<PAGE>   1


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
(Mark One)

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

         For the quarterly period ended August 31, 1999

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


           For the transition period from ____________ to ____________

                         Commission File Number 0-26784


                               SPEEDFAM-IPEC, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

        Illinois                                             36-2421613
-------------------------------                    -----------------------------
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                          Identification Number)

305 North 54th Street, Chandler, Arizona                          85226
----------------------------------------                  ----------------------
(Address of principal executive offices)                       (Zip Code)

        Registrant's telephone number, including area code (602) 705-2100

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                         YES     X               NO
                                             ----------             ----------

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date (October 11, 1999).

                  Common Stock, no par value: 29,436,445 shares
<PAGE>   2
                               SPEEDFAM-IPEC, INC.


                                      INDEX

<TABLE>
<CAPTION>
                                                                                                            Page
PART I            FINANCIAL INFORMATION                                                                     ----
<S>               <C>                                                                                        <C>
         Item 1.          Financial Statements

                             Condensed Consolidated Balance Sheets
                             August 31, 1999 and May 31, 1999.................................................2

                             Condensed Consolidated Statements of Operations
                             Three Months Ended August 31, 1999 and 1998......................................3

                             Condensed Consolidated Statements of Cash Flows
                             Three Months Ended August 31, 1999 and 1998......................................4

                             Notes to Condensed Consolidated Financial Statements.............................5

         Item 2.          Management's Discussion and Analysis of Financial Condition
                          and Results of Operations...........................................................10

         Item 3.          Quantitative and Qualitative Disclosures about Market Risk..........................18



PART II           OTHER INFORMATION

         Item 6.          Exhibits and Reports on Form 8-K....................................................19

SIGNATURE.....................................................................................................20
</TABLE>

EXHIBIT INDEX

         Exhibit-27       Financial Data Schedule
<PAGE>   3
PART I - FINANCIAL INFORMATION

                SPEEDFAM-IPEC, INC. AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                              August 31,           May 31,
                                                                                1999                1999
                                                                              ----------          ---------
                                ASSETS
<S>                                                                           <C>                 <C>
 Current assets:
    Cash and cash equivalents                                                 $  67,701           $  97,003
    Short-term investments                                                       65,126              50,020
    Trade accounts receivable, net                                               78,543              76,808
    Inventories                                                                  80,257              80,744
    Other current assets                                                          9,616               9,790
                                                                              ---------           ---------
      Total current assets                                                      301,243             314,365
 Investments in affiliates                                                       25,342              25,360
 Property, plant and equipment, net                                              85,776              88,997
 Other assets                                                                    13,934              15,056
                                                                              ---------           ---------
      Total assets                                                            $ 426,295           $ 443,778
                                                                              =========           =========

                 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
    Current portion of long-term debt                                         $   1,371           $   1,275
    Accounts payable and due to affiliates                                       23,730              25,101
    Customer deposits                                                             2,418               1,490
    Accrued expenses                                                             36,340              42,764
                                                                              ---------           ---------
      Total current liabilities                                                  63,859              70,630
                                                                              ---------           ---------

 Long-term liabilities:
    Long-term debt                                                              115,864             116,129
    Other liabilities                                                             9,729              10,269
                                                                              ---------           ---------
      Total long-term liabilities                                               125,593             126,398
                                                                              ---------           ---------

 Stockholders' equity:
    Common stock, no par value, 96,000 shares authorized, 29,418 and
       29,392 shares issued and outstanding
       at August 31, 1999 and May 31, 1999, respectively                              1                   1
    Additional paid-in capital                                                  427,413             427,290
    Retained earnings                                                         (191,274)           (180,311)
    Accumulated comprehensive income (loss)                                         703               (230)
                                                                              ---------           ---------
      Total stockholders' equity                                                236,843             246,750
                                                                              ---------           ---------
        Total liabilities and stockholders' equity                            $ 426,295           $ 443,778
                                                                              =========           =========
</TABLE>

     See Accompanying Notes to Condensed Consolidated Financial Statements.

                                       2
<PAGE>   4
                SPEEDFAM-IPEC, INC. AND CONSOLIDATED SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                   Three Months Ended August 31, 1999 and 1998
            (dollars and shares in thousands, except per share data)

<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                   August 31,
                                                           ------------------------
                                                             1999            1998
                                                           --------        --------
<S>                                                        <C>             <C>
Revenue:
   Net sales                                               $ 50,327        $ 64,984
   Commissions from affiliate                                    --             585
                                                           --------        --------
     Total revenue                                           50,327          65,569
Cost of sales                                                35,160          46,399
                                                           --------        --------
     Gross margin                                            15,167          19,170
   Research and development                                  12,890          15,511
   Selling, general and administrative                       12,260          15,278
                                                           --------        --------
Operating loss                                               (9,983)        (11,619)
Other income (expense), net                                     (88)          2,506
                                                           --------        --------
Loss from consolidated companies before income taxes        (10,071)         (9,113)
Income tax benefit                                               --          (1,096)
                                                           --------        --------
Loss from consolidated companies                            (10,071)         (8,017)
Equity in net earnings (loss) of affiliates                    (892)            728
                                                           --------        --------
Net loss                                                   $(10,963)       $ (7,289)
Cumulative dividend on preferred stock                           --             (21)
                                                           --------        --------
Net loss attributable to common stockholders               $(10,963)       $ (7,310)
                                                           ========        ========
Net loss per share:
    Basic and diluted                                      $  (0.37)       $  (0.25)
                                                           ========        ========
Weighted average number of shares:
    Basic and diluted                                        29,404          28,677
                                                           ========        ========
</TABLE>
     See Accompanying Notes to Condensed Consolidated Financial Statements.


                                       3
<PAGE>   5
                SPEEDFAM-IPEC, INC. AND CONSOLIDATED SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Three Months Ended August 31, 1999 and 1998
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                      Three Months Ended
                                                                                          August 31,
                                                                                   --------------------------
                                                                                     1999             1998
                                                                                   ---------        ---------
<S>                                                                                <C>              <C>
 CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                        $ (10,963)       $  (7,289)

   Adjustments to reconcile net loss to net cash used in
   operating activities:
       June 1998 IPEC net income                                                          --           (2,232)
       Equity in net earnings (loss) of affiliates                                       892             (728)
       Depreciation and amortization                                                   4,523            4,389
       Dividend from affiliate                                                            --              521
       Other                                                                            (102)            (385)
       Changes in assets and liabilities:
         (Increase) decrease in trade accounts receivable                             (1,587)          10,957
         Decrease in inventories                                                         697            1,041
         (Increase) decrease in other current assets                                     175             (680)
         Decrease in accounts payable and due to affiliates                           (1,170)         (13,206)
         Decrease in customer deposits and accrued expenses                           (7,348)          (2,865)
                                                                                   ---------        ---------
   Net cash used in operating activities                                             (14,883)         (10,477)
                                                                                   ---------        ---------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of short-term investments                                                (26,024)         (11,158)
   Maturities of short-term investments                                               10,918           11,161
   Proceeds from the sale of short-term investments                                       --           35,849
   Proceeds from licensing technology and transfer of associated assets                2,335               --
   Capital expenditures                                                               (2,233)          (6,839)
   Other investing activities                                                            603             (424)
                                                                                   ---------        ---------
   Net cash provided by (used in) investing activities                               (14,401)          28,589
                                                                                   ---------        ---------
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from exercise of stock options and employee stock plan purchases             123            1,328
   Principal payments on long-term debt                                                 (169)            (182)
                                                                                   ---------        ---------
   Net cash provided by (used in) financing activities                                   (46)           1,146
                                                                                   ---------        ---------
   Effects of foreign currency rate changes on cash                                       28               40
                                                                                   ---------        ---------
   Net increase (decrease) in cash and cash equivalents                              (29,302)          19,298
   Cash and cash equivalents at beginning of year                                     97,003          104,482
                                                                                   ---------        ---------
   Cash and cash equivalents at August 31, 1999 and 1998                           $  67,701        $ 123,780
                                                                                   =========        =========
</TABLE>
     See Accompanying Notes to Condensed Consolidated Financial Statements.


                                       4
<PAGE>   6
                SPEEDFAM-IPEC, INC. AND CONSOLIDATED SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
           (dollars and shares in thousands, except per share amounts)


(1)     BASIS OF PRESENTATION
           The condensed consolidated financial statements included herein have
        been prepared by management without audit. Certain information and note
        disclosures normally included in financial statements prepared in
        accordance with generally accepted accounting principles have been
        condensed or omitted, although management believes that the disclosures
        made are adequate to make the information presented not misleading.
        These condensed consolidated financial statements should be read in
        conjunction with the consolidated financial statements of the Company
        for the year ended May 31, 1999, as filed with the Securities and
        Exchange Commission on August 30, 1999 as part of its Annual Report on
        Form 10-K. In the opinion of management the information furnished herein
        reflects all adjustments (consisting of normal recurring adjustments)
        necessary for a fair statement of results for the interim periods
        presented. Results of operations for the three months ended August 31,
        1999 are not necessarily indicative of results to be expected for the
        full fiscal year.

(2)     LOSS PER SHARE
             Basic loss per common share is based upon the weighted average
        number of common shares outstanding. Diluted loss per common share
        assumes the exercise of all options which are dilutive, whether
        exercisable or not. The dilutive effect of stock options is measured
        under the treasury stock method. Employee stock options outstanding
        during the three months ended August 31, 1999 and 1998 were not included
        in the computation of diluted loss per share because the effect would be
        antidilutive.

(3)     INVENTORIES
             The components of inventory were:

<TABLE>
<CAPTION>
                                                          August 31,                 May 31,
                                                             1999                     1999
                                                          ----------                --------
<S>                                                       <C>                       <C>
              Raw materials                                $ 49,335                 $ 48,082
              Work-in-process                                19,893                   23,428
              Finished goods                                 11,029                    9,234
                                                           --------                 --------
                                                           $ 80,257                 $ 80,744
                                                           ========                 ========
</TABLE>

(4)     SHORT-TERM INVESTMENTS
              In August, 1998 the Company recorded a realized gain of $46 from
        the sale of tax exempt short-term investments, classified as
        held-to-maturity securities, with a carrying value of $35,803. The
        proceeds of $35,849 were re-invested. The Company sold investments
        originally intended to be held-to maturity to take advantage of more
        favorable rates of return available on taxable securities. The Company's
        short-term investments are now classified as available-for-sale. The
        short-term investments are recorded at fair market value and an
        unrealized loss of $252 is included as part of accumulated other
        comprehensive income (loss) within stockholders' equity at May 31 and
        August 31, 1999.


                                       5
<PAGE>   7
(5)     INVESTMENTS IN AFFILIATES
              The Company owns a 50% interest in SpeedFam-IPEC Co., Ltd. The
        Company's equity interest in SpeedFam-IPEC Co., Ltd. was $21,587 and
        $21,764 at August 31, 1999 and at May 31, 1999, respectively, based on
        the balance sheet of SpeedFam-IPEC Co., Ltd. at July 31, 1999 and April
        30, 1999, respectively. The remaining equity interest included in
        investments in affiliates relates to the Company's 50% ownership
        interest in Fujimi Corporation. Condensed consolidated financial
        statements of SpeedFam-IPEC Co., Ltd., which are consolidated on a
        fiscal year that ends April 30, are as follows:

                                 BALANCE SHEETS


<TABLE>
<CAPTION>
                                                       JULY 31,       APRIL 30,
                                                         1999           1999
                                                       --------       ---------
<S>                                                    <C>            <C>
                         Assets

Total current assets                                   $ 85,945       $ 81,760
Property, plant and equipment, net                       36,784         36,003
Other assets                                             11,746         10,759
                                                       --------       --------
         Total assets                                  $134,475       $128,522
                                                       ========       ========

           Liabilities and Stockholders' Equity

Total current liabilities                              $ 58,596       $ 57,789
Long-term debt                                           24,529         19,607
Other long-term liabilities                               8,176          7,599
Stockholders' equity                                     43,174         43,527
                                                       --------       --------
      Total liabilities and stockholders' equity       $134,475       $128,522
                                                       ========       ========
</TABLE>


                                       6
<PAGE>   8
                 STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

<TABLE>
<CAPTION>
                                                     Three Months Ended
                                                          July 31,
                                                   ------------------------
                                                     1999           1998
                                                   --------        --------
<S>                                                <C>             <C>
Net sales                                          $ 19,934        $ 39,623
Costs and operating expenses                         23,310          37,765
                                                   --------        --------
Earnings (loss) before income taxes                  (3,376)          1,858
Income taxes                                          1,062           1,182
                                                   --------        --------
Net earnings (loss) before minority interest         (2,314)            676
Minority interest                                      (213)           (232)
                                                   --------        --------
Net earnings (loss)                                  (2,101)            908

Beginning retained earnings                          40,326          41,162
Dividends                                                --          (1,042)
                                                   --------        --------
Ending retained earnings                           $ 38,225        $ 41,028
                                                   ========        ========
</TABLE>


              The Company pays a commission to SpeedFam-IPEC Co., Ltd. on sales
of equipment produced by the Company in the U. S. and exported to Pacific Rim
customers through SpeedFam-IPEC Co., Ltd. As of August 31, 1999 the Company had
accrued $785 of commission expense to SpeedFam-IPEC Co., Ltd.


(6)     DERIVATIVE FINANCIAL INSTRUMENTS
              The Company uses derivative financial instruments to offset
       exposure to market risks arising from changes in foreign exchange rates.
       Derivative financial instruments currently utilized by the Company
       include foreign currency forward contracts. The Company evaluates and
       monitors consolidated net exposures by currency and maturity, and
       external derivative financial instruments correlate with those net
       exposures in all material respects. Gains and losses on hedges of
       existing assets and liabilities are included in the carrying amounts of
       those assets or liabilities and are ultimately recognized in income when
       those carrying amounts are converted. Gains or losses related to hedges
       of firm commitments are deferred and included in the bases of the
       transactions when they are completed. Gains or losses on unhedged foreign
       currency transactions, if any, are included in income as part of cost of
       sales. Gains and losses on derivative financial instruments which protect
       the Company from exposure in a particular currency, but do not currently
       have a designated underlying transaction, are also included in income as
       part of cost of sales. If a hedged item matures, or is sold,
       extinguished, terminated, or is related to an anticipated transaction
       that is no longer likely to take place, the derivative financial
       instrument is closed and the related gain or loss is included in income
       as part of cost of sales.

                                       7
<PAGE>   9
(7)     COMPREHENSIVE LOSS
       The Company's comprehensive loss was as follows:

                               COMPREHENSIVE LOSS
<TABLE>
<CAPTION>
                                                   Three Months Ended
                                                        August 31,
                                                 ------------------------
                                                   1999            1998
                                                 --------        --------
<S>                                              <C>             <C>
Net loss                                         $(10,963)       $ (7,310)
Other comprehensive income (loss):
  Foreign currency translation adjustments            933          (1,813)
                                                 --------        --------
Comprehensive loss                               $(10,030)       $ (9,123)
                                                 ========        ========
</TABLE>


                  ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
                                                              Unrealized            Accumulated Other
                                      Foreign Currency        Losses on           Comprehensive Income
                                        Translation           Securities                 (Loss)
                                        -----------           -----------         --------------------
<S>                                        <C>                    <C>                    <C>
Balance at May 31, 1999                    $  22                  $(252)                 $(230)
Three month period change                    933                     --                    933
                                           -----                  -----                  -----
Balance at August 31, 1999                 $ 955                  $(252)                 $ 703
                                           =====                  =====                  =====
</TABLE>


(8)     MERGER, INTEGRATION, AND RESTRUCTURING COSTS
              In connection with the merger of SpeedFam International, Inc. and
       Integrated Process Equipment Corp. in April 1999, the Company recorded
       various merger, integration and restructuring costs. Direct merger costs
       primarily consist of professional fees, such as investment banking, legal
       and accounting for services rendered through the date of the merger. The
       Company recorded integration and restructuring costs for lease
       terminations, the write-off of duplicative equipment previously used for
       demonstration purposes, the write-down of inventory and equipment related
       to product lines that will no longer be supported, and severance costs
       resulting from workforce reductions.

        The following table summarizes the components of the merger,
       integration, and restructuring costs:

<TABLE>
<CAPTION>
                                                                  Three Months
                                                                    Activity
                                                                  ------------
                                            Accrued at                Cash                Accrued at
                                           May 31, 1999           Expenditures         August 31, 1999
                                           ------------           ------------         ---------------
<S>                                        <C>                    <C>                  <C>
Direct merger costs                        $ 3,600                 $ 3,600                      --
Lease termination costs                     14,600                   1,736                  12,864
Discontinued product lines                     100                      --                     100
Severance costs                              4,200                   2,545                   1,655
Other costs                                    500                      15                     485
                                           -------                 -------                 -------
                                           $23,000                 $ 7,896                 $15,104
                                           =======                 =======                 =======
</TABLE>


                                       8
<PAGE>   10
(9)     BUSINESS SEGMENT INFORMATION
              The Company classifies its products into three core business
       segments: (i) the CMP Group, which is comprised of the Company's
       development and production of chemical mechanical planarization systems;
       (ii) the Surface Technology Group, which is comprised of the development
       and production of high-throughput precision surface processing equipment
       used in thin film memory disk media and silicon wafer industries; and
       (iii) the Industrial Applications Group, which is comprised of the
       development and production of high-throughput precision surface
       processing equipment used in general industrial applications. Information
       concerning the Company's business segments in the three months ended
       August 31, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                                              1999                     1998
                                                                            --------                  --------
<S>                                                                         <C>                       <C>
Revenue:
  Sales to unaffiliated customers:
              CMP Group ...................................                 $ 39,784                  $ 50,880
              Surface Technology Group ....................                    7,694                    10,575
              Industrial Applications Group ...............                    2,849                     3,529
                                                                            --------                  --------
                  Total net sales to unaffiliated customers                   50,327                    64,984
                                                                            --------                  --------

Commissions from affiliate:
              Surface Technology Group ....................                       --                       485
              Industrial Applications Group ...............                       --                       100
                                                                            --------                  --------
                  Total revenue ...........................                 $ 50,327                  $ 65,569
                                                                            ========                  ========

Segment operating loss:
              CMP Group ...................................                 $ (5,339)                 $ (5,010)
              Surface Technology Group ....................                     (400)                   (1,951)
              Industrial Applications Group ...............                      230                       541
                                                                            --------                  --------
                  Total segment operating loss ............                   (5,509)                   (6,420)

General corporate income (expense), net ...................                   (4,303)                   (3,109)
Interest income (expense), net ............................                     (259)                      416
                                                                            --------                  --------

Loss from consolidated companies before income taxes ......                 $(10,071)                 $ (9,113)
                                                                            ========                  ========
</TABLE>

(10)    RECLASSIFICATIONS
              Certain reclassifications have been made in the financial
       statements for the three months ended August 31, 1998 to conform to the
       fiscal 2000 presentation.


                                       9
<PAGE>   11
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SEGMENTS

              The Company sells its products and services to three market
     segments: (1) semiconductor device manufacturers (CMP Group), (2) thin film
     memory disk media and silicon wafer manufacturers (Surface Technology
     Group), and (3) manufacturers of general industrial components (Industrial
     Applications Group).

RESULTS OF OPERATIONS

              The following table sets forth certain consolidated statements of
     operations data for the periods indicated as a percentage of total revenue:

<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                           August 31,
                                                                 ------------------------------
                                                                  1999                    1998
                                                                 ------                  ------
<S>                                                               <C>                     <C>
Revenue:
   Net sales                                                      100.0%                   99.1%
   Commissions from affiliate                                       0.0                     0.9
                                                                  -----                   -----
   Total revenue                                                  100.0                   100.0
Cost of sales                                                      69.9                    70.8
                                                                  -----                   -----
   Gross margin                                                    30.1                    29.2
   Research and development                                        25.6                    23.6
   Selling, general and administrative                             24.3                    23.3
                                                                  -----                   -----
Operating loss                                                    (19.8)                  (17.7)
Other income (expense), net                                       (0.2)                    3.8
                                                                  -----                   -----
Loss from consolidated companies before income taxes              (20.0)                  (13.9)
Income tax benefit                                                  0.0                     1.7
                                                                  -----                   -----
Loss from consolidated companies                                  (20.0)                  (12.2)
Equity in net earnings (loss) of affiliates                        (1.8)                    1.1
                                                                  -----                   -----
Net loss                                                          (21.8)%                 (11.1)%
                                                                  =====                   =====
</TABLE>




              Net Sales. Net sales for the first quarter of fiscal 2000 were
     $50.3 million, down 22.6% from net sales of $65.0 million in the first
     quarter of fiscal 1999. Sales of CMP systems totaled $39.8 million, or
     79.0% of net sales, down 21.8% from the $50.9 million, or 78.3% of net
     sales, of CMP system sales in the first quarter of fiscal 1999. Sales of
     CMP systems declined in fiscal 2000 from the prior year due to a worldwide
     slowdown in overall demand for semiconductor manufacturing equipment, which
     was caused by an over-capacity situation in the semiconductor device market
     worldwide. In addition, the Company has seen erosion in its market share of
     new sales due to increased competition in the sales of CMP systems to
     semiconductor manufacturers.


                                       10
<PAGE>   12
     Sales of the Surface Technology Group in the first quarter of fiscal 2000
     accounted for $7.7 million, or 15.3% of net sales, as compared to $10.6
     million, or 16.3% of net sales in the first quarter of fiscal 1999. During
     the first quarter of fiscal 2000, thin film memory disk manufacturers
     continued to experience manufacturing over-capacity which in turn reduced
     capital spending. The thin film memory disk industry continues to feel
     "price per unit" pressures which in turn has forced a reduction in capital
     spending for equipment the Company supplies from its U.S. operations. The
     decline in sales from the Surface Technology Group was also due to
     continued slowdown in the silicon wafer market. This slowdown was due to
     the ongoing manufacturing over-capacity caused by various factors including
     die shrink, increased production efficiencies and Asian economic
     conditions. The Company expects the slowdown in these markets to continue
     for at least the next 12 months. Sales in the first quarter of fiscal 2000
     of the Industrial Applications Group were $2.8 million, or 5.7% of net
     sales in the first quarter of fiscal 2000, compared to $3.5 million, or
     5.4% of net sales in the first quarter of fiscal 1999.

              Commissions from Affiliate. No commissions from affiliate were
     recorded in the first quarter of fiscal 2000, compared to $585,000 recorded
     in the first quarter of fiscal 1999. The decrease was due to the continued
     slowdown in the thin film memory disk market, and silicon wafer markets.
     The Company believes that capital equipment spending will continue to be
     weak in the thin film memory and silicon wafer industries through the next
     12 months in turn lowering commissions from affiliate compared to prior
     year periods.

              Gross Margin. In first quarter of fiscal 2000, gross margin was
     $15.2 million, or 30.1% of total revenue, compared to $19.2 million, or
     29.2% of total revenue, in the first quarter of fiscal 1999. Gross margin
     dollars declined due to the decrease in total revenue in the first quarter
     of fiscal 2000 compared to the prior year period. The Company expects that
     the gross margin percentage will continue to increase compared to prior
     year quarters due to increased production efficiencies as a merged company.

              Research and Development. In the first quarter of fiscal 2000,
     research and development expense decreased to $12.9 million, or 25.6% of
     total revenue, compared to $15.5 million, or 23.6% of total revenue, in the
     first quarter of fiscal 1999. The decrease was due to management's efforts
     to realign the Company's research and development efforts around critical
     and key programs while eliminating duplicate projects.

              Selling, General and Administrative. In the first quarter of
     fiscal 2000, selling, general and administrative expense decreased to $12.3
     million, or 24.3% of total revenue, from $15.3 million, or 23.3% of total
     revenue, in the first quarter of fiscal 1999. The dollar amount decrease in
     selling, general and administrative expense resulted primarily from
     management's efforts to reduce costs and eliminate functional duplications
     throughout the merged company.

              Other Income (Expense). Other income (expense) decreased to
     $88,000 of other expense in the first three months of fiscal 2000 from $2.5
     million of other income in same period of fiscal 1999. In the first quarter
     of fiscal 1999, the Company recorded a gain arising from the collection of
     insurance proceeds for a CMP tool, which was destroyed in transit. The
     decrease in other income (expense) in the first three months of fiscal 2000
     compared to the same period in fiscal 1999, was also due to the decrease in
     interest income caused by the decline in short-term investments.

              Provision for Income Taxes. At the end of fiscal 1999, as well as
     at the end of the first quarter of fiscal 2000, the Company established a
     valuation allowance for deferred tax assets generated by its operating
     losses. As a result, the effective tax rate for the first quarter of fiscal
     2000 was zero. While the Company will reassess its tax situation each
     quarter, the Company expects that its effective tax rate will be zero at
     least throughout fiscal 2000.

                                       11
<PAGE>   13
              Equity in Net Earnings of Affiliates. For the first quarter of
     fiscal 2000, equity in net earnings (loss) of affiliates decreased to a
     loss of $892,000 compared to $728,000 of net earnings in the first quarter
     of fiscal 1999. This decline was due to significantly decreased sales
     revenue of the Far East Joint Venture. Investments by manufacturers of both
     silicon wafer and thin film memory disks continue to be weak in fiscal
     2000. The Company believes that the results of the Far East Joint Venture
     will be adversely affected in fiscal year 2000 by both a slowdown in demand
     for equipment sold into the thin film memory disk and silicon wafer
     markets, as well as the current financial difficulties facing several Asian
     economies.

LIQUIDITY AND CAPITAL RESOURCES

              As of August 31, 1999, the Company had $132.8 million in cash,
     cash equivalents and short-term investments, compared to $147.0 million at
     May 31, 1999. The Company used $14.9 million of cash in operating
     activities during the first three months of fiscal 2000. Cash used in
     operations included the net loss of $11.0 million adjusted for non-cash
     items of $5.3 million, primarily representing depreciation and amortization
     expense. In addition, $8.5 million in cash was used to pay down accrued
     expenses and accounts payable, and $700,000 of cash was used to fund a net
     increase in certain current assets. The decrease in accrued expenses was
     primarily due to the payment of accrued liabilities for merger, integration
     and restructuring costs.

     The Company made capital expenditures of $2.2 million in the first quarter
     of fiscal 2000. The majority of the cash was used to fund additional
     building construction, software and equipment purchases. Cash of $2.3
     million was provided from the licensing of certain technologies and
     transferring associated assets. Cash was also used to purchase short-term
     investments of $26.0 million, partially offset by proceeds of maturing
     investments totaling $10.9 million.

              The Company believes that its current cash, cash equivalents and
     short-term investments will be sufficient to meet the Company's cash needs
     during the next 12 months.

              SFAS No. 133, "Accounting for Derivative Instruments and Hedging
      Activities" is effective for financial years beginning after June 15,
      2000. SFAS No. 133 establishes accounting and reporting standards for
      derivative instruments and hedging activities. The Company is evaluating
      the new Statement's provisions and has not yet determined its impact. The
      Company will adopt SFAS No. 133 effective June 1, 2001.

YEAR 2000

              The Company is addressing the issues associated with the
     programming code in existing computer systems as the millennium (Year 2000)
     approaches. The Year 2000 problem is pervasive and complex as virtually
     every computer operation will be affected in some way. The Company is aware
     of and is addressing the potential computing difficulties that may be
     triggered by the Year 2000.

              The Company has commenced a Year 2000 date review and conversion
     project to address all the necessary changes, testing and implementation
     issues. The project encompasses three major areas of review: internal
     systems (hardware and software), supplier compliance and Company products.
     The Company has identified the changes required to its computer programs
     and hardware. The necessary modifications to the Company's centralized
     financial, manufacturing and operational information systems have been
     completed. To date, the Company's suppliers have been sent letters
     requesting information regarding their own Year 2000 plan, as well as
     requesting confirmation that the components supplied by these vendors are
     Year 2000 compliant. The Company has evaluated the vendor responses which
     have been received and concluded that the vendors which have responded

                                       12
<PAGE>   14
     either are Year 2000 compliant or are proceeding with their own Year 2000
     compliance programs. The Company will continue to follow-up with vendors
     with which the Company has a material relationship and who have not
     responded to obtain assurances that they expect to be Year 2000 compliant
     in time. Equipment and systems manufactured and supplied by the Company
     have been evaluated and determined to be free of any material problems that
     could be caused by the Year 2000 issue. Management estimates that the
     Company's remaining Year 2000 compliance expense will be immaterial. To
     date, the Company believes that Year 2000 problems related to its own
     internal systems and equipment and systems it sells will not have a
     material effect on the Company's business, financial condition and results
     of operations. However, there can be no assurance that the systems of other
     companies upon which the Company's systems and business rely will be timely
     converted or that any such failure to convert by another company would not
     have a material adverse effect on the Company's business, financial
     conditions or results of operations. To mitigate this risk, the Company is
     reviewing its vendor relationships and building alternative sources of
     supply should the business operations of any one vendor be interrupted due
     to Year 2000 problems.


                CERTAIN FACTORS AFFECTING THE COMPANY'S BUSINESS

              The Company's business is subject to numerous risks, including
     those discussed below. If any of the events described in these risks
     occurs, the Company's business, financial condition and results of
     operations could be seriously harmed.

              The Company's growth depends on continued and increased acceptance
     of CMP among semiconductor manufacturers. While CMP is used by a number of
     advanced logic semiconductor manufacturers, CMP has been used to
     manufacture advanced memory devices only in the past 2 years. Continued and
     increased acceptance of CMP systems depends on many factors considered by
     potential customers, including the CMP product's

          -        cost of ownership
          -        throughput
          -        process flexibility
          -        performance, including reliability
          -        customer support

              Failure to adequately meet potential customers' needs with respect
     to one or more of these factors will result in decreased acceptance of CMP
     and, therefore, the Company's CMP systems, which will in turn negatively
     impact the Company's profitability.

              The Company's Business is Highly Cyclical. The Company's business
     depends substantially on the capital expenditures of semiconductor
     manufacturers and, to a lesser extent, thin film memory disk and silicon
     wafer manufacturers. These industries are highly cyclical and have
     historically experienced periodic downturns, which often have a material
     adverse effect on the acquisition of capital equipment and other products
     used in the manufacturing process, including products offered by the
     Company. These downturns have in the past and are expected in the future to
     materially adversely affect the business and operating results of the
     Company. The semiconductor device industry has recently experienced a
     slowdown and the memory disk and silicon wafer industries are currently
     experiencing a slowdown. These events have negatively impacted the
     Company's results of operations.

              If the Company does not continue to integrate SpeedFam's and
     IPEC's technology and operations quickly and effectively, its operations
     may be adversely affected. The merger of SpeedFam and IPEC was consummated
     April 6, 1999. The company must continue to integrate all components of
     IPEC's former operations, including the following:

                                       13
<PAGE>   15
-     Sales and marketing operations, including international distribution
      channels. Combining international sales channels could result in
      significant expense or customer confusion.

-     Product offerings, including marketing of products to the other's
      customers.

-     Research and development programs.

-     Manufacturing operations and philosophies.

-     Field service support for CMP equipment.

-     Management information and reporting systems. Since SpeedFam and IPEC used
      different management information systems, the Company may face
      difficulties obtaining timely and accurate information, data and reports
      to operate the company effectively until integration is completed.

            The Company cannot be certain that it can achieve integration of
these components without adversely impacting operations. To the extent
management focuses on integration, it may not be able to develop the business.

            The Company, and its predecessors, have had losses recently and the
Company expects losses in the near future. In the first quarter of fiscal 2000,
the Company recorded a net loss of $11.0 million. In fiscal 1999, the Company
had a net loss of $139.9 million. This loss included $53.9 million of various
merger, integration and restructuring costs. Direct merger costs primarily
consist of professional fees, such as investment banking, legal and accounting
for services rendered through the date of the merger. The Company recorded
integration and restructuring costs for lease terminations, the write-off of
duplicative equipment previously used for demonstration purposes, the writedown
of inventory and equipment related to products lines that will no longer be
supported, and severance costs resulting from workforce reductions. The Company
attributes the additional loss to the slowdown in the industry combined with
increasing investment in research and development.

            IPEC had net losses of $42.3 million in fiscal 1998 and $33.7
million in fiscal 1997. In fiscal 1998, IPEC incurred net charges of $25.9
million to increase the valuation allowance for its deferred tax assets and
$10.6 million for an additional writedown of assets in connection with the
closure of IPEC Clean, a subsidiary of IPEC.

            These losses, excluding the one time charges, are attributed mainly
to the slowdown in the industry combined with increasing investment in research
and development.

            The Company faces intense competition, including from companies with
greater resources. Several companies currently market CMP systems that directly
compete with the Company's

                                       14
<PAGE>   16
      products, including Applied Materials, Inc. and Ebara Corporation. For
      several reasons, the Company may not compete effectively with competitors.
      These reasons include:

              -   Some competitors may have greater financial resources than the
                  Company. They also may have more extensive engineering,
                  manufacturing, marketing and customer service and support
                  capabilities.

              -   Some competitors may supply a broader range of semiconductor
                  capital equipment than the Company. As a result, these
                  competitors may have better relationships with semiconductor
                  manufacturers, including current and potential customers of
                  the Company.

              -   The Company expects competitors to continue to improve their
                  existing technology and introduce new products. This could
                  cause a decline in the Company's sales or lead to intensified
                  pricebased competition.

              -   Other capital equipment manufacturers not currently involved
                  in the development of CMP systems may enter the market or
                  develop technology that reduces the need for the Company's
                  products.

              The Company may not develop products in time to meet changing
     technologies. Semiconductor manufacturing equipment and processes are
     subject to rapid technological changes and product obsolescence. Developing
     new products in the rapidly evolving industry in which the company operates
     involves a number of risks:

              -   products may be introduced behind schedule or after customers
                  have made buying decisions

              -   products may not be accepted in the marketplace

              Competitive pressures require the Company to continue to enhance
     performance for finer geometrics in oxide and tungsten applications, while
     developing new process capabilities for emerging STI, copper and 300mm
     applications. The Company will also continue to develop with the Far East
     Joint Venture products and processes for thin film memory disk
     manufacturers and to enhance the plasma-assisted chemical etch processes.

              Product or process development problems could harm the Company's
     results of operations. The Company's products are complex, and from time to
     time have defects or bugs that are difficult and costly to fix. This can
     harm results of operations for the Company, in two ways:

(1)  The Company incurs substantial costs to ensure the functionality and
     reliability of products earlier in their life cycle. This can reduce
     orders, increase manufacturing costs, adversely impact working capital and
     increase service and warranty expenses.

(2)  The Company requires significant lead-times between product introduction
     and commercial shipment. As a result, the Company may have to write off
     inventory and other assets related to products and could lose customers and
     revenue. For example, in the second quarter of fiscal 1997, the Company
     incurred a $17.6 million pretax asset write-off for discontinuance of the
     Avanti 672 product development program.

              The Company's quarterly operating results will fluctuate for
     reasons not in its control. The Company's quarterly operating results will
     fluctuate due to a variety of factors, including:

                                       15
<PAGE>   17
              -      Industry demand for capital equipment, which depends on
                     economic conditions in the semiconductor, memory disk and
                     silicon wafer markets.

              -      Timing, cancellation or delay of customer orders and
                     shipments. The Company continues to derive a significant
                     portion of revenue from the sale of a relatively small
                     number of machines during a given quarter. Order and
                     delivery delays and cancellations, even of one or two
                     systems, may cause the company to miss quarterly revenue
                     and profit expectations.

              -      Unexpected costs associated with sales and service of the
                     CMP tools and processes.

              -      The quarterly operating results of the company's joint
                     ventures, which are accounted for on the equity method.

              -      Foreign currency exchange rates.

              Results of operations in any period are not an indication of
     future results. Fluctuations in the Company's operating results may also
     result in fluctuations in the Company's common stock price. Operating
     results may not meet the expectations of public market analysts or
     investors and the trading price of the common stock could decline.

              Orders in backlog may not result in future revenue if customers
     cancel or reschedule orders. The Company includes in backlog only those
     customer orders for which it has accepted purchase orders. Expected revenue
     may be lower if customers cancel or reschedule orders, which they can
     generally do without penalty. For example, the Company removed from its
     backlog orders of approximately $5.3 million in the fourth quarter of
     fiscal 1999, primarily due to reduced capacity requirements and increased
     funding constraints of certain customers.

            The Company Depends on key personnel.  The Company's success is
     dependent upon its ability to attract and retain qualified management,
     technical, sales and support personnel. Competition for qualified
     personnel in the industry served by the Company, particularly in the
     Phoenix metropolitan area, is intense. SpeedFam and IPEC had in the past
     experienced difficulty in attracting qualified personnel. Also, other
     employers may offer lucrative compensation and benefit programs, including
     those with respect to stock options. The Company presently experiences the
     same difficulty and may continue to in the future.

              The Company depends on a small number of major customers.
     Currently, and for the foreseeable future, the Company expects that it will
     sell machines to a limited number of major customers. To date, the CMP
     process has been used primarily to fabricate advanced semiconductors, which
     accounts for only a portion of the overall semiconductor market. In fiscal
     1999, Samsung and Intel accounted for 11.4% and 10.5%, respectively, of its
     total revenue. In fiscal 1998, Intel accounted for 19.4% of total revenue.

              The Company's success depends on international sales, particularly
     in Asia and Europe. International sales accounted for 38.1% of
     SpeedFam-IPEC's total revenue for fiscal 1999, 34.3% for fiscal year 1998
     and 26.5% for fiscal year 1997. The Company expects that international
     sales will continue to account for a significant portion of total revenue
     in future periods. International sales are subject to risks, including:

              -      foreign exchange issues

              -      political, economic and regulatory environment of the
                     countries where customers are located

              -      collectibility of accounts receivable

              -      inadequate intellectual property protection

              Foreign exchange issues also affect the value of the Company's
     foreign subsidiaries and equity interest in its Far East joint venture. The
     Company does not manage this balance sheet risk through currency
     transactions known as hedging, which are designed to minimize this risk.
     The

                                       16
<PAGE>   18
     Company does try to manage near term currency risks through hedging.
     However, efforts may not be enough to decrease the risks involved.

              If the Company is unable to protect its intellectual property, its
     business could suffer. The company's intellectual property portfolio is
     very important to its success. However, the Company may not be able to
     protect its technology because:

              -      pending and new patent applications may not be approved in
                     a timely manner or approved at all

              -      third parties may try to challenge or invalidate existing
                     patents and new patents

              -      policing unauthorized use of intellectual property is
                     difficult and expensive

              -      the laws of some foreign countries do not protect
                     intellectual property rights as much as U.S. laws

              -      competitors may independently develop similar technology or
                     design around intellectual property owned by the company

              Third parties may prevent the Company from selling products that
     allegedly infringe on those third parties' intellectual property rights.
     The Company cannot be certain that third parties will not in the future
     claim that its products infringe their intellectual property rights. Third
     parties may

              -      bring claims of patent, copyright or trademark infringement

              -      obtain patents or other intellectual property rights that
                     limit the Company's ability to do business or require the
                     Company to license or cross-license technology

              -      Bring costly, time consuming lawsuits

              Third parties hold many patents relating to CMP machines and
     processes. The Company licenses the right to manufacture CMP machines
     employing an orbital motion in its Avant Gaard 676, 776 and 876 from a
     semiconductor manufacturer.

     The Company may Be subject To risks associated with acquisitions and
     dispositions. The Company continually evaluates strategic acquisitions of
     other businesses and dispositions of portions of its business that it
     determines are not complementary to its strategy. If the Company were to
     consummate an acquisition, the Company would be subject to a number of
     risks, including the following:

              -      difficulty in assimilating the acquired operations and
                     retaining acquired personnel;

              -      limits on the Company's ability to retain acquired
                     distribution channels and customers;

              -      disruption of the Company's ongoing business; and

              -      limits on the Company's ability to successfully incorporate
                     acquired technology and rights into its service offerings
                     and maintain uniform standards, controls, procedures and
                     policies.

     Similarly, a disposition could absorb significant management time,
     distracting it from developing the business. The Company may not
     successfully overcome problems encountered in connection with potential
     acquisitions or dispositions.


              The Company may experience Year 2000 computer problems that harm
     its business. Certain computer systems may not correctly recognize dates
     when the year changes from 1999 to 2000. This could cause computers to
     either shut down or lead to incorrect calculations. The Company has
     reviewed their exposure to this problem, and does not believe it will incur
     significant expenses either to remedy the problem or as a result of the
     effect of the problem on business operations. However, Year 2000 issues may
     cause disruptions in the Company's business for the following reasons:

              -      The Company cannot be certain that the measures taken are
                     enough. Despite completed efforts, the company may incur
                     significant expenses to remedy unforeseen problems or may
                     suffer disruptions in its business.

              -      Third parties with whom the Company has relationships may
                     not successfully complete their Year 2000 remediation
                     efforts. This could also result in disruptions in the
                     company's business, which would harm its financial
                     condition, results of operations and business prospects.

      For additional information regarding the status of Year 2000 issues, refer
      to "Management's Discussion and Analysis of Financial Condition and
      Results of Operations -Year 2000"

                                       17
<PAGE>   19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

              For financial market risks related to changes in interest rates
      and foreign currency exchange rates, refer to Part II, Item 7A,
      Quantitative and Qualitative Disclosures About Market Risk, in the
      Company's Annual Report on Form 10-K for the year ended May 31, 1999.


                                       18
<PAGE>   20
                               SPEEDFAM-IPEC, INC.

PART II - OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K.

             (a)    Exhibits.

                      Exhibit - 27    Financial Data Schedule

             (b)    Reports on Form 8-K.

                      No reports on Form 8-K were filed during the quarter ended
                      August 31, 1999.

                                       19
<PAGE>   21
                               SPEEDFAM-IPEC, INC.

                                    SIGNATURE

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

                                    SPEEDFAM-IPEC, INC.



                                    /s/  J. Michael Dodson
                                    -------------------------------------
Date:    October 15, 1999           By J. Michael Dodson
                                    Treasurer and Chief Financial Officer
                                    (As Chief Accounting Officer and Duly
                                    Authorized Officer of SpeedFam-IPEC, Inc.)


                                       20
<PAGE>   22
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
           EXHIBIT
            NUMBER              DESCRIPTION
            ------              -----------
<S>         <C>                 <C>
              27                Financial Data Schedule
</TABLE>

                                       21