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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-K

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

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                         COMMISSION FILE NUMBER 0-11370

                              CERPROBE CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<S>                                        <C>
                DELAWARE                                  86-0312814
     (STATE OR OTHER JURISDICTION OF                   (I.R.S. EMPLOYER
     INCORPORATION OR ORGANIZATION)                   IDENTIFICATION NO.)

  1150 NORTH FIESTA BOULEVARD, GILBERT,                      85233
                  ARIZONA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                  (ZIP CODE)
</TABLE>

                                 (480) 333-1500
                 (ISSUER TELEPHONE NUMBER, INCLUDING AREA CODE)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                      NONE
                                (TITLE OF CLASS)

             SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT:
                     COMMON STOCK, PAR VALUE $.05 PER SHARE
                        PREFERRED SHARE PURCHASE RIGHTS
                                (TITLE OF CLASS)

     Indicate by check mark whether the issuer (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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]

     As of March 27, 2000, the aggregate market value of the voting stock held
by non-affiliates of the registrant, computed by reference to the last sale
price of such stock as of such date on The Nasdaq National Market(R), was
$125,824,547. Shares of common stock held by each officer and director and by
each person who owned 5% or more of the outstanding common stock have been
excluded in that such persons may be deemed to be affiliates. This determination
of affiliate status is not necessarily conclusive.

     As of March 27, 2000, there were 9,423,052 shares of the registrant's
common stock outstanding.
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                              CERPROBE CORPORATION

                           ANNUAL REPORT ON FORM 10-K
                      FOR THE YEAR ENDED DECEMBER 31, 1999

                               TABLE OF CONTENTS

                                     PART I

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Item 1.   Business....................................................       1
Item 2.   Properties..................................................      18
Item 3.   Legal Proceedings...........................................      18
Item 4.   Submission of Matters to a Vote of Security Holders.........      19

                                   PART II
Item 5.   Market for the Registrant's Common Equity and Related
          Stockholder Matters.........................................      19
Item 6.   Selected Consolidated Financial Data........................      19
Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...................................      21
Item 7A.  Quantitative and Qualitative Disclosures About Market
          Risk........................................................      29
Item 8.   Financial Statements and Supplementary Data.................      29
Item 9.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure....................................      29

                                   PART III
Item 10.  Directors and Executive Officers of the Registrant..........      30
Item 11.  Executive Compensation......................................      31
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management..................................................      34
Item 13.  Certain Relationships and Related Transactions..............      36

                                   PART IV
Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form
          8-K.........................................................      37
Signatures............................................................      42
Financial Statements..................................................     F-1
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                                     PART I

ITEM 1.  BUSINESS

INTRODUCTION AND GENERAL DEVELOPMENT OF BUSINESS

     Cerprobe Corporation ("Cerprobe" or the "Company") offers comprehensive
solutions for semiconductor test interconnect and is a leading manufacturer of
probe cards, automatic test equipment ("ATE") interface assemblies, ATE test
boards, and test sockets/contactors. The Company believes it is the only company
that designs, manufactures, and assembles each of the electromechanical
components that assure the integrity of the electrical test signal that passes
from the ATE to the integrated circuit ("IC") device under test ("DUT"). The
Company's products address critical functions to assure IC quality, reduce
manufacturing costs, improve the accuracy of manufacturing yield data, and
identify repairable memory ICs.

     The Company has grown its business and expanded its product lines through
internal product development, strategic acquisitions, joint
development/ventures, and licensing of technologies. In 1990, the foundation for
the growth of the Company's core probe card business was the development of the
Company's CerCard(TM) technology. In April 1995, the Company acquired Fresh Test
Technology Corporation ("Fresh Test"), which enabled the Company to expand its
product line to include ATE interface assemblies. In December 1996, the Company
acquired Cerprobe Interconnect Solutions, Inc. ("CIS"), formerly CompuRoute,
Inc., which enabled the Company to offer ATE test boards, the Company's first
packaged IC testing product. In May 1997, the Company established a joint
development agreement with Japan-based Mitsubishi Materials Corporation. This
joint development has resulted in the development of the Company's first next
generation probe card based upon the Company's proprietary P4(TM)
(Photolithographic Pattern Plated Probe) technology. In September 1998, the
Company acquired France-based Cerprobe Europe S.A.S., formerly SemiConducteur
Services, S.A., a probe card company, which enabled the Company to further
expand in and service the European market. Additionally, in November 1998, the
Company signed an agreement with Feinmetall GmbH, a German contact technology
company, which provided the Company with an exclusive license to design,
manufacture, and distribute Vertical integrated Probe (ViProbe(R)) products
worldwide, except Europe. Finally, in December 1999, the Company acquired OZ
Technologies, Inc. ("OZ"), which enabled the Company to offer test sockets, test
contactors, and test boards used for testing packaged ICs.

     The Company maintains regional full service facilities in Arizona,
California, and Texas as well as sales offices in Colorado, Florida,
Massachusetts, and Oregon to serve the U.S. market for its products and
services. The Company maintains full service facilities in Scotland and France
and a sales office in Germany to serve the European market. The Company also
maintains full service facilities in Singapore and Taiwan, as well as sales
offices in Japan and Malaysia, to serve the Asian market. Each of the Company's
facilities is located in proximity to major semiconductor manufacturing centers.
The Company's focus on high quality products and innovative technologies has
enabled it to establish strong relationships with leading worldwide
semiconductor manufacturers. In 1999, the Company's top five customers were
Intel Corporation, Texas Instruments, Motorola Inc., IBM Corporation, and LSI
Logic Corporation.

     The Company believes it is a leading provider of high quality semiconductor
testing products and services. The Company's goal is to enhance its leadership
position and increase its domestic and international market share. The Company's
strategy to achieve its goal includes the following key elements:

     - Provide comprehensive solutions for semiconductor test integration

     - Maintain strong customer relationships

     - Expand global presence

     - Focus on technological innovation

     - Provide quality products and services

     The Company was incorporated in California in 1976 and reincorporated in
Delaware in 1987. The Company maintains its principal executive offices at 1150
North Fiesta Boulevard, Gilbert, Arizona 85233 and

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its telephone number is (480) 333-1500. Unless the context indicates otherwise,
all references to "Cerprobe" or the "Company" refer to Cerprobe Corporation and
its subsidiaries.

INDUSTRY OVERVIEW

     The semiconductor industry is characterized as cyclical, with capacity boom
cycles followed by bust cycles that create tremendous pricing pressures. Despite
these cycles, the IC market has generally been a high volume, high growth
commodity market characterized by rapid technological change. According to
independent semiconductor market research, worldwide production of ICs increased
from approximately 41 billion units in 1995 to nearly 60 billion units in 1999.
Presently the industry is in a recovery period after a severe downturn driven by
excess capacity, pricing pressures, and the economic crisis in Asia.

     Growing demand for ICs has driven the increased demand for semiconductor
testing products, such as probe cards, ATE interface assemblies, ATE test
boards, and package test sockets/contactors. Because probe cards, test
sockets/contactors, and to a lesser extent ATE test boards, are consumable
products rather than capital equipment, the historically rapid unit growth of
ICs and new IC designs have in particular fueled the demand for probe cards,
test sockets/contactors, and ATE test boards. VLSI Research Inc. ("VLSI"), an
independent semiconductor market research company, estimates the worldwide
market for probe cards in 2000 to be approximately $366 million. The Company
estimates that the market for ATE test boards is approximately $300 million.
Fleck Research, an independent connector research company, estimates the
worldwide market for test sockets/contactors in 2000 to be approximately $600
million. Based upon VLSI and other industry data on projected sales of new
material handling equipment (wafer probers/handlers), the Company estimates the
market for ATE interface assemblies to be $150 million.

     In addition to the historically rapid unit growth in ICs, technological
advances in ICs have also fueled the increased demand for semiconductor testing
products. IC technology is changing rapidly due to constantly increasing demand
for greater functionality and higher processing speeds. Advances in IC design
and process technologies have enabled manufacturers to meet these demands by
producing ICs with shrinking geometries and ever greater circuit densities,
higher pin counts, more varied configurations, and increased complexity. The
intense competition among semiconductor manufacturers to be first to market with
a new IC and gain a competitive edge has caused design and production cycles to
continue to shrink. As a result of the increased complexity of ICs and shorter
product life cycles, demand for sophisticated test interconnect products that
can be produced in short lead times has increased.

     These trends in the IC market have caused corresponding trends in the probe
card, ATE interface assembly, ATE test board, and test sockets/contactors
markets. IC manufacturers are placing added emphasis on greater test accuracy,
testing at higher speeds, testing multiple ICs simultaneously, and quicker
turnaround times for testing products. As IC technology has become increasingly
sophisticated and complex, it has become more difficult for IC manufacturers to
maintain the necessary technology, expertise, personnel, and equipment to design
and produce internally all of the various components required to carry the
electrical signal between the ATE tester and the DUT. The Company believes
competitive market conditions have led manufacturers to rely increasingly on
outsourcing to reduce their own investment in the personnel, equipment, and
facilities necessary for the specialized design and manufacturing of testing
products in order to concentrate on the design, production, and distribution of
their core IC products.

INTEGRATED CIRCUIT TESTING

     Semiconductor manufacturers test ICs during the design and manufacturing
processes to assure IC quality, reduce manufacturing costs, improve the accuracy
of manufacturing yield data, and identify repairable memory ICs. Semiconductor
manufacturers generally test each IC two or three times before completion of the
fabrication process in order to maintain high manufacturing yields and
acceptable profit margins. The increased cost associated with manufacturing ICs
has increased the importance of IC testing in the manufacturing process.

                                        2
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  Wafer Probing

     Most semiconductor manufacturers test ICs in wafer form by probing each
individual IC to determine whether it meets design specifications. Probing
involves establishing temporary electrical contact between the ATE and the DUT.
The ATE transmits electrical signals to the ICs and analyzes the signals upon
their return. The testing of ICs in wafer form is important to avoid incurring
the significant expense of assembling and packaging ICs that do not meet
specifications. The principal components of a wafer probing system include:

     - The ATE, which is capital equipment that transmits the electrical signals
       to the IC and evaluates the signals upon their return

     - The ATE test board, a complex, multilayer printed circuit board ("PCB")
       that is mounted directly to the ATE and transfers the test signals
       between the ATE and the spring contact tower of the ATE interface
       assembly

     - An ATE interface assembly, typically consisting of a spring contact
       tower, lock ring, and insert ring, that mechanically connects the ATE
       with the wafer prober and carries the electrical signals between the ATE
       and the probe card attached to the wafer prober

     - A probe card, which consists of a complex, multilayer PCB and numerous
       probes positioned to "touch down" on or make electrical contact with
       metallized test pads on the IC

     - A wafer prober, which is capital equipment that moves the wafers into
       position enabling the probe card probes to touch down on the test pads

     During the probing process, the wafer prober successively positions each IC
on a wafer so that the pads on the IC align and make contact with the probes on
a probe card. The ATE transmits electrical signals through the ATE interface
assembly to the probe card. The ATE evaluates the return signals from the probe
card to determine whether each IC meets design specifications. Depending on the
complexity of the DUT, the testing of a single IC, during wafer probe, can last
from a few milliseconds to over a minute.

  Package (Final) Testing

     ICs that pass the initial testing at the wafer level are separated from the
wafer and bonded onto plastic, ceramic, or other packages with extended leads or
solder bumps. The packaged IC must then be tested to validate design and
performance specifications. Package testing establishes temporary electrical
contact between the ATE and the DUT. The ATE transmits electrical signals to the
ICs and analyzes the signals upon their return. The testing of packaged ICs is
important to avoid shipping ICs that have incurred assembly and handling defects
or do not meet the performance requirements of the application. The principal
components of a package IC test system include:

     - The ATE, which is capital equipment that transmits the electrical signals
       to the IC and evaluates the signals upon their return

     - The ATE test board, a PCB that is mounted directly to the ATE and
       transfers the test signals between the ATE and the test socket/contactor

     - A test socket/contactor, which consists of numerous micro spring contacts
       positioned to touch down or make electrical contact with the test pads on
       the packaged IC

     - A handler, which is capital equipment that successively positions each IC
       into a test socket/contactor enabling the temporary electrical connection

                                        3
<PAGE>   6

THE COMPANY'S STRATEGY

     The Company believes it is a leading provider of high quality semiconductor
testing products and services. The Company's goal is to enhance its leadership
position and increase its domestic and international market share. The Company's
strategy to achieve its goal includes the following key elements:

     - Provide Comprehensive Solutions for Semiconductor Test Integration.  The
       Company is focused on providing its worldwide customers with
       comprehensive solutions for semiconductor test integration, consisting of
       each of the electromechanical components necessary to assure the
       integrity of the electrical test signal. Historically, each component of
       the testing system has been supplied by different vendors. The Company
       believes IC manufacturers increasingly are seeking a single source
       provider capable of supplying comprehensive and integrated solutions for
       the components necessary to assure a clean test signal. The Company
       believes it is the only company that designs, manufactures, and assembles
       each of the components in the critical test signal path. The Company
       intends to capitalize on its market position and technical expertise by
       broadening existing product lines through internally developed products
       and as appropriate through acquisitions, joint ventures, and technology
       financing agreements.

     - Maintain Strong Customer Relationships.  The Company intends to continue
       to maintain its long standing relationships with its broad customer base,
       which includes leading semiconductor manufacturers such as Intel
       Corporation, Texas Instruments, Motorola Inc., IBM Corporation, and LSI
       Logic Corporation, as well as with emerging companies. Engineering,
       sales, and management personnel collaborate closely with customer
       counterparts to determine customer needs and specifications and custom
       design specific testing solutions. The Company has accumulated
       substantial design expertise through these collaborations and believes
       this expertise, along with its in-house staff of 155 engineers and
       designers, provides it with a competitive advantage in meeting customer
       requirements for increasingly sophisticated testing products. To help
       meet the demanding service needs of the semiconductor manufacturing
       industry, all of the Company's facilities are located in proximity to
       semiconductor manufacturing centers in the United States, Europe, and
       Asia.

     - Expand Global Presence.  The Company believes that the international
       market for its products is at least as large as the domestic market. The
       Company intends to continue its expansion into international markets,
       including Europe and Asia. To date, the Company's international expansion
       includes the establishment of full service facilities in Scotland,
       France, Singapore, and Taiwan and sales and service facilities in Japan
       and Malaysia. In the Company's international operations, it employs
       managers native to those markets to minimize language and cultural
       barriers and provide market-specific technical and operational insight.

     - Focus on Technological Innovation.  The Company custom designs or
       customizes its products to manufacturers' particular IC design
       specifications. Changes in the IC design require changes in the probe
       card and test socket/contractor, and depending on the design change, in
       the ATE test board. Consequently, the Company continually develops new
       designs and product enhancements. The Company collaborates with IC
       manufacturers and semiconductor equipment manufacturers to anticipate and
       address technological advances in semiconductor testing and to improve
       performance of its products. The Company is focusing its engineering and
       new product development efforts toward producing a variety of high
       performance custom designed products to test more complex ICs, to test at
       higher speeds, and to test more ICs in parallel.

     - Provide Quality Products and Services.  The Company believes it has
       developed a reputation as a leader in providing high quality products and
       services. This high quality level is achieved through a robust,
       documented, and controlled manufacturing process and the application of
       sound quality management policies and practices. The Company's use of
       advanced metrology tools, which ensure precise measurement of all key
       product parameters, is a cornerstone of its quality management system.
       The Company believes that its design capabilities, customer focus, and
       production methods enhance its ability to provide its customers with high
       quality products and services with quick turnaround times.

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PRODUCTS AND SERVICES

     Historically, each component of the IC testing system has been supplied by
different vendors. As a result, IC manufacturers frequently have been left with
the task of combining separate components from many small vendors into a single
integrated testing system. The Company believes IC manufacturers increasingly
are seeking a single source provider capable of supplying comprehensive
solutions for the components necessary to assure a clean test signal between the
testing equipment and the DUT. Through its manufacture of probe cards, ATE
interface assemblies, ATE test boards, and test sockets/contactors, the Company
is able to be a single source provider for its customers.

  Probe Card Products

     The Company believes it is the leading U.S. producer of probe cards, which
constitute the majority of the Company's business. Probe cards accounted for
65%, 72%, and 73% of net sales in 1999, 1998, and 1997, respectively. Probe card
sales will continue to grow. However, as a result of the OZ acquisition in
December 1999 and related new product and service offerings, the Company's probe
card sales likely will become a smaller percentage of net sales in the future.

     The probe card consists of a complex, multilayer (some in excess of 30
layers) PCB and utilizes a number of probes designed to contact (or "probe")
separately a series of electrical contact points (or "pads") on the IC in wafer
form. At the point of contact with the wafer, each probe is significantly
smaller than a human hair. The majority of the Company's probe cards have fewer
than 200 probes, although the Company's complex probe cards can have more than
3,000 probes. Because the type and complexity of ICs vary, the number and
positioning of the probes and the size of each probe card must be custom
designed for the specific IC being tested to ensure proper alignment.

     The testing of a single IC during wafer probe can last from a few
milliseconds to over a minute, depending on the complexity of the semiconductor
device. Unlike the capital equipment used in the semiconductor manufacturing
process, probe cards are considered consumable products. The Company believes
the average life of a probe card is approximately three months, which provides
for 250,000 to 500,000 touchdowns with each touchdown generally representing the
testing of a single IC. However, probe cards for application specific integrated
circuits ("ASICs") might be used to test a single batch order of 5,000 ICs and
then is discarded. The Company estimates that about one-third of its probe cards
become obsolete within six months of being placed into service, primarily as a
result of customer initiated design changes. However, damage due to faulty test
handling equipment or operator error can render a probe card useless prior to
the expiration of its normal life.

     The Company has invested over 20 years in the design of different types of
probe card components and the manufacturing processes required to assemble a
finished probe card. Because the signals carried by the probe card are complex
and vary by customer, the Company manufactures many types of probe cards.

     The Company's probe card products utilize four technologies:

     Epoxy ring technology uses probes that connect directly to a printed
circuit board. Probe cards using this type of technology are capable of high
frequency, high density probing. The Company introduced its first ceramic based
epoxy ring probe card, the CerCard(TM), in October 1990. Sales of ceramic based
epoxy ring probe cards generated approximately 58%, 63%, and 61% of the
Company's net sales for 1999, 1998, and 1997, respectively. The Company
anticipates that these cards will continue to account for a decreasing
percentage of its net sales.

     Ceramic blade technology uses a ceramic blade attached to a needle designed
to make contact with the IC pads. Probe cards using ceramic blade technology,
which was developed and patented by the Company, are capable of low current and
low density probing. With optional features, the ceramic blade can be used for
high frequency probing.

     Vertical (buckling beam) probe technology uses vertical probes that match
the pattern of the pads on the IC being tested. This technology allows for the
probing of pads in the center of an IC (area array) and is used

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generally for high density applications. In November 1998, the Company licensed
the ViProbe(R) (Vertical integrated Probe) products from Feinmetall GmbH, a
German contact technology company. The ViProbe(R) products address customers'
current requirements of probing area array and also testing multiple ICs
simultaneously, meeting the needs of memory manufacturers.

     Photolithographic technology is a chemical plating process that uses photo
masks to pattern unique flex circuit contact sets used on probe cards. The flex
circuit contact sets are attached to probe cards using mechanical leaf springs.
The Company has patented its P4(TM) (Photolithographic Pattern Plated Probe)
technology for use in several probe card applications. The first application is
for probe cards that are capable of fine pitch, ultra high frequency, and high
accuracy probe tip placement on the decreasing size of IC test pads. Another
application using P4(TM) is a vertical contact product using a C-shaped probe.
Its vertical contact set, when fully developed, is expected to enable probing of
ultra fine pitches and testing of multiple ICs simultaneously, which is a
requirement for the memory market. The Company is jointly developing
P4(TM)-based probe cards with Mitsubishi Materials Corporation.

     The Company's probe cards generally range in price from $500 to over
$65,000, depending upon the complexity and performance specifications of the
probe cards.

  ATE Interface Assemblies

     The Company entered the ATE interface business through the acquisition, in
April 1995, of Fresh Test, a company engaged primarily in the design,
manufacture, and sale of ATE interface products. An ATE interface assembly
securely connects the ATE to the wafer prober or handler and is used to carry
signals from the ATE to the DUT. An interface assembly typically consists of
custom mechanical docking hardware such as a lock ring and insert ring, as well
as two intricate multilayer PCBs connected by either a system of cables or,
increasingly, spring-loaded contact pins. Interface assemblies range from small,
single board, cable-type interfaces for less complex systems to high speed, high
frequency, digital or mixed signal interfaces used in testing more complex ICs.
One end of the interface connects to the ATE and the other to either a probe
card fixture mounted on a prober or a test socket mounted to a handler for
packaged IC testing. In each case, the reliability of the test is highly
dependent on maintaining the integrity of the signal between the ATE and the IC
being tested.

     Generally, each ATE interface assembly is custom designed or customized for
each application. The Company's ATE interface product line transmits a clean
electrical test signal from the ATE to the probe card or test socket and carries
a return signal back to the ATE after the circuit processes the signal. The
Company's ATE interface products are designed to optimize the integrity of
return signal data through the reduction of channel crosstalk and the matching
of delay times and impedance, thereby increasing the accuracy of the test data.
Because the Company's ATE interface assemblies enable the ATE to provide
reliable yield data by allowing for clear signal transmission, its interfaces
can also be cost saving devices. The Company's interface assemblies feature ease
of mechanical installation and facilitate access to the probe card or test
socket during testing.

     The ATE and related wafer prober and handler typically have useful lives of
five to seven years. While the Company's ATE interface assemblies have a similar
useful life, any upgrade of the ATE or reconfiguration of the prober or handler
used with a specific ATE requires a new ATE interface assembly. As a result, the
Company believes its ATE interface products have an average life of two to three
years.

     The Company's ATE interface assemblies generally range in price from $5,000
to over $65,000.

  ATE Test Boards

     Through the acquisition of CIS in December 1996, the Company expanded its
product offerings to include custom-designed ATE test boards. The CIS
acquisition also enabled the Company to internalize the fabrication of
specialized ATE PCBs, which are a critical component in its probe card, ATE
interface assembly products, and test socket/contactor integrated units, rather
than rely exclusively on third party PCB manufacturers.

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     ATE test board products are also referred to as prober interface boards,
DUT boards, load boards, handler interface boards, or performance boards,
depending on whether the ATE test board is used for wafer probing or package
testing. The Company has developed a database for different ATE designs, which
are used as starting designs and customized for the particular IC to be tested.
The ATE test board is a complex, multilayer (some in excess of 40 layers) PCB
that is mounted to the ATE and transfers the test signals between the ATE and
the ATE interface assembly of a wafer prober or handler. The Company believes
its ATE test boards have an average life of one year although their useful life
could be much longer. The Company's ATE test board products range in price from
$2,000 to over $30,000.

  Test Sockets/Contactors

     Through the acquisition of OZ Technologies, Inc. in December 1999, the
Company expanded its product offerings to include custom-designed test
sockets/contactors. The OZ acquisition enabled the Company to become a leading
provider of test sockets/contactors for the high performance package test
market.

     The test sockets/contactors provide the contact points between the packaged
IC and the test interface board. Test sockets/contactors must accommodate
repeated actuations (package insertions and removals) while maintaining strict
mechanical and electrical operating tolerances. The Company specializes in high
performance test sockets/contactors for Ball Grid Array ("BGA") and Chip Scale
Packages ("CSP").

     The testing of a packaged IC can last from a few milliseconds to over a
minute, depending on the complexity of the semiconductor device. Like probe
cards, test sockets/contactors are considered consumable products. The Company
believes the average life of test sockets/contactors is approximately one month,
which provides for 50,000 to 100,000 touchdowns with each touchdown generally
representing the testing of a single packaged IC. However, damage due to faulty
test handling equipment or operator error can render test sockets/contactors
useless prior to the expiration of its normal life.

     The Company's test sockets/contactors products range in price from $2,000
to over $6,000.

ENGINEERING AND PRODUCT DEVELOPMENT

     The customized nature of the Company's products results in ongoing
engineering and product development being included in the cost of goods sold for
the Company's products. In addition, the Company has devoted and will continue
to devote substantial resources to materials, process engineering, and product
development. Engineering and product development expenses were $4,806,971,
$3,101,082, and $996,253 for the years ended December 31, 1999, 1998, and 1997,
respectively, which represented 7.7%, 4.1%, and 1.4% of net sales, respectively.
At December 31, 1999, the Company employed 155 engineers and designers.

     The Company has from time to time collaborated with certain customers that
pay the Company to develop new products. Funds received from such engineering
and product development are accounted for as offsets to the total expenses for
the related project.

     In 1997, the Company entered into a joint development agreement with
Mitsubishi Materials Corporation to accelerate the development of the Company's
next generation probe card, which will utilize the Company's proprietary P4(TM)
technology to address increasing demand for tighter pitches and the higher
performance requirements for wafer probing. In 1998, the Company expanded the
agreement with Mitsubishi Materials Corporation to apply P4(TM) technology to
develop vertical probe cards to address customers' increasing interest in
testing more ICs in parallel. The agreement provided that each party will own
any patents and know-how resulting from the efforts of both parties will be
owned jointly. Under the joint development and related agreements, the Company
transferred to Mitsubishi Materials Corporation and a Japanese electronics
distribution company the exclusive right to design, manufacture, and distribute
P4(TM)-based probe cards in Japan.

     In November 1998, the Company signed a 10-year agreement with Feinmetall
GmbH, a German contact technology company. This agreement gives the Company the
exclusive license to design, manufacture, and distribute Vertical integrated
Probe (ViProbe(R)) products worldwide, except Europe. The technology was

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transferred to the Company's Gilbert facility in the fourth quarter of 1999. The
Company and Feinmetall intend to jointly enhance and extend the ViProbe(R)
family of products.

     In June 1998, the Company introduced the StingRay(TM) flexible interface.
This unique product enabled customers to more rapidly and more easily
reconfigure their interface system for a new test set-up or tester/ prober test
combination using the same interface assembly with interchangeable spring
contact towers and probe card trays.

     To address the final package test requirements of increased pin counts and
increasing operating frequencies, CIS has furthered its technological
advancements in microvia drilling capabilities, mixed dielectric board
materials, and ever increasing board layer count. Microvia technology is the
ability to drill holes smaller than 8 mils in diameter. These holes are needed
in high density DUT boards to test advanced IC package types such as BGA and
CSP. CIS has developed seven different levels of board material offerings,
including several proprietary mixed dielectric materials to provide the
customers with solutions targeted specifically for their high performance test
applications. Through leading edge manufacturing processes, CIS is able to
reliably produce printed circuit test boards in excess of 40 layers.

     In December 1999, the Company acquired OZ Technologies, Inc., a leader in
the design and manufacture of high performance test sockets/contactors. OZ also
has under development products for next generation testing requirements. These
products are addressing thermal management issues, the ability to test more ICs
in parallel (strip testing), as well as providing validation platforms that test
IC devices in the end system environment at much lower costs than today's
technology.

MANUFACTURING

     The Company's manufacturing objective is to produce quality products that
meet its customers' testing needs and design specifications on a timely and cost
efficient basis.

     The Company's manufacturing operations consist of procurement and/or
fabrication of components and subassemblies, assembly, and extensive testing of
finished products. All components and subassemblies are inspected for mechanical
and electrical compliance to the Company's specifications and all finished
products are tested against the Company's and customers' specifications.

     The Company believes that it is able to respond more quickly and accurately
to its customers' needs by maintaining manufacturing facilities and technical
support in geographic markets where its semiconductor manufacturing customers
are located. The Company designs and manufactures its probe cards in Arizona,
California, and Texas as well as in Scotland, France, Singapore, and Taiwan. The
Company typically designs and manufactures its probe cards within two weeks of
receiving a customer order. The Company manufactures its interface assemblies in
its Arizona facility. The Company typically designs and manufactures its ATE
interface assemblies within eight weeks of receiving an order. The Company
conducts its ATE test board and related PCB fabrication and assembly operations
at its Dallas, Texas facility. The Company typically designs and fabricates its
ATE test boards within four weeks of receiving an order. The Company designs and
manufactures its test sockets/contactors in its Hayward, California facility and
typically supplies the product within five weeks of receiving a customer order.

     The Company emphasizes quality and reliability in both the design and
manufacture of its products. ISO 9000, the internationally recognized standard
for quality management, sets the criteria for the Company's quality management
system throughout its manufacturing processes. The Company's Scotland facility
is ISO 9001 certified. The Company's use of advanced metrology tools, which
ensure precise measurement of all key product parameters, is a cornerstone of
its quality management system. The accuracy of measurements becomes increasingly
important with the advancements in technology driving smaller IC geometeries.
The Company's Quality and Engineering Departments work together to define
measurement needs and develop tools that can achieve desired results.

     The Company relies on third party suppliers in the production and shipment
of its products. Although the Company believes that all raw materials, component
parts, and services are currently available in adequate amounts, shortages may
develop in the future. Certain raw materials and component parts for the
Company's
                                        8
<PAGE>   11

products are purchased from a single supplier or a limited group of suppliers.
The Company does not have long-term written agreements with any suppliers.
Although the Company believes there are alternative suppliers for all such raw
materials, component parts, and services, termination or a significant
disruption of any of its existing supplier arrangements could have an adverse
effect on the Company's business, financial condition, and operating results.

CUSTOMERS

     An integral part of the Company's strategy is to continue to maintain its
long standing customer relationships. All of the Company's top 10 customers in
1999 were repeat customers. The top 10 customers fluctuate from year to year
depending on the growth cycles of the individual customers. These semiconductor
manufacturers provide the Company with a diversified customer base whose
products serve the communications, computer, consumers, automotive, military,
and aerospace industries. In addition to serving high volume established
manufacturers, the Company's products also are designed to meet the needs of
emerging and leading edge technology firms such as those offering ASICs and
Gallium Arsenide ICs. During 1999, two customers comprised more than 10% of the
Company's business, Intel Corporation and Texas Instruments. Intel accounted for
14%, 17%, and 17% of net sales for the years ended December 31, 1999, 1998, and
1997, respectively, and Texas Instruments accounted for 13%, 12%, and 10% of net
sales for the years ended December 31, 1999, 1998, and 1997, respectively. The
Company's top 10 customers in 1999, which together accounted for approximately
67% of net sales, were as follows:

Credence Systems Corporation
IBM Corporation
Intel Corporation
LSI Logic Corporation
Motorola, Inc.
National Semiconductor Corporation
Phillips Semiconductor
STMicroelectronics
Teradyne, Inc.
Texas Instruments

MARKETING, SALES, AND SERVICES

     The Company's customers place a high value on service. Technical features
and product quality also are attributes expected by the Company's customers. The
unique needs of purchasers of semiconductor testing products demand a high level
of customer responsiveness. The Company's products usually require a high degree
of customization in order to meet customer specifications. Response time,
product design specifications, and rapid delivery typically are critical factors
in customer satisfaction. In addition, the customer's evaluation of the design
and performance of completed products can be quite subjective. Engineering,
sales, and management personnel collaborate closely with customer counterparts
to determine their needs and product specifications. Additionally, in order to
meet the demanding service needs of its customers, all of the Company's
facilities are located in proximity to manufacturing centers worldwide.

     The Company intends to leverage its worldwide sales facilities to market
and distribute all of the Company's products. The Company markets its products
in North America through direct technical sales personnel. To meet the demanding
service requirements of its customers, the Company has five regional
manufacturing, repair, and sales centers in Arizona, California, and Texas. In
addition to its regional full service facilities and to facilitate rapid
response, the Company serves its domestic customers through sales offices
strategically located to major market centers and key customers. The Company
maintains sales offices in Colorado, Florida, Massachusetts, and Oregon.

     The Company's international business represented approximately 23%, 18%,
and 18% of net sales for 1999, 1998, and 1997, respectively. The Company
believes the potential exists to increase sales in international markets and the
Company has positioned itself to initiate a more aggressive marketing and sales
program in these markets in the future. In particular, the Company has expanded
its sales efforts throughout Europe through its full service facility in
Scotland and a new sales office in Germany. Additionally, in September 1998, the
Company acquired France-based SemiConducteur Services, S.A. (renamed Cerprobe
Europe S.A.S.) to further support its European probe card customers. The Company
established full service manufacturing and repair facilities in Singapore and
Taiwan in April 1996 and January 1997, respectively, to

                                        9
<PAGE>   12

penetrate the growing markets for the Company's products in Southeast Asia. In
addition, the Company established a sales office in July of 1999 in Japan and
obtained a sales office in Malaysia in December 1999 through the acquisition of
OZ Technologies, Inc. The Company augments its direct sales force with a network
of independent distributors in Asia.

COMPETITION

     The semiconductor testing products industry is highly competitive. The
Company faces substantial competition in each of the probe card, interface
assembly, ATE test board, and test sockets/contactors markets. In addition, the
Company anticipates that it may face substantial competition in the future from
new entrants in the Company's markets. The principal competitive factors in the
industry are product performance, service, delivery time, and price. Competition
in international markets is also significant, particularly in Asia where the
Company is expanding into new geographic markets. Some of the Company's
competitors, particularly in Asia, have substantially greater financial,
engineering, or manufacturing resources than the Company and larger sales and
service organizations. To compete successfully, the Company must make
substantial investments in its engineering and product development, marketing,
and customer service and support activities. Competition in the Company's
markets may intensify and the Company's technological advantages may be reduced
or lost as a result of technological advances by competitors or customers.

BACKLOG

     As of December 31, 1999, the Company had a backlog of orders of
approximately $9.1 million. These orders are believed to be firm and all are
expected to be filled during fiscal 2000. The Company's business has not been
seasonal to date. Because of possible changes in delivery schedules and
cancellations of orders, the Company's backlog at any particular date is not
necessarily indicative of future sales.

ENVIRONMENTAL REGULATIONS

     The Company is subject to federal, state, and local provisions regulating
the discharge of materials into the environment. The Company has made certain
leasehold improvements in order to comply with Environmental Protection Agency
and local regulations. Proper waste disposal is a major consideration for PCB
and flex circuit manufacturers because metals and chemicals are used in the
manufacturing process. Water used in the PCB and flex circuit manufacturing
process must be treated to remove metal particles and other contaminants before
it can be discharged into the municipal sanitary sewer system. The Company
operates and maintains wastewater treatment systems and effluent testing
facilities at its PCB manufacturing plant in Dallas, Texas and flex circuit
manufacturing plant in Gilbert, Arizona.

     The Company's PCB and flex circuit manufacturing plants operate under
effluent discharge permits issued by the appropriate governmental authorities.
These permits must be renewed periodically and are subject to revocation in the
event of violations of environmental laws. The Company believes that the waste
treatment equipment in both its PCB and flex circuit manufacturing facilities
are currently in compliance with environmental protection requirements in all
material respects. However, there can be no assurance that violations will not
occur in the future as a result of human error, equipment failure, or other
causes. The Company is also subject to environmental laws relating to the
storage, use, and disposal of chemicals, solid waste, and other hazardous
materials as well as air quality regulations. Furthermore, environmental laws
could become more stringent over time and the costs of compliance with more
stringent laws could be substantial.

     Although the Company believes that it is in full compliance with all
regulations, the Company is unable to predict what effect, if any, the adoption
of more stringent regulations would have on its future operations. The Company
does not anticipate incurring any future material expenditures to remain in
substantial compliance with presently applicable environmental regulations.

INTELLECTUAL PROPERTY

     While the Company considers intellectual property rights, patents, and
licenses to be important, the Company does not consider any single patent to be
material to the conduct of its business. The Company relies
                                       10
<PAGE>   13

primarily on trade secret protection for its proprietary information rather than
patents to avoid publicly disclosing its technology in a patent application. The
Company believes that its success will depend primarily on the technological
competence and creative skills of its personnel rather than the protection of
its existing patents or future patents.

EMPLOYEES

     As of December 31, 1999, the Company had 787 employees, consisting of 155
in engineering and product development, 469 in manufacturing, 62 in sales and
marketing, and 101 in administration. There are no collective bargaining
agreements and the Company considers its relations with its employees to be
good.

EXECUTIVE OFFICERS

     The following table sets forth certain information regarding the Company's
executive officers.

<TABLE>
<CAPTION>
NAME                                   AGE                           POSITION
----                                   ---                           --------
<S>                                    <C>    <C>
C. Zane Close........................  50     President, Chief Executive Officer, and Director
Daniel J. Hill.......................  51     Executive Vice President and Chief Operating Officer
Michael K. Bonham....................  61     Senior Vice President, Sales and Marketing
Randal L. Buness.....................  43     Senior Vice President, Chief Financial Officer,
                                              Secretary, and
                                                Treasurer
Kevin M. Kurtz.......................  38     Vice President, Operations
Henry P. Scutoski....................  54     Vice President, Quality and Process Management
</TABLE>

     C. Zane Close has served as President and Chief Executive Officer and as a
director of the Company since July 1990. From September 1989 to July 1990, Mr.
Close served as Vice President and General Manager of Probe Technology
Corporation ("Probe Technology"), a manufacturer of probing devices for testing
integrated circuits. Mr. Close served as Vice President of Operations of Probe
Technology from February 1985 to September 1989. Prior to joining Probe
Technology, Mr. Close held various financial and management positions at
California Devices, NKB Corporation, and National Semiconductor Corporation.

     Daniel J. Hill has served as Executive Vice President and Chief Operating
Officer since December 1999. From December 1998 to November 1999, Mr. Hill
served as Executive Director, Semiconductor Industry Sector of
PricewaterhouseCoopers, a professional services organization and consulting
firm. Mr. Hill served as Chief Executive Officer of D.J. Hill & Associates,
Inc., a consulting business from August 1997 to November 1998. From January 1995
to July 1997, Mr. Hill served as Founder and Chief Executive Officer of
InterConnect Technology, a start-up silicon wafer foundry in Malaysia. Mr. Hill
served as President and Chief Executive Officer of Micro Component Technology,
Inc., a publicly held semiconductor test handling equipment company, from
December 1991 to January 1995. From May 1980 to December 1991, Mr. Hill served
in various management positions for National Semiconductor Corporation.

     Michael K. Bonham has served as Senior Vice President, Sales and Marketing
of the Company since June 1996. Mr. Bonham served as Vice President of Sales and
Marketing of the Company from July 1990 to June 1996. From October 1988 to June
1990, Mr. Bonham served as Marketing Manager of the IC Probe and Curve Tracer
Group of Tektronix, Incorporated, a manufacturer of electronic test measurement
equipment.

     Randal L. Buness has served as Senior Vice President since January 1999,
and served as Vice President from June 1996 to January 1999. He has also served
as Chief Financial Officer, Secretary, and Treasurer of the Company since June
1996. From September 1994 to June 1996, Mr. Buness served as Vice President,
Finance and Administration, Chief Financial Officer, Secretary, and Treasurer of
Three-Five Systems, Inc., a publicly held manufacturer of liquid crystal
displays. Mr. Buness served as Chief Financial Officer, Secretary, and Treasurer
of United Medical Network, a developer of video conferencing networks for
healthcare providers, from January 1993 to September 1994. From January 1989 to
January 1993, Mr. Buness worked as an independent financial consultant. Mr.
Buness served as principal and manager with Arthur Young from

                                       11
<PAGE>   14

January 1986 to January 1989 and served as a manager, senior, and staff
accountant with Price Waterhouse from July 1979 to January 1986. Mr. Buness is a
Certified Public Accountant.

     Kevin M. Kurtz has served as Vice President, Operations of the Company
since February 1999. From May 1997 to January 1999, Mr. Kurtz served as
President of SVTR, Inc., a wholly owned wafer prober refurbishing subsidiary of
the Company. From January 1996 to April 1997, Mr. Kurtz served as Vice President
of Manufacturing of the Company. Mr. Kurtz served as Regional Sales Manager,
then as General Manager of the Company's San Jose facility from December 1990 to
December 1995. From September 1985 to November 1990, Mr. Kurtz held various
sales and sales management positions with Probe Technology, a manufacturer of
probing devices for testing of integrated circuits.

     Henry P. Scutoski has served as Vice President, Quality & Process
Management since August 1999. Mr. Scutoski served as Vice President of Quality
from April 1995 to August 1999 and Director of Quality from March 1994 to April
1995. From February 1991 to March 1994, Mr. Scutoski was an independent quality
management consultant. From January 1985 to February 1991 Mr. Scutoski was a
Quality Assurance Manager for Motorola's Government Electronics Group.

                             SPECIAL CONSIDERATIONS

     The following risk factors should be considered carefully in addition to
the other information in this Report in evaluating the Company and its business.
Except for the historical information contained herein, the discussion in this
Report contains certain forward-looking statements that involve risks and
uncertainties. When used in this Report, the words "believes," "expects,"
"anticipates," "intends," "estimates," "should," "will likely," and similar
expressions are intended to identify such forward-looking statements. The
cautionary statements made in this Report should be read as being applicable to
all related forward-looking statements wherever they appear in this Report. The
Company's actual results could differ materially from those discussed here.
Important factors that could cause or contribute to such differences include
those discussed below, as well as those discussed elsewhere herein.

THE COMPANY'S QUARTERLY OPERATING RESULTS MAY VARY SIGNIFICANTLY FROM PERIOD TO
PERIOD, WHICH COULD NEGATIVELY IMPACT ITS FINANCIAL CONDITION AND ITS STOCK
PRICE.

     The Company's quarterly and annual operating results may be affected by a
wide variety of factors that could adversely impact net sales and profitability,
many of which are beyond its control, including factors pertaining to:

     - Customer demand for the Company's products related to the cyclical nature
       of the semiconductor industry, market acceptance of the Company's
       products, changes in product mix, the level of orders that are received
       and can be delivered in a quarter, and customer order patterns;

     - Competition, including competitive pressures on delivery time, product
       performance and reliability, prices, the introduction or announcement of
       new products by competitors, and intellectual property rights of the
       Company's competitors that could prevent the Company from introducing
       products that effectively compete with theirs;

     - The Company's ability to introduce new product designs and innovations on
       a timely basis in response to market requirements;

     - The availability and cost of raw materials, equipment and other supplies,
       fluctuations in manufacturing yields, and the availability of production
       capacity;

     - The Company's ability to hire and retain technical personnel and
       management employees; and

     - Generally prevailing economic conditions in the U.S. and worldwide
       markets served by the Company.

The market price of the Company's Common Stock could be adversely affected by
fluctuations in the Company's operating results. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" contained in Item
7 of this Report and "Business" contained in Item 1 of this Report.
                                       12
<PAGE>   15

THE SEMICONDUCTOR INDUSTRY IS HIGHLY CYCLICAL AND DEMAND FOR THE COMPANY'S
PRODUCTS MAY DECLINE.

     The Company's business depends substantially on both the volume of IC
production by semiconductor manufacturers as well as new IC and IC package
designs. These factors in turn depend on the demand for ICs and products
utilizing ICs. The semiconductor industry is highly cyclical and historically
has experienced periods of oversupply. During these periods of oversupply, the
demand for IC testing products, including the products manufactured by the
Company, has been reduced. Demand for ICs or products utilizing ICs may decline.
Moreover, demand for the Company's products may not continue at the current
level. The Company anticipates that a significant portion of new orders for its
products will depend upon demand from IC manufacturers building or expanding IC
fabrication facilities or shifting production to new IC designs. IC manufactures
may not increase production capacity or shift production to new IC designs, in
which case demand for the Company's products may slow or decline. In addition,
future downturns or slowdowns in the IC market may have an adverse effect on the
Company's business, financial condition, and operating results. Moreover, the
Company's need to invest in engineering and product development, marketing, and
customer service and support capabilities may limit its ability to reduce
expenses in response to such downturns or slowdowns. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in Item 7 of this Report and "Business" contained in Item 1 of this
Report.

THE COMPANY IS CONTINUING TO SUBSTANTIALLY EXPAND ITS BUSINESS AND OPERATIONS,
AND IT MUST EFFECTIVELY MANAGE AND SUPPORT THIS EXPANSION.

     The Company intends to expand, in part, through strategic acquisitions,
joint development/ventures, and licensing of technologies, and by entering into
new geographic and product markets. The Company's ability to expand through
acquisitions will depend primarily on its ability to identify, acquire, and
operate other businesses that complement the Company's existing business. The
Company may not be able to identify or consummate any suitable acquisitions. In
addition, the operations and product offerings of any businesses that are
acquired may not be successfully integrated into the Company's operations and
product offerings. The Company anticipates that it will use cash, debt, and/or
securities, including the Company's Common Stock, as the primary consideration
for any future acquisitions. Operating results could fluctuate substantially due
to the size, timing, and integration of any future acquisitions. The Company
faces similar risks and uncertainties with respect to joint ventures. The
Company has no specific agreements or plans with respect to any acquisitions or
joint ventures.

     The Company believes that its future success will depend, in part, on its
ability to expand into new international markets, particularly Asia, and new
product markets. The Company believes that its Asian competitors have a
competitive advantage because of their dominance of the Asian market. As a
result, the Company may not be able to establish a significant presence in these
international markets. In addition, it is uncertain whether the Company will be
able to gain market acceptance for any new products it acquires or introduces.
As a result, the Company's failure to penetrate new markets could harm its
business. See "Business" contained in Item 1 of this Report.

THE SEMICONDUCTOR INDUSTRY IS SUBJECT TO RAPID DEMAND SHIFTS WHICH ARE DIFFICULT
TO PREDICT. THE COMPANY'S INABILITY TO EFFICIENTLY MANAGE ITS MANUFACTURING
CAPACITY IN RESPONSE TO THESE RAPID SHIFTS MAY CAUSE A REDUCTION IN ITS GROSS
MARGINS, PROFITABILITY, AND MARKET SHARE.

     The Company underwent a period of rapid growth through early 1998, followed
by a period of slowdown due to the severe industry downturn in mid-1998. Through
these periods the Company adjusted the levels of manufacturing and human
resources. In addition, the Company worked closely with materials suppliers and
other third parties to manage costs and delivery of goods and services on which
the Company is dependent. The Company's operating results could be harmed if it
is unable to effectively manage resources in a similar manner through future
periods of growth and contraction in its industry. The management systems and
controls currently in place and any steps taken to expand or contract such
management systems and controls may not be adequate in the future to respond to
changing industry conditions.

                                       13
<PAGE>   16

THE COMPANY'S FINANCIAL PERFORMANCE MAY BE HARMED IF IT IS NOT ABLE TO INTRODUCE
NEW PRODUCTS AND TECHNOLOGIES.

     The Company operates in an industry subject to rapid change. The Company
custom-designs or customizes its products to a customer's particular IC design
specifications. The Company's business, financial condition, and operating
results could be harmed if it was unable to introduce new product designs and
enhancements and to adapt its manufacturing techniques in response to
technological advances in IC and capital equipment designs. Any new product
designs or enhancements may not receive or maintain substantial market
acceptance. Technologies, other than those that the Company utilizes, are being
developed. The Company's products could lose market share and the Company's
business, financial condition, and operating results could be adversely impacted
if other technologies gain market acceptance. In addition, the Company's future
operating results may be harmed if it were unable to design, develop, and
introduce competitive products on a timely basis. See "Business -- Products and
Services" contained in Item 1 of this Report.

INTENSE COMPETITION IN THE COMPANY'S MARKETS COULD SUBSTANTIALLY LIMIT THE
VOLUME OF PRODUCTS IT SELLS OR REDUCE ITS TECHNOLOGICAL ADVANTAGE.

     The semiconductor testing products industry is highly competitive. The
Company faces substantial competition in each of its product markets. In
addition, the Company anticipates that it may face substantial competition in
the future from new entrants in the Company's markets. The principal competitive
factors in the industry are product performance, service, delivery time, and
price. Competition in international markets is also significant, particularly in
Asia where the Company is expanding into new geographic markets. Some of the
Company's competitors, particularly in Asia, have substantially greater
financial, engineering, or manufacturing resources and larger sales and service
organizations than the Company. To compete successfully, the Company must make
substantial investments in its engineering and product development, marketing,
and customer service and support activities. Competition in the Company's
markets may intensify and the Company's technological advantages may be reduced
or lost as a result of technological advances by competitors or customers.

THE COMPANY RELIES ON INDEPENDENT DISTRIBUTION CHANNELS TO SUSTAIN REVENUE
LEVELS AND ACHIEVE REVENUE GROWTH AND IT IS SUSCEPTIBLE TO NUMEROUS RISKS
ASSOCIATED WITH INTERNATIONAL OPERATIONS.

     The Company's international business represented approximately 23%, 18%,
and 18% of net sales for 1999, 1998, and 1997, respectively. In Asia independent
distributors generate a significant portion of sales. A reduction in the sales
efforts by the Company's Asian distributors or termination of their
relationships with the Company could adversely affect the Company's
international sales and, as a result, its business, financial condition, and
operating results. See "Business -- Marketing, Sales, and Services" contained in
Item 1 of this Report.

     Given the Company's efforts in establishing production and/or sales
facilities in Scotland, France, Singapore, Taiwan, Japan, and Malaysia, the
Company anticipates that sales to international customers will increase in the
future. The foreign manufacture and sale of products and the purchase of raw
materials and equipment from foreign suppliers may be adversely affected by
political and economic conditions abroad. Protectionist trade legislation in
either the United States or foreign countries could adversely affect the
Company's ability to manufacture or sell products in foreign markets and
purchase materials or equipment from foreign suppliers. Examples of
protectionist trade legislation include:

     - Changes in the current tariff structure;

     - Export compliance laws or other trade policies; and

     - The Company's ability to form effective joint venture alliances in order
       to compete in restrictive markets.

     In addition, the laws of certain foreign countries may not protect the
Company's intellectual property rights to the same extent as the laws of the
United States. See "Business" contained in Item 1 of this Report.

                                       14
<PAGE>   17

FLUCTUATIONS IN THE VALUE OF FOREIGN CURRENCIES COULD HARM THE COMPANY'S
PROFITABILITY.

     A portion of the Company's foreign transactions are denominated in
currencies other than the U.S. Dollar. The Company may purchase a portion of its
raw materials and equipment from foreign suppliers and may incur labor costs in
a foreign currency. Through these transactions, the Company is exposed to
exchange rate fluctuations for the period of time from inception of the
transaction until it is settled. The Company monitors its foreign currency
exposure and, from time to time, the Company enters into hedging transactions to
manage this exposure. Fluctuations in the currency exchange rates in the future
may adversely affect the Company's operating results.

A SMALL NUMBER OF CUSTOMERS HAVE ACCOUNTED FOR, AND ARE LIKELY TO CONTINUE TO
ACCOUNT FOR, A SUBSTANTIAL PORTION OF THE COMPANY'S REVENUE AND THEREFORE ITS
REVENUE COULD DECLINE DUE TO THE LOSS OF ONE OF THESE CUSTOMERS OR PRICING
PRESSURES EXERTED BY THESE CUSTOMERS.

     Sales of the Company's products are concentrated with a small number of
customers. During 1999, sales to the Company's largest customers, Intel
Corporation and Texas Instruments, accounted for approximately 14% and 13% of
net sales. The Company's top 10 customers in 1999 together accounted for
approximately 67% of net sales. The Company expects that sales of its products
to relatively few customers will continue to account for a high percentage of
its net sales. None of the Company's customers has entered into a long-term
agreement requiring them to purchase the Company's products. The loss of a
significant customer or any reduction in orders from any significant customer
could have an adverse effect on the Company's business. In addition, to the
extent that these customers demand that the Company provide them with further
discounts on volume purchases or resist the Company's attempts to raise prices
in response to increases in the Company's manufacturing costs then the Company's
revenues or profitability could decrease. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in Item 7
of this Report, and "Business -- Customers" contained in Item 1 of this Report.

THE COMPANY CURRENTLY DOES NOT HAVE ANY LONG-TERM AGREEMENTS WITH ITS SUPPLIERS.
THE COMPANY'S SALES MAY DECLINE AND ITS PROFITABILITY COULD BE HARMED BY THE
LOSS OF OR FAILURE TO PERFORM BY A SINGLE OR LIMITED GROUP OF SUPPLIERS.

     The Company relies on third party suppliers in the production and shipment
of its products. Although the Company believes that all raw materials, component
parts, and services are currently available in adequate amounts, shortages may
develop in the future. Certain of the raw materials and component parts for the
Company's products are purchased from a single supplier or a limited group of
suppliers. The Company does not have long-term written agreements with any
suppliers. The Company's business could be harmed by termination or a
significant disruption of any of its key supplier arrangements. See
"Business -- Manufacturing" contained in Item 1 of this Report.

ALTHOUGH THE COMPANY CURRENTLY HOLDS PATENTS, IT RELIES PRIMARILY ON TRADE
SECRET PROTECTION FOR ITS PROPRIETARY METHODS AND COULD BE HARMED IF IT IS NOT
ABLE TO PROTECT ITS TECHNOLOGY AND KNOW-HOW.

     While the Company currently holds certain patents, it does not consider any
single patent to be material to the conduct of its business. The Company
believes that its competitors have been and will be able to continue to
circumvent many of the Company's patents. If the Company asserts its patent
rights, (1) any patents issued to the Company may be challenged, invalidated, or
circumvented, (2) any rights granted thereunder may not provide adequate
protection to the Company, and (3) the Company may not have sufficient resources
to prosecute its rights. The Company believes that its success will depend
primarily on the technological competence and creative skills of its personnel
rather than the protection of its existing patents or future patents. The
Company relies primarily on trade secret protection for its proprietary methods.
The Company cannot be certain that it will be able to protect its technology and
know-how. In addition, although there are no pending lawsuits against the
Company regarding infringement of any existing patents or other intellectual
property rights, third parties may assert intellectual property infringement
claims against the Company in the future. See "Business -- Intellectual
Property" contained in Item 1 of this Report.

                                       15
<PAGE>   18

THE COMPANY MAY NOT BE ABLE TO MEET ITS FUTURE CAPITAL REQUIREMENTS.

     The Company's business is capital intensive. In order to remain
competitive, the Company must make significant investments in capital equipment
for engineering, product development, and production. As a result of the
increase in fixed costs and operating expenses related to these capital
expenditures, the Company's operating results may be adversely affected if net
sales do not increase sufficiently to offset the increased costs. The Company
may, from time to time, seek additional equity or debt financing to provide for
the capital expenditures required to maintain or expand its production
facilities and capital equipment. The Company cannot predict the timing and
amount of any such capital requirements at this time. These requirements will
depend on a number of factors, including demand for the Company's products,
product mix, changes in industry conditions, and competitive factors. Such
financing may not be available on acceptable terms, and any additional equity
financing, if available, may result in additional dilution to existing
investors. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources" contained in Item 7 of
this Report.

THE COMPANY MAY BE SUBJECT TO LIABILITY FOR FAILURE TO COMPLY WITH ENVIRONMENTAL
REGULATIONS.

     The Company is subject to a variety of federal, state, and local
governmental regulations related to the use, storage, discharge, and disposal of
toxic, volatile, or otherwise hazardous chemicals used in its manufacturing
process. Although the Company believes that its activities are in compliance
with presently applicable environmental regulations, the government could impose
fines, suspend the Company's production or stop the Company's operations for the
failure to comply with present or future regulations. The Company could be
required by such regulations to acquire costly equipment or to incur other
significant expenses to comply with environmental regulations. If the Company
fails to control the use or adequately restrict the discharge of hazardous
substances, it could be subject to future liabilities. See
"Business -- Environmental Regulations" contained in Item 1 of this Report.

THE COMPANY'S EXECUTIVE OFFICERS AND KEY EMPLOYEES ARE CRITICAL TO ITS BUSINESS
AND THEY MAY NOT REMAIN WITH THE COMPANY IN THE FUTURE.

     The Company's success depends, in part, upon the retention of certain key
personnel and the recruitment and retention of additional key personnel,
including technical and engineering staff. The Company's business could be
adversely affected by the loss of existing key personnel or the failure to
recruit and retain necessary additional personnel. Future growth will further
increase the Company's demand on resources and require the addition of new
personnel and the development of additional expertise by existing personnel. The
Company's prospects for success could be harmed by its failure to attract and
retain personnel with the requisite expertise or to develop such expertise
internally.

THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS OWN A SIGNIFICANT BLOCK OF ITS
STOCK AND MAY BE ABLE TO EXERT INFLUENCE ON MATTERS REQUIRING STOCKHOLDER
CONSENT.

     The Company's stockholders have the right to cumulate their votes for the
election of directors. The Company's directors and executive officers and their
affiliates currently beneficially own approximately 13.38% of the Company's
stock. As a result, these persons, if they act as a group, may be able to elect
one or more members to the Company's board of directors and may be able to exert
significant influence regarding the outcome of other matters requiring approval
by the Company's stockholders.

THE COMPANY'S STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE HIGHLY VOLATILE.

     The market price of the Company's Common Stock has experienced significant
volatility during the past three years. See "Market for the Registrant's Common
Equity and Related Stockholder Matters" contained in

                                       16
<PAGE>   19

Item 5 of this Report. The trading price of the Company's Common Stock in the
future could be subject to wide fluctuations in response to:

     - Quarterly variations in the Company's operating results and others in its
       industry;

     - Actual or anticipated announcements concerning the Company or its
       competitors;

     - Changes in analysts' estimates of the Company's financial performance;

     - General conditions in the semiconductor industry;

     - General economic and financial conditions; and

     - Other events or factors.

     In addition, the stock market has experienced extreme price and volume
fluctuations that have adversely affected the market prices for many companies
involved in high technology manufacturing and related industries. Often these
price and volume fluctuations have been unrelated to the operating performance
of such companies. These broad market fluctuations and other factors could have
a material adverse effect on the market price of the Company's Common Stock.

POTENTIAL ISSUANCE OF ADDITIONAL SHARES COULD RESULT IN DILUTION TO EXISTING
HOLDERS.

     As of December 31, 1999, options to acquire a total of 1,191,300 shares
were outstanding under the Company's stock option plans. An additional 1,126,600
shares of Common Stock were reserved for issuance pursuant to the exercise of
options that may be granted in the future under the Company's stock option
plans. The Company also has granted non-employee options to purchase up to
10,000 shares of Common Stock. The Company also has issued warrants to purchase
up to 37,275 shares of Common Stock in connection with the sale in 1996 of
Series A Convertible Preferred Stock. During the terms of such options and
warrants, the holders thereof will have the opportunity to profit from an
increase in the market price of the Common Stock with resulting dilution in the
interests of holders of Common Stock. The existence of such stock options and
warrants could adversely affect the terms on which the Company can obtain
additional financing, and the holders of such options and warrants can be
expected to exercise such options and warrants at a time when the Company, in
all likelihood, would be able to obtain additional capital by offering shares of
its Common Stock on terms more favorable to the Company than those provided by
the exercise of such options and warrants. The Company also has the authority to
issue additional shares of Common Stock and shares of one or more series of
Convertible Preferred Stock. The issuance of such shares could result in the
dilution of the voting power of outstanding shares of Common Stock and could
have a dilutive effect on earnings per share.

CHANGE IN CONTROL PROVISIONS COULD PREVENT TRANSACTIONS THAT COULD BENEFIT
STOCKHOLDERS.

     The Company's First Restated Certificate of Incorporation (the "Restated
Certificate") and the Delaware General Corporation Law (the "Delaware GCL")
contain provisions that may have the effect of making more difficult or delaying
attempts by others to obtain control of the Company, even when these attempts
may be in the best interest of stockholders. The Restated Certificate also
authorizes the Board of Directors, without stockholder approval, to issue one or
more series of preferred stock, which could have voting and conversion rights
that adversely affect the voting power of the holders of the Company's Common
Stock. The Delaware GCL also imposes conditions on certain business combination
transactions with "interested stockholders" (as defined therein).

     The Company has also adopted a Rights Plan whereby, if and when the Rights
become exercisable, holders of shares of Common Stock will be entitled to
purchase one one-thousandth of a share of Series A Junior Participating
Preferred Stock at a purchase price of $110 (subject to certain antidilution
adjustments). The Rights will expire October 8, 2008 and will be exercisable
only if a person or group becomes the beneficial owner of 15% or more of the
Common Stock or commences a tender or exchange offer that would result in the
offeror beneficially owning 15% or more of the Common Stock (the earlier of such
dates being called the "Distribution Date"). If a Distribution Date has
occurred, each Right, unless redeemed by the Company, entitles the holder to
exercise a Right for $110 and receive an amount of Common Stock of the Company,
or
                                       17
<PAGE>   20

in certain circumstances a combination of securities and/or assets or the common
stock of the acquirer, having a market value of two times the exercise price of
the Right.

     The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors since the Rights may be redeemed by the Company at $.01
per Right prior to the public announcement of a Distribution Date.

ITEM 2.  PROPERTIES

     The Company's principal executive offices and primary manufacturing
facility are located in Gilbert, Arizona. The facility is owned by CRPB
Investors, L.L.C. ("CRPB Investors"). The Company owns a 36% interest in CRPB
Investors. The Company has entered into a long-term lease with CRPB Investors,
the initial term of which expires in May 2012 with seven options to extend the
lease for successive five-year terms.

     The Company's major facilities are described in the table below:

<TABLE>
<CAPTION>
                                                                                                  LEASE
                                                                                               EXPIRATION
FACILITY                   SQUARE FEET          FUNCTION                   PRODUCTS               DATE
--------                   -----------          --------                   --------            ----------
<S>                        <C>           <C>                       <C>                        <C>
Gilbert, Arizona.........    83,000      Corporate headquarters,   Probe cards                May 2012
                             53,000      Manufacturing, sales
                                         and service               ATE interface assemblies   July 2008
Dallas, Texas............    35,000      Manufacturing, sales
                                         and service               ATE test boards            Company owned
San Jose, California.....    34,000      Manufacturing, sales
                                         and service               Probe cards                July 2002
Hsin Chu, Taiwan.........    10,600      Manufacturing and
                                         service                   Probe cards                April 2003
Austin, Texas............     7,000      Manufacturing, sales
                                         and service               Probe cards                March 2002
East Kilbride,               11,700      Manufacturing, sales
  Scotland...............                and service               Probe cards                November 2007
Singapore................     2,900      Manufacturing and
                                         service                   Probe cards                August 2001
Meyreuil, France.........     5,600      Manufacturing, sales
                                         and service               Probe cards                June 2012
Yokohama, Japan..........    13,900      Sales and service         Probe cards                April 2009
Hayward, California......    26,800      Manufacturing, sales
                                         and service               Test sockets/contactors    February 2009
</TABLE>

     In addition, the Company leases space in Colorado Springs, Colorado; Boca
Raton, Florida; Westboro, Massachusetts; Beaverton, Oregon; Richardson, Texas;
Dallas, Texas; Austin, Texas; Santa Clara, California; San Diego, California;
Tempe, Arizona; Massy, France; Berngau, Germany; and Penang, Malaysia. The
Company believes that its existing facilities are adequate to meet its current
requirements.

ITEM 3.  LEGAL PROCEEDINGS

     In October 1998, the Company filed an action against the former President,
Director, and shareholder of Silicon Valley Test & Repair, Inc., which was
acquired by the Company by way of a merger into its wholly-owned subsidiary,
SVTR, Inc., in January 1997. The suit seeks rescission of the acquisition and/or
money damages arising from failure of the defendants to disclose material facts
regarding the origins of certain software necessary for SVTR, Inc.'s business.
In February 1999, the defendants filed a counter claim against the Company,
alleging conversion, interference with contractual relations, unfair business
practices, breach of contract, and specific performance allegedly arising from
the Company's actions to preclude the defendants from selling the Company stock
received by the defendants as part of the purchase price of Silicon Valley Test

                                       18
<PAGE>   21

& Repair, Inc.; the Company seeks to recover this stock and the balance of the
purchase price through its claims for rescission. In March 1999, the Company and
SVTR filed an amended complaint. The defendants have responded and the action is
proceeding to trial. While the Company intends to vigorously prosecute this
action, it is impossible to predict the outcome of this or any litigation. It is
not anticipated that this suit will have an adverse impact on the Company's
financial condition or results of operations.

     The Company is involved in other legal actions arising in the ordinary
course of business. In the opinion of management, the disposition of these
actions would not have a material adverse effect on the Company.

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

     There were no matters submitted to a vote of the Company's stockholders
during the fourth quarter of 1999.

                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

     The Company's Common Stock began trading in the over-the-counter market on
the Nasdaq system on September 29, 1983 and commenced trading on The Nasdaq
National Market(R) on August 10, 1995 under the symbol "CRPB." On March 27,
2000, the closing price for the Company's Common Stock was $15.813. The
following table sets forth the high and low last sale prices of the Company's
Common Stock for the periods indicated, as reported on The Nasdaq National
Market(R).

<TABLE>
<CAPTION>
                                                              HIGH    LOW
                                                              ----    ---
<S>                                                           <C>     <C>
1998:
First Quarter...............................................  $22     $16 1/4
Second Quarter..............................................  $20 9/16 $11 5/8
Third Quarter...............................................  $12 3/4 $ 9
Fourth Quarter..............................................  $15 5/8 $ 9
1999:
First Quarter...............................................  $17 13/16 $12 3/4
Second Quarter..............................................  $12 1/4 $ 7 1/2
Third Quarter...............................................  $11 7/8 $ 4 3/4
Fourth Quarter..............................................  $10     $ 4 9/16
</TABLE>

     The Company does not intend to pay any cash dividends in the future and
intends to retain any future earnings for reinvestment in its business. The
Company's revolving credit facility contains restrictions on the Company's
ability to pay cash dividends, and future borrowings may contain similar
restrictions. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."

     As of March 27, 2000, there were approximately 3,000 shareholders of record
of Common Stock.

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

     The following selected consolidated financial data should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," which are included elsewhere in this Report. The
consolidated statement of operations data for the years ended December 31, 1999,
1998, and 1997 and the consolidated balance sheet data as of December 31, 1999
and 1998 are derived from, and are qualified by reference to, the consolidated
financial statements included elsewhere in this Report, which have been audited
by KPMG LLP. The consolidated statement of operations data for the years ended
December 31, 1996 and 1995, and the consolidated balance sheet data as of
December 31, 1997, 1996, and 1995, are derived from audited consolidated
financial statements not included in this Report. These historical results are
not necessarily indicative of the results to be expected in the future.

                                       19
<PAGE>   22

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                  ------------------------------------------------
                                                  1999(1)    1998(2)    1997     1996(3)    1995
                                                  --------   -------   -------   -------   -------
                                                      (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                               <C>        <C>       <C>       <C>       <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................................  $ 62,656   $76,207   $69,012   $37,308   $26,099
Cost of goods sold..............................    41,637    45,052    39,251    20,343    13,706
                                                  --------   -------   -------   -------   -------
          Gross profit..........................    21,019    31,155    29,761    16,965    12,393
Expenses:
  Selling, general and administrative...........    21,215    18,317    16,219    10,460     7,306
  Engineering and product development...........     4,807     3,101       996       903       707
  In-process research and development...........     8,815     1,568        --     4,584        --
  Goodwill amortization.........................       786       461       386       265       197
                                                  --------   -------   -------   -------   -------
          Total expenses........................    35,623    23,447    17,601    16,212     8,210
                                                  --------   -------   -------   -------   -------
Operating income (loss).........................   (14,604)    7,708    12,160       753     4,183
Other income (expense):
  Interest income...............................       882     1,324       349       467        45
  Interest expense..............................      (582)     (269)     (388)     (222)     (154)
  Other, net....................................      (528)      543       323       247       140
                                                  --------   -------   -------   -------   -------
          Total other income (expense)..........      (228)    1,598       284       492        31
                                                  --------   -------   -------   -------   -------
Income (loss) from continuing operations before
  minority interest and income taxes............   (14,832)    9,306    12,444     1,245     4,214
Minority interest...............................      (455)     (384)       30        95        --
                                                  --------   -------   -------   -------   -------
Income (loss) from continuing operations before
  income taxes..................................   (15,287)    8,922    12,474     1,340     4,214
Income tax (expense) benefit....................     2,711    (3,685)   (4,810)   (2,701)   (1,812)
                                                  --------   -------   -------   -------   -------
Income (loss) from continuing operations........   (12,576)    5,237     7,664    (1,361)    2,402
Discontinued operations:
  Loss from operations of SVTR, Inc., net of
     taxes......................................        (5)   (1,925)   (5,767)       --        --
  Loss on disposal of SVTR, Inc., net of
     taxes......................................        --    (3,808)       --        --        --
                                                  --------   -------   -------   -------   -------
          Loss from discontinued operations.....        (5)   (5,733)   (5,767)       --        --
                                                  --------   -------   -------   -------   -------
Net income (loss)...............................  $(12,581)  $  (496)  $ 1,897   $(1,361)  $ 2,402
                                                  ========   =======   =======   =======   =======
Net income (loss) per common share:
  Basic.........................................  $  (1.60)  $ (0.06)  $  0.28   $ (0.30)  $  0.62
                                                  ========   =======   =======   =======   =======
  Diluted.......................................  $  (1.60)  $ (0.06)  $  0.27   $ (0.30)  $  0.53
                                                  ========   =======   =======   =======   =======
Weighted average number of shares:
  Basic.........................................     7,885     7,964     6,690     4,580     3,874
  Diluted.......................................     7,885     8,251     6,982     4,580     4,666
BALANCE SHEET DATA:
Working capital.................................  $ 11,812   $30,519   $42,505   $10,004   $ 4,771
Total assets....................................    83,368    63,686    68,108    31,512    14,967
Long-term debt..................................     7,655     3,204     1,275     1,741       981
Stockholders' equity............................    53,117    53,474    59,344    23,130    10,656
</TABLE>

---------------
(1) Includes a write-off of in-process research and development of $8.8 million
    in 1999, or $1.12 per diluted share, related to the acquisition of OZ.

                                       20
<PAGE>   23

(2) Includes a write-off of in-process research and development of $1.6 million
    in 1998, or $0.11 per diluted share, net of tax benefit, related to the
    acquisition of Cerprobe Europe S.A.S.

(3) Includes a write-off of in-process research and development of $4.6 million
    in 1996, or $1.00 per diluted share, related to the acquisition of CIS.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The following discussion and analysis should be read in conjunction with
the Selected Consolidated Financial Data and the Consolidated Financial
Statements and related Notes thereto of the Company appearing elsewhere in this
Report.

OVERVIEW

     The Company offers comprehensive solutions principally in one segment of
the semiconductor industry -- semiconductor test interconnect. The Company is a
leading manufacturer of probe cards, ATE interface assemblies, ATE test boards,
and test sockets/contactors. The Company believes it is the only company that
designs, manufactures, and assembles each of the electromechanical components
that assure the integrity of the electrical test signal that passes from the ATE
to the IC DUT. The Company's products address critical functions to assure IC
quality, reduce manufacturing costs, improve the accuracy of manufacturing yield
data, and identify repairable memory ICs.

     The semiconductor industry is characterized as cyclical, with capacity boom
cycles followed by bust cycles that create tremendous pricing pressures. Despite
these cycles, the IC market has generally been a high volume, high growth
commodity market characterized by rapid technological change. The Company has
benefited from this and has grown substantially over the last five years as the
Company has increased its market share. Net sales have increased from $26.1
million for 1995 to $62.7 million for 1999, representing a five year average
annualized growth rate of approximately 35%.

     The Company has grown its business and expanded its product lines through
internal product development, strategic acquisitions, joint
development/ventures, and licensing of technologies. In 1990, the foundation for
the growth of the Company's core probe card business was the development of the
Company's CerCard(TM) technology. In April 1995, the Company acquired Fresh Test
Technology Corporation ("Fresh Test"), which enabled the Company to expand its
product line to include ATE interface assemblies. In December 1996, the Company
acquired Cerprobe Interconnect Solutions, Inc. ("CIS"), formerly CompuRoute,
Inc., which enabled the Company to offer ATE test boards, the Company's first
packaged IC testing product. In May 1997, the Company established a joint
development agreement with Japan-based Mitsubishi Materials Corporation. This
joint development has resulted in the company's first probe card based upon the
Company's proprietary P4(TM) (Photolithographic Pattern Plated Probe)
technology. In September 1998, the Company acquired France-based Cerprobe Europe
S.A.S., formerly SemiConducteur Services, S.A., a probe card company, which
enabled the Company to further expand in and service the European market.
Additionally, in November 1998, the Company signed an agreement with Feinmetall
GmbH, a German contact technology company, which provided the Company with an
exclusive license to design, manufacture, and distribute Vertical integrated
Probe (ViProbe(R)) products worldwide, except Europe. Finally, in December 1999,
the Company acquired OZ Technologies, Inc. ("OZ"), which enabled the Company to
offer test sockets, test contactors, and test boards used for testing packaged
ICs.

     From 1996 through 1998, the semiconductor industry was in the worst
recession in its history. The IC test segment of the semiconductor industry
generally lags the cycle by six months or more. Because of this lag and market
share gains by the Company, its business was not significantly impacted by the
recession until the second quarter of 1998. During 1998, certain customers of
the Company began processing a portion of their ICs in a manner that required
vertical probing products that were not manufactured by the Company. This
exacerbated the already difficult business conditions the Company was
experiencing and the Company reported a loss from continuing operations before
income taxes of $2.6 million in the second quarter of 1999. This was the first
such quarterly loss by the Company (excluding acquisition related costs) in 29
consecutive quarters. In the third quarter of 1999, the Company began to
experience some positive signs of a gradual

                                       21
<PAGE>   24

recovery. Sales for the third quarter were $14.9 million, a 6% increase over the
second quarter of 1999. With aggressive cost cutting measures and improved
sales, the operating loss for the third quarter was reduced substantially to
$1.1 million. Similarly, sales for the fourth quarter of 1999 increased 8% to
$16.1 million (excluding OZ's sales since the Company's acquisition on December
3, 1999). The operating loss for the fourth quarter improved again to $723,000
(excluding acquisition related costs and special charges for the quarter of $1.4
million.

     Additionally, the Company's newly licensed ViProbe(R) (a vertical probing
product) has been evaluated by several of the Company's customers, and beginning
in the first quarter of 2000, the Company expects growing demand for the
product. In addition, the Company's P4(TM) product is positioned to address
emerging requirements for fine pitch and high frequency probing.

     The Company believes that it is positioned to recover from the recent
downturn as a result of its strength in designing, producing, and delivering, on
a timely and cost-efficient basis, a broad range of custom or customized, high
quality test products and services for semiconductor manufacturers in North
America, Europe, and Asia. The Company maintains regional full service
facilities in Arizona, California, and Texas as well as sales offices in
Colorado, Florida, Massachusetts, and Oregon to service the U.S. market for its
products and services. The Company continues to expand into international
markets, including Europe and Asia. The Company maintains full service
facilities in France and Scotland and a sales office in Germany to serve the
European market. The Company also maintains full service facilities in Taiwan
and Singapore to serve the Southeast Asian market, as well as sales and
distribution offices in Japan and Malaysia, to serve the Asian market. Each of
the Company's facilities is located in proximity to semiconductor manufacturing
centers.

                                       22
<PAGE>   25

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, the percentage
of net sales of certain items in the Consolidated Statement of Operations of the
Company. The table and the discussion below should be read in conjunction with
the Consolidated Financial Statements and Notes thereto.

<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                                              ---------------------------
                                                              1999(1)    1998(2)    1997
                                                              -------    -------    -----
<S>                                                           <C>        <C>        <C>
Net sales...................................................   100.0%     100.0%    100.0%
Cost of goods sold..........................................    66.5       59.1      56.9
                                                               -----      -----     -----
Gross profit................................................    33.5       40.9      43.1
Expenses:
  Selling, general and administrative.......................    33.9       24.0      23.5
  Engineering and product development.......................     7.7        4.1       1.4
  In-process research and development.......................    14.0        2.1        --
  Goodwill amortization.....................................     1.3        0.6       0.6
                                                               -----      -----     -----
          Total expenses....................................    56.9       30.8      25.5
                                                               -----      -----     -----
Operating income (loss).....................................   (23.4)      10.1      17.6
Other income (expense):
  Interest income...........................................     1.4        1.7       0.5
  Interest (expense)........................................    (0.9)      (0.3)     (0.6)
  Other, net................................................    (0.8)       0.7       0.5
                                                               -----      -----     -----
          Total other income (expense)......................    (0.3)       2.1       0.4
                                                               -----      -----     -----
Income (loss) from continuing operations before and minority
  interest and income taxes.................................   (23.7)      12.2      18.0
Minority interest...........................................    (0.7)      (0.5)      0.1
                                                               -----      -----     -----
Income (loss) from continuing operations and income taxes...   (24.4)      11.7      18.1
Income tax (expense) benefit................................     4.3       (4.8)     (7.0)
                                                               -----      -----     -----
Income (loss) from continuing operations....................   (20.1)       6.9      11.1
Discontinued operations:
  Loss from operations of SVTR, Inc. net of taxes...........      --       (2.5)     (8.4)
  Loss on disposal of SVTR, Inc. net of taxes...............      --       (5.0)       --
                                                               -----      -----     -----
  Loss from discontinued operations.........................    (0.0)      (7.5)     (8.4)
                                                               -----      -----     -----
  Net income (loss).........................................   (20.1)%     (0.6)%     2.7%
                                                               =====      =====     =====
</TABLE>

---------------
(1) Includes a write-off of in-process research and development costs of $8.8
    million related to the acquisition of OZ.

(2) Includes a write-off of in-process research and development costs of $1.6
    million related to the acquisition of Cerprobe Europe S.A.S.

  Years Ended December 31, 1999 and December 31, 1998

     Net Sales.  Net sales for 1999 were $62.7 million, a decrease of 17.8% from
net sales of $76.2 million for 1998. This decrease was partially offset by the
inclusion of Cerprobe Europe, S.A.S. for the full year of 1999 compared to only
the fourth quarter of 1998 ($3.0 million) and the inclusion of OZ in the fourth
quarter of 1999 since the date of acquisition on December 3, 1999 ($1.9
million). The decrease was primarily a result of effects of the semiconductor
industry's downturn, including reduced unit production, pricing pressures, and
excess probe card capacity. Additionally, some of the Company's customers have
begun using vertical probing products to test some of their more complex ICs and
to test memory ICs in parallel. The Company's vertical

                                       23
<PAGE>   26

probing product has been evaluated by several of the Company's customers and,
the Company began shipping its vertical probe cards in the first quarter of
2000. In addition, the Company's P4(TM) product is positioned to address
emerging requirements for fine pitch and high frequency probing.

     Gross Profit.  The gross profit for 1999 was $21.0 million, a decrease of
32.5% from the gross profit of $31.2 million for 1998. Gross margin decreased
from 40.9% in 1998 to 33.5% in 1999. The decrease in gross profit was primarily
a result of reduced sales and reduced average selling prices for the Company's
products. The decrease in gross margin was a result of the Company's production
infrastructure capable of higher production run rates, resulting in over
capacity and under-absorption of overhead, and efforts to increase or maintain
market share during the industry downturn by product price reductions,
particularly to the Company's largest customers.

     Selling, General, and Administrative.  Selling, general, and administrative
expenses were $21.2 million, or 33.9% of net sales, for 1999, compared to $18.3
million, or 24.0% of net sales, for 1998, an increase of 15.8%. The increase in
selling, general, and administrative expenses resulted primarily from continued
domestic expansion, restructuring of the Japanese facility of approximately
$352,000, employee related costs of approximately $255,000, one-time consulting
costs of $300,000, and selling, general, and administration costs associated
with the Company's subsidiary, OZ Technologies, Inc., of $150,000.

     Engineering and Product Development.  Engineering and product development
expenses were $4.8 million, or 7.7% of net sales, for 1999, an increase of 55.0%
over $3.1 million, or 4.1% of net sales, for 1998. The Company has added
substantial resources to its product development team to address emerging and
next generation probing requirements for grid array, multi-chip testing, very
high frequency ICs, and those that have pad pitch architecture of less than 60
microns.

     In-process Research and Development.  In-process research and development
costs from the December 1999 acquisition of OZ Technologies, Inc. totaled $8.8
million. The acquisition was accounted for using the purchase method.
Accordingly, the purchase price was allocated to the assets acquired and the
liabilities assumed based upon their estimated fair values. The state of the
research and development products/processes was not at a technologically
feasible or commercially viable stage. Therefore, consistent with generally
accepted accounting principles, the Company took a charge for the full value of
the in-process research and development.

     Goodwill Amortization.  Goodwill amortization was $785,981 in 1999,
compared to $461,301 for 1998. The increase was attributable to the acquisition
of OZ Technologies, Inc. which is being amortized over seven years.

     Interest Income.  Interest income was $881,769 in 1999, compared to $1.3
million for 1998. This decrease was attributable to the investment of a lower
average cash balance.

     Minority Interest.  The minority interest share of income of $454,450 for
1999 and $383,637 for 1998 represented the Company's joint venture partners'
share of income from the Company's Asian operations.

     Income Taxes.  Income taxes decreased to a benefit of $2.7 million, which
represented an effective tax benefit rate of 41.9% for 1999 (excluding the
in-process research and development expenses of $8.8 million), compared to $3.7
million, which represented an effective tax rate of 41.1% for 1998 (excluding
the in-process research and development expenses of $1.6 million which resulted
in a tax benefit of $627,000).

     Net Loss.  Net loss for 1999 was $12.6 million compared to the loss of
$495,908 for 1998. Excluding in-process research and development and
discontinued operations, net loss for 1999 would have been $3.8 million, or 6%
of net sales compared to net income of $6.2 million or, 8.1% of net sales, for
1998. This increase in net loss was primarily a result of the effects of the
semiconductor industry's downturn, including reduced unit production, pricing
pressures, and excess probe card capacity. The Company's production
infrastructure was capable of higher production run rates, resulting in over
capacity and under-absorption of overhead. The Company has maintained its
operating cost structure during the down cycle in its business because it
believes that its global infrastructure will be an important competitive
advantage as the industry recovers.

                                       24
<PAGE>   27

  Years Ended December 31, 1998 and December 31, 1997

     Net Sales.  Net sales for 1998 were $76.2 million, an increase of 10.4%
over net sales of $69.0 million for 1997. The majority of this increase occurred
in the first quarter of 1998 as a result of higher order rates for the Company's
probe card and interface products. However, during the remainder of the year,
slower sales resulted from the softness in the worldwide demand for
semiconductors.

     Gross Profit.  The gross profit for 1998 was $31.2 million, an increase of
4.7% from the gross profit of $29.8 million for 1997. Gross margin decreased
from 43.1% in 1997 to 40.9% in 1998. The decrease in gross margin was a result
of a change in product mix, which included a higher ratio of lower margin ATE
interface product sales and a result of the Company's production infrastructure
capable of higher production run rates, resulting in over capacity and
under-absorption of overhead.

     Selling, General, and Administrative.  Selling, general, and administrative
expenses were $18.3 million, or 24.0% of net sales, for 1998, compared to $16.2
million, or 23.5% of net sales, for 1997, an increase of 12.9%. The increase in
selling, general, and administrative expenses resulted primarily from the
increase in fixed general and administrative costs due to the Company's
continued domestic expansion occurring in the later part of 1997 and first
quarter of 1998.

     Engineering and Product Development.  Engineering and product development
expenses were $3.1 million, or 4.1% of net sales, for 1998, an increase of
211.3% over $996,253, or 1.4% of net sales, for 1997. The Company has added
substantial resources to its product development team to address emerging and
next generation probing requirements for grid array, multi-chip testing, very
high frequency ICs, and those that have pad pitch architecture of less than 60
microns.

     In-Process Research and Development.  In-process research and development
costs from the September 1998 acquisition of Cerprobe Europe S.A.S. totaled $1.6
million. The acquisition was accounted for using the purchase method.
Accordingly, the purchase price was allocated to the assets acquired and the
liabilities assumed based upon their estimated fair values. The state of the
research and development products/processes was not at a technologically
feasible or commercially viable stage. Therefore, consistent with generally
accepted accounting principles, the Company took a one-time charge for the full
value of the in-process research and development.

     Interest Income.  Interest income was $1.3 million in 1998, compared to
$348,816 for 1997. This increase was attributable to the interest earned on the
net proceeds from the Company's 1997 secondary offering.

     Minority Interest.  The minority interest share of income of $383,637 for
1998 and share of loss of $29,715 for 1997 represented the Company's joint
venture partners' share of income (loss) from the Company's Asian operations
(40%, 30% prior to August 18, 1997) and a France-based joint venture. The
Company was involved from June 2, 1997 to June 25, 1998.

     Income Taxes.  The provision for income taxes decreased to $3.7 million,
which represented an effective tax rate of 41.1% for 1998 (excluding the
in-process research and development expenses of $1.6 million which resulted in a
tax benefit of $627,000), compared to $4.8 million, which represented an
effective tax rate of 38.6% for 1997. The decreased effective tax rate, as
adjusted, was due primarily from the reduced effective tax rate for export sales
through the Company's foreign sales corporation and income from non-taxable
annuities.

     Discontinued Operations.  In December 1998 and 1997 the Company recorded
$5.7 and $5.8 million in loss from discontinued operations from the disposal of
its wafer prober refurbishing and upgrading subsidiary, SVTR, Inc. The Company
disposed of the operations of SVTR through sale of equipment, inventory and
technology in March 1999.

     Net Income (Loss).  Net loss for 1998 was $495,908, compared to income of
$1.9 million for 1997. Excluding acquisition related expenses, net income for
1998 would have been $444,892, or 0.6% of net sales for 1998, compared to 2.7%
of net sales for 1997. This decrease was primarily a result of slower sales in
the later part of 1998 due to the softness in the worldwide demand for
semiconductors. The Company's production infrastructure was capable of higher
production run rates, resulting in over capacity and under-absorption of
overhead.
                                       25
<PAGE>   28

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

     The following table presents unaudited consolidated financial results for
each of the eight quarters ended December 31, 1999. The Company believes that
all necessary adjustments have been included to present fairly the quarterly
information when read in conjunction with the Consolidated Financial Statements
and Notes thereto. The operating results for any quarter are not necessarily
indicative of the results for any subsequent quarter.

<TABLE>
<CAPTION>
                                                                   QUARTERS ENDED(3)
                                   ---------------------------------------------------------------------------------
                                                    1999                                      1998
                                   ---------------------------------------   ---------------------------------------
                                   DEC 31(1)   SEP 30    JUN 30    MAR 31    DEC 31    SEP 30(2)   JUN 30    MAR 31
                                   ---------   -------   -------   -------   -------   ---------   -------   -------
                                                       (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                <C>         <C>       <C>       <C>       <C>       <C>         <C>       <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................   $18,015    $14,932   $14,103   $15,606   $15,008    $20,107    $18,139   $22,953
Gross profit.....................     6,023      5,189     4,246     5,560     5,430      8,593      7,253     9,879
Operating income (loss)..........    (2,498)    (1,070)   (2,556)      335       223      2,922      1,686     4,445
Net income (loss)................    (1,374)      (878)   (1,659)      150       251      1,977      1,202     2,748
Diluted net income (loss) per
  share..........................   $ (0.16)   $ (0.11)  $ (0.22)  $  0.02   $  0.03    $  0.25    $  0.14   $  0.32
AS A PERCENTAGE OF NET SALES:
Net sales........................     100.0%     100.0%    100.0%    100.0%    100.0%     100.0%     100.0%    100.0%
Gross profit.....................      33.4%      34.8%     30.1%     35.6%     36.2%      42.7%      40.0%     43.0%
Operating income (loss)..........     (13.9)%     (7.2)%   (18.1)%     2.1%      1.5%      14.5%       9.3%     19.4%
Net income (loss)................      (7.6)%     (5.9)%   (11.8)%     1.0%      1.7%       9.8%       6.6%     12.0%
</TABLE>

---------------
(1) Excludes a write-off of in-process research and development costs of $8.8
    million or $1.05 per diluted share related to the acquisition of OZ
    Technologies, Inc.

(2) Excludes a write-off of in-process research and development costs of $1.6
    million or $.11 per diluted share, net of tax benefit, related to the
    acquisition of Cerprobe Europe S.A.S.

(3) Excludes discontinued operations of SVTR, Inc.

     Quarterly results can be affected by a number of factors, including the
cyclical nature of the semiconductor industry, market acceptance of the
Company's products, product mix, customer order patterns, competition, the
availability and cost of raw materials and production capacity, and the
Company's ability to respond to technological advances.

LIQUIDITY AND CAPITAL RESOURCES

     The Company has financed its operations and capital requirements primarily
through cash flows from operations, equipment lease financing arrangements, and
sales of equity securities. At December 31, 1999, cash and short-term investment
securities were $3.5 million compared to $19.1 million at December 31, 1998.
This decrease was a result of the use of cash related to the acquisition of OZ
Technologies, Inc.

     The Company generated $922,747 of cash to support its operating activities
for the year ended December 31, 1999. Accounts receivable increased by $3.4
million, net of allowance, or 37.6%, to $12.3 million at December 31, 1999,
compared to the balance at December 31, 1998. Of this increase, $3.9 million was
due to the acquisition of OZ Technologies, Inc. Inventories increased $4.4
million, net of reserve, or 83.4%, over December 31, 1998, to $9.7 million at
December 31, 1999. Of this increase, $3.4 million was due to the acquisition of
OZ Technologies, Inc. Income taxes receivable increased $3.3 million, or 465.3%,
at December 31, 1999 over December 31, 1998. Approximately $2.0 million of the
increase was due to the current recognition of previously recorded deferred
losses associated with the sale of equipment and inventory from discontinued
operations of SVTR. The remaining amount was a result of losses from current
operations. Accounts payable and accrued expenses increased $3.7 million, or
65.2%, to $9.3 million at December 31, 1999. Of this increase, $3.3 million was
due to the acquisition of OZ Technologies, Inc.

                                       26
<PAGE>   29

     Working capital decreased $18.7 million, or 61.3%, to $11.8 million at
December 31, 1999. The current ratio decreased from 5.8 at December 31, 1998, to
1.6 at December 31, 1999. This decrease was due primarily to the use of cash and
increase in short-term debt related to the acquisition of OZ Technologies, Inc.

     On December 3, 1999, the Company acquired OZ Technologies, Inc. for $19.0
million in cash, notes payable of $5.6 million, and 1.5 million shares of stock.
The Company incurred approximately $1.9 million in acquisition related expenses.
The notes payable included a Subordinated Promissory Note in the amount of
$2,830,000 and a Promissory Note in the amount of $2,800,000.

     The Subordinated Promissory Note accrues interest at a rate of 10% per
annum and matures December 3, 2002.

     The Promissory Note accrues interest at a rate of 10% per annum and was to
have matured on February 3, 2000. The selling stockholders have agreed to extend
the maturity of this note until June 30, 2000. The Company may satisfy the
Promissory Note on June 30, 2000, by paying in cash all amounts then due under
the Promissory Note or by transferring its real property located at 10365 Sanden
Drive, Dallas, Texas (the "Real Property") to the selling stockholders' agent,
unencumbered except for minor liens and any mortgage that is executed by the
Company in favor of the selling stockholders with respect to the Real Property.
If the Company satisfies the Promissory Note by transferring the Real Property
to the selling stockholders' agent on June 30, 2000, the Stock Purchase
Agreement between the Company and the selling stockholders provides that the
Company and the selling stockholders' agent will assign a value (the "Appraised
Value") to the Real Property equal to the appraised value for the Real Property
as determined by a mutually agreed-upon real estate appraiser. The Stock
Purchase Agreement further provides that (1) to the extent the Appraised Value
is less than $2,800,000 plus interest due under the Promissory Note, the amount
of the difference will be added to the principal amount of the Subordinated
Promissory Note and (2) to the extent the Appraised Value is more than
$2,800,000 plus interest due under the Promissory Note, the amount of the
difference may be applied to reduce the principal amount of the Subordinated
Promissory Note if doing so does not cause the Company to violate any covenant
in any loan document to which it is a party.

     The Company increased its investment in property, plant and equipment
during the year ended December 31, 1999 by $1.8 million from the acquisition of
OZ and $6.3 million of capital expenditures. The capital expenditures were
primarily attributable to facilitizing of the Company's new manufacturing space
for interface products and for new probe card products expected to be ramped
into production during the year 2000 and additional costs associated with the
Company's recently implemented Oracle based ERP system. These capital
expenditures were funded with cash from operations and credit facilities from
Bank. The Company estimates that it will make between $7.5 million and $9.5
million purchase for equipment, facility expense and information technology in
the year 2000.

     In December 1999, the Company entered into a three-year senior secured
credit facility with Bank of America, N.A. (the "Loan and Security Agreement").
The Loan and Security Agreement includes a revolving credit facility in the
amount of $15,000,000 subject to borrowing base requirements providing for
advances of up to 85% of eligible accounts receivable. Advances on the revolving
credit facility bear interest at prime rate plus 0.50%. The facility also
includes an inventory term loan in the amount of approximately $5,800,000 and a
machinery and equipment term loan in the amount of $2,000,000, both of which
bear interest at prime rate plus 2.00%. The inventory term loan will be repaid
based upon a 24-month amortization with a balloon payment of the outstanding
principal balance at the end of 12 months. The machinery and equipment term loan
will be repaid based upon a 60-month amortization with a balloon payment of the
outstanding principal balance at the end of 36 months. All loans, advances, and
other obligations, liabilities, and indebtedness of the Company under the credit
facility are secured by valid, perfected, and enforceable first priority liens
upon and a security interest in substantially all of the Company's present and
future assets, including all accounts, contract rights, inventory, instruments,
documents, fixtures, chattel paper, general intangibles, patents, trademarks,
copyrights, trade names, deposit accounts, vehicles, equipment, and pledge of
stock of all domestic subsidiaries of Cerprobe and OZ and 65% of the stock of
each wholly-owned foreign subsidiary of the Company. This credit facility is
also guaranteed by all wholly-owned subsidiaries of Cerprobe and OZ. Advances
under the revolving credit facility, the inventory term loan, and the machinery
and

                                       27
<PAGE>   30

equipment term loan were $1,300,878, $5,834,000, and $2,000,000 respectively, at
December 31, 1999. The inventory term loan and the equipment term loan are at
the maximum currently available under the terms of these loans.

     The Loan and Security Agreement contains a number of covenants that, among
other things, restrict the ability of the Company to dispose of assets, incur
additional indebtedness, incur guaranty obligations, prepay indebtedness except
in accordance with relevant subordination provisions, pay dividends or make
capital distributions (other than distributions in capital stock), create liens
on assets, engage in mergers or consolidations (except for any subsidiary which
is acquired solely for the Company's Common Stock and that any subsidiary of the
Company may voluntarily merge into another subsidiary), engage in certain
transactions with subsidiaries and affiliates, make any change in accounting
policies or reporting practices except as required or permitted by generally
accepted accounting principles and otherwise restrict corporate activities. In
addition, the Loan and Security Agreement requires the Company to comply with
certain financial covenants, including the maintenance of a consolidated
Tangible Net Worth (as defined in the Loan and Security Agreement). At December
31, 1999, the Company was in violation of the Tangible Net Worth covenant under
the line of credit agreement which was waived by the lender.

     The Loan and Security Agreement contains customary events of default,
including the failure to pay principal when due or any interest or other amount
that becomes due, any representation or warranty being made by the Company that
is incorrect in any material respect on or as of the date made, a default in the
performance of any covenant which continues for more than thirty days, default
in certain other indebtedness, certain insolvency events, certain ERISA events,
and certain change of control events.

     The Company believes that its working capital, together with the loan and
lease commitments described above and anticipated cash flow from operations,
will provide adequate sources to fund operations for at least the next 12
months. The Company anticipates that any additional cash requirements for
operations or capital expenditures will be financed through cash flow from
operations, by borrowing from the Company's primary lender, by lease financing
arrangements, or by sales of equity securities. Any such financing may not be
available on acceptable terms and any additional equity financing, if available,
would result in additional dilution to existing investors.

YEAR 2000

     In prior periods, the Company discussed the nature and progress of its
plans to become Year 2000 ready. In late 1999, the Company completed the
remediation and testing of its critical computer dependent systems. Through
March 27, 2000, the Company has experienced no significant disruptions in
critical information technology and non-information technology systems and
believes those systems successfully responded to the Year 2000 date change. The
Company is not aware of any material problems resulting from Year 2000 issues,
either with its products, its internal systems, or the products and services of
third parties. The Company will continue to monitor its mission critical
computer applications and those of our suppliers and vendors throughout the year
2000.

     If significant yet to be identified Year 2000 issues arise, the Company may
experience significant problems that could have an adverse affect on its
financial condition and results of operations. Litigation regarding Year 2000
issues is possible. It is uncertain whether, or to what extent, the Company may
be affected by such litigation.

INFLATION AND CHANGING PRICES

     The Company is impacted by inflationary trends and business trends within
the semiconductor industry and by the general condition of the worldwide
semiconductor markets. Market price pressures are exerted on semiconductor
manufacturers by the global marketplace and global competition. Such pressures
mandate that semiconductor manufacturers closely scrutinize the prices they pay
for goods and services purchased from the Company and other suppliers.
Accordingly, the price structure for the Company's products must be competitive.

                                       28
<PAGE>   31

     Changes in the Company's supplier prices did not have a significant impact
on cost of sales during 1999 or 1998.

     As a result of the Company's operation of the manufacturing, repair, and
sales facilities in Scotland, France, Singapore, and Taiwan, the Company's
foreign transactions may be denominated in currencies other than the U.S.
Dollar. Such transactions may expose the Company to exchange rate fluctuations
for the period of time from inception of the transaction until it is settled.
Fluctuations in the currency exchange rate in the future may have an adverse
impact on the Company's foreign operations.

     In addition, the Company may purchase a substantial portion of its raw
materials and equipment from foreign suppliers and will incur labor costs in a
foreign currency. The foreign manufacture and sale of products and the purchase
of raw material and equipment from foreign suppliers may be adversely affected
by political and economic conditions abroad. Protective trade legislation in
either the United States or foreign countries, such as a change in the current
tariff structures, export compliance laws or other trade policies, could
adversely affect the Company's ability to manufacture or sell its products in
foreign markets and purchase materials or equipment from foreign suppliers. In
countries in which the Company conducts business in local currency, currency
exchange rate fluctuations could adversely affect the Company's net sales or
costs.

BUSINESS OUTLOOK

     The Company's business depends substantially on both the volume of IC
production by semiconductor manufacturers as well as new IC designs, which in
turn depend on the demand of ICs and products utilizing ICs. The semiconductor
industry is highly cyclical and historically has experienced periods of
oversupply, resulting in reduced demand for IC testing products, including the
products manufactured by the Company. The Company continues to analyze its
current cost structure to bring its production and overhead costs in line with
the anticipated industry demand for its products for the rest of this year.
However, the Company's need to invest in engineering and product development,
marketing, and customer service and support capabilities will limit its ability
to reduce expenses in response to such downturns or slow downs.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     A portion of the Company's foreign sales are denominated in currencies
other than the U.S. Dollar. The Company may also purchase a portion of its raw
materials and equipment from foreign suppliers and will incur labor costs in a
foreign currency. Such transactions expose the Company to exchange rate
fluctuations for the period of time from inception of the transaction until it
is settled. The Company monitors its foreign currency exposure and from time to
time enters into hedging transactions to manage this exposure. There were no
forward contracts at December 31, 1999.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Independent Auditors' Report and Consolidated Financial Statements of
the Company are set forth on pages F-1 to F-24 of this report and are
incorporated by reference herein.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None.

                                       29
<PAGE>   32

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS AND COMPLIANCE WITH SECTION 16(A) OF
THE EXCHANGE ACT

DIRECTORS AND EXECUTIVE OFFICERS

     The following table sets forth certain information regarding the Company's
directors. The information required by this Item relating to the Company's
executive officers is included under the caption "Executive Officers" in Part I
of this report

<TABLE>
<CAPTION>
NAME                                     AGE                 POSITION(S) WITH CERPROBE
----                                     ---                 -------------------------
<S>                                      <C>    <C>
Ross J. Mangano(1)(2)..................  54     Chairman of the Board of Directors
C. Zane Close..........................  50     President, Chief Executive Officer, and Director
William A. Fresh(2)....................  71     Director
Kenneth W. Miller(1)...................  68     Director
Donald F. Walter(1)(2).................  67     Director
</TABLE>

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

(1) Member of the Compensation Committee

(2) Member of the Audit Committee

     Ross J. Mangano has served as the Chairman of the Board of Directors of the
Company since February 1993 and as a director of the Company since February
1988. Mr. Mangano has served as the President of Oliver Estate, Inc., an
investment management company, since 1996. Prior to that time, Mr. Mangano
served in various management positions with Oliver Estate, Inc., since 1971. Mr.
Mangano also is an investment analyst for Oliver Estate, Inc. Since July 1998,
Mr. Mangano has served on the Board of Directors of U.S. RealTel, Inc., a public
corporation owning access rights on properties around the world and has served
as director of U.S. RealTel Argentina since 1999 as well. Mr. Mangano has served
on the Board of Directors of BioSante Pharmaceuticals, Inc., a public company,
since July 1999 and Orchard Software Corporation, a privately held company,
which develops software for the medical industry, since August 1998. From August
1997 to 1999, Mr. Mangano served on the Board of Directors of Blue Chip Casino,
a privately held casino. From December 1993 to 1996, Mr. Mangano served on the
Board of Directors of Cole Taylor Financial Group, a publicly held bank holding
company.

     C. Zane Close has served as President and Chief Executive Officer and as a
director of the Company since July 1990. From September 1989 to July 1990, Mr.
Close served as Vice President and General Manager of Probe Technology
Corporation ("Probe Technology"), a manufacturer of probing devices for testing
integrated circuits. Mr. Close served as Vice President of Operations of Probe
Technology from February 1985 to September 1989. Prior to joining Probe
Technology, Mr. Close held various financial and management positions at
California Devices, NKB Corporation, and National Semiconductor Corporation.

     William A. Fresh has served as a director of the Company since April 1995.
Mr. Fresh co-founded Fresh Test Technology Corporation ("Fresh Test"), a
designer and manufacturer of probe and interface test technology for the
semiconductor industry, which was acquired by the Company in April 1995. He
served as Chairman of the Board and Chief Executive Officer of Fresh Test from
January 1986 through March 1995. Mr. Fresh also has served as the Chairman of
the Board and Chief Executive Officer of Magellan Technology, a public holding
company; and Orem Tek Development Corp., a real estate development company,
since May 1990 and May 1991, respectively. Mr. Fresh served as Chairman of the
Board and Chief Executive Officer of Satellite Images System Corporation, a
medical information processing company, from February 1992 to August 1996, and
from August 1996 to May 1998 served on the Board of Directors of the successor
company known as Satellite Images System, L.L.C. Mr. Fresh served as Chairman of
the Board of

                                       30
<PAGE>   33

EFI Electronics, a publicly held power conditioning company; and Fresh
Technology Company, a PC-based software company, from January 1991 to March
1994. From April 1996 to July 1998, Mr. Fresh served on the Board of Directors
of Sento Technical Innovation Corporation, a publicly held software company. Mr.
Fresh has served as Chairman of the Board and as senior consultant to Brow Z.com
since August 1998.

     Kenneth W. Miller has served as a director of the Company since 1979. Mr.
Miller served as Treasurer of the Company from June 1994 to June 1996 and as
Secretary of the Company from October 1991 to June 1996. Since January 1992, Mr.
Miller has served as a business consultant to various companies involved in the
microelectronic industry. From April 1991 until October 1991, Mr. Miller served
as Marketing Director of Scrantom Engineering, Inc., a manufacturer of hybrid
circuits and ceramic circuit boards. From September 1988 until April 1991, Mr.
Miller served as Marketing Director of Advanced Packaging Systems, a
manufacturer of high-density ceramic and polymer thin film interconnect
products. From 1981 to September 1988, Mr. Miller served as President of
Interamics, a manufacturer of ceramic packages for ICs and hybrid substrates.

     Donald F. Walter has served as a director of the Company since May 1991.
Since 1982, Mr. Walter has been a financial consultant and is the principal of
Walter & Keenan Financial Consulting Co., a financial consulting firm. Since
January 1982, Mr. Walter has served as a director of National Standard Co., a
publicly held manufacturer of specialty wire products. Since October 1988, Mr.
Walter has served as a director of Metro BanCorp, a publicly held bank.

     Directors hold office until their successors have been elected and
qualified. All officers are elected by the Board of Directors and hold office
until their successors have been duly elected and qualified, or until
resignation or removal. There currently is no classification of the Board of
Directors. There are no family relationships among any of the directors or
officers of the Company.

     The employment agreement between the Company and Mr. Close provides that
the Company will cause Mr. Close to be nominated to the Board of Directors so
long as Mr. Close is employed by the Company. The stockholders of the Company,
however, have no obligation to vote for Mr. Close and may withhold or distribute
votes in their discretion. the Company knows of no other arrangements or
understandings between any director or executive officer and any other person
pursuant to which he has been selected as a director or executive officer.

COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934

     Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors, and greater than 10% stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms filed with the SEC.

     Based solely on the Company's review of the copies of such forms received
by it during the fiscal year ended December 31, 1999, and written
representations that no other reports were required, the Company believes that
each person who, at any time during such fiscal year, was a director, officer,
or beneficial owner of more than 10% of the Company's Common Stock complied with
all Section 16(a) filing requirements during such fiscal year.

ITEM 11.  EXECUTIVE COMPENSATION

SUMMARY OF CASH AND OTHER COMPENSATION

     The following table sets forth information concerning the compensation for
the fiscal years ended December 31, 1999, 1998, and 1997 earned by the Company's
Chief Executive Officer and the Company's four most highly compensated executive
officers whose aggregate cash compensation exceeded $100,000 for

                                       31
<PAGE>   34

services rendered in all capacities to the Company and its subsidiaries for the
last fiscal year (the "Named Officers").

<TABLE>
<CAPTION>
                                                                                   LONG TERM COMPENSATION
                                           ANNUAL COMPENSATION               -----------------------------------
                               -------------------------------------------           AWARDS
                                                                 OTHER       ----------------------    PAYOUTS
                                                                 ANNUAL      RESTRICTED               ----------    ALL OTHER
NAME AND                                                        COMPEN-         STOCK      OPTIONS/      LTIP        COMPEN-
PRINCIPAL POSITION             YEAR    SALARY($)   BONUS($)   SATION($)(1)   AWARD(S)($)   SARS(#)    PAYOUTS($)   SATION($)(2)
------------------             ----    ---------   --------   ------------   -----------   --------   ----------   ------------
<S>                            <C>     <C>         <C>        <C>            <C>           <C>        <C>          <C>
C. Zane Close................  1999     280,000         --        --             --             --       --           1,000(3)
President and Chief            1998     270,000         --        --             --        140,000(2)    --           1,500(4)
Executive Officer              1997     209,276    185,716        --             --         60,000       --                --

Michael K. Bonham............  1999     160,000         --        --             --             --       --           1,000(3)
Sr. Vice President of          1998     150,000         --        --             --         65,000(2)    --           1,500(4)
Sales and Marketing            1997     134,950     99,547        --             --         15,000       --          13,349(5)

Randal L. Buness.............  1999     160,000         --        --             --             --       --           1,000(3)
Senior Vice President,         1998     148,000         --        --             --         90,000(2)    --           1,500(4)
Chief Financial Officer,       1997     119,981     75,000        --             --             --       --                --
Secretary and Treasurer

Kevin M. Kurtz...............  1999     150,000         --        --             --             --       --           8,200(3)
Vice President, Operations     1998     150,000         --        --             --             --       --           8,700(4)
                               1997     133,000     20,000        --             --         20,000       --           1,800(6)

Henry P. Scutoski............  1999     125,000         --        --             --          5,000       --           1,000(3)
Vice President, Quality        1998     115,000         --        --             --             --       --           1,500(4)
and Process Management         1997     105,000     11,626        --             --             --       --                --
</TABLE>

---------------
(1) Other annual compensation did not exceed the lesser of $50,000 or 10% of the
    total salary and bonus for any of the Named Officers.

(2) Reflects the effect of the reissuance in August 1998 of options to acquire
    60,000, 25,000, and 40,000 shares granted to Messrs. Close, Bonham, and
    Buness, respectively, originally granted in January 1998 and cancelled.

(3) Represents matching contributions to the Company's 401(k) plan of $1,000 to
    Messrs. Close, Bonham, Buness, Kurtz, and Scutoski. In addition, $7,200
    represents an auto allowance to Mr. Kurtz.

(4) Represents matching contributions to the Company's 401(K) plan of $1,500 to
    Messrs. Close, Bonham, Buness, Kurtz, and Scutoski. In addition, $7,200
    represents an auto allowance to Mr. Kurtz.

(5) Represents salary and/or bonus earned by Mr. Bonham in 1996 payment for
    which was deferred to 1997.

(6) Represents an auto allowance of $1,800 to Mr. Kurtz.

                                       32
<PAGE>   35

OPTION GRANTS IN LAST FISCAL YEAR

     The following table provides information on stock options granted to the
Company's Named Officers during the fiscal year ended December 31, 1999.

<TABLE>
<CAPTION>
                                                                                                  POTENTIAL REALIZABLE
                                                                                                    VALUE AT ASSUMED
                                                    INDIVIDUAL GRANTS                               ANNUAL RATES OF
                          ---------------------------------------------------------------------       STOCK PRICE
                              NUMBER OF                                                             APPRECIATION FOR
                              SECURITIES                             EXERCISE                      OPTION TERM($)(1)
                          UNDERLYING OPTIONS   % OF TOTAL OPTIONS     PRICE                       --------------------
NAME                         GRANTED (#)       GRANTED FISCAL YEAR    ($/SH)    EXPIRATION DATE      5%         10%
----                      ------------------   -------------------   --------   ---------------   --------   ---------
<S>                       <C>                  <C>                   <C>        <C>               <C>        <C>
Henry P. Scutoski.......       5,000(2)                1.2%           15.125        2/16/09        47,560     120,527
</TABLE>

---------------
(1) Calculated from a base price equal to the exercise price of each option,
    which was the fair market value of the common stock on the date of grant.
    The amounts represent only certain assumed rates of appreciation.

(2) One-fifth of the options vest and become exercisable on the date of grant,
    February 16, 1999; and one-fifth on each of February 16, 2000; February 16,
    2001; February 16, 2002; and February 16, 2003.

OPTION HOLDINGS AND YEAR END OPTIONS VALUES

     The following table contains certain information representing the options
held by the Named Officers as of December 31, 1999.

<TABLE>
<CAPTION>
                                           NUMBER OF UNEXERCISED          VALUE OF UNEXERCISED IN-THE-
                                             OPTIONS AT FISCAL               MONEY OPTIONS AT FISCAL
                                                YEAR-END(#)                      YEAR-END($)(1)
                                      -------------------------------    -------------------------------
NAME                                  EXERCISABLE    UNEXERCISABLE(2)    EXERCISABLE    UNEXERCISABLE(2)
----                                  -----------    ----------------    -----------    ----------------
<S>                                   <C>            <C>                 <C>            <C>
C. Zane Close.......................    98,000           102,000             $--               $--
Michael K. Bonham...................    36,500            43,500             --                --
Randal L. Buness....................    76,000            64,000             --                --
Kevin M. Kurtz......................    38,000            12,000             --                --
Henry P. Scutoski...................     5,000             5,000             --                --
</TABLE>

---------------
(1) Calculated based upon the December 31, 1999, The Nasdaq National Market(R)
    closing price of $7.375 per share, multiplied by the applicable number of
    shares in-the-money, less the aggregate exercise price for such shares.

(2) Not vested as of December 31, 1999.

EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS

     The Company has entered into Employment Agreements with C. Zane Close,
Michael K. Bonham, and Randal L. Buness that provide a base salary of $280,000
for Mr. Close and $160,000 for Messrs. Bonham and Buness and entitles each to
participate in incentive compensation programs, stock option plans, and other
generally available benefit programs. The terms of the agreements are two years
for Mr. Close and one year for Messrs. Bonham and Buness, and each provides for
automatic successive one-year renewal terms to continue until one party provides
the other with written notice of non-renewal.

     Under each of the agreements, if the executive's employment is terminated
by the Company without Cause (as defined) or by the executive for Good Reason
(as defined), the executive will be entitled to "Severance Benefits." Under the
agreements, Severance Benefits are defined as the greater of:

     - the sum of (a) the executive's base salary for the unexpired term of the
       agreement, and (b) the average of incentive compensation paid to the
       executive for the two years prior to the date of termination multiplied
       by a fraction, the numerator of which is the number of months remaining
       from the date of termination to the end of the term of the agreement and
       the denominator of which is 12, or

                                       33
<PAGE>   36

     - the sum of (x) the executive's base salary in effect on the date of
       termination and (y) the average of incentive compensation paid to the
       executive for the two years prior to the date of termination.

     In addition, under the agreements each executive will continue to receive
life, disability, accident and group health insurance benefits substantially
similar to those which he was receiving immediately prior to his termination of
employment until the earlier of the end of the period of 12 months following his
termination of employment or the day on which he becomes eligible to receive any
substantially similar continuing health care benefits under any plan or program
of any other employer.

     Each of the agreements provides for the Company to indemnify the executive
for certain liabilities arising from actions taken within the scope of
employment. Each agreement contains restrictive covenants pursuant to which the
executive has agreed not to compete with the Company or to solicit any clients
or employees for a period of one year after the executive's employment ceases.
These restrictions do not apply if the executive is terminated without Cause or
by the executive for Good Reason.

  Change of Control Agreements

     The Company also entered into Change of Control Agreements with Messrs.
Close, Bonham, and Buness. These Change of Control agreements provide that, upon
termination of their employment by the Company without Cause (as defined) within
two years following a Change of Control (as defined), or termination by
executive for Good Reason (as defined) within two years following a Change of
Control each is entitled to lump sum payment equal to the sum of:

     - two times base salary on the date of termination of employment,

     - two times the average of incentive compensation for the two years prior
       to termination of employment, and

     - the amount of any lump-sum severance benefit paid under any employment
       agreement.

     Additionally, each will be entitled to continuation of life, disability and
group health benefits for 24 months after termination of employment.

     Notwithstanding the above, the benefits under the Change of Control
Agreements will be reduced to the extent that the payments would not be
deductible by the Company (in whole or in part) under Section 280G of the
Internal Revenue Code (which is generally equal to 299% of the executive's
average annual total compensation during the preceding five years).

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 9, 2000 by:

     - each director;

     - each Named Officer set forth in the Summary Compensation Table under the
       section entitled "Executive Compensation";

     - all directors and executive officers of the Company as a group; and

     - each person known by the Company to be the beneficial owner of more than
       5% of the Common Stock. The information as to beneficial ownership is
       based upon statements furnished to the Company by such persons.

                                       34
<PAGE>   37

<TABLE>
<CAPTION>
NAME AND ADDRESS                                                 AMOUNT AND NATURE OF       PERCENT OF
OF BENEFICIAL OWNER(1)                                         BENEFICIAL OWNERSHIP(2)       CLASS(3)
----------------------                                        --------------------------    ----------
<S>                                                           <C>                           <C>
Directors and Named Officers
Ross J. Mangano.............................................            535,799(4)             5.67%
C. Zane Close...............................................            170,100(5)             1.78%
William A. Fresh............................................            175,535(6)             1.86%
Kenneth W. Miller...........................................            149,499(7)             1.58%
Donald F. Walter............................................             34,999(8)                *
Michael K. Bonham...........................................             98,017(9)             1.04%
Randal L. Buness............................................            79,000(10)                *
Kevin M. Kurtz..............................................            49,997(11)                *
Henry P. Scutoski...........................................            16,820(12)                *
All directors and executive officers as a group (nine
  persons)..................................................         1,309,766(13)            13.38%
Affiliate Nasser Barabi.....................................           525,000(14)             5.57%
</TABLE>

---------------
  *  Less than 1%.

 (1) Each director and officer of the Company may be reached through the Company
     at 1150 North Fiesta Boulevard, Gilbert, Arizona 85233-2237.

 (2) Unless otherwise indicated, and subject to community property laws where
     applicable, all shares are owned of record by the persons named and the
     beneficial ownership consists of sole voting power and sole investment
     power.

 (3) The percentages shown include the shares of Common Stock actually owned as
     of March 27, 2000 and the shares of Common Stock that the identified person
     or group had the right to acquire within 60 days of March 27, 2000,
     pursuant to the exercise of stock options. In calculating the percentage of
     ownership, all shares of Common Stock that the identified person or group
     had the right to acquire within 60 days of March 27, 2000, upon the
     exercise of stock options are deemed to be outstanding for the purpose of
     computing the percentage of the shares of Common Stock owned by such person
     or group, but are not deemed to be outstanding for the purpose of computing
     the percentage of the shares of Common Stock owned by any other person.

 (4) Includes 20,000 shares in the name of Nat & Co voted pursuant to a power of
     attorney, 21,300 shares in the name of Oliver & Company voted pursuant to a
     power of attorney, 90,000 shares in the name of Millie M. Cunningham voted
     pursuant to a power of attorney, 350,200 shares held in the name of Troon &
     Co., Ross J. Mangano, et al., Trustees for which Mr. Mangano serves as a
     trustee, and 21,999 shares that Mr. Mangano has the right to acquire
     pursuant to the exercise of options.

 (5) Includes 110,000 shares that Mr. Close has the right to acquire pursuant to
     the exercise of options.

 (6) Includes 111,461 shares held by WAF Investment Company, a company 100%
     owned by Mr. Fresh and his wife, 19,716 shares held by The William A. and
     Reva Luana Fresh Charitable Remainder Unitrust, and 21,999 shares that Mr.
     Fresh has the right to acquire pursuant to the exercise of options.

 (7) Includes 50,000 shares held by U.S. Trust Company of California, N.A., as
     trustee for the Kenneth W. Miller Charitable Remainder Unitrust. Mr. Miller
     disclaims beneficial ownership with respect to these shares. Also includes
     21,999 shares that Mr. Miller has the right to acquire pursuant to the
     exercise of options.

 (8) Includes 21,999 shares that Mr. Walter has the right to acquire pursuant to
     the exercise of options.

 (9) Includes 37,750 shares that Mr. Bonham has the right to acquire pursuant to
     the exercise of options.

(10) Includes 76,000 shares that Mr. Buness has the right to acquire pursuant to
     the exercise of options.

(11) Includes 48,000 shares that Mr. Kurtz has the right to acquire pursuant to
     the exercise of options.

(12) Includes 9,000 shares that Mr. Scutoski has the right to acquire pursuant
     to the exercise of options.

(13) Includes 368,746 shares that members of the group had the right to acquire
     as of March 27, 2000 or within 60 days of March 27, 2000, pursuant to the
     exercise of stock options.

                                       35
<PAGE>   38

(14) Mr. Barabi's address is 3387 Investment Boulevard Hayward, California,
     94545.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Company believes that it is important for its directors and officers to
be significant stakeholders in the Company. With this in mind, in August 1999,
the Board of Directors approved a director and executive officer loan program to
provide financial assistance to directors and executive officers, by way of
loans, to assist with the exercise price and tax consequences of stock option
exercises (the "Loan Program"). Under the Loan Program, the Company provides
loans up to the amount of the exercise price to be paid plus presumed Federal
and State taxes on the exercise of a stock option. Each member of the Board,
each of the Company's executive officers, and any other individual designated by
the Board are eligible for the loans. The Loan Program provides for unsecured,
recourse loans, that bear interest at the applicable short-term Federal rate
(for loans with terms less than three years), or the applicable mid-term Federal
rate (for loans with terms of three years or greater). Generally, the term of
the loans will be no longer than five years, although the Board may provide for
a longer term on a case-by-case basis. Payments are due in installments of
principal and interest throughout the term of the loans. If the
employment/services of a Loan Program participant is terminated for "cause" or
if the participant resigns without "good reason," any loans to that participant
will be immediately due and payable. If the participant's employment/services is
terminated without cause or if the participant resigns with good reason, then
any loan remains payable pursuant to the original term of the loan. The terms
cause and good reason are generally defined in the Company's standard executive
employment agreements as modified for non-employee members of the Board.

     In 1999, the Loan Program provided loans totaling $841,465 in connection
with the exercises of options to purchase 145,000 shares of Company stock and
pay income tax liabilities associated with those exercises.

     The following table sets forth certain information regarding loans made by
the Company to its directors and executive officers that were outstanding as of
December 31, 1999 (collectively, the "Loans"). As of December 31, 1999, the
aggregate indebtedness owed to the Company pursuant to the Loan Program was
$889,206, including accrued interest thereon.

<TABLE>
<CAPTION>
                                                                AMOUNT OUTSTANDING     NUMBER OF SHARES
NAME AND                                                        AS OF DECEMBER 31,     PURCHASED THROUGH
PRINCIPAL POSITION                        DATE DEBT INCURRED         1999(1)          EXERCISE OF OPTIONS
------------------                        ------------------    ------------------    -------------------
<S>                                       <C>                   <C>                   <C>
C. Zane Close...........................        8/5/99               $372,511               60,000
  President, Chief Executive
  Officer, and Director
Michael K. Bonham.......................        8/5/99               $310,965               50,000
  Sr. Vice President of Sales
  and Marketing
Kenneth W. Miller.......................       8/16/99               $117,626               20,000
  Director
Donald F. Walter........................       8/24/99               $ 88,104               15,000
  Director
</TABLE>

---------------
(1) Includes accrued interest.

                                       36
<PAGE>   39

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

  (a) The following documents are filed as part of this report:

     1. Financial Statements

     The following Financial Statements of the Company are filed with this
report:

<TABLE>
<CAPTION>
DESCRIPTION                                                     PAGE
-----------                                                     ----
<S>                                                             <C>
Independent Auditors' Report................................    F-1
Consolidated Balance Sheets, December 31, 1999 and 1998.....    F-2
Consolidated Statements of Operations for the years ended
  December 31, 1999, 1998, and 1997.........................    F-3
Consolidated Statements of Stockholders' Equity and
  Comprehensive Income for the years ended December 31,
  1999, 1998, and 1997......................................    F-4
Consolidated Statements of Cash Flows for the years ended
  December 31, 1999, 1998, and 1997.........................    F-5
Notes to Consolidated Financial Statements..................    F-6
</TABLE>

     2. Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
<S>       <C>
 2(a)     Agreement of Merger and Plan of Reorganization dated
          February 21, 1995, as amended by that certain Amendment of
          Agreement of Merger and Plan of Reorganization dated March
          31, 1995, by and among Fresh Test Acquisition, Inc., the
          Company, Fresh Technology Corporation, and William A. Fresh,
          Robert K. Bench, Harold D. Higgins, WAF Investment Company
          and Orem Tek Development Corp. filed as Exhibit 2 to the
          Company's Current Report on Form 8-K filed with the
          Commission on or about April 4, 1995 and incorporated herein
          by reference.
 3(a)     Second Restated Certificate of Incorporation of Cerprobe
          Corporation, filed with the Secretary of State on June 23,
          1998, filed as Exhibit 3(e) to the Company's Form 10-Q for
          the period ended June 30, 1998 and incorporated herein by
          reference.
 3(b)     Bylaws of the Company dated March 14, 1987, filed as Exhibit
          4(b) to the Company's Form 10-Q for the period ended June
          30, 1987 and incorporated herein by reference.
 3(c)     Rights Agreement, dated September 28, 1998, between Cerprobe
          Corporation and American Securities Transfer & Trust,
          Incorporated, as Rights Agent, filed as an Exhibit to the
          Company's Form 8-A filed on or about October 2, 1998 and
          incorporated herein by reference.
 4(a)     Specimen Stock Certificate filed as Exhibit 4(c) to the
          Company's Form S-18 Registration Statement (No. 2-85679) and
          incorporated herein by reference.
 4(b)     Specimen Convertible Subordinated Debenture filed as Exhibit
          4(b) to the Company's Form 10-K for the year ended December
          31, 1990 and incorporated herein by reference.
 4(c)     Specimen Series A Preferred Stock Certificate filed as
          Exhibit 4(c) to the Company's Form 10-KSB for the year ended
          December 31, 1995 and incorporated herein by reference.
 4(d)     Certificate of Designations of Series A Preferred Stock
          dated January 11, 1996, as filed with the Secretary of State
          of Delaware, filed as Exhibit 4(d) to the Company's Form
          10-KSB for the year ended December 31, 1995 and incorporated
          herein by reference.
</TABLE>

                                       37
<PAGE>   40

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
<S>       <C>
10(a)     Non-Qualified Stock Option Plan adopted by the Company's
          Board of Directors on June 25, 1983, as amended, and Form of
          Qualified Stock Option Agreement filed as Exhibits 4(a) and
          4(c) to the Company's Form S-8 Registration Statement (No.
          33-65200) and incorporated herein by reference.
10(b)     Incentive Stock Option Plan adopted by the Company's Board
          of Directors on April 3, 1989, filed as Exhibit 10(k) to the
          Company's Form 10-K for the year ended December 31, 1989 and
          incorporated herein by reference and Form of Incentive Stock
          Option Agreement filed as Exhibit 4(d) to the Company's Form
          S-8 Registration Statement (No. 33-65200) and incorporated
          herein by reference.
10(bb)    Agreement between Cerprobe Europe, Limited and Lanarkshire
          Development Agency dated August 15, 1994, as amended, filed
          as Exhibit 10(bb) to the Company's Form 10-KSB for the year
          ended December 31, 1994 and incorporated herein by
          reference.
10(cc)    Lease Agreement between the Company and Realtec Properties
          I, L.P. dated July 17, 1995 filed as Exhibit 1 to the
          Company's Form 10-QSB for the quarter ended June 30, 1995
          and incorporated herein by reference.
10(dd)    Lease Agreement between the Company and East Point Realty
          Trust dated June 30, 1995 filed as Exhibit 2 to the
          Company's Form 10-QSB for the quarter ended June 30, 1995
          and incorporated herein by reference.
10(gg)    Letter of Intent between the Company and Technology Parks
          PTE LTD dated June 23, 1995 filed as Exhibit 5 to the
          Company's Form 10-QSB for the quarter ended June 30, 1995
          and incorporated herein by reference.
10(ll)    The Company's 1995 Stock Option Plan filed as Exhibit 10(ll)
          to the Company's Form 10-KSB for the year ended December 31,
          1995 and incorporated herein by reference.
10(oo)    Memorandum of Lease with respect to the Lease Agreement
          between the Company and CRPB Investors, L.L.C. dated August
          21, 1996, and the Addendum to the Lease Agreement filed as
          an Exhibit to the Company's Form 10-QSB for the quarter
          ended September 30, 1996 and incorporated herein by
          reference.
10(qq)    Operating Agreement between the Company and CRPB Investors,
          L.L.C. dated September 18, 1996 filed as an Exhibit to the
          Company's Form 10-QSB for the quarter ended September 30,
          1996 and incorporated herein by reference.
10(rr)    Agreement of Merger and Plan of Reorganization, dated as of
          October 25, 1996, by and among the Company, C-Route
          Acquisition, Inc., CRoute, Inc., CompuRoute, Incorporated,
          and Souad Shrime filed as Exhibit 10(rr) to the Company's
          Registration Statement on Form S-4 (No. 333-15785) and
          incorporated herein by reference.
10(ss)    Agreement and Plan of Merger, dated as of October 25, 1996,
          by and between CompuRoute, Incorporated, and CRoute, Inc.
          filed as Exhibit 10(ss) to the Company's Registration
          Statement on Form S-4 (No. 333-15785) and incorporated
          herein by reference.
10(tt)    Purchase and Sale Agreement dated as of October 25, 1996, by
          and between Souad Shrime and the Company filed as Exhibit
          10(tt) to the Company's Registration Statement on Form S-4
          (No. 333-15785) and incorporated herein by reference.
10(uu)    Indemnification Agreement by Souad Shrime in favor of and
          for the benefit of the Company and C-Route Acquisition, Inc.
          filed as Exhibit 10(uu) to the Company's Registration
          Statement on Form S-4 (No. 333-15785) and incorporated
          herein by reference.
10(vv)    Agreement of Merger and Plan of Reorganization dated January
          15, 1997, by and among the Company, EMI Acquisition, Inc.,
          Silicon Valley Test & Repair, Inc., and William and Carol
          Mayer filed as Exhibit 1 to the Company's Current Report on
          Form 8-K filed with the Commission on or about January 30,
          1997 and incorporated herein by reference.
</TABLE>

                                       38
<PAGE>   41

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
<S>       <C>
10(ww)    Registration Rights Agreement dated January 15, 1997, by and
          between the Company and William and Carol Mayer filed as
          Exhibit 2 to the Company's Current Report on Form 8-K filed
          with the Commission on or about January 30, 1997 and
          incorporated herein by reference.
10(xx)    Employment Agreement dated January 15, 1997, by and between
          the Company and William and Carol Mayer filed as Exhibit 2
          to the Company's Current Report on Form 8-K filed with the
          Commission on or about January 30, 1997 and incorporated
          herein by reference.
10(aaa)   Lease agreement between CompuRoute and Banc One Leasing
          dated November 17, 1997, filed as Exhibit 10(aaa) to the
          Company's Form 10-K for the year ended December 31, 1997 and
          incorporated herein by reference.
10(bbb)   Master Lease Agreement between Company and Banc One Leasing
          Corporation, dated February 16, 1998, filed as Exhibit
          10(bbb) to the Company's Form 10-K for the year ended
          December 31, 1997 and incorporated herein by reference.
10(ccc)   Lease agreement between CompuRoute and Banc One Leasing
          Corporation, dated May 7, 1998, filed as Exhibit 10(ccc) to
          the Company's Form 10-Q for the period ended June 30, 1998
          and incorporated herein by reference.
10(ddd)   Lease agreement between CompuRoute and Banc One Leasing
          Corporation, dated June 17, 1998, filed as Exhibit 10(ddd)
          to the Company's Form 10-Q for the period ended June 30,
          1998 and incorporated herein by reference.
10(eee)   Lease agreement between Cerprobe Corporation and
          Jackson-Shaw El Dorado Tech I Limited Partnerships, dated
          May 15, 1998, filed as Exhibit 10(eee) to the Company's Form
          10-Q for the period ended June 30, 1998 and incorporated
          herein by reference.
10(fff)   Lease agreement between Cerprobe Corporation and Banc One
          Leasing Corporation, dated October 22, 1998, filed as
          Exhibit 10(fff) to the Company's Form 10-Q for the period
          ended June 30, 1998 and incorporated herein by reference.
10(ggg)   Business Loan agreement between Cerprobe Corporation and
          Bank of America, dated December 31, 1998, filed as Exhibit
          10(ggg) to the Company's Form 10-Q for the period ended
          March 31, 1999.
10(hhh)   Lease agreement between Cerprobe Corporation and Bank of
          America, dated February 26, 1999, filed as Exhibit 10(hhh)
          to the Company's Form 10-Q for the period ended March 31,
          1999.
10(iii)   Employment Agreement between Cerprobe Corporation and C.
          Zane Close effective January 1, 1999, filed as Exhibit
          10(iii) to the Company's Form 10-Q for the period ended
          March 31, 1999.
10(jjj)   Employment Agreement between Cerprobe Corporation and
          Michael K. Bonham effective January 1, 1999, filed as
          Exhibit 10(jjj) to the Company's Form 10-Q for the period
          ended March 31, 1999.
10(kkk)   Employment Agreement between Cerprobe Corporation and Randal
          L. Buness effective January 1, 1999, filed as Exhibit
          10(kkk) to the Company's Form 10-Q for the period ended
          March 31, 1999.
10(lll)   Change of Control Agreement between Cerprobe Corporation and
          C. Zane Close dated January 28, 1999, filed as Exhibit
          10(lll) to the Company's Form 10-Q for the period ended
          March 31, 1999.
10(mmm)   Change of Control Agreement between Cerprobe Corporation and
          Michael K. Bonham dated January 26, 1999, filed as Exhibit
          10(mmm) to the Company's Form 10-Q for the period ended
          March 31, 1999.
</TABLE>

                                       39
<PAGE>   42

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
<S>       <C>
10(nnn)   Change of Control Agreement between Cerprobe Corporation and
          Randal L. Buness dated January 26, 1999, filed as Exhibit
          10(nnn) to the Company's Form 10-Q for the period ended
          March 31, 1999.
10(ooo)   First Amendment to the Cerprobe Corporation 1997 Employee
          Stock Purchase Plan dated February 15, 1999, filed as
          Exhibit 10(ooo) to the Company's Form 10-Q for the period
          ended March 31, 1999.
10(ppp)   Form of Secured Promissory Note and Stock Pledge Agreement
          entered into on August 16, 1999 between Cerprobe Corporation
          as Lender and Pledgee and each of the following as Borrower
          and Pledgor: Kenneth W. Miller ($115,000), Donald Walter
          ($86,250), C. Zane Close ($345,000), and Michael Bonham
          ($287,500), filed as Exhibit 10(ppp) to the Company's Form
          10-Q for the period ended September 30, 1999.
10(qqq)   Registration of 1.5 million shares of Cerprobe Corporation
          Common Stock on the Company's Form S-3 on March 8, 2000, in
          conjunction with the purchase of OZ Technologies, Inc. (no.
          333-31992) and incorporated herein by reference.
10(rrr)   Non-Qualified Stock Option Plan adopted by Cerprobe
          Corporation's Board of Directors on December 3, 1999, and
          Stock Option Agreement filed with the Company's form S-8
          Registration Statement on March 8, 2000, (no. 333-31954) and
          incorporated herein by reference.
10(sss)   Employment Agreement between Cerprobe Corporation and Daniel
          J. Hill effective October 19, 1999.
10(ttt)   Change of Control Agreement between Cerprobe Corporation and
          Daniel J. Hill dated October 19, 1999.
10(uuu)   Lease agreement between Cerprobe Interconnect Solutions,
          Inc. and Bank One Leasing Corporation dated November 15,
          1999.
10(vvv)   Lease agreement between Cerprobe Corporation and Bank One
          Leasing Corporation dated November 15, 1999.
10(www)   Stock Purchase Agreement between Cerprobe Corporation and OZ
          Technologies, Inc., Nasser Barabi, Iraj Barabi, Ali
          Bushehri, and Aham Barabi dated December 3, 1999, filed as
          Exhibit 1 to the Company's 8-K on December 18, 1999.
10(xxx)   Subordinated Promissory Note between Cerprobe Corporation
          and Ali Bushehri, dated December 3, 1999 filed as Exhibit 2
          to the Company's 8-K on December 18, 1999.
10(yyy)   Promissory Note between Cerprobe Corporation and Ali
          Bushehri, dated December 3, 1999 filed as Exhibit 3 to the
          Company's 8-K on December 18, 1999.
10(zzz)   Employment Agreement between Cerprobe Corporation and Nasser
          Barabi effective December 3, 1999, filed as Exhibit 4 to the
          Company's 8-K on December 18, 1999.
10(aaaa)  Employment Agreement between Cerprobe Corporation and Iraj
          Barabi effective December 3, 1999, filed as Exhibit 5 to the
          Company's 8-K on December 18, 1999.
10(bbbb)  Consulting Agreement between Cerprobe Corporation and C-MA
          International, Ltd. Effective December 3, 1999, filed as
          Exhibit 6 to the Company's 8-K on December 18, 1999.
10(cccc)  Noncompetition Agreement between Cerprobe Corporation and
          Nasser Barabi effective December 3, 1999, filed as Exhibit 7
          to the Company's 8-K on December 18, 1999.
10(dddd)  Noncompetition Agreement between Cerprobe Corporation and
          Iraj Barabi effective December 3, 1999, filed as Exhibit 8
          to the Company's 8-K on December 18, 1999.
10(eeee)  Noncompetition Agreement between Cerprobe Corporation and
          Ali Busherhi effective December 3, 1999, filed as Exhibit 9
          to the Company's 8-K on December 18, 1999.
</TABLE>

                                       40
<PAGE>   43

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
<S>       <C>
10(ffff)  Noncompetition Agreement between Cerprobe Corporation and
          Ahmad Barabi effective December 3, 1999, filed as Exhibit 10
          to the Company's 8-K on December 18, 1999.
10(gggg)  Loan and Security Agreement between Cerprobe Corporation and
          Bank of America dated December 3, 1999, filed as Exhibit 11
          to the Company's 8-K on December 18, 1999.
10(hhhh)  Notification of Assignment of payments between Cerprobe
          Corporation, Oracle Credit Corporation and Newcourt
          Financial USA, Inc. dated March 16, 2000.
11        Computation of Net Income (Loss) per Share.
21        List of Subsidiaries.
23        Consent of KPMG LLP, Independent Accountants
27.1      Financial Data Schedule for twelve months ended December 31,
          1999
27.2      Restated Financial Data Schedule for twelve months ended
          December 31, 1998
</TABLE>

  (b) Reports on Form 8-K

Form 8-K, filed on December 18, 1999, to report the acquisition of OZ
Technologies, Inc.

Form 8-K/A filed on February 18, 2000 to incorporate the Proforma Combined
Condensed Financial Statements with respect to the acquisition of OZ
Technologies, Inc.

Form 8-K filed March 7, 2000, to file December 31, 1999 financial statements.

                                       41
<PAGE>   44

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

                                          CERPROBE CORPORATION

                                                   /s/ C. ZANE CLOSE
                                          --------------------------------------
                                                      C. Zane Close
                                                President, Chief Executive
                                                  Officer, and Director

Dated: March 30,2000

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                     SIGNATURE                                    TITLE                      DATE
                     ---------                                    -----                      ----
<C>                                                  <S>                                <C>

                /s/ ROSS J. MANGANO                  Chairman of the Board of           March 30, 2000
---------------------------------------------------    Directors and Director
                  Ross J. Mangano

                 /s/ C. ZANE CLOSE                   President, Chief Executive         March 30, 2000
---------------------------------------------------    Officer, and Director
                   C. Zane Close                       (Principal Executive Officer)

               /s/ RANDAL L. BUNESS                  Senior Vice President, Chief       March 30, 2000
---------------------------------------------------    Financial Officer, Secretary,
                 Randal L. Buness                      and Treasurer (Principal
                                                       Financial and Accounting
                                                       Officer)

               /s/ WILLIAM A. FRESH                  Director                           March 30, 2000
---------------------------------------------------
                 William A. Fresh

               /s/ KENNETH W. MILLER                 Director                           March 30, 2000
---------------------------------------------------
                 Kenneth W. Miller

               /s/ DONALD F. WALTER                  Director                           March 30, 2000
---------------------------------------------------
                 Donald F. Walter
</TABLE>

                                       42
<PAGE>   45

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders of
Cerprobe Corporation:

     We have audited the accompanying consolidated balance sheets of Cerprobe
Corporation and subsidiaries as of December 31, 1999 and 1998 and the related
consolidated statements of operations, stockholders' equity and comprehensive
income, and cash flows for each of the years in the three-year period ended
December 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We
conducted our audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Cerprobe
Corporation and subsidiaries as of December 31, 1999 and 1998 and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1999 in conformity with generally accepted accounting
principles.

                                          KPMG LLP

Phoenix, Arizona
February 15, 2000

                                       F-1
<PAGE>   46

                     CERPROBE CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                              --------------------------
                                                                 1999           1998
                                                              -----------    -----------
<S>                                                           <C>            <C>
ASSETS
Current assets:
  Cash......................................................  $ 3,484,045    $ 4,753,696
  Short-term investment securities..........................           --     14,305,400
  Accounts receivable, net of allowance of $331,009 in 1999
     and $333,364 in 1998...................................   12,313,053      8,951,680
  Inventories, net..........................................    9,728,500      5,303,631
  Accrued interest receivable...............................       22,157        102,093
  Prepaid expenses..........................................    1,107,378        869,382
  Income taxes receivable...................................    4,041,140        714,811
  Deferred tax asset........................................    2,123,609        446,092
  Net assets of discontinued operations.....................           --      1,481,903
                                                              -----------    -----------
          Total current assets..............................   32,819,882     36,928,688
Property, plant, and equipment, net.........................   23,537,021     21,169,934
Intangible assets, net......................................   26,334,157      4,579,035
Other assets................................................      676,485      1,007,917
                                                              -----------    -----------
          Total assets......................................  $83,367,545    $63,685,574
                                                              ===========    ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $ 3,687,143    $ 2,534,997
  Accrued expenses..........................................    5,584,724      3,075,894
  Current portion of notes payable..........................   10,334,878        138,985
  Current portion of capital lease obligations..............      954,957        660,192
  Net liabilities of discontinued operations................      446,629             --
                                                              -----------    -----------
          Total current liabilities.........................   21,008,331      6,410,068
Notes payable, less current portion.........................    5,200,034        731,555
Capital lease obligations, less current portion.............    2,454,637      2,472,563
Deferred tax and other liabilities..........................      472,158          7,073
                                                              -----------    -----------
          Total liabilities.................................   29,135,160      9,621,259
                                                              -----------    -----------
Minority interest...........................................    1,115,545        590,465
Commitments and contingencies
Stockholders' equity:
  Preferred stock, $.05 par value; authorized 10,000,000
     shares; issued and outstanding none....................           --             --
  Common stock, $.05 par value; authorized 25,000,000
     shares; issued 9,863,245 and outstanding 9,419,052
     shares at December 31, 1999 and issued 8,131,279 and
     outstanding 7,645,126 shares at December 31, 1998......      493,162        406,564
  Additional paid-in capital................................   67,830,701     55,271,200
  Retained earnings (deficit)...............................   (9,074,938)     3,505,734
  Accumulated other comprehensive loss:
     Foreign currency translation...........................     (236,534)      (188,131)
                                                              -----------    -----------
                                                               59,012,391     58,995,367
  Treasury stock, at cost, 444,193 shares at December 31,
     1999 and 486,153 shares at December 31, 1998...........   (5,027,278)    (5,521,517)
  Notes receivable from related parties.....................     (868,273)            --
                                                              -----------    -----------
          Total stockholders' equity........................   53,116,840     53,473,850
                                                              -----------    -----------
          Total liabilities and stockholders' equity........  $83,367,545    $63,685,574
                                                              ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.
                                       F-2
<PAGE>   47

                     CERPROBE CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                     ------------------------------------------
                                                         1999           1998           1997
                                                     ------------    -----------    -----------
<S>                                                  <C>             <C>            <C>
Net sales..........................................  $ 62,655,751    $76,207,477    $69,012,395
Costs of goods sold................................    41,637,001     45,052,300     39,251,446
                                                     ------------    -----------    -----------
  Gross profit.....................................    21,018,750     31,155,177     29,760,949
                                                     ------------    -----------    -----------
Expenses:
  Selling, general, and administrative.............    21,214,773     18,316,839     16,218,709
  Engineering and product development..............     4,806,971      3,101,082        996,253
  In-process research and development..............     8,815,000      1,568,000             --
  Goodwill amortization............................       785,981        461,301        386,467
                                                     ------------    -----------    -----------
          Total expenses...........................    35,622,725     23,447,222     17,601,429
                                                     ------------    -----------    -----------
Operating income (loss)............................   (14,603,975)     7,707,955     12,159,520
                                                     ------------    -----------    -----------
Other income (expense):
  Interest income..................................       881,769      1,323,918        348,816
  Interest expense.................................      (582,135)      (269,115)      (388,025)
  Other, net.......................................      (527,138)       542,839        323,065
                                                     ------------    -----------    -----------
          Total other income (expense).............      (227,504)     1,597,642        283,856
                                                     ------------    -----------    -----------
Income (loss) from continuing operations before
  minority interest and income taxes...............   (14,831,479)     9,305,597     12,443,376
Minority interest..................................      (454,450)      (383,637)        29,715
                                                     ------------    -----------    -----------
Income (loss) from continuing operations before
  income taxes.....................................   (15,285,929)     8,921,960     12,473,091
Income tax (expense) benefit.......................     2,710,579     (3,685,308)    (4,810,167)
                                                     ------------    -----------    -----------
Income (loss) from continuing operations...........   (12,575,350)     5,236,652      7,662,924
Discontinued operations:
  Loss from operations of SVTR, Inc., net of
     taxes.........................................        (5,322)    (1,924,820)    (5,766,956)
  Loss on disposal of SVTR, Inc., net of taxes.....            --     (3,807,740)            --
                                                     ------------    -----------    -----------
     Loss from discontinued operations.............        (5,322)    (5,732,560)    (5,766,956)
                                                     ------------    -----------    -----------
Net income (loss)..................................  $(12,580,672)   $  (495,908)   $ 1,895,968
                                                     ============    ===========    ===========
Net income (loss) per common share:
  Basic:
     From continuing operations....................  $      (1.60)   $      0.66    $      1.14
     From discontinued operations..................            --          (0.72)         (0.86)
                                                     ------------    -----------    -----------
  Net income (loss) per common share...............  $      (1.60)   $     (0.06)   $      0.28
                                                     ============    ===========    ===========
  Weighted average number of common shares
     outstanding...................................     7,884,628      7,963,747      6,690,265
                                                     ============    ===========    ===========
Diluted:
  From continuing operations.......................  $      (1.60)   $      0.63    $      1.10
  From discontinued operations.....................            --          (0.69)         (0.83)
                                                     ------------    -----------    -----------
  Net income (loss) per common share...............  $      (1.60)   $     (0.06)   $      0.27
                                                     ============    ===========    ===========
  Weighted average number of common and common
     equivalent shares outstanding.................     7,884,628      8,251,373      6,982,368
                                                     ============    ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.
                                       F-3
<PAGE>   48

                     CERPROBE CORPORATION AND SUBSIDIARIES

    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
                                                 NUMBER OF
                                    NUMBER OF    PREFERRED
                                     COMMON       SHARES      NUMBER OF                                        ADDITIONAL
                                     SHARES     ISSUED AND    TREASURY     COMMON    PREFERRED    TREASURY       PAID-IN
                                     ISSUED     OUTSTANDING    SHARES      STOCK       STOCK        STOCK        CAPITAL
                                    ---------   -----------   ---------   --------   ---------   -----------   -----------
<S>                                 <C>         <C>           <C>         <C>        <C>         <C>           <C>
Balance, December 31, 1996........  6,027,714       330             --    $301,386      $16      $        --   $20,652,290
Exercise of stock options.........    95,265         --             --      4,763        --               --       811,702
Issuance of common stock for
 acquisition......................   175,000         --             --      8,750        --               --     1,662,062
Issuance of common stock in
 secondary offering, net of
 issuance cost of $226,764........  1,800,000        --             --     90,000        --               --    37,015,237
Redemption of preferred stock.....        --       (330)            --         --       (16)              --    (5,249,984)
Tax benefit from exercise of
 nonqualified stock options.......        --         --             --         --        --               --       245,000
Comprehensive income (loss):
 Foreign currency translation, net
   of taxes.......................        --         --             --         --        --               --            --
 Net income.......................
Total comprehensive income........
                                    ---------      ----       --------    --------      ---      -----------   -----------
Balance, December 31, 1997........  8,097,979        --             --    $404,899      $--      $        --   $55,136,307
Exercise of stock options.........    31,300         --             --      1,565        --               --       204,048
Expenses from issuance of common
 stock............................        --         --             --         --        --               --      (178,650)
Issuance of common stock for
 employee stock purchase plan.....                              37,198         --        --          480,454       (74,519)
Exercise of warrants..............     2,000                    (1,551)       100        --          (33,114)       33,014
Purchase of treasury stock........        --         --       (521,800)        --        --       (5,968,857)           --
Tax benefit from exercise of
 nonqualified stock options.......        --         --             --         --        --               --       151,000
Comprehensive income (loss):
 Foreign currency translation, net
   of taxes.......................        --         --             --         --        --               --            --
 Net loss.........................        --         --             --         --        --               --            --
Total comprehensive loss..........
                                    ---------      ----       --------    --------      ---      -----------   -----------
Balance, December 31, 1998........  8,131,279        --       (486,153)   $406,564      $--      $(5,521,517)  $55,271,200
Exercise of stock options.........   231,966         --             --     11,598        --               --     1,387,065
Issuance of common stock for
 acquisition......................  1,500,000        --             --     75,000        --               --    11,263,000
Issuance of common stock for
 employee stock purchase plan.....                              41,960         --        --          494,239      (184,564)
Tax benefit from exercise of
 nonqualified stock options.......        --         --             --         --        --               --        94,000
Notes receivable from related
 parties..........................        --         --             --         --        --               --            --
Comprehensive loss:
 Foreign currency translation, net
   of taxes.......................        --         --             --         --        --               --            --
 Net loss.........................        --         --             --         --        --               --            --
Total comprehensive loss..........
                                    ---------      ----       --------    --------      ---      -----------   -----------
Balance, December 31, 1999........  9,863,245        --       (444,193)   $493,162      $--      $(5,027,278)  $67,830,701
                                    =========      ====       ========    ========      ===      ===========   ===========

<CAPTION>
                                                                   ACCUMULATED
                                                      NOTES           OTHER
                                      RETAINED      RECEIVABLE    COMPREHENSIVE       TOTAL
                                      EARNINGS     FROM RELATED      INCOME       STOCKHOLDERS'
                                     (DEFICIT)       PARTIES         (LOSS)          EQUITY
                                    ------------   ------------   -------------   -------------
<S>                                 <C>            <C>            <C>             <C>
Balance, December 31, 1996........  $  2,105,674    $      --       $  42,596      $23,101,962
Exercise of stock options.........            --           --              --          816,465
Issuance of common stock for
 acquisition......................            --           --              --        1,670,812
Issuance of common stock in
 secondary offering, net of
 issuance cost of $226,764........            --           --              --       37,105,237
Redemption of preferred stock.....            --           --              --       (5,250,000)
Tax benefit from exercise of
 nonqualified stock options.......            --           --              --          245,000
Comprehensive income (loss):
 Foreign currency translation, net
   of taxes.......................            --           --        (241,406)        (241,406)
 Net income.......................     1,895,968                                     1,895,968
                                                                                   -----------
Total comprehensive income........                                                   1,654,562
                                    ------------    ---------       ---------      -----------
Balance, December 31, 1997........  $  4,001,642    $      --       $(198,810)     $59,344,038
Exercise of stock options.........            --           --              --          205,613
Expenses from issuance of common
 stock............................            --           --              --         (178,650)
Issuance of common stock for
 employee stock purchase plan.....            --           --              --          405,935
Exercise of warrants..............            --           --              --               --
Purchase of treasury stock........            --           --              --       (5,968,857)
Tax benefit from exercise of
 nonqualified stock options.......            --           --              --          151,000
Comprehensive income (loss):
 Foreign currency translation, net
   of taxes.......................            --           --          10,679           10,679
 Net loss.........................      (495,908)          --              --         (495,908)
                                                                                   -----------
Total comprehensive loss..........                                                    (485,229)
                                    ------------    ---------       ---------      -----------
Balance, December 31, 1998........  $  3,505,734    $      --       $(188,131)     $53,473,850
Exercise of stock options.........            --           --              --        1,398,663
Issuance of common stock for
 acquisition......................            --           --              --       11,338,000
Issuance of common stock for
 employee stock purchase plan.....            --           --              --          309,675
Tax benefit from exercise of
 nonqualified stock options.......            --           --              --           94,000
Notes receivable from related
 parties..........................            --     (868,273)             --         (868,273)
Comprehensive loss:
 Foreign currency translation, net
   of taxes.......................            --           --         (48,403)         (48,403)
 Net loss.........................   (12,580,672)          --                      (12,580,672)
                                                                                   -----------
Total comprehensive loss..........                                                 (12,629,075)
                                    ------------    ---------       ---------      -----------
Balance, December 31, 1999........  $$(9,074,938)   $(868,273)      $(236,534)     $53,116,840
                                    ============    =========       =========      ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>   49

                     CERPROBE CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        YEARS ENDED DECEMBER 31,
                                                              --------------------------------------------
                                                                  1999            1998            1997
                                                              ------------    ------------    ------------
<S>                                                           <C>             <C>             <C>
Cash flows from operating activities:
  Income (loss) from continuing operations..................  $(12,575,350)   $  5,236,652    $  7,662,924
  Adjustments to reconcile net income (loss) from continuing
    operations to net cash provided by (used in) continuing
    operations:
    Depreciation and amortization...........................     6,068,223       4,676,110       3,546,154
    In-process research and development.....................     8,815,000       1,568,000              --
    Loss on sale of equipment...............................       184,763         373,245          12,583
    Tax benefit from exercise of nonqualified stock
     options................................................        94,000         151,000         245,000
    Deferred income taxes...................................      (596,951)       (509,174)          8,062
    Provision for losses on accounts receivable.............         4,000         186,585          24,000
    Provision for obsolete inventory........................       180,000         534,000         621,000
    Compensation expense....................................            --              --         (33,536)
    Income (loss) applicable to minority interest...........       454,450         383,637         (29,715)
    Changes in working capital of continuing operations
      Accounts receivable...................................       499,745         571,725      (2,689,975)
      Inventories...........................................    (1,248,621)       (736,703)     (1,728,051)
      Prepaid expenses and other assets.....................       (42,877)        (72,967)       (236,085)
      Income taxes receivable...............................    (1,224,804)       (243,765)       (256,949)
      Accounts payable and accrued expenses.................       369,742      (1,359,857)      2,075,238
      Accrued income taxes..................................            --        (108,648)             --
      Other liabilities.....................................        (7,073)         (9,627)             --
                                                              ------------    ------------    ------------
        Net cash provided by continuing operations..........       974,247      10,640,213       9,220,650
                                                              ------------    ------------    ------------
        Net cash used in discontinued operations............       (51,500)     (1,161,467)     (7,558,443)
                                                              ------------    ------------    ------------
        Net cash provided by operating activities...........       922,747       9,478,746       1,662,207
                                                              ------------    ------------    ------------
Cash flows from investing activities:
  Purchase of property, plant, and equipment................    (6,339,844)    (11,900,133)     (6,302,918)
  Redemption (purchase) of investment securities............    14,305,400      12,695,298     (24,019,378)
  Investment in CRPB Investors, L.L.C. .....................       213,620          88,455         107,293
  Purchase of OZ Technologies, Inc., net of cash acquired...   (19,696,966)             --              --
  Purchase of Upsys-Cerprobe, L.L.C., net of cash
    acquired................................................            --        (376,366)             --
  Purchase of Cerprobe Europe S.A.S., net of cash
    acquired................................................       (31,135)     (3,230,230)             --
  Purchase of Cerprobe Interconnect Solutions, Inc., net of
    cash acquired...........................................            --              --         (80,102)
  Purchase of SVTR, net of cash acquired....................            --              --      (2,590,697)
  Proceeds from sale of equipment...........................        11,487          15,267          74,683
  Payment (issuance) of notes receivable....................      (560,448)             --         250,000
                                                              ------------    ------------    ------------
        Net cash used in investing activities...............   (12,097,886)     (2,707,709)    (32,561,119)
                                                              ------------    ------------    ------------
Cash flows from financing activities:
  Issuance of notes payable.................................    14,436,555       1,661,310         357,010
  Redemption of convertible preferred stock.................            --              --      (5,250,000)
  Payments on notes payable.................................    (6,261,632)       (768,110)     (1,856,141)
  Net proceeds (costs) from issuance of common stock........            --        (178,650)     37,105,237
  Purchase of treasury stock................................            --      (5,968,857)             --
  Net proceeds from employee stock purchase plan............       309,675         405,935              --
  Net proceeds from exercise of stock options...............     1,398,663         205,613         816,465
  Capital contribution by minority interest partners........            --              --         100,000
                                                              ------------    ------------    ------------
        Net cash provided by (used in) financing
        activities..........................................     9,883,261      (4,642,759)     31,272,571
                                                              ------------    ------------    ------------
Effect of exchange rates on cash............................        22,227         (90,072)       (241,406)
                                                              ------------    ------------    ------------
Net increase (decrease) in cash.............................    (1,269,651)      2,038,206         132,253
Cash, beginning of period...................................     4,753,696       2,715,490       2,583,237
                                                              ------------    ------------    ------------
Cash, end of period.........................................  $  3,484,045    $  4,753,696    $  2,715,490
                                                              ============    ============    ============
Supplemental disclosures of cash flow information from
  continuing operations:
  Interest paid.............................................  $    582,135    $    182,133    $    221,248
                                                              ============    ============    ============
  Income taxes paid.........................................  $    482,597    $  2,049,282    $  2,060,000
                                                              ============    ============    ============
Supplemental disclosures of non-cash investing activities:
  The Company made acquisitions for $37.9 million, $3.6
    million, and $4.5 million in the years ended December
    31, 1999, 1998, and 1997, respectively. The purchase
    prices were allocated to the assets acquired and
    liabilities assumed based on their fair values as
    indicated in the notes to the consolidated financial
    statements. A summary of the acquisitions is as follows:
  Purchase price............................................  $ 37,899,135    $  3,626,366    $  4,546,825
  Less cash acquired........................................    (1,203,034)        (19,770)       (285,316)
  Common stock issued.......................................   (11,338,000)             --      (1,670,812)
  Notes payable issued......................................    (5,630,000)             --              --
                                                              ------------    ------------    ------------
    Cash invested...........................................  $ 19,728,101    $  3,606,596    $  2,590,697
                                                              ============    ============    ============
  Notes receivable from the exercise of stock options from
    related parties.........................................  $    868,273    $         --    $         --
                                                              ============    ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.
                                       F-5
<PAGE>   50

                     CERPROBE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

     Cerprobe Corporation offers comprehensive solutions for semiconductor test
integration and is a leading manufacturer of probe cards, automatic test
equipment ("ATE") interface assemblies, and ATE test boards. The Company
believes it is the only company that designs, manufactures, and assembles each
of the electromechanical components that assure the integrity of the electrical
test signal that passes from the ATE to the integrated circuits ("ICs") device
under test. The Company's products address critical functions to assure IC
quality, reduce manufacturing costs, improve the accuracy of manufacturing yield
data, and identify repairable memory ICs.

     Unless the context indicates otherwise, all references to "Cerprobe" or the
"Company" refer to Cerprobe Corporation and its subsidiaries.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of Cerprobe
Corporation and its subsidiaries: Cerprobe Europe Limited, Cerprobe Europe
S.A.S., Cerprobe Asia Holdings Pte Ltd, Cerprobe Interconnect Solutions, Inc.
("CIS"), SVTR, Inc. ("SVTR"), Cerprobe Japan Co., Ltd, and OZ Technologies, Inc
("OZ"). All significant intercompany transactions have been eliminated in
consolidation.

     Cerprobe Asia Holdings Pte Ltd is a 60% owner of Cerprobe Asia Pte Ltd; the
balance is owned by Asian investors. Cerprobe Asia Pte Ltd's wholly owned
subsidiaries, Cerprobe Singapore Pte Ltd and Cerprobe Taiwan Co., Ltd., operate
full service sales and manufacturing plants.

     In January 1997, the Company acquired all of the outstanding stock of SVTR,
Inc., a company that refurbishes, reconfigures, and services wafer probing
equipment. In the third quarter of 1998, the Company discontinued operations of
SVTR. See Note 17.

     In May 1997, the Company entered into a joint venture with Upsys Reseau
Eurisys ("Upsys"), a French company owned by IBM and GAME COGEMA Group, a French
testing and engineering company. The joint venture, called Upsys-Cerprobe,
L.L.C., assembled and repaired Upsys's vertical probe card that had been
distributed by Cerprobe throughout the United States and Asia. Cerprobe owned
55% of the joint venture and Upsys owned 45%. On June 25, 1998, the Company
terminated its distribution agreement with Upsys, and in connection therewith,
Cerprobe purchased Upsys's 45% interest in Upsys-Cerprobe, L.L.C. Accordingly,
the consolidated financial statements as of and for the years ended December 31,
1999, 1998, and 1997 include the activities of Upsys-Cerprobe, L.L.C. as a
consolidated entity with a minority interest through June 25, 1998.

     In September 1998, the Company acquired France-based Cerprobe Europe S.A.S.
The Company designs, manufactures and distributes probe cards at its
manufacturing plant near Marseilles. Accordingly, the consolidated financial
statements as of and for the year ended December 31, 1998 include Cerprobe
Europe S.A.S.'s activities since the date of acquisition. See Note 18.

     In March 1999, the Company formed Cerprobe Japan Co., Ltd. to operate a
sales and distribution facility in Yokohama, Japan.

     In December 1999, the Company acquired California-based OZ Technologies,
Inc. The Company offers systems solutions for IC package test and is a leading
designer and producer of high performance test sockets and contactors. OZ also
designs and distributes ATE test boards and burn-in interfaces and systems.
Accordingly, the consolidated financial statements as of December 31, 1999 and
for the year ended December 31, 1999 include OZ Technologies, Inc.'s activities
since the date of acquisition. See Note 18.

                                       F-6
<PAGE>   51
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

USE OF ESTIMATES

     Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities at the balance sheet dates and reporting of
revenues and expenses during the reporting periods to prepare these financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.

INVENTORIES

     Inventories are stated at the lower of cost (first-in, first-out method) or
market.

PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are stated at cost and depreciated using the
straight-line method over the following estimated useful lives:

<TABLE>
<S>                                                             <C>
Building....................................................         39 years
Manufacturing tools and equipment...........................        3-7 years
Office furniture and equipment..............................        3-7 years
Computer hardware and software..............................        3-5 years
Leasehold improvements......................................    Life of lease
</TABLE>

INTANGIBLES

     Intangibles consist of a license, goodwill, assembled workforce, patents
and technology.

     Goodwill represents the amount by which the cost of businesses purchased
exceeds the fair value of the net assets acquired. Goodwill is amortized over a
period of seven to ten years using the straight-line method. Assembled workforce
represents the amount allocated to an acquired company's existing personnel
infrastructure and is being amortized over four years using the straight-line
method. Patents and technology are stated at fair market value at the date of
acquisition and are amortized over a period of five to eight years using the
straight-line method. Research and development costs and any costs associated
with internally developed patents, formulas or other proprietary technology are
expensed in the year incurred. The Company continually evaluates whether events
and circumstances have occurred that indicate the remaining estimated useful
lives of intangibles may warrant revision or that the remaining balances may not
be recoverable. When factors indicate that the assets should be evaluated for
possible impairment, the Company uses an estimate of the undiscounted net cash
flows over the remaining life of the assets in measuring whether the asset is
recoverable.

     In November 1998, the Company entered into a 10 year manufacturing license
agreement with Feinmetall GMBH Co., to acquire an exclusive non-transferrable
royalty bearing license to manufacture, use, sell, distribute, and repair
ViProbe(R). This license covers worldwide territories except Europe. The license
will be amortized over the period in which products are produced and will not
exceed the ten-year license term.

INCOME TAXES

     The Company uses the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.

                                       F-7
<PAGE>   52
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FOREIGN CURRENCY TRANSLATION

     The financial statements of the Company's Europe, France, and Asia
subsidiaries are translated into U.S. dollars in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation".
Assets and liabilities of the subsidiaries are translated into U.S. dollars at
current exchange rates. Income and expense items are translated at the average
exchange rate for the year. The resulting translation adjustments are recorded
directly as a separate component of stockholders' equity and minority interest.
All transaction gains or losses are recorded in the statement of operations.

REVENUE RECOGNITION

     The Company records revenue when goods are shipped.

STOCK BASED COMPENSATION

     In accordance with the provisions of Accounting Principals Board Opinion
No. 25, "Accounting for Stock Issued to Employees," the Company measures
stock-based compensation expense as the excess of the market price at the grant
date over the amount the employee must pay for the stock. The Company's policy
is to grant stock options at fair market value at the date of grant;
accordingly, no compensation expense is recognized. As permitted, the Company
has elected to adopt the pro forma disclosure provisions only of SFAS No. 123,
"Accounting for Stock-Based Compensation." ("SFAS No. 123").

CONCENTRATION OF CREDIT RISK

     Financial instruments which potentially subject the Company to
concentrations of credit risk consists principally of cash, investment
securities, forward currency contracts, and accounts receivable. The Company
invests primarily in U.S. Treasury and government agency securities and
corporate debt securities rated A1 or higher which have minimal credit risk. The
Company places forward currency contracts with high credit-quality financial
instruments in order to minimize credit risk exposure. Concentrations of credit
risk with respect to accounts receivable are limited due to the Company's large
semiconductor industry customer base.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities", which establishes standards for
the accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts, and hedging activities. This
statement generally requires recognition of gains and losses on hedging
transactions. As issued, SFAS No. 133 is effective for all fiscal quarters of
all fiscal years beginning after June 15, 1999. In June 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the Effective Date of FASB Statement No. 133 -- An
Amendment of FASB Statement No. 133, "which deferred the effective date of SFAS
No. 133 until June 15, 2000. The company is currently evaluating the impact of
SFAS No. 133.

RECLASSIFICATIONS

     Certain amounts in the 1997 and 1998 financial statements have been
reclassified to conform with the 1999 presentation.

                                       F-8
<PAGE>   53
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(2) INVENTORIES

     Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                 1999          1998
                                                              ----------    ----------
<S>                                                           <C>           <C>
Raw materials...............................................  $8,313,504    $5,147,311
Work-in-process.............................................   1,257,863       416,409
Finished goods..............................................     288,053         4,567
                                                              ----------    ----------
                                                               9,859,420     5,568,287
Reserve for obsolete inventories............................    (130,920)     (264,656)
                                                              ----------    ----------
                                                              $9,728,500    $5,303,631
                                                              ==========    ==========
</TABLE>

(3) PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                              1999            1998
                                                          ------------    ------------
<S>                                                       <C>             <C>
Land....................................................  $    587,433    $    589,950
Building................................................     2,340,887       2,394,679
Manufacturing tools and equipment.......................    17,479,305      15,385,727
Office furniture and equipment..........................     3,372,043       2,489,523
Leasehold improvements..................................     4,615,870       2,380,259
Computer hardware and software..........................     9,523,321       4,675,543
Construction in progress................................     1,956,360       3,816,557
                                                          ------------    ------------
                                                            39,875,219      31,732,238
Accumulated depreciation and amortization...............   (16,338,198)    (10,562,304)
                                                          ------------    ------------
                                                          $ 23,537,021    $ 21,169,934
                                                          ============    ============
</TABLE>

(4) INTANGIBLE ASSETS

     Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                               1999           1998
                                                            -----------    -----------
<S>                                                         <C>            <C>
Licenses..................................................  $ 1,650,000    $ 1,528,575
Goodwill and assembled workforce..........................   26,296,245      4,072,156
Patents and technology....................................      613,057        340,840
                                                            -----------    -----------
                                                             28,559,302      5,941,571
Accumulated amortization..................................   (2,225,145)    (1,362,536)
                                                            -----------    -----------
                                                            $26,334,157    $ 4,579,035
                                                            ===========    ===========
</TABLE>

                                       F-9
<PAGE>   54
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(5) OTHER ASSETS

     Other assets consist of the following:

<TABLE>
<CAPTION>
                                                                1999         1998
                                                              --------    ----------
<S>                                                           <C>         <C>
Investment in CRPB Investors, L.L.C. .......................  $249,865    $  463,845
Other assets and deposits...................................   426,620       544,072
                                                              --------    ----------
                                                              $676,485    $1,007,917
                                                              ========    ==========
</TABLE>

     In September 1996, the Company acquired a 36% interest in CRPB Investors,
L.L.C., for $659,233. CRPB Investors, L.L.C., an Arizona limited liability
company, was formed for the purpose of owning and operating the 83,000 square
foot facility which serves as Cerprobe's worldwide headquarters. The investment
is accounted for by the equity method of accounting. In 1999 and 1998,
$(116,870) and $100,721, respectively, was recorded by Cerprobe as income (loss)
from CRPB Investors, L.L.C.

(6) ACCRUED EXPENSES

     Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                                 1999          1998
                                                              ----------    ----------
<S>                                                           <C>           <C>
Accrued payroll and related taxes...........................  $2,579,820    $2,390,522
Other accrued expenses......................................   2,279,484       685,372
Accrued acquisition costs...................................     513,275            --
Lease termination costs.....................................     212,145            --
                                                              ----------    ----------
                                                              $5,584,724    $3,075,894
                                                              ==========    ==========
</TABLE>

(7) NOTES PAYABLE AND LINE OF CREDIT

     In December 1999, the Company entered into a three-year senior secured
credit facility with Bank of America, N.A. (the "Loan and Security Agreement").
The Loan and Security Agreement includes a revolving credit facility in the
amount of $15,000,000 subject to borrowing base requirements providing for
advances of up to eighty-five (85%) of eligible accounts receivable. Advances on
the revolving credit facility bear interest at prime rate plus 0.50%. The
facility also includes an inventory term loan in the amount of approximately
$5,800,000 and a machinery and equipment term loan in the amount of $2,000,000,
both of which bear interest at prime rate plus 2.00%. The inventory term loan
shall be repaid based upon a 24-month amortization with a balloon payment of the
outstanding principal balance at the end of 12 months. The machinery and
equipment term loan shall be repaid based upon a 60-month amortization with a
balloon payment of the outstanding principal balance at the end of 36 months.
All loans, advances, and other obligations, liabilities, and indebtedness of the
Company shall be secured by valid, perfected, and enforceable first priority
liens upon and security interest in substantially all of the Company's present
and future assets, including all accounts, contract rights, inventory
instruments, documents, fixtures, chattel paper, general intangibles, patents,
trademarks, copyrights, trade names, deposit accounts, vehicles, equipment, and
pledge of stock of all domestic subsidiaries of Cerprobe and OZ and 65% of the
stock of each wholly-owned foreign subsidiary of Cerprobe. The facility is also
guaranteed by all wholly-owned subsidiaries of Cerprobe and OZ. Advances under
the revolving credit facility, the inventory term loan, and the machinery and
equipment term loan were $1,300,878, $5,834,000, and $2,000,000 respectively, at
December 31, 1999. The inventory term loan and the equipment term loan are at
the maximum currently available under the terms of these loans.

     The Loan and Security Agreement contains a number of covenants that, among
other things, restrict the ability of the Company to dispose of assets, incur
additional indebtedness, incur guaranty obligations, prepay

                                      F-10
<PAGE>   55
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

indebtedness except in accordance with relevant subordination provisions, pay
dividends or make capital distribution (other than distributions in capital
stock), create liens on assets, engage in mergers or consolidations (except for
any subsidiary which is acquired solely with the Company's Common Stock and that
any subsidiary of the Company may voluntarily merge into another subsidiary),
engage in certain transactions with subsidiaries and affiliates, make any change
in accounting policies or reporting practices except as required or permitted by
generally accepted accounting principles and otherwise restrict corporate
activities. In addition, the Loan and Security Agreement requires the Company to
comply with certain financial covenants, including the maintenance of a
consolidated Tangible Net Worth (as defined in the Loan and Security Agreement).
At December 31, 1999, the Company was in violation of the Tangible Net Worth
covenant under the line of credit agreement which was waived by the lender.

     The Loan and Security Agreement contains customary events of default,
including the failure to pay principal when due or any interest or other amount
that becomes due, any representation or warranty being made by the Company that
is incorrect in any material respect on or as of the date made, a default in the
performance of any covenant which continues for more than thirty days, default
in certain other indebtedness, certain insolvency events, certain ERISA events,
and certain change of control events.

     In addition, pursuant to the OZ Technologies, Inc. acquisition, the Company
issued to Selling Stockholders notes in the amount of $2,830,000 (the
"Subordinated Promissory Note") and $2,800,000 (the "Promissory Note").

     The Subordinated Promissory Note accrues interest at a rate of 10% per
annum and matures December 3, 2002.

     The Promissory Note accrues interest at a rate of 10% per annum and was to
have matured on February 3, 2000. The Selling Stockholders have agreed to extend
maturity on this note until June 30, 2000. The Company may satisfy the
Promissory Note on June 30, 2000 by paying in cash all amounts then due under
the Promissory Note or by transferring its real property located at 10365 Sanden
Drive, Dallas, Texas (the "Real Property") to the Selling Stockholders' agent,
unencumbered except for minor liens and any mortgage that is executed by the
Company in favor of the Selling Stockholders with respect to the Real Property.
In the event that the Company satisfies the Promissory Note by transferring the
Real Property to the Selling Stockholders' agent on June 30, 2000, the Stock
Purchase Agreement provides that the Company and the Selling Stockholders' agent
shall assign a value (the "Appraised Value") to the Real Property equal to the
appraised value for the Real Property as determined by a mutually agreed-upon
real estate appraiser. The Stock Purchase Agreement further provides that (i) to
the extent the Appraised Value is less than $2,800,000 plus interest due under
the Promissory Note, the amount of the difference shall be added to the
principal amount of the Subordinated Promissory Note and (ii) to the extent the
Appraised Value is more than $2,800,000 plus interest due under the Promissory
Note, the amount of the difference may be applied to reduce the principal amount
of the Subordinated Promissory Note if doing so does not cause the Company to
violate any covenant in any loan document to which it is a party.

     The Company also has various demand loans outstanding to minority
shareholders of Cerprobe Asia Holdings, Pte Ltd. Interest is accrued at the five
year Treasury Rate plus 1.50% per anum. These loans are not contractually due or
expected to be paid within the next 12 months, and accordingly, are classified
as long-term debt. The outstanding balances, including interest at December 31,
1999, totaled $770,034.

                                      F-11
<PAGE>   56
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                1999          1998
                                                            ------------    ---------
<S>                                                         <C>             <C>
Notes payable.............................................  $ 15,534,912    $ 870,540
Less current portion......................................   (10,334,878)    (138,985)
                                                            ------------    ---------
Notes payable, less current portion.......................  $  5,200,034    $ 731,555
                                                            ============    =========
</TABLE>

     Annual maturities of long-term debt are as follows:

<TABLE>
<S>                                               <C>
2000..........................................    $10,334,878
2001..........................................        400,000
2002..........................................      4,030,000
Thereafter....................................        770,034
                                                  -----------
                                                  $15,534,912
                                                  ===========
</TABLE>

(8) LEASES

     The Company leases certain equipment under capital leases. These assets
have been capitalized at the present value of the future minimum lease payments
and are included with manufacturing tools and equipment and office furniture at
a cost of $5,547,998 and $4,710,745 with related accumulated amortization of
$2,090,492 and $1,454,205 as of December 31, 1999 and 1998, respectively. In
addition, the Company is obligated under certain noncancelable operating leases
for the Company's manufacturing and office space. Certain operating lease
agreements provide for annual rent escalations and renewal options.

     The following is a schedule of the future minimum lease payments for the
years ending December 31:

<TABLE>
<CAPTION>
                                                                                RENTALS
                                                                               RECEIVABLE
                                                   CAPITAL       OPERATING       UNDER
                                                    LEASES        LEASES       SUBLEASES
                                                  ----------    -----------    ----------
<S>                                               <C>           <C>            <C>
2000............................................  $1,140,177    $ 2,334,323     $47,600
2001............................................     904,016      2,154,005          --
2002............................................     709,554      1,807,902          --
2003............................................     527,421      1,417,884          --
2004............................................     308,613      1,342,071          --
Thereafter......................................     248,837      9,340,323          --
                                                  ----------    -----------     -------
Total future minimum lease payments.............  $3,838,618    $18,396,508     $47,600
                                                                ===========     =======
Less amounts representing interest (at rates
  ranging from 6.0% to 9.82%)...................    (429,024)
                                                  ----------
Present value of net minimum capital lease
  payments......................................  $3,409,594
Less current portion............................    (954,957)
                                                  ----------
Capital lease obligations, less current
  portion.......................................  $2,454,637
                                                  ==========
</TABLE>

     Depreciation expense for assets under capital leases is charged to
depreciation and amortization expense.

     Rental expense for the years ended December 31, 1999, 1998, and 1997 was
$1,959,970, $1,663,829, and $1,640,272, respectively.

                                      F-12
<PAGE>   57
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(9) INCOME TAXES

     Income tax expense (benefit) consists of the following:

<TABLE>
<CAPTION>
                                                   1999           1998          1997
                                                -----------    ----------    ----------
<S>                                             <C>            <C>           <C>
Foreign.......................................  $   805,988    $  549,245    $  115,763
Federal.......................................   (3,177,178)    2,488,841     3,643,959
State.........................................     (339,389)      647,222     1,050,445
                                                -----------    ----------    ----------
                                                $(2,710,579)   $3,685,308    $4,810,167
                                                ===========    ==========    ==========
Current.......................................  $(1,734,320)   $4,194,482    $4,802,105
Deferred......................................     (976,259)     (509,174)        8,062
                                                -----------    ----------    ----------
                                                $(2,710,579)   $3,685,308    $4,810,167
                                                ===========    ==========    ==========
</TABLE>

     A reconciliation of actual income taxes to income taxes at the "expected"
United States federal corporate income tax rate of 34% is as follows:

<TABLE>
<CAPTION>
                                                   1999           1998          1997
                                                -----------    ----------    ----------
<S>                                             <C>            <C>           <C>
Income tax expense (benefit) at "expected"
  federal corporate rate......................  $(5,042,763)   $3,033,466    $4,240,851
State income taxes, net of federal tax
  effect......................................     (223,997)      427,167       693,294
In-process research and development expense
  not benefited...............................    2,996,420            --            --
Foreign income taxed at lower than U.S.
  federal
  rate........................................     (151,450)       (3,326)      (79,408)
Amortization of intangibles...................      240,307       156,843       131,406
Foreign sales corporation benefit.............           --      (106,236)      (82,501)
Utilization of federal tax credit.............     (703,642)           --            --
Nontaxable income.............................           --            --       (79,013)
Utilization of net operating loss
  carryforwards...............................           --            --       (47,706)
Change in foreign and state valuation
  allowance...................................      143,514       171,810            --
Other.........................................       31,032         5,584        33,244
                                                -----------    ----------    ----------
                                                $(2,710,579)   $3,685,308    $4,810,167
                                                ===========    ==========    ==========
</TABLE>

     The tax effects of temporary differences that give rise to significant
portions of the deferred tax asset and deferred tax liability are as follows:

<TABLE>
<CAPTION>
                                                                1999           1998
                                                             -----------    ----------
<S>                                                          <C>            <C>
Deferred tax assets:
  Foreign tax loss carryforward............................  $    86,738    $  349,364
  Acquisition costs not currently deductible...............      581,902       616,747
  Amortization not currently deductible....................      253,024         1,693
  Currency translation not currently deductible............      120,399       192,589
  Reserves and accruals not currently deductible...........    1,024,801       446,092
Net operating loss carry forward...........................    1,125,339            --
Income tax credits.........................................      379,609            --
                                                             -----------    ----------
     Deferred tax assets...................................  $ 3,571,812    $1,606,485
  Less valuation allowance.................................     (492,878)     (349,364)
                                                             -----------    ----------
</TABLE>

                                      F-13
<PAGE>   58
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
                                                                1999           1998
                                                             -----------    ----------
<S>                                                          <C>            <C>
  Deferred tax assets......................................  $ 3,078,934    $1,257,121
Deferred tax liabilities:
  Difference between book and tax depreciation of property,
     plant and equipment...................................   (1,427,483)     (581,930)
                                                             -----------    ----------
  Net deferred tax asset (liability).......................  $ 1,651,451    $  675,191
                                                             ===========    ==========
</TABLE>

     Summary of current and long-term portion of deferred tax items are as
follows:

<TABLE>
<CAPTION>
                                                                1999        1998
                                                              ---------    -------
<S>                                                           <C>          <C>
Current asset...............................................  2,123,609    446,092
Long-term asset (included in other assets)..................         --    229,099
Long-term liability (included in other liabilities).........   (472,158)        --
                                                              ---------    -------
                                                              1,651,451    675,191
                                                              =========    =======
</TABLE>

     The valuation allowance increased by $143,514 in 1999 and $171,810 in 1998,
and is due to state and foreign losses for which there is no assurance of
realizing a tax benefit. A valuation allowance has not been provided for the
other deferred tax assets since management believes realization of the deferred
tax assets is considered more likely than not.

(10) STOCKHOLDER'S EQUITY

SHAREHOLDER RIGHTS PLAN

     On October 8, 1998, each shareholder of record received one Preferred Share
Purchase Right ("Right") on each outstanding share of Common Stock owned. Each
Right entitled shareholders to buy one one-thousandth of a share of newly
created Series A Junior Participating Preferred Stock of the Company at an
exercise price of $110. The Rights will be exercisable if a person or group
hereafter acquires 15% or more of the Common Stock of the Company or announces a
tender offer for 15% or more of the Common Stock. Should this occur, the Right
will entitle its holder to purchase, at the Right's exercise price, a number of
shares of Common Stock having a market value at the time of twice the Right's
exercise price. Rights held by the 15% holder will become void and will not be
exercisable to purchase shares at the bargain purchase price. If the Company is
acquired in a merger or other business combination transaction after a person
acquires 15% or more of the Company's Common Stock, each Right will entitle its
holder to purchase, at the Right's then current exercise price, a number of the
acquiring company's common shares having a market value at that time of twice
the Right's exercise price.

TREASURY STOCK

     During 1998, the Company repurchased 503,541 shares, or approximately 6%,
of the Company's Common Stock in the open market at an approximate price of
$11.37 per share. The Company has utilized 60,899 shares of the reacquired
shares for reissuance in connection with its Employee Stock Purchase Plan.

WARRANTS AND NON-EMPLOYEE STOCK OPTION

     Additionally, the Company issued 39,275 Common Stock warrants in January
1996. These warrants give the holder the right to purchase from the Company not
more than 39,275 fully paid and non-assessable shares of the Company's Common
Stock, $.05 par value, at a price of $16.55 per share on or after January 16,
1997, with expiration in January 2001. In 1998, 2,000 warrants were exercised.

                                      F-14
<PAGE>   59
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(11) STOCK OPTION PLANS

     The Company adopted in 1983, 1989, 1995, respectively, an incentive stock
option plan, a non-qualified stock option plan, and a combination stock option
plan. In 1999 the Company adopted a broad-based non-qualified stock option plan
with a maximum of 1,000,000 shares of Common Stock to be issued under the plan.
The combined plans provide for the issuance of options to purchase 3,585,000
shares of the Company's Common Stock, of which 1,126,600 were available for
grant as of December 31, 1999. In accordance with the plans, options are to be
granted at no less than 100% of the fair market value of the shares at the date
of grant. The options become exercisable on a basis as established by the
Company's Compensation Advisory Committee of the Board of Directors and are
exercisable for a period of 5 to 10 years.

     The Company has elected to follow APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and related Interpretations in accounting for its plans.
Under APB No. 25, because the exercise price of the Company's employee stock
options equals the market price of the underlying stock on the date of the
grant, no compensation expense is recognized. Pro forma information regarding
net income (loss) and earnings (loss) per share is required by SFAS No. 123 as
if the Company had accounted for its employee stock options under the fair value
method. The fair value of each option granted for 1999, 1998, and 1997 was
estimated as of the date of the grant using the Black-Scholes option pricing
model with the following weighted average assumptions for 1999, 1998, and 1997,
respectively; risk-free interest rates of 5.2%, 5.1%, and 5.6%; dividend yields
of zero for all years; volatility factors of the expected market price of the
Company's Common Stock of 60%, 52%, and 52%, respectively; and weighted average
expected lives of the options of 5 years for 1999 and 3 years for 1998 and 1997.

     Pro forma net income (loss) reflects only options granted in years 1995
through 1999. Therefore, the full impact of calculating compensation cost for
employee stock options under SFAS No. 123 is not reflected in the pro forma
amounts presented below because compensation cost is reflected over the options'
vesting periods of generally between 3 and 4 years and the compensation cost for
options granted before January 1, 1995 is not considered. The Company's pro
forma information follows:

<TABLE>
<CAPTION>
                                                          1999         1998         1997
                                                      ------------   ---------   ----------
<S>                        <C>                        <C>            <C>         <C>
Net income (loss)          As reported..............  $(12,580,672)  $(495,908)  $1,895,968
                           Pro forma (unaudited)....  $(13,196,904)  $(708,146)  $1,784,019
Basic net income (loss)
  per share                As reported..............  $      (1.60)  $   (0.06)  $     0.28
                           Pro forma (unaudited)....  $      (1.67)  $   (0.09)  $     0.27
Diluted net income (loss)
  per share                As reported..............  $      (1.60)  $   (0.06)  $     0.27
                           Pro forma (unaudited)....  $      (1.67)  $   (0.09)  $     0.26
</TABLE>

                                      F-15
<PAGE>   60
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     A summary of the Company's employee stock option activity and related
information for the years ended December 31 follows:

<TABLE>
<CAPTION>
                                             1999                    1998                   1997
                                     ---------------------   ---------------------   -------------------
                                                  WEIGHTED                WEIGHTED              WEIGHTED
                                                  AVERAGE                 AVERAGE               AVERAGE
                                                  EXERCISE                EXERCISE              EXERCISE
                                       SHARES      PRICE       SHARES      PRICE      SHARES     PRICE
                                     ----------   --------   ----------   --------   --------   --------
<S>                                  <C>          <C>        <C>          <C>        <C>        <C>
Outstanding at beginning of year...   1,199,566    $10.19       639,866    $ 8.81     593,631    $ 8.46
  Granted..........................     423,000    $ 8.43       984,000    $13.44     153,000    $10.38
  Exercised........................    (231,966)   $ 6.03       (31,300)   $ 6.57     (95,265)   $ 8.57
  Expired/canceled.................    (199,300)   $10.86      (393,000)   $16.37     (11,500)   $12.88
                                     ----------              ----------              --------
Outstanding at end of year.........   1,191,300    $10.27     1,199,566    $10.19     639,866    $ 8.81
                                     ==========              ==========              ========
  Exercisable at end of year.......     540,196    $10.70       569,898    $ 9.01     367,320    $ 7.45
                                     ==========              ==========              ========
Weighted average fair value of
  options granted during the
  year.............................  $     4.76              $     5.35              $   4.16
                                     ==========              ==========              ========
</TABLE>

     The following table summarizes information about stock options outstanding
at December 31, 1999:

<TABLE>
<CAPTION>
                                                OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
                                           ------------------------------              ----------------------
                                                             WEIGHTED       WEIGHTED                 WEIGHTED
                                             NUMBER          AVERAGE        AVERAGE      NUMBER      AVERAGE
                                           OUTSTANDING      REMAINING       EXERCISE   EXERCISABLE   EXERCISE
                                           AT 12/31/99   CONTRACTUAL LIFE    PRICE     AT 12/31/99    PRICE
                                           -----------   ----------------   --------   -----------   --------
<S>                                        <C>           <C>                <C>        <C>           <C>
$5.50....................................     100,000          9.80          $ 5.50       20,000      $ 5.50
$7.00....................................     150,000         10.00          $ 7.00       30,000      $ 7.00
$8.00 to $9.75...........................      70,000          9.24          $ 8.34       30,000      $ 8.77
$10.25 to $10.50.........................     263,800          7.31          $10.38      180,500      $10.37
$11.00 to $11.875........................     303,000          8.26          $11.15      152,664      $11.24
$12.250 to $13.125.......................     243,500          8.72          $12.34      114,832      $12.44
$15.125..................................      61,000          9.13          $15.13       12,200      $15.13
                                            ---------                                    -------
                                            1,191,300          8.59          $10.26      540,196      $10.26
                                            =========                                    =======
</TABLE>

(12) COMPREHENSIVE INCOME

     The Company recognized comprehensive income (loss) for the years ended
December 31, as follows:

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31,
                                               ---------------------------------------
                                                   1999          1998          1997
                                               ------------    ---------    ----------
<S>                                            <C>             <C>          <C>
Net income (loss)............................  $(12,580,672)   $(495,908)   $1,895,968
Other comprehensive income (loss), net of
  tax:
  Foreign currency translation adjustment....       (80,672)      17,798      (402,344)
  Tax benefit (expense) from foreign currency
     translation.............................        32,269       (7,119)      160,938
                                               ------------    ---------    ----------
     Net other comprehensive income (loss)...       (48,403)      10,679      (241,406)
                                               ------------    ---------    ----------
Comprehensive income (loss)..................  $(12,629,075)   $(485,229)   $1,654,562
                                               ============    =========    ==========
</TABLE>

                                      F-16
<PAGE>   61
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(13) RELATED PARTY TRANSACTIONS

     In August 1999, the Company and certain of its Directors and Officers
entered into Secured Promissory Notes and Stock Pledge Agreements, which totaled
$841,465. The purpose of the loans was to exercise stock options scheduled to
expire. Interest on the notes is at 6% per annum with note maturities in August
2002. The notes are fully recourse to the borrowers and are also collateralized
by the Company's Common Stock.

(14) SEGMENT INFORMATION

     The Company operates principally in one industry segment; the design,
development, manufacture and market of semiconductor integrated circuit test
products and services. The Company's principal customers are North American,
European, and Asian-based semiconductor manufacturing companies.

     Two of the Company's customers exceeded 10% of net sales. The first
customer accounted for 14%, 17%, and 17% of net sales for the years ended
December 31, 1999, 1998, and 1997, respectively. The accounts receivable from
that customer were $327,118, $586,318, and $1,081,424 at December 31, 1999,
1998, and 1997, respectively. The second customer accounted for 13%, 12%, and
10% of net sales for the years ended December 31, 1999, 1998, and 1997,
respectively, with accounts receivable of $639,091, $451,766, and $654,015 at
December 31, 1999, 1998, and 1997, respectively.

     International sales represented 23%, 18%, and 18% of the Company's net
sales in 1999, 1998, and 1997, respectively.

     The following is a summary of the Company's geographic operations:

<TABLE>
<CAPTION>
                                  NORTH         EUROPE
                                 AMERICA       AND ASIA      ELIMINATIONS    CONSOLIDATED
                               -----------    -----------    ------------    ------------
<S>                            <C>            <C>            <C>             <C>
1999
Customer sales...............  $48,288,270    $14,367,481    $         --    $62,655,751
Intercompany sales...........      673,472      3,162,820      (3,836,292)            --
                               -----------    -----------    ------------    -----------
          Total sales........  $48,961,742    $17,530,301    $ (3,836,292)   $62,655,751
                               ===========    ===========    ============    ===========
Long-lived assets............  $60,059,515    $ 3,537,614    $(13,049,467)   $50,547,662
                               ===========    ===========    ============    ===========
1998
Customer sales...............  $62,412,140    $13,795,337    $         --    $76,207,477
Intercompany sales...........      494,987      3,304,021      (3,799,008)            --
                               -----------    -----------    ------------    -----------
          Total sales........  $62,907,127    $17,099,358    $ (3,799,008)   $76,207,477
                               ===========    ===========    ============    ===========
Long-lived assets............  $28,134,572    $ 4,375,940    $ (5,753,626)   $26,756,886
                               ===========    ===========    ============    ===========
1997
Customer sales...............  $56,670,599    $12,341,796    $         --    $69,012,395
Intercompany sales...........      864,575      2,110,599      (2,975,174)            --
                               -----------    -----------    ------------    -----------
          Total sales........  $57,535,174    $14,452,395    $ (2,975,174)   $69,012,395
                               ===========    ===========    ============    ===========
Long-lived assets............  $18,514,131    $ 1,967,317    $ (2,805,672)   $17,675,776
                               ===========    ===========    ============    ===========
</TABLE>

     Management does not believe significant credit risk existed at December 31,
1999. The Company monitors its customers' financial condition and does not
require collateral. Historically, the Company has not experienced significant
losses related to receivables from any individual or groups of customers.

                                      F-17
<PAGE>   62
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(15) COMMITMENTS AND CONTINGENCIES

     In October 1998, the Company filed an action against the former President,
Director and shareholder of Silicon Valley Test & Repair, Inc., which was
acquired by the Company by way of a merger into its wholly-owned subsidiary,
SVTR, Inc., in January 1997. The suit seeks rescission of the acquisition and/or
monetary damages arising from failure of the defendants to disclose material
facts regarding the origins of certain software necessary for SVTR, Inc.'s
business. In February 1999, the defendants filed a counter claim against the
Company alleging conversion, interference with contractual relations, unfair
business practices, breach of contract, and specific performance allegedly
arising from the Company's actions to preclude the defendants from selling the
Company stock received by defendants as part of the purchase price of Silicon
Valley Test & Repair, Inc.; the Company seeks to recover this stock and the
balance of the purchase price through its claims for rescission. In March 1999,
the Company and SVTR filed an amended complaint. The defendants have responded
and the action is proceeding to trial. While the Company intends to vigorously
prosecute this action, it is impossible to predict the outcome of this or any
litigation. It is not anticipated that this suit will have a material adverse
impact on the Company's financial condition or results of operations.

     The Company is involved in other legal actions arising in the ordinary
course of business. In the opinion of management, the disposition of these
actions would not have a material adverse effect on the Company.

(16) EMPLOYEE BENEFIT PLANS

     In December 1997, the Board of Directors approved the Employee Stock
Purchase Plan (the "ESPP") which provides employees the means to acquire an
equity interest in the Company. Eligible employees of the Company can purchase
Common Stock through payroll deductions at the lower of 85% of the closing price
of the Common Stock on the offering commencement date or the offering
termination date. Payroll deductions for the purchase of the stock may not
exceed 10% of the employee's base compensation or $25,000. As of December 31,
1999, 60,899 shares had been purchased under this plan. The maximum number of
shares that may be issued under this plan is 150,000.

     The Company established the Cerprobe Corporation 401(k) Plan ("the Plan")
in 1993. Employees who have reached 18 years of age and who have completed 90
days of service for the Company are eligible to participate in the Plan.
Participants may elect to defer up to 15% of their salary.

     Any contribution by the Company is at its discretion and only for those
participants who have completed one year of service for the Company. The Company
expensed discretionary contributions pursuant to the Plan in the approximate
amounts of $264,778, $324,000, and $241,000 for the years ended December 31,
1999, 1998, and 1997, respectively. The participants are fully vested in their
and the Company's contributions.

(17) DISCONTINUED OPERATIONS

     In the third quarter of 1998, the Company discontinued operations of SVTR,
a wafer prober refurbishing and upgrading subsidiary acquired by the Company in
January 1997. The discontinuance resulted from questions regarding the origins
of certain software necessary for SVTR's business. In March 1999, Cerprobe sold
certain SVTR assets for $500,000. No gain or loss was recognized on the sale.

     SVTR has been accounted for as a discontinued operation and accordingly,
its results of operations and financial position are segregated for all periods
presented in the accompanying consolidated financial

                                      F-18
<PAGE>   63
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

statements. Net sales, related losses and income taxes associated with the
discontinued operations are as follows:

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                              ------------------------
                                                                1999          1998
                                                              --------    ------------
<S>                                                           <C>         <C>
Net sales...................................................  $    --     $ 3,871,292
                                                              -------     -----------
Loss from operations........................................  $(8,869)    $(3,550,636)
Income tax benefit..........................................    3,547       1,625,816
                                                              -------     -----------
Loss from operations, net...................................  $(5,322)    $(1,924,820)
                                                              =======     ===========
Loss on disposal............................................  $    --     $(6,346,233)
Income tax benefit..........................................       --       2,538,493
                                                              -------     -----------
Loss on disposal, net.......................................  $    --     $(3,807,740)
                                                              =======     ===========
</TABLE>

     The effective tax rate used in calculating the income tax benefit from
discontinued operations is approximately the same as the Company's effective tax
rate for continuing operations.

     The Company recorded a pretax charge of $4,597,034 to write down its assets
to estimated net realizable value and to record additional liabilities in the
shut down period. A charge of $1,749,199 was also recorded to reflect the
estimated phase out costs and losses from operations associated with SVTR. The
tax benefit associated with these charges was $2,538,493.

     The net assets (liabilities) of SVTR, as reclassified in the accompanying
consolidated balance sheets, include the following:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                             ------------------------
                                                               1999          1998
                                                             ---------    -----------
<S>                                                          <C>          <C>
Current assets.............................................  $ 554,585    $ 3,445,737
Property, plant and equipment, net.........................         --             --
Intangibles, net...........................................         --             --
Other assets...............................................     63,011         46,865
Current liabilities........................................   (289,358)      (931,913)
Long term debt.............................................     (5,286)       (19,847)
Other long term liabilities................................   (769,581)    (1,058,939)
                                                             ---------    -----------
                                                             $(446,629)   $ 1,481,903
                                                             =========    ===========
</TABLE>

(18) ACQUISITIONS

UPSYS-CERPROBE L.L.C.

     On June 25, 1998, the Company purchased Upsys's 45% interest in
Upsys-Cerprobe L.L.C. The acquisition resulted in $376,366 of goodwill, which is
being amortized on a straight-line basis over eight years.

CERPROBE EUROPE S.A.S. (FORMERLY SEMICONDUCTEUR SERVICES S.A.)

     On September 30, 1998, the Company acquired France-based Cerprobe Europe
S.A.S. for $3.0 million in cash and $250,000 in acquisition related expenses.
Cerprobe Europe S.A.S. designs, manufactures and distributes probe cards. The
acquisition resulted in $1,568,000 of in-process research and development, which
was charged to operations upon acquisition, and $508,051 in goodwill, which is
being amortized on a straight-line basis over 10 years, and $98,000 in assembled
workforce, which is being amortized on a straight line basis over 4 years.

                                      F-19
<PAGE>   64
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The acquisition was accounted for as a purchase and, accordingly, the
accompanying consolidated balance sheet includes the assets purchased and
liabilities assumed of Cerprobe Europe S.A.S. at December 31, 1998 and the
accompanying consolidated statements of operations include the results of
Cerprobe Europe S.A.S. since the date of acquisition.

OZ TECHNOLOGIES, INC. ("OZ")

     In December 1999, the Company acquired all of the outstanding stock of OZ,
a manufacturer of systems solutions for IC package testing and a leading
designer and producer of high performance test sockets and contactors for $36
million. OZ also designs and distributes ATE test boards and burn-in interfaces
and systems. The purchase price consisted of $19 million in cash, notes payable
of $5.6 million, and 1.5 million shares of Common Stock. Of the 1.5 million
shares of common stock, up to 554,089 can be sold during the 180-day period on
or after the effective date of the registration statement on Form S-3 with the
Securities and Exchange Commission. If the selling shareholders sell the common
stock during the 180 day period and the average proceeds per share after selling
expenses are less than $7.58 per share, the product of the difference between
$7.58 per share and the average proceeds per share and the number of shares of
Cerprobe Common Stock sold during the 180-day period shall be added to the
Subordinated Promissory Note.

     The acquisition has been accounted for as a purchase and, accordingly, the
purchase price has been allocated to the assets acquired and the liabilities
assumed based upon the estimated fair values at the date of acquisition. The
acquisition resulted in $8,815,000 in-process research and development, which
was charged to operations upon acquisition, $21,183,864 in goodwill which is
being amortized on a straight-line basis over seven years and $1,009,091 in
assembled workforce which is being amortized on a straight-line basis over four
years. The purchase price of $36 million plus acquisition costs of $1.9 million
was allocated as follows:

<TABLE>
<S>                                                             <C>
Purchase price:
  Cash......................................................    $19,000,000
  Note payable..............................................      5,630,000
  Common Stock and additional paid in capital...............     11,338,000
  Costs of acquisition......................................      1,900,000
                                                                -----------
                                                                $37,868,000
                                                                ===========
Assets acquired and liabilities assumed:
  Current assets............................................    $ 8,945,021
  Property, plant and equipment.............................      1,822,749
  Other assets..............................................         87,209
  In-process research and development.......................      8,815,000
  Goodwill and assembled workforce..........................     22,192,955
  Current liabilities.......................................     (3,994,934)
                                                                -----------
                                                                $37,868,000
                                                                ===========
</TABLE>

     At acquisition, the state of the research and development products was not
yet at a technological or commercially viable state. The Company did not believe
that the research and development products had any future alternative use
because if these products were not finished and brought to ultimate product
completion, they would have no other value. Therefore, consistent with generally
accepted accounting principles, the Company recorded a charge for the full value
of the in-process research and development.

     The consolidated balance sheet as of December 31, 1999 includes the
accounts of OZ and results of operations since the date of acquisition. The
following summary, prepared on a pro forma basis, excluding the

                                      F-20
<PAGE>   65
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

charge for in-process research and development, present the results of
operations as if the acquisition had occurred on January 1, 1998.

<TABLE>
<CAPTION>
                                                             YEARS ENDED DECEMBER 31,
                                                            --------------------------
                                                               1999           1998
                                                            -----------    -----------
                                                            (UNAUDITED)    (UNAUDITED)
<S>                                                         <C>            <C>
Net sales.................................................  $89,292,000    $97,082,000
Net income (loss).........................................     (938,400)     2,944,600
Basic net income (loss) per share.........................        (0.10)          0.31
Diluted net income (loss) per share.......................        (0.10)          0.30
</TABLE>

     The pro forma results are not necessarily indicative of what the actual
consolidated results of operations might have been if the acquisition had been
effective at the beginning of 1998 or as a projection of future results.

(19) FAIR VALUE OF FINANCIAL INSTRUMENTS

     SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires that the Company disclose estimated fair values for its financial
instruments. The following summary presents a description of the methodologies
and assumptions used to determine the amounts.

     The carrying amount of investment securities, receivables, accounts
payable, and accrued expenses approximates fair value because of the short term
nature of these items. The fair value of notes payable and capital lease
obligations approximate the terms in the marketplace at which they could be
replaced. Therefore, the fair value approximates the carrying value of these
financial instruments.

(20) SUPPLEMENTAL FINANCIAL INFORMATION

     A summary of additions and deductions related to the allowances for
accounts receivable and inventories for the years ended December 31, 1999, 1998
and 1997 follows:

<TABLE>
<CAPTION>
                                             BALANCE AT                            BALANCE AT
                                             BEGINNING                               END OF
                                              OF YEAR     ADDITIONS   DEDUCTIONS      YEAR
                                             ----------   ---------   ----------   ----------
<S>                                          <C>          <C>         <C>          <C>
Allowance for doubtful accounts:
  Year ended December 31, 1999.............   $333,364    $  4,000     $  6,355     $331,009
  Year ended December 31, 1998.............   $215,179    $186,585     $ 68,400     $333,364
  Year ended December 31, 1997.............   $223,000    $ 24,000     $ 31,821     $215,179
Allowance for obsolescence of inventories:
  Year ended December 31, 1999.............   $264,656    $180,000     $313,736     $130,920
  Year ended December 31, 1998.............   $244,000    $534,000     $513,344     $264,656
  Year ended December 31, 1997.............   $129,000    $621,000     $506,000     $244,000
</TABLE>

                                      F-21
<PAGE>   66
                     CERPROBE CORPORATION AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(21) NET INCOME (LOSS) PER SHARE

     The following table sets forth the computation of basic and diluted net
income (loss) per share:

<TABLE>
<CAPTION>
                                                   1999          1998          1997
                                               ------------    ---------    ----------
<S>                                            <C>             <C>          <C>
Net income (loss)............................  $(12,580,672)   $(495,908)   $1,895,968
                                               ============    =========    ==========
Weighted average outstanding common shares...     7,884,628    7,963,747     6,690,265
Effect of dilutive securities:
  Stock options..............................        62,768      287,626       292,103
  Convertible preferred stock................            --           --            --
  Antidilutive effect of dilutive
     securities..............................       (62,768)          --            --
                                               ------------    ---------    ----------
  Weighted average and common equivalent
     shares outstanding......................     7,884,628    8,251,373     6,982,368
                                               ============    =========    ==========
  Basic net income (loss) per share..........  $      (1.60)   $   (0.06)   $     0.28
                                               ============    =========    ==========
  Diluted net income (loss) per share........  $      (1.60)   $   (0.06)   $     0.27
                                               ============    =========    ==========
</TABLE>

(22) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                            FIRST     SECOND       THIRD         FOURTH
                                           QUARTER    QUARTER    QUARTER(1)    QUARTER(2)
                                           -------    -------    ----------    ----------
                                               (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                        <C>        <C>        <C>           <C>
YEAR ENDED DECEMBER 31, 1999
Net sales................................  $15,606    $14,103     $14,932       $ 18,015
Gross profit.............................    5,560      4,246       5,189          6,023
Operating income (loss)..................      335     (2,556)     (1,070)       (11,313)
Income (loss) from continuing
  operations.............................      150     (1,659)       (878)       (10,189)
Net income (loss)........................      145     (1,659)       (878)       (10,189)
Basic net income (loss) per share........     0.02      (0.22)      (0.11)         (1.22)
Diluted net income (loss) per share......     0.02      (0.22)      (0.11)         (1.22)

YEAR ENDED DECEMBER 31, 1998
Net sales................................  $22,953    $18,139     $20,107       $ 15,008
Gross profit.............................    9,879      7,253       8,593          5,430
Operating income.........................    4,445      1,686       1,354            223
Income from continuing operations........    2,748      1,202       1,036            251
Net income (loss)........................    2,345        467      (3,557)           249
Basic net income (loss) per share........     0.29       0.06       (0.46)          0.03
Diluted net income (loss) per share......     0.28       0.06       (0.45)          0.03
</TABLE>

---------------
(1) 1998 includes a write-off of in-process research and development of $1.6
    million, or $0.11 per diluted share, related to the acquisition of Cerprobe
    Europe S.A.S.

(2) 1999 includes a write-off of in-process research and development of $8.8
    million or $ 1.05 per diluted share, related to the acquisition of OZ
    Technologies, Inc.

                                      F-22
<PAGE>   67

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
<S>      <C>
 2(a)    Agreement of Merger and Plan of Reorganization dated
         February 21, 1995, as amended by that certain Amendment of
         Agreement of Merger and Plan of Reorganization dated March
         31, 1995, by and among Fresh Test Acquisition, Inc., the
         Company, Fresh Technology Corporation, and William A. Fresh,
         Robert K. Bench, Harold D. Higgins, WAF Investment Company
         and Orem Tek Development Corp. filed as Exhibit 2 to the
         Company's Current Report on Form 8-K filed with the
         Commission on or about April 4, 1995 and incorporated herein
         by reference.
 3(a)    Second Restated Certificate of Incorporation of Cerprobe
         Corporation, filed with the Secretary of State on June 23,
         1998, filed as Exhibit 3(e) to the Company's Form 10-Q for
         the period ended June 30, 1998 and incorporated herein by
         reference.
 3(b)    Bylaws of the Company dated March 14, 1987, filed as Exhibit
         4(b) to the Company's Form 10-Q for the period ended June
         30, 1987 and incorporated herein by reference.
 3(c)    Rights Agreement, dated September 28, 1998, between Cerprobe
         Corporation and American Securities Transfer & Trust,
         Incorporated, as Rights Agent, filed as an Exhibit to the
         Company's Form 8-A filed on or about October 2, 1998 and
         incorporated herein by reference.
 4(a)    Specimen Stock Certificate filed as Exhibit 4(c) to the
         Company's Form S-18 Registration Statement (No. 2-85679) and
         incorporated herein by reference.
 4(b)    Specimen Convertible Subordinated Debenture filed as Exhibit
         4(b) to the Company's Form 10-K for the year ended December
         31, 1990 and incorporated herein by reference.
 4(c)    Specimen Series A Preferred Stock Certificate filed as
         Exhibit 4(c) to the Company's Form 10-KSB for the year ended
         December 31, 1995 and incorporated herein by reference.
 4(d)    Certificate of Designations of Series A Preferred Stock
         dated January 11, 1996, as filed with the Secretary of State
         of Delaware, filed as Exhibit 4(d) to the Company's Form
         10-KSB for the year ended December 31, 1995 and incorporated
         herein by reference.
 10(a)   Non-Qualified Stock Option Plan adopted by the Company's
         Board of Directors on June 25, 1983, as amended, and Form of
         Qualified Stock Option Agreement filed as Exhibits 4(a) and
         4(c) to the Company's Form S-8 Registration Statement (No.
         33-65200) and incorporated herein by reference.
10(b)    Incentive Stock Option Plan adopted by the Company's Board
         of Directors on April 3, 1989, filed as Exhibit 10(k) to the
         Company's Form 10-K for the year ended December 31, 1989 and
         incorporated herein by reference and Form of Incentive Stock
         Option Agreement filed as Exhibit 4(d) to the Company's Form
         S-8 Registration Statement (No. 33-65200) and incorporated
         herein by reference.
10(bb)   Agreement between Cerprobe Europe, Limited and Lanarkshire
         Development Agency dated August 15, 1994, as amended, filed
         as Exhibit 10(bb) to the Company's Form 10-KSB for the year
         ended December 31, 1994 and incorporated herein by
         reference.
10(cc)   Lease Agreement between the Company and Realtec Properties
         I, L.P. dated July 17, 1995 filed as Exhibit 1 to the
         Company's Form 10-QSB for the quarter ended June 30, 1995
         and incorporated herein by reference.
10(dd)   Lease Agreement between the Company and East Point Realty
         Trust dated June 30, 1995 filed as Exhibit 2 to the
         Company's Form 10-QSB for the quarter ended June 30, 1995
         and incorporated herein by reference.
10(gg)   Letter of Intent between the Company and Technology Parks
         PTE LTD dated June 23, 1995 filed as Exhibit 5 to the
         Company's Form 10-QSB for the quarter ended June 30, 1995
         and incorporated herein by reference.
</TABLE>
<PAGE>   68

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
<S>      <C>
10(ll)   The Company's 1995 Stock Option Plan filed as Exhibit 10(ll)
         to the Company's Form 10-KSB for the year ended December 31,
         1995 and incorporated herein by reference.
10(oo)   Memorandum of Lease with respect to the Lease Agreement
         between the Company and CRPB Investors, L.L.C. dated August
         21, 1996, and the Addendum to the Lease Agreement filed as
         an Exhibit to the Company's Form 10-QSB for the quarter
         ended September 30, 1996 and incorporated herein by
         reference.
10(qq)   Operating Agreement between the Company and CRPB Investors,
         L.L.C. dated September 18, 1996 filed as an Exhibit to the
         Company's Form 10-QSB for the quarter ended September 30,
         1996 and incorporated herein by reference.
10(rr)   Agreement of Merger and Plan of Reorganization, dated as of
         October 25, 1996, by and among the Company, C-Route
         Acquisition, Inc., CRoute, Inc., CompuRoute, Incorporated,
         and Souad Shrime filed as Exhibit 10(rr) to the Company's
         Registration Statement on Form S-4 (No. 333-15785) and
         incorporated herein by reference.
10(ss)   Agreement and Plan of Merger, dated as of October 25, 1996,
         by and between CompuRoute, Incorporated, and CRoute, Inc.
         filed as Exhibit 10(ss) to the Company's Registration
         Statement on Form S-4 (No. 333-15785) and incorporated
         herein by reference.
10(tt)   Purchase and Sale Agreement dated as of October 25, 1996, by
         and between Souad Shrime and the Company filed as Exhibit
         10(tt) to the Company's Registration Statement on Form S-4
         (No. 333-15785) and incorporated herein by reference.
10(uu)   Indemnification Agreement by Souad Shrime in favor of and
         for the benefit of the Company and C-Route Acquisition, Inc.
         filed as Exhibit 10(uu) to the Company's Registration
         Statement on Form S-4 (No. 333-15785) and incorporated
         herein by reference.
10(vv)   Agreement of Merger and Plan of Reorganization dated January
         15, 1997, by and among the Company, EMI Acquisition, Inc.,
         Silicon Valley Test & Repair, Inc., and William and Carol
         Mayer filed as Exhibit 1 to the Company's Current Report on
         Form 8-K filed with the Commission on or about January 30,
         1997 and incorporated herein by reference.
10(ww)   Registration Rights Agreement dated January 15, 1997, by and
         between the Company and William and Carol Mayer filed as
         Exhibit 2 to the Company's Current Report on Form 8-K filed
         with the Commission on or about January 30, 1997 and
         incorporated herein by reference.
10(xx)   Employment Agreement dated January 15, 1997, by and between
         the Company and William and Carol Mayer filed as Exhibit 2
         to the Company's Current Report on Form 8-K filed with the
         Commission on or about January 30, 1997 and incorporated
         herein by reference.
10(aaa)  Lease agreement between CompuRoute and Banc One Leasing
         dated November 17, 1997, filed as Exhibit 10(aaa) to the
         Company's Form 10-K for the year ended December 31, 1997 and
         incorporated herein by reference.
10(bbb)  Master Lease Agreement between Company and Banc One Leasing
         Corporation, dated February 16, 1998, filed as Exhibit
         10(bbb) to the Company's Form 10-K for the year ended
         December 31, 1997 and incorporated herein by reference.
10(ccc)  Lease agreement between CompuRoute and Banc One Leasing
         Corporation, dated May 7, 1998, filed as Exhibit 10(ccc) to
         the Company's Form 10-Q for the period ended June 30, 1998
         and incorporated herein by reference.
10(ddd)  Lease agreement between CompuRoute and Banc One Leasing
         Corporation, dated June 17, 1998, filed as Exhibit 10(ddd)
         to the Company's Form 10-Q for the period ended June 30,
         1998 and incorporated herein by reference.
</TABLE>
<PAGE>   69

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
<S>      <C>
10(eee)  Lease agreement between Cerprobe Corporation and
         Jackson-Shaw El Dorado Tech I Limited Partnerships, dated
         May 15, 1998, filed as Exhibit 10(eee) to the Company's Form
         10-Q for the period ended June 30, 1998 and incorporated
         herein by reference.
10(fff)  Lease agreement between Cerprobe Corporation and Banc One
         Leasing Corporation, dated October 22, 1998, filed as
         Exhibit 10(fff) to the Company's Form 10-Q for the period
         ended June 30, 1998 and incorporated herein by reference.
10(ggg)  Business Loan agreement between Cerprobe Corporation and
         Bank of America, dated December 31, 1998, filed as Exhibit
         10(ggg) to the Company's Form 10-Q for the period ended
         March 31, 1999.
10(hhh)  Lease agreement between Cerprobe Corporation and Bank of
         America, dated February 26, 1999, filed as Exhibit 10(hhh)
         to the Company's Form 10-Q for the period ended March 31,
         1999.
10(iii)  Employment Agreement between Cerprobe Corporation and C.
         Zane Close effective January 1, 1999, filed as Exhibit
         10(iii) to the Company's Form 10-Q for the period ended
         March 31, 1999.
10(jjj)  Employment Agreement between Cerprobe Corporation and
         Michael K. Bonham effective January 1, 1999, filed as
         Exhibit 10(jjj) to the Company's Form 10-Q for the period
         ended March 31, 1999.
10(kkk)  Employment Agreement between Cerprobe Corporation and Randal
         L. Buness effective January 1, 1999, filed as Exhibit
         10(kkk) to the Company's Form 10-Q for the period ended
         March 31, 1999.
10(lll)  Change of Control Agreement between Cerprobe Corporation and
         C. Zane Close dated January 28, 1999, filed as Exhibit
         10(lll) to the Company's Form 10-Q for the period ended
         March 31, 1999.
10(mmm)  Change of Control Agreement between Cerprobe Corporation and
         Michael K. Bonham dated January 26, 1999, filed as Exhibit
         10(mmm) to the Company's Form 10-Q for the period ended
         March 31, 1999.
10(nnn)  Change of Control Agreement between Cerprobe Corporation and
         Randal L. Buness dated January 26, 1999, filed as Exhibit
         10(nnn) to the Company's Form 10-Q for the period ended
         March 31, 1999.
10(ooo)  First Amendment to the Cerprobe Corporation 1997 Employee
         Stock Purchase Plan dated February 15, 1999, filed as
         Exhibit 10(ooo) to the Company's Form 10-Q for the period
         ended March 31, 1999.
10(ppp)  Form of Secured Promissory Note and Stock Pledge Agreement
         entered into on August 16, 1999 between Cerprobe Corporation
         as Lender and Pledgee and each of the following as Borrower
         and Pledgor: Kenneth W. Miller ($115,000), Donald Walter
         ($86,250), C. Zane Close ($345,000), and Michael Bonham
         ($287,500), filed as Exhibit 10(ppp) to the Company's Form
         10-Q for the period ended September 30, 1999.
10(qqq)  Registration of 1.5 million shares of Cerprobe Corporation
         Common Stock on the Company's Form S-3 on March 8, 2000, in
         conjunction with the purchase of OZ Technologies, Inc. (no.
         333-31992) and incorporated herein by reference.
10(rrr)  Non-Qualified Stock Option Plan adopted by Cerprobe
         Corporation's Board of Directors on December 3, 1999, and
         Stock Option Agreement filed with the Company's form S-8
         Registration Statement on March 8, 2000, (no. 333-31954) and
         incorporated herein by reference.
10(sss)  Employment Agreement between Cerprobe Corporation and Daniel
         J. Hill effective October 19, 1999.
</TABLE>
<PAGE>   70

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
<S>      <C>
10(ttt)  Change of Control Agreement between Cerprobe Corporation and
         Daniel J. Hill dated October 19, 1999.
10(uuu)  Lease agreement between Cerprobe Interconnect Solutions,
         Inc. and Bank One Leasing Corporation dated November 15,
         1999.
10(vvv)  Lease agreement between Cerprobe Corporation and Bank One
         Leasing Corporation dated November 15, 1999.
10(www)  Stock Purchase Agreement between Cerprobe Corporation and OZ
         Technologies, Inc., Nasser Barabi, Iraj Barabi, Ali
         Bushehri, and Aham Barabi dated December 3, 1999, filed as
         Exhibit 1 to the Company's 8-K on December 18, 1999.
10(xxx)  Subordinated Promissory Note between Cerprobe Corporation
         and Ali Bushehri, dated December 3, 1999 filed as Exhibit 2
         to the Company's 8-K on December 18, 1999.
10(yyy)  Promissory Note between Cerprobe Corporation and Ali
         Bushehri, dated December 3, 1999 filed as Exhibit 3 to the
         Company's 8-K on December 18, 1999.
10(zzz)  Employment Agreement between Cerprobe Corporation and Nasser
         Barabi effective December 3, 1999, filed as Exhibit 4 to the
         Company's 8-K on December 18, 1999.
10(aaaa) Employment Agreement between Cerprobe Corporation and Iraj
         Barabi effective December 3, 1999, filed as Exhibit 5 to the
         Company's 8-K on December 18, 1999.
10(bbbb) Consulting Agreement between Cerprobe Corporation and C-MA
         International, Ltd. Effective December 3, 1999, filed as
         Exhibit 6 to the Company's 8-K on December 18, 1999.
10(cccc) Noncompetition Agreement between Cerprobe Corporation and
         Nasser Barabi effective December 3, 1999, filed as Exhibit 7
         to the Company's 8-K on December 18, 1999.
10(dddd) Noncompetition Agreement between Cerprobe Corporation and
         Iraj Barabi effective December 3, 1999, filed as Exhibit 8
         to the Company's 8-K on December 18, 1999.
10(eeee) Noncompetition Agreement between Cerprobe Corporation and
         Ali Busherhi effective December 3, 1999, filed as Exhibit 9
         to the Company's 8-K on December 18, 1999.
10(ffff) Noncompetition Agreement between Cerprobe Corporation and
         Ahmad Barabi effective December 3, 1999, filed as Exhibit 10
         to the Company's 8-K on December 18, 1999.
10(gggg) Loan and Security Agreement between Cerprobe Corporation and
         Bank of America dated December 3, 1999, filed as Exhibit 11
         to the Company's 8-K on December 18, 1999.
10(hhhh) Notification of Assignment of payments between Cerprobe
         Corporation, Oracle Credit Corporation and Newcourt
         financial USA, Inc. dated March 16, 2000.
11       Computation of Net Income (Loss) per Share.
21       List of Subsidiaries.
23       Consent of KPMG LLP, Independent Accountants
27.1     Financial Data Schedule for twelve months ended December 31,
         1999
27.2     Restated Financial Data Schedule for twelve months ended
         December 31, 1998
</TABLE>