreciation on fixed assets and tax loss carryforwards will no
longer be linked to future changes in the CPI subsequent to the 2007 tax
year, and the balances that have been linked to the CPI through the end of
the 2007 tax year will be used going forward.
I.	Accounting for uncertainty in income taxes
	FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements in accordance with FAS 109. This
interpretation prescribes a minimum recognition threshold a tax position is
required to meet before being recognized in the financial statements. FIN 48
also provides guidance on derecognition of tax positions, classification on
the balance sheet, interest and penalties, accounting in interim periods,
disclosure, and transition. FIN 48 requires significant judgment in
determining what constitutes an individual tax position as well as assessing
the outcome of each tax position.
	The Company
adopted the provisions of FIN 48 as of January 1, 2007, and there was no
effect on the financial statements. As a result, the Company did not record
any cumulative effect adjustment related to adopting FIN 48.
	As of
January 1, 2007, and for the year ended December 31, 2007, the Company did
not have any unrecognized tax benefits. In addition, the Company does not
expect that the amount of unrecognized tax benefits will change significantly
within the next twelve months.
	The Company
accounts for interest and penalties related to unrecognized tax benefits as a
component of income tax expense. As of January 1, 2007 and for the
twelve-month period ended December 31, 2007, no interest and penalties
related to unrecognized tax benefits have been accrued.
	The Company
files its income tax returns in Israel while its principle foreign
subsidiaries file their income tax returns in Belgium, Hong-Kong and United
States of America. The Israeli tax returns of the Company and its Israeli
subsidiary are open to examination by the Israeli Tax Authorities for the tax
years beginning in 2003 while the tax returns of its principle foreign
subsidiaries remain subject to examination for the tax years beginning in
1997 in Belgium, 2001 in Hong-Kong and 2004 in the United States of America.

F – 31

CAMTEK LTD. and its subsidiaries

Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 18 – TRANSACTIONS WITH RELATED PARTIES

2007		2006	2005
U.S. Dollars (In thousands)
Purchases from Parent and affiliates	1,876		3,244	597
Interest income (expense) from Parent	(33	)	16	19
Sales to Parent and affiliates	27		240	1

Registration Rights Agreement with Parent

On March 1, 2004, the Company entered into a registration rights agreement providing for the Company to register with the SEC certain of its ordinary shares held by Parent. This registration rights agreement may be used in connection with future offerings of our ordinary shares, and includes, among others, the following terms: (a) Parent is entitled to make up to three demands that we register our ordinary shares held by Parent, subject to delay due to market conditions; (b) Parent will be entitled to participate and sell the Company’s ordinary shares in any future registration statements initiated by the Company, subject to delay due to market conditions; (c) the Company will indemnify Parent in connection with any liabilities incurred in connection with such registration statements due to any misstatements or omissions other than information provided by Parent, and Parent will indemnify the Company in connection with any liabilities incurred in connection with such registration statements due to any misstatements or omissions in written statements by Parent made for the purpose of their inclusion in such registration statements; and (d) the Company will pay all expenses related to registrations which the Company has initiated, except for certain underwriting discounts or commissions or legal fees, and Parent will pay all expenses related to a registration initiated at its demand in which the Company is not participating.

On December 30, 2004, the Registration Rights Agreement with Parent was amended. The amendment concerns primarily the grant of unlimited shelf registration rights thereunder to Parent with respect to its holdings in us, and the assignability of those shelf registration rights to its transferees.

Employment Agreements with the CEO and the COO

Effective January 1, 1998, the Company entered into an employment agreement with its Chief Executive Officer (“CEO”). Pursuant to his employment agreement, the CEO may dedicate up to 20% of his time to work for Parent or any of the Parent’s entities.

Also effective January 1, 1998, the Company entered into an employment agreement with its Executive Vice President, Business & Strategy (“EVP”). Pursuant to his employment agreement, the EVP may dedicate up to 40% of his time to work for Parent or any of the Parent’s entities.

The CEO works on a full time basis for the Company and therefore receives a full time salary, while the EVP receives from the Company 60% of a full time salary. The EVP is compensated directly by each of the Parent entities for which he works. The CEO also serves as the Chairman of Parent, and the EVP also serves as the Chief Executive Officer and as a director of Parent.

The CEO and EVP do not receive any additional compensation for their service as the Company’s directors.

F – 32

CAMTEK LTD. and its subsidiaries

Notes to Consolidated Financial Statements As of December 31, 2007

NOTE 19 – SUBSEQUENT EVENTS

| A. | On January 1, 2008 132,800 RSU were granted to employees. | | --- | --- | | B. | On March 7, 2008, a purported class action complaint (the “Class Action Complaint”), Yuval Lapiner v. Camtek, Ltd. et al., Case No. 08-01327-MMC, was filed in the United States District Court for the Northern District of California on behalf of purchasers of our common stock between November 22, 2005 and December 20, 2006. The Class Action Complaint names the Company and certain of our directors and officers as defendants. It alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and breached fiduciary duties by making false and misleading statements in the Company’s SEC filings and press releases. The plaintiffs seek unspecified compensatory damages against the defendants, as well as attorneys’ fees and costs. At this preliminary stage, before the Company has submitted its response, management does not believe that the Class Action Complaint has merit and intends to defend itself vigorously. Accordingly, no provision has been made in the financial statements in respect of this claim. |

F – 33

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

ITEM 19. Exhibits.

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

Exhibit No. Exhibit

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

1.1 Memorandum of Association of Registrant (incorporated herein by reference to Exhibit 3.1 to Amendment No. 1 to the Registrant’s Registration Statement on Form F-1, File No. 333-12292, filed with the Securities and Exchange Commission on July 21, 2000).‡

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

1.2 Articles of Registrant (incorporated herein by reference to Exhibit 3.2 to Amendment No. 1 to the Registrant’s Registration Statement on Form F-1, File No. 333-113208, filed with the Securities and Exchange Commission on April 5, 2004).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.1 Amended and Restated Employee Share Option Plan (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-8, File No. 333-84476, filed with the Securities and Exchange Commission on March 18, 2002).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.2 Amended and Restated Subsidiary Employee Option Plan (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-8, File No. 333-84476, filed with the Securities and Exchange Commission on March 18, 2002).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.3 Employee Share Option Plan – Europe (incorporated herein by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-8, File No. 333-49982, filed with the Securities and Exchange Commission on November 15, 2000).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.4 Executive Share Option Plan (incorporated herein by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form S-8, File No. 333-60704, filed with the Securities and Exchange Commission on May 11, 2001).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.5 2003 Share Option Plan (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-8, File No. 333- 113139, filed with the Securities and Exchange Commission on February 27, 2004).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.6 Sub-Plan for Grantees Subject to United States Taxation (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-8, File No. 333-113139, filed with the Securities and Exchange Commission on February 27, 2004).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.7 Sub-Plan for Grantees Subject to Israeli Taxation (incorporated herein by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S- 8, File No. 333-113139, filed with the Securities and Exchange Commission on February 27, 2004).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.8 2007 Restricted Share Unit Plan (attached to the original filing).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.9 Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.10 to Amendment No. 1 to the Registrant’s Registration Statement on Form F-1, File No. 333-12292, filed with the Securities and Exchange Commission on July 21, 2000).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.10 Registration Rights Agreement, by and between the Registrant and Priortech Ltd., dated March 1, 2004 (incorporated herein by reference to Exhibit 10.9 to Amendment No. 1 to the Registrant’s Registration Statement on Form F-1, File No. 333-113208, filed with the Securities and Exchange Commission on April 5, 2004).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.11 Registration Rights Amended and Restated Agreement by and between the Registrant and Priortech Ltd., dated December 30, 2004. (incorporated herein by reference to Exhibit 4.10 to the Registrant’s Registration Statement on Form 20-F File No.000-30664 filed with the Securities and Exchange Commission on June 30, 2005).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.12 Convertible Loan Agreement, by and between the Registrant and FIMI Opportunity Fund, L.P., and FIMI Israel Opportunity Fund, dated August 8, 2005 (incorporated herein by reference to Exhibit 4.11 to the Registrant’s Registration Statement on Form 20-F File No.000-30664 filed with the Securities and Exchange Commission on June 29, 2006).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

4.13 Press Release announcing the Company’s completion of $15,000,000 Private Placement dated April 28, 2006; Press Release announcing Priortech Ltd. Sale of Camtek shares to Israeli Institutional Investors dated June 21, 2006 (incorporated herein by reference to Exhibit 4.12 to the Registrant’s Registration Statement on Form 20-F File No.000-30664 filed with the Securities and Exchange Commission on June 29, 2006).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

8.1 Subsidiaries of the Registrant (attached to the original filing).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

12.1 Certification of Chief Executive Officer required by Rules 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.*

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

12.2 Certification of Chief Financial Officer required by Rules 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.*

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

13.1 Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

15.1 Consent of Somekh Chaikin, a member firm of KPMG International (attached to the original filing).

MARKER FORMAT-SHEET="Exhibit Index Hang" FSL="Workstation"

15.2 Consent of Brightman Almagor & Co., a member firm of Deliotte, Touche Tohmatsu, and Goldstein Sabo Tevet (attached to the original filing).

MARKER FORMAT-SHEET="Para Flush Lv 1-TNR" FSL="Workstation"

MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation"

‡ English translations from Hebrew original.

MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation"

• Filed herewith.

MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation"

SIGNATURES

MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default"

The Company hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

MARKER FORMAT-SHEET="Signature (Single)" FSL="Workstation"

CAMTEK LTD. By: /s/ Rafi Amit —————————————— Rafi Amit Chief Executive Officer

MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation"

Date: November 9, 2009