SEC Info - Axcelis Technologies Inc - IPO: ‘424B4’ on 7/11/00

SEC Info℠

Home

Help

Please Sign In

Axcelis Technologies Inc – IPO: ‘424B4’ on 7/11/00

On: Tuesday, 7/11/00, at 2:16pm ET · Accession #: 950128-0-971 · File #: 333-36330

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 7/11/00  Axcelis Technologies Inc          424B4                  1:342K                                   Bowne of Pittsbur… 01/FA

Initial Public Offering (IPO): Prospectus — Rule 424(b)(4)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B4       Axcelis Technologies Inc. Form 424(B)(4)             109    493K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Arrangements With Eaton Board Structure and Compensation Business Capitalization Description of Capital Stock Dilution Dividend Policy Estimates Executive Compensation Experts Gross profit Incentive Plans Income (loss) from operations Income taxes (credit) Index to Combined Financial Statements Inventories Liquidity and Capital Resources Management Management's Discussion and Analysis Net income (loss) Net sales Notes to Combined Financial Statements Offering, The Other income (expense) Our Separation from Eaton Principal Stockholder Products and Services Prospectus Summary Report of Independent Auditors Restructuring charges Revenue Recognition Rights Plan Risk Factors Risks Related to our Separation from Eaton Risks Relating to Our Business Selected Historical Combined Financial Data Selling SEN Joint Venture Shares Eligible For Future Sale Special Note Regarding Forward-Looking Statements Stock Ownership of Directors and Executive Officers Summary Historical Combined Financial Data The Offering Trademark License Agreement Treatment of Eaton Options Underwriting United States Federal Tax Considerations to Non-United States Holders Use of proceeds Validity of Common Stock Where You Can Find More Information 2000 Stock Plan
1	1st Page - Filing Submission
3	Prospectus Summary
5	The Offering
6	Summary Historical Combined Financial Data
9	Risk Factors
"	Risks Relating to Our Business
14	Risks Related to our Separation from Eaton
19	Special Note Regarding Forward-Looking Statements
20	Our Separation from Eaton
22	Use of proceeds
"	Dividend Policy
23	Capitalization
24	Dilution
25	Selected Historical Combined Financial Data
27	Management's Discussion and Analysis
30	Net sales
"	Gross profit
31	Selling
"	Income (loss) from operations
"	Other income (expense)
"	Income taxes (credit)
32	Net income (loss)
34	Restructuring charges
37	Liquidity and Capital Resources
40	Business
42	Products and Services
48	SEN Joint Venture
55	Management
57	Board Structure and Compensation
58	Stock Ownership of Directors and Executive Officers
60	Executive Compensation
62	Treatment of Eaton Options
"	Incentive Plans
"	2000 Stock Plan
66	Arrangements With Eaton
69	Trademark License Agreement
74	Principal Stockholder
75	Description of Capital Stock
76	Rights Plan
77	Shares Eligible For Future Sale
79	United States Federal Tax Considerations to Non-United States Holders
82	Underwriting
84	Validity of Common Stock
"	Experts
"	Where You Can Find More Information
85	Index to Combined Financial Statements
86	Report of Independent Auditors
92	Notes to Combined Financial Statements
93	Inventories
94	Revenue Recognition
96	Estimates

424B4 1st Page of 109 TOC ↑Top Previous Next ↓Bottom Just 1st

Filed Pursuant to Rule 424(b)(4)
Registration No. 333-36330

15,500,000 Shares

Axcelis Technologies, Inc. Logo
Common Stock
----------------------
This is an initial public offering of shares of common stock of Axcelis
Technologies, Inc. All of the 15,500,000 shares of common stock are being sold
by Axcelis.

Prior to this offering, there has been no public market for the common
stock. The shares of common stock have been approved for quotation on the Nasdaq
National Market under the symbol "ACLS".

See "Risk Factors" beginning on page 9 to read about factors you should
consider before buying shares of the common stock.

----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

----------------------

[Download Table]

Per Share Total
--------- ------------

Initial public offering price............................... $22.00 $341,000,000
Underwriting discount....................................... $ 1.32 $ 20,460,000
Proceeds, before expenses, to Axcelis....................... $20.68 $320,540,000

To the extent that the underwriters sell more than 15,500,000 shares of the
common stock, the underwriters have the option to purchase up to an additional
1,550,000 shares from Axcelis at the initial public offering price less the
underwriting discount.

----------------------
Goldman, Sachs & Co. expects to deliver the shares against payment in New
York, New York on July 14, 2000.

GOLDMAN, SACHS & CO. MORGAN STANLEY DEAN WITTER

LEHMAN BROTHERS

SALOMON SMITH BARNEY
----------------------

Prospectus dated July 10, 2000.

424B4 2nd Page of 109 TOC 1st Previous Next ↓Bottom Just 2nd

INSIDE FRONT COVER

424B4 3rd Page of 109 TOC 1st Previous Next ↓Bottom Just 3rd

PROSPECTUS SUMMARY

This summary does not contain all of the information that you should
consider before investing in our common stock. You should read the entire
prospectus carefully, especially "Risk Factors" beginning on page 9.

AXCELIS

We are a leading producer of ion implantation equipment used in the
fabrication of semiconductors and, together with our Japanese joint venture,
were ranked number one in sales in the world in this category for 1999 by
Dataquest Inc. The ion implantation process provides a means for introducing
charged ions into the surface of a silicon wafer in order to form the active
components of a semiconductor. We also produce dry strip, photostabilization and
rapid thermal processing equipment, which is used in semiconductor manufacturing
primarily before and after the ion implantation process. In addition, we provide
extensive aftermarket service and support, including spare parts, equipment
upgrades, maintenance services and customer training. We are a 50-50 joint
venture partner in Japan with Sumitomo Heavy Industries, Ltd., or Sumitomo. This
joint venture, which is known as Sumitomo Eaton Nova Corporation, or SEN,
licenses our technology and is the leading producer of ion implantation
equipment in Japan.

Our customers are located in North America, Europe and Asia Pacific. We and
SEN serve all of the 20 largest semiconductor manufacturers in the world. We
believe that more than 3,200 of our products, including products shipped by SEN,
are in use worldwide. We manufacture our equipment at three locations in the
United States, and we support customers in 19 countries through 49 support
locations in nine countries. SEN manufactures equipment at its Toyo, Japan
facility.

Based on our knowledge of the semiconductor equipment manufacturing
industry, we believe that we have been at the forefront of technological
innovation in the ion implant sector. For example, we believe that we developed
the first high current ion implantation system in the late 1970s and the first
high energy ion implantation system in the 1980s. In 1999, we installed what we
believe is the first 300 millimeter high energy ion implantation system, which
we believe will be the next generation of ion implant products. In addition, we
pioneered the development of photostabilization in 1983, and we believe that we
have developed the only 300 millimeter production photostabilizer in the
industry.

The semiconductor industry is continuing to experience growth in demand for
semiconductors, or chips, for use in personal computers, telecommunication
equipment, digital consumer electronics, wireless communication products and
other applications. According to World Semiconductor Trade Statistics, an
industry trade association, worldwide sales of semiconductors were $149 billion
in 1999. While the semiconductor industry has been highly cyclical, the
semiconductor market, as measured by total sales, grew at an average annual
compound rate of approximately 12% in the period from 1989 through 1999. World
Semiconductor Trade Statistics projects continued growth at higher rates for the
next two years. Sales of high energy ion implanters, our largest product line,
have grown substantially faster than semiconductor sales over this period.

The increasing demand for semiconductors has required manufacturers to
increase chip production. Manufacturers have primarily increased production
through efficiency improvements, the addition of manufacturing equipment in
existing fabrication facilities and the construction of new fabrication
facilities. Efficiency improvements have been derived largely from increased
equipment utilization and higher manufacturing yields. In recent years, however,
the ability to make significant efficiency gains has diminished. For that
reason, as market conditions have improved since early 1999, semiconductor
manufacturers have been meeting the increased demand for chips mostly by
building new fabrication facilities and by making additional equipment purchases
to expand existing fabrication facilities.

Our objective is to enhance our position as a leading producer of ion
implantation equipment and to offer on an integrated basis a broad array of
products and services used primarily in the

424B4 4th Page of 109 TOC 1st Previous Next ↓Bottom Just 4th

front-end of the chip fabrication process. Key elements of our strategy to
achieve our objective include:

- increase ion implantation market penetration;

- maintain strong commitment to research and development;

- capitalize on broad product lines to provide an integrated range of
front-end equipment;

- provide lowest cost of ownership;

- provide superior customer service; and

- reduce cycle times in our businesses.

OUR RELATIONSHIP WITH EATON CORPORATION

We are currently a wholly owned subsidiary of Eaton Corporation. On April
26, 2000, Eaton announced its plan to reorganize its semiconductor equipment
operations into an independent, publicly held company. On June 30, 2000, Eaton
substantially completed the transfer to us of all of the assets of its
semiconductor equipment operations that were not owned by us, and we assumed the
related liabilities. In connection with the reorganization, we changed our name
from Eaton Semiconductor Equipment Inc. to Axcelis Technologies, Inc. After
completion of this offering, Eaton will own approximately 83.8% of our
outstanding common stock, or 82.4% if the underwriters fully exercise their
option to purchase additional shares.

Eaton currently plans to consummate the divestiture of our common stock to
its shareholders approximately six months following the completion of this
offering by distributing all of its shares of our common stock in a tax-free
transaction to Eaton shareholders. Eaton may accomplish this divestiture through
a split-off, a spin-off or some combination of both transactions. Eaton will, in
its sole discretion, determine the timing, structure and terms of the
divestiture of the remaining shares of our common stock that it owns. The
planned divestiture by Eaton is subject to receiving a private letter ruling
from the Internal Revenue Service that the divestiture will be tax-free to Eaton
and its shareholders and that Eaton's contribution of assets to us in connection
with our separation from Eaton will qualify as a tax-free reorganization for
U.S. federal income tax purposes. Eaton recently filed the private letter ruling
request. Eaton is not, however, obligated to consummate the divestiture, and we
cannot assure you whether or when it will occur.

On May 3, 2000, our Board of Directors declared a dividend of $300 million
payable to Eaton. We have the option of paying this dividend in either cash or
notes or in a combination thereof. Any notes issued would bear interest and
would have a maturity not to exceed two years. We presently expect to pay all of
this dividend in cash.

We have entered into agreements with Eaton providing for the substantial
completion of the reorganization of Eaton's semiconductor equipment operations
and the separation of our business operations from Eaton. These agreements
provide for, among other things:

- the transfer from Eaton to us of assets and the assumption by us of
liabilities relating to our business, and

- various interim relationships with Eaton.

The agreements regarding the separation of our business operations from
Eaton are described more fully in the section entitled "Arrangements With Eaton"
included elsewhere in this prospectus. The terms of these agreements, which are
made in the context of a parent-subsidiary relationship, may be more or less
favorable to us than if they had been negotiated with unaffiliated third
parties. See "Risk Factors -- Risks Related to our Separation from Eaton". Our
assets and liabilities are described more fully in our combined financial
statements and notes to those statements that are included elsewhere in this
prospectus.

424B4 5th Page of 109 TOC 1st Previous Next ↓Bottom Just 5th

THE OFFERING

[Enlarge/Download Table]

Common stock offered.................................... 15,500,000 shares
Common stock to be outstanding immediately after this
offering.............................................. 95,500,000 shares
Common stock to be held by Eaton immediately after this
offering.............................................. 80,000,000 shares
Use of proceeds......................................... We intend to use the estimated net proceeds
of $317.5 million from this offering, or
$349.6 million if the underwriters fully
exercise their option to purchase additional
shares, together with available cash, for
the payment of a previously declared
dividend to Eaton of $300 million and for
general corporate purposes.
Nasdaq National Market symbol........................... "ACLS"

----------------------

Unless we specifically state otherwise, the information in this prospectus
gives effect to a stock split increasing the number of shares of our common
stock owned by Eaton from 100 to 80,000,000 effected in the form of a stock
dividend that was paid in June 2000 and does not take into account the issuance
of up to 1,550,000 shares of common stock that the underwriters have the option
to purchase. If the underwriters exercise in full their option to purchase
additional shares, 97,050,000 shares of common stock will be outstanding
immediately after this offering.

The information above does not take into account 21,000,000 shares of our
common stock reserved for issuance under our stock plans, of which options to
purchase 5,400,000 shares have been granted at the date of this offering at an
exercise price equal to the initial public offering price. In addition, we may
assume substantially all of the Eaton stock options held by our employees on the
date Eaton consummates its divestiture of our company. If the divestiture had
been consummated on July 10, 2000, these options to purchase Eaton common shares
would have converted into options to purchase 1,864,151 shares of our common
stock on that date, based on the initial public offering price of $22.00 per
share and the closing price of $69 1/2 per Eaton common share on July 10, 2000.

Our principal executive offices are located at 55 Cherry Hill Drive,
Beverly, Massachusetts 01915, and our telephone number is (978) 232-4000. We
were incorporated under the laws of the State of Delaware in 1995. Our website
is located at http://www.axcelis.com. The information on our website is not a
part of this prospectus.

Subject to certain limitations, Eaton has authorized us to use "Eaton" as a
trademark. We own the symbolic replicas of our product lines and the following
trademarks: Gemini(TM), Fusion 200(TM), Fusion 300(TM), GSD/HE(TM), GSD/VHE(TM),
GSD/200E(2)(TM), 8250HT(TM), HE3(TM), ULE2(TM), MC3(TM), Axcelis(TM), SMART(TM),
Fusion PS3(TM), Fusion ES3(TM), GSD/HE(MC)(TM), FusionGemini(TM), Summit(TM) and
Summit 300(TM). All other trademarks or trade names referred to in this
prospectus are the property of their respective owners.

424B4 6th Page of 109 TOC 1st Previous Next ↓Bottom Just 6th

SUMMARY HISTORICAL COMBINED FINANCIAL DATA

The following tables present our summary historical combined financial
data. The information set forth below should be read together with "Management's
Discussion and Analysis" and our historical combined financial statements and
notes to those statements included elsewhere in this prospectus. Our statements
of combined operations data set forth below for the years ended December 31,
1997, 1998 and 1999 and the combined balance sheet data as of December 31, 1998
and 1999 are derived from our audited combined financial statements included in
this prospectus which have been audited by Ernst & Young LLP, independent
auditors, whose report is also included in this prospectus.

The statements of combined operations data for the years ended December 31,
1995 and 1996 and the combined balance sheet data as of December 31, 1995, 1996
and 1997 are derived from our unaudited combined financial statements that are
not included in this prospectus. The statements of combined operations data for
the three months ended March 31, 1999 and 2000 and the combined balance sheet
data as of March 31, 2000 are derived from unaudited combined financial
statements included in this prospectus and, in the opinion of management,
include all adjustments, consisting only of normal recurring accruals, that are
necessary for a fair presentation of our financial position and operating
results for these periods. The historical financial information may not be
indicative of our future performance and does not reflect what our financial
position and operating results would have been had we operated as a separate,
stand-alone entity during the periods presented.

424B4 7th Page of 109 TOC 1st Previous Next ↓Bottom Just 7th

[Enlarge/Download Table]

THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------ -------------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- --------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED) (UNAUDITED)

STATEMENTS OF COMBINED
OPERATIONS DATA (1)
Net sales....................... $385,080 $448,663 $ 460,010 $ 265,709 $397,267 $ 59,124 $143,051
Gross profit (2)................ 138,335 157,246 172,802 64,229 157,082 20,768 61,474
Other costs & expenses:
Selling....................... 34,375 45,600 47,148 42,134 37,946 9,087 11,598
General & administrative...... 23,326 33,437 38,287 47,075 45,925 9,612 13,030
Research & development........ 21,802 35,107 70,466 78,656 51,599 12,183 16,125
Amortization of goodwill &
intangible assets........... 100 3,936 9,279 9,279 2,320 2,320
Restructuring charges (2)..... 24,994
Write-off of in-process
research & development (1).. 85,000
-------- -------- --------- --------- -------- -------- --------
Income (loss) from operations... 58,832 43,002 (72,035) (137,909) 12,333 (12,434) 18,401
Other income (expense):
Royalty income................ 8,273 9,590 6,265 7,949 5,854 965 3,823
Equity income (loss) of SEN... 7,044 10,148 3,283 (2,132) 1,338 (2,447) 3,340
Other income (expense)-net.... (163) (1,837) 1,123 (1,045) 28 (145) 1,549
-------- -------- --------- --------- -------- -------- --------
Income (loss) before income
taxes......................... 73,986 60,903 (61,364) (133,137) 19,553 (14,061) 27,113
Income taxes (credit)........... 25,365 14,599 103 (51,090) 5,125 (3,686) 8,251
-------- -------- --------- --------- -------- -------- --------
Net income (loss)............... $ 48,621 $ 46,304 $ (61,467) $ (82,047) $ 14,428 $(10,375) $ 18,862
======== ======== ========= ========= ======== ======== ========
Net income (loss) per share:
Basic and diluted net income
(loss) per share............ $ .61 $ .58 $ (.77) $ (1.03) $ .18 $ (.13) $ .24
======== ======== ========= ========= ======== ======== ========
Shares used in computing basic
and diluted net income
(loss) per share............ 80,000 80,000 80,000 80,000 80,000 80,000 80,000
======== ======== ========= ========= ======== ======== ========
Unaudited pro forma basic and
diluted net income per share
(3)......................... $ .15 $ .20
======== ========
Shares used in computing
unaudited pro forma basic
and diluted net income per
share (3)................... 94,644 94,644
======== ========

[Enlarge/Download Table]

MARCH 31, 2000
DECEMBER 31, -------------------------
---------------------------------------------------- PRO FORMA AS
1995 1996 1997 1998 1999 ACTUAL ADJUSTED(4)
-------- -------- -------- -------- -------- -------- --------------
(IN THOUSANDS)
(UNAUDITED) (UNAUDITED)

COMBINED BALANCE SHEET DATA
Cash & short-term investments..... $ 1,662 $ 2,159 $ 3,479 $ 3,338 $ 3,530 $ 2,803 $ 40,603(5)
Working capital................... 102,578 112,092 149,041 91,028 169,759 190,004 219,504
Total assets...................... 213,659 279,189 457,567 341,121 422,835 449,332 467,832
Stockholder's net investment...... 151,112 190,429 349,192 269,161 342,296 363,467 380,967

(Notes on following page)
7

424B4 8th Page of 109 TOC 1st Previous Next ↓Bottom Just 8th

---------------

NOTES:

(1) On August 4, 1997, we acquired Fusion Systems Corporation, a developer
and manufacturer of dry strip and photostabilization systems for use in
the semiconductor manufacturing process. The acquisition was accounted
for under the purchase method of accounting and, accordingly, our
combined financial statements include Fusion's results of operations
beginning August 4, 1997. Net income in 1997 was reduced by an $85.0
million write-off of purchased in-process research and development
related to the acquisition of Fusion, with no income tax benefit.

(2) Net loss in 1998 reflects a restructuring charge of $42.4 million
($27.5 million aftertax) of which $17.4 million related to inventory
writedowns and reduced gross profit and $25.0 million related to
workforce reductions and other restructuring actions and was recorded
in operating expenses.

(3) Pro forma basic and diluted net income per share amounts are calculated
based on 80,000,000 shares of our common stock outstanding that are
owned by Eaton prior to this offering, plus an additional 14,643,824
shares of common stock. The number of additional shares is calculated
by dividing the $300 million previously declared dividend to Eaton by
the initial public offering price of $22.00 per share, reduced by the
estimated per share offering expenses.

(4) Pro forma as adjusted amounts give effect to the following actions as
though these actions had been taken as of March 31, 2000:

- our sale of 15,500,000 shares of common stock in this offering at the
initial public offering price of $22.00 per share, resulting in net
proceeds of $317.5 million after deducting the underwriting discount
and estimated offering expenses payable by us;

- our payment of a previously declared dividend to Eaton of $300
million;

- our receipt of net proceeds of $11.0 million from the sale of our
Austin, Texas facility on May 18, 2000; this facility was closed in
the first quarter of 1999;

- our payment of $0.9 million to settle the March 31, 2000 payable to
Eaton as a result of Eaton's management of substantially all of our
cash receipts and disbursements in the United States since December
31, 1999;

- our receipt of $3.7 million to settle the balance of the March 31,
2000 "Receivables from Eaton Corporation", net of $5.5 million, which
represents the portion of these receivables to be retained by Eaton;

- the net transfer of approximately $8.0 million of cash from Eaton to
us in connection with Eaton's transfer of assets to us; and

- Eaton's retention of $1.5 million of our $2.8 million of cash and
short-term investments at March 31, 2000.

See "Management's Discussion and Analysis -- Liquidity and Capital
Resources".

(5) During April and May 2000, we estimate that Eaton's management of
substantially all of our cash receipts and disbursements in the United
States resulted in additional cash due us of $23.9 million.

424B4 9th Page of 109 TOC 1st Previous Next ↓Bottom Just 9th

RISK FACTORS

Investing in our common stock involves a high degree of risk and
uncertainty. You should carefully consider the risks and uncertainties described
below before purchasing our common stock. If any of the following risks actually
occur, our business, financial condition or results of operations could be
harmed. In that case, the trading price of our common stock could decline, and
you could lose all or part of your investment.

RISKS RELATING TO OUR BUSINESS

DOWNTURNS IN THE SEMICONDUCTOR INDUSTRY HAVE HAD IN THE PAST, AND MAY HAVE IN
THE FUTURE, A SEVERE ADVERSE EFFECT ON OUR SALES AND PROFITABILITY.

Our business depends in significant part upon capital expenditures by
semiconductor manufacturers, especially manufacturers that are opening new or
expanding existing fabrication facilities. The level of capital expenditures by
these manufacturers depends upon the current and anticipated market demand for
semiconductors and the products utilizing them, the available manufacturing
capacity in manufacturers' fabrication facilities, and the ability of
manufacturers to increase productivity in existing facilities without incurring
additional capital expenditures.

The semiconductor industry is highly cyclical and has experienced periodic
downturns that have had a severe adverse impact on the semiconductor industry
and on suppliers to the semiconductor industry, including us. The semiconductor
industry has in the past experienced, and will likely experience in the future,
periods of oversupply that result in significantly reduced demand for capital
equipment, including our systems. When these periods occur, we will be adversely
affected. For instance, semiconductor equipment manufacturers were affected by a
severe downturn in the semiconductor industry in 1998, during which our net
sales declined by $194.3 million, or 42.2%, from the prior year.

We anticipate that a significant portion of our new orders will depend upon
demand from semiconductor manufacturers who build or expand fabrication
facilities. If existing fabrication facilities are not expanded or new
facilities are not built as rapidly as anticipated, demand for our systems may
decline, and we may be unable to generate significant new orders for our
systems, which would adversely affect our sales levels. In addition, the
continued requirements for investments in engineering, research and development
and marketing necessary to develop new products and to maintain extensive
customer service and support capabilities limit our ability to reduce expenses
during downturns in proportion to declining sales. Any future downturns or
slowdowns in the semiconductor industry may cause the price of our common stock
to decline.

IF WE FAIL TO DEVELOP AND INTRODUCE NEW OR ENHANCED PRODUCTS AND SERVICES FOR
SEMICONDUCTOR MANUFACTURERS, WE WILL NOT BE ABLE TO COMPETE EFFECTIVELY.

Rapid technological changes in semiconductor manufacturing processes
require the semiconductor equipment industry to respond quickly to changing
customer requirements. We believe that our future success will depend in part
upon our ability to develop, manufacture and successfully introduce new systems
and product lines with improved capabilities and to continue to enhance existing
products, including products that process 300 millimeter wafers. Our ability to
successfully develop, introduce and sell new and enhanced systems depends upon a
variety of factors, including new product selection, timely and efficient
completion of product design and development, timely and efficient
implementation of manufacturing and assembly processes, product performance in
the field and effective sales and marketing. We cannot assure you that we will
be successful in selecting, developing, manufacturing and marketing new products
or in enhancing our existing products.

424B4 10th Page of 109 TOC 1st Previous Next ↓Bottom Just 10th

Due to the risks inherent in transitioning to new products, we will need to
accurately forecast demand for new products while managing the transition from
older products. Our inability to develop or meet the technical specifications of
any of our new systems or enhancements to our existing systems or to manufacture
and ship these systems or enhancements in volume in a timely manner could
materially and adversely affect us.

If new products have reliability or quality problems, we may experience
reduced orders, higher manufacturing costs, delays in acceptance and payment,
and additional service and warranty expense. In the past, we have experienced
some delays as well as reliability and quality problems in connection with new
product introductions, resulting in some of these consequences.

We cannot assure you that we will successfully develop and manufacture new
products or that our new products will be accepted in the marketplace. A failure
to successfully introduce new products will have a material adverse effect on
us.

We expect to continue to make significant investments in research and
development. Future technologies, processes or product developments may render
our current product offerings obsolete or we may not be able to develop and
introduce new products or enhancements to existing products that satisfy
customer needs in a timely manner or achieve market acceptance. The failure to
do so could adversely affect us. If we are not successful in marketing and
selling advanced processes or equipment to customers with whom we have formed
long-term relationships, sales of our products to those customers could be
adversely affected.

IF WE FAIL TO COMPETE SUCCESSFULLY IN THE HIGHLY COMPETITIVE SEMICONDUCTOR
EQUIPMENT INDUSTRY, OUR SALES AND PROFITABILITY WILL DECLINE.

The market for semiconductor manufacturing equipment is highly competitive.
We believe that, to remain competitive, we will require significant financial
resources in order to offer a broad range of products, to maintain customer
service and support centers worldwide and to invest in product and process
research and development.

In the ion implantation market, we compete with a relatively small number
of competitors. An acquisition of, or by, one of our competitors in the ion
implant sector may result in a substantially strengthened competitor with
greater financial, engineering, manufacturing, marketing and customer service
and support resources than we have. Competitors with substantially greater
financial resources than we may be better positioned to successfully compete in
the industry. In addition, there are smaller, emerging semiconductor equipment
companies that provide innovative systems with technology that may have
performance advantages over our systems.

Competitors are expected to continue to improve the design and performance
of their existing products and processes and to introduce new products and
processes with improved price and performance characteristics. If competitors
enter into strategic relationships with leading semiconductor manufacturers
covering products similar to those sold or being developed by us, our ability to
sell products to those manufacturers may be adversely affected. We cannot assure
you that we will be able to compete successfully with our existing competitors
or with new competitors.

WE HAVE BEEN DEPENDENT ON SALES TO A LIMITED NUMBER OF LARGE CUSTOMERS; THE LOSS
OF ANY OF THESE CUSTOMERS OR ANY REDUCTION IN ORDERS FROM SUCH CUSTOMERS COULD
MATERIALLY AFFECT OUR SALES.

Historically, we have sold a significant proportion of our products and
services to a limited number of fabricators of semiconductor products. For
example, in 1999, three of our customers, STMicroelectronics N.V., Motorola,
Inc. and Texas Instruments Incorporated, accounted for 37.0% of our net sales,
and our ten largest customers accounted for 59.1%. None of our customers has
entered into a long-term agreement requiring it to purchase our products.
Product

424B4 11th Page of 109 TOC 1st Previous Next ↓Bottom Just 11th

sales to certain of our customers may decrease in the near future as those
customers complete current purchasing requirements for new or expanded
fabrication facilities. Although the composition of the group comprising our
largest customers has varied from year to year, the loss of a significant
customer or any reduction or delays in orders from any significant customer,
including reductions or delays due to customer departures from recent buying
patterns, or market, economic or competitive conditions in the semiconductor
industry, could adversely affect us. The ongoing consolidation of semiconductor
manufacturers may increase the adverse effect of losing a significant customer.

OUR QUARTERLY FINANCIAL RESULTS MAY FLUCTUATE SIGNIFICANTLY AND MAY FALL SHORT
OF ANTICIPATED LEVELS, WHICH COULD CAUSE OUR STOCK PRICE TO DECLINE.

We derive most of our revenues from the sale of a relatively small number
of expensive products to a small number of customers. The list prices on these
products range from $150,000 to over $4.0 million. At our current sales level,
each sale, or failure to make a sale, could have a material effect on us in a
particular quarter. Our lengthy sales cycle, coupled with customers' competing
capital budget considerations, make the timing of customer orders uneven and
difficult to predict. In a given quarter, a number of factors can adversely
affect our revenues and results, including changes in our product mix, increased
fixed expenses per unit due to reductions in the number of products
manufactured, and higher fixed costs due to increased levels of research and
development and expansion of our worldwide sales and marketing organization. In
addition, our backlog at the beginning of a quarter typically does not include
all orders required to achieve our sales objectives for that quarter and is not
a reliable indicator of our future sales. As a result, our net sales and
operating results for a quarter depend on our shipping orders as scheduled
during that quarter as well as obtaining new orders for products to be shipped
in that same quarter. Any delay in scheduled shipments or in shipments from new
orders could materially and adversely affect us, which could cause our stock
price to decline significantly. Due to the foregoing factors, we believe that
period-to-period comparisons of our operating results should not be relied upon
as an indicator of our future performance.

WE ARE DEPENDENT UPON OUR JAPANESE JOINT VENTURE AND SUMITOMO FOR ACCESS TO THE
JAPANESE SEMICONDUCTOR EQUIPMENT MARKET.

In 1982, we established our SEN joint venture with Sumitomo to provide us
with additional manufacturing capacity for our ion implantation products and
local access to the Japanese semiconductor equipment market. Under our
arrangements with Sumitomo, our ion implantation products may be sold in Japan
only through the joint venture. We receive our 50% proportionate share of the
equity income or loss from SEN. As part of the joint venture arrangement, we
have entered into a separate license agreement with SEN, last renewed in 1996,
under which SEN is entitled to use our ion implantation technology in sales of
ion implanters to semiconductor manufacturers in Japan. We receive substantial
income from this license agreement. The license agreement expires on December
31, 2004 and is automatically renewable for successive five-year periods unless
either party has provided one year's prior notice of termination. A substantial
decline in SEN's sales and income from operations could have a material adverse
effect on our net income.

We also have an arrangement with Sumitomo, outside the SEN joint venture,
under which it is the exclusive distributor of our dry strip, photostabilization
and rapid thermal processing products to semiconductor manufacturers in Japan.
This distribution arrangement expires in 2002 and thereafter is renewable from
year to year unless either party has given the other party six months prior
written notice.

424B4 12th Page of 109 TOC 1st Previous Next ↓Bottom Just 12th

WE ARE SUBSTANTIALLY DEPENDENT UPON SALES OF OUR PRODUCTS AND SERVICES TO
CUSTOMERS OUTSIDE THE UNITED STATES.

Sales of our products and services to customers outside the United States,
including exports from our U.S. facilities, accounted for approximately 55.4%,
49.4% and 53.5% of our net sales in 1997, 1998 and 1999, respectively. We
anticipate that international sales will continue to account for a significant
portion of our net sales. Because of our dependence upon international sales, we
are subject to a number of factors, including:

- unexpected changes in laws or regulations resulting in more burdensome
governmental controls, tariffs, restrictions, embargoes or export license
requirements;

- difficulties in obtaining required export licenses;

- volatility in currency exchange rates;

- political and economic instability, particularly in Asia;

- difficulties in accounts receivable collections;

- extended payment terms beyond those customarily offered in the United
States;

- difficulties in managing distributors or representatives outside the
United States;

- difficulties in staffing and managing foreign subsidiary operations; and

- potentially adverse tax consequences.

Substantially all of our sales to date have been denominated in U.S.
dollars. Our products become less price competitive in countries with currencies
that are declining in value in comparison to the dollar. This could cause us to
lose sales or force us to lower our prices, which would reduce our gross
margins. If it becomes necessary for us to make sales denominated in foreign
currencies, we will become more exposed to the risk of currency fluctuations.
Our equity income and royalty income from SEN are denominated in Japanese yen.

WE MAY NOT BE ABLE TO MAINTAIN AND EXPAND OUR BUSINESS IF WE ARE NOT ABLE TO
RETAIN, HIRE AND INTEGRATE ADDITIONAL QUALIFIED PERSONNEL.

Our business depends on our ability to attract and retain qualified,
experienced employees. There is substantial competition for experienced
engineering, technical, financial, sales and marketing personnel in our
industry. In particular, we must attract and retain highly skilled design and
process engineers. Competition for such personnel is intense, particularly in
the areas where we are based, including the Boston metropolitan area and the
Rockville, Maryland area, as well as in Taiwan and Singapore. If we are unable
to retain our existing key personnel, or attract and retain additional qualified
personnel, we may from time to time experience inadequate levels of staffing to
develop, manufacture and market our products and perform services for our
customers. As a result, our growth could be limited due to our lack of capacity
to develop and market our products to our customers, or we could fail to meet
our delivery commitments or experience deterioration in service levels or
decreased customer satisfaction, all of which could adversely affect us and
cause the value of our common stock to decline.

OUR DEPENDENCE UPON A LIMITED NUMBER OF SUPPLIERS FOR MANY COMPONENTS AND SUB-
ASSEMBLIES COULD RESULT IN INCREASED COSTS OR DELAYS IN MANUFACTURE AND SALES OF
OUR PRODUCTS.

We rely to a substantial extent on outside vendors to manufacture many of
the components and subassemblies of our products. We obtain many of these
components and subassemblies from either a sole source or a limited group of
suppliers. Because of our reliance on outside vendors generally, and on a
limited group of suppliers in particular, we may be unable to obtain

424B4 13th Page of 109 TOC 1st Previous Next ↓Bottom Just 13th

an adequate supply of required components on a timely basis, on price and other
terms acceptable to us, or at all. For example, we recently incurred additional
costs to obtain an adequate supply of certain electrical components on a timely
basis from a sole supplier due to increased demand for that supplier's products.

In addition, we often quote prices to our customers and accept customer
orders for our products prior to purchasing components and subassemblies from
our suppliers. If our suppliers increase the cost of components or
subassemblies, we may not have alternative sources of supply and may not be able
to raise the price of our products to cover all or part of the increased cost of
components.

The manufacture of some of these components and subassemblies is an
extremely complex process and requires long lead times. As a result, we have in
the past and may in the future experience delays or shortages. If we are unable
to obtain adequate and timely deliveries of our required components or
subassemblies, we may have to seek alternative sources of supply or manufacture
these components internally. This could delay our ability to manufacture or to
ship our systems on a timely basis, causing us to lose sales, incur additional
costs, delay new product introductions and suffer harm to our reputation.

WE MAY INCUR COSTLY LITIGATION TO PROTECT OUR PROPRIETARY TECHNOLOGY, AND IF
UNSUCCESSFUL, WE MAY LOSE A VALUABLE ASSET OR EXPERIENCE REDUCED MARKET SHARE.

We rely on a combination of patents, copyrights, trademark and trade secret
laws, non-disclosure agreements and other intellectual property protection
methods to protect our proprietary technology. Despite our efforts to protect
our intellectual property, our competitors may be able to legitimately ascertain
the non-patented proprietary technology embedded in our systems. If this occurs,
we may not be able to prevent their use of this technology. Our means of
protecting our proprietary rights may not be adequate and our patents may not be
sufficiently broad to prevent others from using technology that is similar to or
the same as our technology. In addition, patents issued to us have been, or
might be challenged, and might be invalidated or circumvented and any rights
granted under our patents may not provide adequate protection to us. Our
competitors may independently develop similar technology, duplicate features of
our products or design around patents that may be issued to us. As a result of
these threats to our proprietary technology, we may have to resort to costly
litigation to enforce or defend our intellectual property rights. For example,
on February 3, 2000, we filed suit in California Superior Court against Advanced
Ion Beam Technology and Jiong Chen, a principal of that company, alleging
misappropriation of trade secrets, unfair competition, common law
misappropriation and breach of contract. Mr. Chen worked for us as a principal
scientist from 1994 until January 1999. During that period, he worked with
proprietary ion beam technology, which we believe he later used in violation of
an employee confidentiality agreement. A further example is that we recently
defended a reexamination before the United States Patent and Trademark Office of
a patent, expiring in 2005, which relates to ion implantation equipment having a
significant market share. A second request for reexamination of this patent,
which has not yet been acted upon by the United States Patent and Trademark
Office, has recently been filed by the same requester.

WE MIGHT FACE INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS OR PATENT DISPUTES THAT
MAY BE COSTLY TO RESOLVE AND, IF RESOLVED AGAINST US, COULD BE VERY COSTLY TO US
AND PREVENT US FROM MAKING AND SELLING OUR SYSTEMS.

From time to time, claims and proceedings have been or may be asserted
against us relative to patent validity or infringement matters. Our involvement
in any patent dispute or other intellectual property dispute or action to
protect trade secrets, even if the claims are without merit, could be very
expensive to defend and could divert the attention of our management. Adverse
determinations in any litigation could subject us to significant liabilities to
third parties, require us to seek costly licenses from third parties and prevent
us from manufacturing and
13

424B4 14th Page of 109 TOC 1st Previous Next ↓Bottom Just 14th

selling our systems. Any of these situations could have a material adverse
effect on us and cause the value of our common stock to decline.

RISKS RELATED TO OUR SEPARATION FROM EATON

WE CURRENTLY USE EATON'S OPERATIONAL AND ADMINISTRATIVE INFRASTRUCTURE, AND OUR
ABILITY TO SATISFY OUR CUSTOMERS AND OPERATE OUR BUSINESS WILL BE ADVERSELY
AFFECTED IF WE DO NOT DEVELOP OUR OWN INFRASTRUCTURE QUICKLY AND
COST-EFFECTIVELY.

We currently use Eaton's services and systems to support our operations,
including services and systems associated with voice and data transmission and
other data-related operations, accounts receivable, accounts payable, fixed
assets, payroll, general accounting, financial accounting consolidation, cash
management, human resources, tax, legal and real estate. Certain of these
systems are proprietary to Eaton and are very complex. Some of these services
and systems are being modified to enable us to separately monitor, process,
support and record information important to our business. These modifications,
however, may result in unexpected system failures or the loss or corruption of
data.

We are in the process of creating or acquiring our own processes, services
and systems to replace some of the services and systems provided to us by Eaton.
We may be delayed, or we may not be successful, in implementing these systems
and transitioning from Eaton's systems to ours.

Any failure or significant downtime in Eaton's or our own information
systems could prevent us from taking customer orders, shipping products or
billing customers and could harm our business. In addition, Eaton's and our
information systems require the services of employees with extensive knowledge
of these information systems and the business environment in which we operate.
In order to successfully implement and operate our systems, we must be able to
attract and retain a significant number of highly skilled employees.

IF EATON DOES NOT CONSUMMATE ITS DIVESTITURE OF OUR COMPANY, WE WILL NOT BE ABLE
TO OPERATE OUR BUSINESS WITHOUT EATON'S CONTROL AND OUR STOCK PRICE MAY DECLINE.

Eaton currently intends to consummate its divestiture of our company
approximately six months after this offering. However, it will not be obligated
to do so, and we cannot assure you as to whether or when the divestiture will
occur. Any divestiture of the shares of our common stock by Eaton will be
subject, among other factors, to obtaining approval by the Eaton board of
directors and a ruling from the Internal Revenue Service that the divestiture
will be tax-free to Eaton and its shareholders and that the contribution of
assets from Eaton to us as part of the separation from Eaton will qualify as a
tax-free reorganization. At the time of this offering, we will not know what the
ruling from the Internal Revenue Service regarding the tax treatment of the
separation and the divestiture will be. If Eaton does not receive a favorable
tax ruling, it is not likely to make the divestiture in the expected time frame
or at all.

In addition, until this divestiture occurs, the risks discussed below
relating to Eaton's control of us and the potential business conflicts of
interest between Eaton and us will continue to be relevant to our stockholders.
If Eaton does not divest its shares of our common stock, we might face
significant difficulty hiring and retaining key personnel, many of whom are
attracted by the potential of operating our business as a fully independent
entity.

If the divestiture is delayed or not completed at all, the liquidity of our
shares in the market will be severely constrained unless and until Eaton elects
to sell some or all of its significant ownership interest. There are no limits
on these sales except for limits under the Securities Act of 1933, as amended,
and the sale or potential sale by Eaton could adversely affect market prices for
our common stock. In addition, because of the limited liquidity until the
divestiture of its

424B4 15th Page of 109 TOC 1st Previous Next ↓Bottom Just 15th

shares of our common stock by Eaton occurs, relatively small trades of our stock
could have a disproportionate effect on our stock price.

WE WILL BE CONTROLLED BY EATON AS LONG AS IT OWNS A MAJORITY OF OUR COMMON
STOCK, AND OUR OTHER STOCKHOLDERS WILL BE UNABLE TO AFFECT THE OUTCOME OF
STOCKHOLDER VOTING DURING THAT TIME.

After the completion of this offering, Eaton will own approximately 83.8%
of our outstanding common stock, or approximately 82.4% if the underwriters
exercise in full their option to purchase additional shares. As long as Eaton
owns a majority of our outstanding common stock, Eaton will continue to be able
to elect our entire board of directors and to remove any director, with or
without cause, without calling a special meeting. Investors in this offering
will not be able to affect the outcome of any stockholder vote prior to the
planned divestiture of our stock to Eaton shareholders. As a result, Eaton will
control all matters affecting us, including:

- the composition of our board of directors and, through it, any
determination with respect to our business direction and policies,
including the appointment and removal of officers;
- the allocation of business opportunities that may be suitable for us and
Eaton;
- any determinations with respect to mergers or other business
combinations;
- our acquisition or disposition of assets;
- our financing;
- changes to the agreements providing for our separation from Eaton;
- the payment of dividends on our common stock; and
- determinations with respect to our tax returns.

Eaton is not prohibited at any time from selling a controlling interest in
us to a third party.

OUR HISTORICAL FINANCIAL INFORMATION MAY NOT BE REPRESENTATIVE OF OUR RESULTS AS
A SEPARATE COMPANY.

Our combined financial statements have been carved out from the
consolidated financial statements of Eaton using the historical bases of assets,
liabilities and operating results of the Eaton semiconductor equipment
operations business that we comprise. Accordingly, the historical financial
information we have included in this prospectus does not necessarily reflect
what our financial position, operating results and cash flows would have been
had we been a separate, stand-alone entity during the periods presented. Eaton
did not operate or account for us as a separate, stand-alone entity for the
periods presented. Our costs and expenses include direct charges and an
allocation from Eaton for centralized corporate services and infrastructure
costs including, for example, services and systems associated with voice and
data transmission and other data-related operations, accounts receivable,
accounts payable, fixed assets, payroll, general accounting, financial
accounting consolidation, cash management, human resources, legal and real
estate as well as other functions associated with Eaton's corporate governance
and operations support.

This allocation is based on Eaton's internal expense allocation methodology
which charges these expenses to operating locations based both on net working
capital, excluding short-term investments and short-term debt, and on property,
plant and equipment - net. While we believe this allocation methodology is
reasonable and allocated costs are representative of the operating expenses that
would have been incurred had we operated on a stand-alone basis, the historical
financial information is not necessarily indicative of what our financial
position, operating results and cash flows will be in the future. We have not
made adjustments to our historical financial information to reflect any
significant changes that may occur in our cost structure and operations as a
result of our separation from Eaton, including increased costs associated with
being a publicly traded, stand-alone company.

424B4 16th Page of 109 TOC 1st Previous Next ↓Bottom Just 16th

WE WILL NOT BE ABLE TO RELY ON EATON TO FUND OUR FUTURE CAPITAL REQUIREMENTS,
AND FINANCING FROM OTHER SOURCES MAY NOT BE AVAILABLE ON AS FAVORABLE TERMS AS
EATON COULD OBTAIN.

In the past, our capital needs have been satisfied by Eaton. However,
following our separation, Eaton will no longer provide funds to finance our
working capital or other cash requirements. We cannot assure you that financing
from other sources, if needed, will be available on favorable terms.

We believe our capital requirements will vary greatly from quarter to
quarter, depending on, among other things, capital expenditures, fluctuations in
our operating results, financing activities, acquisitions and investments and
inventory and receivables management. We believe that the portion of the
proceeds from this offering that we will retain, together with available cash
and our future cash flow from operations, will be sufficient to satisfy our
working capital, capital expenditure and research and development requirements
for the foreseeable future. We cannot assure you, however, that the underlying
assumed levels of sales and expenses will prove to be accurate. In addition, in
the future, we may require or choose to obtain additional debt or equity
financing in order to finance acquisitions or other investments in our business.
Future equity financings would be dilutive to the existing holders of our common
stock. We cannot raise additional equity capital without Eaton's consent prior
to Eaton's divestiture of our common stock to Eaton shareholders, and following
any divestiture, we would be restricted in raising substantial amounts of equity
capital under our tax sharing and indemnification agreement with Eaton, as well
as by market conditions. Future debt financings could involve restrictive
covenants that may limit the manner in which we conduct our business. In
addition, we will likely not be able to obtain debt financing with interest
rates as favorable as those that Eaton could obtain.

WE MAY HAVE POTENTIAL BUSINESS CONFLICTS OF INTEREST WITH EATON WITH RESPECT TO
OUR PAST AND ONGOING RELATIONSHIPS AND, BECAUSE OF EATON'S CONTROLLING
OWNERSHIP, WE MAY NOT RESOLVE THESE CONFLICTS ON THE MOST FAVORABLE TERMS TO US.

Conflicts of interest may arise between Eaton and us in a number of areas
relating to our past and ongoing relationships, including:

- sales or distributions by Eaton of all or any portion of our common stock
owned by Eaton;
- agreements between Eaton and us associated with the divestiture,
including under the trademark license agreement and the master separation
and distribution agreement;
- labor, tax, employee benefit, indemnification and other matters arising
from our separation from Eaton;
- employee retention and recruiting;
- the nature, quality and pricing of transitional services Eaton has agreed
to provide us; and
- business opportunities that may be attractive to both Eaton and us.

Nothing restricts Eaton from competing with us.

We may not be able to resolve any potential conflicts and, even if we do,
the resolution may be less favorable than if we were dealing with an
unaffiliated party. The agreements we have entered into with Eaton may be
amended upon agreement between the parties. While we are controlled by Eaton,
Eaton may be able to require us to agree to amendments to these agreements that
may be less favorable to us than the current terms of the agreements.

OUR DIRECTORS AND EXECUTIVE OFFICERS MAY HAVE CONFLICTS OF INTEREST BECAUSE OF
THEIR OWNERSHIP OF EATON COMMON STOCK AND EATON STOCK OPTIONS AND BECAUSE SOME
ALSO ARE DIRECTORS OR EXECUTIVE OFFICERS OF EATON.

Some of our directors and executive officers have a substantial amount of
their personal financial portfolios in Eaton common stock and options to
purchase Eaton common stock. Their options to purchase Eaton common stock may
not convert into options to purchase our common

424B4 17th Page of 109 TOC 1st Previous Next ↓Bottom Just 17th

stock if the divestiture does not occur or for other reasons. Ownership of Eaton
common stock and options by our directors and officers after our separation from
Eaton could create, or appear to create, potential conflicts of interest when
directors and officers are faced with decisions that could have different
implications for Eaton and us.

Our directors who are also directors or executive officers of Eaton will
have obligations to both companies and may have conflicts of interest with
respect to matters potentially or actually involving or affecting us. We
anticipate that immediately after the offering four of our directors will also
be directors of Eaton and that two of these persons will be executive officers
of Eaton, although at the time of any divestiture of Eaton's ownership interest
in our company no more than three of our directors will be directors of Eaton.

IF THE TRANSITIONAL SERVICES BEING PROVIDED TO US BY EATON ARE NOT SUFFICIENT TO
MEET OUR NEEDS, OR IF WE ARE NOT ABLE TO REPLACE THESE SERVICES AFTER OUR
AGREEMENTS WITH EATON EXPIRE, WE MAY BE UNABLE TO MANAGE CRITICAL OPERATIONAL
FUNCTIONS OF OUR BUSINESS.

Eaton has agreed to provide transitional services to us, including services
related to:

- voice and data transmission and other data related operations;
- accounts receivable, accounts payable, fixed assets, payroll, general
accounting and financial accounting consolidation;
- cash management;
- human resources;
- tax;
- legal; and
- real estate.

Although Eaton is contractually obligated to provide us with these
services, these services may not be provided at the same level as when we were
part of Eaton, and we may not be able to obtain the same benefits. The
transition periods covered by these agreements vary but are generally less than
two years. After the expiration of these various arrangements, we may not be
able to replace the transitional services or enter into appropriate leases in a
timely manner or on terms and conditions, including cost, as favorable as those
we will receive from Eaton.

RISKS RELATED TO THE SECURITIES MARKETS AND OWNERSHIP OF OUR COMMON STOCK

SUBSTANTIAL SALES OF OUR COMMON STOCK MAY OCCUR IN CONNECTION WITH THE
DIVESTITURE, WHICH COULD CAUSE OUR STOCK PRICE TO DECLINE.

If Eaton divests all of the shares of our common stock it owns to Eaton
shareholders after this offering, substantially all of these shares will be
eligible for immediate resale in the public market. We are unable to predict
whether significant amounts of common stock will be sold in the open market in
anticipation of, or following, this distribution, or by Eaton if the divestiture
does not occur. We are also unable to predict whether a sufficient number of
buyers will be in the market at that time. Any sales of substantial amounts of
common stock in the public market, or the perception that such sales might
occur, whether as a result of this divestiture or otherwise, could adversely
affect the market price of our common stock. Eaton has the sole discretion to
determine the timing, structure and terms of its divestiture of our common
stock, all of which may also affect the level of market transactions in our
common stock.

OUR SECURITIES HAVE NO PRIOR MARKET, AND WE CANNOT ASSURE YOU THAT OUR STOCK
PRICE WILL NOT DECLINE AFTER THE OFFERING.

Before this offering, there has not been a public market for our common
stock, and an active public market for our common stock may not develop or be
sustained after this offering. The

424B4 18th Page of 109 TOC 1st Previous Next ↓Bottom Just 18th

market price of our common stock could be subject to significant fluctuations
after this offering. Among the factors that could affect our stock price are:

- quarterly variations in our operating results;
- changes in revenue or earnings estimates or publication of research
reports by analysts;
- speculation in the press or investment community;
- strategic actions by us or our competitors, such as acquisitions or
restructurings;
- actions by institutional stockholders or by Eaton prior to its
divestiture of our stock;
- general market conditions; and
- domestic and international economic factors unrelated to our performance.

The stock markets in general, and the markets for high technology stocks in
particular, have experienced extreme volatility that has often been unrelated to
the operating performance of particular companies. Moreover, in recent years the
stock prices of many companies in the semiconductor industry have been volatile
and have declined substantially due to the worldwide semiconductor downturn.
These broad market fluctuations may adversely affect the trading price of our
common stock. In particular, we cannot assure you that you will be able to
resell your shares at or above the initial public offering price, which will be
determined by negotiations between the representatives of the underwriters and
us.

PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW AND THE TERMS OF THE TAX
SHARING AND INDEMNIFICATION AGREEMENT BETWEEN US AND EATON MAY DELAY OR PREVENT
AN ACQUISITION OF US, WHICH COULD DECREASE THE VALUE OF YOUR SHARES.

Our certificate of incorporation, bylaws and shareholder rights plan
contain provisions that could make it harder for a third party to acquire us
without the consent of our board of directors, although these provisions have
little significance while we are controlled by Eaton. These provisions include a
classified board of directors and limitations on actions by our stockholders by
written consent. In addition, our board of directors has the right to issue
preferred stock without stockholder approval, which could be used to dilute the
stock ownership of a potential hostile acquirer. Delaware law also imposes some
restrictions on mergers and other business combinations between us and any
holder of 15% or more of our outstanding common stock. Although we believe these
provisions provide an opportunity to receive a higher bid by requiring any
potential acquirers to negotiate with our board of directors, these provisions
apply even if the offer may be considered beneficial by some stockholders.

If Eaton decides to divest its remaining ownership in us after the offering
and receives a private letter ruling from the Internal Revenue Service to the
effect that such a divestiture will be tax-free, we will be limited in our
ability to merge or consolidate with any other person or enter into any
transaction or to issue equity securities that would result in one or more
persons acquiring a 40% or greater interest in us during the two-year period
following any such divestiture under the terms of our tax sharing and
indemnification agreement with Eaton.

PURCHASERS IN THIS OFFERING WILL EXPERIENCE IMMEDIATE DILUTION IN NET TANGIBLE
BOOK VALUE PER SHARE.

Purchasers of our common stock in this offering will experience immediate
dilution of $18.75 in net tangible book value per share.

424B4 19th Page of 109 TOC 1st Previous Next ↓Bottom Just 19th

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

You should not rely on forward-looking statements in this prospectus. This
prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends," "may," "will," "should," "estimates,"
"predicts," "potential," "continue" and similar expressions to identify these
forward-looking statements. Our actual results could differ materially from the
results contemplated by these forward-looking statements due to a number of
factors, including those discussed in "Risk Factors," "Management's Discussion
and Analysis" and elsewhere in this prospectus. This prospectus also contains
forward-looking statements attributed to third parties relating to their
estimates regarding the growth of our markets. Forward-looking statements are
subject to known and unknown risks, uncertainties and other factors that may
cause our actual results, as well as those of the markets we serve, levels of
activity, performance, achievements and prospects to be materially different
from those expressed or implied by the forward-looking statements. We do not
have any intention or obligation to update forward-looking statements, even if
new information, future events or other circumstances make them incorrect or
misleading.

424B4 20th Page of 109 TOC 1st Previous Next ↓Bottom Just 20th

OUR SEPARATION FROM EATON
OVERVIEW

We are currently a wholly owned subsidiary of Eaton. On April 26, 2000,
Eaton announced a plan to reorganize its semiconductor equipment operations into
an independent, publicly held company. On June 30, 2000, Eaton substantially
completed the transfer to us of all of the assets of its semiconductor equipment
operations that were not owned by us and we assumed the related liabilities. On
that date, we also entered into arrangements with Eaton relating to various
interim relationships between us. In connection with the reorganization, we
changed our name from Eaton Semiconductor Equipment Inc. to Axcelis
Technologies, Inc. After the completion of the offering, Eaton will own
approximately 83.8% of our outstanding common stock, or 82.4% if the
underwriters fully exercise their option to purchase additional shares.

HISTORY OF OUR BUSINESS

Our ion implantation products were initially developed and offered by Eaton
in 1980 and constitute our principal product offering. In 1982, we entered into
our SEN joint venture to provide us with additional manufacturing capacity for
our ion implantation products and local access for these products to the
Japanese semiconductor equipment market. Our semiconductor equipment products
also include dry strip, photostabilization and rapid thermal processing
products. We introduced our rapid thermal processing products in 1996 and we
entered the photoresist removal and photostabilization product market through
our acquisition of Fusion in August 1997. Fusion pioneered the development of
photostabilization in 1983.

BENEFITS OF THE SEPARATION

We believe that we will realize benefits from Eaton's reorganization of its
semiconductor equipment operations and our complete separation from Eaton,
including the following:

GREATER STRATEGIC FOCUS. In addition to our semiconductor equipment
manufacturing business, Eaton generates significant revenue from its other
business segments, including electrical power distribution and control
equipment, truck transmissions and clutches, engine components, hydraulic
products and a wide variety of controls. Our focus will be solely on
developing businesses and strategic opportunities for the semiconductor
equipment business. This effort will be supported by our own board of
directors, management team and employees.

INCREASED SPEED AND RESPONSIVENESS. As a smaller company than Eaton we
will focus on one line of business, and we expect to make decisions more
quickly, deploy resources more rapidly and efficiently and operate with
more agility than we could as a part of a larger organization. We expect to
be more responsive to our customers and suppliers.

BETTER INCENTIVES FOR EMPLOYEES AND GREATER ACCOUNTABILITY. We expect
the motivation of our employees and the focus of our management to be
strengthened by incentive compensation programs tied to the market
performance of our common stock. The separation will enable us to offer our
employees compensation directly linked to the performance of our business,
which we expect to enhance our ability to attract and retain qualified
personnel.

MORE CAPITAL PLANNING FLEXIBILITY. As a separate company, we will have
enhanced capital planning flexibility. We will be able to have direct
access to the capital markets to issue debt or equity securities and to use
our own stock to facilitate growth through acquisitions and will no longer
have to compete with other business units of Eaton for funding from Eaton.

SEPARATION AND TRANSITIONAL ARRANGEMENTS

In May 2000, our Board of Directors declared a dividend of $300 million
payable to Eaton. We have the option of paying this dividend in either cash or
notes or in a combination thereof.

424B4 21st Page of 109 TOC 1st Previous Next ↓Bottom Just 21st

Any notes issued would bear interest and would have a maturity not to exceed two
years. We presently expect to pay all of this dividend in cash.

We have entered into agreements with Eaton providing for the completion of
the reorganization of Eaton's semiconductor equipment operations and the
separation of our business from Eaton. These agreements generally provide for,
among other things:

- the transfer from Eaton to us of assets and the assumption by us of
liabilities relating to our business; and

- various interim relationships between us and Eaton.

THE DIVESTITURE BY EATON OF OUR COMMON STOCK

After completion of this offering, Eaton will own approximately 83.8% of
the outstanding shares of our common stock, or approximately 82.4% if the
underwriters fully exercise their option to purchase additional shares. Eaton
currently plans to consummate its divestiture of us approximately six months
after this offering by distributing all of its shares of our common stock in a
tax-free transaction to Eaton shareholders. Eaton may accomplish this through a
split-off, a spin-off or some combination of both transactions. Eaton is not,
however, obligated to consummate the divestiture, and we cannot assure you as to
whether or when it will occur.

Eaton has advised us that it has not yet determined definitively either
when it expects to consummate the divestiture or the structure or terms under
which it would accomplish the divestiture. Eaton has advised us that it would
not consummate the divestiture if its board of directors determines that a
complete separation is no longer in the best interest of Eaton and its
shareholders. Eaton presently expects to consummate the divestiture unless one
of the following circumstances or events were to occur:

- the Internal Revenue Service fails to issue a ruling that the divestiture
will be tax-free to Eaton and its shareholders and that Eaton's
contribution of assets to us in connection with the separation will
qualify as a tax-free reorganization for U.S. federal income tax
purposes;

- there is a court order or regulation prohibiting or restricting the
consummation of the divestiture; or

- Eaton concludes that the divestiture would have a material adverse effect
on it or its shareholders.

424B4 22nd Page of 109 TOC 1st Previous Next ↓Bottom Just 22nd

USE OF PROCEEDS

We estimate that our net proceeds from this offering will be approximately
$317.5 million, or $349.6 million if the underwriters fully exercise their
option to purchase additional shares, after deducting the underwriting discount
and estimated offering expenses payable by us.

We intend to use the net proceeds of this offering, together with cash from
other sources available to us:

- to pay the previously declared $300 million dividend to Eaton in cash;
and

- for general corporate purposes, including funding our capital expenditure
program, our working capital requirements and other liabilities.

See "Management's Discussion and Analysis -- Liquidity and Capital Resources"
for a discussion of the other cash we expect to have available to us.

We have budgeted our capital expenditures for the last three quarters of
2000 at approximately $24.0 million. We expect to use a significant portion of
these budgeted capital expenditures to construct an advanced demonstration and
application development center at our Beverly, Massachusetts facility and to
expand our manufacturing and research facilities in Rockville, Maryland.

DIVIDEND POLICY

After completion of this offering, we currently intend to retain any future
earnings to fund the development and growth of our business. Therefore, we do
not anticipate paying any cash dividends in the foreseeable future, other than
the previously declared dividend to Eaton described under "Use of Proceeds".

424B4 23rd Page of 109 TOC 1st Previous Next ↓Bottom Just 23rd

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2000. Our
capitalization is presented:

- on an actual basis;

- on a pro forma basis to give effect to the previously declared dividend
to Eaton of $300 million; and

- on a pro forma as adjusted basis to reflect our receipt of the estimated
net proceeds of $317.5 million from the sale of shares of our common
stock in this offering and the other transactions described in note (4)
to the "Prospectus Summary -- Summary Historical Combined Financial
Data", as well as to reflect the payment of the previously declared $300
million dividend to Eaton.

You should read the information set forth below together with "Selected
Historical Combined Financial Data", "Management's Discussion and Analysis --
Liquidity and Capital Resources" and our historical combined financial
statements and the notes to those statements included elsewhere in this
prospectus.

[Enlarge/Download Table]

MARCH 31, 2000
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
(UNAUDITED)

Cash & short-term investments.......................... $ 2,803 $ 2,803 $ 40,603(1)
======== ======== ========
Payable to Eaton (2)................................... $ -- $300,000 $ --
Stockholder's net investment:
Preferred stock, par value $0.001; 30,000,000 shares
authorized, no shares issued and outstanding...... -- -- --
Common stock, par value $0.001; 300,000,000 shares
authorized, 80,000,000 shares issued and
outstanding, 95,500,000 shares issued and
outstanding (pro forma as adjusted)(3)............ -- -- 96
Additional paid-in capital........................... -- -- 386,878
Parent company investment (2)........................ 369,474 69,474 --
Accumulated other comprehensive income (loss)........ (6,007) (6,007) (6,007)
-------- -------- --------
Total stockholder's net investment................ 363,467 63,467 380,967
-------- -------- --------
Total capitalization......................... $363,467 $363,467 $380,967
======== ======== ========

---------------

NOTES:

(1) During April and May 2000, we estimate that Eaton's management of
substantially all of our cash receipts and disbursements in the United
States resulted in additional cash due us of $23.9 million.

(2) On May 3, 2000, our Board of Directors declared a dividend of $300 million
payable to Eaton. We have the option of paying this dividend in either cash
or notes or in a combination thereof. We presently expect to pay all of this
dividend in cash.

(3) On June 14, 2000, our Board of Directors declared a stock split, to be
effected in the form of a stock dividend, increasing the number of
outstanding shares of our common stock owned by Eaton from 100 to
80,000,000.

424B4 24th Page of 109 TOC 1st Previous Next ↓Bottom Just 24th

DILUTION

Our net tangible book value at March 31, 2000 was approximately $292.6
million, or $3.66 per share. Pro forma net tangible book value per share is
determined by dividing our pro forma net tangible book value, which is total
tangible assets less total liabilities after giving effect to the payment of a
previously declared $300 million dividend to Eaton, by the 80,000,000 shares of
common stock outstanding immediately before this offering. Dilution in pro forma
net tangible book value per share represents the difference between the amount
per share paid by purchasers of shares of our common stock in this offering and
the pro forma net tangible book value per share of our common stock immediately
afterwards. After giving effect to our sale of 15,500,000 shares of common stock
in this offering at the initial public offering price of $22.00 per share and
after deducting the underwriting discount and estimated offering expenses
payable by us, our pro forma as adjusted net tangible book value at March 31,
2000 would have been approximately $310.1 million, or $3.25 per share. This
represents an immediate increase in pro forma net tangible book value of $3.34
per share to our existing stockholder and an immediate dilution in pro forma net
tangible book value of $18.75 per share to new investors purchasing shares of
our common stock in this offering. The following table illustrates this dilution
per share:

[Download Table]

Initial public offering price per share..................... $22.00
Pro forma net tangible book value per share as of March
31, 2000............................................... $(0.09)
Increase in pro forma net tangible book value per share
attributable to new investors.......................... 3.34
------
Pro forma, as adjusted, net tangible book value per share
after this offering....................................... 3.25
------
Dilution in pro forma net tangible book value per share to
new investors............................................. $18.75
======

The discussion and table above assume no issuance of shares reserved for
future issuance under our 2000 Employee Stock Purchase Plan. As of March 31,
2000, there were no options outstanding to purchase shares of our common stock.
To the extent that any options are granted and exercised, there will be further
dilution to new investors. We have granted options to purchase 5,400,000 shares
of our common stock to employees at the initial public offering price, none of
which options will be immediately exercisable. In addition, we may assume
substantially all of the Eaton stock options held by our employees on the date
Eaton consummates its divestiture of our company. If the divestiture had been
consummated on July 10, 2000, these options to purchase Eaton common shares
would have been converted into options to purchase 1,864,151 shares of our
common stock, based on the initial public offering price of $22.00 per share and
on the closing price of $69 1/2 per Eaton common share on July 10, 2000.

424B4 25th Page of 109 TOC 1st Previous Next ↓Bottom Just 25th

SELECTED HISTORICAL COMBINED FINANCIAL DATA

The following tables present our selected historical combined financial
data. The information set forth below should be read together with "Management's
Discussion and Analysis" and our historical combined financial statements and
notes to those statements included elsewhere in this prospectus. Our statements
of combined operations data set forth below for the years ended December 31,
1997, 1998 and 1999 and the combined balance sheet data as of December 31, 1998
and 1999 are derived from our audited combined financial statements included in
this prospectus which have been audited by Ernst & Young LLP, independent
auditors, whose report is also included in this prospectus.

[Enlarge/Download Table]

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1999 2000
-------- -------- -------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED) (UNAUDITED)

STATEMENTS OF COMBINED OPERATIONS
DATA(1)
Net sales......................... $385,080 $448,663 $460,010 $ 265,709 $397,267 $ 59,124 $143,051
Gross profit (2).................. 138,335 157,246 172,802 64,229 157,082 20,768 61,474
Other costs & expenses:
Selling......................... 34,375 45,600 47,148 42,134 37,946 9,087 11,598
General & administrative........ 23,326 33,437 38,287 47,075 45,925 9,612 13,030
Research & development.......... 21,802 35,107 70,466 78,656 51,599 12,183 16,125
Amortization of goodwill &
intangible assets............. 100 3,936 9,279 9,279 2,320 2,320
Restructuring charges (2)....... 24,994
Write-off of in-process research
& development (1)............. 85,000
-------- -------- -------- --------- -------- -------- --------
Income (loss) from operations..... 58,832 43,002 (72,035) (137,909) 12,333 (12,434) 18,401
Other income (expense):
Royalty income.................. 8,273 9,590 6,265 7,949 5,854 965 3,823
Equity income (loss) of SEN..... 7,044 10,148 3,283 (2,132) 1,338 (2,447) 3,340
Other income (expense)-net...... (163) (1,837) 1,123 (1,045) 28 (145) 1,549
-------- -------- -------- --------- -------- -------- --------
Income (loss) before income
taxes........................... 73,986 60,903 (61,364) (133,137) 19,553 (14,061) 27,113
Income taxes (credit)............. 25,365 14,599 103 (51,090) 5,125 (3,686) 8,251
-------- -------- -------- --------- -------- -------- --------
Net income (loss)................. $ 48,621 $ 46,304 $(61,467) $ (82,047) $ 14,428 $(10,375) $ 18,862
======== ======== ======== ========= ======== ======== ========

424B4 26th Page of 109 TOC 1st Previous Next ↓Bottom Just 26th

[Enlarge/Download Table]

Net income (loss) per share:
Basic and diluted net income
(loss) per share.............. $ .61 $ .58 $ (.77) $ (1.03) $ .18 $ (.13) $ .24
======== ======== ======== ========= ======== ======== ========
Shares used in computing basic
and diluted net income (loss)
per share..................... 80,000 80,000 80,000 80,000 80,000 80,000 80,000
======== ======== ======== ========= ======== ======== ========
Unaudited pro forma basic and
diluted net income per
share (3)..................... $ .15 $ .20
======== ========
Shares used in computing
unaudited pro forma basic and
diluted net income per
share (3)..................... 94,644 94,644
======== ========

[Enlarge/Download Table]

DECEMBER 31,
---------------------------------------------------- MARCH 31,
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- -----------
(IN THOUSANDS)
(UNAUDITED) (UNAUDITED)

COMBINED BALANCE SHEET DATA
Cash & short-term investments............... $ 1,662 $ 2,159 $ 3,479 $ 3,338 $ 3,530 $ 2,803
Working capital............................. 102,578 112,092 149,041 91,028 169,759 190,004
Total assets................................ 213,659 279,189 457,567 341,121 422,835 449,332
Stockholder's net investment................ 151,112 190,429 349,192 269,161 342,296 363,467

---------------
NOTES:

(1) On August 4, 1997, we acquired Fusion, a developer and manufacturer of dry
strip and photostabilization systems for use in semiconductor manufacturing
processes. The acquisition was accounted for under the purchase method of
accounting and, accordingly, our combined financial statements include
Fusion's results of operations beginning August 4, 1997. Net income in 1997
was reduced by an $85.0 million write-off of purchased in-process research
and development related to the acquisition of Fusion, with no income tax
benefit.

(2) Net loss in 1998 reflects a restructuring charge of $42.4 million ($27.5
million aftertax) of which $17.4 million related to inventory writedowns and
reduced gross profit and $25.0 million related to workforce reductions and
other restructuring actions and was recorded in operating expenses.

(3) Pro forma basic and diluted net income per share amounts are calculated
based on 80,000,000 shares of our common stock outstanding that are owned by
Eaton prior to this offering, plus an additional 14,643,824 shares of common
stock. The number of additional shares is calculated by dividing the $300
million previously declared dividend to Eaton by the initial public offering
price of $22.00 per share, reduced by the estimated per share offering
expenses.

424B4 27th Page of 109 TOC 1st Previous Next ↓Bottom Just 27th

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion of our financial condition and results of
operations should be read together with our combined financial statements and
notes to those statements included elsewhere in this prospectus.

OVERVIEW

We are a leading producer of ion implantation equipment used in the
fabrication of semiconductors and, we also produce dry strip, photostabilization
and rapid thermal processing equipment, which is used in semiconductor
manufacturing primarily before and after the ion implantation process. In
addition, we provide extensive aftermarket service and support, including spare
parts, equipment upgrades, maintenance services and customer training. We are a
50-50 joint venture partner in Japan with Sumitomo.

SEPARATION FROM EATON

We are currently a wholly owned subsidiary of Eaton. On June 30, 2000,
Eaton substantially completed the transfer to us of all of the assets of its
semiconductor equipment operations that were not owned by us, and we assumed the
related liabilities. We also entered into various other agreements with Eaton
which provide for transitional services and support, including those associated
with voice and data transmissions and other data-related operations, accounts
receivable, accounts payable, fixed assets, payroll, general accounting,
financial accounting consolidation, cash management, human resources, tax, legal
and real estate. Under these agreements, we will reimburse Eaton for its direct
and indirect costs of providing these services until the divestiture, and
thereafter, for a limited time, we will reimburse Eaton for its costs plus an
additional fee. The transition periods covered by these agreements vary, but are
generally less than two years from the date of the completion of this offering.
The agreements do not necessarily reflect the costs of obtaining these services
from unrelated third parties or of providing the applicable services in-house.
However, management believes that purchasing these services from Eaton provides
an efficient means of obtaining these services during the transition period. We
must also negotiate new agreements with various third parties as a separate,
standalone entity. There can be no assurance that the terms we will be able to
negotiate for these agreements will be as favorable as those we enjoy as part of
Eaton. See "Arrangements with Eaton" for a more detailed discussion of the
agreements entered into between our company and Eaton.

OUR BUSINESS

Our business depends in significant part upon capital expenditures by
semiconductor manufacturers, especially manufacturers that are opening new
fabrication facilities or expanding existing facilities. These expenditure
patterns are based on many factors, including anticipated market demand for
semiconductors and the products utilizing them, the available manufacturing
capacity in manufacturers' fabrication facilities, the development of new
technologies and global economic conditions. We have benefited from the recent
growth of the global semiconductor industry, and we expect it to continue to
expand over the long term. Although our business is not seasonal, we operate in
a cyclical industry. We expect the industry to continue its historically
cyclical nature.

The cyclicality in the semiconductor capital equipment market over the last
several years resulted in a decline in net sales beginning in late 1997 and
continuing through late 1998, with orders and backlog under continuous pressure.
This situation was the combined result of an oversupply of memory chips, a
decline in personal computer demand and the effects of the Asian financial
crisis. Typical of our industry, we have relatively high fixed costs, and our
ongoing need to make investments in engineering, marketing, and research and
development limit our ability to

424B4 28th Page of 109 TOC 1st Previous Next ↓Bottom Just 28th

reduce expenses during downturns. As a result, a decline in our sales, whether
attributable to a downturn in the semiconductor industry or otherwise, could
have a disproportionate effect on our business.

In response to the severe downturn in the semiconductor industry that began
in late 1997, we undertook a restructuring in the third quarter of 1998 and
incurred a related charge of $42.4 million. Key elements of this restructuring
included the closure of our Austin, Texas manufacturing facility, workforce
reductions involving 475 employees, almost half of whom were employed in Austin,
the relocation of ion implantation production and engineering from Austin to our
Beverly, Massachusetts facility and a charge for asset write-downs, primarily
inventory, to estimated market value. On May 18, 2000, we sold our idle Austin
facility for net proceeds of $11.0 million, a price that approximated book
value. See Notes 5 and 8 to our combined financial statements.

We derive a substantial majority of our net sales from the sale of ion
implantation systems. These sales accounted for more than 80.0% of our net sales
for each of the three years ended December 31, 1999 and for the three months
ended March 31, 2000.

In August 1997, we acquired Fusion, which develops and manufactures dry
strip and photostabilization systems for use within the semiconductor
manufacturing process. This acquisition was accounted for using the purchase
method of accounting, under which goodwill of $49.8 million, which is being
amortized over 15 years with no tax benefit, was recorded. Our combined
statements of operations include the results of Fusion beginning in August 1997.
The acquisition of Fusion also included $85.0 million allocable to in-process
research and development. This amount was expensed at the date of acquisition,
with no tax benefit, because the technological feasibility of certain projects
had not been established and no alternative commercial use had been identified.

We have a 50% interest in SEN, our joint venture with Sumitomo. This joint
venture manufactures ion implantation equipment under license from us for sale
to semiconductor manufacturers in Japan. We account for the results of this
joint venture based on the equity method of accounting, which means that we
record our pro rata share of the joint venture's earnings or losses in our
statement of combined operations under "Other income (expense)". We also receive
royalty income from the joint venture based on a percentage of net sales of
specific products sold by SEN. Summary financial information for SEN is
presented in Note 17 to our combined financial statements.

Historically we have sold a significant proportion of our products and
services to a limited number of fabricators of semiconductor products. In 1999,
three of our customers, STMicroelectronics N.V., Motorola, Inc. and Texas
Instruments Incorporated, accounted for 37.0% of our net sales. Also, we derive
most of our revenues from the sale of a relatively small number of expensive
products to our customers. The list prices on our principal products range from
$150,000 to over $4.0 million. Our lengthy sales and installation cycle, coupled
with customers' competing capital budget considerations, make timing of customer
orders uneven and difficult to predict. As a result, our net sales and operating
results for any given period will depend on our shipment and installation of
orders as scheduled during that period as well as obtaining new orders for
products to be shipped in that same period.

We recognize sales of systems upon shipment to the customer and the costs
of installation at the customer's site are accrued at the time of shipment. See
Note 3 to our combined financial statements. In December 1999, the Securities
and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, "Revenue
Recognition". SAB No. 101, as amended, articulates certain of the SEC staff's
views in applying generally accepted accounting principles to revenue
recognition in financial statements and requires compliance by issuers no later
than the fourth quarter of 2000. We have concluded that our existing revenue
recognition policy continues to be

424B4 29th Page of 109 TOC 1st Previous Next ↓Bottom Just 29th

appropriate and in accordance with generally accepted accounting principles and
SAB 101 as currently written.

BASIS OF PRESENTATION

The combined financial statements include our assets, liabilities, revenues
and expenses based on Eaton's historical amounts. Prior to January 1, 2000,
substantially all of our cash receipts and disbursements in the United States
were processed through Eaton's centralized cash management system and were
recorded in Parent Company investment. Since December 31, 1999, substantially
all of these amounts have been recorded as a receivable from or payable to
Eaton. At March 31, 2000, a net amount of $0.9 million was payable to Eaton by
us for these transactions and was included in "Receivables from Eaton
Corporation" in our March 31, 2000 combined balance sheet. This payable became a
receivable of approximately $23.0 million at May 31, 2000. We plan to settle
this receivable in cash at or shortly after the closing of this offering.

The remaining balance of the "Receivables from Eaton Corporation" at March
31, 2000 was $9.2 million and represented primarily cash generated by us in
Europe that was processed through Eaton's European centralized cash management
system. Approximately $5.5 million of this receivable, as well as $1.5 million
of our $2.8 million of cash and short-term investments at March 31, 2000, will
be retained by Eaton and will not be available to us. The resulting $3.7 million
balance of this receivable will also be settled in cash at or shortly after the
closing of this offering. Subsequent to March 31, 2000, in connection with
Eaton's contribution of assets to us, we received a cash transfer from Eaton
which, after offsets, we expect to net to approximately $8.0 million.

Our combined statements of operations include those expenses originally
recorded by us or directly charged to us by Eaton. Further, the statements
include an allocation of Eaton's general corporate expenses to reflect the
services provided or benefits received by us. This allocation is based on
Eaton's internal expense allocation methodology, which charges these expenses to
operating locations based both on net working capital, excluding short-term
investments and short-term debt, and on property, plant, and equipment-net. We
believe that this is a reasonable method of allocating these expenses.

In the opinion of management, all adjustments necessary for a fair
presentation of combined financial position, operating results and cash flows
for the stated periods have been made. However, Eaton did not operate or account
for us as a separate, stand-alone entity for the periods presented and, as a
result, the financial information included herein may not reflect our combined
financial position, operating results and cash flows as they would have been
reported if we had been a separate, stand-alone entity during the periods
presented or in the future. The financial information presented in this
prospectus does not reflect any significant changes that may occur in our
operations as a result of our becoming a stand-alone entity and this offering.

424B4 30th Page of 109 TOC 1st Previous Next ↓Bottom Just 30th

RESULTS OF OPERATIONS

The following table sets forth combined statements of operations data
expressed as a percentage of net sales for the periods indicated:

[Enlarge/Download Table]

THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------- --------------
1997 1998 1999 1999 2000
----- ----- ----- ----- -----
(UNAUDITED)

Net sales...................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit................................... 37.6 24.2 39.5 35.1 43.0
Other costs & expenses:
Selling...................................... 10.3 15.9 9.5 15.4 8.1
General & administrative..................... 8.3 17.7 11.6 16.2 9.1
Research & development....................... 15.3 29.6 13.0 20.6 11.3
Amortization of goodwill & intangible
assets.................................... 0.9 3.5 2.3 3.9 1.6
Restructuring charges........................ 9.4
Write-off of in-process research &
development............................... 18.5
----- ----- ----- ----- -----
Income (loss) from operations.................. (15.7) (51.9) 3.1 (21.0) 12.9
Other income (expense):
Royalty income............................... 1.4 3.0 1.5 1.6 2.7
Equity income (loss) of SEN.................. 0.7 (0.8) 0.3 (4.1) 2.3
Other income (expense)-net................... 0.2 (0.4) (0.3) 1.1
----- ----- ----- ----- -----
Income (loss) before income taxes.............. (13.4) (50.1) 4.9 (23.8) 19.0
Income taxes (credit).......................... (19.2) 1.3 (6.3) 5.8
----- ----- ----- ----- -----
Net income (loss).............................. (13.4)% (30.9)% 3.6% (17.5)% 13.2%
===== ===== ===== ===== =====

FIRST QUARTER 2000 COMPARED TO FIRST QUARTER 1999 (UNAUDITED)

NET SALES

Net sales were $143.1 million in the first quarter of 2000, an increase of
$84.0 million, or 142.0%, as compared to net sales of $59.1 million in the first
quarter of 1999. The increase in net sales was attributable to continued high
levels of capital spending by our semiconductor manufacturing customers,
resulting in increased demand for our products and services.

Sales of ion implant products and services accounted for $115.8 million in
total sales in the first quarter of 2000, an increase of $68.8 million, or
146.4%, as compared to $47.0 million in the first quarter of 1999. Sales of
other products and services, including dry strip products, photostabilization
products and rapid thermal processing systems, accounted for $27.3 million in
total sales in the first quarter of 2000, an increase of $15.2 million, or
125.6%, as compared to $12.1 million in the first quarter of 1999.

GROSS PROFIT

Gross profit was $61.5 million in the first quarter of 2000, an increase of
$40.7 million, or 196.0%, as compared to gross profit of $20.8 million in the
first quarter of 1999. The increase in gross profit was primarily attributable
to increased products and services sales volume. Gross profit as a percentage of
net sales increased to 43.0% in the first quarter of 2000 from 35.1% in the
first quarter of 1999. This increase was due primarily to improved capacity
utilization as a result of higher sales volume and, to a lesser extent, to a
more favorable product mix of ion implant sales.

424B4 31st Page of 109 TOC 1st Previous Next ↓Bottom Just 31st

SELLING

Selling expense was $11.6 million in the first quarter of 2000, an increase
of $2.5 million, or 27.6%, as compared to $9.1 million in the first quarter of
1999. The increase in selling expense was primarily due to increased headcount
expenses of $2.0 million and increased commissions of $0.5 million associated
with increased net sales. As a percentage of net sales, selling expense
decreased to 8.1% in the first quarter of 2000 as compared to 15.4% in the first
quarter of 1999, as costs were spread over a higher revenue base.

GENERAL AND ADMINISTRATIVE

General and administrative expense, including the allocation of Eaton
general corporate expenses to our business, was $13.0 million in the first
quarter of 2000, an increase of $3.4 million, or 35.6%, as compared with $9.6
million in the first quarter of 1999. The increase in general and administrative
expense was primarily attributable to increased personnel costs associated with
a greater number of employees. As a percentage of net sales, general and
administrative expense decreased to 9.1% in the first quarter of 2000 as
compared with 16.2% in the first quarter of 1999 as these costs were spread over
a higher revenue base. The allocation of Eaton general corporate expense was
$4.0 million in the first quarter of 2000 as compared to $3.2 million in the
first quarter of 1999. Following the separation, Eaton will provide transitional
services under the terms of a transitional services agreement described under
"Arrangements with Eaton".

RESEARCH AND DEVELOPMENT

Research and development expense was $16.1 million in the first quarter of
2000, an increase of $3.9 million, or 32.4%, as compared to $12.2 million in the
first quarter of 1999. As a percentage of net sales, research and development
expense decreased to 11.3% in the first quarter of 2000 from 20.6% in the first
quarter of 1999, as costs were spread over a higher revenue base. We continue to
invest significantly in both current product enhancements and new product
development.

AMORTIZATION OF GOODWILL AND INTANGIBLE ASSETS

Amortization of goodwill and intangible assets was $2.3 million in the
first quarter of 2000, consistent with the first quarter of 1999.

INCOME (LOSS) FROM OPERATIONS

Income from operations was $18.4 million in the first quarter of 2000 as
compared to a loss from operations of $12.4 million in the first quarter of
1999, primarily as a result of the factors described above.

OTHER INCOME (EXPENSE)

Total other income-net was $8.7 million in the first quarter of 2000 as
compared to expense of $1.6 million in the first quarter of 1999. Other income
consists primarily of royalty income and equity income from SEN. Royalty income,
primarily from SEN, was $3.8 million in the first quarter of 2000 as compared to
$1.0 million in the first quarter of 1999. Equity income attributable to SEN was
$3.3 million in the first quarter of 2000 compared to a loss of $2.4 million in
the first quarter of 1999. Both increases in 2000 were due to increased SEN
sales volume due primarily to the recovery in the Japanese semiconductor market,
which began in late 1999.

INCOME TAXES (CREDIT)

Income taxes were $8.3 million in the first quarter of 2000 as compared
with an income tax credit of $3.7 million in the first quarter of 1999. Our
effective income tax rate was 30.4% in the first quarter of 2000 as compared to
26.2% in the first quarter of 1999. The 1999 rate was lower

424B4 32nd Page of 109 TOC 1st Previous Next ↓Bottom Just 32nd

than the U.S. federal statutory rate primarily because of benefits associated
with research and development credits taken in that year. See Note 13 to our
combined financial statements.

NET INCOME (LOSS)

Net income increased to $18.9 million in the first quarter of 2000 as
compared to a loss of $10.4 million in the first quarter of 1999, principally as
a result of the factors discussed above.

1999 COMPARED TO 1998

NET SALES

Net sales in 1999 were $397.3 million, an increase of $131.6 million, or
49.5%, as compared to net sales of $265.7 million in 1998. The increase in net
sales was attributable to the increased demand for our principal products and
services resulting from the semiconductor industry's recovery, which began in
the second half of 1999. Our third quarter 1999 net sales increased 125.4% over
the third quarter of 1998, and fourth quarter 1999 net sales increased 193.7%
over the fourth quarter of 1998.

Sales of our ion implant systems and services accounted for $322.0 million
in total sales in 1999 as compared to $219.9 million in 1998, an increase of
46.4% over 1998. Sales of other products and services, including dry strip
products, photostabilization products and rapid thermal processing systems,
increased by 64.4% in 1999 over 1998.

International sales, including exports from our three United States
manufacturing facilities to customers in Europe and Asia Pacific and the sale of
products and services directly by our foreign branches, totalled $212.4 million
in 1999, an increase of $81.1 million, or 61.8%, as compared to $131.3 million
in 1998. Excluding export sales from the United States, our sales in Europe were
$35.5 million, a decrease of 11.9% from 1998, reflecting a lower volume of sales
of service contracts, spares and upgrades. Sales in Asia Pacific were $18.4
million, an increase of 63.5% over 1998, primarily as a result of the economic
recovery in Asia Pacific and increased sales of our products in Taiwan,
Singapore and South Korea.

GROSS PROFIT

Gross profit was $157.1 million in 1999, an increase of $92.9 million, or
144.6%, as compared with gross profit of $64.2 million in 1998. Of this
increase, $31.9 million resulted from increased sales while $43.6 million was
due primarily to improved capacity utilization resulting from higher product
sales volume. In addition, gross profit in 1998 was reduced by $17.4 million of
restructuring charges for inventory writedowns. The increase in gross profit as
a percentage of net sales to 39.5% in 1999 from 24.2% in 1998 was due to
improved capacity utilization, increased sales and the absence of restructuring
charges in 1999.

SELLING

Selling expense was $37.9 million in 1999, a decline of $4.2 million, or
9.9%, as compared to $42.1 million in 1998. The reduction in selling expense
between years was driven principally by headcount savings attributable to our
cost reduction strategy that was initiated in the second quarter of 1998 and
continued into the second quarter of 1999. As a percentage of net sales, selling
expense decreased to 9.5% in 1999 as compared to 15.9% in 1998.

GENERAL AND ADMINISTRATIVE

General and administrative expense, including the allocation of Eaton
general corporate expenses to our business, was $45.9 million in 1999, a
decrease of $1.2 million, or 2.4%, as compared with $47.1 million in 1998. As a
percentage of net sales, general and administrative expense decreased to 11.6%
in 1999 as compared with 17.7% in 1998 as these costs were spread over a higher
revenue base. The allocation of Eaton general corporate expense was $15.0
million in 1999 as compared to $14.8 million in 1998.

424B4 33rd Page of 109 TOC 1st Previous Next ↓Bottom Just 33rd

RESEARCH AND DEVELOPMENT

Research and development expense was $51.6 million in 1999, a decrease of
$27.1 million, or 34.4%, as compared to $78.7 million in 1998. As a percentage
of net sales, research and development expense was 13.0% in 1999 and 29.6% in
1998. Approximately $17.2 million of the decrease in expense was attributable
primarily to synergy savings associated with the closing of our Austin, Texas
facility and the subsequent transfer of Austin's ion implant engineering
activities to our Beverly, Massachusetts facility. The balance of the decrease
was attributable to a reallocation of our research and development efforts
following our 1998 restructuring and the completion of certain research
projects.

AMORTIZATION OF GOODWILL AND INTANGIBLE ASSETS

Amortization of goodwill and intangible assets was $9.3 million in 1999,
consistent with 1998.

INCOME (LOSS) FROM OPERATIONS

Income from operations was $12.3 million in 1999 as compared to a loss from
operations of $137.9 million in 1998, primarily as a result of the factors
described above.

OTHER INCOME (EXPENSE)

Total other income-net was $7.2 million in 1999, an increase of $2.4
million, or 51.3%, as compared to $4.8 million in 1998. Other income primarily
consisted of royalty income and equity income from SEN. Royalty income, more
than half of which was from SEN, was $5.9 million in 1999, as compared to $7.9
million in 1998, or a decrease of 26.4%. The decrease in 1999 was due to income
in 1998 from a large one-time royalty payment from an unrelated party. Equity
income attributable to SEN was $1.3 million in 1999 as compared to a loss of
$2.1 million in 1998. This increase primarily reflects a 19.4% increase in SEN
sales volume in 1999 as compared to 1998 as a result of improvements in the
Japanese semiconductor market.

INCOME TAXES (CREDIT)

Income tax expense was $5.1 million in 1999 as compared with an income tax
credit of $51.1 million in 1998, which was generated by our loss from operations
in that year. The effective tax rate for 1999 was 26.2% and included a credit
for research activities, as compared to an effective tax rate of 38.4% in 1998.
See Note 13 to the combined financial statements.

NET INCOME (LOSS)

Net income increased to $14.4 million in 1999 as compared to a loss of
$82.0 million in 1998, principally as a result of the factors discussed above.

1998 COMPARED TO 1997

NET SALES

Net sales in 1998 were $265.7 million, a decline of $194.3 million, or
42.2%, as compared with net sales of $460.0 million in 1997. The decrease in net
sales was largely attributable to the severe worldwide downturn in the
semiconductor industry that began in late 1997.

Sales of our ion implant systems and services accounted for $219.9 million
of total sales in 1998, a decrease of $195.3 million, or 47.0%, as compared to
$415.2 million in 1997, caused mainly by decreasing demand for semiconductors
which led to excess capacity at manufacturers of semiconductors and lower
capital spending. Sales of other products and services, including dry strip
products, photostabilization products and rapid thermal processing systems,
increased by 2.1% in 1998 compared to 1997 due to the inclusion of a full year
of sales from Fusion in 1998 as compared to approximately five months of sales
in 1997.

International sales, including exports from our United States facilities to
customers in Europe and Asia Pacific and the sale of products and manufacturing
services directly by our foreign

424B4 34th Page of 109 TOC 1st Previous Next ↓Bottom Just 34th

operations totaled $131.3 million in 1998, a decrease of 48.4% as compared to
1997. Excluding export sales from the United States, our sales in Europe were
$40.3 million, an increase of 16.4% as compared to 1997 reflecting a higher
volume of sales of service contracts, spares and upgrades. Sales in Asia Pacific
were $11.3 million, a decrease of 29.6% from 1997, primarily as a result of the
economic crisis in Asia.

GROSS PROFIT

Gross profit was $64.2 million in 1998, a decrease of $108.6 million, or
62.8%, as compared to $172.8 million in 1997. Of this decrease, $73.1 million
was primarily the result of a reduced volume of product sales, while $18.2
million resulted from excess capacity costs associated with the semiconductor
industry downturn. Gross profit was also affected by restructuring charges of
$17.4 million in 1998 related to the writedown of inventory, as described in
Note 5 to our combined financial statements. As a percentage of net sales, gross
profit decreased to 24.2% in 1998 from 37.6% in 1997, primarily due to the $17.4
million restructuring charges and the downturn in the semiconductor industry.

SELLING

Selling expense was $42.1 million in 1998, a decline of $5.0 million, or
10.6%, as compared to $47.1 million in 1997. Decreases in selling expense of
$9.6 million were primarily the result of product volume decreases offset in
part by the full year impact in 1998 of the acquisition of Fusion in August
1997. As a percentage of net sales, selling expense increased to 15.9% in 1998
from 10.3% in 1997.

GENERAL AND ADMINISTRATIVE

General and administrative expense, including the allocation of Eaton
general corporate expenses to our business, was $47.1 million in 1998, an
increase of $8.8 million, or 23.0%, as compared with $38.3 million in 1997,
primarily as a result of the full year impact of the Fusion acquisition. As a
percentage of net sales, general and administrative expense increased to 17.7%
in 1998 compared with 8.3% in 1997, primarily due to spreading fixed costs over
a smaller sales base. The allocation of Eaton general corporate expense was
$14.8 million in 1998 as compared to $11.8 million in 1997, with the increase
principally reflecting an increased asset base associated with the acquisition
of Fusion.

RESEARCH AND DEVELOPMENT

Research and development expense was $78.7 million in 1998, an increase of
$8.2 million, or 11.6%, as compared to $70.5 million in 1997. As a percentage of
net sales, research and development expense was 29.6% in 1998 as compared to
15.3% in 1997, primarily resulting from a significant decrease in sales in 1998.
The increase reflected our continued commitment to new product development and
the enhancement of existing product capabilities, notwithstanding the downturn
in sales volume in 1998.

AMORTIZATION OF GOODWILL AND INTANGIBLE ASSETS

Amortization of goodwill and intangible assets increased to $9.3 million in
1998 as compared to $3.9 million in 1997. This increase reflected a full year of
amortization resulting from the acquisition of Fusion in August 1997.

RESTRUCTURING CHARGES

Restructuring charges of $25.0 million in 1998, not including the $17.4
million related to inventory writedowns, which was included in cost of products
sold, related primarily to workforce reductions, non-cash asset writedowns, and
other restructuring actions. The charge for workforce reductions of $7.1 million
included the termination of approximately 475 employees, primarily manufacturing
personnel. As of December 31, 1998, approximately 300 employees had been
terminated in this program. In addition, the ion implant equipment manufacturing
facility in
34

424B4 35th Page of 109 TOC 1st Previous Next ↓Bottom Just 35th

Austin, Texas was closed and production was transferred to Beverly,
Massachusetts. The writedown of this plant to estimated selling price
represented approximately $2.1 million of asset writedowns. The phase-out of
this plant was concluded in the first quarter of 1999. On May 18, 2000, we sold
the Austin facility for net proceeds of $11.0 million, a price that approximated
book value. See Notes 5 and 8 to our combined financial statements.

WRITE-OFF OF IN-PROCESS RESEARCH AND DEVELOPMENT

Results for 1997 included an $85.0 million write-off of purchased
in-process research and development, with no tax benefit, related to the
acquisition of Fusion. This amount was expensed at the date of acquisition
because technological feasibility of certain projects had not been established
and no alternative commercial use had been identified. See Note 4 to our
combined financial statements.

LOSS FROM OPERATIONS

Loss from operations was $137.9 million in 1998 as compared to a loss from
operations of $72.0 million in 1997, primarily as a result of the factors
described above.

OTHER INCOME (EXPENSE)

Total other income-net was $4.8 million in 1998 as compared to $10.7
million in 1997, a decrease of 55.3%, and consisted primarily of royalty and
equity income (loss) from SEN. Royalty income, primarily from SEN, was $7.9
million in 1998, as compared to $6.3 million in 1997. We also benefited from a
one-time royalty payment from an unrelated party in 1998. We recorded an equity
loss of $2.1 million in 1998 attributable to SEN as compared to income of $3.3
million in 1997, which primarily reflected lower SEN sales and earnings in 1998
as a result of the downturn in the Japanese semiconductor market.

INCOME TAXES (CREDIT)

Income tax credit was $51.1 million in 1998 as compared with income tax
expense of $0.1 million in 1997. The effective income tax rate for 1998 was
38.4% as compared to 0.2% in 1997. The pretax loss in 1997 included a
nondeductible charge of $85.0 million in connection with the write-off of
acquired in-process research and development costs resulting from the
acquisition of Fusion. See Notes 4 and 13 to our combined financial statements.

NET LOSS

We reported a net loss of $82.0 million in 1998 as compared to a net loss
of $61.5 in 1997, reflecting the factors described above.

424B4 36th Page of 109 TOC 1st Previous Next ↓Bottom Just 36th

QUARTERLY RESULTS OF OPERATIONS

The following tables present our combined operating results for each of the
four quarters in 1998 and 1999 and for the first quarter in 2000, in dollars and
as a percentage of net sales. The information for each of these quarters is
unaudited and has been prepared on the same basis as the audited combined
financial statements included in this prospectus. In the opinion of management,
all necessary adjustments, consisting only of normal recurring accruals, have
been included to fairly present the unaudited quarterly results. This data
should be read together with our combined financial statements and the notes to
those statements included in this prospectus.

The historical financial information may not be indicative of our future
performance and does not reflect what our financial position and operating
results would have been had we operated as a separate, stand-alone entity during
the periods presented.

[Enlarge/Download Table]

(UNAUDITED)
THREE MONTHS ENDED
-----------------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31,
1998 1998 1998 1998 1999 1999 1999 1999 2000
--------- -------- --------- -------- --------- -------- --------- -------- ---------
(IN THOUSANDS)

STATEMENTS OF COMBINED
OPERATIONS DATA
Net sales................. $ 79,178 $ 93,829 $ 48,217 $ 44,485 $ 59,124 $98,814 $108,658 $130,671 $143,051
Gross profit (1).......... 25,979 33,878 (4,346) 8,718 20,768 41,512 42,260 52,542 61,474
Other costs & expenses:
Selling.................. 11,216 11,577 10,589 8,752 9,087 8,485 10,085 10,289 11,598
General &
administrative......... 11,025 12,388 11,069 12,593 9,612 9,751 10,608 15,954 13,030
Research & development... 22,205 19,670 18,997 17,784 12,183 12,549 12,347 14,520 16,125
Amortization of goodwill
& intangible assets.... 2,319 2,320 2,320 2,320 2,320 2,320 2,320 2,319 2,320
Restructuring
charges (1)............ 25,529 (535)
-------- -------- -------- -------- -------- ------- -------- -------- --------
Income (loss) from
operations............... (20,786) (12,077) (72,850) (32,196) (12,434) 8,407 6,900 9,460 18,401
Other income (expense):
Royalty income........... 5,022 1,341 292 1,294 965 1,760 1,455 1,674 3,823
Equity income (loss) of
SEN.................... (1,071) 468 (1,627) 98 (2,447) (1,302) 4,981 106 3,340
Other income
(expense)-net.......... (131) (132) 1,136 (1,918) (145) (447) (259) 879 1,549
-------- -------- -------- -------- -------- ------- -------- -------- --------
Income (loss) before
income taxes............. (16,966) (10,400) (73,049) (32,722) (14,061) 8,418 13,077 12,119 27,113
Income taxes (credit)..... (6,510) (3,991) (28,032) (12,557) (3,686) 2,206 3,428 3,177 8,251
-------- -------- -------- -------- -------- ------- -------- -------- --------
Net income (loss) (1)..... $(10,456) $ (6,409) $(45,017) $(20,165) $(10,375) $ 6,212 $ 9,649 $ 8,942 $ 18,862
======== ======== ======== ======== ======== ======= ======== ======== ========

AS A PERCENTAGE OF NET
SALES
Net sales................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit (1).......... 32.8 36.1 (9.0) 19.6 35.1 42.0 38.9 40.2 43.0
Other costs & expenses:
Selling.................. 14.2 12.3 22.0 19.6 15.4 8.6 9.3 7.9 8.1
General &
administrative......... 13.9 13.2 23.0 28.3 16.2 9.9 9.8 12.2 9.1
Research & development... 28.0 21.0 39.4 40.0 20.6 12.7 11.3 11.1 11.3
Amortization of goodwill
& intangible assets.... 2.9 2.5 4.8 5.2 3.9 2.3 2.1 1.8 1.6
Restructuring
charges (1)............ 53.0 (1.2)
-------- -------- -------- -------- -------- ------- -------- -------- --------
Income (loss) from
operations............... (26.2) (12.9) (151.2) (72.3) (21.0) 8.5 6.4 7.2 12.9
Other income (expense):
Royalty income........... 6.3 1.4 0.6 2.9 1.6 1.8 1.3 1.3 2.7
Equity income (loss) of
SEN.................... (1.3) 0.5 (3.3) 0.2 (4.1) (1.3) 4.6 0.1 2.3
Other income
(expense)-net.......... (0.2) (0.1) 2.4 (4.3) (0.3) (0.5) (0.2) 0.6 1.1
-------- -------- -------- -------- -------- ------- -------- -------- --------
Income (loss) before
income taxes............. (21.4) (11.1) (151.5) (73.5) (23.8) 8.5 12.1 9.2 19.0
Income taxes (credit)..... (8.2) (4.3) (58.1) (28.2) (6.3) 2.2 3.2 2.4 5.8
-------- -------- -------- -------- -------- ------- -------- -------- --------
Net income (loss) (1)..... (13.2)% (6.8)% (93.4)% (45.3)% (17.5)% 6.3% 8.9% 6.8% 13.2%
======== ======== ======== ======== ======== ======= ======== ======== ========

---------------

(1) Net loss in the third quarter of 1998 reflects a restructuring charge of
$42.9 million ($27.9 million aftertax), of which $17.4 million related to
inventory writedowns and reduced gross profit and $25.5 million related to
workforce reductions and other restructuring actions and was recorded in
operating expenses.

424B4 37th Page of 109 TOC 1st Previous Next ↓Bottom Just 37th

LIQUIDITY AND CAPITAL RESOURCES

Historically, Eaton has managed substantially all of our cash on a
centralized basis. Cash receipts associated with our business have been
transferred to Eaton on a periodic basis and Eaton has provided funds to cover
our disbursements. Accordingly, the cash and short-term investment balances
presented in the accompanying combined balance sheets do not represent balances
required or generated by our operations; rather they primarily relate to cash
and highly liquid short-term investments maintained for working capital
purposes, primarily at international locations.

Prior to January 1, 2000, substantially all of our cash receipts and
disbursements in the United States were processed through Eaton's centralized
cash management system and were recorded in Parent Company investment. Since
December 31, 1999, substantially all of these amounts have been recorded as a
receivable from or payable to Eaton. At March 31, 2000, a net amount of $0.9
million was payable to Eaton by us for these transactions and was included in
"Receivables from Eaton Corporation" in our March 31, 2000 combined balance
sheet. This payable became a receivable of approximately $23.0 million at May
31, 2000. We plan to settle this receivable in cash at or shortly after the
closing of this offering.

The remaining balance of the "Receivables from Eaton Corporation" at March
31, 2000 was $9.2 million and represented primarily cash generated by us in
Europe that was processed through Eaton's European centralized cash management
system. Approximately $5.5 million of this receivable, as well as $1.5 million
of our $2.8 million of cash and short-term investments at March 31, 2000, will
be retained by Eaton and will not be available to us. The resulting $3.7 million
balance of this receivable will also be settled in cash at or shortly after the
closing of this offering. Subsequent to March 31, 2000, in connection with
Eaton's contribution of assets to us, we received a cash transfer from Eaton
that, after offsets, we expect to net to approximately $8.0 million. On May 18,
2000, we sold our Austin, Texas facility for net proceeds of $11.0 million in
cash. We closed this plant in the first quarter of 1999.

After giving pro forma effect to the foregoing transactions, including the
payments we will receive upon settlement of receivables at or shortly after the
closing of this offering, we would have had $47.0 million of cash and short-term
investments at May 31, 2000. This cash, together with the net proceeds from this
offering of an estimated $317.5 million, reduced by the payment of the $300
million dividend to Eaton, will be available to us for working capital and other
corporate purposes. See "Use of Proceeds".

Net working capital was $190.0 million at March 31, 2000 as compared to
$169.8 million at December 31, 1999, $91.0 million at December 31, 1998 and
$149.0 million at December 31, 1997. The current ratio at those dates was 3.6 as
compared to 3.6, 2.6 and 2.7, respectively. The increase in accounts receivable
and inventory was the primary cause of the increase in working capital at March
31, 2000 and resulted from increasing sales volume and higher levels of
production beginning in the second half of 1999 and continuing into the first
quarter of 2000.

Cash (used in) provided by operating activities was ($2.9 million) for the
three months ended March 31, 2000 as compared to ($39.1 million) in 1999, $12.2
million in 1998 and ($6.7 million) in 1997. The cash used in operating
activities in 1999 and the first quarter of 2000 was primarily the result of
increased accounts receivable and the build-up of inventory balances by period
end, resulting from expanding sales volume partially offset by higher accounts
payable and improved earnings performance.

Budgeted capital expenditures for 2000 are $24.1 million, a significant
portion of which will be used to build a 140,000 square foot expansion of our
Beverly, Massachusetts facility to house an advanced process development,
product demonstration and customer training center for all the equipment we
produce, and an expansion of our Rockville, Maryland manufacturing and

424B4 38th Page of 109 TOC 1st Previous Next ↓Bottom Just 38th

research facilities. We had capital expenditures of $0.3 million in the first
quarter of 2000, $16.9 million in 1999, $15.0 million in 1998 and $14.2 million
in 1997. The amount of our future capital requirements will depend on a number
of factors, including the timing and rate of the expansion of our business. We
anticipate increased capital expenditures to support anticipated worldwide sales
growth.

Our joint venture arrangements provide that any SEN financing must be
approved by Sumitomo and us. In recent years, SEN has satisfied its capital
needs with unsecured short-term bank financing. Following our separation from
Eaton, lenders to SEN may require our guarantee or impose other terms and
conditions less favorable to SEN than in the past.

We currently believe that the portion of the net proceeds being retained by
us, together with available cash and our cash flow from operations, will provide
sufficient capital to fund our operations for at least the next 18 months. We
cannot assure you, however, that the underlying assumed levels of sales and
expenses will prove to be accurate. We may need to raise additional funds
through public or private financings or other arrangements in order to:

- support more rapid expansion of our business than we anticipate;

- develop and introduce new or enhanced products or services;

- respond to competitive pressures;

- invest in or acquire businesses or technologies; or

- respond to unanticipated requirements or developments.

We cannot be certain that financing will be available to us on favorable
terms when we need it. We do not intend to raise additional equity capital prior
to the complete divestiture by Eaton of our common stock to Eaton shareholders
and for two years following any divestiture, we would be restricted in raising
substantial amounts of equity capital under our tax sharing and indemnification
agreement with Eaton. If additional funds are raised through the issuance of
equity securities, dilution to existing stockholders may result. Future debt
financings could involve restrictive covenants that may limit the manner in
which we conduct our business. If sufficient funds are not available, we may not
be able to introduce new products and services, expand the development of our
product platform or compete effectively in any of our markets, any of which
could materially harm our business, financial condition and operating results.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK DISCLOSURE

We are subject to various inherent financial risks attributable to
operating in a global economy.

INTEREST RATE SENSITIVITY

As of December 31, 1999 and March 31, 2000, we had cash and short-term
investments of $3.5 million and $2.8 million, respectively. See "Management's
Discussion and Analysis -- Liquidity and Capital Resources" for a discussion of
the cash that we expect to have available after the offering.

FOREIGN CURRENCY EXCHANGE RISK

Historically, our exposure to foreign exchange rate risk has been managed
on an enterprise-wide basis as part of Eaton's risk management strategy.
Substantially all of our sales are billed in U.S. dollars, thereby reducing the
impact of fluctuations in foreign exchange rates on our results. Our investment
in SEN and our royalty and equity income from SEN are subject to foreign
currency exchange risks. We are currently evaluating our exchange rate risk
management strategy.

424B4 39th Page of 109 TOC 1st Previous Next ↓Bottom Just 39th

EQUITY SECURITY PRICE RISK

We do not own any equity security investments which are subject to price
risk and, therefore, we do not currently have any direct equity price risk.

EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS

In 1998, Statement of Financial Accounting Standard No. 133, "Accounting
for Derivative Instruments and Hedging Activities", was issued. This Statement
requires all derivatives to be recognized on the balance sheet at fair value. We
must adopt the standard by the first quarter of 2001. We expect that the
adoption of the standard will have an immaterial effect on earnings and
financial position, if any.

In December 1999, the SEC issued SAB 101, "Revenue Recognition". We have
concluded that our existing revenue recognition policy continues to be
appropriate and in accordance with generally accepted accounting principles and
SAB 101 as currently written. See Note 3 to our combined financial statements.

YEAR 2000

We were included in Eaton's Year 2000 compliance program under which Eaton
incurred substantial program costs. We believe that our significant vendors and
service providers are Year 2000 compliant and have not, to date, been made aware
that any of them have experienced Year 2000 disruptions in their systems.
Accordingly, we do not anticipate incurring material expenses or experiencing
any material operational disruptions as a result of any Year 2000 problems.
Based on operations since January 1, 2000, we have not experienced any
significant business disruptions related to the Year 2000 issue.

424B4 40th Page of 109 TOC 1st Previous Next ↓Bottom Just 40th

BUSINESS

OVERVIEW OF OUR BUSINESS

We are a leading producer of ion implantation equipment used in the
fabrication of semi-conductors in the United States, Europe and Asia Pacific.
Our Japanese joint venture licenses our technology and is the leading producer
of ion implantation equipment in Japan. We also produce dry strip,
photostabilization and rapid thermal processing equipment, which is used in
semiconductor manufacturing primarily before and after the ion implantation
process. In addition, we provide extensive aftermarket service and support,
including spare parts, equipment upgrades, maintenance services and customer
training.

INDUSTRY OVERVIEW

The semiconductor industry is continuing to experience growth in demand for
semiconductors, or chips, for use in personal computers, telecommunication
equipment, digital consumer electronics, wireless communication products and
other applications. Semiconductors are tiny silicon slivers that contain
complete electronic circuits. Most semiconductors are built on a base of
silicon, called a wafer, and consist of two main structures. The lower structure
is made up of the active components, typically transistors or capacitors, and
the upper structure consists of the circuitry that connects the active
components.

According to World Semiconductor Trade Statistics, an industry trade
association, total worldwide sales of semiconductors were $149 billion in 1999.
While the semiconductor industry has been highly cyclical, the worldwide
semiconductor market, as measured by total sales, grew at an average annual
compound rate of approximately 12% in the period from 1989 through 1999. World
Semiconductor Trade Statistics projects continued growth at higher rates for the
next two years. A significant factor in the growth in demand for semiconductors
has been the continuous technological innovation in chip design and manufacture,
which has enabled semiconductor manufacturers to produce chips with greater
functionality at a lower cost per function. For example, the semiconductor
industry historically has been able to double the number of transistors on a
given space of silicon every 18 to 24 months.

The increasing demand for semiconductors has required manufacturers to
increase chip production. Manufacturers have primarily increased production
through efficiency improvements, the addition of manufacturing equipment in
existing fabrication facilities and the construction of new fabrication
facilities. Efficiency improvements have been derived largely from increased
equipment utilization and higher manufacturing yields. In recent years, however,
their ability to make significant efficiency gains has diminished. For that
reason, as market conditions have improved since early 1999, semiconductor
manufacturers have been meeting the increased demand for chips mostly by
building new fabrication facilities, which usually cost $1.0 billion or more,
and by making additional equipment purchases to expand existing fabrication
facilities.

When new fabrication facilities are built, customers have an opportunity to
increase the size of the wafer. By increasing the wafer size, semiconductor
manufacturers can produce more chips per wafer, thus reducing the overall
manufacturing cost per chip. The more advanced wafer fabrication facilities are
currently using circular wafers with a diameter of 200 millimeters, up from the
100 millimeter diameter wafers used 10 to 15 years ago. Currently, some
semiconductor manufacturers are commencing pilot production lines using 300
millimeter wafers. It is anticipated that additional manufacturers will add 300
millimeter production capabilities within the next two to five years, which will
lead to demand for equipment with 300 millimeter capability.

During the period 1992 through 1998, the most recent semiconductor
equipment cycle, growth in sales of high current and high tilt/medium current
ion implantation equipment has been lower than the growth in chip sales, while
the growth in sales of high energy implanters has been substantially higher. See
"Products and Services". Over the past ten years, based on Dataquest

424B4 41st Page of 109 TOC 1st Previous Next ↓Bottom Just 41st

data, sales of ion implantation equipment as a whole have grown faster during
periods of high capital spending by semiconductor manufacturers, particularly
spending for new fabrication facilities.

Given the magnitude of the investment needed to build a new fabrication
facility, independent semiconductor manufacturers, or foundries, have emerged to
serve semiconductor producers who design but do not manufacture chips. In
addition, foundries manufacture semiconductors for producers who choose to
outsource part of their demand. Foundries, which are predominantly located in
Taiwan and Singapore, have become significant purchasers of semiconductor
equipment. Dataquest forecasts a worldwide rise in semiconductor capital
equipment purchases this year of over 40%, and we are fully participating in
what we believe will be a multi-year industry rebound.

OUR BUSINESS STRATEGY

Our objective is to enhance our position as a leading producer of ion
implantation equipment and to offer on an integrated basis a broad array of
products and services used primarily in the front-end of the chip fabrication
process. Key elements of our strategy to achieve our objective include:

INCREASE ION IMPLANTATION MARKET PENETRATION. We seek to increase our
share of the ion implantation market by leveraging our competitive strengths in
advanced ion implant technology and by capitalizing on key trends toward
smaller, faster, more complex chips, such as those used in personal computers,
cellular phones and other electronic products. As the market leader in high
energy, the fastest growing ion implant sector, we intend to continue to broaden
the applications served by our high energy products to capture a greater
percentage of the total ion implantation market. We also have broadened our high
current product line to include ultra low energy implantation to capitalize on
the trend towards faster chips. In addition, we intend to continue to invest in
our high tilt/medium current products in order to offer the complete range of
ion implantation products.

MAINTAIN STRONG COMMITMENT TO RESEARCH AND DEVELOPMENT. Semiconductor
manufacturing processes continue to undergo rapid technological change. Based on
our knowledge of the semiconductor equipment manufacturing industry, we believe
that we have been, and must continue to be, at the forefront of technological
innovation in the ion implant sector. Based on our knowledge of the
semiconductor equipment manufacturing industry, we believe that we developed the
first high current ion implantation system in the late 1970s and the first high
energy ion implantation system in the 1980s. In 1999, we installed what we
believe is the first 300 millimeter high energy ion implantation system, which
we believe will be the next generation of ion implant products. We also plan to
continue to devote substantial research and development resources to our dry
strip, photostabilization and rapid thermal processing systems. We pioneered the
development of photostabilization in 1983, and we believe that we have developed
the only 300 millimeter production photostabilizer in the industry. SEN devotes
substantial resources to research and development and we receive a
non-exclusive, royalty-free license for the ion implant technology developed by
SEN.

CAPITALIZE ON BROAD PRODUCT LINES TO PROVIDE AN INTEGRATED RANGE OF
FRONT-END EQUIPMENT. In addition to our broad offering of ion implantation
systems, we offer a range of products utilized in semiconductor manufacturing
primarily before and after the ion implantation process. The high degree of
interaction among these individual process steps affects overall process
quality, throughput and cost. We believe that semiconductor manufacturers will
increasingly seek integrated solutions from their equipment suppliers and we
intend to highlight the productivity, high degree of interaction and cost
advantages of our broad product line.

PROVIDE LOWEST COST OF OWNERSHIP. Total cost of ownership is an important
criterion customers apply when selecting semiconductor capital equipment. We
seek to provide the lowest
41

424B4 42nd Page of 109 TOC 1st Previous Next ↓Bottom Just 42nd

cost of ownership by developing products with the best combination of
reliability, advanced technology, high throughput and high yield. For example,
we have expanded the range of steps that our most capable high energy machines
can perform and, at the same time, we have developed a lower cost high energy
machine for those customers with limited need for the broad functionality of our
most capable machines. All of our ion implantation systems are designed on a
common platform, utilizing the same wafer handling robot, ion source, vacuum
system and operator interface. Our dry strip and photostabilization equipment
also share the same wafer handling platform. These common platforms reduce our
design and production time and costs, and overall cost of ownership for our
customers by minimizing training, spare parts inventory and maintenance.

PROVIDE SUPERIOR CUSTOMER SERVICE. Prompt and effective field support is
critical to our sales efforts, due to the complexity of our machines and the
substantial operational and financial commitments made by our customers when
they purchase our equipment. We intend to increase our sales and customer
support infrastructure in all our markets, particularly in Taiwan, Singapore and
South Korea, to capitalize on growth opportunities. Furthermore, we continually
seek to improve our responsiveness to customer needs. For example, our SMART
internet-based parts supply system streamlines the replenishment of customers'
inventory, and we are expanding our Beverly, Massachusetts facility to provide
training and education to our customers on advanced processes for all our
products.

REDUCE CYCLE TIMES IN OUR BUSINESS. We seek to improve our operating
efficiencies by, among other things, reducing cycle times across our business.
For example, we recently made available to those customers who select it
additional modular testing of our ion implantation products, which avoids the
need to assemble, test and disassemble a complete unit prior to shipment. This
"ship from cell" process has enabled us to cut approximately four weeks from the
average period from receipt of an order to shipment of the product to those
customers. We have also sought to reduce the development cycle for new products
through a collaborative process whereby our engineering, manufacturing and
marketing personnel work closely together with one another and with our
customers at an earlier stage in the development process.

PRODUCTS AND SERVICES

We are a leading producer of ion implantation equipment. We also offer
other products and services, including dry strip, photostabilization and rapid
thermal processing products used to produce semiconductor devices. We provide
extensive aftermarket service and support to our customers, including spare
parts, equipment upgrades, maintenance services and customer training.

The dollar amount (in millions) and percentage of our net sales
attributable to ion implantation systems and services and to other products and
services were as follows for the periods indicated:

[Enlarge/Download Table]

YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
-------------------------------------------------- -------------------------------
1997 1998 1999 1999 2000
-------------- -------------- -------------- ------------- --------------
(UNAUDITED)

Ion implantation systems
and services.......... $415.2 90.3% $219.9 82.8% $322.0 81.0% $47.0 79.5% $115.8 80.9%
Other products and
services.............. 44.8 9.7 45.8 17.2 75.3 19.0 12.1 20.5 27.3 19.1
------ ----- ------ ----- ------ ----- ----- ----- ------ -----
Total............. $460.0 100.0% $265.7 100.0% $397.3 100.0% $59.1 100.0% $143.1 100.0%
====== ===== ====== ===== ====== ===== ===== ===== ====== =====

ION IMPLANTATION SYSTEMS

Ion implantation is a principal step in the manufacturing process for
semiconductors. An ion implanter is a large, technically advanced machine that
injects charged ions, or dopants, such as

424B4 43rd Page of 109 TOC 1st Previous Next ↓Bottom Just 43rd

arsenic, boron or phosphorus, into a silicon wafer through an accurately
controlled electric field, with a precisely defined amount of energy ranging
between several hundred and three million volts. Certain areas of the silicon
wafer are blocked off by a material known as photoresist so that the dopants
will only enter the wafer where needed. The dopants change the electrical
properties of the silicon wafer to create the active components of a chip. The
amount of energy determines the depth to which the dopant penetrates the wafer,
and the amount of dopant or dose determines how much the electrical properties
of the silicon wafer are changed.

There are three types of ion implantation machines: high energy, high
current and high tilt/medium current. Each type of machine produces chips with
varying degrees of computing speed, miniaturization and power consumption. Most
complex chips require implant steps from each type of machine and the
manufacturer determines the optimal combination of machines based on the
performance requirements of the chips being produced. We have designed our
products to enhance the manufacturers' flexibility in combining machines during
the implant process.

A high energy implanter is typically used to implant dopant deep in the
wafer, which allows improved isolation of adjoining circuits on the same chip.
High energy implanters enable a closer stacking of circuits, which results in
more functionality for the consumer. As a result, in recent years the use of
high energy implanters has expanded into the manufacture of virtually all types
of chips. They are used in the manufacture of smaller, more complex chips, such
as those used in cellular phones and other hand held devices because they enable
more functionality with less power consumption. They are also increasingly used
in the manufacture of chips that are used in personal computers because they
permit greater computing power from a chip of a given size.

For implants that require high dose and medium to very shallow depth, a
high current implanter is most often used. In some applications, very shallow,
high-dose implants result in faster chips, an important feature for
microprocessors, digital signal processors and other chips.

Most ion implant steps occur with the ion beam perpendicular to the wafer.
A high tilt/medium current implanter, however, is primarily used for the implant
step that requires the ion beam to be positioned at an angle to the wafer to
implant dopants below preexisting features. The use of the high tilt/medium
current implanter extends into some high energy applications to allow customers
greater flexibility in selecting the most optimal combination of implanters for
their needs.

The following table shows the 1999 estimated overall market size for high
energy, high current and high tilt/medium current implanter machines (excluding
aftermarket sales and service revenues), the estimated annual compound growth
rate for each of these markets from 1992 to 1998, the 1999 estimated combined
market share for our sales and SEN's sales of each product line and the 1999
estimated average selling price for industry sales of each product line. All
data in the table has been supplied by Dataquest.

[Enlarge/Download Table]

TYPES OF ION IMPLANTERS
HIGH TILT/
HIGH ENERGY HIGH CURRENT MEDIUM CURRENT
------------------ ------------ -------------------
(DOLLARS IN MILLIONS)

1999 Overall market size.............. $187 $287 $174
1992-1998 Annual compound growth
rate................................ 39.2% 4.6% 12.6%
1999 Axcelis/SEN market share......... 87.7% 41.5% 9.4%
1999 Industry average selling price... $3.5-4.0 $2.5-3.5 $2.0-3.0

424B4 44th Page of 109 TOC 1st Previous Next ↓Bottom Just 44th

We manufacture a complete line of high energy, high current and high
tilt/medium current implanters, which is broader than that of our competitors.
The following chart lists our principal products:

[Enlarge/Download Table]

TYPE OF ION
IMPLANTER CORE PRODUCTS RECENTLY INTRODUCED PRODUCTS
----------- ----------------------------------------- -------------------------------------

HIGH ENERGY GSD/HE HE(MC)
- Permits multiple implant steps - Lower cost alternative to GSD/HE
in one process, or chaining, thus
increasing throughput HE3
- More than 80% of our GSD/HE - For use with 300 millimeter
customers use it for one or more wafers
medium current applications
- Broadest application coverage
GSD/VHE
- Highest energy range available
- Also used by customers
for R&D
HIGH CURRENT GSD/200E(2) LED
- High dose implants - Increased performance at low
- High productivity at low cost energy
ULE2
- Ultra-low energy
HIGH TILT/ 8250HT MC3
MEDIUM CURRENT - Energy purity - For use with 300 millimeter
- Process flexibility wafers

Our implanters have been designed with a process overlap that allows
customers to tailor the combination of high energy, high current and high
tilt/medium current implanters to their specific needs. High energy and high
current implanters can be used to cover most high tilt/medium current
applications, and the high tilt/medium current implanter can be used for some
high energy applications. All of our ion implantation systems share certain of
the same modular subsystems for efficiency and convenience. The subsystems for
wafer handling robot, ion source, vacuum system and operator interface are
common among our three implanters. This common platform reduces our design and
production time and costs, and overall cost of ownership for our customers by
minimizing training, spare parts inventory and maintenance.

Our high energy and high current machines process wafers in batches of 13
to 25 wafers, while, as is common in the industry, our high tilt/medium current
machines process one wafer at a time. In addition, our high energy implanters
can perform several implants without reloading the wafers, a process known as
chaining. We believe that the ability of our high energy machines to process
wafers in batches and to chain has contributed to the high growth of that
product line.

We intend to continue to broaden the applications served by our high energy
products and have recently introduced our HE(MC) implanter to provide a lower
cost alternative for those customers with a limited need for the broad
functionality of our most capable high energy machines. We also recently
introduced our next generation HE3 implanter designed specifically to process
300 millimeter wafers. Two HE3 machines have been installed in 300 millimeter
wafer pilot production lines. Our GSD/HE product is the industry's only ion
implantation product to be rated "best product" and was the "Grand Award" winner
among semiconductor capital equipment products, an award sponsored by
Semiconductor International, an industry publication.

424B4 45th Page of 109 TOC 1st Previous Next ↓Bottom Just 45th

We believe that we developed the first high current ion implantation
system. We were ranked number one in this product sector in 1999, according to
Dataquest. We have recently introduced our LED implanter, which extends the
energy range of our GSD/200E(2) implanter to lower energies than can be achieved
with traditional high current implanters. The ULE2 is an ultra low energy, high
current implanter. These machines respond to the demand for high dose, ultra
shallow implants that increase chip speed at acceptable machine throughput
rates.

Our high tilt/medium current ion implanter complements our high energy and
high current implanters. Our 8250HT targets high tilt applications that cannot
be performed with high energy or high current implanters and extends into some
high energy applications to allow customers a flexible combination of
implanters. We target our 8250HT high tilt/medium current machine for the
relatively few steps that our high energy and high current machines cannot
complete. The most important step is an angular implant designed to insert
dopants below preexisting features on the wafer. Our recently introduced MC3
high tilt/medium current implanter is designed to process 300 millimeter wafers.

During the past three years, we have also produced a small number of ion
implanters used in the production of laptop computer screens and other flat
panel displays. We also continue to service the machines that have been
installed. Our net sales from the sale and service of these implanters were
between 0.5% and 1.6% of net sales in each of the last three years.

OTHER PRODUCTS

We also produce dry strip, photostabilization and rapid thermal processing
equipment, which is used in semiconductor manufacturing primarily before and
after the ion implantation process. We introduced our rapid thermal processing
products in 1996 and we entered the dry strip and photostabilization product
markets through our acquisition of Fusion in August 1997. Fusion pioneered the
development of photostabilization in 1983.

We estimate that, in 1999, the market for photostabilizer equipment was $18
million and our market share was approximately 75%. Dataquest reports that, in
1999, the market for dry strip equipment was $227 million and our market share
was 14% and that the market for rapid thermal processing equipment was $331
million and our market share was 2%.

DRY STRIP AND PHOTOSTABILIZATION SYSTEMS. In the process steps prior to ion
implantation, certain areas of the silicon wafer are blocked off to ensure that
only defined areas of the wafer are processed. First, a light sensitive,
polymer-based liquid, called photoresist, is spread in a uniformly thin film on
the wafer. After baking to solidify the liquid, light is passed through a
stencil, which projects an image on the photoresist by means of a lithographic
tool. Thereafter, photostabilization uses ultraviolet light to harden the
photoresist in order to provide better performance for the subsequent implant
step. After the implant step, the used photoresist must be removed. The primary
means of removing excess photoresist and residue is called dry strip. Our dry
strip machines, often called ashers, use microwave energy to turn process gases
into plasma, which then acts on the surface of the wafer to remove the
photoresist and unwanted residue. Dry strip and photostabilization are also used
in conjunction with several other steps in the manufacturing process.

424B4 46th Page of 109 TOC 1st Previous Next ↓Bottom Just 46th

The following chart lists our principal products in each category:

[Enlarge/Download Table]

PRODUCT LINE CORE PRODUCTS RECENTLY INTRODUCED PRODUCTS
------------ ------------------------------------------- ---------------------------------------------

DRY STRIP FUSIONGEMINI PLASMA ASHER FUSION ES3
- High ash rates with low damage - Comprehensive dry strip and
FUSIONGEMINI PLASMA ASHER ES residue removal with
- Adds additional capability for 300 millimeter capability
dry residue removal

PHOTOSTABILIZERS FUSIONGEMINI PHOTOSTABILIZER FUSION PS3
- Propriety ultraviolet light - Industry's only 300 millimeter
source; high throughput production-ready photostabilizer

Our FusionGemini dual chamber platform is the foundation for both our dry
strip and our photostabilizer products. Fusion pioneered photostabilization
technology, and we believe that our products remain the industry standard. Our
dry strip tools are capable of removing bulk photoresist from the wafer, as well
as the residue left behind after bulk strip. This reduces or eliminates the need
for further wet chemical stripping by eliminating the use of hazardous chemicals
traditionally used for this step. Manufacturing cost is further reduced by the
fact that our ashers do not require side access, conserving expensive cleanroom
space. Our Fusion ES3 dry strip product, a 300 millimeter dry strip machine, was
tested by Sematech, an industry association of semiconductor manufacturers, and
met Sematech's 300 millimeter requirements. Satisfaction of Sematech's standard
requirements indicates that our Fusion ES3 product has achieved a level of
performance required by many semiconductor manufacturers. We are not a member of
Sematech.

Our photostabilizers are used by a majority of integrated circuit
manufacturers worldwide because of our proprietary ultraviolet light source and
the high throughput of the FusionGemini dual chamber platform. Our recently
introduced Fusion PS3 machine has 300 millimeter wafer capability and we believe
that it is the only 300 millimeter production-ready photostabilizer available on
the market. It has been installed in 300 millimeter pilot production facilities.

RAPID THERMAL PROCESSING SYSTEMS. At a number of points during the
manufacturing process, silicon wafers need to be heated rapidly, often to 900
degrees centigrade or higher, in order to complete chemical or electronic
reactions. For example, high temperature treatment is needed after all the
dopants have been implanted in the wafer so that the dopants will settle into
the correct atomic state. This heating process is referred to as rapid thermal
processing, or RTP.

Our RTP machine employs a patented design to process a single wafer in a
hot wall vertical reactor. The reactor has three zones that are heated by
heating coils, as well as an actively cooled base, which create a uniform
temperature gradient from top to bottom. The resulting stable temperature
profile is inherently repeatable, accurate and reliable. Rapid heating and
cooling of the wafer is achieved by simply adjusting the vertical position of
the wafer within the reactor. Most other RTP equipment manufacturers use more
expensive lamp-based RTP systems, which require frequent lamp replacement and
require expensive control systems. For this reason, we believe our RTP machines
have lower overall operating costs than these lamp-based systems.

The following chart lists our principal RTP products:

[Enlarge/Download Table]

PRODUCT LINE CORE PRODUCTS RECENTLY INTRODUCED PRODUCTS
------------ -------------------------------------- ---------------------------------------------

RTP SYSTEMS SUMMIT SUMMIT 300
- Accommodates 0.18m devices - 300 millimeter capability
- Repeatable, accurate temperature
gradient

424B4 47th Page of 109 TOC 1st Previous Next ↓Bottom Just 47th

Our Summit series of RTP systems has a flexible design, offering both
single and dual chamber systems. Its engineering incorporates recent
developments in furnace design, temperature measurement, emission correction
techniques and wafer handling. Our recently introduced Summit 300 has 300
millimeter wafer capability.

AFTERMARKET SUPPORT AND SERVICES

We offer our customers extensive aftermarket service and support throughout
the lifecycle of the equipment we manufacture. We believe that more than 3,200
of our products, including products shipped by SEN, are in use worldwide. The
service and support that we provide include spare parts, equipment upgrades,
maintenance services and customer training. At March 31, 2000, we offered
aftermarket service at 49 locations in nine countries; 13 of these were combined
sales and service offices, and the balance were service-only offices, mostly
located in our principal customers' fabrication facilities.

Our customer support network includes approximately 500 sales and marketing
personnel and service engineers, including field service engineers, spare parts
support staff and applications engineers. An additional 300 persons located at
our three manufacturing facilities work with our customers to provide advanced
equipment support, applications support, customer training and documentation.

Most of our customers maintain spare parts inventories for our machines. In
1997, we launched a web-based spare parts management and replenishment tracking
program, or SMART, to facilitate internet communication with our customers. The
implementation of our SMART program has helped us to achieve reduced order
fulfillment costs and cycle times.

Our process technology center in Beverly, Massachusetts is available to
customers for developing and testing advanced ion implantation and RTP
processes, and our process technology center in Rockville, Maryland is available
to customers for developing and testing dry strip and photostabilization
processes. At these facilities, we also make available to our customers advanced
testing and analysis equipment. In addition, we are constructing a 140,000
square foot addition to the Beverly facility, which will house an advanced
process development, product demonstration and customer training center for all
of the equipment we produce.

The ability to provide prompt and effective field support is critical to
our sales efforts, due to the substantial operational and financial commitments
made by customers that purchase our systems. Our customer support programs,
combined with our research and development efforts, have served to encourage use
of our systems in production applications and have accelerated penetration of
certain key accounts.

SALES AND MARKETING

We primarily sell our equipment and services through our direct sales
force. At March 31, 2000, we had 13 sales offices in seven countries.
Aftermarket service and support is also offered at all of these offices. In the
United States, we conducted sales and marketing activities from seven locations.
Outside of the United States, our sales offices are located in Taiwan, South
Korea, Germany, Singapore, Italy and France. In addition, isolated sales are
made in smaller markets through distributors and manufacturers representatives.
At March 31, 2000, we had approximately 500 sales and marketing personnel and
service engineers. Our sales objective is to work closely with customers to
secure purchase orders for multiple systems as they expand existing facilities
and build new wafer facilities. We believe that our marketing efforts are
enhanced by the technical expertise of our research and development personnel.
At March 31, 2000, over 44% of our workforce consisted of engineers, scientists
and technical personnel.

In Japan, we market our products through two channels: one, we sell our ion
implant products only through our SEN joint venture, which sells its machines
and services directly to

424B4 48th Page of 109 TOC 1st Previous Next ↓Bottom Just 48th

semiconductor fabricators; and two, we sell our photostabilizers, dry strip and
rapid thermal processing products to semiconductor fabricators through an
exclusive distribution agreement with Sumitomo entered into in 1999. The
distribution agreement also provides for the parties to discuss the manufacture
and sale of these products through SEN if the parties agree that sales volume
will justify manufacturing these products in Japan in the future. In 1999, sales
under the distribution agreement accounted for only 0.47% of our net sales. The
distribution arrangement expires in 2002 and thereafter is renewable from year
to year, unless either party has given the other party six months prior written
notice.

The semiconductor fabrication industry is currently experiencing
significant growth in Asia, particularly in Taiwan, Singapore and South Korea.
As a result, we have also increased our focus on markets in Asia outside of
Japan by increasing our sales and customer support personnel focused on those
countries. We intend to make additional investments in this region over the next
few years.

International sales, including export sales from our U.S. manufacturing
facilities to foreign customers and sales by our foreign subsidiaries and
branches, accounted for 53.5% of total net sales in 1999, 49.4% in 1998 and
55.4% in 1997. We expect that international sales will continue to account for a
significant portion of our net sales. International sales are subject to various
risks that are described under "Risk Factors--Risks Relating to Our Business--A
Decline in Our International Sales Could Harm Our Business". Substantially all
of our sales are denominated in U.S. dollars. SEN's sales are denominated in
Japanese yen.

CUSTOMERS

In 1999, the top 20 semiconductor manufacturers accounted for approximately
75% of total semiconductor industry capital spending. These manufacturers are
from the four largest semiconductor manufacturing regions in the world: the
United States, Asia Pacific (Taiwan, South Korea and Singapore), Japan and
Europe. We and SEN serve all of the 20 largest semiconductor manufacturers. We
believe that more than 3,200 of our products, including products shipped by SEN,
are in use worldwide.

Net sales to our ten largest customers accounted for 48.7%, 37.6% and 59.1%
of net sales, respectively, in 1997, 1998 and 1999. We expect that sales of our
products to relatively few customers will continue to account for a high
percentage of net sales for the foreseeable future. In 1999, net sales to
STMicroelectronics N.V., Motorola, Inc. and Texas Instruments Incorporated
accounted for 15.9%, 10.6% and 10.5%, respectively, of our net sales. No other
customer accounted for as much as 10% of our net sales in 1999. In 1997 and
1998, no single customer accounted for as much as 9.0% of our net sales.

SEN JOINT VENTURE

In 1982, we established our SEN joint venture with Sumitomo to provide us
with additional manufacturing capacity for our ion implant products and local
access to the Japanese semiconductor equipment market. Under our arrangements
with Sumitomo, our ion implant products may be sold in Japan only through the
joint venture. SEN may sell its products outside Japan only with our consent and
through us as exclusive distributor. There are isolated sales of our equipment
into Japan to our non-Japanese customers and isolated sales of SEN equipment
outside of Japan primarily to its Japanese customers and their joint ventures.
SEN manufactures ion implantation equipment at its Toyo, Japan location under
the license from us described below. From time to time, we sell ion implantation
equipment and other products to SEN. In 1999, our net sales of products to SEN
amounted to $6.7 million.

As part of the joint venture arrangement, we have entered into a separate
license agreement with SEN, last renewed in 1996, under which we have granted
SEN an exclusive license in Japan to use our current and future ion implantation
technology and to manufacture, use and sell

424B4 49th Page of 109 TOC 1st Previous Next ↓Bottom Just 49th

products using our current and future ion implantation patents. We have also
granted SEN a non-exclusive license to sell ion implantation products outside of
Japan. We received royalty income from SEN under the license agreement of $6.2
million in 1997, $4.0 million in 1998 and $3.8 million in 1999. The license
agreement expires on December 31, 2004 and is automatically renewable for
successive five year periods unless either party has provided one year's prior
notice of termination.

SEN has the right to use the name "EATON" as part of its corporate name
under a corporate name agreement with Eaton that has been assigned to us. We
have the right, however, to terminate that agreement at any time upon 60 days'
notice and we are obligated under our trademark license agreement with Eaton to
terminate the corporate name agreement on December 31, 2004. SEN also has the
right to use in Japan the trademarks "EATON" and "NOVA" on its ion implantation
products under SEN's separate trademark license agreement with Eaton that also
has been assigned to us. SEN does not, however, have the right to use "EATON" in
logo format. The SEN trademark license agreement requires SEN to pay us
semiannual royalties equal to 0.5% of net sales. SEN must maintain quality and
reliability standards, and we are entitled to terminate our trademark agreement
with SEN at any time for cause and we are obligated under our trademark license
agreement with Eaton to terminate the SEN trademark license agreement on
December 31, 2004.

RESEARCH AND DEVELOPMENT

Our industry continues to experience rapid technological change, requiring
us to frequently introduce new products and enhancements. Our ability to remain
competitive in this market will depend in part upon our ability to develop new
and enhanced systems and to introduce these systems at competitive prices and on
a timely and cost effective basis.

We devote a significant portion of our personnel and financial resources to
research and development programs and seek to maintain close relationships with
our customers to remain responsive to their product needs. We have also sought
to reduce the development cycle for new products through a collaborative process
whereby our engineering, manufacturing and marketing personnel work closely
together with one another and with our customers at an earlier stage in the
process. We also use 3D, computer-aided design, finite element analysis and
other computer-based modeling methods to test new designs. We conduct our
research and development programs at our facilities in Beverly and Peabody,
Massachusetts and in Rockville, Maryland. SEN also conducts research and
development in Toyo, Japan.

Our product development efforts have led to numerous industry
breakthroughs, including the first production high current implantation system,
the first production high energy implanter and the first photostabilizer.

An important focus of our current research and development efforts is
directed at machines capable of processing 300 millimeter wafers. Our 300
millimeter high energy ion implanter, the HE3, and our 300 millimeter
photostabilizer, the PS3, were installed by Semiconductor 300 in 1999 in its
Dresden, Germany pilot production facility.

Our expenditures for research and development during 1997, 1998 and 1999
were $70.5 million, $78.7 million and $51.6 million, respectively, or 15.3%,
29.6% and 13.0% of net sales, respectively. Our budgeted research and
development expenditures for 2000 are approximately $69.0 million, of which
$16.1 million was spent in the first quarter of 2000. The increase in research
and development expenditures in 2000 as compared to 1999 primarily reflected our
research focus to develop products capable of processing 300 millimeter wafers.
We expect in future years that research and development expenditures will
continue to represent a substantial percentage of net sales.

424B4 50th Page of 109 TOC 1st Previous Next ↓Bottom Just 50th

MANUFACTURING

We manufacture our products at facilities in Beverly and Peabody,
Massachusetts and in Rockville, Maryland. In addition, SEN manufactures products
at its facility in Toyo, Japan.

Our Beverly, Massachusetts facility manufactures our high energy, high
current and high tilt/medium current ion implantation systems. In 1999, we
completed an 80,000 square foot expansion of this facility.

We manufacture photoresist removal and curing systems in our Rockville,
Maryland facility, including our photostabilizer and dry strip product lines. We
currently manufacture our rapid thermal processing products in our Peabody,
Massachusetts facility, but we are considering relocating the Peabody facility
to our Beverly plant.

Our manufacturing facilities employ advanced manufacturing methods and
technologies, including lean manufacturing, Six Sigma controls and processes and
web-enabled inventory purchase systems. We manufacture our products in cleanroom
environments that are similar to the cleanrooms used by semiconductor
manufacturers for wafer fabrication. The majority of our systems is designed and
tailored to meet the customer's specifications as outlined in the contract
between the customer and us.

To ensure that the customer's specifications are satisfied, per contract
terms, the systems are tested at our facilities prior to shipment, normally with
the customer present, under conditions that substantially replicate the
customer's production environment and the customer's criteria are confirmed to
have been met. These environmental conditions include power requirements, toxic
gas usage, air handling requirements including humidity and temperature,
equipment bay configuration, wafer characteristics and other factors. These
procedures are intended to reduce installation and production qualification
times and the amount of particulates and other contaminants in the assembled
system, which in turn improves yield and reduces downtime for the customer.

After testing, the system is disassembled and packaged to maintain
cleanroom standards during shipment. Installation is itself not a complex
process and does not require specialized skills. It is typically performed by a
team of assemblers from the customer and ourselves. It includes placing and
leveling the equipment at its installation site, connecting it to sources of
gas, water and electricity and recalibrating it to specifications that had
previously been tested and met.

We purchase materials, components and subassemblies, such as pumps, machine
components, power supplies and other electrical components, from various
suppliers. These items are either standard products or built to our
specifications. Some of the components and subassemblies included in our
products are obtained either from a sole source or a limited group of suppliers,
which could result in disruptions to our operations. We have installed a
web-based supply chain system in order to increase efficiency and cut costs
associated with obtaining materials and components. This system electronically
exchanges information with our vendors as to purchase orders, forecasts and
automatic delivery updates.

424B4 51st Page of 109 TOC 1st Previous Next ↓Bottom Just 51st

We recognize sales at the time of shipment to the customer. We have a
demonstrated history of customer acceptance subsequent to shipment and
installation of our systems. We believe that the customer's post delivery
acceptance provisions and installation process are routine from a commercial
standpoint because the process is a replication of pre-shipment procedures. We
have never failed to successfully complete a system installation. However,
should an installation not be successfully completed, our contractual provisions
do not provide for forfeitures, refunds or other purchase price concessions
beyond those prescribed by the provisions of the Uniform Commercial Code
applicable generally to these transactions.

COMPETITION

The semiconductor equipment market is highly competitive and is
characterized by a small number of large participants. We compete in four
principal product markets primarily at the front-end of the semiconductor
manufacturing process: ion implantation, dry strip, photostabilization and rapid
thermal processing.

A substantial investment is required by customers to install and integrate
capital equipment into a semiconductor production line. As a result, once a
semiconductor manufacturer has selected a particular vendor's capital equipment
for a production line, we believe that most manufacturers continue to rely
heavily on the incumbent supplier's equipment for that production line. However,
we believe that, although the existing suppliers have some advantage in
supplying a new fabrication facility for the same manufacturer, the manufacturer
will also take into account technological advances and other competitive factors
in deciding from whom to buy.

In addition to the importance of preexisting relationships, significant
competitive factors in the semiconductor equipment market include price/cost of
ownership, performance, customer support, breadth of product line, distribution
and financial viability. Price wars have not been common in our industry.

ION IMPLANTATION

We are a leading producer of ion implantation equipment used in the
fabrication of integrated circuits and, together with our Japanese joint
venture, were ranked number one in sales in the world in this category for 1999
by Dataquest. In high energy equipment, where we have a commanding market
position, our principal competitor is Varian Semiconductor Equipment Associates,
Inc. ("Varian"). In high current products, we and Applied Materials Inc. have
substantial market shares and Varian has a smaller share. In high tilt/medium
current equipment, where we have a small market share, Varian has a commanding
market position. SEN is the largest manufacturer of ion implantation equipment
in Japan and competes with Nissin Electric Co., Ltd., Varian, Ulvac
Technologies, Inc. and Applied Materials Inc. for sales in that market.

DRY STRIP, PHOTOSTABILIZATION AND RAPID THERMAL PROCESSING

Our principal competitors in the dry strip product market are GaSonics
International Corp., Mattson Technology Inc., KEM and Canon Inc., and our
principal competitor in photostabilization is Ushio Inc.. Our chief competitors
in the rapid thermal processing equipment market are Applied Materials Inc.,
Steag AG and Dainippon Screen Mfg. Co., Ltd.

INTELLECTUAL PROPERTY

We rely on patent, copyright, trademark and trade secret protection, as
well as contractual restrictions, in the United States and in other countries to
protect our proprietary rights in our products and our business. At March 31,
2000, we had 134 patents in the United States and 232 patents in other
countries, as well as 416 patent applications (63 in the United States and 353
in other countries) on file with various patent agencies worldwide. We intend to
file additional

424B4 52nd Page of 109 TOC 1st Previous Next ↓Bottom Just 52nd

patent applications as appropriate. Although patents are important to our
business, we do not believe that we are substantially dependent on any single
patent or any group of patents.

We have trademarks, both registered and unregistered, that are maintained
to provide customer recognition for our products in the marketplace. We have a
license from Eaton to use the Eaton trademark and logo for a fixed period of
time in connection with the sale of semiconductor manufacturing equipment. See
"Arrangements with Eaton--Trademark License Agreement".

We have agreements with third parties, mostly as licensor, that provide for
the licensing of patented or proprietary technology. These agreements include
royalty-bearing licenses and technology cross-licenses. Our license agreement
with SEN is described above under "SEN Joint Venture". No other license is
material to us.

There has been substantial litigation regarding patent and other
intellectual property rights in semiconductor-related industries. For example,
on February 3, 2000, we filed suit in California Superior Court against Advanced
Ion Beam Technology and Jiong Chen, a principal of that company, alleging
misappropriation of trade secrets, unfair competition, common law
misappropriation and breach of contract. Mr. Chen worked for us as a principal
scientist from 1994 until January 1999. During that period, he worked with
proprietary ion beam technology, which we believe he later used in violation of
an employee confidentiality agreement. We also have recently defended a
reexamination before the United States Patent and Trademark Office of a patent,
expiring in 2005, which relates to ion implantation equipment having a
significant market share. On June 22, 2000, the United States Patent and
Trademark Office issued a decision confirming the patentability of our claims in
the patent with certain amendments that we believe are not material, thus
concluding this challenge to the validity of our patent. A second request for
reexamination of this patent, which has not yet been acted upon by the United
States Patent and Trademark Office, has recently been filed by the same
requester. While this patent is important to us, we do not believe that this
second request for reexamination is likely to materially affect us.

We can give no assurance that we, our licensors, licensees, customers or
suppliers will not be subject to claims of patent infringement or claims to
invalidate our patents, and that any such claim will not be successful and
require us to pay substantial damages or delete certain features from our
products or both.

BACKLOG

As of March 31, 2000, our backlog was $166.1 million, as compared to $93.8
million, $27.8 million and $67.1 million, respectively, for year end 1999, 1998
and 1997. Our policy is to include in backlog only those orders for which we
have accepted purchase orders. All orders are subject to cancellations or
rescheduling by customers with limited or no penalties. Due to possible changes
in system delivery schedules, cancellations of orders and delays in systems
shipments, our backlog at any particular date is not necessarily indicative of
our actual sales for any succeeding period. In addition, our backlog at the
beginning of a quarter typically does not include all orders required to achieve
our sales objectives for that quarter and is not a reliable indicator of our
future sales.

PROPERTIES

We have a total of 35 properties, of which 26 are located in the United
States and the remainder are located in Asia and Europe, including offices in
Taiwan, Singapore, South Korea, Italy, Germany, France and the United Kingdom.
Of these properties, two are owned and 33 are leased. We own our 54,600 square
foot corporate headquarters in Beverly, Massachusetts located adjacent to our
Beverly manufacturing facility.

424B4 53rd Page of 109 TOC 1st Previous Next ↓Bottom Just 53rd

Our manufacturing facilities are listed below:

[Download Table]

SQUARE FOOTAGE
FACILITY LOCATION PRINCIPAL USE (OWNED/LEASED)
----------------- ------------------------------------- ----------------

Beverly, Massachusetts Manufacturing of ion implantation 310,200 (owned)
products and research and development
Peabody, Massachusetts Manufacturing of rapid thermal 20,000 (leased)
processing products
Rockville, Maryland Manufacturing of photoresist and 151,000 (leased)
photostabilization products

Our Japanese joint venture manufactures ion implantation products in a
300,300 square foot owned facility located in Toyo, Japan.

The Beverly facility includes an 11,000 square foot demonstration line,
which is used to develop next-generation application solutions for specific
customers, as well as to demonstrate the full range of our integrated process
equipment. We also have a process technology center in Rockville, Maryland that
is available to customers for developing and testing dry strip and
photostabilization processes.

We are building a 140,000 square foot facility in Beverly, Massachusetts
which will house an advanced process development, product demonstration and
customer training center with all of the equipment we produce, and we are
expanding our manufacturing and research facilities in Rockville, Maryland. In
1998, as part of our restructuring, we closed our Austin, Texas ion implant
manufacturing facility and transferred production to our Beverly, Massachusetts
facility. On May 18, 2000, we sold our Austin facility for net proceeds of $11.0
million, a price that approximated book value.

We do not believe there is any material, long-term, excess capacity in our
facilities, although utilization is subject to change based on customer demand.
We believe that our manufacturing facilities and equipment generally are
well-maintained, in good operating condition, suitable for our purposes, and
adequate for our present operations. Our Beverly, Massachusetts and Rockville,
Maryland facilities are ISO 9001 certified.

EMPLOYEES

As of March 31, 2000, we had 1,717 full-time and 165 temporary employees
worldwide, of which 1,663 were employed in North America, 119 in Asia and 100 in
Western Europe. At that date, more than 44% of our workforce consisted of
scientists, engineers and technicians. All of our employees have entered into
confidentiality and noncompetition agreements with us. At that date, none of our
employees based in the United States was represented by a union, and we have
never experienced a work stoppage, slowdown or strike. Our employees based in
Germany are subject to collective bargaining agreements. We consider our
relationship with our employees to be good.

ENVIRONMENTAL

We are subject to environmental laws and regulations in the countries in
which we operate that regulate, among other things: air emissions; water
discharges; and the generation, use, storage, transportation, handling and
disposal of solid and hazardous wastes produced by our manufacturing, research
and development and sales activities. As with other companies engaged in like
businesses, the nature of our operations exposes us to the risk of environmental
liabilities, claims, penalties and orders. We believe, however, that our
operations are in substantial

424B4 54th Page of 109 TOC 1st Previous Next ↓Bottom Just 54th

compliance with applicable environmental laws and regulations and that there are
no pending environmental matters that would have a material impact on our
business.

LEGAL PROCEEDINGS

From time to time, a number of lawsuits, claims and proceedings have been
or may be asserted against us relating to the conduct of our business, including
those pertaining to patent validity or infringement, commercial, employment and
employee benefits matters. While the outcome of litigation cannot be predicted
with certainty, and some of these lawsuits, claims or proceedings may be
determined adversely to us, we do not believe that the disposition of any such
pending matters is likely to materially affect us.

424B4 55th Page of 109 TOC 1st Previous Next ↓Bottom Just 55th

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The names, ages at July 10, 2000 and positions of our directors, executive
officers and key employees as of the completion of the offering are set forth
below.

[Download Table]

NAME AGE POSITION
---- --- --------

Brian R. Bachman 55 Vice Chairman and Chief Executive Officer
Mary G. Puma 42 President, Chief Operating Officer, Secretary and Director
Stephen R. Hardis 64 Chairman of the Board
Alexander M. Cutler 49 Director
Ned C. Lautenbach 56 Director
Philip S. Paul 61 Director
Naoki Takahashi 54 Director
Gary L. Tooker 61 Director
Kevin M. Bisson 39 Vice President and Controller
Michael Davies 54 Director of Human Resources
Craig Halterman 37 Director of Information Technology
Michael J. Luttati 45 Senior Vice President -- General Manager, Implant Systems
Division
Ted S. Miller 42 Vice President and General Manager -- Global Customer
Service
Robert A. Mionis 37 Senior Vice President -- Worldwide Operations
Kevin O'Connor 41 Senior Vice President -- Human Resources
John Poate 58 Chief Technology Officer
Jan-Paul van Maaren 38 Director of Business Development

Set forth is certain biographical information about our directors,
executive officers and key employees:

BRIAN R. BACHMAN has been our Vice Chairman and Chief Executive Officer
since April 2000, and a director of our company since May 2000. He is also
Senior Vice President and Group Executive-Hydraulics, Semiconductor Equipment
and Specialty Controls of Eaton, a position that he has held since December
1995. Mr. Bachman will resign as an officer of Eaton effective at the time of
this offering. From 1991 to 1995, he was vice president and general manager for
the Standard Products Business Group of Philips Semiconductors B.V. Prior to
joining Philips, Mr. Bachman held positions with FMC Corporation, General
Electric Co. and TRW Inc. and was president of General Semiconductor, Inc., a
subsidiary of Square D Co., and was a group General Manager with ITT Industries
Inc. He is a member of the Board of Directors of Keithley Instruments, Inc., the
Board of Governors of Electronic Industries Association and the Board of the
Vocational Guidance Services. He also serves on Northwestern University's
Kellogg McCormick Master of Management in Manufacturing Program Advisory Board.

MARY G. PUMA has been our President, Chief Operating Officer and Secretary
since May 2000 and a director of our company since July 2000. Prior to her
current position, she also served as our Vice President from February 1999 to
May 2000. In 1998, she became General Manager and Vice President of our implant
systems division. In May 1996, she joined Eaton as General Manager of the
Commercial Controls Division. Prior to joining Eaton, Ms. Puma spent 15 years in
various marketing and general management positions for General Electric Co.

424B4 56th Page of 109 TOC 1st Previous Next ↓Bottom Just 56th

STEPHEN R. HARDIS is our Chairman of the Board and is also Chairman and
Chief Executive Officer of Eaton. He will retire as Chairman and Chief Executive
Officer of Eaton effective July 31, 2000. He became Eaton's Chairman in January
1996 and its Chief Executive Officer in September 1995. Prior to that, Mr.
Hardis served as Eaton's Vice Chairman from 1986 and its Executive Vice
President -- Finance and Administration from 1979. Mr. Hardis is a director of
American Greetings Corp., Lexmark International Group, Inc., Marsh & McLennan
Companies, Inc., Nordson Corp. and The Progressive Corporation.

ALEXANDER M. CUTLER is a director of our company and he also has served as
President and Chief Operating Officer of Eaton since 1995. He will become
Chairman and Chief Executive Officer of Eaton effective August 1, 2000. Mr.
Cutler served as Eaton's Executive Vice President and Chief Operating
Officer -- Controls from 1993 to 1995, as its Executive Vice President --
Operations from 1991 and as President of its Industrial Group from 1986. He is
also a director of Eaton and KeyCorp.

NED C. LAUTENBACH has been a director of our company since July 2000 and is
a partner of Clayton, Dubilier & Rice, Inc., an investment firm specializing in
structuring leveraged buyouts. Before joining CD&R, Mr. Lautenbach was employed
by International Business Machines Corp. from 1968 until his retirement in 1998.
At IBM, he held several executive positions, including Vice President, President
of IBM Asia Pacific, Senior Vice President, Chairman of IBM World Trade
Corporation, Senior Vice President and Group Executive, Sales and Distribution,
and was a member of IBM's Corporate Executive Committee. He is a director of
Eaton, ChoicePoint, Inc., Dynatech Corporation, Fidelity Mutual Funds and
Fairfield University.

PHILIP S. PAUL has been a director of our company since July 2000. He has
been Chairman of Paul Capital Partners., L.L.C., a private equity investment
firm, and registered investment advisor, since 1991. He is also Managing Partner
of Top Tier Investments, L.L.C., a venture capital firm. Previously, Mr. Paul
was Chairman and Chief Executive Officer of Hillman Ventures, Inc., a venture
capital firm. Mr. Paul serves on the Boards of Advisors of various venture
capital funds, including New Enterprise Associates, Bay Partners, U.S. Venture
Partners, and Den Danske Bank's private equity group. He is a director of Soma
Networks, Inc., Telecore, Inc., and S.E.D. Ventures, a French investment firm.

NAOKI TAKAHASHI has been a director of our company since July 2000. In
April 2000, he became Director, Senior Vice President and General Manager of the
Precision Products Division of Sumitomo. Prior to that, Mr. Takahashi held a
number of senior level positions in the Corporate Technology Operations Group of
Sumitomo.

GARY L. TOOKER has been a director of our company since July 2000. Mr.
Tooker is the former Chairman and Chief Executive Officer of Motorola, Inc. Mr.
Tooker served as Vice Chairman of Motorola, Inc., a manufacturer of electronics
equipment, from July 1999 to December 1999. Prior to that, he was Motorola's
Chairman from 1997, Vice Chairman and Chief Executive Officer from 1993,
President from 1990, Chief Operating Officer from 1988, Senior Executive Vice
President and Chief Corporate Staff Officer from 1986 and in other capacities
from 1962. Mr. Tooker is a director of Eaton and Motorola, Inc.

KEVIN M. BISSON was elected our Vice President and Controller in June 2000,
and has served as our principal financial and accounting officer since May 2000.
From January to May 2000, he was our Director of Finance. Prior to joining our
company, Mr. Bisson was Director of Finance for Hamilton Sundstrand Corporation,
a subsidiary of United Technologies Corporation, beginning in 1999. For more
than ten years prior thereto, he held various other financial management
positions at UTC.

424B4 57th Page of 109 TOC 1st Previous Next ↓Bottom Just 57th

MICHAEL DAVIES has been our Director of Worldwide Human Resources since
1998 and has announced that he plans to retire later in 2000. Prior to joining
our company, Mr. Davies was employed by Analog Devices Inc., most recently
serving as Director of Human Resources for Analog's Global Field Organizations
from 1995 to 1998. Mr. Davies held various other senior human resources
positions with Analog from 1983 to 1995.

CRAIG HALTERMAN has been our Director of Information Technology since the
beginning of 2000. Prior to joining our company, Mr. Halterman was Information
Technology Director at Honeywell/Allied Signal in its space and defense systems
business since 1997. Prior to that, Mr. Halterman held various information
technology positions at The Dow Chemical Co., Thomson Consumer Electronics,
General Electric Co. and RCA Consumer Electronics.

MICHAEL J. LUTTATI has been our Senior Vice President -- General Manager,
Implant Systems Division since June 2000. Mr. Luttati was our General Manager of
Implant Systems and Director of Worldwide Sales from 1999 to June 2000. Prior to
joining our company, Mr. Luttati served as Vice President, North America Sales
Operations of Teradyne Inc. from 1996 to 1998 and, from 1981 to 1996, he held
several other sales and marketing positions with Teradyne.

TED S. MILLER has been our Vice President and General Manager-- Global
Customer Service since June 2000. Mr. Miller was our Director of Global Customer
Service from January to June 2000. Prior to joining our company, Mr. Miller most
recently served as Division Marketing Manager, Global Customer Service at
Teradyne, Inc. and since 1980, he held various other marketing and other
positions at Teradyne, including ten years experience in the semiconductor
service segment.

ROBERT A. MIONIS has been our Senior Vice President -- Worldwide Operations
since June 2000. Mr. Mionis was our Director of Worldwide Operations from March
1999 to June 2000 and was our Global Operations Director for our implant systems
operations from April 1998. Prior to joining our company, Mr. Mionis served
AlliedSignal Inc. as Director of Operations and GE Aerospace in various
management positions.

KEVIN O'CONNOR has been our Senior Vice President -- Human Resources since
July 2000. Mr. O'Connor was the principal of a consultant firm providing human
resources advice to several privately held technology firms in the United States
from March 2000 until July 2000. From December 1996 until March 2000, he was
Vice President -- Global Human Resources for Iomega Corporation. From 1993 until
December 1996, Mr. O'Connor was Vice President, Human Resources -- Americas/Asia
for Dell Computer Corporation.

JOHN POATE has been our Chief Technology Officer since June 2000. Prior to
joining us, Dr. Poate was Dean of the College of Science and Technology of the
New Jersey Institute of Technology, and was Dean of the College of Liberal Arts
since 1997. From 1971 to 1997, he held several senior research positions,
including head of silicon processing research, with Bell Laboratories.

JAN-PAUL VAN MAAREN has been our Director of Business Development since May
1999. He joined our company in October 1997 and was our Director of Technology
and Business Development until 1998 and our Director of Global Customer Service
until 1999. Dr. van Maaren was employed by Honeywell Inc. from 1992 to 1997 in
various senior marketing management positions with Honeywell's Home and Building
Controls Division. He also worked as a senior scientist for the Institute for
Atomic and Molecular Physics in the Netherlands from 1985 to 1990.

BOARD STRUCTURE AND COMPENSATION

Our board of directors is divided into three classes serving staggered
three year terms. Mr. Cutler's and Mr. Tooker's initial terms will expire in
2001. Mr. Hardis', Mr. Bachman's and Mr. Lautenbach's initial terms will expire
in 2002. Ms. Puma's, Mr. Takahashi's and Mr. Paul's initial terms will expire in
2003.
57

424B4 58th Page of 109 TOC 1st Previous Next ↓Bottom Just 58th

Messrs. Paul (Chairman), Lautenbach, Takahashi and Tooker serve as the
committee to administer the option portion of the 2000 Plan (as described below)
that is intended to qualify as "performance-based compensation" within the
meaning of Section 162(m) of the Internal Revenue Code. Mr. Hardis will join the
administrative committee on August 1, 2000.

Each non-employee director will receive grants of non-qualified stock
options under the 2000 Plan as compensation for their services. In addition, the
non-employee Chairman of our Board will receive annual cash compensation in the
amount of $200,000.

AUDIT COMMITTEE

Messrs. Paul (Chairman), Lautenbach and Tooker are members of our audit
committee. Our audit committee reviews our auditing, accounting, financial
reporting and internal control functions and makes recommendations to the board
of directors for the selection of independent accountants. In addition, the
committee will monitor the quality of our accounting principles and financial
reporting as well as the independence of and the non-audit services provided by
our independent accountants. In discharging its duties, the audit committee:

- assists directors in fulfilling the Board's responsibility for the
quality of financial reporting;

- reviews and approves the scope of the annual audit and the independent
accountant's fees;

- reviews the annual audit and the annual and quarterly financial
statements;

- meets independently with our internal auditing personnel, our independent
accountants and our senior management; and

- reviews the general scope of our accounting, financial reporting, annual
audit and internal audit programs, matters relating to internal control
systems as well as the results of the annual audit.

STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

All of our common stock is currently owned by Eaton, and thus none of our
officers, directors or director nominees own any of our common stock. To the
extent our directors and officers own shares of Eaton common stock at the time
of the divestiture, they will participate in the divestiture on the same terms
as other holders of Eaton common stock.

424B4 59th Page of 109 TOC 1st Previous Next ↓Bottom Just 59th

The following table sets forth the number of Eaton common shares
beneficially owned on December 31, 1999 by each director, each director nominee,
each executive officer named in the Summary Compensation Table in the "Executive
Compensation" section below, and all of our directors, director nominees and
executive officers as a group. The total number of Eaton common shares
outstanding as of December 31, 1999 was 74,033,679.

[Enlarge/Download Table]

NUMBER OF SHARES
OF EATON
BENEFICIALLY OWNED(1,2) TOTAL NUMBER OF
NAME OF BENEFICIAL ------------------------ DEFERRED SHARES AND
OWNER NUMBER PERCENTAGE SHARE UNITS(3) DEFERRED SHARE UNITS
------------------ -------- ----------- -------------- --------------------

B. R. Bachman.................... 77,993(4) * 6,354 84,347
M. G. Puma....................... 21,712 * 0 21,712
S. R. Hardis..................... 386,543(4) * 182,877 569,420
A. M. Cutler..................... 289,899(4,5) * 46,907 336,806
N. C. Lautenbach................. 9,662 * 1,794 11,456
P. S. Paul....................... 0 * 0 0
N. Takahashi..................... 0 * 0 0
G. L. Tooker..................... 12,662(6) * 1,063 13,725
All directors and executive
officers as a group (eight
persons)....................... 798,471 238,995 1,037,466

---------------
* Represents holdings of less than one percent.

(1) Each person has sole voting and investment power with respect to the shares
listed, unless otherwise indicated.

(2) Includes shares which the person has the right to acquire within 60 days of
March 31, 2000 upon the exercise of outstanding options as follows: B.R.
Bachman, 75,950; M.G. Puma, 21,440; S.R. Hardis, 328,386; A.M. Cutler,
264,676; and all directors and executive officers as a group, 690,452.

(3) The Eaton director plan and the Eaton Long Term Incentive Plan permits
directors and officers, respectively, to defer receipt of a portion of cash
compensation otherwise due them. At least 50% of deferred amounts due to be
paid after retirement are converted to Eaton share units and earn Eaton
share price appreciation and dividend equivalents.

(4) Includes shares held under the Eaton Share Purchase and Investment Plan as
of January 31, 2000.

(5) Includes 1,000 shares held by a trust for the benefit of Mr. Cutler's
children, which was created under the Ohio Uniform Gift to Minors Act. Mr.
Cutler's wife is the trustee of the trust and shares voting and investment
power with respect to such shares with Mr. Cutler.

(6) Includes 3,000 shares held in the Tooker Family Trust. Mr. Tooker's wife is
trustee of the trust and shares voting and investment power with respect to
such shares with Mr. Tooker.

424B4 60th Page of 109 TOC 1st Previous Next ↓Bottom Just 60th

EXECUTIVE COMPENSATION

The following table sets forth compensation information for our chief
executive officer and our other executive officers who, based on salary and
bonus compensation from Eaton and its subsidiaries, were the most highly
compensated in 1999. All information set forth in this table reflects
compensation earned by these individuals for services with Eaton and its
subsidiaries in 1999.

SUMMARY COMPENSATION TABLE

[Enlarge/Download Table]

LONG-TERM
COMPENSATION
ANNUAL -----------------------
COMPENSATION AWARDS PAYOUTS
--------------------- ---------- ---------
SECURITIES LONG-TERM
NAME AND PRINCIPAL UNDERLYING INCENTIVE ALL OTHER
POSITION SALARY($) BONUS($) OPTIONS(#) PAYOUTS COMPENSATION($)(1)
------------------ --------- -------- ---------- --------- ------------------

B. R. Bachman........ $380,040 $364,656 35,000 $414,037 $14,560
M. G. Puma........... 224,700 264,839 21,000 81,700 $12,522

---------------
(1) All Other Compensation contains several components. The Eaton Corporation
Share Purchase and Investment Plan permits an employee to contribute from 1%
to 6% of salary to the matching portion of the plan. Eaton makes a matching
contribution which, except in special circumstances, ranges between $0.25
and $1.00 for each dollar contributed by the participating employee, as
determined under a formula designed to reflect Eaton's quarterly earnings
per share. The amount contributed during 1999 for each named executive
officer was as follows: B.R. Bachman, $4,392 and M.G. Puma, $4,357. Under an
Eaton program, certain executives may acquire an automobile. Under this
program for 1999, the approximate cost to Eaton for each named executive
officer was: B.R. Bachman, $9,486 and M.G. Puma, $7,459. Eaton provides
certain executives, including the named executive officers, with the
opportunity to acquire individual whole-life insurance. The annual premiums
paid by Eaton during 1999 for each of the named executive officers were as
follows: B.R. Bachman, $682 and M.G. Puma, $706.

GRANTS OF STOCK OPTIONS

The following table shows all grants of options to acquire shares of Eaton
common stock to the executive officers named in the Summary Compensation Table
in 1999.

[Enlarge/Download Table]

POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL OPTIONS APPRECIATION FOR
SECURITIES GRANTED TO EATON EXERCISE OR OPTION TERM(1)
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ------------------ ------------------ ----------- ---------- ---------- ----------

B. R. Bachman 35,000 1.62 $71.41 1/26/09 $1,574,591 $3,973,697
M.G. Puma 21,000 0.97 71.41 1/26/09 943,097 2,389,992

---------------
(1) Potential realizable values are net of exercise price, but before deduction
for taxes associated with exercise. These amounts represent certain assumed
rates of appreciation only, based on Securities and Exchange Commission
rules, and do not represent our estimate of future stock prices. No gain to
an optionee is possible without an increase in stock price, which will
benefit all stockholders commensurately. A zero percent gain in stock price
will result in zero dollars for the optionee. Actual realizable values, if
any, on stock option exercises are dependent on the future performance of
our common stock, overall market conditions and the option holders'
continued employment through the vesting period.

424B4 61st Page of 109 TOC 1st Previous Next ↓Bottom Just 61st

EXERCISES OF STOCK OPTIONS

The following table shows aggregate exercises of options to purchase Eaton
common stock in 1999 by the executive officers named in the Summary Compensation
Table in the "Executive Compensation" section above.

[Enlarge/Download Table]

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FISCAL YEAR-END THE-MONEY OPTIONS AT
SHARES (#) FISCAL YEAR-END ($) (1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------

B.R. Bachman 0 0 64,400 97,000 $429,475 $94,200
M.G. Puma 0 0 15,995 39,005 104,499 36,971

---------------
(1) Based on fair market value of $72.625 per share as of December 31, 1999, the
closing sale price of Eaton's common stock on that date as reported on the
New York Stock Exchange.

EMPLOYMENT ARRANGEMENTS

We have entered into employment agreements with Mr. Bachman and Ms. Puma
effective as of the date of this offering. Each agreement provides for a
three-year term of employment. Mr. Bachman's agreement can be extended by mutual
consent of the parties. Ms. Puma's is self-extending unless one party notifies
the other that the agreement will not be extended. The agreements provide that
neither employee may compete with us for a period of 12 months after termination
of his or her active employment or the remaining term of his or her agreement
whichever is longer, and neither may reveal confidential information for a
specified period of time. In the event the agreement and the employee's
employment is terminated prior to the end of the term for reasons other than
cause, death, disability or voluntary resignation, or, in the case of Mr.
Bachman, his agreement is not extended, the employee is entitled to receive all
compensation accrued to date, acceleration of vesting of options and other
equity rights and base compensation and target bonus, for Mr. Bachman, for the
greater of 12 months or the then remaining term or, for Ms. Puma, two years, in
each case from the date of termination of employment.

Mr. Bachman's starting base salary is $600,000 per year and he will have an
annual target incentive compensation of 50% of that amount. Ms. Puma will
receive $380,000 in initial base salary and will have an annual target incentive
compensation opportunity of 45% of base salary. Actual incentive compensation
for any year may be greater or less if actual performance is greater or less
than the target. Base salary and incentive opportunities can be increased by our
Board of Directors. The agreements provide that both executives will also
participate in the 2000 Plan (as described below), the defined
contribution/401(k) Savings Plan and the welfare benefit plans which we sponsor.
On July 10, 2000, Mr. Bachman and Ms. Puma were granted options under the 2000
Plan to purchase shares of our common stock at the initial public offering price
for the number of shares determined by dividing $12,000,000 and $8,000,000,
respectively, by the per share option value indicated by the Black-Scholes
option valuation model.

Ms. Puma has been granted a credit line by Eaton in the maximum amount of
$500,000. The outstanding balance on that line as of May 1, 2000 was $175,000.
We intend to make comparable credit line arrangements for Ms. Puma and to assume
the outstanding balance on that line.

We also have entered into change in control agreements with several of our
senior officers, including Mr. Bachman and Ms. Puma. These agreements provide
that in the event there was both a change in control and a termination of
employment within three years of that change in control for reasons other than
voluntary resignation, cause, death or disability, the covered employee would be
entitled to severance compensation. Under the change in control agreement,

424B4 62nd Page of 109 TOC 1st Previous Next ↓Bottom Just 62nd

a resignation by a covered employee for reasons of a demotion or reduction in
compensation, benefits or position is a termination by us and is not a voluntary
resignation. If severance compensation is payable, severance consists of (i) a
cash payment equal to the sum of (a) incentive compensation for the completed
portion of the incentive period and (b) the amount determined by multiplying the
employee's then salary and average bonus by three, and (ii) continuation of our
medical, life and other welfare benefits for three years. We will also reimburse
the employee for the effects, including federal, state and local income tax
consequences, of any excise tax due on severance compensation.

TREATMENT OF EATON OPTIONS

As of March 31, 2000, our employees held options to purchase 579,286 shares
of Eaton common stock at a weighted average exercise price per share of $72.88.
The price of Eaton common stock on that date was $78.00.

If Eaton completes its divestiture of our shares of common stock by means
of a spin-off to its shareholders, we intend to assume substantially all of the
Eaton options held by our employees on the date of the divestiture. These
assumed options would convert at the date of the spin-off by our granting
options to our employees to purchase our common stock and cancelling their
rights to acquire Eaton shares. The conversion would be done in such a manner
that (1) the aggregate intrinsic value of the options immediately before and
after the exchange are the same, (2) the ratio of the exercise price per option
to the market value per share is not reduced, and (3) the vesting provisions and
option period of the Axcelis options do not accelerate or extend the original
vesting terms and option period of the Eaton options. Performance vesting
provisions would change, as appropriate, to focus on our performance, as opposed
to Eaton's performance. No option will be exercisable, however, if the effect of
that exercise would prevent us from filing a consolidated federal income tax
return with Eaton. If we do not assume substantially all of the Eaton options
held by our employees on the date of the divestiture, we intend to make
equitable arrangements to preserve the economic value of substantially all Eaton
options held by our employees, if the financial reporting consequences are not
materially adverse.

INCENTIVE PLANS

2000 STOCK PLAN

Our board of directors adopted the 2000 Stock Plan, referred to as the
"2000 Plan," on June 12, 2000, and our sole stockholder initially approved our
2000 Plan on June 13, 2000. Our 2000 Plan provides for the grant of incentive
stock options to our employees, and for the grant of nonstatutory stock options,
restricted stock, stock purchase rights, performance units and other
equity-based awards to our employees, directors and consultants.

Number of Shares of Common Stock Available under the 2000 Plan. As of June
12, 2000, a total of 18,500,000 shares of our common stock were reserved for
issuance pursuant to the 2000 Plan. No options to acquire shares of our common
stock were issued and outstanding as of that date. Our 2000 Plan provides for
annual increases in the number of shares available for issuance on the first day
of each fiscal year, beginning with our 2001 fiscal year, equal to the lesser of
5% of our outstanding shares of common stock on that date, 5,000,000 shares or a
lesser amount determined by our board. The shares represented by the annual
increases may not be granted as incentive stock options. No awards under the
2000 Plan will become exercisable or otherwise convertible into our securities
if the effect of that exercise or conversion is to cause Eaton to be ineligible
to file a consolidated federal income tax return with us, or if the conversion
would cause Eaton not to be in control of us for purposes of Section 368(c) of
the Internal Revenue Code.

424B4 63rd Page of 109 TOC 1st Previous Next ↓Bottom Just 63rd

Administration of the 2000 Plan. Our board of directors or, with respect to
options intended to qualify as "performance-based compensation" within the
meaning of Section 162(m) of the Internal Revenue Code, the committee described
in "Board Structure and Compensation" above) will administer the 2000 Plan. In
the case of options intended to qualify as "performance-based compensation"
within the meaning of Section 162(m) of the Internal Revenue Code, the committee
will consist of two or more "outside directors" within the meaning of Section
162(m) of the Internal Revenue Code. The administrator has the power to
determine the terms of the options or stock purchase rights granted, including
the exercise price, the number of shares subject to each option or stock
purchase right, the exercisability of the options and the form of consideration
payable upon exercise.

Effective upon consummation of the offering, each non-employee director
will be granted a fully vested, nonstatutory option with a term of ten years to
purchase 24,000 shares of common stock at the initial public offering price. In
addition, at such time as a member of our initial Board of Directors first
becomes a non-employee director, such person will be granted a nonstatutory
stock option to purchase up to 24,000 shares of common stock at an exercise
price equal to the then fair market value of our common stock. Thereafter, any
then non-employee director will receive an annual grant of a fully vested,
nonstatutory option with a term of ten years to purchase 12,000 shares of common
stock at an exercise price equal to the then fair market value of our common
stock.

Options. The administrator determines the exercise price of options granted
under the 2000 Plan, but with respect to nonstatutory stock options intended to
qualify as "performance-based compensation" within the meaning of Section 162(m)
of the Code and all incentive stock options, the exercise price must at least be
equal to the fair market value of our common stock on the grant date. The term
of an incentive stock option may not exceed ten years, except that with respect
to any participant who owns 10% of the voting power of all classes of our
outstanding capital stock, the term must not exceed five years and the exercise
price must at least equal 110% of the fair market value on the grant date. The
administrator determines the term of all other options.

No optionee may be granted an option to purchase more than 1,250,000 shares
in any fiscal year, except that in connection with his or her initial service,
an optionee may be granted an additional option to purchase up to 1,250,000
shares.

After termination of the employment of an option holder, he or she may
exercise his or her option for the period of time stated in the option
agreement. Generally, if termination is due to death or disability, the option
will remain exercisable until the earlier of the expiration date as provided in
the option contract, or the first anniversary of the date of the death or
disability or of the date of this offering, whichever is later. If the
termination is due to resignation of the optionee or termination by our company,
the option will expire immediately upon that event. However, an option may never
be exercised later than the expiration of its term.

Restricted Stock. The 2000 Plan permits the administrator to grant
restricted shares of common stock to eligible employees. The stock will be
subject to such restrictions as the administrator determines appropriate,
including lapse of restrictions over time or lapse of restrictions based on
attainment of predetermined goals. The administrator may, but is not required
to, grant stock purchase rights to participants who receive a grant of
restricted stock and timely notify the administrator of his or her electing
immediate federal income tax treatment on that grant. The administrator
determines the exercise price of stock purchase rights granted under our 2000
Plan. Unless the administrator determines otherwise, the restricted stock
purchase agreement will grant us a repurchase option that we may exercise upon
the voluntary or involuntary termination of the participant's service with us
for any reason, including death or disability. The purchase price for shares we
repurchase will generally be the original price paid

424B4 64th Page of 109 TOC 1st Previous Next ↓Bottom Just 64th

by the participant and may be paid by cancellation of any indebtedness of the
participant to us. The administrator will determine the date at which our
repurchase option will lapse.

Performance Units. The administrator may grant performance units to
employees, directors or consultants. Performance units are the right to receive
a designated number of shares of common stock and/or cash if performance goals
set at the time of the grant of the performance units are actually achieved.

Other Awards. The administrator may grant other awards as the administrator
determines appropriate in its discretion.

Transferability of Options and Stock Purchase Rights. Our 2000 Plan
generally prohibits transfer or assignment of options or stock purchase rights
other than by will or the laws of descent and only the optionee may exercise an
option or stock purchase right during his or her lifetime. The administrator
may, but is not required to, permit nonstatutory options to be transferable,
without payment of any consideration, to certain persons including immediate
family members of the option holder or trusts or partnerships created for such
family members. Performance units and other awards are not transferable.

Adjustments upon Merger or Asset Sale. Our 2000 Plan provides that in the
event of our merger with or into another corporation or a sale of substantially
all of our assets, the successor corporation will assume or substitute an
equivalent award for each option, stock purchase right, performance unit or
other award. If, for any reason, the successor does not agree to assume or
substitute an equivalent award for each award, all awards will become vested and
exercisable immediately prior to the consummation of the merger transaction. In
addition, in the event of a change in control, all then outstanding options
shall become completely vested and exercisable and any restrictions on other
awards will lapse; performance units and/or other awards are deemed owned and
are then payable. If the outstanding options or stock purchase rights are not
assumed or substituted for in connection with a merger or sale of assets, the
administrator will provide notice to the optionee that he or she has the right
to exercise the option or stock purchase right as to all of the shares subject
to the option or stock purchase right, including shares which would not
otherwise be exercisable, as of a date determined by the administrative prior to
such merger.

Amendment and Termination of our 2000 Plan. Our 2000 Plan will
automatically terminate in 2010, unless we terminate it sooner. In addition, our
board of directors has the authority to amend, suspend or terminate the 2000
Plan, provided such action does not adversely affect any option previously
granted under our 2000 Plan.

2000 EMPLOYEE STOCK PURCHASE PLAN

Within one year of the offering, we intend to establish an Employee Stock
Purchase Plan, referred to as the "Purchase Plan." The board adopted the
Purchase Plan on June 12, 2000, to be implemented within one year of the
completion of this offering.

Number of Shares of Common Stock Available under the Purchase Plan. A total
of 2,500,000 shares of our common stock will be made available for sale under
the Purchase Plan. In addition, our Purchase Plan will provide for annual
increases in the number of shares available for issuance on the first day of
each fiscal year, beginning with our 2001 fiscal year, equal to 1% of the
outstanding shares of our common stock on the first day of the fiscal year, or a
lesser amount as may be determined by our board of directors.

Administration of the Purchase Plan. Our board of directors or a committee
of our board will administer the Purchase Plan. Our board of directors or its
committee will have full and exclusive authority to interpret the terms of the
Purchase Plan and determine eligibility.

424B4 65th Page of 109 TOC 1st Previous Next ↓Bottom Just 65th

Eligibility to Participate. All of our employees, other than officers
elected by our board of directors, will be eligible to participate in the
Purchase Plan if we or any authorized and participating subsidiary customarily
employ them on a regular schedule. However, an employee will not be granted the
right to purchase stock under the Purchase Plan if:

- immediately after grant the employee owns stock possessing 5% or more of
the total combined voting power or value of all classes of our capital
stock; or

- the employee's rights to purchase stock under all of our employee stock
purchase plans accrues at a rate that exceeds $25,000 worth of stock for
each calendar year.

Offering Periods and Contributions. Our Purchase Plan will be intended to
qualify under Section 423 of the Code and will contain 24-month offering
periods. Each offering period will include four six-month purchase periods. The
offering periods generally start on the first trading day on or after January 1
and July 1 of each year, except for the first such offering period which will
commence on the first trading day on or after the date Eaton disposes of its
ownership interest in our company, and will end on the last trading day on or
before June 30, 2002.

Our Purchase Plan will permit participants to purchase common stock through
payroll deductions of up to 10% of their eligible compensation, which will
include a participant's base salary and commission but will exclude all other
compensation paid to the participant. A participant will be allowed to purchase
only the lesser of $25,000 worth of our common stock at the prices then offered
under the Purchase Plan or 1,500 shares during a six-month purchase period.

Purchase of Shares. Amounts deducted and accumulated by the participant
will be used to purchase shares of our common stock at the end of each six-month
purchase period. The price will be 85% of the lower of the fair market value of
our common stock at either the beginning or end of an offering period. If the
fair market value at the end of a purchase period is less than the fair market
value at the beginning of the offering period, participants will be withdrawn
from the current offering period following their purchase of shares on the
purchase date and will be automatically re-enrolled in a new offering period.
Participants will be allowed to end their participation at any time during an
offering period and any payroll deductions from their checks through that date
will be repaid to them in cash. Participation ends automatically upon
termination of employment with us.

Transferability of Rights. A participant will not be permitted to transfer
rights granted under the Purchase Plan other than by will, the laws of descent
and distribution or designation of a beneficiary as provided under the Purchase
Plan.

Adjustments upon Merger or Asset Sale. In the event of our merger with or
into another corporation or a sale of all or substantially all of our assets, a
successor corporation may assume or substitute for each outstanding purchase
authorizations. If the successor corporation refuses to assume or substitute for
the outstanding purchase authorizations, the offering periods then in progress
will be shortened, and a new purchase date will be set prior to the merger or
sale of assets.

Amendment and Termination of the Purchase Plan. Our Purchase Plan will
terminate in 2010. However, our board of directors will have the authority to
amend or earlier terminate the Purchase Plan, except that, subject to exceptions
described in the Purchase Plan, no such action may adversely affect any
outstanding rights to purchase stock under our Purchase Plan.

424B4 66th Page of 109 TOC 1st Previous Next ↓Bottom Just 66th

ARRANGEMENTS WITH EATON

We have provided below a summary description of the master separation
and distribution agreement along with the key related agreements. This
description, which summarizes the material terms of the agreements, is not
complete. You should read the full text of these agreements, which will be filed
with the Securities and Exchange Commission as exhibits to the registration
statement of which this prospectus is a part.

MASTER SEPARATION AND DISTRIBUTION AGREEMENT

The master separation and distribution agreement contains the key
provisions relating to our separation from Eaton, this offering and the possible
divestiture of our shares to Eaton shareholders.

THE SEPARATION. The master separation and distribution agreement provides
for the transfer to us of the business, assets and liabilities from Eaton
related to our business as described in this prospectus. On June 30, 2000, Eaton
substantially completed the transfer of assets contemplated by the separation
agreement. The various ancillary agreements that are exhibits to the separation
agreement and which detail the separation and various interim and ongoing
relationships between Eaton and us following June 30, 2000, the separation date,
include:

- a general assignment and assumption agreement;

- a trademark license agreement;

- an employee matters agreement;

- a tax sharing and indemnification agreement;

- a transitional services agreement;

- a real estate matters agreement; and

- an indemnification and insurance matters agreement.

Generally, to the extent that the terms of any of these ancillary agreements
conflict with the separation agreement, the terms of these agreements will
govern. These agreements are described more fully below.

THE INITIAL PUBLIC OFFERING. Under the terms of the separation agreement,
Eaton will continue to own at least 80.1% of our outstanding common stock
immediately following this offering. We are obligated to use our reasonable
commercial efforts to satisfy the following conditions to the completion of this
offering, any of which may be waived by Eaton:

- the registration statement containing this prospectus must be effective;

- U.S. and foreign securities and blue sky laws must be satisfied;

- our common stock must have been approved for quotation on the Nasdaq
National Market;

- all our obligations under the underwriting agreement must be satisfied or
waived by the underwriters;

- Eaton must own at least 80.1% of our outstanding common stock following
this offering and must be satisfied that any divestiture of all the
shares of our common stock will be tax-free to its U.S. shareholders;

- no legal restraints must exist preventing the separation or this
offering;

- the separation must have occurred; and

- the separation agreement must not have been terminated.

THE DIVESTITURE. Following completion of this offering, Eaton may divest
itself of our common stock through a distribution to Eaton shareholders in a
tax-free transaction. Eaton is not

424B4 67th Page of 109 TOC 1st Previous Next ↓Bottom Just 67th

obligated to consummate the divestiture and may, in its sole discretion,
determine the form, structure, timing and terms on which it would accomplish the
divestiture and whether and when it expects to consummate the divestiture. Eaton
intends to consummate the divestiture only if the following conditions are met,
any of which may be waived by Eaton:

- the Internal Revenue Service must issue a ruling that the divestiture of
Eaton's shares of our common stock will be tax-free to Eaton and its
shareholders and that Eaton's contribution of assets to us in connection
with the separation will qualify as a tax-free reorganization for U.S.
federal income tax purposes;

- all required government approvals must be in effect;

- no legal restraints must exist preventing this divestiture; and

- nothing must have happened prior to the divestiture that would have a
material adverse effect on Eaton or its shareholders.

In addition, we have agreed that we will not issue or sell shares of common
stock before Eaton's divestiture without Eaton's prior written consent.

COVENANTS WITH EATON. In addition to signing documents that transfer
control and ownership of various assets and liabilities of Eaton relating to our
business, we have agreed with Eaton to enter into additional transitional
service agreements, exchange information, engage in auditing practices and
resolve disputes in particular ways.

INFORMATION EXCHANGE. Both Eaton and we have agreed to share information
relating to governmental, accounting, contractual and other similar requirements
of our ongoing businesses, unless the sharing would be commercially detrimental,
violate any law or agreement or waive any attorney-client privilege. In
furtherance of this arrangement, both Eaton and we have agreed as follows:

- each party will maintain at its own cost and expense adequate internal
accounting and will provide, at the request of the other party, all
financial and other data and information as necessary to allow the other
party to satisfy its reporting obligations and prepare its financial
statements;

- each party will retain records beneficial to the other party for a
specified period of time. If the records are going to be destroyed, the
destroying party will give the other party an opportunity to retrieve all
relevant information from the records, unless the records are destroyed
in accordance with adopted record retention policies; and

- each party will use commercially reasonable efforts to provide the other
party with directors, officers, employees, other personnel and agents who
may be used as witnesses, and books, records and other documents which
may reasonably be required, in connection with legal, administrative or
other proceedings.

ACCOUNTING AND AUDITING PRACTICES. As long as Eaton is required to
consolidate and report on our results of operations and financial position, we
and Eaton have agreed that:

- we will inform Eaton of any significant changes in any accounting policy
or principle before the changes are implemented;

- Eaton will inform us of any significant changes in accounting estimate or
principle before the changes are implemented;

- we will comply with all Eaton financial reporting requirements, policies,
and accounting and reporting deadlines, including providing to Eaton on a
timely basis all information that Eaton reasonably requires for the
preparation of Eaton's annual and quarterly financial statements;

- we will provide any supplemental information required by Eaton for
external financial reporting or compliance, and Eaton will provide any
supplemental information required by us for external financial reporting
or compliance;

424B4 68th Page of 109 TOC 1st Previous Next ↓Bottom Just 68th

- we will not select a different independent accounting firm from that used
by Eaton without Eaton's consent;

- we will use all reasonable commercial efforts to enable our auditors to
date their opinion on our audited financial statements on the same date
as Eaton's auditors date their opinion on Eaton's financial statements;
and

- we will grant each other's internal and external auditors and their
designees access to each other's records as necessary.

DISPUTE RESOLUTION. If problems arise between us and Eaton, we have agreed
to the following procedures:

- the parties will make a good faith effort to first resolve the dispute
through negotiation;

- if negotiations fail, the parties will attempt to resolve the dispute
through non-binding mediation; and

- if mediation fails, the parties can resort to binding arbitration.

In addition, nothing prevents either party acting in good faith from
initiating litigation at any time if failure to do so would cause serious and
irreparable injury to one of the parties or to others.

NO REPRESENTATIONS AND WARRANTIES. Neither party is making any promises to
the other regarding:

- the value of any asset that Eaton is transferring or has transferred;

- whether there is a lien or encumbrance on any asset Eaton is transferring
or has transferred;

- the absence of defenses or freedom from counterclaims with respect to any
claim Eaton is transferring; or

- the legal sufficiency of any conveyance of title to any asset Eaton is
transferring or has transferred.

CASH. Prior to January 1, 2000, substantially all of our cash receipts and
disbursements in the United States were processed through Eaton's centralized
cash management system and were recorded in Parent Company investment. Since
December 31, 1999, substantially all of these amounts have been recorded as a
receivable from or payable to Eaton. At March 31, 2000, a net amount of $0.9
million was payable to Eaton by us for these transactions and was included in
"Receivables from Eaton Corporation" in our March 31, 2000 combined balance
sheet. This payable became a receivable of approximately $23.0 million at May
31, 2000. We plan to settle this receivable in cash at or shortly after the
closing of this offering.

The remaining balance of the "Receivables from Eaton Corporation" at March
31, 2000 was $9.2 million and represented primarily cash generated by us in
Europe that was processed through Eaton's European centralized cash management
system. Approximately $5.5 million of this receivable, as well as $1.5 million
of our $2.8 million of cash and short-term investments at March 31, 2000, will
be retained by Eaton and will not be available to us. The resulting $3.7 million
balance of this receivable will also be settled in cash at or shortly after the
closing of this offering. Subsequent to March 31, 2000, in connection with
Eaton's contribution of assets to us, we received a cash transfer from Eaton
that we expect, after offsets, to net to approximately $8.0 million.

NO SOLICITATION. Each party has agreed not to directly solicit or recruit
employees of the other party without the other party's consent for two years
after the divestiture date. However, this prohibition does not apply to general
recruitment efforts carried out through public or general solicitation or where
the solicitation is employee-initiated.

EXPENSES. It is anticipated that we will bear the costs and expenses
associated with the reorganization transactions and associated with this
offering and Eaton will bear the costs and

424B4 69th Page of 109 TOC 1st Previous Next ↓Bottom Just 69th

expenses associated with the divestiture. We will each bear our own internal
costs incurred in consummating these transactions.

TERMINATION OF THE SEPARATION AGREEMENT. Eaton, in its sole discretion, can
terminate the separation agreement and all ancillary agreements at any time
prior to the completion of this offering. Both Eaton and we must agree to any
early termination of the separation agreement and all ancillary agreements at
any time between the completion of this offering and the divestiture.

GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT

The general assignment and assumption agreement identifies the assets Eaton
will transfer to us and the liabilities we will assume from Eaton in the
separation, to the extent not transferred prior to the separation date. The
agreement also describes when and how these transfers and assumptions will
occur.

ASSET TRANSFER. To the extent not transferred prior to the separation date,
effective on the separation date, Eaton transferred all of the assets to us that
it held related to our business, to the extent that those assets were, prior to
the separation date, an Eaton asset.

ASSUMPTION OF LIABILITIES. Effective on the separation date and with no
recourse to Eaton, we assumed the actual and contingent liabilities from Eaton
which are liabilities related to our business, except as specifically provided
to the contrary in an ancillary or other agreement.

EXCLUDED LIABILITIES. The general assignment and assumption agreement also
provides that we will not assume specified liabilities, including:

- except for policy deductibles or retention amounts, any liabilities that
would otherwise be allocated to us but which are covered by Eaton's
insurance policies, unless we are a named insured under such policies;
and

- other specified liabilities.

NON-UNITED STATES ASSETS. The transfer of international assets and
assumption of international liabilities will be accomplished through agreements
entered into between international subsidiaries. The agreement acknowledges that
circumstances in various jurisdictions outside of the United States may require
the timing of portions of the international separation to be delayed past the
separation date. If it is not practicable to transfer specified assets and
liabilities on the separation date, the agreement provides that these assets and
liabilities will be transferred at such other time as the parties shall agree.

TERMS OF ANCILLARY AGREEMENTS GOVERN. If another ancillary agreement
expressly provides for the transfer of an asset or an assumption of a liability,
the terms of the other ancillary agreement will determine the manner of the
transfer and assumption.

OBTAINING APPROVALS AND CONSENTS. The parties agree to use all commercially
reasonable efforts to obtain any required consents, substitutions or amendments
required to novate or assign all rights and obligations under any contracts that
will be transferred or assumed in the separation, provided that there will be no
obligation to pay any consideration to any third party from whom such consents,
substitutions or amendments are required.

NONRECURRING COSTS AND EXPENSES. Any nonrecurring costs and expenses that
are not allocated in the separation agreement or any other ancillary agreement
shall be the responsibility of the party that incurs the costs and expenses.

TRADEMARK LICENSE AGREEMENT

The trademark license agreement governs our use of the "EATON" trademark.
We are licensed to use, on a worldwide basis, the Eaton logo and "EATON"
trademark in connection with ion implantation, dry strip, photostabilization and
rapid thermal processing products. The license is non-exclusive and royalty
free. We are required to allow Eaton, upon request and at its expense, to
inspect the quality of the goods with the Eaton trademark to ensure conformity
with

424B4 70th Page of 109 TOC 1st Previous Next ↓Bottom Just 70th

quality standards. We are not allowed to use any confusingly similar trademarks.
The license is for a period of three years and expires June 30, 2003. We are
obligated to notify Eaton of any alleged infringement and will indemnify Eaton
for our use. We do not have the right to sublicense the Eaton logo or "EATON"
trademark except to carry out the terms of an agreement with SEN. The agreement
is assignable only with the express permission of Eaton.

EMPLOYEE MATTERS AGREEMENT

We have entered into an employee matters agreement with Eaton to allocate
assets, liabilities and responsibilities relating to our current and former
employees and their participation in the benefit plans, including stock plans,
that Eaton currently sponsors and maintains for our eligible employees.

All of our eligible employees will, in most instances, continue to
participate in such Eaton benefit plans on comparable terms and conditions to
those provided to such employees prior to the offering until the earlier of our
adoption of a comparable plan or the date that Eaton and Axcelis cease to be
members of the same controlled group for federal income tax purposes. After such
date, we may establish benefit plans for our employees, or elect not to
establish comparable plans, if it is not legally or financially practical or
competitively advisable.

Once we establish our own benefit plans, we may modify or terminate each
plan in accordance with the terms of that plan and our policies. None of our
benefit plans will pay benefits that duplicate payments already made under the
corresponding Eaton benefit plan at the time of the distribution. Each of our
benefit plans will provide that all service, compensation and other benefit
determinations that, as of the distribution, were recognized under the
corresponding Eaton benefits plan will be taken into account under our
corresponding benefit plan.

Except with respect to the Eaton Share Purchase and Investment Plan, a
defined contribution plan with 401(k) deferral features, the assets relating to
Eaton's employee benefit plans will not be transferred to our related plans.

OPTIONS. We have established a replacement stock option plan for our
eligible employees on or before the completion of this offering. Upon the
divestiture, we may assume substantially all of the Eaton options held by our
employees. These options then will be converted into options to purchase our
common stock. The number of shares and the exercise price of Eaton options that
convert into our options will be adjusted using a conversion formula. The
conversion formula will be based on the opening per share price of our common
stock on the first trading day after the distribution relative to the closing
per share price of Eaton common stock on the last trading day before the
divestiture. The resulting Axcelis options will maintain vesting provisions and
option periods substantially similar to those of the initial grant.

TAX SHARING AND INDEMNIFICATION AGREEMENT

We have entered into a tax sharing and indemnification agreement with Eaton
that allocates responsibilities and liabilities for tax matters between us and
Eaton. The agreement requires us to pay Eaton for our allocable share of any
taxes due with respect to consolidated, combined or unitary tax returns that we
file with Eaton for all periods beginning after December 31, 1999, prior to the
divestiture date. The agreement also provides for compensation or reimbursement
as the case may be, to reflect redeterminations of our tax liability for periods
beginning after December 31, 1999 during which we joined in filing consolidated,
combined or unitary tax returns with Eaton.

In order to initially satisfy our tax liability for the first quarter of
2000, we will pay Eaton cash in an amount equal to the $8.3 million tax
provision shown in our combined financial statements for the quarter. This
payment will be made as part of the settlement of the cash management receivable
or payable described in note (4) to the "Prospectus Summary -- Summary
Historical Combined Financial Data". The ultimate amount of tax liability that
we will have to pay Eaton in

424B4 71st Page of 109 TOC 1st Previous Next ↓Bottom Just 71st

respect of this quarter under the tax sharing and indemnification agreement will
be based on our allocable share of any taxes due with respect to tax returns
that we file with Eaton.

The tax sharing and indemnification agreement also requires us to indemnify
Eaton for certain taxes (including interest and penalties), the amount of which
could be material to us, including:

- any taxes resulting from our separation from Eaton that are imposed on
Eaton due to any action on our part that is not contemplated in the
master separation and distribution agreement or any failure to take
action required by that agreement.

- any taxes imposed on Eaton that would not have been payable but for the
breach by us of any representation, warranty or obligation under the tax
sharing and indemnification agreement, the private letter tax ruling
request or other agreements; and

- the additional taxes that would result if any acquisition of our stock
after the divestiture of our common stock to Eaton's shareholders causes
the divestiture not to qualify for tax-free treatment to Eaton and/or its
shareholders, regardless of whether Eaton consents to such acquisition.

The tax sharing and indemnification agreement provides that for a period of
two years after the divestiture, we will not, without Eaton's prior written
consent, liquidate, merge or consolidate with any other person, or enter into
any transaction or make any change in our equity structure that may cause the
divestiture to be treated as part of a plan pursuant to which one or more
persons other than Eaton shareholders acquire a 40 percent or greater interest
in our stock.

Each member of a consolidated group for United States federal income tax
purposes is jointly and severally liable for the group's federal income tax
liability for the period during which it is a member even after it withdraws
from the group, and the tax sharing and indemnification agreement does not
change this result. Accordingly, we could be required to pay a deficiency in the
Eaton group's federal income tax liability for a period during which we were a
member of the group even if the tax sharing and indemnification agreement
allocates that liability to Eaton or another member. In this event, however, we
would have a claim for indemnification from Eaton under this agreement.

The tax sharing and indemnification agreement also assigns responsibilities
for administrative matters, such as the filing of returns, payment of taxes due,
retention of records, and conduct of audits, examinations or similar
proceedings.

TRANSITIONAL SERVICES AGREEMENT

The transitional services agreement governs providing transitional services
by Eaton and us to each other, on an interim basis, generally for one year or
less after the distribution date, unless extended for up to one additional year
for specific services or otherwise indicated in the agreement. The agreement
provides for transitional services, systems and support to our operations,
including those associated with voice and data transmissions and other
data-related operations, accounts receivables, accounts payable, fixed assets,
payroll, general accounting, financial accounting consolidations, cash
management, human resources, tax, legal and real estate. Services are generally
priced at cost prior to the divestiture and thereafter at fair market rates. The
transitional services agreement also covers the provision of additional
transitional services identified from time to time after the separation date
that were inadvertently or unintentionally omitted from the specified services,
or that are essential to effectuate an orderly transition under the separation
agreement, so long as the provision of such services would not significantly
disrupt Eaton's operations or significantly increase the scope of its
responsibility under the agreement.

424B4 72nd Page of 109 TOC 1st Previous Next ↓Bottom Just 72nd

REAL ESTATE MATTERS AGREEMENT

The real estate matters agreement addresses real estate matters relating to
the Eaton leased and owned properties that Eaton will transfer to or share with
us. The agreement describes the manner in which Eaton will transfer to us
various leased and owned properties and the manner in which we will share
occupancy of one leased property.

The real estate matters agreement identifies each owned property to be
transferred to us and each leased property to be assigned to us. The real estate
matters agreement requires both parties to use reasonable efforts to obtain any
landlord consents required for the proposed transfers of leased sites, including
us agreeing to provide any security required under the applicable lease or by
the applicable landlord as a condition to the landlord's release of Eaton from
any further liability under the lease.

The real estate matters agreement provides that we may occupy a leased
property as a licensee pending receipt of the landlord's consent to the
assignment of the lease to us. If the landlord refuses to consent to the
assignment, Eaton will use reasonable efforts to obtain the landlord's consent
to sublease the property to us. We will indemnify Eaton against all further
liabilities under each lease assigned to us. Eaton will pay all reasonable costs
required to obtain each landlord's consent to the assignment or sublease.

The real estate matters agreement further provides that we will be required
to accept the transfer of all sites allocated to us, even if a site has been
damaged by a casualty before the separation date. Transfers with respect to
leased sites where the underlying lease is terminated due to casualty or action
by the landlord prior to the separation date will not be made, and neither party
will have any liability related thereto.

INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT

GENERAL RELEASE OF PRE-SEPARATION CLAIMS. On June 30, 2000, subject to
specified exceptions, we released Eaton and its affiliates, agents, successors
and assigns, and Eaton released us, and our affiliates, agents, successors and
assigns, from any liabilities arising from events occurring on or before the
separation date, including events occurring in connection with the activities to
implement the separation. This provision will not impair a party from enforcing
the separation agreement or any ancillary agreement.

INDEMNIFICATION. In general, we have agreed to indemnify Eaton and its
affiliates, agents, successors and assigns from all liabilities arising from:

- our business, any of our liabilities or any of our contracts;

- any breach by us of the separation agreement or any ancillary agreement;
and

- any untrue statement of a material fact or any omission of a material
fact in this prospectus or in any other securities filings relating to
the divestiture, other than with respect to specified information
relating to Eaton.

Eaton has agreed to indemnify us and our affiliates, agents, successors and
assigns from all liabilities arising from:

- Eaton's business other than our business and Eaton's liabilities other
than our liabilities;

- any breach by Eaton of the separation agreement or any ancillary
agreement; and

- any untrue statement of a material fact or any omission of a material
fact in this prospectus or in any other securities filings relating to
the divestiture with respect to specified information relating to Eaton.

These indemnification provisions do not apply to any liabilities which have
been satisfied from insurance collection. The agreement also contains provisions
governing notice and indemnification procedures.

424B4 73rd Page of 109 TOC 1st Previous Next ↓Bottom Just 73rd

LIABILITY ARISING FROM THIS PROSPECTUS. We will bear any liability arising
from any untrue statement of a material fact or any omission of a material fact
in this prospectus other than with respect to specified information relating to
Eaton.

INSURANCE MATTERS. The agreement also contains provisions governing our
insurance coverage from the separation date until the divestiture date. In
general, we agree to reimburse Eaton for premium expenses related to insurance
coverage during this period. Prior to the divestiture, Eaton will maintain
insurance policies on our behalf. We will work with Eaton to secure additional
insurance if desired and cost effective.

ENVIRONMENTAL MATTERS. We have agreed to indemnify Eaton and its
affiliates, agents, successors and assigns from all liabilities arising from
environmental conditions or any actions relating to, resulting from, or present
at, our properties, facilities or operations, either before or after the
separation date. This includes indemnifying Eaton from any liabilities resulting
from the transportation of hazardous materials to or from any of our facilities
either before or after the separation date.

ASSIGNMENT. The indemnification and insurance matters agreement is not
assignable by either party without the prior written consent of the other party.

424B4 74th Page of 109 TOC 1st Previous Next ↓Bottom Just 74th

PRINCIPAL STOCKHOLDER

Prior to this offering, all of the outstanding shares of our common stock
will be owned by Eaton. After this offering, Eaton will own about 83.8% of our
outstanding common stock, or about 82.4% if the underwriters fully exercise
their option to purchase additional shares of our common stock. Except for
Eaton, we are not aware of any person or group that will beneficially own more
than 5% of the outstanding shares of our common stock following this offering.
None of our executive officers, directors or director nominees currently owns
any shares of our common stock, and those who own shares of Eaton common stock
will be treated on the same terms as other holders of Eaton stock in any
divestiture of our common stock by Eaton to its shareholders. Our executive
officers, however, will be granted options to purchase our common stock at the
initial public offering price. See "Management -- Stock Ownership of Directors
and Executive Officers" for a description of the ownership of Eaton stock by our
directors and executive officers.

424B4 75th Page of 109 TOC 1st Previous Next ↓Bottom Just 75th

DESCRIPTION OF CAPITAL STOCK

GENERAL

We are authorized to issue 300,000,000 shares of common stock, $0.001 par
value, and 30,000,000 shares of undesignated preferred stock, $0.001 par value.
The following description of our capital stock is subject to our certificate of
incorporation and bylaws, which are included as exhibits to the registration
statement of which this prospectus forms a part, and to the provisions of
applicable Delaware law.

COMMON STOCK

The holders of our common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of our common stock
are entitled to receive ratably such dividends, if any, as our board of
directors may declare from time to time out of funds legally available for that
purpose. See "Dividend Policy". In the event of our liquidation, dissolution or
winding up, the holders of our common stock are entitled to share ratably in all
assets remaining after payment of liabilities, subject to the priority of
preferred stock, if any, then outstanding. The holders of our common stock have
no preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to our common stock.

PREFERRED STOCK

Our board of directors has the authority, without action by the
stockholders, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, which may be
greater than the rights of our common stock. It is not possible to state the
actual effect of the issuance of any shares of preferred stock upon the rights
of holders of our common stock until our board of directors determines the
specific rights of the holders of the preferred stock. However, the effects
might include, among other things:

- restricting dividends on our common stock;

- diluting the voting power of our common stock;

- impairing the liquidation rights of our common stock; or

- delaying or preventing a change in control of us without further action
by the stockholders.

At the closing of this offering, no shares of preferred stock will be
outstanding, and we have no present plans to issue any shares of preferred
stock. See "Rights Plan" below.

ANTI-TAKEOVER EFFECTS OF OUR CERTIFICATE AND BYLAWS AND DELAWARE LAW

Some provisions of Delaware law and our certificate of incorporation and
bylaws could make the following more difficult:

- acquisition of us by means of a tender offer;

- acquisition of us by means of a proxy contest or otherwise; or

- removal of our incumbent officers and directors.

These provisions, summarized below, are expected to discourage coercive
takeover practices and inadequate takeover bids. These provisions are also
designed to encourage persons seeking to acquire control of us to first
negotiate with our board of directors. We believe that the benefits of increased
protection give us the potential ability to negotiate with the proponent of an
unfriendly or unsolicited proposal to acquire or restructure us and outweigh the

424B4 76th Page of 109 TOC 1st Previous Next ↓Bottom Just 76th

disadvantages of discouraging those proposals because negotiation of those
proposals could result in an improvement of their terms.

ELECTION AND REMOVAL OF DIRECTORS. Our board of directors is divided into
three classes. The directors in each class will serve for a three-year term, one
class being elected each year by our stockholders. See "Management-Directors and
Executive Officers". This system of electing directors may discourage a third
party from making a tender offer or otherwise attempting to obtain control of us
because it generally makes it more difficult for stockholders to replace a
majority of the directors. Under the terms of our bylaws, this provision cannot
be changed without a supermajority vote of our stockholders.

STOCKHOLDER MEETINGS. Under our bylaws, only our board of directors, the
chairman or the vice chairman of our board of directors, or the chief executive
officer, and until Eaton owns less than 50% of our common stock, Eaton, may call
special meetings of stockholders.

REQUIREMENTS FOR ADVANCE NOTIFICATION OF STOCKHOLDER NOMINATIONS AND
PROPOSALS. Our bylaws establish advance notice procedures with respect to
stockholder proposals and the nomination of candidates for election as
directors, other than nominations made by or at the direction of our board of
directors or a committee of our board of directors. Under the terms of our
bylaws, this provision cannot be changed without a supermajority vote of our
stockholders.

DELAWARE ANTI-TAKEOVER LAW. We are subject to Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, Section 203 prohibits
a publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years following the date
the person became an interested stockholder, unless the "business combination"
or the transaction in which the person became an interested stockholder is
approved in a prescribed manner. Generally, a "business combination" includes a
merger, asset or stock sale, or other transaction resulting in a financial
benefit to the interested stockholder. Generally, an "interested stockholder" is
a person who, together with affiliates and associates, owns or within three
years prior to the determination of interested stockholder status, did own, 15%
or more of a corporation's voting stock. The existence of this provision may
have an anti-takeover effect with respect to transactions not approved in
advance by our board of directors, including discouraging attempts that might
result in a premium over the market price for the outstanding shares of our
common stock. After completion of this offering, Eaton will be an "interested
stockholder" subject to these statutory provisions.

ELIMINATION OF STOCKHOLDER ACTION BY WRITTEN CONSENT. Our certificate of
incorporation eliminates the right of stockholders other than Eaton to act by
written consent without a meeting. Eaton will lose this right once it owns less
than 50% of our common stock.

ELIMINATION OF CUMULATIVE VOTING. Our certificate of incorporation and
bylaws do not provide for cumulative voting in the election of directors.

UNDESIGNATED PREFERRED STOCK. The authorization of undesignated preferred
stock makes it possible for our board of directors to issue preferred stock with
voting or other rights or preferences that could impede the success of any
attempt to change control of us. These and other provisions may have the effect
of deferring hostile takeovers or delaying changes in control or management of
us.

AMENDMENT OF CHARTER PROVISIONS. The amendment of any of the above
provisions would require approval by holders of at least 75% of our outstanding
common stock.

RIGHTS PLAN

Our rights plan may have the effect of delaying or preventing a change in
control of our company. This plan attaches to each common share one right that,
when exercisable, entitles the holder of a right to purchase one one-hundredth
of a share of Preferred Stock at a purchase

424B4 77th Page of 109 TOC 1st Previous Next ↓Bottom Just 77th

price of $110, subject to adjustment. If certain takeover events occur, exercise
of the rights would entitle the holders thereof (other than the acquiring person
or group) to receive common shares or common stock of a surviving corporation,
or cash, property or other securities, with a market value equal to twice the
purchase price. These takeover events include a person or group becoming the
owner of 20% or more of our outstanding common stock or the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20% or more of our outstanding common shares. Accordingly, exercise of
the rights may cause substantial dilution to a person who attempts to acquire
our company.

The rights automatically attach to each outstanding common share. There is
no monetary value presently assigned to the rights, and they will not trade
separately from our common stock unless and until they become exercisable. The
rights, which expire in June 2010, may be redeemed, at the option of our Board
of Directors, at a price of $.001 per right at any time prior to a group or
person acquiring ownership of 20% or more of the outstanding common shares. The
rights agreement may have certain antitakeover effects, although it is not
intended to preclude any acquisition or business combination that is at a fair
price and otherwise in the best interests of our company and our stockholders as
determined by our Board of Directors. However, a stockholder could potentially
disagree with the Board's determination of what constitutes a fair price or the
best interests of our company and our stockholders.

The description and terms of the rights are set forth in a rights agreement
between us and Equiserve Trust Company N.A., as rights agent. A copy of the
rights agreement is filed as an exhibit to the registration statement of which
this prospectus forms a part. The above summary of the material terms of the
rights does not purport to be complete and is qualified in its entirety by
reference to the rights agreement.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock will be Equiserve
Trust Company, N.A.

SHARES ELIGIBLE FOR FUTURE SALE

All of the shares of our common stock sold in this offering will be freely
tradeable without restriction under the Securities Act, except for any shares
which may be acquired by an affiliate of ours, as that term is defined in Rule
144 under the Securities Act. Persons who may be deemed to be affiliates
generally include individuals or entities that control, are controlled by, or
are under common control with, us and may include our directors and officers as
well as our significant stockholders, if any.

Eaton currently plans to consummate its divestiture of all of its shares of
our common stock approximately six months following this offering by disposing
of all of its shares of our common stock to Eaton shareholders, although Eaton
is not obligated to consummate this divestiture. Any shares of our common stock
distributed to Eaton shareholders in the divestiture generally will be freely
transferable, except for shares of common stock received by persons who may be
deemed to be our affiliates. Persons who are affiliates will be permitted to
sell the shares of common stock that are issued in this offering or that they
receive in the divestiture only through registration under the Securities Act,
or under an exemption from registration, such as the one provided by Rule 144.
Generally, Rule 144, as presently in effect, provides that an affiliate who has
owned shares of our common stock for at least one year is entitled to sell in
the open market in broker's transactions, within any three-month period, a
number of shares that does not exceed the greater of:

424B4 78th Page of 109 TOC 1st Previous Next ↓Bottom Just 78th

- one percent of the then outstanding shares of our common stock, which
will equal approximately 955,000 shares immediately after this offering,
or 970,500 shares if the underwriters fully exercise their option to
purchase additional shares of our common stock; and

- the average weekly trading volume of our common stock during the four
calendar weeks preceding the sale.

Sales under Rule 144 are also subject to additional restrictions relating
to the manner of sale and the availability of current public information about
our company.

The shares of our common stock held by Eaton before the divestiture are
deemed "restricted securities" as defined in Rule 144, and may not be sold other
than through registration under the Securities Act or under an exemption from
registration, such as the one provided by Rule 144. Eaton, our directors and
officers and we have agreed not to offer, sell or otherwise dispose of any
shares of our common stock, subject to exceptions, for a period of 180 days
after the date of this prospectus, without the prior written consent of Goldman,
Sachs & Co. This agreement does not apply to the divestiture of our common stock
owned by Eaton to its shareholders on or after November 1, 2000, any sale by
Eaton of its shares of our common stock to a purchaser who offers to buy all
other outstanding shares of our common stock at the same price, any grants under
our existing employee benefit plans or transactions in Eaton common shares. See
"Underwriting."

If Eaton distributes all of the shares of our common stock it owns to Eaton
shareholders after this offering, substantially all of these shares will be
eligible for immediate resale in the public market. We are unable to predict
whether significant amounts of common stock will be sold in the open market in
anticipation of, or following, this divestiture, or by Eaton if the divestiture
does not occur. We are also unable to predict whether a sufficient number of
buyers will be in the market at that time. Any sales of substantial amounts of
common stock in the public market, or the perception that such sales might
occur, whether as a result of this divestiture or otherwise, could harm the
market price of our common stock. Eaton has the sole discretion to determine the
timing, structure and all terms of its divestiture of our common stock, all of
which may also affect the level of market transactions in our common stock.

We will grant shares of our common stock pursuant to the 2000 Stock Plan
subject to restrictions. See "Management -- Incentive Plans -- 2000 Stock Plan."
We currently expect to file a registration statement under the Securities Act to
register shares reserved for issuance under the 2000 Stock Plan and the 2000
Employee Stock Purchase Plan. Shares issued pursuant to awards after the date of
this prospectus, other than shares issued to affiliates, generally will be
freely tradable without further registration under the Securities Act. Shares
issued pursuant to any vested and exercisable options of Eaton converted into
our options will also be freely tradable without registration under the
Securities Act after the date of this prospectus. See "Management -- Treatment
of Eaton Options".

424B4 79th Page of 109 TOC 1st Previous Next ↓Bottom Just 79th

UNITED STATES FEDERAL TAX CONSIDERATIONS TO NON-UNITED STATES HOLDERS

The following summary describes material United States federal income and
estate tax consequences that may be relevant to the purchase, ownership and
disposition of our common stock by a Non-United States Holder. A Non-United
States Holder is any person who is, for United States federal income tax
purposes, a foreign corporation, a non-resident alien individual, a foreign
partnership or a foreign estate or trust or any other foreign entity. This
discussion does not address all aspects of United States federal income and
estate taxes and does not deal with foreign, state and local consequences that
may be relevant to Non-United States Holders in light of their personal
circumstances. Furthermore, this discussion is based on provisions of the
Internal Revenue Code of 1986, existing and proposed regulations promulgated
thereunder, and administrative and judicial interpretations thereof, as of the
date hereof, all of which are subject to change. EACH PROSPECTIVE PURCHASER OF
COMMON STOCK IS ADVISED TO CONSULT A TAX ADVISOR WITH RESPECT TO CURRENT AND
POSSIBLE FUTURE CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF COMMON STOCK
AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY UNITED
STATES STATE, MUNICIPALITY OR OTHER TAXING JURISDICTION.

DIVIDENDS

We do not anticipate paying cash dividends on our capital stock in the
foreseeable future. See "Dividend Policy". In the event, however, that dividends
are paid on shares of our common stock, dividends paid to a Non-United States
Holder of our common stock generally will be subject to withholding of United
States federal income tax at a 30% rate or such lower rate as may be specified
by an applicable income tax treaty. However, assuming certain certification and
disclosure requirements are met, dividends that are effectively connected with
the conduct of a trade or business by a Non-United States Holder within the
United States and, where a tax treaty applies, are attributable to a United
States permanent establishment of the Non-United States Holder, are not subject
to the withholding tax, but instead are subject to United States federal income
tax on a net income basis at the applicable graduated individual or corporate
rates. Any such effectively connected dividends received by a foreign
corporation may be subject to an additional "branch profits tax" at a 30% rate
or such lower rate as may be specified by an applicable income tax treaty.

In October 1997, the Internal Revenue Service issued final regulations
relating to the withholding, backup withholding and information reporting with
respect to payments made to Non-United States Holders. The new regulations
generally apply to payments made after December 31, 2000, subject to certain
transition rules.

Until December 31, 2000, dividends paid to an address outside the United
States are presumed to be paid to a resident of such country, unless the payer
has knowledge to the contrary, for purposes of the withholding tax discussed
above and, under the current interpretation of United States Treasury
regulations, for purposes of determining the applicability of a tax treaty rate.
To avoid back-up withholding for dividends paid after December 31, 2000, a
Non-United States Holder will be required to satisfy certain certification and
other requirements which may differ from current requirements. Special rules
will apply to dividend payments made after December 31, 2000 to foreign
intermediaries, foreign partnerships, United States or foreign wholly-owned
entities that are disregarded for United States federal income tax purposes, and
entities that are treated as fiscally transparent in the United States, the
applicable income tax treaty jurisdiction or both. In addition, United States
tax law denies income tax treaty benefits to foreigners receiving income derived
through a partnership or other fiscally transparent entity in certain
circumstances.

A Non-United States Holder of our common stock eligible for a reduced rate
of United States withholding tax pursuant to an income tax treaty may obtain a
refund of any excess amounts withheld by filing an appropriate claim for refund
with the Internal Revenue Service.

424B4 80th Page of 109 TOC 1st Previous Next ↓Bottom Just 80th

GAIN ON DISPOSITION OF COMMON STOCK

A Non-United States Holder generally will not be subject to United States
federal income tax with respect to gain recognized on a sale or other
disposition of our common stock unless:

- the gain is effectively connected with a trade or business of the
Non-United States Holder in the United States and, where a tax treaty
applies, is attributable to a United States permanent establishment of
the Non-United States Holder,

- in the case of a Non-United States Holder who is an individual and holds
common stock as a capital asset, such holder is present in the United
States for 183 or more days in the taxable year of the sale or other
disposition and certain other conditions are met,

- the Non-United States Holder is subject to tax pursuant to the provisions
of the United States tax law applicable to certain United States
expatriates, or

- we are or have been a "United States real property holding corporation"
for United States federal income tax purposes, and the Non-United States
Holder owned, directly or pursuant to certain attribution rules, more
than 5% of our common stock at any time within the shorter of the
five-year period preceding such disposition or such Non-United States
Holder's holding period. We believe we are not, and we do not anticipate
becoming, a "United States real property holding corporation" for United
States federal income tax purposes.

An individual Non-United States Holder described in the first point above
will be subject to tax on the net gain from the sale under regular graduated
United States federal income tax rates. An individual Non-United States Holder
described in the second point above will be subject to a flat 30% tax on the
gain derived from the sale, which may be offset by United States-source capital
losses, even though the individual is not considered a resident of the United
States. If a Non-United States Holder that is a foreign corporation is described
in the first point above, it will be subject to tax on its net gain under
regular graduated United States federal income tax rates and, in addition, may
be subject to the branch profits tax equal to 30% of its effectively connected
earnings and profits within the meaning of the Code for the year, as adjusted
for certain items, unless it qualifies for a lower rate under an applicable
income tax treaty.

FEDERAL ESTATE TAX

Common stock owned or treated as owned by an individual who is not a
citizen or resident for U.S. estate tax purposes at the time of death will be
included in such holder's gross estate for United States federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.

INFORMATION REPORTING AND BACKUP WITHHOLDING

We must report annually to the Internal Revenue Service and to each
Non-United States Holder the amount of dividends paid to such Non-United States
Holder and the tax withheld with respect to such dividends, regardless of
whether withholding was required. Copies of the information returns reporting
such dividends and withholding may also be made available to the tax authorities
in the country in which the Non-United States Holder resides under the
provisions of an applicable income tax treaty.

Until December 31, 2000, backup withholding generally will not apply to
dividends paid to a Non-United States Holder at an address outside the United
States, unless the payer has knowledge that the payee is a United States person.
With respect to dividends paid after December 31, 2000, however, a Non-United
States Holder will be subject to back-up withholding at a 31% rate unless
applicable certification requirements are met to establish non-United States
status.

424B4 81st Page of 109 TOC 1st Previous Next ↓Bottom Just 81st

Payment of the proceeds of a sale of common stock within the United States
or conducted through certain United States-related foreign financial
intermediaries is subject to:

- information reporting; and

- backup withholding, other than payments made before January 1, 2001 by or
through certain United States-related foreign financial intermediaries,
unless the beneficial owner certifies under penalties of perjury that it
is a Non-United States Holder, and the payor does not have actual
knowledge that the beneficial owner is a United States person, or the
holder otherwise establishes an exemption.

Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against a holder's United States federal income tax liability
provided the required information is furnished to the Internal Revenue Service.

424B4 82nd Page of 109 TOC 1st Previous Next ↓Bottom Just 82nd

UNDERWRITING

Axcelis and the underwriters named below have entered into an underwriting
agreement with respect to the shares being offered. Subject to certain
conditions, each underwriter has severally agreed to purchase the number of
shares indicated in the following table. Goldman, Sachs & Co., Morgan Stanley &
Co. Incorporated, Lehman Brothers Inc. and Salomon Smith Barney Inc. are the
representatives of the underwriters.

[Download Table]

Underwriters Number of Shares
------------ ----------------

Goldman, Sachs & Co. ....................................... 5,725,000
Morgan Stanley & Co. Incorporated........................... 4,978,000
Lehman Brothers Inc. ....................................... 1,515,000
Salomon Smith Barney Inc. .................................. 1,515,000
Sanford C. Bernstein & Co., Inc. ........................... 143,000
Chase Securities Inc........................................ 143,000
CIBC World Markets Corp. ................................... 143,000
Dain Rauscher Incorporated.................................. 143,000
A.G. Edwards & Sons, Inc. .................................. 143,000
FleetBoston Robertson Stephens Inc. ........................ 143,000
J.P. Morgan Securities Inc. ................................ 143,000
Wasserstein Perella Securities, Inc. ....................... 143,000
Wit SoundView Corporation................................... 143,000
Robert W. Baird & Co. Incorporated.......................... 60,000
Cazenove Inc. .............................................. 60,000
Legg Mason Wood Walker, Incorporated........................ 60,000
McDonald Investments Inc., A KeyCorp Company................ 60,000
Midwest Research............................................ 60,000
Neuberger Berman, LLC....................................... 60,000
SBK Brooks Investment Corp. ................................ 60,000
Muriel Siebert & Co., Inc. ................................. 60,000
----------
Total.................................................. 15,500,000
==========

If the underwriters sell more shares than the total number set forth in the
table above, the underwriters have an option to buy up to an additional
1,550,000 shares from Axcelis to cover such sales. They may exercise that option
for 30 days. If any shares are purchased pursuant to this option, the
underwriters will severally purchase shares in approximately the same proportion
as set forth in the table above.

The following table shows the per share and total underwriting discounts
and commissions to be paid to the underwriters by Axcelis. Such amounts are
shown assuming both no exercise and full exercise of the underwriters' option to
purchase 1,550,000 additional shares.

[Download Table]

Paid by Axcelis
----------------------------
No Exercise Full Exercise
----------- -------------

Per Share....................................... $ 1.32 $ 1.32
Total...................................... $20,460,000 $22,506,000

Shares sold by the underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus. Any
shares sold by the underwriters to securities dealers may be sold at a discount
of up to $0.80 per share from the initial public offering price. Any such
securities dealers may resell any shares purchased from the underwriters to
certain other brokers or dealers at a discount of up to $0.10 per share from the
initial public offering price. If all the shares are not sold at the initial
offering price, the representatives may change the offering price and the other
selling terms.

424B4 83rd Page of 109 TOC 1st Previous Next ↓Bottom Just 83rd

Axcelis and its directors, director nominees and officers, and Eaton have
agreed with the underwriters not to dispose of or hedge any of Axcelis' common
stock or securities convertible into or exchangeable for shares of Axcelis'
common stock during the period from the date of this prospectus continuing
through the date 180 days after the date of this prospectus, except with the
prior written consent of Goldman, Sachs & Co. This agreement does not apply to
the divestiture of shares of Axcelis' common stock owned by Eaton to its
shareholders on or after November 1, 2000, any sale by Eaton of its shares of
Axcelis' common stock to a purchaser who offers to buy all other outstanding
shares of Axcelis' common stock at the same price, any grants under Axcelis'
existing employee benefit plans or transactions in Eaton common shares. See
"Shares Eligible For Future Sale" for a discussion of transfer restrictions.

Prior to the offering, there has been no public market for the shares. The
initial public offering price has been negotiated among Axcelis and the
representatives. Among the factors considered in determining the initial public
offering price of the shares, in addition to prevailing market conditions, were
Axcelis' historical performance, estimates of Axcelis' business potential and
earnings prospects, an assessment of Axcelis' management and the consideration
of the above factors in relation to market valuation of companies in related
businesses.

The shares of common stock have been approved for quotation on the Nasdaq
National Market under the symbol "ACLS".

In connection with the offering, the underwriters may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Shorts sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in the offering. "Covered"
short sales are sales made in an amount not greater than the underwriters'
option to purchase additional shares from the issuer in the offering. The
underwriters may close out any covered short position by either exercising their
option to purchase additional shares or purchasing shares in the open market. In
determining the source of shares to close out the covered short position, the
underwriters will consider, among other things, the price of shares available
for purchase in the open market as compared to the price at which they may
purchase shares through the overallotment option. "Naked" short sales are any
sales in excess of such option. The underwriters must close out any naked short
position by purchasing shares in the open market. A naked short position is more
likely to be created if the underwriters are concerned that there may be
downward pressure on the price of the common stock in the open market after
pricing that could adversely affect investors who purchase in the offering.
Stabilizing transactions consist of various bids for or purchases of common
stock made by the underwriters in the open market prior to the completion of the
offering.

The underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.

Purchases to cover a short position and stabilizing transactions may have
the effect of preventing or retarding a decline in the market price of Axcelis'
stock, and together with the imposition of the penalty bid may stabilize,
maintain or otherwise affect the market price of the common stock. As a result,
the price of the common stock may be higher than the price that otherwise might
exist in the open market. If these activities are commenced, they may be
discontinued at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.

The underwriters do not expect sales to discretionary accounts to exceed
five percent of the total number of shares offered.

Axcelis estimates that its share of the total expenses of the offering,
excluding underwriting discounts and commissions, will be approximately
$3,000,000.

424B4 84th Page of 109 TOC 1st Previous Next ↓Bottom Just 84th

Axcelis and Eaton agreed to indemnify the several underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.

Goldman, Sachs & Co. has been engaged by Eaton to provide financial
advisory services relating to our separation from Eaton and the distribution of
shares of our common stock to Eaton shareholders, for which it will be paid a
fee upon consummation of the divestiture. Goldman, Sachs & Co. has from time to
time performed various investment banking services for Eaton in the past, and it
may from time to time in the future perform investment banking services for
Eaton and us for which it has received and will receive customary fees.

VALIDITY OF COMMON STOCK

The validity of the common stock offered hereby will be passed upon for us
by Kirkpatrick & Lockhart LLP, Pittsburgh, Pennsylvania and for the underwriters
by Shearman & Sterling, New York, New York.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our combined
financial statements at December 31, 1998 and 1999, and for each of the three
years in the period ended December 31, 1999, as set forth in their report. We
have included our financial statements in this prospectus in reliance on Ernst &
Young LLP's report, given on their authority as experts in accounting and
auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission, Washington, D.C.
20549, a registration statement on Form S-1 under the Securities Act with
respect to the common stock offered hereby. This prospectus does not contain all
of the information set forth in the registration statement and the exhibits and
schedules to the registration statement. Some items are omitted in accordance
with the rules and regulations of the SEC. For further information about us and
our common stock, reference is made to the registration statement and the
exhibits and any schedules to the registration statement. Statements contained
in this prospectus as to the contents of any contract or other document referred
to are not necessarily complete and in each instance, if the contract or
document is filed as an exhibit, reference is made to the copy of the contract
or other documents filed as an exhibit to the registration statement, each
statement being qualified in all respects by such reference. A copy of the
registration statement, including the exhibits and schedules to the registration
statement, may be read and copied at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. Information on the operation of the
Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In
addition, the SEC maintains an Internet site at http://www.sec.gov, from which
interested persons can electronically access the registration statement,
including the exhibits and any schedules to the registration statement.

As a result of this offering, we will become subject to the full
informational requirements of the Securities Exchange Act of 1934, as amended.
We will fulfill our obligations with respect to those requirements by filing
periodic reports and other information with the SEC. We intend to furnish our
stockholders with annual reports containing combined financial statements
certified by an independent public accounting firm. We also maintain an Internet
site at http://www.axcelis.com. Our website and the information contained
therein or connected thereto shall not be deemed to be incorporated into this
prospectus or the registration statement of which it forms a part.

424B4 85th Page of 109 TOC 1st Previous Next ↓Bottom Just 85th

AXCELIS TECHNOLOGIES, INC.

INDEX TO COMBINED FINANCIAL STATEMENTS

[Download Table]

PAGE
----

Report of Independent Auditors.............................. F-2

Combined Balance Sheets at December 31, 1998 and 1999
(audited), March 31, 2000 (unaudited) and pro forma at
March 31, 2000 (unaudited)................................ F-3

Statements of Combined Operations for the Years Ended
December 31, 1997, 1998 and 1999 (audited) and Three
Months Ended March 31, 1999 and 2000 (unaudited).......... F-4

Statements of Combined Cash Flows for the Years Ended
December 31, 1997, 1998 and 1999 (audited) and Three
Months Ended March 31, 1999 and 2000 (unaudited).......... F-5

Statements of Combined Stockholder's Net Investment for the
Years Ended December 31, 1997, 1998 and 1999 (audited) and
Three Months ended March 31, 2000 (unaudited)............. F-6

Notes to Combined Financial Statements...................... F-8

F-1

424B4 86th Page of 109 TOC 1st Previous Next ↓Bottom Just 86th

REPORT OF INDEPENDENT AUDITORS

To the Stockholder of
Axcelis Technologies, Inc.

We have audited the combined balance sheets of Axcelis Technologies, Inc.
as of December 31, 1998 and 1999, and the related statements of combined
operations, cash flows and stockholder's net investment for each of the three
years in the period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the 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 financial statements referred to above present fairly,
in all material respects, the combined financial position of Axcelis
Technologies, Inc. at December 31, 1998 and 1999, and the combined results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.

/s/ Ernst & Young LLP

Cleveland, Ohio
May 3, 2000, except for Note 19
as to which the date is June 14, 2000

F-2

424B4 87th Page of 109 TOC 1st Previous Next ↓Bottom Just 87th

AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

COMBINED BALANCE SHEETS
(IN THOUSANDS)

[Enlarge/Download Table]

DECEMBER 31, PRO FORMA
-------------------- MARCH 31, MARCH 31,
1998 1999 2000 2000
-------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)

ASSETS
Current assets:
Cash & short-term investments........... $ 3,338 $ 3,530 $ 2,803 $ 2,803
Accounts receivable..................... 42,534 101,335 117,295 117,295
Receivables from Eaton Corporation...... 11,241 8,286 8,286
Inventories............................. 66,786 83,326 97,872 97,872
Deferred income taxes................... 30,817 33,036 32,762 32,762
Prepaid expenses........................ 4,836 3,024 3,219 3,219
-------- -------- -------- --------
Total current assets............ 148,311 235,492 262,237 262,237
Property, plant & equipment............. 64,563 73,809 72,221 72,221
Investment in Sumitomo Eaton Nova
Corporation.......................... 20,058 22,210 25,679 25,679
Goodwill................................ 50,570 47,006 46,114 46,114
Intangible assets....................... 31,905 26,190 24,762 24,762
Other assets............................ 25,714 18,128 18,319 18,319
-------- -------- -------- --------
Total assets.................... $341,121 $422,835 $449,332 $449,332
======== ======== ======== ========
LIABILITIES & STOCKHOLDER'S NET INVESTMENT
Current liabilities:
Accounts payable........................ $ 6,173 $ 24,579 $ 31,878 $ 31,878
Payables to Eaton Corporation........... 5,011 300,000
Restructuring liabilities............... 7,060
Accrued compensation.................... 9,645 8,984 6,606 6,606
Warranty reserve........................ 16,055 18,568 20,836 20,836
Other current liabilities............... 13,339 13,602 12,913 12,913
-------- -------- -------- --------
Total current liabilities....... 57,283 65,733 72,233 372,233
Deferred income taxes..................... 10,777 10,238 9,891 9,891
Pension & other employee benefit
liabilities............................. 3,900 4,568 3,741 3,741
Stockholder's net investment:
Preferred stock ($0.001 par value per
share; 30 million shares authorized;
none outstanding).................... -- -- -- --
Common stock ($0.001 par value per
share; 300 million shares authorized;
80 million shares outstanding)....... -- -- -- --
Parent Company investment............... 274,981 347,825 369,474 69,474
Accumulated other comprehensive income
(loss)............................... (5,820) (5,529) (6,007) (6,007)
-------- -------- -------- --------
Total stockholder's net
investment...................... 269,161 342,296 363,467 63,467
-------- -------- -------- --------
Total liabilities &
stockholder's net
investment................. $341,121 $422,835 $449,332 $449,332
======== ======== ======== ========

See accompanying notes to combined financial statements.
F-3

424B4 88th Page of 109 TOC 1st Previous Next ↓Bottom Just 88th

AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

STATEMENTS OF COMBINED OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

[Enlarge/Download Table]

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- -------------------
1997 1998 1999 1999 2000
-------- --------- -------- -------- --------
(UNAUDITED)

Net sales............................... $460,010 $ 265,709 $397,267 $ 59,124 $143,051
Cost of products sold................... 287,208 184,122 240,185 38,356 81,577
Cost of products sold -- restructuring
charges............................... 17,358
-------- --------- -------- -------- --------
Gross profit........................ 172,802 64,229 157,082 20,768 61,474
Other costs & expenses:
Selling............................... 47,148 42,134 37,946 9,087 11,598
General & administrative.............. 38,287 47,075 45,925 9,612 13,030
Research & development................ 70,466 78,656 51,599 12,183 16,125
Amortization of goodwill & intangible
assets.............................. 3,936 9,279 9,279 2,320 2,320
Restructuring charges................. 24,994
Write-off of in-process research &
development...................... 85,000
-------- --------- -------- -------- --------
Income (loss) from
operations.................. (72,035) (137,909) 12,333 (12,434) 18,401
Other income (expense):
Royalty income........................ 6,265 7,949 5,854 965 3,823
Equity income (loss) of Sumitomo Eaton
Nova Corporation.................... 3,283 (2,132) 1,338 (2,447) 3,340
Other income (expense) -- net......... 1,123 (1,045) 28 (145) 1,549
-------- --------- -------- -------- --------
Total other income (expense)..... 10,671 4,772 7,220 (1,627) 8,712
-------- --------- -------- -------- --------
Income (loss) before income taxes....... (61,364) (133,137) 19,553 (14,061) 27,113
Income taxes (credit)................... 103 (51,090) 5,125 (3,686) 8,251
-------- --------- -------- -------- --------
Net income (loss)....................... $(61,467) $ (82,047) $ 14,428 $(10,375) $ 18,862
======== ========= ======== ======== ========
Basic & diluted net income (loss) per
share................................. $ (.77) $ (1.03) $ .18 $ (.13) $ .24
======== ========= ======== ======== ========
Shares used in computing basic & diluted
net income (loss) per share........... 80,000 80,000 80,000 80,000 80,000
======== ========= ======== ======== ========
Unaudited pro forma basic & diluted net
income per share...................... $ .15 $ .20
======== ========
Shares used in computing unaudited pro
forma basic & diluted net income per
share................................. 94,644 94,644
======== ========

See accompanying notes to combined financial statements.

F-4

424B4 89th Page of 109 TOC 1st Previous Next ↓Bottom Just 89th

AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

STATEMENTS OF COMBINED CASH FLOWS
(IN THOUSANDS)

[Enlarge/Download Table]

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------- --------------------
1997 1998 1999 1999 2000
--------- --------- --------- -------- ---------
(UNAUDITED)

Operating activities:
Net income (loss)........................... $ (61,467) $ (82,047) $ 14,428 $(10,375) $ 18,862
Adjustments to reconcile to net cash
provided (used) by operating activities:
Depreciation............................ 6,766 10,548 9,803 2,567 2,332
Amortization of goodwill & intangible
assets............................... 3,936 9,279 9,279 2,320 2,320
Deferred income taxes................... 2,510 (12,065) (2,758) 1,927 (72)
Undistributed (income) loss of Sumitomo
Eaton Nova Corporation............... (1,554) 2,890 (1,347) 2,426 (3,340)
Deferred royalty income from Sumitomo
Eaton Nova Corporation............... (6,583) (3,249) (2,286) (876)
Restructuring charges................... 37,347 (7,060) (1,411)
Write-off of in-process research &
development.......................... 85,000
Changes in operating assets &
liabilities, excluding acquisition of
a business & non-cash
restructuring charges:
Accounts receivable................ 9,930 57,465 (71,918) (20,123) (13,837)
Inventories........................ (21,961) 27,936 (16,989) (5,300) (14,477)
Accounts payable & other current
liabilities...................... (1,844) (39,920) 18,481 4,365 7,200
Other assets....................... (15,774) (616) 7,604 1,815 (181)
Other-net.......................... (5,654) 4,638 3,658 (247) (1,705)
--------- --------- --------- -------- ---------
Net cash provided (used) by
operating activities........... (6,695) 12,206 (39,105) (22,912) (2,898)
Investing activities:
Expenditures for property, plant &
equipment................................. (14,161) (14,988) (16,914) (4,966) (299)
Acquisition of Fusion Systems Corporation... (201,552)
Other-net................................... (1,179) 1,722 (2,205) (935) (317)
--------- --------- --------- -------- ---------
Net cash used by investing
activities..................... (216,892) (13,266) (19,119) (5,901) (616)
Financing activities:
Transfers from (to) Parent Company
relating to:
Accounts receivable..................... (474,843) (320,289) (327,225) (40,355) (121,794)
Inventories & operating expenses........ 466,420 328,941 386,485 68,388 128,827
Expenditures for property, plant &
equipment............................ 14,161 14,988 16,914 4,966 299
Acquisition of Fusion Systems
Corporation.......................... 201,552
Other-net............................... 17,617 (22,721) (17,758) (4,925) (4,545)
--------- --------- --------- -------- ---------
Net cash provided by financing
activities..................... 224,907 919 58,416 28,074 2,787
--------- --------- --------- -------- ---------
Net increase (decrease) in cash & short-term
investments................................. 1,320 (141) 192 (739) (727)
Cash & short-term investments at beginning of
period...................................... 2,159 3,479 3,338 3,338 3,530
--------- --------- --------- -------- ---------
Cash & short-term investments at end
of period................................... $ 3,479 $ 3,338 $ 3,530 $ 2,599 $ 2,803
========= ========= ========= ======== =========

See accompanying notes to combined financial statements.

F-5

424B4 90th Page of 109 TOC 1st Previous Next ↓Bottom Just 90th

AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

STATEMENTS OF COMBINED STOCKHOLDER'S NET INVESTMENT
(IN THOUSANDS)

[Enlarge/Download Table]

ACCUMULATED
PARENT OTHER TOTAL
COMPANY COMPREHENSIVE STOCKHOLDER'S
INVESTMENT INCOME (LOSS) NET INVESTMENT
---------- ------------- --------------

Balance at January 1, 1997............................ $ 192,669 $(2,240) $ 190,429
Net loss.............................................. (61,467) (61,467)
Foreign currency translation adjustments.............. (4,677) (4,677)
---------
Total comprehensive (loss)............................ (66,144)
Transfers from (to) Parent Company relating to:
Accounts receivable................................. (474,843) (474,843)
Inventories & operating expenses.................... 466,420 466,420
Expenditures for property, plant & equipment........ 14,161 14,161
Acquisition of Fusion Systems Corporation........... 201,552 201,552
Other-net........................................... 17,617 17,617
--------- ---------
Net transfers from Parent Company.............. 224,907 224,907
--------- ------- ---------
Balance at December 31, 1997.......................... 356,109 (6,917) 349,192
--------- ------- ---------
Net loss.............................................. (82,047) (82,047)
Foreign currency translation adjustments.............. 1,097 1,097
---------
Total comprehensive (loss)............................ (80,950)
Transfers from (to) Parent Company relating to:
Accounts receivable................................. (320,289) (320,289)
Inventories & operating expenses.................... 328,941 328,941
Expenditures for property, plant & equipment........ 14,988 14,988
Other-net........................................... (22,721) (22,721)
--------- ---------
Net transfers from Parent Company................ 919 919
--------- ------- ---------
Balance at December 31, 1998.......................... 274,981 (5,820) 269,161
--------- ------- ---------
Net income............................................ 14,428 14,428
Foreign currency translation adjustments.............. 291 291
---------
Total comprehensive income............................ 14,719
Transfers from (to) Parent Company relating to:
Accounts receivable................................. (327,225) (327,225)
Inventories & operating expenses.................... 386,485 386,485
Expenditures for property, plant & equipment........ 16,914 16,914
Other-net........................................... (17,758) (17,758)
--------- ---------
Net transfers from Parent Company................ 58,416 58,416
--------- ------- ---------
Balance at December 31, 1999.......................... $ 347,825 $(5,529) $ 342,296

F-6

424B4 91st Page of 109 TOC 1st Previous Next ↓Bottom Just 91st
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

STATEMENT OF COMBINED STOCKHOLDER'S NET INVESTMENT -- (CONTINUED)
(IN THOUSANDS)

[Enlarge/Download Table]

ACCUMULATED
PARENT OTHER TOTAL
COMPANY COMPREHENSIVE STOCKHOLDER'S
INVESTMENT INCOME (LOSS) NET INVESTMENT
---------- ------------- --------------

Balance at December 31, 1999.......................... $ 347,825 $(5,529) $ 342,296
Net income*........................................... 18,862 18,862
Foreign currency translation adjustments*............. (478) (478)
---------
Total comprehensive income*........................... 18,384
Transfers from (to) Parent Company relating to:
Accounts receivable*................................ (121,794) (121,794)
Inventories & operating expenses*................... 128,827 128,827
Expenditures for property, plant & equipment*....... 299 299
Other-net*.......................................... (4,545) (4,545)
--------- ---------
Net transfers from Parent Company*............... 2,787 2,787
--------- ------- ---------
Balance at March 31, 2000*............................ $ 369,474 $(6,007) $ 363,467
========= ======= =========

---------------
* unaudited

See accompanying notes to combined financial statements.

F-7

424B4 92nd Page of 109 TOC 1st Previous Next ↓Bottom Just 92nd

AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999 (AUDITED) AND
THREE MONTHS ENDED MARCH 31, 1999 AND 2000 (UNAUDITED)

1. THE COMPANY

On April 26, 2000, Eaton Corporation (Eaton or Parent Company) announced
its plan to restructure its semiconductor equipment operations into an
independent publicly-traded company, Axcelis Technologies, Inc. (Axcelis).
Eaton's semiconductor equipment operations are currently conducted principally
through its direct and indirect wholly-owned subsidiaries, Axcelis Technologies,
Inc. and subsidiaries, Fusion Systems Corporation and High Temperature
Engineering Corporation, Eaton's 50% interest in Sumitomo Eaton Nova
Corporation, a joint venture in Japan with Sumitomo Heavy Industries, Ltd., and
various foreign branches and divisions of other Eaton subsidiaries. Through a
reorganization transaction, Eaton intends to transfer to Axcelis all of the
assets and liabilities of its semiconductor equipment operations not owned by
Axcelis. After completion of the initial public offering, Eaton will own at
least 80.1% of Axcelis' outstanding common stock. Eaton currently plans to
consummate the divestiture of Axcelis approximately six months following the
completion of the initial public offering by distributing all of its shares of
the common stock on a tax-free basis to Eaton shareholders (the distribution
date).

Axcelis includes all of Eaton's operations that manufacture, sell and
service capital equipment used in the production of semiconductors, including
high- and medium- current implanters and high-energy implanters, and other
products, including photostabilizers, ozone and plasma ashers and thermal
processing systems. At the end of 1999, it had approximately 1,800 employees
including 200 temporary employees, primarily located at manufacturing sites in
Beverly and Peabody, Massachusetts and Rockville, Maryland. Axcelis also has
sales and service locations in Germany, the United Kingdom, Taiwan, Singapore,
South Korea, Italy and France. Additionally, it has a 50% ownership interest in
Sumitomo Eaton Nova Corporation (SEN), a joint venture in Japan engaged in the
design, manufacture, sale and service of ion implantation equipment in Japan.

2. BASIS OF PRESENTATION

The combined financial statements include the assets, liabilities, revenues
and expenses of Eaton's semiconductor operations to be included in Axcelis after
the reorganization transaction, based on Eaton's historical amounts. Parent
Company investment represents Eaton's investment in Axcelis.

The statements of combined operations include those expenses originally
recorded by Axcelis or directly charged to it by Eaton. Further, the statements
include an allocation of Eaton's general corporate expenses to reflect the
services provided or benefits received by Axcelis. This allocation is based on
Eaton's internal expense allocation methodology which charges these expenses to
operating locations based both on net working capital, excluding short-term
investments and short-term debt, and on property, plant and equipment -- net.
Management believes this is a reasonable method of allocating these expenses and
is representative of the operating expenses that would have been incurred had
Axcelis operated on a stand-alone basis.

F-8

424B4 93rd Page of 109 TOC 1st Previous Next ↓Bottom Just 93rd
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

combined financial position, operating results and cash flows of Axcelis if it
had been a separate, stand-alone entity during the periods presented or in the
future.

3. ACCOUNTING POLICIES

COMBINATION

The combined financial statements include the accounts of Axcelis, which
includes all of Eaton's semiconductor equipment operations. All significant
intercompany and interunit accounts and transactions have been eliminated. The
equity method is used to account for the 50% investment in SEN.

FOREIGN CURRENCY TRANSLATION

The functional currency for all operations outside the United States is the
local currency. Financial statements for these operations are translated into
United States dollars at year-end exchange rates as to assets and liabilities
and weighted-average exchange rates as to revenues and expenses. The resulting
translation adjustments are recorded in stockholder's net investment in
accumulated other comprehensive income (loss).

CASH AND SHORT-TERM INVESTMENTS

Axcelis participates in Eaton's centralized cash management system. Under
this system, cash receipts are transferred to Eaton and Eaton funds cash
disbursements. Accordingly, the cash and short-term investment balances
presented in the accompanying combined balance sheets do not represent balances
required or generated by operations. The amounts for cash and short-term
investments presented in the combined balance sheet substantially relate to cash
and highly liquid short-term investments maintained for working capital
purposes, primarily at international locations.

For purposes of classification in the statement of combined cash flows, all
short-term investments are considered cash equivalents.

The carrying values of cash and short-term investments in the combined
balance sheets approximated their estimated fair values. The estimated fair
value of these financial instruments was principally based on quoted market
prices.

INVENTORIES

Inventories are carried at lower of cost, determined using the first-in,
first-out (FIFO) method, or market.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization are computed by the straight-line method for
financial statement purposes. The historical cost of buildings is depreciated
over forty years and machinery and equipment principally over three to ten
years. Substantially all goodwill is amortized over fifteen years. Intangible
assets, consisting of developed technology, are amortized over seven years.

Goodwill and other long-lived assets are reviewed for impairment losses
whenever events or changes in circumstances indicate the carrying amount may not
be recoverable. Events or circumstances that would result in an impairment
review primarily include operations reporting

F-9

424B4 94th Page of 109 TOC 1st Previous Next ↓Bottom Just 94th
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

losses or a significant change in the use of an asset. The asset would be
considered impaired when the future net undiscounted cash flows generated by the
asset are less than its carrying value. An impairment loss would be recognized
based on the amount by which the carrying value of the asset exceeds its fair
value.

FINANCIAL INSTRUMENTS

Axcelis has no material financial instruments outstanding at December 31,
1999 used to manage foreign exchange or interest rate risk. In 1998, Statement
of Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities", was issued. This Statement requires all derivatives to
be recognized on the balance sheet at fair value. Axcelis must adopt the
standard by the first quarter of 2001. It expects that the adoption of the
standard will have an immaterial effect on financial position and operating
results, if any.

REVENUE RECOGNITION

Axcelis recognizes sales at the time of shipment of the system to the
customer. The costs of installation at the customer's site are accrued at the
time of shipment. Management believes the customer's post delivery acceptance
provisions and installation process have been established to be routine,
commercially inconsequential and perfunctory because the process is a
replication of the pre-shipment procedures. The majority of Axcelis' systems are
designed and tailored to meet the customer's specifications as outlined in the
contract between the customer and Axcelis. To ensure that the customer's
specifications are satisfied, per contract terms, the systems are tested at
Axcelis' facilities prior to shipment, normally with the customer present, under
conditions that substantially replicate the customer's production environment
and the customer's criteria are confirmed to have been met. Axcelis has never
failed to successfully complete a system installation. Should an installation
not be successfully completed, the contractual provisions do not provide for
forfeiture, refund or other purchase price concession beyond those prescribed by
the provisions of the Uniform Commercial Code applicable generally to such
transactions. Installation is non-complex and does not require specialized
skills, and the related costs are predictable and insignificant to the total
purchase price. Axcelis has a demonstrated history of customer acceptance
subsequent to shipment and installation of these systems.

In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition". SAB No. 101, which was
subsequently amended by Staff Accounting Bulletin No. 101A (collectively
referred to as SAB 101), articulates certain of the SEC staff's views in
applying generally accepted accounting principles to revenue recognition in
financial statements. Axcelis has concluded that its revenue recognition policy
continues to be appropriate and in accordance with generally accepted accounting
principles and SAB 101.

INTEREST EXPENSE

The statements of combined operations do not include an allocation of
interest expense related to Eaton's debt obligations, consistent with Eaton's
internal expense allocation methodology.

INCOME TAXES

Eaton accounts and pays for all United States income taxes. Axcelis'
taxable income (loss) related to its United States operations is included in
Eaton's consolidated income tax returns.

F-10

424B4 95th Page of 109 TOC 1st Previous Next ↓Bottom Just 95th
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Consistent with the terms of the tax sharing agreement with Eaton, the
statements of combined operations include an allocation of Eaton's United States
income taxes (credit) in amounts generally equivalent to the provisions which
would have resulted had it filed separate income tax returns for the years
presented. It has also been allocated United States deferred income taxes based
on the estimated differences between the book and tax basis of its assets and
liabilities. For tax years beginning in 2000, Axcelis will assume the liability
to pay for income taxes attributable to Axcelis' operations in the United
States.

Several of Axcelis' operations outside the United States account and pay
for income taxes related to their operations. For those operations which have
not accounted and paid for income taxes related to their operations, the
statements of combined operations include an allocation of Eaton's foreign
income taxes in amounts generally equivalent to the provisions which would have
resulted had Axcelis filed separate income tax returns for the years presented.
These operations have also been allocated foreign deferred income taxes based on
the estimated differences between the book and tax basis of their assets and
liabilities.

STOCK OPTIONS FOR COMMON SHARES HELD BY AXCELIS EMPLOYEES

Axcelis applies the intrinsic value based method described in Accounting
Principles Board Opinion (APB) No. 25 to account for stock options granted to
employees. Under this method, no compensation expense is recognized on the grant
date, since on that date the option price equals the market price of the
underlying common shares.

NET INCOME (LOSS) PER SHARE

All of Axcelis' outstanding common stock is owned by Eaton. Basic and diluted
net income (loss) per share amounts are computed by dividing the net income
(loss) for the period by the common stock outstanding after the conversion of
the 100 shares of Axcelis common stock held by Eaton into 80 million shares of
common stock as discussed in footnote 19 to the combined financial statements.

Net income (loss) per share amounts do not give effect to any conversion of
Eaton stock options into Axcelis stock options. The actual number of Eaton stock
options to be converted into Axcelis stock options will not be determined until
the individual employee options are converted into Axcelis stock options at the
distribution date. See footnote 12 to the combined financial statements for a
description of how Eaton stock options are expected to be converted into Axcelis
stock options at the distribution date.

UNAUDITED PRO FORMA NET INCOME PER SHARE

Unaudited pro forma basic and diluted net income per share amounts are
calculated based on 80 million shares of common stock outstanding that are owned
by Eaton prior to this offering, plus an additional 14.644 million shares of
common stock. The number of additional shares is calculated by dividing the $300
million previously declared dividend to Eaton, described below, by the initial
public offering price of $22 per share, reduced by the estimated per share
offering expenses.

F-11

424B4 96th Page of 109 TOC 1st Previous Next ↓Bottom Just 96th
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

UNAUDITED PRO FORMA BALANCE SHEET

The unaudited pro forma balance sheet as of March 31, 2000 gives effect to
the $300 million dividend declared on May 3, 2000 to be paid by Axcelis to
Eaton, as though it had been declared and payable as of March 31, 2000.

ESTIMATES

Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions in
certain circumstances that affect amounts reported in the accompanying combined
financial statements and notes. Actual results could differ from these
estimates.

INTERIM FINANCIAL INFORMATION

The financial information as of March 31, 2000 and for the three months
ended March 31, 1999 and 2000 is unaudited and includes all adjustments,
consisting only of normal and recurring accruals, that management considers
necessary for a fair presentation of combined financial position, operating
results and cash flows. Results for the three months ended March 31, 1999 and
2000 are not necessarily indicative of results to be expected for full year 2000
or for any future period.

Subsequent to December 31, 1999, Axcelis' cash receipts and disbursements
processed through Eaton's centralized cash management system in the United
States are being recorded as a receivable from or payable to Eaton. Prior to
January 1, 2000, the majority of these amounts were recorded in Parent Company
investment. As of March 31, 2000, a net amount of $0.9 million was payable to
Eaton for these transactions and is included in "Receivables from Eaton
Corporation" in the Combined Balance Sheet.

4. ACQUISITION OF FUSION SYSTEMS CORPORATION

On August 4, 1997, Fusion Systems Corporation (Fusion) was acquired.
Fusion, which had $85 million of sales in 1996, develops and manufactures dry
strip and photostabilization systems for use within the semiconductor
manufacturing process.

The acquisition was accounted for by the purchase method of accounting and,
accordingly, Axcelis' combined financial statements include the results of
Fusion beginning August 4, 1997. A summary of the estimated fair values of the
assets acquired and liabilities assumed in the acquisition follows (in
thousands):

[Download Table]

Assets acquired............................................. $ 57,172
Liabilities assumed......................................... (30,433)
Intangible assets........................................... 40,000
Goodwill.................................................... 49,813
In-process research & development........................... 85,000
--------
$201,552
========

Goodwill and intangible assets, consisting of developed technology, are
being amortized by the straight-line method for financial statement purposes
over a useful life of fifteen and seven years, respectively.

F-12

424B4 97th Page of 109 TOC 1st Previous Next ↓Bottom Just 97th
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The purchase price allocation included $85 million for purchased in-process
research and development. This amount was expensed at the date of acquisition
because technological feasibility had not been established and no alternative
commercial use had been identified. Therefore, 1997 results include a write-off
of $85 million for purchased in-process research and development, with no income
tax benefit.

Eaton's management was primarily responsible for estimating the fair value
of the purchased in-process research and development. The purchased in-process
research and development was determined based on the income method using a risk
adjusted discount rate of 31% applied to project cash flows. Three groups of
projects comprised over 95% of the total value of purchased in-process research
and development, and are described in more detail below. The nature of the
efforts required to develop the purchased in-process technology into
commercially viable products principally related to the completion of all
planning, designing and testing activities that were necessary to establish that
these products could be produced to meet their design requirements, including
functions, features and technical performance requirements.

Gemini Photostabilizer (GPS) -- This project involved the development of a
300 millimeter photostabilizer and was valued at $22.4 million. This product was
scaled for 300 millimeter wafers and included functions new to photostabilizing.
In order to realize this new technology, product designs had to be configured
and scaled for the larger wafers. At the acquisition date, the greatest risk of
potential failure associated with this project was that it could not be
accomplished given technical and economic constraints. Product completion was
originally expected in late 1998 with an undiscounted cost of completion of
$13.2 million. Development was ultimately completed in the first quarter of 1999
at a cost approximating the estimate, resulting in the sale of the first
prototype.

Gemini Enhanced Strip (GES) -- These projects involved the development of
the next generation enhanced strip products for both 200 millimeter and 300
millimeter wafers and together were valued at $37.4 million. These new products
incorporated various new functions, including targeting applications for 0.25
micron and 0.18 micron geometries. Areas requiring design were the same as those
in the GPS project, with corresponding risks of failure. Product development was
ultimately completed in mid-1999 at an undiscounted cost of completion of $8.5
million, which approximated the original cost estimate.

Gemini Microwave Plasma Asher (GPL) -- These projects involved the
development of the next generation of plasma ashers for 200 millimeter and 300
millimeter wafers and together were valued at $22.8 million. These new products
incorporated substantial changes to enable targeting applications for 0.25
micron and 0.18 micron geometries. The primary risk related to these projects
involved the achievement of tightly controlled process parameters, which was
considered difficult due to the smaller line widths targeted with these
projects. Product development was originally planned for mid-1998, and was
completed by the fourth quarter of 1998 at an undiscounted cost of completion of
$2.5 million, which approximated the original cost estimate.

5. RESTRUCTURING CHARGES

Due to the decline of the semiconductor capital equipment market in 1998,
Axcelis took actions in the third quarter of 1998 to restructure its business
and recorded restructuring charges of $42.4 million ($27.5 million aftertax).

F-13

424B4 98th Page of 109 TOC 1st Previous Next ↓Bottom Just 98th
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Several specific actions comprised the overall restructuring efforts,
including workforce reductions, asset write-downs and other restructuring
actions. The charge for workforce reductions, primarily severance and other
related employee benefits, included the termination of approximately 475
employees, primarily manufacturing personnel. Approximately half of the
workforce reductions related to the closing of the Austin, Texas plant. The
charge for asset write-downs included $17.4 million for inventory, which was
written down to estimated market value, and is included in cost of products
sold. The ion implantation equipment manufacturing facility in Austin, Texas was
closed and production was transferred to Beverly, Massachusetts. The write-down
of this plant to estimated selling price represented approximately $2.1 million
of the restructuring charge. The phase-out of production was concluded in the
first quarter of 1999. Further, the Thermal Processing Systems product line,
located in Peabody, Massachusetts, was merged into the Fusion Systems division
in Rockville, Maryland, and the Flat Panel Equipment product line was merged
into the Implant Systems division in Beverly, Massachusetts.

A summary of the various components of the restructuring liabilities
follows (in thousands of dollars):

[Enlarge/Download Table]

INVENTORY &
WORKFORCE REDUCTIONS OTHER ASSET PLANT
--------------------- WRITE- CONSOLIDATION
EMPLOYEES DOLLARS DOWNS & OTHER TOTAL
---------- -------- ----------- ------------- --------

1998 charges.................... 475 $ 7,054 $ 30,296 $ 5,002 $ 42,352
Utilized in 1998................ (300) (3,493) (30,296) (1,503) (35,292)
---- ------- -------- ------- --------
Balance remaining at
December 31, 1998............. 175 3,561 0 3,499 7,060
Utilized in 1999................ (175) (3,561) (3,499) (7,060)
---- ------- -------- ------- --------
Balance remaining at
December 31, 1999............. 0 $ 0 $ 0 $ 0 $ 0
==== ======= ======== ======= ========

6. ACCOUNTS RECEIVABLE

The components of accounts receivable follow (in thousands):

[Download Table]

DECEMBER 31,
-------------------- MARCH 31,
1998 1999 2000
-------- -------- -----------
(UNAUDITED)

Trade.......................................... $ 41,204 $100,137 $114,512
Sumitomo Eaton Nova Corporation................ 3,358 3,246 4,949
-------- -------- --------
44,562 103,383 119,461
Allowance for doubtful accounts................ (2,028) (2,048) (2,166)
-------- -------- --------
$ 42,534 $101,335 $117,295
======== ======== ========

F-14

424B4 99th Page of 109 TOC 1st Previous Next ↓Bottom Just 99th
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. INVENTORIES

The components of inventories follow (in thousands):

[Download Table]

DECEMBER 31,
-------------------- MARCH 31,
1998 1999 2000
-------- -------- -----------
(UNAUDITED)

Raw materials.................................. $ 47,104 $ 54,146 $ 61,220
Work in process................................ 9,876 19,229 25,473
Finished goods................................. 20,470 20,800 22,853
-------- -------- --------
77,450 94,175 109,546
Inventory allowances........................... (10,664) (10,849) (11,674)
-------- -------- --------
$ 66,786 $ 83,326 $ 97,872
======== ======== ========

8. PROPERTY, PLANT & EQUIPMENT

The components of property, plant and equipment follow (in thousands):

[Download Table]

DECEMBER 31,
-------------------- MARCH 31,
1998 1999 2000
-------- -------- -----------
(UNAUDITED)

Land & buildings............................... $ 52,524 $ 59,862 $ 60,871
Machinery & equipment.......................... 42,441 48,914 52,395
Construction in process........................ 8,625 9,662 6,055
-------- -------- --------
103,590 118,438 119,321
Accumulated depreciation....................... (39,027) (44,629) (47,100)
-------- -------- --------
$ 64,563 $ 73,809 $ 72,221
======== ======== ========

Property, plant and equipment includes a plant in Austin, Texas which
became idle at the end of the first quarter of 1999 due to the restructuring of
Axcelis initiated in 1998. This plant is recorded at the estimated selling price
after a $2.1 million writedown.

9. GOODWILL & OTHER INTANGIBLE ASSETS

The components of goodwill and intangible assets follow (in thousands):

[Download Table]

DECEMBER 31,
------------------- MARCH 31,
1998 1999 2000
------- -------- -----------
(UNAUDITED)

Goodwill........................................ $55,904 $ 55,904 $ 55,904
Accumulated amortization........................ (5,334) (8,898) (9,790)
------- -------- --------
$50,570 $ 47,006 $ 46,114
======= ======== ========
Intangible assets............................... $40,000 $ 40,000 $ 40,000
Accumulated amortization........................ (8,095) (13,810) (15,238)
------- -------- --------
$31,905 $ 26,190 $ 24,762
======= ======== ========

F-15

424B4 100th Page of 109 TOC 1st Previous Next ↓Bottom Just 100th
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

10. RETIREMENT BENEFIT PLANS

The components of recorded liabilities for pension and other employee
benefits at December 31 follow (in thousands):

[Download Table]

1998 1999
------ ------

Pensions:
United States........................................ $ 444 $ 648
Foreign.............................................. 2,341 2,563
Postretirement benefits other than pensions............ 1,115 1,357
------ ------
$3,900 $4,568
====== ======

Eaton sponsors a Share Purchase and Investment Plan (401k plan) for its
United States operations under which eligible participating employees may choose
to contribute up to 17% of their eligible compensation to the Plan. Eaton
matches employee contributions up to 6% of the participant's eligible
compensation as limited by United States income tax regulations. The matching
contribution percentage, which is determined each quarter based on net income
per Eaton Common Share -- basic, ranges from 25% to 100% of a participant's
contribution and is invested in Eaton Common Shares. Expense related to the 401k
plan match (in millions) was $2.5 in 1997, $3.6 in 1998 and $2.0 in 1999. After
the initial public offering, Axcelis intends to establish a separate 401k plan
for its employees.

Beginning in 1997, the majority of Axcelis' United States employees have
been covered by a non-contributory defined benefit pension plan of Eaton. The
plan provides a benefit that is based on an employee's accumulated pay, as
defined in the plan. Eaton's policy is to fund at least the minimum required by
applicable regulations. Expense for participation in the pension plan (in
millions) was $2.4 in 1997 and 1998 and $2.2 in 1999.

Certain of Axcelis' employees at foreign operations, primarily Germany, are
covered by non-contributory defined benefit pension plans of Eaton. Expense for
participation in these plans (in millions) was $0.3 in 1997, $0.6 in 1998 and
$0.5 in 1999.

After the initial public offering, Axcelis intends to establish separate
pension plans for its employees.

Axcelis also provides postretirement benefits other than pensions,
primarily long-term disability benefits, to a limited number of its United
States employees. Expense related to these benefits (in millions) was $0.3 in
1997 and 1998 and $0.4 in 1999.

11. EQUITY

Axcelis has authorized common stock of 1,000 shares with a par value of
$1.00 per share; 100 shares are outstanding and owned by Eaton. As described in
Note 19, in June 2000, the Axcelis Board of Directors authorized the conversion
of the 100 shares of Axcelis common stock owned by Eaton into 80 million shares
and increased the number of authorized shares to 300 million with a par value of
$0.001 per share.

12. STOCK OPTIONS FOR EATON COMMON SHARES HELD BY AXCELIS EMPLOYEES

Eaton has stock option plans under which Axcelis employees have been
granted options to purchase Eaton Common Shares at prices equal to fair market
value as of date of grant.

F-16

424B4 101st Page of 109 TOC 1st Previous Next ↓Bottom Just 101st
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of Eaton stock option activity for options held by Axcelis
employees follows:

[Enlarge/Download Table]

1997 1998 1999
------------------- ------------------- -------------------
AVERAGE AVERAGE AVERAGE
PRICE PER PRICE PER PRICE PER
SHARE SHARES SHARE SHARES SHARE SHARES
--------- ------- --------- ------- --------- -------

Outstanding, January 1........ $53.07 65,050 $67.21 192,451 $74.03 305,093
Granted....................... 73.31 132,850 84.76 115,941 71.41 162,625
Exercised..................... 46.98 5,449 53.44 3,299 56.60 8,211
------- ------- -------
Outstanding, December 31...... $67.21 192,451 $74.03 305,093 $73.41 459,507
======= ======= =======
Exercisable, December 31...... $51.21 38,730 $63.08 104,104 $65.06 116,710

Historically, the majority of these options vest ratably during the
three-year period following the date of grant and expire ten years from the date
of grant. Stock options granted in 1997 and 1998 included 105,000 and 34,000,
respectively, of special performance-vested options in lieu of the more standard
options. These options become exercisable when Eaton achieves certain net income
and Eaton Common Share price targets. If these targets are not achieved, these
options become exercisable ten days before the expiration of their ten-year
term. Half of the options granted in 1997 became exercisable during 1997 when
the initial Eaton Common Share price target of $85 was achieved.

The following table summarizes information about Eaton stock options held
by Axcelis employees outstanding at December 31, 1999:

[Enlarge/Download Table]

WEIGHTED-AVERAGE WEIGHTED-AVERAGE
RANGE OF EXERCISE NUMBER REMAINING CONTRACTUAL EXERCISE PRICE
PRICE PER SHARE OUTSTANDING LIFE (YEARS) PER SHARE
----------------- ----------- --------------------- ----------------

$31.50 -- $49.99......................... 8,500 3.8 $43.27
$50.00 -- $59.99......................... 31,183 5.8 53.63
$60.00 -- $79.99......................... 314,883 8.2 71.16
$80.00 -- $89.91......................... 104,941 8.1 88.50

The following table summarizes information about Eaton stock options held
by Axcelis employees that are exercisable at December 31, 1999:

[Enlarge/Download Table]

WEIGHTED-AVERAGE
RANGE OF EXERCISE NUMBER EXERCISE PRICE
PRICE PER SHARE EXERCISABLE PER SHARE
----------------- ----------- ----------------

$31.50 -- $49.99............................................ 8,500 $43.27
$50.00 -- $59.99............................................ 31,183 53.63
$60.00 -- $79.99............................................ 70,069 70.44
$80.00 -- $89.91............................................ 6,958 88.62

If the financial reporting consequences are not materially adverse, Axcelis
intends to make equitable arrangements with its employees regarding the value of
their Eaton options if and when Eaton disposes of substantially all of its
interest in Axcelis. If Eaton disposes of its interest in a distribution of
shares to Eaton shareholders, Axcelis intends to assume substantially all of the
Eaton options held by Axcelis employees on the date of the distribution. These
assumed options will convert at the distribution by the granting of options to
Axcelis employees to purchase Axcelis common stock and cancelation of their
rights to acquire Eaton shares. The conversion is expected to be done in such a
manner that (1) the aggregate intrinsic value of the options

F-17

424B4 102nd Page of 109 TOC 1st Previous Next ↓Bottom Just 102nd
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

immediately before and after the exchange are the same, (2) the ratio of the
exercise price per option to the market value per share is not reduced, and (3)
the vesting provisions and option period of the replacement Axcelis options do
not accelerate or extend the original vesting terms and option period of the
Eaton options. Performance vesting provisions will change to focus on Axcelis'
performance, as opposed to Eaton's performance. No option will be exercisable,
however, if the effect of that exercise would prevent Axcelis from filing a
consolidated federal income tax return with Eaton, or if the exercise would
cause Eaton not to be in control of Axcelis for purposes of Section 368(c) of
the Internal Revenue Code. If Eaton disposes of its interest in any other
transaction, Axcelis intends to make equitable arrangements to preserve the
economic value of substantially all Eaton options held by Axcelis employees.

As permitted under Statement of Financial Accounting Standard (SFAS) No.
123, Accounting for Stock-Based Compensation, Axcelis has elected to follow
Accounting Principles Board Opinion (APB) No. 25 and related interpretations in
accounting for stock-based awards to employees. Under APB No. 25, it recognizes
no compensation expense with respect to such awards, since on the date the
options were granted, the option price equaled the market value of Eaton Common
Shares.

Pro forma information regarding net income (loss) is required by SFAS No.
123. This information is required to be determined as if Axcelis had accounted
for stock-based awards to its employees granted subsequent to 1995 under the
fair value method of that Statement. The fair value of the options granted has
been estimated at the date of grant using the Black-Scholes option pricing model
with Eaton's input assumptions as follows:

[Enlarge/Download Table]

1997 1998 1999
------------- ------------- -------------

Dividend yield.......................... 3% 3% 3%
Expected volatility..................... 22% 22% 21%
Risk-free interest rate................. 6.1% to 6.3% 4.7% to 5.7% 4.7%
Expected option life in years........... 4, 5 or 6 4, 5 or 6 4 or 5
Weighted average fair value per share of
options granted during the year....... $17.16 $17.57 $12.56

For purposes of pro forma disclosures under SFAS No. 123, the estimated
fair value of the options is assumed to be amortized to expense over the
options' vesting period. Pro forma information related to the Eaton options held
by Axcelis employees follows (in thousands):

[Download Table]

1997 1998 1999
-------- -------- -------

Net income (loss)
As reported........................................ $(61,467) $(82,047) $14,428
Assuming fair value method......................... (62,383) (82,665) 13,473
Basic and diluted net income (loss) per share
As reported........................................ $(.77) $(1.03) $.18
Assuming fair value method......................... (.78) (1.03) .17

F-18

424B4 103rd Page of 109 TOC 1st Previous Next ↓Bottom Just 103rd
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

13. INCOME TAXES

Income (loss) before income taxes for the years ended December 31 follows
(in thousands):

[Download Table]

1997 1998 1999
-------- --------- -------

United States...................................... $(68,784) $(132,446) $12,999
Foreign............................................ 4,137 1,441 5,216
Equity income (loss) of Sumitomo Eaton Nova
Corporation...................................... 3,283 (2,132) 1,338
-------- --------- -------
$(61,364) $(133,137) $19,553
======== ========= =======

Income taxes (credit) for the years ended December 31 follows (in
thousands):

[Download Table]

1997 1998 1999
------- -------- -------

Current:
United States
Federal......................................... $(3,298) $(34,469) $ 4,150
State........................................... (1,277) (5,809) 1,883
Foreign............................................ 2,168 1,253 1,850
------- -------- -------
(2,407) (39,025) 7,883
Deferred:
United States...................................... 2,607 (11,910) (2,211)
Foreign............................................ (97) (155) (547)
------- -------- -------
2,510 (12,065) (2,758)
------- -------- -------
$ 103 $(51,090) $ 5,125
======= ======== =======

F-19

424B4 104th Page of 109 TOC 1st Previous Next ↓Bottom Just 104th
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Reconciliations of income taxes (credit) at the United States Federal
statutory rate to the effective income tax rate for the years ended December 31
follow (in thousands):

[Download Table]

1999
1997 1998 ----------------
RATE RATE AMOUNT RATE
---- ---- ------ ----

Income taxes (credit) at the United States
statutory rate............................... (35.0)% (35.0)% $ 6,843 35.0%
Write-off of purchased in-process research &
development.................................. 48.5
State taxes, net of federal income tax
benefit...................................... (1.4) (2.9) 1,224 6.3
Amortization of goodwill....................... 0.9 1.0 1,248 6.4
Current and prior years' foreign sales
corporation benefit.......................... (8.8) (0.2) (300) (1.5)
Current and prior years' credit for increasing
research activities.......................... (2.7) (2.8) (3,100) (15.9)
Foreign income tax rate differentials.......... 1.0 0.4 (522) (2.7)
Foreign tax credit............................. (3.9) (30) (0.2)
Income tax rate differential related to
Sumitomo Eaton Nova Corporation.............. (1.9) 0.6 (468) (2.4)
Other - net.................................... 3.5 0.5 230 1.2
----- ----- ------- -----
0.2% (38.4)% $ 5,125 26.2%
===== ===== ======= =====

Significant components of current and long-term deferred income taxes at
December 31 follow (in thousands):

[Download Table]

CURRENT LONG-TERM
ASSETS LIABILITIES
------- -----------

1998
Inventories............................................ $18,094
Accrued warranty....................................... 4,791
Accrued vacation....................................... 1,201
Restructuring accruals................................. 2,471
Depreciation of property, plant & equipment............ $ (2,168)
Amortization of intangible assets...................... (11,167)
Other items............................................ 4,260 2,558
------- --------
$30,817 $(10,777)
======= ========
1999
Inventories............................................ $25,048
Accrued warranty....................................... 5,267
Accrued vacation....................................... 1,061
Depreciation of property, plant & equipment............ $ (3,229)
Amortization of intangible assets...................... (9,167)
Other items............................................ 1,660 2,158
------- --------
$33,036 $(10,238)
======= ========

F-20

424B4 105th Page of 109 TOC 1st Previous Next ↓Bottom Just 105th
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

No provision has been made for income taxes on undistributed earnings of
operations outside the United States of $32.5 million at December 31, 1999,
which includes $23.2 million for Sumitomo Eaton Nova Corporation, since the
earnings retained have been reinvested by the operations. If distributed, such
remitted earnings would be subject to withholding taxes but substantially free
of United States income taxes.

14. LEASE COMMITMENTS

Minimum rental commitments under noncancelable operating leases, which
expire at various dates and in most cases contain renewal options, are as
follows (in millions): 2000, $9.6; 2001, $9.2; 2002, $8.8; 2003, $7.6; and 2004,
$6.3.

Rental expense in 1997, 1998 and 1999 (in millions) was $3.4, $5.6 and
$4.8, respectively.

15. BUSINESS SEGMENT AND GEOGRAPHIC REGION INFORMATION

Axcelis operates in only one business segment, which is the manufacture of
capital equipment for the semiconductor manufacturing industry. The principal
market for semiconductor manufacturing equipment is semiconductor manufacturers.
Substantially all sales are made directly by Axcelis to customers located in the
United States, Europe and Asia Pacific.

Axcelis' ion implantation systems product line includes high and medium
current implanters and high energy implanters and services. Other products
include photostabilizers, ozone and plasma ashers, thermal processing systems
and other products and services. Net sales by product line follow (in
thousands):

[Download Table]

1997 1998 1999
-------- -------- --------

Ion implantation systems & services............ $415,164 $219,927 $322,002
Other products & services...................... 44,846 45,782 75,265
-------- -------- --------
$460,010 $265,709 $397,267
======== ======== ========

F-21

424B4 106th Page of 109 TOC 1st Previous Next ↓Bottom Just 106th
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Net sales and long-lived assets by geographic region based on the physical
location of the operation recording the sale or the asset, follow (in
thousands):

[Download Table]

NET LONG-LIVED
SALES ASSETS*
-------- ----------

1997
United States.......................................... $409,405 $64,202
Europe................................................. 34,581 1,436
Asia Pacific........................................... 16,024 1,132
-------- -------
$460,010 $66,770
======== =======
1998
United States.......................................... $214,174 $62,321
Europe................................................. 40,254 1,192
Asia Pacific........................................... 11,281 1,050
-------- -------
$265,709 $64,563
======== =======
1999
United States.......................................... $343,345 $71,740
Europe................................................. 35,482 752
Asia Pacific........................................... 18,440 1,317
-------- -------
$397,267 $73,809
======== =======

---------------
* Long-lived assets consist of property, plant, and equipment -- net.

Sales from United States operations to customers in foreign countries (in
thousands) were $204,034 in 1997, $79,791 in 1998 and $158,523 in 1999 (44.4% of
net sales in 1997, 30.0% in 1998 and 39.9% in 1999).

16. SIGNIFICANT CUSTOMERS

No single customer represented more than 10% of net sales in 1997 or 1998.
Three customers individually accounted for 15.9%, 10.6% and 10.5% of net sales
in 1999.

17. SUMITOMO EATON NOVA CORPORATION

Sumitomo Eaton Nova Corporation (SEN) was established in 1982 under the
Commercial Code of Japan and is owned equally by Sumitomo Heavy Industries,
Ltd., a Japanese corporation, and Axcelis. SEN designs, manufactures, sells and
services ion implantation equipment in Japan under a license agreement with
Axcelis. Summary financial information follows (in thousands):

F-22

424B4 107th Page of 109 TOC 1st Previous Next ↓Bottom Just 107th
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

[Enlarge/Download Table]

1997 1998 1999
-------- -------- --------

Twelve months ended November 30:
Net sales.......................................... $119,130 $ 92,740 $110,722
Income from operations............................. 14,314 (5,581) 5,005
Net income......................................... 6,566 (4,264) 2,676
November 30:
Current assets..................................... 89,426 157,591
Total assets....................................... 149,139 211,390
Current liabilities................................ 102,085 150,087
Shareholders' equity............................... 46,676 60,873

The fiscal year end for SEN is March 31. The combined statements of operations
for Axcelis include the results of SEN for the twelve-month periods ended
November 30, which represents a one-month lag. The information above has been
presented as of and for the twelve months ended November 30 to conform to
Axcelis' equity accounting for SEN.

A summary of Axcelis' transactions with SEN follows (in thousands):

[Download Table]

1997 1998 1999
------ ------- ------

Net sales to SEN....................................... $9,512 $ 6,401 $6,660
Royalty income from SEN................................ 6,215 4,036 3,838
Dividends received..................................... 1,729 720
Axcelis' equity in income (loss) of SEN................ 3,283 (2,132) 1,338
Accounts receivable at December 31 from SEN............ 5,364 3,358 3,246

18. TRANSACTIONS WITH EATON CORPORATION

The statements of combined operations include those expenses originally
recorded by Axcelis or directly charged to Axcelis by Eaton. Further, the
statements include an allocation of Eaton's general corporate expenses to
reflect the services provided or benefits received by Axcelis. Such allocated
expenses were (in millions) $11.8 in 1997, $14.8 in 1998 and $15.0 in 1999 and
are included in "General & Administrative Expense" in the Statements of Combined
Operations. This allocation is based on Eaton's internal expense allocation
methodology which charges these expenses to operating locations based both on
net working capital, excluding short-term investments and short-term debt, and
on property, plant, and equipment - net. Management believes this is a
reasonable method of allocating these expenses, and are representative of the
operating expenses that would have been incurred had Axcelis operated on a
stand-alone basis.

Prior to the initial public offering, Axcelis will enter into agreements
with Eaton providing for the reorganization of Eaton's semiconductor equipment
operations and separation of this business from Eaton. These agreements
generally will provide for, among other things, the transfer from Eaton to
Axcelis of assets and liabilities relating to this business, and various interim
and ongoing relationships between Axcelis and Eaton.

19. SUBSEQUENT EVENTS

During June 2000, Axcelis' Board of Directors and sole stockholder approved
the following:

- The conversion of 100 shares of Axcelis common stock owned by Eaton
into 80 million shares. All share and per share amounts in these
combined financial statements have been adjusted to give effect to the
conversion of shares.

F-23

424B4 108th Page of 109 TOC 1st Previous Next ↓Bottom Just 108th
AXCELIS TECHNOLOGIES, INC.
(WHOLLY-OWNED SUBSIDIARY OF EATON CORPORATION)

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

- An increase in the authorized number of shares of common stock to 300
million, with a par value of $0.001 per share, and the creation of
preferred stock with 30 million shares authorized, with a par value of
$0.001 per share.

- Adoption of the 2000 Stock Plan for which 18.5 million shares of
common stock have been reserved for future issuance.

- Adoption of the 2000 Employee Stock Purchase Plan for which 2.5
million shares of common stock have been reserved for future issuance.

F-24

424B4 Last Page of 109 TOC 1st Previous Next ↓Bottom Just 109th

------------------------------------------------------
------------------------------------------------------

No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

-------------------------

TABLE OF CONTENTS

[Download Table]

Page
----

Prospectus Summary....................... 3
Risk Factors............................. 9
Special Note Regarding Forward-Looking
Statements............................. 19
Our Separation from Eaton................ 20
Use of Proceeds.......................... 22
Dividend Policy.......................... 22
Capitalization........................... 23
Dilution................................. 24
Selected Historical Combined Financial
Data................................... 25
Management's Discussion and Analysis..... 27
Business................................. 40
Management............................... 55
Arrangements with Eaton.................. 66
Principal Stockholder.................... 74
Description of Capital Stock............. 75
Shares Eligible for Future Sale.......... 77
United States Federal Tax Considerations
to Non-United States Holders........... 79
Underwriting............................. 82
Validity of Common Stock................. 84
Experts.................................. 84
Where You Can Find More Information...... 84
Index to Combined Financial Statements... F-1

-------------------------

Through and including August 4, 2000 (the 25th day after the date of this
prospectus), all dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to a dealer's obligation to deliver a prospectus when acting
as an underwriter and with respect to an unsold allotment or subscription.
------------------------------------------------------
------------------------------------------------------

------------------------------------------------------
------------------------------------------------------
15,500,000 Shares

AXCELIS TECHNOLOGIES, INC.
Common Stock
-------------------------

Axcelis Technologies, Inc. Logo
-------------------------
GOLDMAN, SACHS & CO.

MORGAN STANLEY DEAN WITTER

LEHMAN BROTHERS

SALOMON SMITH BARNEY

Representatives of the Underwriters
------------------------------------------------------
------------------------------------------------------

424B4	1st Page of 109	TOC	↑Top	Previous	Next	↓Bottom	Just 1st

424B4	2nd Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 2nd

424B4	3rd Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 3rd

424B4	4th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 4th

424B4	5th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 5th

424B4	6th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 6th

424B4	7th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 7th

424B4	8th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 8th

424B4	9th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 9th

424B4	10th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 10th

424B4	11th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 11th

424B4	12th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 12th

424B4	13th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 13th

424B4	14th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 14th

424B4	15th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 15th

424B4	16th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 16th

424B4	17th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 17th

424B4	18th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 18th

424B4	19th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 19th

424B4	20th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 20th

424B4	21st Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 21st

424B4	22nd Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 22nd

424B4	23rd Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 23rd

424B4	24th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 24th

424B4	25th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 25th

424B4	26th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 26th

424B4	27th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 27th

424B4	28th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 28th

424B4	29th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 29th

424B4	30th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 30th

424B4	31st Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 31st

424B4	32nd Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 32nd

424B4	33rd Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 33rd

424B4	34th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 34th

424B4	35th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 35th

424B4	36th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 36th

424B4	37th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 37th

424B4	38th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 38th

424B4	39th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 39th

424B4	40th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 40th

424B4	41st Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 41st

424B4	42nd Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 42nd

424B4	43rd Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 43rd

424B4	44th Page of 109	TOC	1st	Previous	Next	↓Bottom	Just 44th

Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘424B4’ Filing	Date	First	Last	Other Filings

	12/31/04	11	49	10-K, 10-K/A, 4
	6/30/03	70		10-K/A, 10-Q, 4
	6/30/02	65		10-Q
	1/1/01	81
	12/31/00	79	80	10-K, 5/A
	11/1/00	78	83
	8/4/00	109
	8/1/00	56	58
	7/31/00	56
	7/14/00	1
Filed on:	7/11/00
	7/10/00	1	61
	6/30/00	4	72	10-Q, 8-A12G, S-1/A
	6/22/00	52
	6/14/00	23	86
	6/13/00	62
	6/12/00	62	64
	5/31/00	29	68
	5/18/00	8	53
	5/3/00	4	96
	5/1/00	61
	4/26/00	4	92
	3/31/00	6	96
	2/3/00	13	52
	1/31/00	59
	1/1/00	29	96
	12/31/99	6	105
	3/31/99	6	96
	12/31/98	6	98
	12/31/97	6	92
	8/4/97	8	96
	1/1/97	90
	12/31/96	6	25
	12/31/95	6	25
				List all Filings

↑Top

Filing Submission 0000950128-00-000971 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Axcelis Technologies Inc – IPO: ‘424B4’ on 7/11/00

On: Tuesday, 7/11/00, at 2:16pm ET · Accession #: 950128-0-971 · File #: 333-36330

Initial Public Offering (IPO): Prospectus — Rule 424(b)(4)Filing Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Initial Public Offering (IPO): Prospectus — Rule 424(b)(4)
Filing Table of Contents