<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 November 30, 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 (480) 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 (January 7, 2000).

                  Common Stock, no par value: 29,448,841 shares
<PAGE>   2
                               SPEEDFAM-IPEC, INC.


                                      INDEX
<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                             <C>
PART I            FINANCIAL INFORMATION

         Item 1.    Financial Statements

                       Condensed Consolidated Balance Sheets
                       November 30, 1999 and May 31, 1999...............................................    2

                       Condensed Consolidated Statements of Operations
                       Three and Six Months Ended November 30, 1999 and 1998............................    3

                       Condensed Consolidated Statements of Cash Flows
                       Six Months Ended November 30, 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..........................    19



PART II           OTHER INFORMATION

         Item 4.    Submission of Matters to a Vote of Security Holders.................................    20

         Item 6.    Exhibits and Reports on Form 8-K....................................................    20

SIGNATURE...............................................................................................    21

EXHIBIT INDEX

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

                SPEEDFAM-IPEC, INC. AND CONSOLIDATED SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                         November 30,           May 31,
                                                                             1999                1999
                                                                         ------------         -----------
<S>                                                                      <C>                  <C>
                                ASSETS

 Current assets:
    Cash and cash equivalents                                             $  62,788           $  97,003
    Short-term investments                                                   72,932              50,020
    Trade accounts receivable, net                                           80,068              76,808
    Inventories                                                              78,285              80,744
    Other current assets                                                      9,409               9,790
                                                                         ------------         -----------
      Total current assets                                                  303,482             314,365
 Investments in affiliates                                                   21,707              25,360
 Property, plant and equipment, net                                          85,458              88,997
 Other assets                                                                13,710              15,056
                                                                         ------------         -----------
      Total assets                                                        $ 424,357           $ 443,778
                                                                         ============         ===========

                 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
    Current portion of long-term debt                                     $   1,377           $   1,275
    Accounts payable and due to affiliates                                   28,427              25,101
    Customer deposits                                                         3,654               1,490
    Accrued expenses                                                         32,904              42,764
                                                                         ------------         -----------
      Total current liabilities                                              66,362              70,630
                                                                         ------------         -----------
 Long-term liabilities:
    Long-term debt                                                          115,559             116,129
    Other liabilities                                                         8,033              10,269
                                                                         ------------         -----------
      Total long-term liabilities                                           123,592             126,398
                                                                         ------------         -----------
 Stockholders' equity:
 Common stock, no par value, 96,000 shares authorized, 29,442 and
       29,392 shares issued and outstanding at November 30, 1999
       and May 31, 1999, respectively                                             1                   1
    Additional paid-in capital                                              427,537             427,290
    Accumulated deficit                                                   (195,764)           (180,311)
    Accumulated comprehensive income (loss)                                   2,629               (230)
                                                                         ------------         -----------
      Total stockholders' equity                                            234,403             246,750
                                                                         ------------         -----------
        Total liabilities and stockholders' equity                        $ 424,357           $ 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 and Six Months Ended November 30, 1999 and 1998
            (dollars and shares in thousands, except per share data)



<TABLE>
<CAPTION>
                                                              Three Months Ended             Six Months Ended
                                                                 November 30,                   November 30,
                                                          -------------------------       -------------------------
                                                             1999            1998           1999            1998
                                                          ---------       ---------       ---------       ---------
<S>                                                       <C>             <C>             <C>             <C>
 Revenue:
   Net sales                                              $  55,354       $  48,113       $ 105,681       $ 113,097
   Commissions from affiliate                                   423             152             423             737
                                                          ---------       ---------       ---------       ---------
     Total revenue                                           55,777          48,265         106,104         113,834
Cost of sales                                                37,737          39,261          72,897          85,660
                                                          ---------       ---------       ---------       ---------
     Gross margin                                            18,040           9,004          33,207          28,174
   Research and development                                  13,298          16,115          26,189          31,626
   Selling, general and administrative                       12,663          15,948          24,923          31,226
                                                          ---------       ---------       ---------       ---------
Operating loss                                               (7,921)        (23,059)        (17,905)        (34,678)
 Other income, net                                            5,415             828           5,328           3,334
                                                          ---------       ---------       ---------       ---------
Loss from consolidated companies before income taxes         (2,506)        (22,231)        (12,577)        (31,344)
Income tax benefit                                             --            (4,581)           --            (5,677)
                                                          ---------       ---------       ---------       ---------
Loss from consolidated companies                             (2,506)        (17,650)        (12,577)        (25,667)
Equity in net earnings (loss) of affiliates                  (1,984)            701          (2,876)          1,429
                                                          ---------       ---------       ---------       ---------
Net loss                                                  $  (4,490)      $ (16,949)      $ (15,453)      $ (24,238)
Cumulative dividend on preferred stock                         --               (51)           --               (72)
                                                          ---------       ---------       ---------       ---------
 Net loss attributable to common stockholders             $  (4,490)      $ (17,000)      $ (15,453)      $ (24,310)
                                                          =========       =========       =========       =========

 Net loss per share:
    Basic and diluted                                     $   (0.15)      $   (0.59)      $   (0.53)      $   (0.85)
                                                          =========       =========       =========       =========

 Weighted average number of shares:
    Basic and diluted                                        29,435          28,807          29,419          28,742
                                                          =========       =========       =========       =========
</TABLE>




     See Accompanying Notes to Condensed Consolidated Financial Statements.



                                       3
<PAGE>   5
                SPEEDFAM-IPEC, INC. AND CONSOLIDATED SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Six Months Ended November 30, 1999 and 1998
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                           Six Months Ended
                                                                                             November 30,
                                                                                 -------------------------------------
                                                                                       1999                1998
                                                                                 ----------------   ------------------
<S>                                                                              <C>                <C>
 CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                         $ (15,453)          $ (24,238)
   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                                      2,876              (1,429)
       Depreciation and amortization                                                    8,821               9,557
       Dividend from affiliate                                                           --                   521
       Gain on the sale of Fujimi Corporation                                          (5,603)               --
       Other                                                                             (178)                339
       Changes in assets and liabilities:
         (Increase) decrease in trade accounts receivable                              (3,354)             24,005
         Decrease in inventories                                                        3,878               3,528
         (Increase) decrease in other current assets                                      378              (3,261)
         Increase (decrease) in accounts payable and due to affiliates                  3,604             (19,186)
          Decrease in customer deposits and accrued expenses                          (11,642)             (5,273)
                                                                                    ---------           ---------
   Net cash used in operating activities                                              (16,673)            (17,669)
                                                                                    ---------           ---------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of short-term investments                                                 (48,888)            (39,141)
   Maturities of short-term investments                                                25,976              31,066
   Proceeds from the sale of short-term investments                                      --                35,849
   Proceeds from the sale of Fujimi Corporation                                        10,000                --
   Proceeds from licensing technology and transfer of associated assets                 2,335                --
   Proceeds form sales of assets                                                         --                   600
   Redemption of cash surrender value of life insurance                                 1,024                --
   Capital expenditures                                                                (7,032)            (18,628)
   Other investing activities                                                            (692)               (612)
                                                                                    ---------           ---------
   Net cash provided by (used in) investing activities                                (17,277)              9,134
                                                                                    ---------           ---------
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from exercise of stock options and employee stock plan purchases              247               1,522
   Principal payments on long-term debt                                                  (467)               (779)
                                                                                    ---------           ---------
   Net cash provided by (used in) financing activities                                   (220)                743
                                                                                    ---------           ---------
   Effects of foreign currency rate changes on cash                                       (45)                 (8)
                                                                                    ---------           ---------
   Net decrease in cash and cash equivalents                                          (34,215)             (7,800)
   Cash and cash equivalents at beginning of year                                      97,003             104,482
                                                                                    ---------           ---------
   Cash and cash equivalents at November 30, 1999 and 1998                          $  62,788           $  96,682
                                                                                    =========           =========
   Cash paid for:
     Interest                                                                       $   3,665           $   3,674
                                                                                    =========           =========
     Income taxes                                                                   $       0           $     253
                                                                                    =========           =========

</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 and six months ended
        November 30, 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 six months ended November 30, 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>
                                            November 30,               May 31,
                                               1999                     1999
                                            ------------             ----------
<S>                                         <C>                      <C>
              Raw materials                 $   51,018               $   48,082
              Work-in-process                   19,301                   23,428
              Finished goods                     7,966                    9,234
                                            ----------               ----------
                                            $   78,285               $   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 $444 and $252 is included as part of accumulated
        other comprehensive income (loss) within stockholders' equity at
        November 30 and May 31, 1999, respectively.




                                       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 $21,707 and
        $21,764 at November 30, 1999 and at May 31, 1999, respectively, based on
        the balance sheet of SpeedFam-IPEC Co., Ltd. at October 31, 1999 and
        April 30, 1999, respectively. 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>
                                                                           OCTOBER 31,             APRIL 30,
                                                                              1999                   1999
                                                                        -----------------     -----------------
                                      Assets

<S>                                                                     <C>                   <C>
            Total current assets                                           $    83,914           $    81,760
            Property, plant and equipment, net                                  39,004                36,003
            Other assets                                                        15,678                10,759
                                                                           -----------           -----------
                     Total assets                                          $   138,596           $   128,522
                                                                           ===========           ===========
                       Liabilities and Stockholders' Equity

            Total current liabilities                                      $    60,573           $    57,789
            Long-term debt                                                      25,809                19,607
            Other long-term liabilities                                          8,800                 7,599
            Stockholders' equity                                                43,414                43,527
                                                                           -----------           -----------
                  Total liabilities and stockholders' equity               $   138,596           $   128,522
                                                                           ===========           ===========
</TABLE>



                                       6
<PAGE>   8
                 STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

<TABLE>
<CAPTION>
                                                         Three Months Ended             Six Months Ended
                                                            October 31,                    October 31,
                                                         -------------------           -------------------
                                                         1999           1998           1999           1998
                                                         ----           ----           ----           ----
<S>                                                    <C>            <C>            <C>            <C>
     Net sales                                         $ 24,785       $ 33,415       $ 44,719       $ 73,038
     Costs and operating expenses                        32,108         31,641         55,418         69,406
                                                       --------       --------       --------       --------
     Earnings (loss) before income taxes                 (7,323)         1,774        (10,699)         3,632
     Income taxes                                        (3,112)           918         (4,174)         2,100
                                                       --------       --------       --------       --------
     Net earnings (loss) before minority interest        (4,211)           856         (6,525)         1,532
     Minority interest                                       41           (113)          (172)          (345)
                                                       --------       --------       --------       --------
     Net earnings (loss)                                 (4,252)           969         (6,353)         1,877

     Beginning retained earnings                         38,225         41,028         40,326         41,162
     Transfers to capital                                  --               (4)          --               (4)
     Dividends                                             --             --             --           (1,042)
                                                       ========       ========       ========       ========
     Ending retained earnings                          $ 33,973       $ 41,993       $ 33,973       $ 41,993
                                                       ========       ========       ========       ========
</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 November 30,
        1999 the Company had accrued $2,200 of commission expense to
        SpeedFam-IPEC Co., Ltd.

              In the second quarter of fiscal year 2000, the Company sold its
        50% interest in a joint venture, Fujimi Corporation, to its 50% partner,
        Fujimi Incorporated. Total proceeds from the sale were $10,000. The gain
        on the sale of $5.6 million is classified as other income, net in the
        accompanying condensed consolidated statements of income for the three
        and six months ended November 30, 1999.


(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                   Six Months Ended
                                                               November 30,                         November 30,
                                                          -----------------------             -----------------------
                                                          1999               1998             1999               1998
                                                          ----               ----             ----               ----
<S>                                                     <C>                <C>              <C>                <C>
        Net loss                                        $ (4,490)          $(17,000)        $(15,453)          $(24,310)
        Other comprehensive income (loss):
          Foreign currency translation adjustments         2,118              4,233            3,051              2,420
          Unrealized holding losses on securities           (192)               (11)            (192)                (7)
                                                        ========           ========         ========           ========
        Comprehensive loss                              $ (2,564)          $(12,778)        $(12,594)          $(21,897)
                                                        ========           ========         ========           ========
</TABLE>


                  ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

<TABLE>
<CAPTION>
                                                                       Unrealized            Accumulated Other
                                           Foreign Currency            Losses on               Comprehensive
                                             Translation               Securities              Income (Loss)
                                           --------------             -------------            -------------
<S>                                        <C>                        <C>                    <C>
Balance at May 31, 1999                            $   22                  $ (252)                  $ (230)
Six month period change                             3,051                    (192)                    2,859
                                           --------------             -------------            -------------
Balance at November 30, 1999                      $ 3,073                  $ (444)                  $ 2,629
                                           ==============             =============            =============
</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>
                                                                   Six Month's
                                                                    Activity
                                                                    --------
                                            Accrued at                Cash                 Accrued at
                                           May 31, 1999           Expenditures          November 30, 1999
                                           ------------           ------------          -----------------
<S>                                      <C>                   <C>                      <C>
Direct merger costs                             $ 3,600               $3,600                        --
Lease termination costs                          14,600                4,334                    10,266
Discontinued product lines                          100                  100                        --
Severance costs                                   4,200                2,763                     1,437
Other costs                                         500                  218                       282
                                         ----------------       -------------           -------------------
                                                $23,000              $11,015                   $11,985
                                         ================       =============           ===================
</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 and six months
       ended November 30, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                 Three Months Ended             Six Months Ended
                                                    November 30,                   November 30,
                                             -------------------------       -------------------------
                                               1999            1998            1999            1998
                                             ---------       ---------       ---------       ---------
<S>                                          <C>             <C>             <C>             <C>
Revenue:
  Sales to unaffiliated customers:
   CMP Group                                 $  45,596       $  33,763       $  85,380       $  84,647
   Surface Technology Group                      6,307          11,199          14,001          21,770
   Industrial Applications Group                 3,451           3,151           6,300           6,680
                                             ---------       ---------       ---------       ---------
     Total net sales to unaffiliated
     customers                                  55,354          48,113         105,681         113,097
                                             ---------       ---------       ---------       ---------

Commissions from affiliate:
   Surface Technology Group                        423             192             423             677
   Industrial Applications Group                    --             (40)             --              60
                                             =========       =========       =========       =========
     Total revenue                           $  55,777       $  48,265       $ 106,104       $ 113,834
                                             =========       =========       =========       =========

Segment operating loss:
   CMP Group                                 $  (4,429)      $ (16,955)      $  (9,768)      $ (21,965)
   Surface Technology Group                       (209)         (3,084)           (609)         (5,035)
   Industrial Applications Group                   934             409           1,164             950
                                             ---------       ---------       ---------       ---------
     Total segment operating loss               (3,704)        (19,630)         (9,213)        (26,050)

General corporate income (expense), net          1,563          (3,391)         (2,740)         (6,500)
Interest expense, net                             (365)            790            (624)          1,206
                                             ---------       ---------       ---------       ---------

Loss from consolidated companies before
income taxes                                 $  (2,506)      $ (22,231)      $ (12,577)      $ (31,344)
                                             =========       =========       =========       =========
</TABLE>


(10)    RECLASSIFICATIONS

              Certain reclassifications have been made in the financial
       statements for the three and six months ended November 30, 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
earnings data for the periods indicated as a percentage of total revenue:

<TABLE>
<CAPTION>
                                                      Three Months Ended            Six Months Ended
                                                          November 30,                November 30,
                                                      --------------------        --------------------
                                                       1999          1998          1999          1998
                                                      ------        ------        ------        ------
<S>                                                   <C>           <C>           <C>           <C>
Revenue:
   Net sales                                            99.2%         99.7%         99.6%         99.4%
   Commissions from affiliate                            0.8           0.3           0.4           0.6
                                                      ------        ------        ------        ------
     Total revenue                                     100.0         100.0         100.0         100.0
Cost of sales                                           67.7          81.3          68.7          75.2
                                                      ------        ------        ------        ------
   Gross margin                                         32.3          18.7          31.3          24.8
   Research and development                             23.8          33.5          24.7          27.8
   Selling, general and administrative                  22.7          33.0          23.5          27.5
                                                      ------        ------        ------        ------
Operating loss                                         (14.2)        (47.8)        (16.9)        (30.5)
 Other income, net                                       9.7           1.7           5.0           3.0
                                                      ------        ------        ------        ------
Loss from consolidated companies before income
 taxes                                                  (4.5)        (46.1)        (11.9)         27.5
Income tax benefit                                       0.0          (9.5           0.0          (5.0)
                                                      ------        ------        ------        ------
Loss from consolidated companies                        (4.5)        (36.6)        (11.9)        (22.5)
Equity in net earnings (loss) of affiliates             (3.5)          1.5          (2.7)          1.2
                                                      ------        ------        ------        ------
Net loss                                                (8.0)%       (35.1)%       (14.6)%       (21.3)%
                                                      ======        ======        ======        ======
</TABLE>


              Net Sales. Net sales for the second quarter of fiscal 2000 were
     $55.4 million, up 15.0% from net sales of $48.1 million in the second
     quarter of fiscal 1999. Net sales for the six months ended November 30,
     1999, were $105.7 million, down 6.6% against net sales of $113.1 million in
     the first six months of fiscal 1999. Sales of CMP systems totaled $45.6
     million, or 82.4% of net sales, up 35.0% from the $33.8 million, or 70.2%
     of net sales, in the second quarter of fiscal 1999. Sales of CMP systems
     increased in the second quarter of fiscal 2000 from the prior year due to
     an increase in demand for semiconductor manufacturing equipment, driven
     primarily by manufacturers in the Far East. Sales of CMP systems for the
     first six months of fiscal year 2000 were


                                       10
<PAGE>   12
     $85.4 million, or 80.8% of net sales, compared to $84.6 million, or 74.9%
     of net sales, for the first six months of fiscal 1999.

     Sales of the Surface Technology Group in the second quarter of fiscal 2000
     accounted for $6.3 million, or 11.4% of net sales, as compared to $11.2
     million, or 23.3% of net sales in the second quarter of fiscal 1999. Sales
     of the Surface Technology Group in the first six months of fiscal 2000 were
     $14.0 million, or 13.2% of net sales, compared to $21.8 million, or 19.2%
     of net sales, for the first six months of fiscal 1999. During the first
     quarter and first six months of fiscal 2000, thin film memory disk
     manufacturers continued to experience manufacturing over-capacity which in
     turn reduced capital spending. In addition, this over-capacity situation
     has created a larger market for used equipment making it even more
     difficult to sell the new 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 and increased production efficiencies.
     The Company expects the slowdown in these markets to continue
     for at least the next 12 months.

     Sales in the second quarter of fiscal 2000 of the Industrial Applications
     Group were $3.5 million, or 6.2% of net sales, compared to $3.1 million, or
     6.5% of net sales in the second quarter of fiscal 1999. Sales of the
     Industrial Applications Group in the first six months of fiscal 2000 were
     $6.3 million, or 6.0% of net sales, compared to $6.7 million, or 5.9% of
     net sales, for the first six months of fiscal 1999.

              Commissions from Affiliate. Commissions from affiliate in the
     second quarter and first six months of fiscal 2000 were $423,000, compared
     to $152,000 and $737,000 recorded in the second quarter and first six
     months of fiscal 1999, respectively. The decrease in the first six months
     was due to the continued slowdown in the thin film memory disk 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.

              Gross Margin. In the second quarter of fiscal 2000, gross margin
     was $18.0 million, or 32.3% of total revenue, compared to $9.0 million, or
     18.7% of total revenue, in the second quarter of fiscal 1999. Gross margin
     dollars and gross margin percentages increased due to an increase in total
     revenue in the second quarter of fiscal 2000 compared to the prior year
     period, as well as increased production efficiencies as a merged company.
     For the first six months of fiscal 2000, gross margin was $33.2 million, or
     31.3% of total revenue, compared to $28.2 million, or 24.8% of total
     revenue in the first six months of fiscal 1999. The increase in the gross
     margin dollars and gross margin percentages reflects the continued
     integration of the respective merged company's production lines, the
     outsourcing of sub-component manufacturing and the reduction of cycle
     times. As a result, the Company believes gross margin percentages will
     continue to increase compared to the prior year.

              Research and Development. In the second quarter of fiscal 2000,
     research and development expense decreased to $13.3 million, or 23.8% of
     total revenue, compared to $16.1 million, or 33.5% of total revenue, in the
     second quarter of fiscal 1999. In the six months ended November 30, 1999,
     research and development expense decreased to $26.2 million, or 24.7% of
     total revenue, compared to $31.6 million, or 27.8% of total revenue, in the
     same period of fiscal 1999. The decrease in both the three and six month
     periods ended November 30, 1999 was due to management's efforts to realign
     the Company's research and development efforts around critical and key
     programs while eliminating duplicate projects.



                                       11
<PAGE>   13
              Selling, General and Administrative. In the second quarter of
     fiscal 2000, selling, general and administrative expense decreased to $12.7
     million, or 22.7% of total revenue, from $15.9 million, or 33.0% of total
     revenue, in the second quarter of fiscal 1999. Selling, general and
     administrative expense decreased to $24.9 million, or 23.5% of total
     revenue, in the first six months of fiscal 2000, from $31.2 million, or
     27.5% of total revenue, in the first six months of fiscal 1999. The
     decrease in selling, general and administrative expense in the three and
     six months ended November 30, 1999, compared to the prior year resulted
     primarily from management's efforts to reduce costs and eliminate
     functional duplications throughout the merged company.

              Other Income, Net. Other income increased to $5.4 million in the
     second three months of fiscal 2000 from $828,000 of other income in the
     same period of fiscal 1999. This increase resulted from a $5.6 million gain
     recorded in the second quarter of fiscal 2000 on the sale of the Company's
     50% interest in its joint venture, Fujimi Corporation. In the first six
     months of fiscal 2000, other income was $5.3 million, compared to $3.3
     million recorded in the same period of fiscal 1999. The increase in other
     income in the first six months of fiscal 2000 over the prior year was due
     to the gain described above. 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.

              Provision for Income Taxes. At the end of fiscal 1999, as well as
     at the end of the second quarter of fiscal 2000, the Company established a
     valuation allowance for deferred tax assets generated by its operating
     losses and is in a net operating loss carryforward position. As a result,
     the effective tax rate for the second quarter and first six months 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.

              Equity in Net Earnings (Loss) of Affiliates. For the second
     quarter of fiscal 2000, equity in net earnings (loss) of affiliates
     decreased to a loss of $2.0 million, compared to $701,000 of net earnings
     in the second quarter of fiscal 1999. For the first six months of fiscal
     2000, equity in the net earnings (loss) of affiliates decreased to a loss
     of $2.9 million, compared to $1.4 million of earnings in the first six
     months of fiscal 1999. This decline in both the three and six month periods
     compared to the to the prior year was due to significantly decreased sales
     revenue of the Far East Joint Venture. Investments by manufacturers of both
     silicon wafers and thin film memory disks continue to be weak in fiscal
     2000. Also during the second quarter of fiscal 2000, the Far East Joint
     Venture recorded a charge for certain asset impairments, severance costs
     and other reorganization charges to account for the slowdown in the thin
     film memory disk media market and the transition of CMP research and
     development operations to the Company. The Company's share of this charge
     was approximately $1.4 million, net of tax. 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.

LIQUIDITY AND CAPITAL RESOURCES

              As of November 30, 1999, the Company had $135.7 million in cash,
     cash equivalents and short-term investments, compared to $147.0 million at
     May 31, 1999. The Company used $16.7 million of cash in operating
     activities during the first six months of fiscal 2000. Cash used in
     operations included the net loss of $15.5 million adjusted for non-cash
     items of $5.9 million. Non-cash positive adjustments included $8.8 million
     for depreciation and amortization expense and $2.9 million in equity in the
     net loss of the Far East Joint Venture. These adjustments were offset by a
     $5.6 million gain on the sale of Fujimi Corporation, and $200,000 of other
     items. In addition, $11.6 million in cash was used to pay down accrued
     expenses primarily due to the payment of liabilities for merger,
     integration and restructuring costs. Changes in other working capital
     accounts provided cash of $4.5 million.



                                       12
<PAGE>   14
              The Company made capital expenditures of $7.0 million in the
     first six months of fiscal 2000. The majority of the cash was used to fund
     building improvements, 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 $48.9 million, partially offset by proceeds of maturing
     investments totaling $26.0 million.

              During the quarter ended November 30, 1999, the Company sold its
     50% interest in its joint venture, Fujimi Corporation, to its 50% partner,
     Fujimi Incorporated. Proceeds from the sale of the investment in Fujimi
     Corporation were $10.0 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, 2002.

YEAR 2000

              In calendar year 1999, the Company completed all of its Year 2000
     date review and conversion projects to address all necessary changes,
     testing and implementation issues. This project encompassed three major
     areas of review: internal systems (hardware and software), supplier
     compliance and Company products. To date the Company has not experienced
     any interruption to its business activities or incurred any impairment to
     its financial condition or results of operations as a result of passing
     into calendar year 2000. The Company will continue to monitor its own
     internal systems and products to determine the impact, if any, of problems
     associated with the Year 2000.




                                       13
<PAGE>   15
                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. 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:

              -   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.


                                       14
<PAGE>   16
              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 six months of fiscal
     2000, the Company recorded a net loss of $15.5 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.

              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.


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


                                       15
<PAGE>   17
     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.

              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:

              -   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


                                       16
<PAGE>   18
     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.

              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.

              The Company's success depends on international sales, particularly
     in Asia and Europe. International sales accounted for 47.3%, 38.1% and
     34.3% of SpeedFam-IPEC's total revenue for the first six months ended
     November 30, 1999 and fiscal years ended May 31, 1999 and 1998,
     respectively. 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 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


                                       17
<PAGE>   19
              -   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 o 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 it strategy. In November 1999, the
     Company sold its 50% interest in its joint venture Fujimi Corporation, to
     its 50% partner Fujimi Incorporated. If the Company were to consummate an
     acquisition, the Company would be subject to a number 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.







                                       18
<PAGE>   20
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.






                                       19
<PAGE>   21
                               SPEEDFAM-IPEC, INC.

PART II - OTHER INFORMATION

Item 4.    Submission of Matters to a Vote of Security Holders.

           At the Company's Annual Meeting of Shareholders held on October 15,
           1999, shareholders elected Messrs. James N. Farley, Sanjeev R.
           Chitre, Richard J. Faubert, Makoto Kouzuma, Neil R. Bonke, Richard S.
           Hill, Roger D. McDaniel, William Freschi and Kenneth Levy to serve
           the Company as directors for a one-year term or until their
           respective successors have been elected. The results of the voting
           for each director were as follows:

<TABLE>
<CAPTION>
                                           For                 Withheld
                                           ---                 --------
<S>                                    <C>                     <C>
                   Farley              25,375,647              267,292
                   Chitre              25,434,068              208,871
                   Faubert             25,373,568              269,371
                   Kouzuma             25,423,175              219,764
                   Bonke               25,437,136              205,803
                   Hill                25,404,211              238,728
                   McDaniel            25,435,805              207,134
                   Freschi             25,396,192              246,747
                   Levy                25,436,527              206,412
</TABLE>

           Shareholders also approved a proposal to amend the 1995 Stock Plan
           for Employees and Directors of SpeedFam-IPEC, Inc. to increase the
           initial automatic option grant to eligible directors from an option
           to purchase 5,000 shares of SpeedFam-IPEC, Inc. common stock to an
           option to purchase 15,000 shares. The results of the voting for the
           matter were as follows:

<TABLE>
<CAPTION>
                     For                     Against                 Abstained
                     ---                     -------                 ---------
                  <S>                       <C>                      <C>
                  19,667,475                5,948,095                   27,369
</TABLE>



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
                      November 30, 1999.







                                       20
<PAGE>   22
                               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:    January 14, 2000                  By J. Michael Dodson
                                          Treasurer and Chief Financial Officer
                                          (As Chief Accounting Officer and Duly
                                          Authorized Officer of SpeedFam-IPEC,
                                          Inc.)










                                       21
<PAGE>   23
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
            EXHIBIT
            NUMBER                    DESCRIPTION
            ------                    -----------

<S>                             <C>
              27                Financial Data Schedule
</TABLE>











                                       22