UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2007

OR

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

For the transition period from                  to                 

Commission file number 1-9125

American Technical Ceramics Corp.

(Exact name of Company as specified in its charter)


Delaware 11-2113382
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer Identification No.)
1 Norden Lane, Huntington Station, NY 11746
(Address of principal executive offices) (Zip code)

Company’s telephone number, including area code: (631) 622-4700
Securities registered pursuant to Section 12(b) of the Act:


Title of each class Name of each exchange on which registered
Common Stock, par value $.01 per share American Stock Exchange

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ]    No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ]    No [X]

Indicate by check mark whether the Company (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 Company 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Company’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the Company is a large accelerated filer, an accelerated filer, or a non-accelerated filer as defined in Exchange Act Rule (2b-2).

Large accelerated filer [ ]                            Accelerated filer [ ]                            Non-accelerated filer [X]

Indicate by check mark whether the Company is a shell company as defined in Exchange Act Rule (12b-2).
Yes [ ]    No [X]

As of the last business day of the Company’s most recently completed second fiscal quarter ended December 31, 2006, the aggregate market value of the Company’s Common Stock (based upon the closing sales price of the Company’s Common Stock on the American Stock Exchange on such date) held by nonaffiliates of the Company was approximately $66,770,939. (For purposes of this report, all officers and directors have been classified as affiliates, which classification shall not be construed as an admission of the affiliate status of any such person.)

On September 25, 2007, the Company had outstanding 1,000 shares of Common Stock, all of which are owned by AVX Corporation.

The Registrant meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format permitted by General Instruction I(2).




PART I

INTRODUCTORY NOTE

On June 15, 2007, American Technical Ceramics Corp. entered into a definitive merger agreement (the ‘‘Merger Agreement’’) with AVX Corporation (‘‘AVX’’) and Admiral Byrd Acquisition Sub, Inc. (‘‘Acquisition Sub’’), a wholly-owned subsidiary of AVX relating to the merger (the ‘‘Merger’’) of Acquisition Sub with and into the Company. The Company’s stockholders approved the Merger Agreement on September 21, 2007. The Merger was consummated on September 25, 2007, as a result of which the Company became a wholly-owned subsidiary of AVX. Pursuant to the Merger Agreement, upon consummation of the Merger, each share of common stock of the Company issued and outstanding prior to the Merger (other than shares held by stockholders properly demanding and perfecting appraisal rights) was converted into the right to receive $24.75 in cash, without interest and less any applicable withholding taxes, and each outstanding option to purchase shares of the Company’s common stock was converted into the right to receive a cash payment equal to the product of the difference between the per-share option exercise price of such option and $24.75 and the number of shares subject to such option.

Item 1.    BUSINESS

GENERAL

The Company was incorporated in New York in 1966 as Phase Industries, Inc., and changed its name to American Technical Ceramics Corp. in June 1984. The Company was merged into a Delaware corporation in 1985 in order to change its jurisdiction of incorporation. Unless the context indicates otherwise, references to the Company herein include American Technical Ceramics Corp., a Delaware corporation, and its subsidiaries, all of which are wholly-owned. On September 25, 2007, the Company became a wholly-owned subsidiary of AVX. See ‘‘Introductory Note.’’

The Company designs, develops, manufactures and markets radio frequency (RF)/Microwave/ Millimeter-Wave ceramic capacitors, thin film products and other passive components. The Company’s products are focused primarily in the high reliability market for ultra-high frequency and microwave applications, including wireless electronics, medical electronics, semiconductor equipment, satellite equipment and fiber optics. Capacitors function within electronic circuits by storing and discharging precise amounts of electrical power. Thin film products are ceramic substrates on which circuit patterns are printed by means of thin film processes, and are used by customers as building blocks in electronic circuits. The Company’s line of high power, passive resistance products include standard resistors, terminators, attenuators and other customized products which are used in many of the same types of equipment as the Company’s capacitor products. The Company has also begun offering, on a limited basis, certain products based upon a new high density electronic packaging technology, referred to as Low-Temperature Co-fired Ceramics, or LTCC, for use in radio frequency and microwave frequency broadband applications.

The Company sells products primarily to customers in the wireless infrastructure, fiber optic telecommunications, military, medical, semiconductor equipment manufacturing and aerospace industries. In the United States, the Company principally sells its products through independent sales representatives who are compensated on a commission basis. In foreign countries, the Company utilizes resellers, who purchase products from the Company for resale, independent sales representatives and its own employees.

The Company’s research and development activities are focused on the development of new products and improvement of existing products. Improvements in materials and process technology, and the development of specialized production equipment, are directed toward reducing product cost, as well as enhancing performance requirements that are identified through frequent customer contacts by the Company’s sales and technical personnel.

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Competition in the broad multi-layer capacitor, or MLC, industry continues to be intense and, in general, is based primarily on price. In the RF/Microwave market segment, where price has historically been less important, competition has been based primarily on high performance product specifications, achieving consistent product reliability, fast deliveries and high levels of customer service. Competition in the Company’s other product areas is similar in nature to that of the capacitor market.

Although the Company has manufacturing and design patents and pending patent applications, the Company generally considers protection of its products, processes and materials to be more dependent upon proprietary knowledge and on rapid assimilation of innovations than on patent protection.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

Statements in this Annual Report on Form 10-K under the captions ‘‘Business’’ and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’, as well as statements made in press releases and oral statements that may be made by the Company or by officers, directors or employees of the Company acting on the Company’s behalf that are not statements of historical fact, constitute ‘‘forward-looking statements’’ within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. The risk factors set forth below under the caption ‘‘Item 1A. RISK FACTORS’’ identify certain factors that could cause such differences. In addition to statements which explicitly describe risks and uncertainties, readers are urged to consider statements labeled with terms such as ‘‘believes’’, ‘‘belief’’, ‘‘expects’’, ‘‘plans’’, ‘‘anticipates’’, or ‘‘intends’’ to be uncertain and forward-looking. All cautionary statements made and risk factors contained in this Annual Report on Form 10-K should be read as being applicable to all related forward-looking statements wherever they appear. Any forward-looking statement represents the Company’s expectations or forecasts only as of the date it was made and should not be relied upon as representing its expectations or forecasts as of any subsequent date. The Company undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise, even if its expectations or forecasts change.

Item 1A.    RISK FACTORS

The Company’s business, operations, and financial condition are subject to various risks. Some of these risks are described below. This section does not describe all risks that may be applicable to the Company, the Company’s industry, or the Company’s business, and it is intended only as a summary of certain material risk factors.

The Company’s products are used in the production of a variety of highly complex electronic products manufactured for the military and for commercial use. Accordingly, demand for the Company’s products is highly dependent upon demand for the products in which they are used. From time to time, the Company’s results have been negatively impacted by a general decrease in demand for technology and electronic products in the United States and abroad. There can be no assurance that, if demand for such products declines, it will increase again or that, even if it does increase, the demand for the Company’s products will increase. In addition, there can be no assurance that the Company will not receive order cancellations after orders are booked into backlog. Moreover, a majority of the Company’s costs are fixed, and the Company may not be able to reduce costs if sales volumes were to decline.

The Company produces and ships product based upon orders received from its customers. If these orders are cancelled prior to shipment, it could affect the Company’s profitability.

The Company offers a broad variety of products to its customers. Gross margins can vary significantly from product to product and across product lines. Accordingly, a change in the mix of products sold by the Company during a particular period could lead to distinctly different financial results for that period as compared to other periods.

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International sales constitute a substantial portion of the Company’s total sales. These sales expose the Company to certain risks, including, without limitation, barriers to trade, fluctuations in foreign currency exchange rates (which may make the Company’s products less price competitive), political and economic instability, changes in monetary policy, tariff regulations and other United States and foreign laws and regulations that may apply to the export of the Company’s products, as well as the generally greater difficulties of doing business abroad.

During fiscal year 2007, the Company’s ten largest customers accounted for approximately 34% of net sales. The Company expects that sales to a relatively small number of customers will continue to account for a significant portion of its net sales for the foreseeable future. A loss of one or more of such key customers could affect the Company’s profitability. Moreover, an increasing amount of the Company’s sales are to contract manufacturers. Several contract manufacturers to whom the Company sells parts could be selling their products to the same end customer. The discontinued use of these contract manufacturers’ products (or of their products which incorporate the Company’s parts) by the end customer could affect the Company’s profitability.

The technology upon which the Company’s products are based is subject to continuous development of materials and processes. The Company’s business is in large part contingent upon the continuous refinement of its technological and engineering expertise and the development of new or enhanced products and technologies to meet the rapidly developing demands of new applications and increased competition. There can be no assurance that the Company will continue to be successful in its efforts to develop new or refine existing products, that such new products will meet with anticipated levels of market acceptance or that the Company will otherwise be able to timely identify and respond to technological improvements made by its competitors. Significant technological breakthroughs by others could also have a material adverse effect on the Company’s business.

The Company’s business may be adversely affected by difficulties in obtaining raw materials and other items needed for the production of its products, the effects of quality deviations in raw materials and fluctuations in prices of such materials. Palladium, a precious metal used in the production of the Company’s capacitors, is currently available from a limited number of metal dealers who obtain product from the Republic of South Africa or the Russian Federation. A prolonged cessation or reduction of exports of palladium by the Republic of South Africa or the Russian Federation, or a significant increase in the price of palladium, could have a material adverse effect on the Company’s business.

Certain raw materials used by the Company may fluctuate in price. To the extent that the Company is unable to pass on increases in the costs of such materials to its customers, this may adversely affect the gross profit margins of those products using such materials. At times, the Company will enter into contracts to purchase certain raw materials in the future at agreed upon prices in order to protect against shortages and rising prices. If the Company were to do so and prices were to decline, the Company would be required to purchase such raw materials at or above market prices which would also negatively impact gross profit margins.

Competition in the MLC industry is intense and, in general, is based primarily on price. In the RF/Microwave market segments, where price has historically been less important, competition has been based primarily on high performance product specifications, achieving consistent product reliability, fast deliveries and high levels of customer service. The Company competes with a number of large MLC manufacturers who have broader product lines and greater financial, marketing and technical resources than the Company. Growth of some commercial market applications has increased, and is expected to continue to increase, the competitive importance of price. There can be no assurance that the Company will be able to improve the productivity and efficiency of its manufacturing processes in order to respond to pricing pressures, or to successfully design new processes and products; and the failure to do so could have a material adverse effect on the Company’s business.

The Company produces hazardous wastes in the production of its capacitors. Accordingly, the inherent risks of environmental liability and remediation costs associated with the Company’s manufacturing operations may result in substantial unforeseen liabilities.

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The Company is also subject to various federal, state, local and foreign laws regulating or prohibiting the use of certain materials in the manufacture of its products. As part of its research and development efforts, the Company continues to develop and test new materials and products designed to comply with these laws. However, there can be no assurance that the Company will be able to develop replacement materials or products for those which may become prohibited in the future, or that competitors will not develop superior compliant products.

In May 2007, an action was filed against the Company claiming that one of its products infringes a patent issued to the plaintiff. See Item 3. ‘‘LEGAL PROCEEDINGS.’’ Such claim, if successful, or any future claims alleging that the Company’s products or the technologies upon which they are based infringe the intellectual property rights of others, may result in the Company being required to enter into royalty arrangements, cease manufacturing the infringing products or utilizing the infringing technologies, pay damages or defend litigation, any of which could have a material adverse effect on the Company’s business.

The Company’s business may also be adversely affected by matters and events affecting businesses generally, including, without limitation, political and economic events, labor unrest, acts of God, war, acts of terrorism and other events outside of the Company’s control.

Item 2.    PROPERTIES

The Company’s primary production facilities are located in Huntington Station, New York and Jacksonville, Florida. The Company’s principal executive office is located in Huntington Station, New York, and its principal research and development facility is located in Jacksonville, Florida. The following table sets forth the address of each facility, its primary function, the square footage occupied by the Company and whether the facility is leased or owned.


Address of Facility Primary Function Square
Footage
Occupied
Type of
Occupancy
10 Stepar Place
Huntington Station, New York
Production 11,200 Owned
11 – 13 Stepar Place
Huntington Station, New York
Production and
    production support
20,000 Owned
15 Stepar Place
Huntington Station, New York
Production 35,700 Leased          
One Norden Lane
Huntington Station, New York
Production 8,700 Owned
17 Stepar Place
Huntington Station, New York
Sales and administration 18,000 Owned
2201 Corporate Square Blvd.
Jacksonville, Florida
Production, research
    and development
99,700 Leased
8810 Corporate Square Court
Jacksonville, Florida
Held for sale 10,000 Owned
Ellipsvaegen 5
SE-141 75
Kungens Kurva, Sweden
Sales and
distribution office
3,400 Leased
Rm. 621-623, International Culture Building, No. 3039 Shennan Centre Rd., Futian District, Shenzhen, PR China Sales office 1,950 Leased

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Item 3.    LEGAL PROCEEDINGS

Presidio Components, Inc. v. American Technical Ceramics Corporation, United States District Court for the Southern District of California (Case No. ’07 CV 0893 J). On May 17, 2007, Presidio Components, Inc. (‘‘Presidio’’) commenced an action against the Company in the United States District Court for the Southern District of California claiming that the Company’s 545L capacitor infringes upon a patent issued to Presidio. The complaint seeks unspecified damages, requests that damages be trebled based upon Presidio’s allegations of willful infringement and seeks preliminary and permanent injunctive relief against further infringement of the subject patent. On July 11, 2007, the Company filed an Answer and Counterclaim in which, among other things, it (i) denied the allegations set forth in the complaint that it is infringing Presidio’s patent, (ii) asserts that the claims of Presidio’s patent are invalid and/or unenforceable, and (iii) seeks declaratory relief as to the non-infringement, invalidity and/or unenforceability of the subject patent.

Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Omitted under the reduced disclosure format permitted by General Instruction I(2)(c) of Form 10-K.

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PART II

Item 5.  MARKET FOR COMPANY’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

Until September 25, 2007, the date of consummation of the Merger, the Company’s common stock was traded on the American Stock Exchange (‘‘AMEX’’) under the symbol ‘‘AMK’’. As a result of the Merger, trading of the Company’s common stock on the AMEX was suspended and the Company’s common stock will be delisted. The application is scheduled to become effective on October 5, 2007. The table below sets forth the quarterly high and low sales prices for the common stock on the AMEX for the fiscal years ended June 30, 2007 and June 30, 2006.


  Fiscal 2007 Fiscal 2006
Quarter Ended: High Low High Low
September $ 14.45 10.25 $ 13.86 9.89
December 16.40 11.75 11.46 8.40
March 20.41 11.53 15.75 8.61
June 24.11 13.60 16.05 11.90

NUMBER OF STOCKHOLDERS

As of September 25, 2007, as a result of the Merger, there was one holder of record of the Company’s common stock.

DIVIDENDS

The Company has not paid any cash dividends on its common stock during the past two fiscal years.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table details securities authorized for issuance under equity compensation plans as of June 30, 2007:


Plan category Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
Weighted-average exercise
price of outstanding options,
warrants and rights
(b)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)
Equity compensation plans approved by security holders 522,865 $ 9.92 64,200

On September 21, 2007, the Company’s 2000 Stock Plan the only equity compensation plan pursuant to which the Company could still grant awards, was terminated. On September 25, 2007, pursuant to the terms of the Merger Agreement, upon consummation of the Merger, each outstanding option to purchase shares of the Company’s common stock was converted into the right to receive a cash payment equal to the product of the difference between the per-share option exercise price of such option and $24.75 and the number of shares subject to such option.

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Item 6.  SELECTED FINANCIAL DATA

Omitted under the reduced disclosure format permitted by General Instruction I(2)(a) of Form 10-K.

Item 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information in this Item has been prepared pursuant to the reduced disclosure format permitted by General Instruction I(2)(a) of Form 10-K. It should be read in conjunction with the Consolidated Financial Statements and Notes thereto and other information set forth following Item 15 of this Report. See also ‘‘CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS’’ and ‘‘Item 1A. RISK FACTORS’’ in Part I of this Report.

RESULTS OF OPERATIONS FISCAL YEAR 2007 COMPARED WITH FISCAL YEAR 2006

Net sales for the fiscal year ended June 30, 2007 were $93,763,000, an increase of 11% from the $84,131,000 recorded in the fiscal year ended June 30, 2006. Domestic sales increased by 14% to $48,641,000 in fiscal year 2007 from $42,744,000 in fiscal year 2006. Sales to international locations increased by 9% to $45,122,000 in fiscal year 2007 from $41,387,000 in fiscal year 2006. The increase in sales is due to the improved business climate in a majority of the markets the Company serves and increased market penetration. Sales growth was particularly strong in the wireless infrastructure, fiber optic, medical electronics and semiconductor equipment markets in fiscal year 2007.

Bookings have improved from the levels experienced in fiscal year 2006. Total bookings in fiscal year 2007 were $93,828,000, compared to $89,163,000 in fiscal year 2006, representing an increase of approximately 5%. Growth has come from a majority of the markets the Company serves, but was particularly strong in the wireless infrastructure, semiconductor equipment, medical electronics and fiber optic markets.

Gross margins were 37% of net sales in fiscal year 2007, compared to 35% in fiscal year 2006. Fiscal year 2007 gross margins benefited from higher sales volume, the economics associated with higher production volumes and cost reductions related to the outsourcing of certain production, offset in part by a less favorable sales mix. Fiscal year 2006 gross margins were negatively impacted by costs related to difficulties encountered while converting certain of the Company’s operations to its Enterprise Resource Planning system during the first quarter of fiscal year 2006.

Operating expenses totaled $21,380,000, or 23% of net sales, in fiscal year 2007, compared to $20,144,000, or 24% of net sales, in fiscal year 2006. The increase in operating expenses in absolute terms compared to the prior fiscal year is attributable to increased bonus expense as a result of increased profits, costs incurred related to the Merger and increased severance expense related to cost reduction measures implemented during fiscal year 2007. These increases were partially offset by decreased depreciation expense and decreased training costs. The Company incurred $222,000 of training costs in fiscal year 2006 pertaining to the attempted implementation of the Enterprise Resource Planning system. Other operating expenses increased primarily due to a loss on disposal of fixed assets.

Research and development expenses for the fiscal year ended June 30, 2007 increased 14% to $2,269,000, compared to $1,986,000 in the prior fiscal year. The increase was primarily due to increased depreciation and labor as a result of new equipment for research and development piloting and additional projects in the research and development stage.

Interest income increased 142% to $208,000 compared to $86,000 in the prior fiscal year due to increased average available funds to invest during the fiscal year as a result of positive cash flow from operations and cash proceeds from the exercise of stock options, partially offset by capital expenditures and repayments of long-term debt.

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The effective income tax rate for fiscal year 2007 was 24% compared to 29% for fiscal year 2006. In fiscal year 2007, the Company’s effective tax rate was favorably impacted by the reversal of $1,198,000 of valuation allowance on state deferred tax assets. The Company reversed the valuation allowance previously established for deferred tax assets for state net operating loss carryforwards. The valuation allowance was originally established due to uncertainties of realizing these carryforwards and deferred tax assets. Management now expects to be able to utilize the loss carryforwards and deferred tax assets against projected future taxable income. In fiscal year 2006, the Company’s effective tax rate was favorably impacted by an approximately $500,000 reduction of tax reserves primarily due to the expiration of a statute of limitations and audit settlements for less than the amounts reserved.

As a result of the foregoing, the Company reported net income of $9,725,000, or $1.10 per common share and $1.07 per common share assuming dilution, for fiscal year 2007, compared to net income of $5,988,000, or $0.70 per common share and $0.67 per common share assuming dilution, for fiscal year 2006.

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has identified three market risks relative to its business: foreign currency exchange rate risk, commodity price risk and interest rate risk. The Company has managed its market risk exposures in order to minimize their potential impact on its consolidated financial condition and results of operations. Specifically:

a)  Foreign currency exchange rate risk.    With the exception of transactions by the Company’s wholly-owned subsidiary in Sweden (which are denominated in Krona), all transactions are denominated in U.S. Dollars. Fluctuations in exchange rates could impact revenues with an offsetting impact on costs and expenses. Historically, the Company did not believe that the impact on net earnings of a 10% shift in exchange rates would be material.
b)  Commodity price risk.    The Company uses certain precious metals in the manufacturing of its products (primarily palladium, gold and silver), and is therefore subject to certain commodity price risks. In the last several years, the price of precious metals rose due to the higher demand coming from the electronics industry and other industries. Historically, the Company has purchased a quantity of these metals to protect against rising prices. In addition, in July 2006, the Company exchanged silver for palladium to better align its inventory of precious metals against expected production requirements.
c)  Interest rate risk.    The Company earns interest income on cash and investment balances and pays interest on debt incurred. Historically, in light of the Company’s existing cash, results of operations, the terms of its debt obligations and projected capital needs, the Company did not believe that a 10% change in interest rates would have a significant impact on its consolidated financial position.
Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company’s Consolidated Financial Statements and the Notes thereto begin on page F-2 of this report.

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.    In response to the requirements of the Sarbanes-Oxley Act of 2002, within 90 days prior to the date of this report (the ‘‘Evaluation Date’’), the Company’s President and Chief Executive Officer and Vice President – Finance carried out an

9




evaluation of the effectiveness of the Company’s ‘‘disclosure controls and procedures’’ (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)). Based on that evaluation, these officers concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company and the Company’s consolidated subsidiaries was made known to them by others within those entities, particularly during the period in which this report was being prepared.

Changes in Internal Controls.    There were no changes in the Company’s internal controls over financial reporting, identified in connection with the evaluation of such internal controls that occurred during the Company’s last fiscal quarter, that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Item 9B.  OTHER INFORMATION

None.

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PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

Omitted under the reduced disclosure format permitted by General Instruction I(2)(c) of Form 10-K.

Item 11.  EXECUTIVE COMPENSATION

Omitted under the reduced disclosure format permitted by General Instruction I(2)(c) of Form 10-K.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Omitted under the reduced disclosure format permitted by General Instruction I(2)(c) of Form 10-K.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Omitted under the reduced disclosure format permitted by General Instruction I(2)(c) of Form 10-K.

Item 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth fees billed by KPMG LLP for the last two fiscal years ended June 30:


  2007 2006
Audit Fees $ 464,086 $ 352,107
Audit Related Fees(1) 7,500 31,000
Tax Fees(2) 80,405 96,500
All Other Fees(3) 10,256
Total Fees $ 551,991 $ 489,863
(1) Audit related fees consists of work performed with respect to the audit of the financial statements of the Company’s retirement savings plan.
(2) Tax fees relate to tax compliance and consultations.
(3) All other fees relates to the Company’s compliance with the Sarbanes Oxley Act of 2000.

All of the services set forth in the categories above were approved in advance by the Audit Committee.

The Audit Committee considered whether the provision of such non-audit services by KPMG LLP to the Company is compatible with maintaining KPMG LLP’s independence, and concluded that such services were compatible.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the independent auditor. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by the independent auditor.

Prior to engagement of the independent auditor for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of the following four categories of services to the Audit Committee for approval:

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1.    Audit services include audit work performed in the preparation of financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, including comfort letters, statutory audits and attest services and consultation regarding financial accounting and/or reporting standards.

2.    Audit-Related services are for assurance and related services that are traditionally performed by the independent auditor, including due diligence related to mergers and acquisitions, employee benefit plan audits and special procedures required to meet certain regulatory requirements.

3.    Tax services include all services performed by the independent auditor’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning and tax advice.

4.    Other Fees are those associated with services not captured in the other categories.

Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted and the Audit Committee requires the independent registered public accounting firm and management to report actual fees compared to the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approved services. In those instances, the Audit Committee requires specific pre-approval before engaging the independent registered public accounting firm.

The Audit Committee may delegate pre-approval authority to one or more of its members. The member or members to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.

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PART IV

Item 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

a)    Financial Statements


  Page No.
Index to Consolidated Financial Statements F    
Report of Independent Registered Public Accounting Firm F-1
Consolidated Financial Statements  
Balance Sheets as of June 30, 2007 and 2006 F-2
Statements of Operations  
Fiscal Years Ended June 30, 2007, 2006 and 2005 F-3
Statements of Stockholders’ Equity and Comprehensive Income  
Fiscal Years Ended June 30, 2007, 2006 and 2005 F-4
Statements of Cash Flows  
Fiscal Years Ended June 30, 2007, 2006 and 2005 F-5
Notes to Consolidated Financial Statements F-6

(b)    Exhibits

Unless otherwise indicated, the following exhibits were filed as part of the Company’s Registration Statement on Form S-18 (No. 2-96925-NY) and are incorporated herein by reference to the same exhibit thereto.


Exhibit No.   Description
2 .1 Agreement and Plan of Merger, dated as of June 15, 2007, by and among AVX Corporation, Admiral Byrd Acquisition Sub, Inc. and the Company.(22)
3 .1 Certificate of Incorporation of the Company.
3 .2 Amendment to Certificate of Incorporation.(3)
3 .3 Amended and restated By-laws of the Company.(21)
9 .1 Restated Shareholders’ Agreement, dated April 15, 1985, among Victor Insetta, Joseph Mezey, Joseph Colandrea and the Company.
9 .2 Voting Agreement, dated June 15, 2007, among Admiral Byrd Acquisition Sub, Inc., AVX Corporation, and the Stockholders named therein.(22)
10 .1 Lease, dated September 1, 2002, between Stepar Leasing, LLC and the Company for premises at 15 Stepar Place, Huntington Station, N.Y.(11)
10 .1(i )  Letter Agreement, dated August 23, 2007, between Stepar Leasing, LLC and the Company.(24)
10 .2 Form of 1985 Employee Stock Sale Agreement between the Company and various employees.
10 .3 Form of Employee Stock Bonus Agreement, dated as of July 1, 1993, between the Company and various employees.(2)
10 .4 Form of Employee Stock Bonus Agreement, dated as of April 19, 1994, between the Company and various employees.(2)
10 .5 Form of Employee Stock Bonus Agreement, dated as of April 20, 1995, between the Company and various employees.(3)

13





Exhibit No.   Description
10 .6 Second Amended and Restated Lease, dated as of May 16, 2000, between V.P.I. Properties Associates, d/b/a V.P.I. Properties Associates, Ltd., and American Technical Ceramics (Florida), Inc.(7)
10 .7 Profit Bonus Plan, dated April 19, 1995, and effective for the fiscal years beginning July 1, 1994.(3)
10 .8 Employment Agreement, dated April 3, 1985, between Victor Insetta and the Company, and Amendments No. 1 through 4 thereto.(1)
10 .9 Amendment No. 5, dated as of September 11, 1998, to Employment Agreement between Victor Insetta and the Company.(4)
10 .10 Amendment No. 6, dated as of January 3, 2001, to Employment Agreement between Victor Insetta and the Company.(8)
10 .11 Employment Agreement, dated October 1, 2003, between the Company and Richard Monsorno.(13)
10 .11(i )  Letter extending the Employment Agreement with Richard Monsorno until September 30, 2008.
10 .12 Managers Profit Bonus Plan, dated December 7, 1999 and effective January 1, 2000.(6)
10 .13 Officers Profit Bonus Plan, dated October 30, 2003 and effective June 30, 1992.(13)
10 .14 Consulting Agreement, dated January 1, 2004, between the Company and Northport Systems, Inc.(14)
10 .15 Letter extending the Consulting Agreement with Northport System, Inc. until December 31, 2007.(19)
10 .16 American Technical Ceramics Corp. 1997 Stock Option Plan.(4)
10 .17 American Technical Ceramics Corp. 2000 Incentive Stock Plan.(6)
10 .18 Master Loan Agreement, dated April 2, 2004, between the Company and General Electric Capital Corporation.(14)
10 .19 Letter from General Electric Capital Corporation, dated as of March 30, 2006.(20)
10 .20 Second Amended and Restated Employment Agreement, dated as of December 31, 2001, between Judah Wolf and the Company.(9)
10 .20(i )  Letter Agreement, dated December 22, 2005, between the Company and Judah Wolf.(18)
10 .21 Employment Agreement, dated January 1, 2004, between the Company and David Ott.(14)
10 .21(i )  Letter extending the Employment Agreement with David Ott until December 31, 2007.(23)
10 .22 Severance Agreement, dated November 1, 2003, between the Company and Kathleen Kelly.(13)
10 .23 Severance Agreement, dated November 1, 2003, between the Company and Andrew Perz.(13)
10 .24 Severance Agreement, dated November 1, 2003, between the Company and Harrison Tarver.(13)

14





Exhibit No.   Description
10 .25 Letter, dated May 21, 2007, confirming Board approval of a transaction bonus for Kathleen Kelly.
10 .26 Letter, dated May 21, 2007, confirming Board approval of a transaction bonus for Andrew Perz.
10 .27 Loan and Security Agreement, dated November 30, 2004, between the Company and Commerce Bank N.A.(15)
10 .27(i )  Amendment No.1 to the Loan and Security Agreement, dated January 25, 2007, between the Company and Commerce Bank N.A.(23)
10 .28 Security Agreement, dated November 30, 2004, between American Technical Ceramics (Florida) Inc. and Commerce Bank N.A.(15)
10 .28(i )  Amendment No.1 to the Security Agreement, dated January 25, 2007, between the Company and Commerce Bank N.A.(23)
10 .29 Surety Agreement, dated November 30, 2004, between American Technical Ceramics (Florida) Inc. and Commerce Bank N.A.(15)
10 .30 Victor Insetta Compensation Arrangement.(16)
10 .31 Stuart Litt Consulting Arrangement.(16)
10 .32 Executive Compensation Arrangement.(16)
10 .33 Director Compensation Arrangement.(16)
10 .34 William Johnson Compensation Arrangement.(17)
10 .35 Financial Obligation, dated as of September 16, 2005, between American Technical Ceramics Europe AB and Svenska Handelsbanken, AB.(17)*
10 .36 Guaranty and Agreement, dated as of September 9, 2005, between the Company and Svenska Handelsbanken, AB.(17)
31 .1 Section 302 Certification of Chief Executive Officer.(24)
31 .2 Section 302 Certification of Principal Accounting Officer.(24)
32 .1 Section 906 Certification of Chief Executive Officer.(24)
32 .2 Section 906 Certification of Principal Accounting Officer.(24)
1. Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1993.
2. Incorporated by reference to the Company’s Annual Report on Form 10-KSB for the fiscal year ended June 30, 1994.
3. Incorporated by reference to the Company’s Annual Report on Form 10-KSB for the fiscal year ended June 30, 1995.
4. Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1997.
5. Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1998.
6. Incorporated by reference to the Company’s Annual Report on Form 10-K/A for the fiscal year ended June 30, 2000.

15




7. Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2000.
8. Incorporated by reference to the Company’s Annual Report on Form 10-Q for the quarterly period ended December 31, 2000.
9. Incorporated by reference to the Company’s Quarterly Report on Form 10-Q/A for the quarterly period ended March 31, 2002.
10. Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2002.
11. Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2002.
12. Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003.
13. Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2003.
14. Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004.
15. Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2004.
16. Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005.
17. Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005.
18. Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2005.
19. Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007.
20. Incorporated by reference to the Company’s Current Report on Form 8-K, dated April 4, 2006.
21. Incorporated by reference to the Company’s Current Report on Form 8-K, dated May 8, 2006.
22. Incorporated by reference to the Company’s Schedule 14A, dated August 21, 2007.
23. Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2006.
24. Filed herewith.
*    Summary of document written in Swedish.

(c)    Financial Statement Schedules

Schedules have been omitted since they either are not applicable, not required or the information is included elsewhere herein.

16




SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


  AMERICAN TECHNICAL CERAMICS CORP.
  By: /S/ VICTOR INSETTA
    VICTOR INSETTA
President

Dated: September 25, 2007

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

Name Title Date
/S/ VICTOR INSETTA President and Director
(Principal Executive Officer)
September 25, 2007
Victor Insetta
/S/ ANDREW R. PERZ Vice President – Finance
(Principal Accounting Officer)
September 25, 2007
Andrew R. Perz
/S/ STUART P. LITT Director September 25, 2007
Stuart P. Litt
/S/ THOMAS J. VOLPE Director September 25, 2007
Thomas J. Volpe
/S/ DOV S. BACHARACH Director September 25, 2007
Dov S. Bacharach



Item 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


F-1




Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholder
American Technical Ceramics Corp.:

We have audited the accompanying consolidated balance sheets of American Technical Ceramics Corp. and subsidiaries as of June 30, 2007 and 2006, and the related consolidated statements of operations, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended June 30, 2007. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Technical Ceramics Corp. and subsidiaries as of June 30, 2007 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended June 30, 2007, in conformity with U.S. generally accepted accounting principles.

As discussed in Notes 1 and 6 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 123(R), ‘‘Shared-Based Payment’’, effective July 1, 2005.

/s/ KPMG LLP

Melville, New York
September 25, 2007

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Table of Contents

AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


  June 30, 2007 June 30, 2006
ASSETS    
CURRENT ASSETS    
Cash (including cash equivalents of $2,200,000 and $2,000, respectively) $ 9,581,000 $ 6,230,000
Investments 3,000,000 2,094,000
Accounts receivable, (net of allowance for doubtful accounts of $351,000 and $401,000, respectively) 13,948,000 12,719,000
Inventories 39,025,000 33,255,000
Deferred income taxes 4,882,000 3,472,000
Prepaid and other current assets 2,014,000 1,035,000
Total current assets 72,450,000 58,805,000
PROPERTY, PLANT AND EQUIPMENT    
Land 738,000 738,000
Buildings and leasehold improvements 18,861,000 19,418,000
Machinery and equipment 55,413,000 53,474,000
Computer equipment and software 5,989,000 7,508,000
Furniture, fixtures and other 2,665,000 3,064,000
  83,666,000 84,202,000
Less: Accumulated depreciation and amortization 54,575,000 52,827,000
  29,091,000 31,375,000
OTHER ASSETS 285,000 363,000
Total assets $ 101,826,000 $ 90,543,000
LIABILITIES AND STOCKHOLDERS’ EQUITY    
CURRENT LIABILITIES    
Current portion of long-term debt (including related party debt of $538,000 and $485,000, respectively) $ 2,115,000 $ 1,957,000
Accounts payable 3,032,000 3,005,000
Accrued expenses 7,008,000 6,192,000
Income taxes payable 1,002,000
Total current liabilities 12,155,000 12,156,000
LONG-TERM DEBT, NET OF CURRENT PORTION
(including related party debt of $1,436,000 and $1,974,000, respectively)
5,183,000 7,229,000
DEFERRED INCOME TAXES 3,210,000 3,091,000
Total liabilities 20,548,000 22,476,000
COMMITMENTS AND CONTINGENCIES    
STOCKHOLDERS’ EQUITY    
Common Stock – $0.01 par value; authorized 20,000,000 shares; issued 9,439,243 and 9,104,613 shares; outstanding 9,025,103 and 8,690,473 shares, respectively 94,000 91,000
Capital in excess of par value 18,407,000 15,000,000
Retained earnings 63,827,000 54,102,000
Accumulated other comprehensive income:    
Unrealized loss on investments available-for-sale, net (1,000 ) 
Cumulative foreign currency translation adjustment 346,000 271,000
  346,000 270,000
Less: Treasury stock, at cost (414,140 and 414,140 shares, respectively) 1,396,000 1,396,000
Total stockholders’ equity 81,278,000 68,067,000
Total liabilities and stockholders’ equity $ 101,826,000 $ 90,543,000

See accompanying notes to consolidated financial statements.

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Table of Contents

AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL YEARS ENDED JUNE 30, 2007, 2006 AND 2005


  2007 2006 2005
Net sales $ 93,763,000 $ 84,131,000 $ 72,965,000
Cost of sales 59,119,000 55,034,000 48,383,000
Gross profit 34,644,000 29,097,000 24,582,000
Selling, general and administrative expenses 18,851,000 18,092,000 15,935,000
Research and development expenses 2,269,000 1,986,000 2,161,000
Other 260,000 66,000 19,000
Operating expenses 21,380,000 20,144,000 18,115,000
Income from operations 13,264,000 8,953,000 6,467,000
Other expense (income)      
Interest expense 674,000 643,000 475,000
Interest income (208,000 )  (86,000 )  (57,000 ) 
Other 8,000
  466,000 557,000 426,000
Income before provision for income taxes 12,798,000 8,396,000 6,041,000
Provision for income taxes 3,073,000 2,408,000 1,773,000
Net Income $ 9,725,000 $ 5,988,000 $ 4,268,000
Basic net income per common share $ 1.10 $ 0.70 $ 0.51
Diluted net income per common share $ 1.07 $ 0.67 $ 0.49
Basic weighted average common shares outstanding 8,859,000 8,573,000 8,402,000
Diluted weighted average common shares outstanding 9,103,000 8,891,000 8,738,000

See accompanying notes to consolidated financial statements.

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Table of Contents

AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME FISCAL YEARS ENDED JUNE 30, 2007, 2006 AND 2005


  Comprehensive
Income
    
    
Common Stock
Capital in
Excess of Par
Value
Retained
Earnings
Accumulated
Other
Comprehensive
Income
(Loss)
Treasury
Stock
Total
Shares Amount
Balance at June 30, 2004   8,644,058 $ 86,000 $ 12,014,000 $ 43,846,000 $ 277,000 $ (1,396,000 )  $ 54,827,000
Net income $ 4,268,000 4,268,000 4,268,000
Tax benefit of stock options exercised 215,000 215,000
Stock awards 22,000 120,000 120,000
Stock option compensation expense 44,000 44,000
Exercise of stock options 251,405 3,000 802,000 805,000
Other comprehensive loss, net of tax:                
Unrealized losses on investments
available-for-sale, net of reclassification adjustment
5,000              
Foreign currency translation adjustment (137,000 )               
Other comprehensive loss, net of tax (132,000 )  (132,000 )  (132,000 ) 
Comprehensive income $ 4,136,000              
Balance at June 30, 2005   8,917,463 $ 89,000 $ 13,195,000 $ 48,114,000 $ 145,000 $ (1,396,000 )  $ 60,147,000
Net income $ 5,988,000 5,988,000 5,988,000
Tax benefit of stock options exercised 458,000 458,000
Stock awards 16,450 209,000 209,000
Stock option compensation expense 279,000 279,000
Exercise of stock options 170,700 2,000 859,000 861,000
Other comprehensive income, net of tax:                
Unrealized gain on investments available-for-sale, net of reclassification adjustment (1,000 )               
Foreign currency translation adjustment 126,000              
Other comprehensive income, net of tax 125,000 125,000 125,000
Comprehensive income $ 6,113,000              
Balance at June 30, 2006   9,104,613 $ 91,000 $ 15,000,000 $ 54,102,000 $ 270,000 $ (1,396,000 )  $ 68,067,000
Net income     $ 9,725,000 9,725,000 9,725,000
Tax benefit of stock options exercised 882,000 882,000
Stock awards 7,000 93,000 93,000
Stock option compensation expense 227,000 227,000
Exercise of stock options 327,630 3,000 2,205,000 2,208,000
Other comprehensive income, net of tax:                
Unrealized gain on investments available-for-sale, net of reclassification adjustment 1,000              
Foreign currency translation adjustment 75,000              
Other comprehensive income, net of tax 76,000 76,000 76,000
Comprehensive income $ 9,801,000              
Balance at June 30, 2007   9,439,243 $ 94,000 $ 18,407,000 $ 63,827,000 $ 346,000 $ (1,396,000 )  $ 81,278,000

See accompanying notes to consolidated financial statements.

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Table of Contents

AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FISCAL YEARS ENDED JUNE 30, 2007, 2006 AND 2005


  2007 2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income $ 9,725,000 $ 5,988,000 $ 4,268,000
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:      
Depreciation and amortization 6,152,000 6,207,000 5,383,000
Loss/(gain) on disposal of fixed assets 230,000 246,000 (12,000 ) 
Stock based compensation expense 320,000 488,000 164,000
Excess tax benefits from stock based     
compensation arrangements
(882,000 )  (458,000 )  (215,000 ) 
Provision for doubtful accounts and sales returns (50,000 )  101,000 (170,000 ) 
Deferred income taxes (1,291,000 )  (1,021,000 )  (99,000 ) 
Investment interest accretion, net (103,000 )  (46,000 )  (17,000 ) 
Realized loss on sale of investments 7,000
Changes in operating assets and liabilities:      
Accounts receivable (1,072,000 )  (2,626,000 )  651,000
Inventories (5,686,000 )  (5,580,000 )  (5,348,000 ) 
Other assets (490,000 )  (200,000 )  (147,000 ) 
Accounts payable, accrued expenses and
income taxes payable
694,000 2,569,000 61,000
Net cash provided by operating activities 7,547,000 5,668,000 4,526,000
CASH FLOWS FROM INVESTING ACTIVITIES:      
Capital expenditures (4,563,000 )  (8,309,000 )  (8,784,000 )