10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 29, 2008

OR

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

For the transition period from              to             

Commission File Number 000-17297

BTU INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)

DELAWARE	04-2781248
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)
23 Esquire Road, North Billerica, Massachusetts	01862-2596
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (978) 667-4111

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  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large Accelerated Filer	¨	Accelerated Filer	x
Non-Accelerated Filer	¨	Smaller Reporting Company	¨

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

Indicate the number of shares outstanding of the Registrant’s Common Stock, par value $.01 per share, as of the latest practicable date: As of August 6, 2008: 9,388,311 shares.

BTU INTERNATIONAL, INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Unaudited Condensed Consolidated Balance Sheets	1
Unaudited Condensed Consolidated Statements of Operations	2
Unaudited Condensed Consolidated Statements of Stockholders’ Equity and Comprehensive Income	3
Unaudited Condensed Consolidated Statements of Cash Flows	4-5
Notes to Unaudited Condensed Consolidated Financial Statements	6-11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	11-15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	15
Item 4. Controls and Procedures	15-16
PART II. OTHER INFORMATION
Item 1A. Risk Factors	16
Item 5. Other Information	16
Item 6. Exhibits	17
Signatures	18
EX-3.1 Amended and Restated By-Laws
EX-31.1 Section 302 Certification of C.E.O.
EX-31.2 Section 302 Certification of C.F.O.
EX-32.1 Section 906 Certification of C.E.O.
EX-32.2 Section 906 Certification of C.F.O.

BTU INTERNATIONAL, INC

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

	June 29, 2008			December 31, 2007
Assets
Current assets
Cash and cash equivalents	$	27,589		$	25,065
Accounts receivable, net		19,841			18,832
Inventories, net		18,263			16,891
Other current assets		1,116			787
Total current assets		66,809			61,575
Property, plant and equipment, net		5,955			5,536
Other assets, net		2,148			2,401
Total assets	$	74,912		$	69,512
Liabilities and stockholders’ equity
Current liabilities
Current portion of long-term debt	$	284		$	277
Accounts payable		7,451			5,645
Other current liabilities		6,873			5,088
Total current liabilities		14,608			11,010
Long-term debt, less current portion		9,127			9,267
Other long-term liabilities		—			300
Total liabilities		23,735			20,577
Commitments and contingencies
Stockholders’ equity
Preferred stock, $1.00 par value - 5,000,000 shares authorized; no shares issued or outstanding		—			—
Common stock, $0.01 par value - 25,000,000 shares authorized; 10,537,321 shares issued and 9,388,311 shares outstanding at June 29, 2008 and 10,502,311 shares issued and 9,353,301 shares outstanding at December 31, 2007		105			105
Additional paid in capital		44,728			44,046
Retained earnings		8,201			7,814
Treasury stock, at cost, 1,149,010 shares at June 29, 2008 and December 31, 2007		(4,177	)		(4,177	)
Accumulated other comprehensive income		2,320			1,147
Total stockholders’ equity		51,177			48,935
Total liabilities and stockholders’ equity	$	74,912		$	69,512

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

1

BTU INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended						Six Months Ended
	June 29, 2008			July 1, 2007			June 29, 2008			July 1, 2007
Net sales	$	20,384		$	13,770		$	37,003		$	28,934
Costs of goods sold		11,064			7,833			21,060			16,434
Gross profit		9,320			5,937			15,943			12,500
Operating expenses:
Selling, general and administrative		6,401			4,121			11,313			8,665
Research, development and engineering		1,787			1,524			3,390			2,895
Operating income		1,132			292			1,240			940
Interest income		78			245			178			512
Interest expense		(174	)		(120	)		(354	)		(286	)
Foreign exchange loss		(395	)		(194	)		(271	)		(315	)
Other income, net		—			4			—			110
Income before provision for income taxes		641			227			793			961
Provision for income taxes		353			21			406			96
Net income	$	288		$	206		$	387		$	865
Income per share:
Basic	$	0.03		$	0.02		$	0.04		$	0.09
Diluted	$	0.03		$	0.02		$	0.04		$	0.09
Weighted average number of shares outstanding:
Basic shares		9,375,097			9,275,349			9,365,175			9,218,358
Effect of dilutive options		149,559			171,618			158,193			167,316
Diluted shares		9,524,656			9,446,967			9,523,368			9,385,674

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

2

BTU INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 29, 2008

(in thousands)

(unaudited)

	Common Stock			Additional Paid-In		Retained		Treasury Stock				Accumulated Other Comprehensive
	# of shares	$		Capital		Earnings		# of shares	$			Income		Total
Balance at December 31, 2007	10,502	$	105	$	44,046	$	7,814	1,149	$	(4,177	)	$	1,147	$	48,935
Net income	—		—		—		387	—		—			—		387
Exercise of stock options	30		—		93		—	—		—			—		93
Issuance of stock under ESPP	5		—		46		—	—		—			—		46
Stock-based compensation	—		—		543		—	—		—			—		543
Translation adjustment	—		—		—		—	—		—			1,173		1,173
Balance at June 29, 2008	10,537	$	105	$	44,728	$	8,201	1,149	$	(4,177	)	$	2,320	$	51,177

	Three Months Ended		Six Months Ended
	June 29, 2008
Comprehensive income is calculated as follows:
Net income	$	288	$	387
Other comprehensive gain
Foreign currency translation adjustment		339		1,173
Comprehensive income	$	627	$	1,560

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

3

BTU INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 29, 2008 AND JULY 1, 2007

(in thousands)

(unaudited)

	June 29, 2008			July 1, 2007
Cash flows from operating activities:
Net income	$	387		$	865
Adjustments to reconcile net cash provided by (used in) operating activities:
Depreciation		609			449
Amortization		261			242
Provision (recovery) for bad debt		34			(24	)
Provision for inventory obsolescense		(69	)		(47	)
Stock-based compensation		543			284
Gain on foreign currency forward contract		(115	)		—
Net change in operating assets and liabilities:
Accounts receivable		(702	)		489
Inventories		(983	)		1,350
Other current assets		(283	)		(101	)
Other assets		19			193
Accounts payable and other current liabilities		3,173			(1,871	)
Net cash provided by operating activities		2,874			1,829
Cash flows from (used in) investing activities:
Purchases of property, plant and equipment		(990	)		(883	)
Settlement of foreign currency forward contract		60			—
Net cash used in investing activities		(930	)		(883	)
Cash flows from (used in) financing activities:
Principal payments under loan and capital lease agreements		(132	)		(151	)
Proceeds from the exercise of stock options		93			328
Net cash provided by (used in) financing activities		(39	)		177
Effects of exchange rates on cash		619			113
Net increase in cash and cash equivalents		2,524			1,236
Cash and cash equivalents, beginning of period		25,065			25,100
Cash and cash equivalents, end of period	$	27,589		$	26,336

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

4

BTU INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

FOR THE SIX MONTHS ENDED JUNE 29, 2008 AND JULY 1, 2007

(in thousands)

(unaudited)

	June 29, 2008		July 1, 2007
Supplemental disclosures of cash flow information:
Cash paid (received) during the periods for:
Interest	$	76	$	(156	)
Income taxes		17		57

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

5

BTU INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1) Basis for Presentation

The condensed consolidated balance sheet, financial information and related disclosures as of and for the year ended December 31, 2007 have been derived from our consolidated financial statements, which have been audited as of that date. The condensed consolidated balance sheet as of June 29, 2008 and the related condensed consolidated statements of operations and comprehensive income for the three and six months ended June 29, 2008 are unaudited. The condensed consolidated statements of cash flows and statement of stockholders’ equity for the six months ended June 29, 2008 are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of such financial statements have been included. Such adjustments consisted only of normal recurring items. Interim results are not necessarily indicative of results for any other period or for the full year. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with the footnotes contained in the Company’s consolidated financial statements as of and for the year ended December 31, 2007, together with the auditors’ report, included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission.

(2) Summary of Significant Accounting Policies

The accounting policies underlying the accompanying unaudited condensed consolidated financial statements are those set forth in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 as filed with the Securities and Exchange Commission.

(3) Inventories

	June 29, 2008		December 31, 2007
	(in thousands)
Raw materials and manufactured components	$	9,943	$	11,439
Work-in-process		5,821		3,718
Finished goods		2,499		1,734
	$	18,263	$	16,891

(4) Debt

Long-Term Debt at June 29, 2008 and December 31, 2007 consisted of (in thousands):

	June 29, 2008		December 31, 2007
Mortgage note payable, interest rate of 6.84%	$	9,407	$	9,538
Capital lease obligations, interest rate of 6.75%		4		6
		9,411		9,544
Less - current maturities		284		277
	$	9,127	$	9,267

On March 30, 2006, we entered into a new mortgage note that is secured by our real property in Billerica, MA, in the amount of $10 million. The mortgage note requires monthly payments of $76,280, which includes interest calculated at the rate of 6.84% per annum. This mortgage note payable has a balloon payment of $6.8 million due and payable at maturity on December 23, 2015. The mortgage note had an outstanding balance at June 29, 2008 of approximately $9.4 million.

6

BTU INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

On March 1, 2007, the Company entered into an amended revolving loan agreement with a bank that allows for unsecured aggregate borrowings, including letters of credit, up to a maximum of $15 million against a borrowing base of accounts receivable, inventory and fixed assets. The Company may elect to borrow at interest rates related to the bank’s prime rate or LIBOR. This loan agreement extends to December 31, 2010.

As of June 29, 2008, the borrowing base would support the maximum borrowings of $15 million, and there were no borrowings outstanding under the loan agreement.

(5) Earnings Per Share (EPS)

Basic EPS is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common and dilutive potential common shares outstanding during the period, using the treasury stock method. The number of common shares underlying options that were not included in the determination of diluted EPS, because their effect would be anti-dilutive, was 338,838 and 365,931 for the three and six months ended June 29, 2008 and 222,602 and 304,759 for the three and six months ended July 1, 2007, respectively. The Company has elected to adopt the Alternative Transition method provided by the FASB Staff Position 123(R)-3 for calculating the tax effects of stock-based compensation expense pursuant to Statement of Financial Accounting Standards No. 123R, Share-Based Payment (SFAS 123R).

(6) Accounting for Stock-Based Compensation

The Company’s stock option compensation expense was $306,283 and $536,183 respectively, for the three and six months ended June 29, 2008 and $152,489 and $284,782 for the three and six months ended July 1, 2007. These amounts do not include expense related to restricted stock awards.

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. This model incorporates certain assumptions for inputs including a risk-free market interest rate, expected dividend yield of the underlying common stock, expected option life and expected volatility in the market value of the underlying common stock. The Company is also required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. Historical data was used to estimate pre-vesting forfeitures and record stock-based compensation expense only for those awards that are expected to vest. We used the following assumptions for options issued in the following periods:

	Three Months Ended
	29-Jun-08		1-Jul-07
Calculation of Fair Values - Assumptions Used:
Expected Volatility	66.46	%	65.00	%
Expected Life	4.75		5.00
Risk-Free Interest Rate	2.81	%	4.79	%
Expected Dividend Yield	None		None

Expected volatilities are based on the historical volatility of the Company’s common stock. The Company had significant historical data to help evaluate the expected lives of options in developing its assumption. The risk-free interest rate is based upon quoted market yields for United States Treasury debt securities. The expected dividend yield is based upon the Company’s history of having never issued a dividend and management’s current expectation of future action surrounding dividends.

7

BTU INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table summarizes the stock option activity during the six months ended June 29, 2008:

	Shares		Weighted- Average Exercise Price		Average Remaining Contractual Term	Aggregate Intrinsic Value
Options
Outstanding at December 31, 2007	756,466		$	6.66
Granted	446,295		$	10.06
Exercised	(30,015	)	$	3.39
Forfeited	(8,463	)	$	12.22
Outstanding at June 29, 2008	1,164,283		$	9.94	5.12	$	2,781,888
Exercisable at June 29, 2008	187,426		$	6.34	4.98	$	1,118,635

The weighted-average grant-date fair value of options granted during the six month period ended June 29, 2008 and July 1, 2007 was $5.55 and $6.00, respectively. The fair value of options exercised during the six month period ended June 29, 2008 and July 1, 2007 was $59,552 and $1,351,416, respectively.

As of June 29, 2008, there was $3,830,120 of total unrecognized compensation cost related to non-vested options granted under all of the Company’s option plans. That cost is expected to be recognized over a weighted average period of 2.1 years. The total fair value of shares vested during the six month period ended June 29, 2008 was $946,345.

On March 18, 2008, the Compensation Committee of the Board of Directors adopted a 2008 Key Employee Incentive Compensation Plan (the “Plan”). Approximately 20 key employees, including all of the Company’s executive officers, will participate in the Plan. Participants are eligible to earn a 2008 bonus equal to a percentage of their annual base salary ranging from 10% to 80%. The achievement of the bonus will be based solely on meeting targets in two performance measures: 1) net income per share, before tax, from continuing operations and 2) bookings and revenue for solar equipment. Any bonus earned under the Plan will be paid in the form of stock options issued under the Company’s 2003 Equity Incentive Plan. An initial option representing one-half of the maximum will be awarded currently, but the number of shares subject to the options will be reduced if the Company’s aggregate performance against the targets for 2008 is less than 100%. If aggregate performance exceeds 100%, participants will be entitled to an additional option award in 2009. In addition to the performance vesting, the options will be subject to time-based vesting requirements as set forth in the Plan.

As of June 29, 2008, there was $11,250 of unrecognized compensation costs related to restricted stock grants which were issued in a prior year. These grants have a remaining life of less than one year.

8

BTU INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(7) Revenue Recognition

For the three and six months ended June 29, 2008, there was $1,371,024 and $2,551,225, respectively, of revenue recognized using the percentage of completion method. For the three and six months ended July 1, 2007, there was $103,129 and $103,129, respectively, of revenue recognized using the percentage of completion method.

(8) Fair Value Disclosures

On January 1, 2008, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

SFAS No. 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, SFAS No. 157 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Assets Measured at Fair Value on a Recurring Basis at June 29, 2008

(Unaudited, dollars in thousands)

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at June 29, 2008
Derivative financial instruments	$	—	$	85	$	—	$	85

Included in “Other current assets” in the accompanying consolidated balance sheet. The market value of the non-deliverable foreign currency forward contract is determined by reference to widely published exchange rates, thus is established using Level II criteria.

In February 2008, the FASB proposed a one-year deferral of fair value measurement requirements for nonfinancial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis. Accordingly, the Company’s adoption of this standard in 2008 was limited to financial assets and liabilities, which affects the valuation of the Company’s derivative contracts.

As of June 29, 2008 the Company held a non-deliverable foreign currency forward contract. At December 31, 2007, the Company held a foreign currency contract which had been marked-to-market and carried in other current assets at $34 thousand, and an unrealized gain of $34 thousand was recorded to other income in 2007. That contract expired in January 2008, during which time the decline of the US dollar against the Chinese RMB generated a further gain in 2008 of $29 thousand. A new contract was entered into in January 2008 which generated an additional gain of $334 thousand in the first quarter of 2008. During the second quarter of 2008, the value of the Chinese RMB declined relative to the US dollar, generating a loss of $249 thousand on this contract. Of the total gain of $115 thousand recognized related to these foreign currency forward contracts in the first half of 2008, $85 thousand was unrealized as of June 29, 2008.

(9) Product Warranty Costs

The Company provides standard warranty coverage for parts and labor for 12 months and special extended material-only coverage on certain other products. The Company estimates and records an accrual for anticipated warranty claims based on revenue. The accrual for warranty covers the estimated costs of material, labor and travel. Actual warranty claims incurred are charged to the accrual. Factors that affect the Company’s product warranty liability include the number of installed units, the anticipated cost of warranty repairs and historical and anticipated rates of warranty claims.

The following table reflects changes in the Company’s accrued warranty account during the six months ended June 29, 2008 (in thousands):

	Six Months Ended June 29, 2008
Beginning balance, December 31, 2007	$	638
Plus: accruals related to new sales		242
Less: warranty claims incurred		(298	)
Ending balance, June 29, 2008	$	582

9

BTU INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(10) Recent Accounting Pronouncements

In February 2008, the FASB issued FASB Staff Position on Statement 157 “Effective Date of FASB Statement No. 157” (FSP 157-2). FSP 157-2 delays the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed on a recurring basis, to fiscal years beginning after November 15, 2008. The adoption of FSP 157-2 is not expected to have a significant impact on our financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (SFAS 141R). SFAS 141R will significantly change the accounting for business combinations in a number of areas including the treatment of contingent consideration, contingencies, acquisition costs, in-process research and development, and restructuring costs. In addition, under SFAS 141R, changes in deferred tax asset valuation allowances and acquired income tax uncertainties in a business combination after the measurement period will impact the provision for income taxes. SFAS 141R is effective for fiscal years beginning after December 15, 2008, which is the Company’s fiscal year beginning January 1, 2009, and will impact the accounting for any business combinations entered into after the effective date.

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin (ARB) No. 51,” (SFAS 160) which changes the accounting and reporting for minority interests. Minority interests will be re-characterized as non-controlling interests and will be reported as a component of equity separate from the parent’s equity, and purchases or sales of equity interests that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the non-controlling interest will be included in consolidated net income on the face of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. SFAS 160 will apply prospectively, except for the presentation and disclosure requirements, which will apply retrospectively. SFAS 160 is effective for periods beginning on or after December 15, 2008 and will impact the accounting for non-controlling interests after the effective date.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133”. SFAS 161 will require companies to disclose their objectives and strategies for using derivative instruments, whether or not their derivatives are designated as hedging instruments. The new pronouncement requires disclosure of the fair value of derivative instruments by primary underlying risk exposures (e.g., interest rate, credit, foreign exchange rate, combination of interest rate and foreign exchange rate, or overall price). It also requires detailed disclosures about the income statement impact of derivative instruments by designation as fair-value hedges, cash-flow hedges, or hedges of the foreign-currency exposure of a net investment in a foreign operation. SFAS 161 will also require disclosure of information that will enable financial statement users to understand the level of derivative activity entered into by the company. The principles of SFAS 161 may be applied on a prospective basis and are effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Early application is encouraged. For the Company, SFAS 161 will be effective at the beginning of its 2009 fiscal year. Management is currently evaluating the impact of adopting SFAS 161 on the Company’s financial statements.

(11) Segment Reporting

Segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker in deciding how to allocate resources and in assessing performance. The Company operates as a single business segment called thermal processing capital equipment.

The thermal processing capital equipment segment consists of the designing, manufacturing, selling and servicing of thermal processing equipment and related process controls for use in the electronics, energy

10

BTU INTERNATIONAL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

generation and other industries. This business segment includes the supply of equipment used in a number of process steps to produce electronic devices such as: solder reflow systems used for surface mount applications in printed circuit board assembly; integrated circuit packaging and sealing; and processing multi-chip modules. In addition, the thermal process equipment is used in several process steps for alternative energy generation such as: metallization and diffusion of photovoltaic solar cells; sintering nuclear fuel for commercial power generation; and the doping and firing of solid oxide fuel cells. The business segment’s customers are multi-national electronics manufacturers and electronic manufacturing service providers, as well as manufacturers of fuel and components used to generate energy.

Tangible Long-lived assets by geographic location are as follows (in thousands):

	June 29, 2008		December 31, 2007
North America	$	5,087	$	5,002
Asia Pacific		868		534
	$	5,955	$	5,536

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

BTU International, founded in 1950 and headquartered in Billerica, Massachusetts, is a supplier of advanced thermal processing equipment to the electronics manufacturing and energy generation markets. We manufacture reflow furnaces for printed circuit board assembly as well as semiconductor wafer-level and die-level packaging equipment. In addition, we participate in the fast growing alternative energy market for which we provide thermal process equipment for the manufacturing of solar cells, fuel cells and nuclear fuels.

Our customers require high throughput, high yield and highly reliable thermal processing systems with tightly controlled temperature and atmospheric parameters. Our convection solder reflow systems are used to attach electronic components to the printed circuit boards, primarily in the advanced high-density surface mount segments of this market. In the semiconductor market, we participate in both wafer level and die level packaging, where our thermal processing systems are used to connect and seal integrated circuits into a package. Our customers in the energy generation market use our thermal systems to process silicon, ceramics and metal alloys which are used in solar cell, fuel cell and nuclear fuel manufacturing applications.

11

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, selected items in our statements of operations (in thousands) expressed as a percentage of net sales and percent change:

	Three Months Ended								Percent change
	June 29, 2008				July 1, 2007
	($ in thousands)
			% of net sales				% of net sales
Net sales	$	20,384	100.0	%	$	13,770	100.0	%	48.0	%
Cost of goods sold		11,064	54.3	%		7,833	56.9	%	41.2	%
Gross profit		9,320	45.7	%		5,937	43.1	%	57.0	%
Selling, general and administrative expenses		6,401	31.4	%		4,121	29.9	%	55.3	%
Research, development and engineering expenses		1,787	8.8	%		1,524	11.1	%	17.3	%
Operating income		1,132	5.6	%		292	2.1	%	287.7	%
Income before provision for income taxes		641	3.1	%		227	1.6	%	182.4	%
Net income	$	288	1.4	%	$	206	1.5	%	39.8	%
	Six Months Ended								Percent change
	June 29, 2008				July 1, 2007
	($ in thousands)
			% of net sales				% of net sales
Net sales	$	37,003	100.0	%	$	28,934	100.0	%	27.9	%
Cost of goods sold		21,060	56.9	%		16,434	56.8	%	28.1	%
Gross profit		15,943	43.1	%		12,500	43.2	%	27.5	%
Selling, general and administrative expenses		11,313	30.6	%		8,665	29.9	%	30.6	%
Research, development and engineering expenses		3,390	9.2	%		2,895	10.0	%	17.1	%
Operating income		1,240	3.4	%		940	3.2	%	31.9	%
Income before provision for income taxes		793	2.1	%		961	3.3	%	(17.5	)%
Net income	$	387	1.0	%	$	865	3.0	%	(55.3	)%

Net Sales. Net sales increased by 48% and 28% in the second quarter and six month periods of 2008 respectively, as compared to the same periods in 2007. The primary factor for the improved net sales was increased demand for our products designed for the alternative energy markets, while for the first six months of 2008, the sales to the Company’s electronic markets also showed improvement over the same period last year.

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The following table sets forth, for the periods indicated, select geographical data (in thousands) expressed in dollars and as a percentage of total revenue. The values shown represent the amount sold into each of the listed geographical areas.

	Three Months Ended								Six Months Ended
	June 29 , 2008				July 1, 2007				June 29, 2008				July 1, 2007
	$		% of revenues		$		% of revenues		$		% of revenues		$		% of revenues
United States	$	4,082	20.0	%	$	3,301	24.0	%	$	8,126	22.0	%	$	5,867	20.3	%
Europe, Near East		2,616	12.8	%		2,736	19.9	%		6,112	16.5	%		5,902	20.4	%
Asia Pacific		12,794	62.8	%		6,931	50.3	%		21,366	57.7	%		14,920	51.6	%
Other Americas		892	4.4	%		802	5.8	%		1,399	3.8	%		2,245	7.8	%
Total Revenue	$	20,384			$	13,770			$	37,003			$	28,934

In the first six months of 2008 as compared to the same periods in 2007, the total revenue has increased in each of our significant geographical areas. The largest geographical increase is in our Asia Pacific region where the increase was primarily from the Company’s alternative energy products.

Gross Profit. In the second quarter and first six months of 2008 as compared to the same periods in 2007, gross margin has improved in line with the increase in net sales. The year to date gross margin as a percentage of net sales for 2008 compared to 2007 is relatively unchanged.

Selling, General and Administrative. In the second quarter of 2008 as compared to the same period in 2007, the Company’s SG&A costs as a percentage of net sales increased from 29.9% to 31.4%. The increased costs were in support of the second quarter year over year 48% increase in revenue along with the announced intention to increase service, sales, marketing and administrative support for our continued expansion into the alternative energy markets. The increase in the six month year to date SG&A spending for 2008 as compared to the same period in 2007 is for the same reasons as stated above for the second quarter.

Research, Development and Engineering. In the second quarter and first six months of 2008 the Company has increased its spending on RD&E versus the same periods in 2007 primarily for its development efforts towards new products for our alternative energy markets.

Operating Income. Notwithstanding the increase in operating costs, operating income, for the second quarter and first six months of 2008 as compared with the same periods of 2007, increased as a result of the increased revenue.

Foreign Exchange (loss). The $0.4 million foreign exchange loss for the second quarter of 2008 as compared to a loss of $0.2 million in the same period last year is due primarily to a loss of $250 thousand on a foreign currency forward contract. The $0.3 million foreign exchange loss for the six months year to date 2008 is approximately the same as recorded the same period in 2007.

Income Taxes. In the second quarter and for the first six months of 2008, we estimated our annual effective income tax rate for each corporate entity and applied this rate to the year to date profits before income tax for each of our profitable corporations. In addition, we calculated the estimated withholding tax on royalty and other taxable corporate services charged in the first six months of 2008 to our China operations. The results were recorded as our tax provisions.

The effective income tax rate was 55% for the three months ended June 29, 2008, compared to 9% for the three months ended July 1, 2007. The effective income tax rate for the six months ended June 29, 2008 and July 1, 2007 was 51% and 10%, respectively. The change in the Company’s effective income tax rate is primarily attributable to increases in income tax rates and the inclusion of the withholding tax in China as well as changes to the ratio of current tax provision to consolidated pre-tax income, which is in-turn significantly influenced by income and losses at foreign and domestic subsidiaries.

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The Company has federal and state net operating loss carry forwards of approximately $7 million. The Company has recorded a full valuation allowance to offset the deferred tax asset arising as a result of these loss carry forwards because of uncertainty surrounding realization. Our statutory federal income tax rate is 34.0%.

LIQUIDITY AND CAPITAL RESOURCES

As of June 29, 2008, the Company had $27.6 million in cash and cash equivalents.

Cash generated by Operations:

During the six months ended June 29, 2008, the Company generated net cash resources of approximately $2.9 million from operating activities. This source of cash was primarily the result of an increase in accounts payable and accrued expenses of $3.2 million, net profit of $0.4 million, non-cash stock-based compensation of $0.5 million, depreciation and amortization of $0.9 million, and was offset by an increase in inventories of $1.0 million, accounts receivable of $0.7 million, and other current assets of $0.2 million.

Cash Used in Investing Activities:

For the six months ended June 29, 2008, the Company used $0.9 million in investing activities, the same amount used in the comparable period of 2007. Approximately $1.0 million was related to capital expenditures in the first half of 2008, compared to $0.9 million in 2007. Offsetting the capital expenditures in the first half of 2008 was $60 thousand received in settlement of a foreign currency forward contract.

Cash provided by (used in) financing activities:

The Company used approximately $39 thousand in financing activities in the first six months of 2008, compared to generating $0.2 million in the first six months of the prior year. In the first six months of 2008, approximately $0.1 million was related to principal payments on loans and capital leases, compared to approximately $0.2 million in 2007. In 2008, approximately $93 thousand was generated through the exercise of stock options by employees, compared to $328 thousand in the comparable period of 2007.

On March 30, 2006, the Company entered into a new mortgage note that is secured by its real property in Billerica, MA. The amount of the mortgage note executed was $10 million. The mortgage note requires monthly payments of $76,280, which includes interest calculated at the rate of 6.84% per annum. This mortgage note payable has a balloon payment of $6.8 million due and payable at maturity on December 23, 2015. The mortgage note had an outstanding balance at June 29, 2008 of approximately $9.4 million.

On March 1, 2007, the Company entered into an amended revolving loan agreement with a bank that allows for unsecured aggregate borrowings, including letters of credit, up to a maximum of $15 million against a borrowing base of accounts receivable, inventory and fixed assets. The Company may elect to borrow at interest rates related to the bank’s prime rate or LIBOR. This loan agreement extends to December 31, 2010 and is subject to maintaining certain financial covenants, with which the Company is in full compliance. At June 29, 2008, the borrowing base would support the maximum borrowings of $15 million, and there were no borrowings outstanding under the loan agreement.

As of June 29, 2008, the Company has no material commitments relating to capital expenditures.

The Company’s business forecasts project that our cash position, cash flow and our working capital line of credit will be sufficient to meet our corporate, operating and capital requirements through 2008.

OTHER MATTERS

Given that the Company invoices the vast majority of its sales in U.S. dollars and that the Company has a substantial manufacturing presence in China, and that sales into China are primarily in U.S. dollars, should the U.S. dollar decline in relation to the Chinese RMB the Company’s financial results will continue to be adversely affected.

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The impact of inflation in the first two quarters of 2008 had no material impact on our business and financial results versus costs in the fourth quarter of 2007.

FORWARD LOOKING STATEMENTS

This Report, other than historical financial information, includes forward-looking statements that involve known and unknown risks and uncertainties, including quarterly fluctuations in results. In particular, our forecast of the sufficiency of capital resources through 2008 is a forward-looking statement. Such statements are made pursuant to the “safe harbor” provisions under the securities laws, and are based on the assumptions and expectations of the Company’s management at the time such statements are made. Important factors that could cause actual results to differ include the cyclicality of our business; our shift of manufacturing to China; a failure to maintain cost reductions; risks related to sales to the energy generation market; a failure to increase sales across our industries; a failure to effectively develop and market our products; changes in the economic, political, legal and business environments in the countries in which we operate; a failure of our business systems; the time and costs related to complying with the requirements of the Sarbanes-Oxley Act; and the loss of key personnel. Actual results may vary materially. Accordingly, you should not place undue reliance on any forward-looking statements. Unless otherwise required by law, the Company disclaims any obligation to revise or update such forward-looking statements in order to reflect future events or developments.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from changes in interest rates primarily through our revolving loan agreement. As of June 29, 2008, we had no debt outstanding under our revolving loan agreement.

A significant percentage of consolidated revenues are derived from foreign sources. Accordingly, our financial results are impacted by changes in foreign currency exchange rates with respect to the U.S. dollar.

Item 4. CONTROLS AND PROCEDURES

1. Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company’s management carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer and the Chief Accounting Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) as of June 29, 2008, pursuant to the evaluation of these controls and procedures required by Rule 13a-15 of the Securities Exchange Act of 1934.

Based upon that evaluation, management concluded that as of June 29, 2008 our disclosure controls and procedures were effective.

2. Changes in Internal Control over Financial Reporting

Effective January 1, 2008, the Company, at its Billerica, Massachusetts headquarters, moved most accounting processes to a new enterprise reporting programming environment. Many of the financial processes and procedures related to producing financial statements and disclosures prior to that date have

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changed as a result. Management is engaged in re-documenting these processes and developing testing procedures to be able to demonstrate the effectiveness of the new controls as required by the Sarbanes-Oxley Act of 2002.

PART II. OTHER INFORMATION

Item 1A. RISK FACTORS

Risk factors are disclosed in the Company’s 2007 Annual Report on Form 10-K. During the quarter ended June 29, 2008, there were no material changes to the risk factors for the business.

Item 5. OTHER INFORMATION

On and effective August 7, 2008, the Board of Directors (the “Board”) of the Company amended and restated the Company’s by-laws (the “By-Laws” and as amended and restated, the “Amended and Restated By-Laws”). The following is a summary of the material changes effected by adoption of the Amended and Restated By-Laws:

Section 2.2 (Special Meetings): The section was amended to reflect that only the president of the Company or the Board may call a special meeting of stockholders. The By-Laws had previously allowed holders of at least ten percent of the Company’s outstanding capital stock to call a special meeting.

Section 2.4 (Remote Communications): The section was added to allow the Board to determine that shareholders and proxy holders not physically present at a meeting may participate and be deemed present at a stockholder meeting via remote communications.

Section 2.5 (Notice of Meetings): The section was amended to provide that notice may be given to a stockholder by any electronic means to which that stockholder has consented.

Section 2.6 (Nomination of Directors): The section was added to require that a stockholder proposing to nominate persons for election to the board of directors must give the Company timely notice thereof in writing. The notice is required to include information about the proposing stockholder and certain affiliated stockholders, including their ownership interests in the Company’s capital stock and any derivative positions held or beneficially held or any hedging transactions entered into by them.

Section 2.7 (Advance Notice of Business at Annual Meetings): The section was added to require that a stockholder proposing to bring business before the annual meeting give the Company timely notice thereof in writing. The notice shall include a brief description of the business desired to be brought and the reasons for conducting such business at the annual meeting and information about the proposing stockholder and certain affiliated stockholders, including their ownership interests in the Company’s capital stock and any derivative positions held or beneficially held or any hedging transactions entered into by them.

Section 2.10 (Action without Meetings) (formerly Section 2.8): The section was amended to reflect that stockholders may not take any action by written consent in lieu of a meeting, to conform to the provisions in the Company’s certificate of incorporation.

Section 3.1 (Number): The section was amended to provide that the Board has the power to set the number of directors. The By-Laws previously required that the number of directors be between one and seven, as determined by the stockholders at the annual meeting.

Section 3.5 (Committees): The section was amended to conform to the provisions of Delaware General Corporation Law, which allows a committee to exercise all the powers of the Board, unless otherwise prohibited by law, by the Company’s certificate of incorporation or by the Amended and Restated By-Laws.

Sections 3.8 (Notice), 3.11 (Action Without a Meeting), The Amended and Restated By-Laws change the reasonable notice requirement for meetings of the Board from three days to 24 hours and allow such notice to

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be sent by telecopy or electronic mail, in addition to hand-delivery, mail and telephone (which were previously allowed). The Amended and Restated By-Laws allow a written consent of the Board to be sent through electronic transmission.

Section 7.1 (Stock Certificates) and Section 8.1 (Transfer on Books): These sections were amended to grant the Board the authority to issue uncertificated shares of the Company’s capital stock and to outline the procedure for the transfer of uncertificated shares on the books of the Company.

Section 13 (Indemnification): The section was amended to add the following provisions: (i) the Company shall indemnify a director or officer in connection with a proceeding initiated by such person only if such proceeding was approved by the Board; (ii) the Company shall advance the fees and expenses incurred by a director in defending any proceeding prior to final disposition, provided that the director undertake to repay such amount if it is ultimately determined that he is not entitled to indemnification; and (iii) any repeal or modification of Section 13 shall not affect any rights or protection of directors or officers with respect to acts or omissions which occurred prior to such repeal or modification.

Section 14 (Voting of Securities): The section was added to authorize certain of the Company’s officers to act as attorney-in-fact for the Company at any meeting of stockholders or owners of other interests of any other corporation or organization the securities of which may be held by the Company.

In addition to the amendments described above, the following sections of the Amended and Restated By-Laws include certain other changes to clarify language and to comply or be consistent with Delaware General Corporation Law and various technical edits and non-substantive changes: Sections 2.1 (Annual Meeting), 2.12 (Inspectors), 2.13 (List of Shareholders), 3.6 (Regular Meetings), 4.4 (Tenure), 4.5 (Chairman of the Board of Directors), 5.1 (Resignations and Removals), 6.1 (Vacancies) and 8.2 (Record Date and Closing Transfer Books).

The Amended and Restated By-Laws of BTU International, Inc. are filed herewith as Exhibit 3.1 and incorporated herein by reference.

Item 6. EXHIBITS

(a) Exhibits

Exhibit   3.1 - Amended and Restated By-Laws

Exhibit 31.1 - Section 302 Certification

Exhibit 31.2 - Section 302 Certification

Exhibit 32.1 - Section 906 Certification

Exhibit 32.2 - Section 906 Certification

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SIGNATURES

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

	BTU INTERNATIONAL, INC.
DATE: August 8, 2008	BY:	/s/ Paul J. van der Wansem
		Paul J. van der Wansem
		President, Chief Executive Officer (principal executive officer) and Chairman of the Board of Directors
DATE: August 8, 2008	BY:	/s/ Thomas P. Kealy
		Thomas P. Kealy
		Vice President, Corporate Controller and Chief Accounting Officer (principal financial and accounting officer)

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EX-3.1

EXHIBIT 3.1

Amended and Restated

By-Laws

of

BTU International, Inc.

Section 1. CERTIFICATE OF INCORPORATION

AND BY-LAWS

1.1. These by-laws are subject to the certificate of incorporation of the corporation. In these by-laws, references to the certificate of incorporation and by-laws mean the provisions of the certificate of incorporation and the by-laws as from time to time in effect.

Section 2. STOCKHOLDERS

2.1. Annual Meeting. The annual meeting of stockholders shall be held at such date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect a board of directors and transact such other business as may be required by law or these by-laws or as may be specified by the president or by a majority of the directors then in office and of which notice was given in the notice of the meeting.

2.2. Special Meetings. A special meeting of the stockholders may be called at any time by the president or by the board of directors. Business transacted at any special meeting shall be limited to the purpose stated in the notice.

2.3. Place of Meeting. All meetings of the stockholders for the election of directors or for any other purpose shall be held at such place within or without the State of Delaware as may be determined from time to time by the president or the board of directors. Any adjourned session of any meeting of the stockholders shall be held at the place designated in the vote of adjournment.

2.4. Remote Communication. For the purposes of these by-laws, if authorized by the board of directors in its sole discretion, and subject to such guidelines and procedures as the board of directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication: (a) participate in a meeting of stockholders and (b) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication.

2.5. Notice of Meetings. Except as otherwise provided by law, a written notice of each meeting of stockholders stating the place, if any, day and hour thereof and, in the case of a special meeting, the purposes for which the meeting is called, and the means of remote communication, if any, by which stockholders or proxyholders may be deemed to be present and vote at such meeting, shall be given not less then ten nor more than sixty days before the

meeting, to each stockholder entitled to vote thereat, and to each stockholder who, by law, by the certificate of incorporation or by these by-laws, is entitled to notice. Notice to stockholders may be given in writing or by electronic transmission as permitted in this Section 2.5. If given in writing, notice may be given personally to each stockholder by leaving such notice with him or at his residence or usual place of business, or by depositing it in the United States mail, postage prepaid, and addressed to such stockholder at his address as it appears in the records of the corporation. Such notice shall be given by the secretary or by an officer or person designated by the board of directors. As to any adjourned session of any meeting of stockholders, notice of the adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment was taken except that if the adjournment is for more than thirty days or if after the adjournment a new record date is set for the adjourned session, notice of any such adjourned session of the meeting shall be given in the manner heretofore described. No notice of any meeting of stockholders or any adjourned session thereof need be given to a stockholder if a written waiver of notice or waiver by electronic transmission, executed or sent before or after the meeting or such adjourned session by such stockholder is filed with the records of the meeting or if the stockholder attends such meeting without objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the stockholders or any adjourned session thereof need be specified in any written waiver of notice or waiver by electronic transmission.

Any notice to stockholders given by the corporation shall be effective if given by a form of electronic transmission to which the stockholder to whom the notice is given has consented.

2.6. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors at any annual meeting of stockholders. Nominations of persons for election as directors may be made only by or at the direction of the board of directors, or in compliance with the notice procedures set forth in this Section 2.6 by a stockholder entitled to vote for the election of directors at the meeting. Such nominations, other than those made by or at the direction of the board of directors, shall be made pursuant to timely notice in writing to the chairman of the board, if any, the president or the secretary. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the corporation by the close of business on the Advance Notice Date. For the purposes of these by-laws, the “Advance Notice Date” shall be one of the following:

(a) the date not less than 45 or more than 75 days before the anniversary date of the prior year’s annual meeting, if (i) there was an annual meeting in the prior year and (ii) the date of the current year’s annual meeting is not more than 30 days before or after the anniversary date of the prior year’s annual meeting; or

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(b) if clause (a) does not apply, the date 90 days prior to the date of the current year’s annual meeting or the 10th day following the day on which public announcement of the date of the current year’s annual meeting is given or made.

Such stockholder’s notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of capital stock of the corporation that are beneficially owned by the person and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any successor provision thereto (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (b) as to the stockholder giving the notice, (i) the name and record address of such stockholder and any Stockholder Associated Person (defined below), (ii) the class and number of shares of capital stock of the corporation that are held of record or beneficially owned by such stockholder and by any Stockholder Associated Person and (iii) any derivative positions held or beneficially held by the stockholder and any Stockholder Associated Person and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding has been made the effect or intent of which is to increase or decrease the voting power of, such stockholder or any Stockholder Associated Person with respect to the corporation’s securities.

For purposes of these by-laws, “Stockholder Associated Person” of any stockholder means (i) any “affiliate” or “associate” (as those terms are defined in Rule 12b-2 under the Exchange Act) of the stockholder who owns beneficially or of record any capital stock or derivative securities of the corporation and (ii) any person acting in concert with such stockholder or any affiliate or associate of such stockholder with respect to the capital stock of the corporation.

Notwithstanding anything in this by-law to the contrary, in the event that the number of directors to be elected to the board of directors is increased and there is no public announcement naming all the corporation’s nominees for director or specifying the size of the increased board of directors at least 55 days prior to the anniversary of the prior year’s annual meeting, a stockholder’s notice required by this by-law shall also be considered timely, but only with respect to nominees for any new positions created by that increase, if it shall be delivered to the secretary at the principal executive offices of the corporation by the close of business on the 10th day following the day on which such public announcement is first made by the corporation.

For purposes of this Section 2.6, “public announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 15 or 15(d) of the Exchange Act.

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The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if the chairman should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded.

2.7. Advance Notice of Business at Annual Meetings. At any annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be brought properly before an annual meeting, business must be either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the president or the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be brought properly before an annual meeting by a stockholder, whether through inclusion in the Company’s proxy materials pursuant to Rule 14a-8 or through the stockholder’s independent proxy solicitation, the stockholder must have given timely notice thereof in writing to the chairman of the board, if any, the president or the secretary. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the corporation by the close of business on the Advance Notice Date as defined in Section 2.6 hereof. A stockholder’s notice shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and record address of the stockholder proposing such business and any Stockholder Associated Person, (c)(i) the class and number of shares of the corporation that are held of record or beneficially owned by the stockholder and by any Stockholder Associated Person and (ii) any derivative positions held or beneficially held by the stockholder and any Stockholder Associated Person and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding has been made the effect or intent of which is to increase or decrease the voting power of, such stockholder or any Stockholder Associated Person with respect to the corporation’s securities and (d) any material interest of the stockholder or any Stockholder Associated Person in such business.

Notwithstanding anything in these by-laws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 2.7, provided, however, that nothing in this Section 2.7 shall be deemed to preclude discussion by any stockholder of any business properly brought before the annual meeting in accordance with said procedure.

The chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the foregoing procedure, and if the chairman should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

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2.8. Quorum of Stockholders. At any meeting of the stockholders, whether an original or an adjourned session, a quorum shall consist of a majority in interest of all stock issued and outstanding and entitled to vote at the meeting, except in any case where a larger quorum is required by law, by the certificate of incorporation or by these by-laws. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present.

2.9. Action by Vote. When a quorum is present at any meeting, whether an original or an adjourned session, a plurality of the votes properly cast for election to any office shall elect to such office and a majority of the votes properly cast upon any question other than an election to an office shall decide the question, except when a larger vote is required by law, by the certificate of incorporation or by these by-laws. No ballot shall be required for any election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election.

2.10. Action without Meetings. At any time during which the common stock of the corporation is registered under Section 12 of the Exchange Act, any action by the holders of the common stock must be taken at an annual or special meeting and may not be taken by written consent.

2.11. Proxy Representation. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, objecting to or voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. The authorization of a proxy may but need not be limited to specified action, provided, however, that if a proxy limits its authorization to a meeting or meetings of stockholders, unless otherwise specifically provided such proxy shall entitle the holder thereof to vote at any adjourned session but shall not be valid after the final adjournment thereof.

2.12. Inspectors. The directors or the person presiding at the meeting may, and shall if required by law, appoint one or more inspectors of election and any substitute inspectors to act at the meeting or any adjournment thereof. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents,

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determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any fact found by them.

2.13. List of Stockholders. The secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in his name. Such list shall be open to examination by any stockholder, for any purpose germane to the meeting, during ordinary business hours, for at least ten days prior to the meeting at the corporation’s principal place of business, and shall also be produced at the time and place of the meeting during the whole time thereof and subject to the inspection of any stockholder who may be present. The stock ledger shall be the only evidence as to who are stockholders entitled to examine such list or to vote in person or by proxy at such meeting.

Section 3. BOARD OF DIRECTORS

3.1. Number. The number of directors shall be one or more as determined by the board of directors. Directors need not be stockholders.

3.2. Tenure. Except as otherwise provided by law, by the certificate of incorporation or by these by-laws, each director shall hold office until his successor is elected and qualified, or until he sooner dies, resigns, is removed or becomes disqualified.

3.3. Powers. The business of the corporation shall be managed by or under the direction of the board of directors who shall have and may exercise all the powers of the corporation and do all such lawful acts and things as are not by law, the certificate of incorporation or these by-laws directed or required to be exercised or done by the stockholders.

3.4. Vacancies. Vacancies and any newly created directorships resulting from any increase in the number of directors may be filled by vote of the stockholders at a meeting called for the purpose, or by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. When one or more directors shall resign from the board, effective at a future date, a majority of the directors then in office, including those who have resigned, shall have power to fill such vacancy or vacancies, the vote or action by writing thereon to take effect when such resignation or resignations shall become effective. The directors shall have and may exercise all their powers notwithstanding the existence of one or more vacancies in their number, subject to any requirements of law or of the certificate of incorporation or of these by-laws as to the number of directors required for a quorum or for any vote or other actions.

3.5. Committees. The board of directors may, by vote of a majority of the whole board, (a) designate, change the membership of or terminate the existence of any committee or

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committees, each committee to consist of one or more of the directors; (b) designate one or more directors as alternate members of any such committee who may replace any absent or disqualified member at any meeting of the committee; and (c) determine the extent to which each such committee shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, including the power to authorize the seal of the corporation to be affixed to all papers which require it; excepting, however, those powers that by law, by the certificate of incorporation or by these by-laws they are prohibited from so delegating. In the absence or disqualification of any member of such committee, the member or members present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the board of directors to act at the meeting in his place. Except as the board of directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the board or such rules, its business shall be conducted as nearly as may be in the same manner as is provided by these by-laws for the conduct of business by the board of directors. Each committee shall keep regular minutes of its meetings and report the same to the board of directors upon request.

3.6. Regular Meetings. Regular meetings of the board of directors may be held without call or notice at such place within or without the State of Delaware and at such times as the board may from time to time determine. A regular meeting of the directors may be held without call or notice immediately after and at the same place as the annual meeting of stockholders.

3.7. Special Meetings. Special meetings of the board of directors may be held at any time and at any place within or without the State of Delaware designated in the notice of the meeting, when called by the president, or by one-third or more in number of the directors, reasonable notice thereof being given to each director by the secretary or by the president or any one of the directors calling the meeting.

3.8. Notice. It shall be reasonable and sufficient notice to a director to provide notice in writing (which may include by hand delivery, mail, telecopy or electronic mail) or by telephone at least 24 hours before the meeting addressed to him at his usual or last known business or residence address. Notice of a meeting need not be given to any director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any director who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him. Neither notice of a meeting nor a waiver of a notice need specify the purposes of the meeting.

3.9. Quorum. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, at any meeting of the directors a majority of the directors then in office shall constitute a quorum; a quorum shall not in any case be less than one-third of the total number of directors constituting the whole board. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice.

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3.10. Action by Vote. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, when a quorum is present at any meeting the vote of a majority of the directors present shall be the act of the board of directors.

3.11. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the board of directors or a committee thereof may be taken without a meeting if all the members of the board or of such committee, as the case may be, consent thereto in writing or by electronic transmission, and such writing or writings or electronic transmissions are filed with the records of the meetings of the board or of such committee. Such consent shall be treated for all purposes as the act of the board or of such committee, as the case may be.

3.12. Participation in Meetings by Conference Telephone. Members of the board of directors, or of any committee thereof, may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment that enables all persons participating in the meeting to hear each other. Such participation shall constitute presence in person at such meeting.

3.13. Compensation. In the discretion of the board of directors, each director may be paid such fees for his services as director and be reimbursed for his reasonable expenses incurred in the performance of his duties as director as the board of directors from time to time may determine. Nothing contained in this Section shall be construed to preclude any director from serving the corporation in any other capacity and receiving reasonable compensation therefor.

3.14. Interested Directors and Officers.

(a) No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of the corporation’s directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if:

(1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or

(2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or

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(3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee thereof, or the stockholders.

(b) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction.

Section 4. OFFICERS AND AGENTS

4.1. Enumeration; Qualification. The officers of the corporation shall be a president, a treasurer, a secretary and such other officers, if any, as the board of directors from time to time may in its discretion elect or appoint including without limitation a chairman of the board, one or more vice presidents and a controller. The corporation may also have such agents, if any, as the board of directors from time to time may in its discretion choose. Any officer may be but none need be a director or stockholder. Any two or more offices may be held by the same person. Any officer may be required by the board of directors to secure the faithful performance of his duties to the corporation by giving bond in such amount and with sureties or otherwise as the board of directors may determine.

4.2. Powers. Subject to law, to the certificate of incorporation and to the other provisions of these by-laws, each officer shall have, in addition to the duties and powers herein set forth, such duties and powers as are commonly incident to his office and such additional duties and powers as the board of directors may from time to time designate.

4.3. Election. The officers may be elected by the board of directors at their first meeting following the annual meeting of the stockholders or at any other time. At any time or from time to time the directors may delegate to any officer their power to elect or appoint any other officer or any agents.

4.4. Tenure. Each officer shall hold office until his respective successor is chosen and qualified unless a shorter period shall have been specified by the terms of his election or appointment, or in each case until he sooner dies, resigns, is removed or becomes disqualified. Each agent shall retain his authority at the pleasure of the directors, or the officer by whom he was appointed or by the officer who then holds agent appointive power.

4.5. Chairman of the Board of Directors, President and Vice President. The chairman of the board (if any) shall have such duties and powers as shall be designated from time to time by the board of directors. If there is a chairman of the board, he shall preside at all meetings of the stockholders and of the board of directors at which he is present, except as otherwise voted by the board of directors. If there is no chairman of the board or in the absence of the chairman of the board, the president shall preside at all meetings of the stockholders and of the board of directors at which he is present, except as otherwise voted by the board of directors.

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Unless the board of directors has designated another officer as chief executive officer, the president shall be the chief executive officer and shall have direct charge of all business operations of the corporation and, subject to the control of the directors, shall have general supervision over the entire business of the corporation. The president shall preside at all meetings of the stockholders and of the directors at which he is present.

Any vice presidents shall have such duties and powers as shall be designated from time to time by the board of directors or by the president.

4.6. Treasurer and Assistant Treasurers. The treasurer shall be the chief financial officer of the corporation and shall be in charge of its funds and valuable papers, and shall have such other duties and powers as may be designated from time to time by the board of directors or by the president. If no controller is elected, the treasurer shall also have the duties and powers of the controller.

Any assistant treasurers shall have such duties and powers as shall be designated from time to time by the board of directors, the president or the treasurer.

4.7. Controller and Assistant Controllers. If a controller is elected, he shall be the chief accounting officer of the corporation and shall be in charge of its books of account and accounting records, and of its accounting procedures. He shall have such other duties and powers as may be designated from time to time by the board of directors, the president or the treasurer.

Any assistant controller shall have such duties and powers as shall be designated from time to time by the board of directors, the president, the treasurer or the controller.

4.8. Secretary and Assistant Secretaries. The secretary shall record all proceedings of the stockholders, of the board of directors and of committees of the board of directors in a book or series of books to be kept therefor and shall file therein all writings of, or related to action by stockholder or director consent. In the absence of the secretary from any meeting, an assistant secretary, or if there be none or he is absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof. Unless a transfer agent has been appointed the secretary shall keep or cause to be kept the stock and transfer records of the corporation, which shall contain the names and record addresses of all stockholders and the number of shares registered in the name of each stockholder. He shall have such other duties and powers as may from time to time be designated by the board of directors or the president.

Any assistant secretaries shall have such duties and powers as shall be designated from time to time by the board of directors, the president or the secretary.

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Section 5. RESIGNATIONS AND REMOVALS

5.1. Any director or officer may resign at any time by delivering his resignation in writing to the president, or the secretary or to a meeting of the board of directors. Such resignation shall be effective upon receipt unless specified to be effective at some other time, and without in either case the necessity of its being accepted unless the resignation shall so state. A director (including persons elected by directors to fill vacancies in the board) may be removed from office with or without cause by the vote of the holders of a majority of the shares issued and outstanding and entitled to vote in the election of directors. The board of directors may at any time remove any officer either with or without cause. The board of directors may at any time terminate or modify the authority of any agent. No director or officer resigning and (except where a right to receive compensation shall be expressly provided in a duly authorized written agreement with the corporation) no director or officer removed, shall have any right to any compensation as such director or officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise; unless in the case of a resignation, the directors, or in the case of removal, the body acting on the removal, shall in their or its discretion provide for compensation.

Section 6. VACANCIES

6.1. The board of directors may fill any vacancy occurring in any office for any reason. Each such successor shall hold office for the unexpired term, and in the case of the president, the treasurer and the secretary until his successor is chosen and qualified, or in each case until he sooner dies, resigns, is removed or becomes disqualified. Any vacancy of a directorship shall be filled as specified in Section 3.4 of these by-laws.

Section 7. CAPITAL STOCK

7.1. Stock Certificates. The shares of the corporation shall be represented by certificates, provided that the board of directors may provide by resolution or resolutions that some or all of any or all classes or series of stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock represented by certificates shall be entitled to a certificate stating the number and the class and the designation of the series, if any, of the shares held by him, in such form as shall, in conformity to law, the certificate of incorporation and the by-laws, be prescribed from time to time by the board of directors. Such certificate shall be signed by the chairman or vice chairman of the board of directors or the president or a vice president and by the treasurer or an assistant treasurer or by the secretary or an assistant secretary. Any of or all the signatures on the certificate may be a facsimile. In case an officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the time of its issue.

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7.2. Loss of Certificates. In the case of the alleged theft, loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms, including receipt of a bond sufficient to indemnify the corporation against any claim on account thereof, as the board of directors may prescribe.

Section 8. TRANSFER OF SHARES OF STOCK

8.1. Transfer on Books. Subject to the restrictions, if any, stated or noted on the stock certificate, certificated shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment and power of attorney properly executed, with necessary transfer stamps affixed, and with such proof of the authenticity of signature as the board of directors or the transfer agent of the corporation may reasonably require. Uncertificated shares of stock may be transferred on the books of the corporation upon receipt of proper transfer instructions from the registered owner of the uncertificated shares, an instruction from an approved source duly authorized by such owner or from an attorney lawfully constituted in writing. Except as may be otherwise required by law, by the certificate of incorporation or by these by-laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to receive notice and to vote or to give any consent with respect thereto and to be held liable for such calls and assessments, if any, as may lawfully be made thereon, regardless of any transfer, pledge or other disposition of such stock until the shares have been properly transferred on the books of the corporation.

It shall be the duty of each stockholder to notify the corporation of his post office address.

8.2. Record Date and Closing Transfer Books. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days (or such longer period as may be required by law) before the date of such meeting, nor more than sixty days prior to any other action to which such record date relates.

If no record date is fixed:

(a) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

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(b) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

Section 9. CORPORATE SEAL

9.1. The seal of the corporation shall, subject to alteration by the directors, consist of a flat-faced circular die with the word “Delaware” together with the name of the corporation and the year of its organization, cut or engraved thereon.

Section 10. EXECUTION OF PAPERS

10.1. Except as the board of directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts or other obligations made, accepted or endorsed by the corporation shall be signed by the president or by one of the vice presidents or by the treasurer.

Section 11. FISCAL YEAR

11.1. Except as from time to time otherwise provided by the board of directors, the fiscal year of the corporation shall end on the 31st day of December of each year.

Section 12. AMENDMENTS

12.1. These by-laws may be adopted, amended or repealed by vote of a majority of the directors in office or by vote of a majority of the stock outstanding and entitled to vote. Any by-law, whether adopted, amended or repealed by the stockholders or directors, may be amended or reinstated by the stockholders or the directors.

Section 13. INDEMNIFICATION

13.1. The corporation shall indemnify each person who is or was a director or officer of this corporation (including persons who serve at its request as directors, officers, trustees, employees or agents of another organization) against expenses (including attorney’s fees), judgments, fines and amounts paid in settlement to the maximum extent permitted from time to time under the General Corporation Law of the State of Delaware. Such indemnification shall

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not be exclusive of other indemnification rights arising under any by-law, agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person. The corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees) incurred by a director in defending any proceeding in advance of the final disposition, provided, however, that to the extent required by law the payment of expenses in advance shall be made only upon receipt of an undertaking by the director to repay all amounts advanced if it should be ultimately determined that the director is not entitled to be indemnified under this Section 13 or otherwise.

Any repeal or modification of the foregoing provisions of this Section 13 shall not adversely affect any right or protection of a director or officer of the corporation with respect to any acts or omissions of such director or officer occurring prior to such repeal or modification. Nothing in this Section 13 shall require the corporation to indemnify or advance expenses to any person seeking indemnification in connection with any action, suit or proceeding, or part thereof, initiated by or on behalf of such person unless the initiation thereof was approved by the board of directors.

SECTION 14. VOTING OF SECURITIES

14.1 Unless otherwise provided by the board of directors, the president, the secretary or any vice president, each acting singly, may waive notice of, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for this corporation (with or without power of substitution) at any meeting of stockholders or owners of other interests of any other corporation or organization the securities of which may be held by this corporation. In addition, the board of directors, the president, the secretary or any vice president may expressly delegate such powers to any other officer or agent of the corporation.

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul J. van der Wansem, certify that:

1. I have reviewed this quarterly report on Form 10-Q of BTU International, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2008

/s/ Paul J. van der Wansem

Paul J. van der Wansem

President, Chief Executive Officer and Chairman of the Board of Directors (principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas P. Kealy, certify that:

1. I have reviewed this quarterly report on Form 10-Q of BTU International, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:August 8, 2008

/s/ Thomas P. Kealy

Thomas P. Kealy

Vice President, Corporate Controller and Chief Accounting Officer (principal financial and accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as President and Chief Executive Officer of BTU International, Inc. (the “Company”), does hereby certify that to his knowledge:

1. the Company’s Quarterly Report on Form 10-Q for the quarterly period ended July 29, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods covered by the Report.

/s/ Paul J. van der Wansem

Paul J. van der Wansem

President, Chief Executive Officer and Chairman of the Board of Directors (principal executive officer)

Dated: August 8, 2008

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Vice President, Corporate Controller and Chief Accounting Officer of BTU International, Inc. (the “Company”), does hereby certify that to his knowledge:

1. the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 29, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods covered by the Report.

/s/ Thomas P. Kealy

Thomas P. Kealy

Vice President, Corporate Controller and Chief Accounting Officer (principal financial and accounting officer)

Dated: August 8, 2008