<PAGE>   1
                                 UNITED STATES
                       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 December 2, 2000

/ /      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)

<TABLE>
<CAPTION>
<S>                                                                                <C>
                            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)
</TABLE>

        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 (December 20, 2000).

                  Common Stock, no par value: 29,912,569 shares
<PAGE>   2
                               SPEEDFAM-IPEC, INC.

                                      INDEX



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

         Item 1.    Financial Statements
                         Condensed Consolidated Balance Sheets
                         December 2, 2000 and June 3, 2000 .......................    1

                         Condensed Consolidated Statements of Operations
                         Second Quarter Ended and Two Quarters Ended
                         December 2, 2000 and November 30, 1999 ..................    2

                         Condensed Consolidated Statements of Cash Flows
                         Two Quarters Ended December 2, 2000
                         and November 30, 1999 ...................................    3

                         Notes to Condensed Consolidated Financial Statements ....    4

         Item 2.    Management's Discussion and Analysis of Financial
                    Condition and Results of Operations ..........................    9

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


PART II           OTHER INFORMATION

         Item 4.    Submission of Matters to a Vote of Security Holders ..........   18

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

SIGNATURES .......................................................................   20

EXHIBIT INDEX
</TABLE>
<PAGE>   3
                         PART I - FINANCIAL INFORMATION

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




<TABLE>
<CAPTION>
                                                                               December 2,         June 3,
                                                                                  2000              2000
                                                                               -----------       -----------
<S>                                                                            <C>               <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                     $  67,886        $  72,060
   Short-term investments                                                           29,237           28,236
   Trade accounts receivable, net                                                   89,772          129,102
   Inventories                                                                     116,439           81,192
   Other current assets                                                              7,286            3,301
                                                                                 ---------        ---------
      Total current assets                                                         310,620          313,891
Investments in affiliates                                                               --           19,810
Property, plant and equipment, net                                                  86,955           87,913
Other assets                                                                        10,801           13,466
                                                                                 ---------        ---------
         Total assets                                                            $ 408,376        $ 435,080
                                                                                 =========        =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current portion of long-term debt                                             $     518        $   1,077
   Accounts payable and due to affiliates                                           50,384           51,354
   Accrued liabilities                                                              28,570           23,264
                                                                                 ---------        ---------
      Total current liabilities                                                     79,472           75,695
                                                                                 ---------        ---------
 Long-term liabilities:
   Long-term debt                                                                  115,074          115,162
   Other liabilities                                                                 7,037            7,253
                                                                                 ---------        ---------
      Total long-term liabilities                                                  122,111          122,415
                                                                                 ---------        ---------
Stockholders' equity:
   Common stock, no par value, 96,000 shares authorized, 29,913 and 29,703
       shares issued and outstanding at December 2, 2000
       and June 3, 2000, respectively                                                    1                1
   Additional paid-in capital                                                      433,409          430,706
   Retained earnings (deficit)                                                    (227,269)        (194,489)
   Accumulated other comprehensive income                                              652              752
                                                                                 ---------        ---------
      Total stockholders' equity                                                   206,793          236,970
                                                                                 ---------        ---------
         Total liabilities and stockholders' equity                              $ 408,376        $ 435,080
                                                                                 =========        =========
</TABLE>

     See Accompanying Notes to Condensed Consolidated Financial Statements.

                                       1
<PAGE>   4
                               SPEEDFAM-IPEC, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

          Second Quarter Ended and Two Quarters Ended December 2, 2000
                             and November 30, 1999
                     (in thousands, except per share data)




<TABLE>
<CAPTION>
                                                               Second Quarter Ended                  Two Quarters Ended
                                                              Dec. 2,           Nov. 30,          Dec. 2,           Nov. 30,
                                                               2000              1999               2000              1999
                                                               ----              ----               ----              ----
<S>                                                          <C>               <C>               <C>               <C>
Net sales                                                    $  82,896         $  55,777         $ 157,603         $ 106,104
Cost of sales                                                   56,973            37,737           111,961            72,897
                                                             ---------         ---------         ---------         ---------
      Gross margin                                              25,923            18,040            45,642            33,207
                                                             ---------         ---------         ---------         ---------
Operating expenses:
  Research and development                                      14,412            13,298            30,969            26,189
  Selling, general and administrative                           15,016            12,663            31,469            24,923
  Restructuring charges                                             --                --             5,123                --
                                                             ---------         ---------         ---------         ---------
      Total operating expenses                                  29,428            25,961            67,561            51,112
      Operating loss                                            (3,505)           (7,921)          (21,919)          (17,905)
Other income (expense), net                                        (88)            5,415              (209)            5,328
                                                             ---------         ---------         ---------         ---------
      Loss before income taxes and
        equity earnings (loss)                                  (3,593)           (2,506)          (22,128)          (12,577)
Income taxes                                                        --                --                --                --
                                                             ---------         ---------         ---------         ---------
      Loss before equity earnings                               (3,593)           (2,506)          (22,128)          (12,577)
Loss on disposal of investment in affiliate                         --                --           (10,763)               --
Equity in net earnings (loss) of affiliates                         --            (1,984)              110            (2,876)
                                                             ---------         ---------         ---------         ---------
Net loss attributable to common stockholders                 $  (3,593)        $  (4,490)        $ (32,781)        $ (15,453)
                                                             =========         =========         =========         =========

Net loss per share - basic and diluted                       $   (0.12)        $   (0.15)        $   (1.10)        $   (0.53)
                                                             =========         =========         =========         =========

Weighted average number of shares - basic and diluted           29,912            29,435            29,865            29,419
                                                             =========         =========         =========         =========
</TABLE>

     See Accompanying Notes to Condensed Consolidated Financial Statements.

                                       2
<PAGE>   5
                               SPEEDFAM-IPEC, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
            Two Quarters Ended December 2, 2000 and November 30, 1999
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                                      Two Quarters Ended
                                                                                   December 2,     November 30,
                                                                                      2000            1999
                                                                                      ----            ----
<S>                                                                                <C>             <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                         $(32,781)        $(15,453)
   Adjustments to reconcile net loss to net cash provided by (used in)
      operating activities:
       Equity in net (earnings) loss of affiliates                                      (110)           2,876
       Depreciation and amortization                                                   8,831            8,821
       Fixed asset impairments and non-cash portion of restructuring charges          19,360               --
       Gain on sale of Fujimi Corporation                                                 --           (5,781)
       Changes in operating assets and liabilities:
         (Increase) decrease in trade accounts receivable                             40,331           (3,354)
         (Increase) decrease in inventories                                          (37,571)           3,878
         (Increase) decrease in other current assets                                  (3,416)             378
         Increase (decrease) in accounts payable and due to affiliates                 6,149            3,604
         Increase (decrease) in accrued expenses                                       5,149          (11,642)
                                                                                    --------         --------
   Net cash provided by (used in) operating activities                                 5,942          (16,673)
                                                                                    --------         --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of short-term investments                                               (15,700)         (48,888)
   Maturities of short-term investments                                               15,012           25,976
   Proceeds from the sale of Fujimi Corporation                                           --           10,000
   Proceeds from licensing of technology and transfer of associated assets                --            2,335
   Redemption of cash surrender value of life insurance                                  245            1,024
   Net proceeds from disposal of investment in affiliate                                 661               --
   Capital expenditures                                                               (9,555)          (7,032)
   Other investing activities                                                         (1,855)            (692)
                                                                                    --------         --------
   Net cash used in investing activities                                             (11,192)         (17,277)
                                                                                    --------         --------
CASH FLOWS FROM FINANCING ACTIVITIES;
   Proceeds from exercise of stock options and employee stock
      purchases                                                                        2,703              247
   Principal payments on long-term debt                                               (1,356)            (467)
                                                                                    --------         --------
   Net cash provided by (used in) financing activities                                 1,347             (220)
   Effect of foreign currency rate changes on cash                                      (271)             (45)
                                                                                    --------         --------
   Net decrease in cash and cash equivalents                                          (4,174)         (34,215)
                                                                                    --------         --------
   Cash and cash equivalents at beginning of the period                               72,060           97,003
                                                                                    --------         --------
   Cash and cash equivalents at end of period                                       $ 67,886         $ 62,788
                                                                                   ========         ========
</TABLE>

     See Accompanying Notes to Condensed Consolidated Financial Statements.

                                       3
<PAGE>   6
                               SPEEDFAM-IPEC, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(1)      BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required for complete financial statements. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the Company's management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements as well as the reported amounts of revenues and
expenses during the reporting period. In the opinion of management, all
adjustments (consisting of normal recurring items) considered necessary for a
fair presentation have been included. Actual results may differ from these
estimates. Operating results for the quarter ended December 2, 2000 are not
necessarily indicative of the results that may be expected for the year ending
June 2, 2001. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended June 3, 2000.

The Company has changed its fiscal year from the twelve-month period ended May
31 to a 52 or 53 week period ending on the Saturday nearest May 31. Accordingly,
the 2001 fiscal year ends on June 2, 2001 and contains 52 weeks whereas the 2000
fiscal year ended on June 3, 2000 and contained 53 weeks. All references to
quarters and years relate to fiscal quarters and fiscal years unless otherwise
noted.

Since 1971, the Company had owned a 50% interest in SpeedFam-IPEC Co., Ltd.
(together with its subsidiaries and joint ventures, also known as the Far East
Joint Venture) which was accounted for using the equity method of accounting.
The remaining 50% was owned by Obara Corporation, a publicly traded Japanese
company that supplies products to the automotive industry. On August 30, 2000,
the Far East Joint Venture between the Company and Obara Corporation was
officially dissolved. Under the terms of the Master Reorganization Agreement,
ownership of the chemical mechanical planarization (or "CMP") operations of the
Far East Joint Venture was transferred to the Company. The CMP operations, as of
the date of dissolution, have been consolidated in the accompanying unaudited
condensed consolidated financial statements.

(2)      INVENTORIES

             The components of inventory were (in thousands):

<TABLE>
<CAPTION>
                     December 2, 2000      June 3, 2000
                     ----------------      ------------
<S>                  <C>                   <C>
Raw materials             $ 61,389           $ 54,058
Work-in-process             40,345             21,396
Finished goods              14,705              5,738
                          --------           --------
                          $116,439           $ 81,192
                          ========           ========
</TABLE>

                                    4
<PAGE>   7
(3)      ACCRUED LIABILITIES


         Accrued liabilities are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                          December 2, 2000     June 3, 2000
                                                          -----------------    ------------
<S>                                                       <C>                  <C>
Accrued warranty and installation costs                        $13,584           $ 8,665
Accrued payroll and benefits                                     4,694             4,588
Accrued merger, integration, and restructuring costs             1,714             1,952
Other accrued liabilities                                        8,578             8,059
                                                               -------           -------
                                                               $28,570           $23,264
                                                               =======           =======
</TABLE>


(4)      COMPREHENSIVE LOSS

           The Company's comprehensive loss was as follows (in thousands):

<TABLE>
<CAPTION>
                                                 Second Quarter Ended   Two Quarters Ended
                                                   Dec. 2,   Nov. 30,    Dec. 2,   Nov. 30,
                                                    2000       1999       2000       1999
                                                  --------   --------   --------   --------
<S>                                              <C>         <C>        <C>        <C>
Net loss                                          $ (3,593)  $ (4,490)  $(32,781)  $(15,453)
Other comprehensive income (loss):
  Unrealized gain (loss) on securities                  93       (192)       313      (192)
  Foreign currency translation adjustments            (675)     2,118       (413)     3,051

                                                  --------   --------   --------   --------
Comprehensive loss                                $ (4,175)  $ (2,564)  $(32,881)  $(12,594)
                                                  ========   ========   ========   ========
</TABLE>


           Accumulated Other Comprehensive Income (Loss)


<TABLE>
<CAPTION>
                                                                      Unrealized
                                            Foreign Currency        Gain (Loss) on            Accumulated Other
                                               Translation            Securities         Comprehensive Income (Loss)
                                            ----------------        --------------       --------------------------
<S>                                         <C>                     <C>                  <C>
Balance at June 3, 2000                         $ 1,239                $  (487)                    $   752
Two quarter period change                          (413)                   313                        (100)
                                                -------                -------                     -------
Balance at December 2, 2000                     $   826                $  (174)                    $   652
                                                =======                =======                     =======

Balance at May 31, 1999                         $  (60)                $  (170)                    $  (230)
Two quarter period change                         3,051                   (192)                      2,859
                                                -------                -------                     -------
Balance at November 30, 1999                    $ 2,991                $  (362)                    $ 2,629
                                                =======                =======                     =======
</TABLE>

                                       5
<PAGE>   8
(5)    RESTRUCTURING AND OTHER CHARGES ASSOCIATED WITH THE DISPOSAL OF THE FAR
       EAST JOINT VENTURE

On August 30, 2000, the Far East Joint Venture was officially dissolved. Under
the terms of the Master Reorganization Agreement with Obara Corporation (Obara),
ownership of the CMP operations of the Far East Joint Venture was transferred to
the Company and specific personnel involved in CMP efforts became employees of
the Company. Obara will continue the non-CMP activities of the Joint Venture
which include the manufacture of silicon wafer and thin film memory disk
polishing products.

Under the terms of a distributor agreement signed on August 31, 2000, the
Company will continue to act as a direct distributor in the United States and
Europe for the wafer and disk polishing products manufactured by Obara and is
prohibited from manufacturing these products.

During the first quarter of 2001, the Company recorded charges totaling $10.8
million related to the loss on disposal of the Company's 50% investment interest
in the Far East Joint Venture and $8.4 million related to the Company's exit
from the manufacturing of wafer and disk polishing products as the Company is
prohibited from manufacturing these products. The $8.4 million is comprised of
inventory write-offs of raw materials and spare parts related to silicon wafer
and thin film memory disk polishing products; impairment of fixed assets of the
exited operations; severance costs for three employees including a former
executive of the Far East Joint Venture and other charges associated with the
Company's exit from the manufacturing of wafer and disk polishing products.

Through December 2, 2000 the Company incurred $15.8 million in asset write-offs
and paid and charged to the liability $2.3 million. The remaining restructuring
accrual is approximately $1.2 million which the Company believes is adequate to
cover the remaining liabilities. The following table summarizes the components
of the restructuring and other charges (in thousands):

<TABLE>
<CAPTION>
                                                       Activity During the
                                              Two quarters Ended December 2, 2000       Accrued
                                              -----------------------------------      Liability at
                                              Asset Write-offs  Cash Expenditures    December 2, 2000
                                              ----------------  -----------------    ----------------
<S>                                           <C>               <C>                  <C>
Loss on disposal of investment in affiliate         $   9,741           $    676           $    346
Inventory write-offs                                    3,351                 --                --
Fixed asset impairments                                 2,700                 --                --
Severance costs                                            --              1,191                --
Other costs                                                --                401                831
                                                      --------           --------           ---------
   Total                                             $ 15,792           $  2,268           $  1,177
                                                     =========          ========           ========
</TABLE>

These costs were classified in the statement of operations for the first two
quarters ended December 2, 2000 in cost of sales, loss on disposal of investment
in affiliate and operating expenses. The following table summarizes the
classification of the restructuring and other charges (in thousands):


<TABLE>
<S>                                                            <C>
Cost of sales                                                  $ 3,351
Restructuring charges                                            5,123
Loss on disposal of investment in affiliate                     10,763
                                                               -------
   Total                                                       $19,237
                                                               =======
</TABLE>

Also included in the first two quarters ended December 2, 2000 was $2.4 million
of asset impairment charges for CMP equipment that was designed by the Far East
Joint Venture that is no longer be used in ongoing research and development
programs. These charges were classified in the statement of operations for the
first two quarters ended December 2, 2000 as research and development expenses.


(6)    MERGER, INTEGRATION, AND RESTRUCTURING COSTS ASSOCIATED WITH THE 1999
       MERGER

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 consisted of
professional fees related to investment banking, legal and accounting services
incurred through the date of the merger. The Company

                                       6
<PAGE>   9
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 are no
longer supported, and severance costs resulting from workforce reductions.

The severance and other related employee costs provided for the reduction of
approximately 70 employment positions resulting from facility closures, and the
elimination of duplicate positions or positions no longer necessary due to the
streamlining of operations.

Through December 2, 2000, the Company incurred $27.0 million in asset
write-downs and paid and charged to the liability $19.4 million. The remaining
restructuring accrual for lease termination, severance and other expenses
associated with the merger is approximately $7.5 million which the Company
believes is adequate to cover the remaining liabilities. Lease termination costs
on certain vacated facilities (which were included in the restructuring charge)
primarily related to remaining rent, related utilities and common area
maintenance on the closed Phoenix, Arizona manufacturing and administrative
facility not recoverable through sublease income. Sublease activity began in May
2000 (as reflected in the remaining accrual) and is projected to be carried out
through the end of the Company's lease term. The Company's management has been
and is currently in the process of securing additional subleases or other
negotiated agreements for the Phoenix, Arizona manufacturing and administrative
facility. The following table summarizes the components of the merger,
integration, and restructuring costs (in thousands):

<TABLE>
<CAPTION>
                                                                          Activity During the
                                                                          Two Quarters Ended
                                                                           December 2, 2000
                                                  Accrued          ------------------------------         Accrued
                                                Liability at                   Cash                     Liability at
                                                June 3, 2000                Expenditures              December 2, 2000
                                                ------------                ------------              -------------
<S>                                             <C>                <C>                                <C>
        Lease termination costs                   $  8,565                    $  1,492                    $  7,073
        Severance costs                                372                         213                         159
        Other costs                                    264                          --                         264
                                                  --------                    --------                    --------
                                                  $  9,201                    $  1,705                    $  7,496
                                                  ========                    ========                    ==========
</TABLE>

                                        7
<PAGE>   10
(7)      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 distribution of high-throughput precision surface
processing equipment used in thin film memory disk media and silicon wafer
industries and the manufacture of polyvinyl alcohol products; 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 during the second quarter ended and two quarters ended December 2, 2000
and November 30, 1999 is as follows (in thousands):

<TABLE>
<CAPTION>
                                                    Second Quarter Ended   Two Quarters Ended
                                                      Dec. 2,  Nov. 30,     Dec. 2,   Nov. 30,
                                                       2000      1999        2000       1999
                                                    --------   --------    --------   --------
<S>                                                 <C>        <C>         <C>        <C>
Net sales:
CMP Group                                           $ 71,193   $ 45,596    $136,498   $ 85,380
Surface Technology Group                               7,203      6,730      12,737     14,424
Industrial Applications Group                          4,500      3,451       8,368      6,300
                                                    --------   --------    --------   --------
Total net sales to unaffiliated customers             82,896     55,777     157,603    106,104
                                                    --------   --------    --------   --------
Segment operating profit (loss):
CMP Group                                                488     (4,429)     (4,308)    (9,768)
Surface Technology Group                                 409       (209)     (2,703)      (609)
Industrial Applications Group                            584        934       1,513      1,164
                                                    --------   --------    --------   --------
Total segment operating profit (loss)                  1,481     (3,704)     (5,498)    (9,213)
General corporate income (expense), net               (4,557)     1,563     (15,769)    (2,740)
Interest expense, net                                   (517)      (365)       (861)      (624)
                                                    --------   --------    --------   --------
Loss before income taxes and equity earnings (loss) $ (3,593)  $ (2,506)   $(22,128)  $(12,577)
                                                    ========   ========    ========   ========
</TABLE>

                                       8
<PAGE>   11
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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).

On August 30, 2000, the 30-year-old Far East Joint Venture between the Company
and Obara Corporation was officially dissolved. Under the terms of the Master
Reorganization Agreement with Obara Corporation, ownership of the CMP sales and
service operations of the Far East Joint Venture was transferred to the Company
and specific personnel involved in CMP efforts became employees of the Company.
Obara Corporation will continue the non-CMP activities of the former Joint
Venture, which include the manufacturing of silicon wafer and thin film memory
disk polishing products. The Company will not compete with the non-CMP business
and Obara will not compete with the CMP business for an initial period of five
(5) years. The Company will indemnify Obara for any claims relating to the CMP
business and Obara will indemnify the Company for any claims relating to the
non-CMP business. Under the terms of a distributor agreement signed on August
31, 2000, the Company will continue to act as a direct distributor in the United
States and Europe for the wafer and disk polishing products manufactured by
Obara Corporation and is prohibited from manufacturing these products.

The Company has changed its fiscal year from the twelve-month period ended May
31 to a 52 or 53 week period ending on the Saturday nearest May 31. Accordingly,
the 2001 fiscal year ends on June 2, 2001 and contains 52 weeks whereas the 2000
fiscal year ended on June 3, 2000 and contained 53 weeks. All references to
quarters and years relate to fiscal quarters and fiscal years unless otherwise
noted.

     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>
                                                     Second Quarter Ended          Two Quarters Ended
                                                    Dec. 2,         Nov. 30,      Dec. 2,        Nov. 30,
                                                      2000           1999          2000           1999
                                                    -------         -------       -------        -------
<S>                                                  <C>            <C>            <C>            <C>
Net sales                                            100.0%         100.0%         100.0%         100.0%
Cost of sales                                         68.7           67.7           71.0           68.7
                                                     -----          -----          -----          -----
   Gross margin                                       31.3           32.3           29.0           31.3
Research and development                              17.4           23.8           19.7           24.7
Selling, general and administrative                   18.1           22.7           20.0           23.5
Restructuring charges                                  0.0            0.0            3.2            0.0
                                                     -----          -----          -----          -----
   Operating loss                                     (4.2)         (14.2)         (13.9)         (16.9)
Other income (expense), net                           (0.1)           9.7           (0.1)           5.0
                                                     -----          -----          -----          -----
   Loss from consolidated companies
    before income taxes                               (4.3)          (4.5)         (14.0)         (11.9)
Income taxes                                           0.0            0.0            0.0            0.0
                                                     -----          -----          -----          -----
   Loss from consolidated companies                   (4.3)          (4.5)         (14.0)         (11.9)
Loss on disposal of investment in affiliate            0.0            0.0           (6.8)           0.0
Equity in net earnings (loss) of affiliates            0.0           (3.5)           0.1           (2.7)
                                                     -----          -----          -----          -----
   Net loss                                           (4.3)%         (8.0)%        (20.7)%        (14.6)%
                                                     =====          =====          =====          =====
</TABLE>

                                       9
<PAGE>   12
Net Sales. Net sales for the second quarter of 2001 were $82.9 million, up 49%
from net sales of $55.8 million in the second quarter of 2000. Net sales of CMP
systems for the second quarter of 2001 totaled $71.2 million or 86% of net sales
compared to $45.6 million or 82% of net sales in the second quarter of 2000.
Total net sales for the first two quarters of 2001 were $157.6 million, an
increase of 49% over $106.1 million reported for the same period a year ago. Net
sales of CMP systems for the first two quarters of 2001 totaled $136.5 million
or 87% of net sales compared to $85.4 million or 80% of net sales for the same
period a year ago. Net sales for 2001 increased compared to the same periods
last year due to increased demand for semiconductor manufacturing equipment.

Increased sales volume was driven by customer investments in both capacity and
advanced technology to meet rising demand. Moreover, the increase in CMP system
sales to almost 87% of total net sales signifies the Company's focus on the CMP
market. From a geographic standpoint, for the second quarter of 2001, just under
50% of the CMP revenue was generated in the Far East with approximately 25% of
CMP revenue each in Europe and the United States.

Net sales of the Surface Technology Group in the second quarter of 2001
accounted for $7.2 million, or 9% of net sales, as compared to $6.7 million, or
12% of net sales in the second quarter of 2000. Net sales for the first two
quarters of 2001 totaled $12.7 million, or 8% of net sales, as compared to $14.4
million, or 14% of net sales for the same period a year ago. With the
dissolution of the Far East Joint Venture, the Company has exited from the
manufacturing of silicon wafer and thin film memory disk polishing equipment, as
required by the agreement with Obara Corporation. However, the Company will
continue to act as a direct distributor in the United States and Europe for the
wafer and disk polishing products manufactured by Obara Corporation.

Net sales of the Industrial Applications Group in the second quarter of 2001
increased to $4.5 million or 5% of net sales compared to $3.5 million or 6% of
net sales for the same period last year. Net sales for the first two quarters of
2001 were $8.4 million, or 5% of net sales compared to $6.3 million, or 6% of
net sales for the same period last year. Sales increased due to increased
shipments in European markets.

In December 1999, the Staff of the Securities and Exchange Commission (SEC)
issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in
Financial Statements". SAB 101 provides guidance on the recognition,
presentation and disclosure of revenue in financial statements of all publicly
held companies. See further discussion at "Impact of Recently Issued Accounting
Standards."

Gross Margin. In the second quarter of 2001, gross margin was $25.9 million, or
31% of net sales, compared to $18.0 million, or 32% of net sales in the second
quarter of 2000. Excluding restructuring charges of $3.4 million related to
inventory write-offs associated with the Company's exit from the manufacturing
of wafer and disk polishing equipment, gross margin for the two quarters ended
December 2, 2000 was $49.0 million, or 31% of net sales, compared to $33.2
million, or 31% of net sales for the same period last year. During the quarter
ended December 2, 2000, the decrease in gross margin as a percentage of sales
was primarily due to the mix of CMP shipments including a higher percentage of
orbital tools, which historically have had a lower gross margin than rotational
platforms. Excluding these restructuring charges, the dollar amount of gross
margin improved primarily due to the increase in total sales volume in the first
two quarters of 2001 compared to the prior year period.

                                       10
<PAGE>   13
Research and Development. In the second quarter of 2001, the dollar amount of
research and development expense increased to $14.4 million, or 17% of net
sales, compared to $13.3 million, or 24% of net sales in the second quarter of
2000. For the two quarters ended December 2, 2000, research and development
expense totaled $31.0 million, or 20% of net sales, compared to $26.2 million,
or 25% of net sales for the same period a year ago. The increase, in dollars,
for the first two quarters of 2001 includes a $2.4 million asset impairment
charge for CMP equipment that was designed by the Far East Joint Venture that is
no longer used in ongoing research and development programs. In addition, as the
Company has been finalizing the production model of the Momentum(TM) tool and
its design process requirements to reach 300 millimeter capabilities, additional
research and development costs have been incurred during the first two quarters
of 2001.

Selling, General and Administrative. In the second quarter of 2001, the dollar
amount of selling, general and administrative expenses increased to $15.0
million, or 18% of net sales, from $12.7 million, or 23% of net sales in the
second quarter of 2000. For the two quarters ended December 2, 2000, selling,
general and administrative expenses totaled $31.5 million, or 20% of net sales
compared to $24.9 million, or 24% of net sales for the same period last year.
During the first two quarters of 2001, the dollar amount increase in selling,
general and administrative expenses primarily results from significant marketing
and promotional costs incurred in connection with product launch activities
related to the introduction of the Company's new products, the Momentum(TM) and
the Auriga Vision(TM) . During the second quarter ended December 2, 2000, the
Company also recorded approximately $2.9 million of selling, general and
administrative expenses directly related to the new Far East operations.

Restructuring Charges. During the first two quarters ended December 2, 2000, the
Company recorded charges of $5.1 million that primarily related to restructuring
associated with the Company's exit from the manufacturing of silicon wafer and
thin film memory disk polishing equipment, as required by the distribution
agreement with Obara Corporation. Approximately $2.7 million related to the
impairment of fixed assets of the exited operations; $1.2 million related to
severance costs for three employees including a former executive of the Far East
Joint Venture; $1.2 million related to other restructuring charges associated
with the Company's plan to exit the manufacturing of wafer and disk polishing
products.

Provision for Income Taxes. At the end of the second quarter of 2001 and 2000,
the Company established a valuation allowance for deferred tax assets generated
by its operating losses and is in a net operating loss carry-forward position.
As a result, the effective tax rate for the second quarter of 2001 and 2000 was
zero. While the Company will reassess its tax situation each quarter, the
Company expects that its effective tax rate will approximate zero throughout
2001.

Loss on Disposal of Investment in Affiliate and Equity in Net Earnings (Loss) of
Affiliates. At the end of the first quarter of 2001, the Company reported a
$10.8 million loss on disposal of investment in affiliate in connection with the
dissolution of the Far East Joint Venture. The 30-year-old Far East Joint
Venture between the Company and Obara Corporation was officially dissolved on
August 30, 2000. Under the terms of the Master Reorganization Agreement with
Obara Corporation, ownership of the CMP sales and service operations of the Far
East Joint Venture was transferred to the Company and specific personnel
involved in CMP efforts became employees of the Company. Obara Corporation will
continue the non-CMP activities of the former Joint Venture, which includes the
manufacturing of wafer and disk polishing products. The Company will continue to
act as a direct distributor in the United States and Europe for the wafer and
disk polishing products manufactured by Obara Corporation.

For the first two quarters of 2001, equity in net earnings (loss) of affiliates
improved to $0.1 million compared to ($2.9 million) in the same period of 2000.
This improvement was due to increased sales revenue of the former Far East Joint
Venture. Also, during the second quarter of 2000, the then Far East Joint
Venture recorded a charge of certain asset impairments, severance costs and
other reorganization costs 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. With the integration of the former Far East Joint Venture's CMP
operations into current operations, the Company does not anticipate any
significant changes in financial reporting and trends. Historically, the Company
recorded the CMP costs of the joint venture in operating expenses under a
cost-plus arrangement. With the integration of CMP operations related to the
former Far East Joint Venture, the Company has incurred these same costs as
direct expenses and beginning in the second quarter of 2001, will no longer be
reporting equity in net earnings (loss) of affiliates on the income statement.



LIQUIDITY AND CAPITAL RESOURCES

As of December 2, 2000, the Company had $97.1 million in cash, cash equivalents
and short-term investments, compared to $100.3 million at June 3, 2000. During
the first two quarters of 2001, the Company had $5.9 million of cash provided by
operating activities compared to cash used of $16.7 million in operating
activities during the same period in 2000.

                                       11
<PAGE>   14
Approximately, $10.6 million in cash was provided due to a decrease in working
capital. Other than the cash provided by changes in working capital, cash used
in operations amounted to $4.7 million. The net loss of $32.8 million included
non-cash items totaling $28.1 million: fixed asset impairments and the non-cash
portion of restructuring charges of $19.4 million, depreciation and amortization
expense of $8.8 million, offset by equity in net earnings of affiliates of $0.1
million.

Net cash used in investing activities totaled $11.2 million during the first two
quarters of 2001 compared with net cash used of $17.3 million during the same
period in 2000. Cash was primarily used for capital expenditures of $9.6 million
during the first two quarters of 2001.

Financing activities provided cash of $1.3 million during the first two quarters
of 2001 compared with cash used in financing activities of approximately $0.2
million during the same period of 2000. The sale of stock to employees and the
exercise of stock options generated proceeds of $2.7 million and principal
payments on capital lease obligations amounted to $1.4 million during the first
two quarters ended December 2, 2000.

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.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities" and No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities", established
accounting and reporting standards for derivative financial instruments and
hedging activities. These statements require that the Company recognize all
derivatives as either assets or liabilities on the balance sheet and measure
those instruments at fair value. Derivatives that are not hedges must be
adjusted to fair value through income. If the derivative is a hedge, depending
on the nature of the hedge, changes in the fair value of derivatives will either
be offset against changes in the fair value of the hedged assets, liabilities,
or firm commitments through earnings or included in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The Company will adopt SFAS No. 133 and No. 138 in the first quarter of 2002,
and does not expect the adoption to have a material effect on its financial
condition or results of operations.

In December 1999, the Staff of the Securities and Exchange Commission (SEC)
issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in
Financial Statements". SAB 101 provides guidance on the recognition,
presentation and disclosure of revenue in financial statements of all publicly
held companies. The semiconductor capital equipment industry association and a
number of association members have met with the Staff of the SEC to discuss and
evaluate the applicability of SAB 101 and various practical implementation
considerations. On June 26, 2000, the Staff of the SEC issued Staff Accounting
Bulletin No. 101B (SAB 101B), which permitted the delay in the Company's
implementation date of SAB 101 until the fourth quarter of 2001. Accordingly,
any shipments previously reported as revenue, including revenue reported during
the first nine months of 2001, which do not meet SAB 101's guidance will be
recorded as revenue in future periods. Changes in our revenue recognition policy
resulting from the interpretation of SAB 101 and SAB 101B would not involve the
restatement of prior financial statements, but would, to the extent applicable,
be reported as a cumulative change in accounting principle as of the fourth
quarter of 2001, calculated as of the first day of 2001.

Management believes that SAB 101 and SAB 101B, to the extent that they impact
the Company, will not affect the underlying strength or weakness of the business
operations as measured by the dollar value of the Company's product shipments
and cash flows.
                                       12
<PAGE>   15
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Actual results could differ materially from those projected in the
forward-looking statements because of a number of factors, risks and
uncertainties, including the risk factors described in this discussion and
elsewhere in this report. Such forward-looking statements include, but are not
limited to, statements that relate to the Company's future revenue, product
development, product backlog, customers, demand, acceptance and market share,
competitiveness, gross margins, levels of research and development and operating
expenses, intellectual property, management's plans and objectives for current
and future operations of the Company, the effects of the Company's
reorganization of the Far East Joint Venture, and the markets in which the
Company does business. In addition, the words "anticipate", "expect", "intend",
"believe" and similar expressions generally identify forward-looking statements.
The information included in this report is as of the filing date with the
Securities and Exchange Commission and future events or circumstances could
differ significantly from the forward-looking statements included herein.

                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 depends on selling a small number of high-priced machines. The
Company derives a significant portion of its revenue from the sale of a
relatively small number of CMP systems. Thus, order and delivery delays and
cancellations, even of one or two systems, may cause the Company to miss
quarterly revenue and profit expectations.

The Company's quarterly operating results may fluctuate for reasons not within
its control, which may affect the Company's stock price.

The Company's quarterly operating results may 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 of new product introductions

    -  ability to develop and implement new technologies

    -  timing, cancellation or delay of customer orders and shipments

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

    -  foreign currency exchange rates

    -  changes in analysts' earnings estimates

    -  announcements regarding restructuring, technological innovations,
       departures of key officers or employees, or the introduction of new
       products

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. The Company's stock price may also
fluctuate due to factors specific to the semiconductor industry, which has
experienced significant price fluctuations in recent years. Investors in the
Company's stock should be willing to incur the risk of such price fluctuations.

                                       13
<PAGE>   16
If the market price of the Company's stock is adversely affected, the Company
may experience difficulty in raising capital or making acquisitions. In
addition, the Company may become the object of securities class action
litigation. If the Company is sued in a securities class action, the Company may
incur substantial costs and management's attention and resources may be
diverted.

The Company's current business model is predicated on closing and fulfilling
expected orders for its Momentum(TM) product. A significant portion of the
Company's projected revenue for the year ending June 2, 2001 depends on sales of
its Momentum(TM) product. Although initial customer reaction to Momentum(TM) has
been positive, this response may not translate into sales of Momentum(TM) on the
scale or on the time frame the Company anticipates. For instance, market
conditions in the semiconductor industry may cause potential purchasers of
Momentum(TM) to delay investment in new equipment, which could reduce demand for
Momentum(TM). In addition, rollout of Momentum(TM) may be slowed due to
manufacturing problems, unforeseen technical problems with the Momentum(TM)
product itself or changes in the CMP marketplace that differ from our
expectations. If the Company is unable to close anticipated orders for the
Momentum(TM) product or fulfill orders for the Momentum(TM) product in its year
ending June 2, 2001, the Company's revenue for that period will be adversely
affected.

The Company must succeed in selling CMP equipment for 300 millimeter and copper
applications in order to increase its revenue and maintain market share.
Semiconductor manufacturers currently purchase CMP equipment predominantly to
manufacture 200 millimeter wafers, using CMP to polish the tungsten and oxide
layers of these wafers. Many of those same manufacturers are now beginning to
develop the ability to make 300 millimeter wafers and to process copper layers
for both 200 millimeter and 300 millimeter wafers. Many of these manufacturers
are currently qualifying CMP equipment for 300 millimeter tungsten, 300
millimeter oxide and for copper layers for both the 200 millimeter and 300
millimeter wafers. In the future, it is anticipated that semiconductor
manufacturers will purchase CMP equipment for volume production of 300
millimeter and/or copper-based wafers. If the Company does not win qualification
contests for 300 millimeter and/or copper-based wafers, it may experience
difficulty achieving volume sales of this next-generation equipment to
semiconductor manufacturers, which could result in declining revenues.

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 price-based 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.

    -  Once a semiconductor manufacturer commits to purchase a competitor's
       equipment, the manufacturer generally relies on that equipment for an
       entire production line and continues to purchase that equipment
       exclusively for an extended period of time.

Increased competitive pressure could lead to lower prices for the Company's
products, thereby damaging the Company's business. There can be no assurance
that the Company will be able to compete successfully in the future.

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. The success of the Company in
developing, introducing and selling new and enhanced systems depends upon a
variety of factors including:

    -  product selection

    -  timely and efficient completion of product design and development

                                       14
<PAGE>   17
    -  timely and efficient implementation of manufacturing and assembly
       processes

    -  product performance in the field

    -  effective sales and marketing

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 have had 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.

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:

    -  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.

    -  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.

There can be no assurance that the Company will be successful in preventing
product and process development problems that could potentially harm the
Company's results of operations.

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 loss of a significant customer or a
substantial reduction in orders by any significant customer, including
reductions due to customer departures from recent buying patterns, market,
economic or competitive conditions in the semiconductor industry, could damage
the Company's business.

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.

The Company's success depends on international sales, particularly in Asia and
Europe. International sales accounted for 73% of the Company's total revenue for
the second quarter of 2001, 70% for 2000 and 38% for 1999. 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

    -  collecting accounts receivable

    -  inadequate intellectual property protection

    -  intense price competition

                                       15
<PAGE>   18
The Company derives a substantial portion of its revenues from customers in
Asian countries particularly Taiwan and Korea. Economic developments in late
1997 and early 1998 resulted in decreased capital investments by Asian
customers. Recent economic developments indicate that the economies of Taiwan,
Korea and other Asian countries have recovered somewhat from 1997 and 1998
levels. Any negative economic developments or delays in the economic recovery of
Asian countries could result in the cancellation or delay of orders for the
Company's products from Asian customers, thus damaging the Company's business.

The Company may not realize the potential benefits of the reorganization of the
Far East Joint Venture. The reorganization of the Far East Joint Venture makes
the Company more dependent on the CMP business. If this market fails to continue
to develop, the Company will suffer.

Also, the success of the Company's CMP operations in Asia after the
reorganization depends upon its ability to retain key employees. None of the key
employees in Asia have long-term employment contracts. The Company does not have
any direct experience managing operations in Asia. Some employees may decide to
leave after the reorganization for this and other reasons. This may negatively
affect the Company's operations in Asia, which represent a large portion of the
Company's total revenue.

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

                                       16
<PAGE>   19
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. In the
event the Company loses any of its intellectual property rights or otherwise
determines that it needs to obtain licenses to third party intellectual
property, there is no assurance that the Company will be able to obtain such
licenses on reasonable terms, if at all. The Company currently licenses the
right to manufacture CMP machines employing an orbital motion in its Avant Gaard
676, 776, 876 and Momentum (TM) 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 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

    -  limits on the Company's ability to successfully incorporate acquired
       technology and rights into its service offerings

    -  maintenance of uniform standards, controls, procedures and policies

The Company is dependent on key management and technical personnel. The
Company's performance and ability to execute is substantially dependent on the
performance of the Company's executive officers and key technical and
engineering employees. The loss of the services of any of these executive
officers or key employees could damage the Company's business.

The Company's future success also depends on its ability to identify, hire,
train and retain other highly qualified managerial and technical personnel.
Competition for such personnel is intense. If the Company is not successful in
identifying, hiring, training and retaining such personnel, it could damage the
Company's business.

The Company uses financial instruments that potentially subject it to
concentrations of credit risk. The Company enters into foreign exchange
contracts to hedge certain firm commitments denominated in foreign currencies,
principally Japanese Yen. The Company also invests its cash in deposits in
banks, money market funds, government and corporate debt securities. The Company
does not use derivative financial instruments in its investment portfolio. The
Company places its investments with high credit quality issuers and by policy,
limits the amount of credit exposure to any one issuer. The Company mitigates
default risk by investing in only the safest and highest credit quality
securities and by monitoring the credit rating of investment issuers. The
portfolio includes only marketable securities with active secondary or resale
markets to ensure portfolio liquidity. To date, the Company has not experienced
material losses on these investments. However, there can be no assurance that
the Company will not in the future experience losses that could damage the
Company's business.

                                       17
<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 June 3, 2000.


ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.


At the Company's Annual Meeting of Shareholders held on October 13, 2000,
shareholders elected Messrs. James N. Farley, Sanjeev Chitre, Richard J.
Faubert, Makoto Kouzuma, Neil R. Bonke, Richard S. Hill, Roger D. McDaniel,
Kenneth Levy and Carl Neun 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>
         James N. Farley                             25,263,208                         2,425,603
         Sanjeev Chitre                              25,168,504                         2,520,307
         Richard J. Faubert                          25,306,075                         2,382,736
         Makoto Kouzuma                              25,319,579                         2,369,232
         Neil R. Bonke                               25,414,137                         2,274,674
         Richard S. Hill                             25,433,612                         2,255,199
         Roger D. McDaniel                           25,325,165                         2,363,646
         Kenneth Levy                                25,460,653                         2,228,158
         Carl Neun                                   25,417,847                         2,270,964
</TABLE>

Shareholders approved an amendment to the 1995 Stock Plan for Employees and
Directors of Speedfam-IPEC, Inc., to increase the shares reserved for issuance
thereunder by 2,000,000 shares. The results of the voting for the matter were as
follows:

<TABLE>
<CAPTION>
               For                                       Against                          Abstained
         ------------------                         -----------------               ---------------------
<S>                                                 <C>                             <C>
            12,818,383                                  7,778,918                           77,478
</TABLE>

Shareholders approved an amendment to the 1995 Stock Plan for Employees and
Directors of Speedfam-IPEC, Inc., to provide for immediate vesting of eligible
Director option grants on the date of grant for both the initial and the annual
automatic grants. The results of the voting for the matter were as follows:

<TABLE>
<CAPTION>
               For                                       Against                           Abstained
         -----------------                          -----------------                 -------------------
<S>                                                 <C>                               <C>
            14,928,475                                  5,647,716                           98,588
</TABLE>

Shareholders approved an amendment to the 1995 Stock Plan for Employees and
Directors of Speedfam-IPEC, Inc., to increase the shares reserved for issuance
thereunder by 300,000 shares. The results of the voting for the matter were as
follows:

<TABLE>
<CAPTION>
               For                                       Against                           Abstained
         -----------------                          -----------------                 -------------------
<S>                                                 <C>                               <C>
            18,464,947                                  2,162,072                           47,760
</TABLE>

                                       18
<PAGE>   21
Shareholders approved an amendment to the 1995 Stock Plan for Employees and
Directors of Speedfam-IPEC, Inc., to provide for annual increases in the number
of shares reserved for issuance thereunder by the evergreen amendment on June 1
of each year (beginning June 1, 2001) by the lesser of (i) 1,000,000 shares,
(ii) 1% of the outstanding shares of common stock of the Company or (iii) a
number of shares determined by the Board of Directors. The results of the voting
for the matter were as follows:

<TABLE>
<CAPTION>
               For                                       Against                           Abstained
         -----------------                          -----------------                 -------------------
<S>                                                 <C>                               <C>
            16,924,807                                  3,648,752                          101,220
</TABLE>

Shareholders approved the appointment of KPMG LLP as independent auditors for
the 2001 fiscal year. The results of the voting for the matter were as follows:

<TABLE>
<CAPTION>
               For                                       Against                           Abstained
         -----------------                          -----------------                 -------------------
<S>                                                 <C>                               <C>
            27,549,824                                     97,632                           41,355
</TABLE>

PART II - OTHER INFORMATION

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

             (a)    Exhibits.

                      Exhibit 27.1 Financial Data Schedule

             (b) Reports on Form 8-K.

                           None


                                       19
<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.




<TABLE>
<S>                                       <C>
Date:     January 3, 2001                 /s/  J. Michael Dodson
          --------------------             ----------------------
                                           J. Michael Dodson
                                           Secretary and Chief Financial Officer
                                           (Principal Financial Officer)


Date:     January 3, 2001                 /s/ G. Michael Latta
          --------------------             ---------------------
                                           G. Michael Latta
                                           Corporate Controller
                                           (Principal Accounting Officer)
</TABLE>


                                       20
<PAGE>   23
                                  EXHIBIT INDEX

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




                                       21