Date of Report (Date of earliest event reported): January 28, 2004


Axcelis Technologies, Inc.

(Exact name of registrant as specified in charter)







(State or other jurisdiction of incorporation)


(Commission File Number)


(IRS Employer Identification No.)


108 Cherry Hill Drive, Beverly, Massachusetts



(Address of principal executive offices)


(Zip Code)


Registrant’s telephone number, including area code: (978) 787-4000



Former address: 55 Cherry Hill Drive, Beverly, MA 01915

(Former name or former address, if changed since last report)



Item 12.    Disclosure of Results of Operations and Financial Condition.


On January 28, 2004, Axcelis Technologies, Inc. (the "Company") issued a press release regarding its financial results for the quarter ended December 31, 2003. The Company's press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.

The information in this Current Report on Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by refernce in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.





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


Date: January 28, 2004


Axcelis Technologies, Inc.






Stephen G. Bassett

Chief Financial Officer




Exhibit No.





Press release dated January 28, 2004

Company Contact: Investor Contact: Agency Contact:
Maureen Hart Mark Namaroff Stacy Grisinger
Axcelis Technologies, Inc. Axcelis Technologies, Inc. Axcelis Technologies, Inc.
Tel: (978) 787-4266 Tel: (978) 787-4000 Tel:(617) 638-0022
Fax: (978) 787-4275 Fax: (978) 787-9133 Fax: (617) 638-0033

Strong Market Growth and Financial Leverage Lead to Improved Profitability

Beverly, MA, January 28, 2004 -- Axcelis Technologies, Inc. (NASDAQ: ACLS) today announced financial results for its fourth quarter ended December 31, 2003. Highlights for the period include:

1.    The company achieved net income of $3.3 million ($0.03 per diluted share) for the quarter on reported revenues of $95.9 million.

2.   Gross margins increased to 37.3% on higher volume, stabilized pricing, and improved warranty cost performance of our 300 mm tools.

3.   Systems bookings during the fourth quarter increased 44% sequentially and the company ended the year with a systems backlog of $97.7 million, up 28% from the close of the prior quarter.

Mary Puma, president and Chief Executive Officer stated, "I am proud to say that Axcelis performed beyond our original expectations for the quarter. Revenue in the fourth quarter was up 63% sequentially as a result of continued customer demand for our leading edge technology and long awaited capacity additions. The fact that we also achieved profitability is a testament to the financial leverage that has resulted from the strong execution of our cost reduction strategy this past year."

Puma continued, "We expect increasing profitability in 2004 as the market continues to improve. Our visibility is the best it has been in over three years with delivery slots being booked into the third quarter. We anticipate revenues to grow sequentially at least through the first half of the year. At this point we believe that the market will be robust for the remainder of 2004."

Worldwide revenues for the fourth quarter, including revenues of the Company's 50% owned joint venture in Japan, Sumitomo Eaton Nova Corporation ("SEN"), were $158.2 million and net revenues (excluding SEN revenues) for the fourth quarter were $95.9 million, an increase of 63% compared with the third quarter of 2003 and 46% compared with the fourth quarter of the prior year. Net income for the quarter was $3.3 million ($0.03 per diluted share) compared with a net loss of $31.9 million ($0.32 per share) the third quarter of 2003 and a net loss of $6.8 million ($0.07 per share) for the corresponding quarter of 2002.

For the full year 2003, worldwide revenues, including revenues of SEN, were $486.2 million compared with worldwide revenues of $448.3 million in 2002. Net revenues, excluding SEN revenues, were $322.0 million compared with $309.7 million in 2002. Net loss for the year 2003 was $113.9 million ($1.16 per diluted share) including the effect of a non-cash charge to income tax expense of $69.7 million ($0.70 per share) recorded in the second quarter and restructuring costs of $4.9 million ($0.05 per share) for severance and other benefits associated with the Company's reduction in force action taken in the third quarter of 2003. Net loss for the year 2002 was $26.2 million ($0.27 per share).

Axcelis believes that the information regarding the aggregate quarterly shipments of SEN, a 50% owned unconsolidated subsidiary of Axcelis, combined with Axcelis' own sales for the quarter, is useful to investors. SEN's ion implant products are covered by a license from Axcelis and therefore the combined revenue of the two companies indicates the full market penetration of Axcelis' technology.

First Quarter 2004 Outlook

Worldwide revenue (including SEN) is expected to be $185 million to $195 million. Net revenue (excluding SEN) is expected to be in the range of $120 to $127 million on shipments of $124 to $131 million. Gross margins are expected in the mid 30% range. Contribution from SEN is expected to approximate $6.0 to $7.0 million. Net income is expected to be $7.0 to $10.0 million ($0.07 to $0.10 per share). Cash outflow is expected to be in the range of $5.0 to $10.0 million required for working capital.

Fourth Quarter Detail


Shipments for the fourth quarter on a worldwide basis, including SEN, totaled $156.8 million with net shipments, excluding SEN, totaling $105.2 million. Worldwide shipments were up 25% from the third quarter and net shipments were up 66%.

Service revenue (service contracts, spare parts and consumables) was $35.7 million for the quarter, up 16% from the third quarter driven by higher utilization rates in our customer's factories. Geographically, systems shipments (excluding SEN) were as follows: Asia 82%, Europe 14% and North America 4% with Taiwan making up the largest percentage of shipments (26%). Including SEN, 89% of worldwide systems shipments were to Asia, with 43% of shipments to Japan, indicating that strength in the Japanese market continued to be a key driver during the quarter.

The ion implantation business accounted for 70% of total shipments in the fourth quarter while the complementary products (RTP, Dry Strip and Photostabilization) accounted for 30%. For the calendar year 2003 year the ion implantation business accounted for 74% of shipments while RTP, Dry Strip and Photostabilization accounted for the remaining 26%. During the quarter, 300 mm tools represented a larger portion of total shipments at 47% compared with the third quarter at 19%. For the year, 300 mm tools represented 35% of total shipments where 200 mm represented 65%.

Orders and Backlog

Net orders (systems and service), excluding SEN, received for the fourth quarter totaled $126 million, up 35% from the third quarter of 2003. System bookings alone totaled $90.2 million, up 44% from third quarter. Worldwide orders, including SEN, totaled $197.4 million, up 22% compared with the third quarter.

Geographically, system orders were split as follows: Asia 75%, Europe 10% and North America 15%. The split in orders received from Memory and Logic manufacturers (IDM and Foundry) was 50/50 as logic becomes a larger portion of the new business looking into 2004. Book to bill ratio for the quarter was 1.30, exceeding the recently announced industry book to bill ratio for front-end equipment of 1.20.

Backlog plus deferred systems revenue for the quarter ended at $111.3 million, an increase of 38% since the end of the third quarter of 2003. Reported backlog consists of systems only (e.g. excluding service contracts) that are generally scheduled to ship within 6 months.

Gross Margin

Gross margin for the quarter was 37.3% as compared with 24% in our third quarter. The improvement in gross margin was attributable to a higher level of factory absorption driven by higher volume and an adjustment of approximately $2.1 million to lower warranty costs associated with our 300 mm tools.

Operating Expenses

Total operating expenses for the fourth quarter (excluding restructuring costs and amortization of intangible assets) were $36.2 million, down 7% sequentially from the third quarter primarily due the benefit associated with the restructuring actions taken in the third quarter. SG&A expense decreased 7% to $21.3 million and R&D expense decreased 8% to $14.9 million.

SEN Contribution

Contribution from SEN (royalties and Axcelis' 50% share of net income) for the fourth quarter was $7.1 million. The Japanese market continues to remain strong driven by consumer electronics spending.

Balance Sheet

Axcelis ended the year with $114.6 million in cash, cash equivalents and short-term investments compared with $115.2 million in cash and equivalents at the end of the third quarter. Net cash outflow of $0.6 million related to the timing of customer receipts due at the end of the quarter.

Fourth Quarter 2003 Earnings Conference Call

Please join us for our fourth quarter conference call on January 28, 2004 at 5:00 pm EST. The call will be available to interested listeners via an audio webcast that can be accessed through Axcelis' home page at, or by dialing 1-800-482-9816 (1-719-457-2732 outside North America). Participants calling into the conference call will be requested to provide the company name: Axcelis Technologies, the conference leader: Mark Namaroff, and pass code: Axcelis Q4. A telephone replay will be available from 8:00 pm EST on January 28, 2004 until 11.59 pm EST on February 4, 2004. Dial 1-888-203-1112 (1-719-457-0820 outside North America), and enter conference ID code #305525. A webcast replay will be available from 8:00 pm EST on January 28, 2004 until 5:00 pm EST February 27, 2004.

2004 Annual Shareholders Meeting

The Company's 2004 annual meeting of stockholders is currently scheduled for April 29, 2004. Since this date is more than 30 days prior to the anniversary of the Company's 2003 annual meeting of stockholders, the deadline for timely submission of shareholder proposals for that meeting has changed from that disclosed in our 2003 proxy statement. In accordance with the Company's by-laws, notices of shareholder proposals for presentation at the 2004 annual meeting may be submitted until February 29, 2004 (60 days prior to the meeting date) without being untimely.

Safe Harbor Statement

This document contains forward-looking statements under the SEC safe harbor provisions. These statements are based on management's current expectations and should be viewed with caution. They are subject to various risks and uncertainties, many of which are outside the control of the Company, including the conversion of orders to revenue in any particular quarter, or at all, our ability to implement successfully our profit plans, the continuing demand for semiconductor equipment, relative market growth, continuity of business relationships with and purchases by major customers, competitive pressure on sales and pricing, increases in material and other production costs that cannot be recouped in product pricing and global economic, political and financial conditions. These risks and other risk factors relating to Axcelis are described more fully in the most recent Form 10-K filed by Axcelis and in other documents filed from time to time with the Securities and Exchange Commission.

About Axcelis Technologies, Inc.

Axcelis Technologies, Inc., headquartered in Beverly, Massachusetts, provides innovative, high-productivity solutions for the semiconductor industry. Axcelis is dedicated to developing enabling process applications through the design, manufacture and complete life cycle support of ion implantation, rapid thermal processing, and cleaning and curing systems. Axcelis Technologies has key technology centers in Beverly, Massachusetts, and Rockville, Maryland as well as in Toyo, Japan through its joint venture, SEN. The company's internet address is:

Consolidated Statements of Operations
(In thousands, except per share amounts)

Three Months Ended Twelve Months Ended

December 31, December 31, December 31, December 31,
2003 2002 2003 2002

Net sales
  $ 95,890     $ 65,515     $ 321,973     $ 309,705  
Cost of products sold
    60,129       46,620       217,622       205,740  

Gross profit
    35,761       18,895       104,351       103,965  
Operating expenses:
Research and development
    14,908       17,689       63,284       72,069  
    10,612       10,146       46,202       44,038  
General and adminstrative
    10,674       10,297       41,057       44,716  
Amortization of intangible assets
    662       365       1,955       1,460  
Restructuring charges
    162             4,907        

Total operating expenses
    37,018       38,497       157,405       162,283  
Loss from operations
    (1,257 )     (19,602 )     (53,054 )     (58,318 )
Other income (expense):
Royalty income of Sumitomo Eaton Nova Corporation
    2,673       775       5,866       8,275  
Royalty income - other
    56       62       151       104  
Equity income of Sumitomo Eaton Nova Corporation
    4,420       1,211       8,954       4,806  
Interest income
    322       841       1,807       3,691  
Interest expense
    (1,566 )     (1,374 )     (6,229 )     (5,803 )
    (891 )     112       (1,836 )     (2,498 )

Income (loss) before taxes
    3,757       (17,975 )     (44,341 )     (49,743 )
Income taxes (credit)
    487       (11,142 )     69,535       (23,593 )

Net income (loss)
  $ 3,270     $ (6,833 )   $ (113,876 )   $ (26,150 )

Basic net income (loss) per share
  $ 0.03     $ (0.07 )   $ (1.16 )   $ (0.27 )
Diluted net income (loss) per share
  $ 0.03     $ (0.07 )   $ (1.16 )   $ (0.27 )
Shares used in computing:
Basic net income (loss) per share
    98,785       98,131       98,514       97,920  
Diluted net income (loss) per share
    100,713       98,131       98,514       97,920  

Consolidated Balance Sheets
(In thousands)
December 31,
2003 2002

Current assets:
Cash & cash equivalents
  $ 99,665     $ 150,651  
Short-term investments
    14,972       34,992  
Accounts receivable, net
    84,925       60,311  
    123,985       115,290  
Deferred income taxes & other current assets
    8,928       18,329  
Total current assets
    332,475       379,573  
Property, plant & equipment, net
    80,927       93,597  
Investment in Sumitomo Eaton Nova Corporation
    73,327       57,868  
    46,774       40,682  
Intangible assets
    20,119       13,141  
Deferred income taxes
Other assets
    31,973       27,454  
Total assets
  $ 585,595     $ 669,451  
Current liabilities:
Accounts payable
  $ 36,335     $ 32,594  
Accrued compensation
    8,343       6,745  
Warranty reserve
    17,000       16,625  
Income taxes payable
    7,109       12,823  
Deferred revenue
    14,441       224  
Other current liabilities
    18,643       18,028  
Total current liabilities
    101,871       87,039  
Convertible debt
    125,000       125,000  
Other long-term liabilities
    5,474       4,904  
Stockholders’ equity:
Common stock
    99       98  
Additional paid-in capital
    451,389       447,533  
Deferred compensation
    (811 )     (782 )
Treasury stock - at cost
    (1,218 )     (1,218 )
Retained earnings (deficit)
    (101,507 )     12,369  
Accumulated other comprehensive loss
    5,298       (5,492 )
Total stockholders’ equity
    353,250       452,508  
Total liabilities and stockholders’ equity
  $ 585,595     $ 669,451