SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

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BTU International, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)

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BTU INTERNATIONAL, INC.

23 Esquire Road

North Billerica, Massachusetts 01862-2596, USA

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

May 26, 2005

       Notice is hereby given that the Annual Meeting of Stockholders of BTU International, Inc. will be held at the offices of the Company, 23 Esquire Road, North Billerica, Massachusetts, at 10:00 A.M. on Thursday, May 26, 2005, for the following purposes:

      Stockholders of record at the close of business on April 15, 2005 are entitled to notice of and to vote at the meeting.

      If you are unable to be present personally, please sign and date the enclosed proxy and return it promptly in the enclosed envelope.

North Billerica, Massachusetts

April 27, 2005

ANNUAL MEETING OF STOCKHOLDERS

May 26, 2005

PROXY STATEMENT

       The enclosed proxy is solicited on behalf of the Board of Directors of BTU International, Inc. (“BTU” or the “Company”) to be voted at the Annual Meeting of Stockholders (the “Meeting”) to be held on May 26, 2005 or at any adjournment thereof. The cost of soliciting proxies will be borne by BTU. Directors, officers and employees of BTU, without additional remuneration, may also solicit proxies by telephone, telegraph or personal interview. BTU will reimburse banks, brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of shares.

      The holders of record of shares of Common Stock, par value $.01 per share, of the Company (the “Common Stock”) at the close of business on April 15, 2005 are entitled to notice and to vote at the Meeting. There were 7,230,063 of Common Stock outstanding on that date, each of which is entitled to one vote on each matter to come before the Meeting.

      Shares of Common Stock represented by proxies in the form enclosed, if properly executed and returned and not revoked, will be voted as specified, but where no specification is made, the shares will be voted to fix the number of directors at six and for the election as directors of the nominees named below. To be voted, proxies must be filed with the Secretary prior to voting. A proxy may be revoked at any time before it is voted by filing a notice of such revocation with the Secretary.

      The holders of a majority of the issued and outstanding shares of Common Stock, present in person or represented by proxy and entitled to vote, will constitute a quorum for the transaction of business at the Meeting. Directors are elected by a plurality of the votes cast at the meeting for the election of directors. The person designated as the election inspector will count shares represented by proxies that withhold authority to vote for a nominee for election as a director or that reflect abstentions only as shares that are present and entitled to vote on the matter for the purposes of determining the presence of a quorum, but neither abstentions nor proxies that withhold authority will have any effect on the outcome of voting on the matter.

      The Annual Report on Form 10-K for BTU’s fiscal year ended December 31, 2004 has been mailed with this proxy statement. This proxy statement and the enclosed proxy were mailed to stockholders on the same date as the date of the Notice of Annual Meeting of Stockholders. The principal executive offices of BTU are located at 23 Esquire Road, North Billerica, Massachusetts 01862-2596.

ELECTION OF DIRECTORS

      The persons named in the enclosed proxy intend to vote each share as to which a proxy has been properly executed and returned and not revoked to fix the number of directors at six and in favor of the election as directors of the six nominees named below, all of whom are now directors of BTU, unless authority to vote for the election of any or all of such nominees is withheld by marking the proxy to that effect.

      The persons elected as directors will serve until the next annual meeting of stockholders and until their successors are elected and shall qualify. It is expected that each of the nominees will be able to serve, but if any nominee is unable to serve, the proxies reserve discretion to vote or refrain from voting for a substitute nominee or nominees or to fix the number of directors at a lesser number.

      During 2004, the Board of Directors held six meetings. Mr. Van der Wansem, Mr. Wyman, Mr. Parkhill, and Mr. Beard attended 100% of the Board and relevant committee meetings. Mr. Wrinn attended 83% and Dr. Chu attended 50% of the Board and relevant committee meetings. Each director who is not an officer or employee of the Company receives an annual retainer. For 2004, the annual retainer for directors was $10,000, paid in two $5,000 installments, of which the directors are permitted to elect to take up to one-half in the form of stock options. The number of shares subject to options granted pursuant to any such election by a director is equal to twice the number of shares determined by dividing the cash amount by the fair market value of the Common Stock on the date of the award.

      The exercise price of such options is equal to the fair market value of the Common Stock on the date of the award. Under this program, Mr. Beard, Dr. Chu and Mr. Wrinn each received an option to purchase 901 shares of Common Stock at an exercise price of $5.55 per share on April 1, 2004. Mr. Wyman and Mr. Parkhill became Board members in April 2004 and each received 4,000 options at an exercise price of

$5.35 and $5.39 respectively. On October 1, 2004, Mr. Beard, Dr. Chu, Mr. Wrinn, Mr. Wyman and Mr. Parkhill also each received an option to purchase 1,389 shares of Common Stock at an exercise price of $3.60 per share. Each non-employee director receives $750 for each Board meeting attended and $500 for each committee meeting attended.

      Under the Company’s 1998 Stock Option Plan for Non-Employee Directors, on May 27, 2004, Mr. Beard, Dr. Chu, Mr. Wrinn, Mr. Wyman and Mr. Parkhill each received an option to purchase 2,000 shares of Common Stock with an exercise price equal to the fair market value of the stock on that date ($5.25 per share). These options become exercisable with respect to one-fourth of the shares on each of the first four anniversaries of the date of grant, and expire seven years from the date of grant.

      The Company’s compensation for non-employee directors is as follows:

      The Audit Committee in 2004 was comprised of G. Mead Wyman (Chairman), J. Samuel Parkhill and Joseph F. Wrinn, who are not employees of the Company and are “independent” as defined in Rule 4200(a)(15) of the NASDAQ listing standards. The Committee held five meetings during 2004. The Committee recommends to the Board of Directors the independent public accountants to be engaged by the Company; reviews with the independent public accountants and management the Company’s internal accounting procedures and controls; and reviews with the independent public accountants the scope and results of the auditing engagement. The Board determined that Mr. Wyman is an “audit committee financial expert.” The revised charter of the Audit Committee is attached as Exhibit A to this proxy.

      The Stock Option and Compensation Committee was comprised in 2004 of Joseph F. Wrinn (Chairman), J. Chuan Chu, G. Mead Wyman and J. Samuel Parkhill). The Committee administers the Company’s stock option and compensation plans and provides recommendations to the Board of Directors regarding compensation matters. The Committee held four meetings during 2004.

      The Company had no nominating committee in 2004 because the size of the Board and the size of the Company did not warrant a separate committee.

      Although there are no definite qualifications for service as a director of BTU International, Inc., the Company seeks candidates for director who will have the integrity, business experience, commitment and independence to act in the best interest of the Company and its stockholders. Each director is urged to suggest appropriate candidates to the Chairman of the Board for consideration. The Board of Directors will also consider recommendations by stockholders and will evaluate any such recommended candidates against the same criteria as internally generated candidates. A stockholder may recommend a nominee by writing to Director Nominations, Board of Directors, BTU International, Inc. 23 Esquire Road, N. Billerica, MA 01862. Any nominees for the Board of Directors of the Company will be evaluated and recommended by a majority of the independent directors.

      All of our Board members, except for Paul van der Wansem, are independent. Our Board members are encouraged to attend the Company’s Annual Meeting. In some cases, this has been impractical due to other obligations. Last year all members of the Board of Directors attended the annual meeting.

Communications from Stockholders

      Any stockholder wishing to communicate with the Board may do so by writing to the Board of Directors, c/o BTU International, 23 Esquire Road, N. Billerica, Massachusetts 01862. These communications will be forwarded to the Chairman of the Audit Committee, who will determine what action to take with respect to the communication, including where appropriate providing copies of the communication to the other directors.

Section 16(a) Beneficial Ownership Reporting Compliance

      Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the Company’s directors, its officers and any persons holding more than ten percent of the Company’s Common Stock are required to report to the Securities and Exchange Commission their holdings of and transactions in the Common Stock of the Company. Specific due dates for these reports have been established, and the Company is required to report in this proxy statement any failure during 2004 to file by these dates. The Company’s directors, officers and ten percent holders satisfied all of these filing requirements for 2004. In making these statements, the Company has relied on the written representations of its directors, officers and ten percent holders and copies of the reports that they have filed with the Commission and the Company.

Beneficial Ownership of Shares

      The following table sets forth certain information regarding beneficial ownership as of April 8, 2005 of the Company’s Common Stock (i) by each person known by the Company to own beneficially more than 5% of the Company’s Common Stock, (ii) by each of the Company’s directors and nominees, (iii) by each executive officer of the Company listed below in the Summary Compensation Table and (iv) by all directors and executive officers of the Company as a group. Unless otherwise noted below, the address of each person is 23 Esquire Road, North Billerica, MA 10862.

Executive Compensation

      The following table sets forth information with respect to compensation paid to or accrued on behalf of the persons who on December 31, 2004 were the chief executive officer, chairman of the board of directors and the two other most highly paid executive officers of the Company (the “Named Executive Officers”), for services to the Company for the years 2002, 2003 and 2004.

Summary Compensation Table

Option Grants in 2004

      There were no options granted to the Named Executive Officers during 2004.

      The table below sets forth information with respect to option exercises during 2004 and the number and aggregate value on December 31, 2004 of options held by the named executive officers.

Aggregated Option Exercises in

Last Fiscal Year and FY-End Option Value

      Value is based on the closing sales price of the Company’s Common Stock on December 31, 2004, the last trading day of 2004 ($3.049), less the applicable option exercise price.

Compensation Committee Interlocks and Insider Participation

      Messrs. Wyman, Parkhill, Chu, and Wrinn, none of whom is or was an officer or employee of the Company or had any relationship with the Company requiring disclosure in this proxy statement during 2004, served on the Compensation Committee.

Employment Contracts

      The Company has an employment agreement with Paul J. van der Wansem dated February 18, 2005. Mr. van der Wansem is the Chairman of the Board of Directors and the Chief Executive Officer of the Company. The Agreement was approved by the Company’s Compensation Committee on February 18, 2005 and was effective as of October 1, 2004.

      The following is a brief description of the material terms and conditions of the Agreement:

      Subject to earlier termination provisions, the term of employment is indefinite, and is effective as of October 1, 2004.

      Mr. van der Wansem receives a salary at the annual rate of $276,000, payable in regular payroll practices of the Company. He is also generally entitled to participate in any and all benefit plans from time to time in effect for Company executives.

      The amount of bonus compensation for which Mr. van der Wansem is eligible in each fiscal year ranges from 0 to 70% calculated on the basis of $350,000 of annual income and will be 35% of that amount if the Board determines that the Company has achieved all of its performance at targeted levels.

      If Mr. van der Wansem’s employment is terminated in the event of death or disability or if he terminates his employment with the Company for other than Good Reason, then the Company will pay to him: (i) base salary through the termination date, (ii) vacation earned but not used, (iii) any bonus for the preceding year to the extent earned but not yet paid, (iv) if he has worked at least 90 days during the fiscal year, a pro-rated portion of the current year’s bonus, and (v) business expenses incurred but not yet paid.

      If Mr. van der Wansem is terminated by the Company for Cause (as such term is defined in the Agreement), then the Company will pay to him: (i) base salary through the termination date, (ii) vacation earned but not used, (iii) any bonus for the preceding year to the extent earned but not yet paid and (iv) business expenses incurred but not yet paid.

      If Mr. van der Wansem is terminated by the Company for reasons other than for Cause, or if he terminates his employment with the Company for Good Reason (as such term is defined in the Agreement), then the Company will pay to him: (i) base salary through the termination date, (ii) vacation earned but not used, (iii) any bonus for the preceding year to the extent earned but not yet paid, (iv) business expenses incurred but not yet paid, and (v) an amount equal to his base salary, at his then current rate of pay, for a period equal to twelve months.

      If there occurs a change of control (as defined in the Agreement) and if Mr. van der Wansem’s employment is terminated other than for Cause, the Company will pay him the amounts in the preceding bullet (except that the twelve months’ base salary will be in a lump-sum payment), and the Company will accelerate the exercisability of any options he holds and cancel any restrictions on any restricted stock that he holds.

      Mr. van der Wansem has agreed to confidentiality provisions and to a one-year post-termination non-competition agreement. In addition, Mr. van der Wansem and the Company have agreed that the Company will cease making consulting payments to him under his Retirement Agreement but that upon his termination of employment the Company will make a lump-sum payment to him equal to the payments foregone. If his employment terminates before the end of the consulting period, the consulting period will resume on that date. In all other respects, the Retirement Agreement and remains in full force effect.

      Also, as part of the agreement, the Company will compensate Mr. van der Wansem $100,000 per year in connection with his responsibilities as Chairman of the Board for the period July 2003 through June 2007. The Company will recognize these amounts as the services are performed. The agreement also provides for certain settlement amounts if Mr. van der Wansem responsibilities as Chairman of the Board are terminated.

      In addition, the Company has an employment agreement with Mark Rosenzweig dated July 8, 2002.

      Mr. Rosenzweig resigned from the Company on September 29, 2004. He is entitled to receive his base salary through the date of termination, any bonus payable from the previous fiscal year, and a pro rata portion of any bonus for the then current fiscal year if the termination occurs in the second half, which is referred to as his “final compensation.” In addition to final compensation, he is entitled to receive base salary for the remainder of the original term or 12 months, whichever is longer, (unless he finds other employment) automobile and life insurance benefits for three months and medical and dental benefits for up to six months.

Equity Compensation Plan Benefit Information

      The following table gives information about BTU International’s common stock that may be issued upon the exercise of options, warrants and rights under all of BTU International’s existing equity compensation plans as of December 31, 2004.

Report of the Compensation Committee on Executive Compensation

      The Compensation Committee has submitted the following report:

      Compensation for executive officers consists of three components: base salary; cash incentive compensation and equity compensation. Company executive base salary compensation is arrived at through market survey analysis, functional responsibility and expected contribution to the results of the business. For cash incentive compensation, the Compensation Committee, in conjunction with the full Board of Directors, reviews and approves incentive compensation plans for the Company’s executive officers based on attaining certain goals. These goals included both earnings per share target and the accomplishment of specific organizational goals. Because of the losses during 2004 no incentive compensation was paid under this plan.

      The Company awards stock options and or restricted stock to executive officers as a component of an overall compensation package. The Company believes that stock options can help better align the interests of the executive officers with those of stockholders generally.

Report of the Audit Committee

      The Audit Committee held five meetings during 2004. The Audit Committee recommends to the Board of Directors the independent public accountants to be engaged by the Company; reviews with such auditors and management the Company’s internal accounting procedures and controls; and reviews with such auditors the audit scope and results of their audit of the consolidated financial statements of the Company. The Audit Committee adopted a revised committee charter in May 2004, a copy of which was filed as part of the 2004 Proxy Statement.

      The Audit Committee has reviewed and discussed the Company’s audited consolidated balance sheets as of December 31, 2004 and 2003 and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2004 with BTU International, Inc.’s management. The Audit Committee has discussed with Vitale, Caturano and Co. PC (“Vitale”), the Company’s independent accountants, the matters required to be discussed by Statement of Auditing Standards No. 61 (concerning the accounting methods used in the financial statements).

      The Audit Committee has also reviewed with Vitale the Independent Standards Board No. 1 concerning the matters that may affect the accountant’s independence and has discussed with Vitale their independence. Based on the foregoing review and discussion, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company Annual Report on Form 10-K for the year ended December 31, 2004 for filing with the Securities and Exchange Commission.

Independent Auditors and Audit Fees

      The Board of Directors, upon recommendation of the Audit Committee, selected Vitale as independent auditors of the Company for the year ending December 31, 2004. The Audit Committee has not yet formally recommended an independent auditor for the year ending December 31, 2005. This will be addressed at our Audit Committee meeting scheduled for May 26, 2005. We expect that representatives of Vitale will be present at the annual meeting.

      The following table describes the fees that Vitale billed to the Company for the fiscal year ended December 31, 2004 and December 31, 2003.

Comparative Stock Performance

      The following graph shows the cumulative total return on BTU Common Stock since December 31, 1999 compared to the Standard & Poors 500 Index and the Standard & Poors Technology Sector Index. Historical stock price performance is not necessarily indicative of future performance.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

AMONG BTU INTERNATIONAL, INC., THE S&P 500 INDEX

AND THE S&P INFORMATION TECHNOLOGY INDEX

INCLUDING REINVESTMENT OF DIVIDENDS.

FISCAL YEAR ENDING DECEMBER 31.

Audit Matters

      Vitale has examined the financial statements of the Company for the year ended December 31, 2004. A representative of Vitale is expected to be present at the Annual Meeting and will be afforded the opportunity to make a statement and to respond to appropriate questions from stockholders.

Stockholder Proposals

      Proposals of stockholders to be included in the Company’s proxy statement for the 2006 Annual Meeting must be received by the Company no later than December 17, 2005. For stockholder proposals at the 2006 annual meeting of stockholders that will not be included in the Company’s proxy statement, unless notice of such a proposal is received by the Company at its corporate headquarters, Attention John E. Beard, Secretary, on or before February 25, 2006, the management proxies with respect to such meeting will confer discretionary voting authority with respect to any such matter.

Other Business

      The Board of Directors knows of no business that will come before the meeting for action except as described in the accompanying Notice of Annual Meeting of Stockholders. However, as to any such business, the persons designated as proxies will have discretionary authority to act in their best judgment.

Form 10-K

      A copy of BTU’s annual report on Form 10-K filed with the Securities and Exchange Commission is provided to you concurrently with this Proxy Statement.

Exhibit A

CHARTER OF THE AUDIT COMMITTEE

OF THE BOARD OF DIRECTORS OF

BTU INTERNATIONAL, INC. (THE “COMPANY”)

      1. Purpose. The purpose of the Audit Committee shall be to (a) appoint, oversee and replace, if necessary, the independent auditor, (b) assist the Board of Director’s oversight of (i) the preparation of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements in the area of financial accounting, (iii) the independent auditor’s qualifications and independence, (iv) the performance of the Company’s internal audit function and independent auditor; and (c) prepare the report the SEC rules require be included in the Company’s annual proxy statement.

      2. Composition of the Audit Committee. The Committee shall consist of not less than three board members appointed by the Board of Directors of the Company. Committee members may be removed by the Board of Directors in its discretion. Each member of the Committee shall satisfy the independence requirements of the Sarbanes-Oxley Act of 2002 and the NASDAQ Stock Market, Inc. Members of the Committee shall be versed in reading and understanding financial statements. No member of the Committee may sit on more than three separate audit committees. At least one member of the Audit Committee shall be a financial expert as defined by the SEC.

      3. Meetings of the Audit Committee. The Committee shall hold at least four regularly scheduled meetings and such special meetings as circumstances dictate. It shall meet separately, at least quarterly, with management, with the internal auditors (or other personnel responsible for the internal audit function), and with the independent auditor to discuss results of examinations, or discuss any matters that the Committee or any of these persons or firms believe should be discussed privately. The Committee shall report regularly to the Board of Directors.

      4. Responsibilities of the Audit Committee. The function of the Committee is oversight. The Committee has direct and sole responsibility for the appointment, compensation, oversight and replacement, if necessary, of the independent auditor, including the resolution of disagreements between management and the auditor regarding financial reporting. Each member of the Committee shall be entitled to rely on (i) the integrity of those persons and organizations within and outside the Company that it receives information from and (ii) the accuracy of the financial and other information provided to the Committee by such persons or organizations absent actual knowledge to the contrary (which shall be promptly reported to the Board of Directors).

      5. Duties and Proceedings of the Audit Committee. The Committee shall assist the Board of Directors in fulfilling its oversight responsibilities by accomplishing the following:

      5.1. Oversight of Independent Auditor.

      5.2. Oversight of Audit Process and Company’s Legal Compliance Program.

      5.3. Other Responsibilities.

      6. Authority and Resources of the Audit Committee. The Committee has the authority to retain legal, accounting or other experts that it determines to be necessary to carry out its duties. It also has the authority to determine compensation levels for such advisors as well as for the independent auditor. The Committee may determine appropriate funding needs for its own ordinary administrative expenses that are necessary and appropriate to carry out its duties.

BTU-PS-05

BTU INTERNATIONAL, INC.

 

 

 

 

 

 

 

PROXY

ANNUAL MEETING OF BTU INTERNATIONAL, INC.

MAY 26, 2005

     The undersigned hereby constitutes and appoints Paul J. van der Wansem and Thomas P. Kealy, or either of them with full power of substitution to each, proxies to vote and act at the Annual Meeting of Stockholders on May 26, 2005 at 10:00 a.m., and at any adjournments thereof, upon and with respect to the number of shares of Common Stock of the company as to which the undersigned may be entitled to vote or act. The undersigned instructs such proxies, or their substitutes, to vote in such manner as they may determine on any matters which may come before the meeting, all as indicated in the accompanying Notice of Meeting and Proxy Statement, receipt of which is acknowledged, and to vote on the following as specified by the undersigned. All proxies heretofore given by the undersigned in respect of said meeting are hereby revoked.

     THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. Unless otherwise specified in the boxes provided on the reverse side hereof, the proxy will be voted IN FAVOR of all nominees for director and in the discretion of the named proxies as to any other matter that may come before this meeting or any adjournment thereof.