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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   Form 10-K

(Mark One)
 [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

     For the fiscal year ended December 31, 2001 or

 [_] Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

     For the transition period from        to

                       Commission File Number 001-16611

                             MYKROLIS CORPORATION
            (Exact name of registrant as specified in its charter)

                      Delaware                 04-3536767
                   (State or Other          (I.R.S. Employer
                   Jurisdiction of         Identification No.)
                  Incorporation or
                    Organization)

                 One Patriots Park,
                   Bedford, MA 01730              01730
                (Address of principal
                 executive offices)            (Zip Code)

                                (877) 695-7654
             (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

                                           Name of Exchange on Which
                  Title of Class                  Registered
                  --------------                  ----------
            Common Stock, $0.01 Par        New York Stock Exchange,
                     Value                           Inc.


Securities registered pursuant to Section 12(g) of the Act: None

   Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]  No [_]

   As of January 30, 2002, the aggregate market value of the registrant's
voting stock held by non-affiliates of the registrant was approximately
$92,104,208 based on the closing price on that date on the New York Stock
Exchange.

   As of February 1, 2002, 39,500,000 shares of the registrant's Common Stock
were outstanding.

                      Documents Incorporated by Reference

                                         Incorporated into Form
                      Document                    10-K
                      --------                    ----
                  Definitive Proxy
                Statement, dated March
                       20, 2002                 Part III

   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 Form 10-K or any amendment to this
Form 10-K. [_]

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                                    Part I

Item 1.  Business.

  The Company

   Mykrolis Corporation is a Delaware corporation organized on October 16, 2000
under the name Millipore MicroElectronics, Inc. in connection with the proposed
spin-off by Millipore Corporation of its microelectronics business unit. On
March 27, 2001, we changed our name to Mykrolis Corporation. On March 31, 2001,
Millipore effected the separation of our business from Millipore's business by
transferring to us substantially all of the assets and liabilities associated
with its microelectronics business. On August 9, 2001 we completed an initial
public offering of 7,000,000 shares of our common stock, representing
approximately 17.7% of the 39,500,000 total shares of the Company's common
stock outstanding. On February 27, 2002, Millipore will complete the spin-off
of Mykrolis by distributing to its shareholders the 32,500,000 shares of our
common stock that it has held since our initial public offering. In the early
1980's, Millipore internally developed products with applications in
semiconductor manufacturing, which became the Millipore microelectronics
business unit. Subsequently, through internal development and acquisitions,
Millipore expanded that business unit into the business that now makes up
Mykrolis Corporation. Unless the context otherwise requires, the terms
"Mykrolis", "we", "our", or the "Company" mean Mykrolis Corporation and its
subsidiaries and the term "Millipore" means Millipore Corporation and its
subsidiaries when referring to periods prior to March 31, 2001 and Millipore
Corporation and its subsidiaries other than Mykrolis when referring to periods
subsequent to March 31, 2001.

   Mykrolis is a worldwide developer, manufacturer and supplier of liquid and
gas delivery systems, components and consumables used to precisely measure,
deliver, control and purify the process liquids, gases and chemicals, as well
as the deionized water, photoresists and vacuum systems, that are utilized in
the semiconductor manufacturing process. In addition, our products are used to
manufacture a range of other products, such as flat panel displays, high purity
chemicals, photoresists, solar cells, gas lasers, optical and magnetic storage
devices and fiber optic cables. The Company's products include membrane and
metal based filters, housings, precision liquid dispense filtration pumps,
resin based gas purifiers and mass flow and pressure controllers. The products
are used by customers in manufacturing operations to remove contaminants in
liquid and gas processes, to purify liquids and gases, to measure and control
flow rates and to control and monitor pressure and vacuum levels during the
manufacturing process. Mykrolis sells its products worldwide through a direct
sales force and through distributors in selected regions.

   We offer thousands of products grouped in 250 product categories, including
more than 2,500 consumable products. Our consumables are those products, such
as filters for liquid and gas processes, that are used by our customers in the
manufacturing process and which require periodic replacement to maintain the
purity and precision of the manufacturing process. Our products use
purification technologies to remove particles, ions and molecules from liquid
and gas streams, as well as electro-mechanical, pressure differential and
related technologies, to permit semiconductor and other electronics
manufacturers to monitor and control the flow and condition of liquids, gases
and vacuum systems used in these manufacturing processes. Our specially
designed proprietary filters remove sub-micron sized particles and bubbles from
the different chemical fluid streams, typically liquid or gas, that are used in
the manufacturing process.

  Information About Our Operating Segment

   The Company operates in one reportable business segment: the development,
manufacture and sale of consumable purification products and capital equipment
to semiconductor fabrication companies and other companies using similar
manufacturing processes, as well as to OEM suppliers to those companies. The
Company also provides capital equipment warranty and repair services to
customers in this segment. During 2001 approximately 67% of our net sales were
made to customers outside the Americas. Industry and geographic segment
information is discussed in Note 10 to the Mykrolis Corporation Consolidated
and Combined Financial Statements (the "Financial Statements") included in Item
8 below, which Note is hereby incorporated herein by reference.

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  Products, Technologies and Applications

   Our products include instruments, components, subsystems and consumable
products used in the manufacture of semiconductors and other electronic
devices. Instruments, components and subsystems accounted for 42%, 50% and 42%
of our net sales for the years ended December 31, 2001, 2000 and 1999,
respectively, and consumable products accounted for, 58%, 50% and 58%,
respectively, of our net sales in these same periods. In each of these periods
photochemical dispense systems represented between 15% and 31% of our net sales
from instruments, components and subsystems, gas flow measurement and control
products accounted for approximately 30% of our net sales from instruments,
components and subsystems, and liquid filtration and purification products
accounted for more than two-thirds of our net sales from consumable products.
In each of our last three fiscal years, our sales of pressure measurement and
control products, vacuum gauges, valves and controllers and our sales outside
of the semiconductor industry have each accounted for less than 10% of our net
sales in such periods. Our two product classes include the following specific
product types:

Instruments, Components and Subsystems Product Class

  Photochemical Dispense Systems

   Based upon our proprietary integrated, high precision photochemical
filtration and dispense systems that utilize patented two-stage technology, we
believe that we are the only supplier to the microelectronics industry with
integrated filtration and dispense technology. Our proprietary technology also
includes our Connectology(TM) technology, low hold-up volume disposable
filters, hollow fiber membrane technology and patented digital valve control
technology. Two-stage technology, as opposed to conventional single-stage
technology, allows for filtering and dispensing of photochemicals at different
rates, reducing defects in wafers. Connectology technology allows for filter
changes in less than two minutes, faster than our conventional filters and with
less potential exposure to hazardous chemicals. Low hold-up volume disposable
filters reduce the amount of expensive chemicals lost each time a filter is
changed. Hollow fiber membrane technology allows the process liquids and gases
to flow through the hollow center of a straw-like tube made of a porous
membrane material. Digital valve control technology improves chemical
uniformity on wafers and improves ease of operation in the fabrication plant.
In addition, high precision liquid dispense systems based on our proprietary
patented technology enable uniform application of photoresists for the
spin-coating process where uniformity is measured in units of Angstroms, a
fraction of the thickness of a human hair.

  Gas Flow Measurement and Control Products

   We offer a complete product family of digital and analog mass flow
controllers to meet the stringent requirements of semiconductor processing.
Mass flow controllers are devices that automatically and precisely measure and
control the flow rates of multiple liquids and gases into the process chamber
in order to maintain circuit quality, reduce maintenance requirements and
prolong the life of the equipment used in the manufacturing process. We have
also developed pressure-based mass flow controllers, which measure and control
the liquids and gases by controlling the pressure applied to these fluids. Our
IntelliFlow (TM) product platform combines our gas measurement and control
products with the DeviceNet(TM) communications protocol to provide a digital
solution to achieve advanced process control and network communications. The
embedded diagnostics software provides real time feedback as to gas measurement
and control performance thereby minimizing costly unscheduled down time.

  Pressure Measurement and Control Products

   We offer a wide variety of pressure measurement and control products to meet
the needs of our customers, including pressure gauges, transducers, displays
and scales. These products offer high rates of accuracy, reliability,
repeatability and purity. Transducers measure the pressure applied to the wafer
and the fluids during the manufacturing process. Our displays range from local
readout displays at the point-of-use to real-time displays at the
point-of-source. Our scales are used to provide real-time volume measurement.

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  Vacuum Gauges, Valves and Controllers

   We offer a wide range of vacuum instruments consisting of vacuum measurement
sensors and associated power supplies and display units. Our vacuum valves are
used between the process chamber and the pump that delivers the gas to the
process chamber and can withstand temperatures of 150 degrees Celsius. These
vacuum gauges directly measure the level of pressure in the process chamber and
between the process chamber and a pump. These gauges can measure pressures as
low as 0.1 Torr, which is a fraction of the Earth's atmospheric pressure. We
also manufacture a range of vacuum controllers that take the signals from the
vacuum gauges and provide the necessary control signals to the vacuum valves in
order to maintain precise processing parameters.

Consumables Product Class

  Liquid Filtration and Purification Products

   Liquid processing includes such steps as photolithography, deposition,
planarization and surface etching and cleaning. The fluids that are used
include various mixtures of acids, bases, solvents, slurries and
photochemicals, which in turn are used over a broad range of operating
conditions, including temperatures from 5 degrees Celsius up to 180 degrees
Celsius. Specially designed proprietary filters remove sub-micron sized
particles and bubbles from the different fluid streams that are used in the
manufacturing process. Some of our filters are constructed with ultra-high
molecular weight polyethylene hollow fiber membranes that offer improved bubble
clearance and gel removal, either of which can cause defects in the wafers if
not removed. These filters also utilize patented Connectology(TM) technology to
provide for rapid filter changes, minimal equipment downtime and limited
operator exposure to toxic chemicals.

  Gas Filtration and Purification Products

   Our Wafergard, ChamberGard and Waferpure particle and molecular filtration
products provide for the distribution of gas in the process chamber in order to
eliminate system and wafer problems due to particulate, atmospheric and
chemical contaminants. These filters are able to retain all particles 0.003
microns and larger. Our metal filters, such as stainless steel and nickel
filters, reduce outgassing and improve corrosion resistance. Our Waferpure
purifiers chemically react with and absorb volatile contaminants, such as
oxygen and water, to prevent contamination and our ChamberGard vent diffusers
reduce particle contamination and processing cycle times.

Worldwide Applications Development and Field Support Capabilities

   We provide strong technical support to our customers through local service
groups and engineers consisting of field applications engineers, technical
service groups, applications development groups and training departments. Our
field applications engineers, located in the United States and in seven other
countries, work directly with our customers on product qualification and
process improvement in their facilities. In addition, in response to customer
needs for local technical service and fast turn-around time, we maintain
regional applications laboratories. Our applications laboratories maintain
process equipment that simulate customers' applications and industry test
standards and provide product evaluation, customer technical support and
complaint resolution. Our service centers are responsible for calibration,
repairs and servicing of our products. These service centers also support
industry collaborations and provide additional technical expertise to our
customers. We maintain eleven service centers located in California, Texas,
Japan, Korea, Taiwan, Singapore, Germany, France and the United Kingdom.

  Customers and Markets

   Our major customer groups include integrated circuit manufacturers, original
equipment manufacturers that provide equipment to integrated circuit
manufacturers, and gas and chemical manufacturing companies.

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   The increasing complexity of semiconductor devices has resulted in the need
for more complex, higher-precision liquid and gas delivery, measurement,
control and purification systems. The ability of semiconductor device
manufacturers to offer integrated circuits with smaller geometries, greater
functionality and higher performance at a lower cost requires continuous
improvements in semiconductor process equipment, process controls and liquid
and gas delivery systems. Manufacturing a semiconductor can require hundreds of
process steps, many of which involve the precise measurement, delivery, control
and purification of process liquids, gases and other chemicals. The design and
performance of those liquid and gas delivery systems, subsystems, components
and consumables are critical to the semiconductor manufacturing process because
they directly affect cost of ownership and manufacturing yield.

   As equipment and process complexity in semiconductor manufacturing
increases, semiconductor original equipment manufacturers and device
manufacturers are seeking to improve time-to-market, reduce manufacturing costs
and improve production quality and reliability and long-term service and
support. To address these issues, semiconductor equipment companies and device
manufacturers are outsourcing the design and manufacture of liquid and gas
delivery, measurement, control and purification systems, components, and
consumables to us and to other well-established subsystem and component
companies that have worldwide presence and leading technologies.

   The manufacturing of semiconductors and other electronic devices can require
hundreds of process steps. These steps take place within a process chamber,
which provides a controlled environment for the fabrication of semiconductor
and other electronic devices. The primary processing steps in the manufacture
of semiconductors are listed below; the Company offers products used in each of
these process steps.

   Deposition.  Deposition refers to placing layers of insulating or conductive
materials on a wafer surface in thin films that make up the circuit elements of
semiconductor devices. The two main deposition processes are physical vapor
deposition, where a thin film is deposited on a wafer surface in a low-pressure
gas environment, and chemical vapor deposition, where a thin film is deposited
on a wafer surface using a gas medium and a chemical bonding process. In
addition, electro-plating technology is utilized for the deposition of low
resistance materials such as copper. The control of uniformity and thickness of
these films through filtration and purification of the fluids and materials
used during the process is critical to the performance of the semiconductor
circuit and, consequently, the manufacturing yield.

   Chemical Mechanical Planarization.  Chemical mechanical planarization
flattens, or planarizes, the topography of the film surface to permit the
patterning of small features on the resulting smooth surface by the
photolithography process. Semiconductor manufacturers need filtration and
purification systems to maintain acceptable manufacturing yields through the
chemical mechanical planarization process by filtering the liquid slurries,
which are solutions containing abrasive particles in a chemical mixture, to
remove oversized particles and contaminants that can cause defects on a wafer's
surface while not affecting the functioning of the abrasive particles in the
liquid slurries.

   Photolithography.  Photolithography is the process step that defines the
patterns of the circuits to be built on the chip. Before photolithography, a
wafer is pre-coated with photoresist, a light sensitive film composed of
ultra-high purity chemicals in liquid form. The photoresist is exposed to
specific forms of radiation, such as ultraviolet light, electrons or x-rays, to
form patterns which eventually become the circuitry on the chip. This process
is repeated many times, using different patterns and interconnects between
layers to form the complex, multi-layer circuitry on a semiconductor chip. As
device geometries decrease and wafer sizes increase, it is even more critical
that these photoresists have an accurate thickness and uniformity, as well as
low levels of contamination, for manufacturers to achieve acceptable yields in
the manufacturing process.

   Etch and Resist Strip.  Etch is the process of selectively removing precise
areas of thin films that have been deposited on the surface of a wafer. The
hardened photoresist protects the remaining material that makes up the
circuits. During etch, specific areas of the film not covered by photoresist
are removed to leave a desired circuit

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pattern. Similarly, resist strip is a process of removing the photoresist
material from the wafer after the desired pattern has been placed on the wafer.
Emerging advanced etch and resist strip applications require precisely
controlled gas chemistries and flow rates in order to achieve precise etch and
resist strip characteristics.

   Wet Cleaning.  Ultra-high purity chemicals and photoresists of precise
composition are used to clean the wafers, to pattern circuit images and to
remove photoresists after etch. Before processes such as photoresist coating,
thin film deposition, ion implantation, diffusion and oxidation, and after
processes, such as ion implantation and etch, the photoresists must be stripped
off, and the wafer cleaned in multiple steps of chemical processes. To maintain
manufacturing yields and avoid defective products, these chemicals must be
maintained at very high purity levels without the presence of foreign matters
such as particles, ions or organic contaminants.

   Many of the processes used to manufacture semiconductors are also used to
manufacture flat panel displays, magnetic and optical storage devices and fiber
optic cables for telecommunications, resulting in the need for similar
filtration, purification, control and measurement capabilities.

   Our most significant customers based on sales in 2001 include industry
leaders, such as Applied Materials, Inc., ASM Lithography Holding N.V.,
Dainippon Screen Manufacturing Co., Ltd., FSI International, Inc., LAM Research
Corporation, Novellus Systems, Inc., Samsung Electronics Co., Ltd., Taiwan
Semiconductor Manufacturing Co. Ltd. and Tokyo Electron Limited. We also sell
our products to flat panel display original equipment manufacturers, materials
suppliers and end-users. The major manufacturers for flat panel displays and
flat panel display equipment are concentrated in Japan, Korea and other parts
of Asia.

   In 2001, 2000 and 1999, sales to our top ten customers accounted for
approximately 33%, 39% and 31%, respectively, of our net sales. During those
same periods, Tokyo Electron Limited accounted for approximately 14%, 18% and
13%, respectively, of our net sales and international net sales represented
approximately 67%, 61% and 61%, respectively, of our net sales. Over 2,500
customers purchased products from us during 2001.

   We may enter into supply agreements with our customers to govern the conduct
of business between us and our customers, including the manufacture of our
products. These agreements generally have a term of one to three years but
these agreements do not contain any long-term purchase orders or commitments.
Instead, we work closely with our customers to develop non-binding forecasts of
the future volume of orders. However, customers may cancel their orders, change
production quantities from forecasted volumes or delay production for a number
of reasons beyond our control.

Sales and Marketing

   We sell our products worldwide primarily through our own direct sales force
located in over 17 offices in major industrialized and developed countries, as
well as through independent distributors in other parts of the world. As of
December 31, 2001, our sales and marketing force consisted of approximately 215
employees worldwide. Our direct sales force is supplemented by independent
sales representatives and agents.

   Our marketing efforts focus on our "push/pull" marketing strategy in order
to maximize our selling opportunities. We work with original equipment
manufacturers to design tools that require our products and we create end user
"pull" demand where the products are specified by the semiconductor
manufacturers. Our industry relationships have provided us with the opportunity
for significant collaboration with our customers at the product design stage
that has facilitated our ability to introduce new products and applications
that meet our customers' needs. In addition, we are constantly identifying for
our customers the variety of analytical, purification and process control
challenges which may be addressed by our products. Further, we adapt our
products and technologies to process control issues identified by our
customers. Our sales representatives provide our customers with worldwide
support and information on our products.

   We believe that our technical support services are important to our
marketing efforts. These services include assisting in defining a customer's
needs, evaluating alternative products, designing a specific system to perform

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the desired separation, training users and assisting customers in compliance
with relevant government regulations. In addition, we maintain a network of
service centers located in the United States and in key international markets
to support our products.

  Competition

   The market for our products is highly competitive. While price is an
important factor, we compete primarily on the basis of the following factors:

                .  historical customer    .  breadth of product
                   relationships;            line;

                .  technical expertise;   .  breadth of
                                             geographic presence;

                .  product quality and    .  manufacturing
                   performance;              capabilities; and

                .  total cost of
                   ownership;             .  after-sales service.

                .  customer service and
                   support;

   We believe that we compete favorably with respect to all of the factors
listed above, but we cannot assure you that we will continue to do so. We
believe that our key competitive strengths include our broad product line, the
low total cost of ownership of our products, our ability to provide our
consumables customers with quick order fulfillment and our technical expertise.
However, our competitive position varies depending on the market segment and
specific product areas within these segments. For example, in the market for
photochemical dispense systems, we believe that our patented technology, our
longstanding relationships with leading original equipment manufacturers in
this market niche and our ability to support our customers' needs on a global
basis have allowed us to compete favorably. In contrast, other companies have
more established positions in the markets related to gas delivery systems and
components, such as gas flow measurement and control products, pressure
measurement and control products and vacuum gauges, valves and controllers.
While we have longstanding relationships with a number of semiconductor and
other electronic device manufacturers, we also face significant competition
from companies that have longstanding relationships with other semiconductor
and electronic device manufacturers and, as a result, have been able to have
their products specified by those customers for use in manufacturers'
fabrication facilities. In addition, some of our competitors have cost
advantages over us in the markets for gas delivery systems and components due
to their larger market share and the related economies of scale. In the markets
for our consumable products, we believe that our differentiated membrane
technology, strong supply chain capabilities, which allow us to provide our
customers with quick order fulfillment, and technical expertise, which enables
us to develop membranes to meet specific customer needs and assist our
customers in improving the functionality of our membranes for particular
applications, allow us to compete favorably. In these markets our competitors
compete against us on the basis of price, as well as alternative membrane
technology having different functionality, manufacturing capabilities and
breadth of geographic presence.

   The market for our products is highly fragmented, and we compete with a
number of different companies, including Iwaki Co., Ltd., MKS Instruments,
Inc., Mott Metallurgical Corporation and Pall Corporation. Some of our
competitors are larger and have greater resources than we do. In some cases,
our competitors are smaller than us, but well-established in specific product
niches. However, we believe that none of our competitors competes with us
across all of our product offerings and that, within the markets that we serve,
we offer a broader line of products, make use of a wider range of process
control technologies and address a broader range of applications than any
single competitor. Nonetheless, competitors with greater financial resources
may be able to offer lower prices, additional products or services or other
incentives that we cannot match or offer These competitors may be in a stronger
position to respond quickly to new technologies, devote more resources to
developing new technologies and may be able to undertake more extensive
marketing campaigns. They also may adopt more aggressive pricing policies and
make more attractive offers to potential customers, employees and strategic
partners.

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   Semiconductor and other electronic device manufacturers may direct
semiconductor capital equipment manufacturers to use a specified supplier's
product in their equipment. Accordingly, our success depends in part on our
ability to have semiconductor and other electronic device manufacturers specify
that our products be used at their fabrication facilities. Some of our
competitors may have more developed relationships with semiconductor and other
electronic device manufacturers, which enables them to have their products
specified for use in manufacturers' fabrication facilities.

   In addition, following our separation from Millipore, except as specifically
prohibited in our separation agreements with Millipore with respect to the use
of existing intellectual property and technological expertise, we may compete
against Millipore and Millipore may compete against us. In particular,
Millipore may choose to reestablish a microelectronics business unit, or work
with a third party to establish a competitive capability.

  Research and Development

   Our aggregate research and development expenses in 2001, 2000 and 1999 were
$19.8 million, $23.2 million and $19.3 million, respectively. As of December
31, 2001, we had approximately 97 employees in engineering, research and
development. In addition, we have followed a practice of supplementing our
internal research and development efforts by licensing technology from
unaffiliated third parties and/or acquiring distribution rights with respect
thereto when we believe it is in our long-term interests to do so.

   To meet the global needs of our customers, we have research and development
capabilities in the United States and Japan. Our research and development
efforts are directed toward developing and improving our technology platforms
for semiconductor and advanced processing applications and identifying and
developing products for new applications for which fluid management plays a
critical role. Recently, our efforts have been particularly focused on the
development of new materials and technology associated with key industry
trends, such as the transition from the use of 200 millimeter wafers to 300
millimeter wafers, the shrinking of integrated circuit line-widths and the use
of new classes of materials, such as copper, titanium nitride and organic and
inorganic dielectric materials. We have undertaken an initiative to involve our
marketing, engineering, manufacturing and sales personnel in the development of
new products in order to reduce the time to market for new products. Our
employees also work closely with our customers' development personnel. These
relationships help us identify and define future technical needs on which to
focus our research and development efforts. In addition, we participate in
Semiconductor Equipment and Materials International (SEMI), a consortium of
semiconductor equipment suppliers. We also support research at academic and
other institutions targeted at advances in materials science and semiconductor
process development.

   On the effective date of our separation from Millipore, key membrane
researchers and engineers were transferred to us. In addition, we entered into
a five-year contractual research agreement with Millipore to minimize the
interruption of our long-term research projects and transfer to us full
ownership of specified related intellectual property rights.

  Patents and Other Intellectual Property Rights

   We rely on a combination of patent, copyright, trademark and trade secret
laws and license agreements to establish and protect our proprietary rights. We
have 108 U.S. issued and enforceable patents, 127 issued and enforceable
foreign patents, including counterparts to U.S. filings, 101 pending U.S.
patent applications, 43 pending filings under the Patent Cooperation Treaty not
yet nationalized and 235 pending foreign patent applications. While we believe
that patents may be important for aspects of our business, such as our patents
related to photoresist dispense pumps, polymer membranes, gas filters, mass
flow controllers and our Connectology(TM) products, which patents expire
between 2003 and 2018, we believe that our success depends more upon close
customer contact, innovation, technological expertise, responsiveness and
worldwide distribution. Additionally, while our patented technology may delay
or deter a competitor in offering a competing product, we do not believe that
our patent portfolio functions as a barrier to entry for any of our
competitors. In

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addition, while we license and will continue to license technology used in the
manufacture and distribution of products from third parties, except as
described in the separation agreements with Millipore, these licenses are not
currently related to any of our core product technology.

   We require each of our employees, including our executive officers, to enter
into standard agreements pursuant to which the employee agrees to keep
confidential all of our proprietary information and to assign to us all
inventions made while employed by us.

   A number of our patented products were specifically developed in response to
the transition from 200 millimeter wafers to 300 millimeter wafers, and many of
our new products are specifically targeted to meet the more stringent
requirements for the advanced technologies dominating 300 millimeter wafer
manufacturing processes. Examples include our Solaris(TM) chemical mechanical
planarization filters for copper slurries, IntelliGen(TM) photoresist dispense
with digital valves targeted for photolithography applications and our
Intelliflow(TM) mass flow controllers for 300 millimeter tool automation.

   In connection with our separation from Millipore, we were assigned patents
and trademarks which relate exclusively to our business. Patented technology
that is used by both Millipore and Mykrolis was generally retained by Millipore
and licensed to us with exclusive rights in our fields of use that are
generally defined by the current operating scope of our business. In some
cases, the technology was transferred to us, and we granted Millipore an
exclusive license in its fields of use in the biopharmaceutical and related
industries. These licenses are assignable by the licensee only in connection
with a sale of its business, do not require the payment of any license fees or
royalties by either Millipore or us and will continue in effect for the life of
the patents. In addition, in order to assure future access to patented
technology not licensed as part of the separation, the separation agreements
provide each of us with a technology license option. The option grants each
party a five-year option to acquire a royalty bearing license to patented
technology existing as of the separation date that is owned by the other party
and is not currently used by the optionee but may be useful for future
products, with exclusive rights in its fields of use. The license term would
extend for the life of the subject patents.

  Governmental Regulation

   Our operations are subject to federal, state and local regulatory
requirements relating to environmental, waste management and health and safety
matters, including measures relating to the release, use, storage, treatment,
transportation, discharge, disposal and remediation of contaminants, hazardous
substances and wastes, as well as practices and procedures applicable to the
construction and operation of our plants. There can be no assurance that we
will not incur material costs and liabilities or that our past or future
operations will not result in exposure to injury or claims of injury by
employees or the public. Although some risk of costs and liabilities related to
these matters is inherent in our business, as with many similar businesses, we
believe that our business is operated in substantial compliance with applicable
regulations. However, new, modified or more stringent requirements or
enforcement policies could be adopted, which could adversely affect us. While
we expect that capital expenditures will be necessary to assure that any new
manufacturing facility is in compliance with environmental and health and
safety laws, we do not expect these expenditures to be material. Otherwise, we
are not presently aware of any facts or circumstances that would cause us to
incur significant liabilities in the future related to environmental, health
and safety law compliance.

  Employees

   As of December 31, 2001, we had approximately 927 full-time employees the
majority of whom, prior to the separation date, were employed by Millipore's
microelectronics division, including approximately 97 in engineering, research
and development and approximately 215 in sales and marketing. Given the
variability in our business and the quick response time required by our
customers, it is critical that we be able to quickly adjust the size of our
production staff to maximize efficiency. Therefore, we use skilled temporary
labor as required. Prior to our separation from Millipore, all necessary
corporate functions were provided to us by Millipore, and the associated costs
were allocated to us in the form of an allocation of the expense. This
allocation is included in

                                      9

<PAGE>

our historical financial results. Following our separation from Millipore, we
have hired approximately 74 personnel to facilitate our operation as an
independent company and in replacement of services formerly provided by
Millipore's central functions.

   None of our employees are represented by a labor union or covered by a
collective bargaining agreement other than statutorily mandated programs in
European countries.

  Other Information

   In March of 2001, the Board of Directors of Mykrolis adopted a shareholder
rights plan (the "Rights Plan") pursuant to which Mykrolis declared a dividend
on November 29, 2001 to its shareholders of record on December 31, 2001 of the
right to purchase (a "Right") one additional share of Mykrolis Common Stock for
each share of Mykrolis Common Stock owned, at a price of $130.00 for each
share. The Rights Plan is designed to protect Mykrolis' shareholders from
attempts by others to acquire Mykrolis on terms or by using tactics that could
deny all shareholders the opportunity to realize the full value of their
investment. The Rights are attached to the shares of our common stock until
certain triggering events occur. The Rights authorize the holders to purchase
shares of our common stock at a 50% discount from market value upon the
occurrence of specified triggering events, including, unless approved by our
board of directors, an acquisition by a person or group of specified levels of
beneficial ownership of our common stock or a tender offer for our common
stock. The common stock purchase rights are redeemable by us for $.01 and will
expire in March of 2011. One of the events which will trigger the common stock
purchase rights is the acquisition, or commencement of a tender offer, by a
person (an Acquiring Person, as defined in the shareholder rights plan), other
than Mykrolis or any of our subsidiaries or employee benefit plans, of 15% or
more of the outstanding shares of our common stock. An Acquiring Person may not
exercise a common stock purchase right. Until the spin-off distribution of our
shares, Millipore is excluded from the definition of Acquiring Person.

   Mykrolis' products are made from a wide variety of raw materials which are
generally available in quantity from alternate sources of supply. Accordingly,
as a general matter, Mykrolis is not substantially dependent upon any single
supplier.

Executive Officers of Mykrolis

   The following is a list, as of February 1, 2002, of the Executive Officers
of Mykrolis. All of the officers of Mykrolis Corporation listed below were
elected to serve until the first Directors Meeting following the 2002 Annual
Shareholders Meeting.

<TABLE>
<CAPTION>
                                                                              First Elected
       Name         Age                        Office                           To Office
       ----         ---                        ------                         -------------
<S>                 <C> <C>                                                   <C>
C. William Zadel... 58  Chairman of the Board, and Chief Executive Officer        2001
Jean-Marc Pandraud. 48  President and Chief Operating Officer                     2001
Bertrand Loy....... 36  Vice President, Treasurer and Chief Financial Officer     2001
Jean-Paul Mangeolle 40  Vice President-Operations                                 2001
Peter W. Walcott... 55. Vice President, Secretary & General Counsel               2001
Fred E. Faulkner... 55. Vice President--Worldwide Manufacturing                   2001
Gary Nadeau........ 46. Vice President--Worldwide Sales                           2001
Takashi Mizuno..... 41. Vice President; President Nihon Mykrolis KK               2001
Robert Crook....... 49. Vice President--Human Resources                           2001
</TABLE>

   C. William Zadel has been our Chairman and Chief Executive Officer since
November 2000 and one of our directors since February 2001. Mr. Zadel was Chief
Executive Officer, Chairman and President of Millipore from February 1996
through April 2001, at which time he resigned as President but continued as
Chief Executive Officer until August 2001. Mr. Zadel continues as a
non-executive Chairman of the Board of Millipore. Mr.

                                      10

<PAGE>

Zadel had been, since 1986, President and Chief Executive Officer of Ciba
Corning Diagnostics Corp., a company that develops, manufactures and sells
medical diagnostic products. Prior to that he was Senior Vice President of
Corning Glass Works (now Corning Inc.) Americas Operations since 1985 and Vice
President of business development since 1983. Mr. Zadel currently serves on the
Boards of Directors of Kulicke and Soffa Industries, Inc. and Matritech, Inc.
Mr. Zadel served as Chairman of the Board of Directors of the Massachusetts
High Technology Council from 1999 until 2001; he continues as a member of the
Board of Directors of that organization. He has also served as the Chairman of
the Health Industry Manufacturers Association from 1994 to 1995.

   Jean-Marc Pandraud has been our President and Chief Operating Officer since
January 2001. Mr. Pandraud joined Millipore's French subsidiary in 1978 as an
Application Specialist for the contamination laboratory market. He subsequently
held a series of management and marketing positions, including France Division
Manager for the Millipore Product Division from 1982-1984, and France Division
Manager for the company's Waters Chromatography Division from 1984-1988. In
1988, Mr. Pandraud was promoted to Managing Director of Millipore's French
subsidiary and European General Manager for the Millipore Analytical Division.
From 1994 until 1999, Mr. Pandraud served as the Vice President and General
Manager of Millipore's Laboratory Water Division and was also Regional Manager
of Millipore's Latin American operations from 1997 until 1999. In July 1999, he
was appointed to the position of Vice President and General Manager,
Microelectronics Divisions of Millipore, a position he held until his
appointment as our President and Chief Operating Officer.

   Bertrand Loy has been our Vice President and Chief Financial Officer since
January 2001. Prior to that, Mr. Loy served as the Chief Information Officer of
Millipore from April 1999 until December 2000. From 1995 until 1999, he served
as the Division Controller for Millipore's Laboratory Water Division. From 1989
until 1995, Mr. Loy served Sandoz Pharmaceuticals (now Novartis) in a variety
of financial, audit and controller positions located in Europe, Central America
and Japan.

   Jean-Paul Mangeolle has been our Vice President--Operations since April
2001. Prior to that, Mr. Mangeolle served as Vice President and General Manager
of Millipore's Liquids Division from October 1999 until April 2001. Mr.
Mangeolle has also served as Millipore's Vice President of Worldwide Sales and
Service from March 1998 to October 1999, as Millipore's Worldwide Sales and
Marketing Director, Laboratory Water from January 1997 to March 1998 and as
Manager of Millipore's Asian Operations from April 1992 to January 1997.

   Peter W. Walcott has been our Vice President, Secretary and General Counsel
since October 2000. Mr. Walcott served as the Assistant General Counsel of
Millipore from 1981 until March 2001.

   Fred E. Faulkner, Jr. has been our Vice President--Worldwide Manufacturing
since April 2001. Prior to joining Mykrolis, Mr. Faulkner served as Millipore's
Director of Manufacturing Operations from May 2000 until April 2001. Prior to
that, Mr. Faulkner was President and Chief Operating Officer of Boston
Acoustics, Inc., a designer and manufacturer of high-performance audio systems,
from April 1997 until April 2000. Before joining Boston Acoustics, Mr. Faulkner
served as Vice President of Technical Operations for Millipore's
microelectronics division from June 1994 until April 1997.

   Gary Nadeau has been our Vice President--Worldwide Sales since April 2001.
Mr. Nadeau served as Millipore's Director of Worldwide Sales and Service from
November 2000 until March 2001 and as Vice President of the Electronics
Division for Netvendor Inc., a business to business sell-side software and
services provider for manufacturers and distributors in the aerospace,
automotive, electronics and industrial sectors, from February 2000 until
November 2000. Prior to that, Mr. Nadeau served as Director of North American
Sales for Millipore's microelectronics division.

   Takashi Mizuno has been our Vice President since April 2001 and has been
President of our Japanese subsidiary, Nihon Mykrolis KK since April 2001. Mr.
Mizuno was a Director of Global Accounts for Tokyo

                                      11

<PAGE>

Electron Limited from February 2000 until April 2001. Prior to that, Mr. Mizuno
served as Millipore's Director of Laboratory Research from September 1995 until
February 2000 and as Division Manager of Millipore's Laboratory Water division
from January 1995 until September 1995.

   Robert Crook has been our Vice President--Human Resources since April 2001.
Prior to that, Mr. Crook served as Millipore's Human Resources Manager from
November 1999 until April 2001. Before joining Millipore, Mr. Crook served as
Vice President of Human Resources for the Transnational Group, a marketing and
financial services company from October 1996 until November 1999. Before that
Mr. Crook served as a human resources manager for Digital Equipment Corporation.

Item 2.  Properties.

   Our principal executive offices are located in Bedford, Massachusetts. We
also have manufacturing and design facilities in the United States and Japan.
Information about these facilities is set forth below:

<TABLE>
<CAPTION>
                                                                      Approximate Leased/
        Location                      Principal Function              Square Feet  Owned
        --------                      ------------------              ----------- -------
<S>                       <C>                                         <C>         <C>
Bedford, Massachusetts(1) Executive Offices, Research & Manufacturing    46,000   Leased
Allen, Texas............. Research & Manufacturing                      178,000   Leased
Jaffrey, New Hampshire(2) Manufacturing                                  55,000   Leased
San Clemente, California. Manufacturing                                   7,000   Leased
Yonezawa, Japan(3)....... Manufacturing                                 100,000    Owned
</TABLE>
--------
(1) Pursuant to the terms of our master transitional services agreements with
    Millipore, we are currently occupying on an interim basis approximately
    41,000 square feet of office and laboratory space in Millipore's
    headquarters facility located at 80 Ashby Road, Bedford, MA. In addition we
    lease approximately 4,600 square feet of manufacturing space in this
    facility from Millipore under a transitional services agreement that
    expires March 31, 2006.
(2) Pursuant to the terms of our master transitional services agreements with
    Millipore, we are currently sharing space with Millipore in this
    manufacturing facility that is owned by Millipore. Pursuant to our
    worldwide manufacturing rationalization plan, we are finalizing the
    relocation of certain of our operations from this facility to our Allen,
    Texas facility; the remainder of our operations will be relocated to a new
    facility that we anticipate opening in New England during the first half of
    2002.
(3) Excludes an additional 69,000 square feet that are leased to Millipore.
    Millipore pays us rent for the leased space sufficient to cover our costs
    associated with the space.

   In addition, we lease a 144,000 square foot building in Bedford,
Massachusetts of which 70,000 is subleased by us to a third party under a
sublease expiring in 2005. We have an option to purchase this leased facility
at fair market value between June 2005 and November 2005, the expiration date
on our lease, and our landlord has an option to sell us this facility at 90% of
its fair market value prior to November 30, 2005. If our landlord exercises the
option to sell, we will have one year to complete the purchase of the facility,
during which time interest on the purchase price will accrue. Since this
facility was inappropriate for our future needs, we closed this facility during
the third quarter of 2001. We are currently attempting to sublease this
facility.

   We maintain a worldwide network of sales and service centers, including two
in the United States, five in Europe (two in Germany, one in France and one in
the United Kingdom), two in Japan and three in other parts of Asia (Taiwan,
Singapore and Korea). Leases for our facilities expire between February 2002
and March 2008. We currently expect to be able to extend the terms of expiring
leases or to find suitable replacement facilities on reasonable terms.

   We believe that our facilities are well-maintained and, except as described
above, suitable for their respective operations.

                                      12

<PAGE>

   As noted above, we expect to open a combined headquarters, research and
manufacturing facility in the New England region during the first half of 2002.
A potential site has been identified and lease negotiations are underway.
Further we anticipate that as our business grows we will need to obtain
additional facilities through acquisitions, leases or new construction. We may
encounter unforeseen difficulties, costs or delays in expanding our facilities.

Item 3.  Legal Proceedings.

   In July 2000, we were sued in the Osaka District Court, Osaka, Japan, by
Kurabo Industries Ltd. This suit alleges that a type of filter cartridge
manufactured in Japan by our subsidiary, Nihon Mykrolis KK, infringes a
Japanese patent held by Kurabo. The suit seeks $11 million in damages and an
injunction against our future use of these filter cartridges. Nihon Mykrolis KK
has responded to this suit by denying any infringement. We intend to vigorously
defend this suit but there can be no assurances that we will prevail. We
believe, however, that the litigation described above will not have a material
adverse effect on our business, financial condition or results of operations.

   We are also party to other lawsuits in the ordinary course of business. We
do not believe that these proceedings individually or in the aggregate will
have a material adverse effect on our financial condition, results of
operations or cash flows.

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

   This item is not applicable.

                                    PART II

Item 5.  Market for Mykrolis' Common Stock, and Related Shareholder Matters.

   Mykrois' Common Stock, $0.01 par value, is listed on the New York Stock
Exchange and is traded under the symbol "MYK". The following table sets forth,
for the indicated fiscal periods, the high and low sales prices of Mykrolis'
Common Stock (as reported on the New York Stock Exchange Composite Tape). No
cash dividends have been declared (on a per share basis). On November 29, 2001
the Mykrolis Board of Directors declared a dividend of one common stock
purchase right for each share of Mykrolis Common Stock outstanding to
shareholders of record on December 31, 2001, payable on January 4, 2002, for a
description of the Common Stock Rights Plan see "Other Information" in Item 1
above. Each right entitles the holder to purchase one share of Mykrolis
Corporation Common Stock at a price of $130. As of February 8, 2002 there were
approximately 687 shareholders of record.

<TABLE>
<CAPTION>
                            Range of Stock Prices Dividends Declared
                            --------------------- ------------------
                                2001       2002    2001       2000
                            ------------ --------  -----      -----
                             High   Low  High Low    (Per Share)
                            ------ ----- ---- --- ------------------
             <S>            <C>    <C>   <C>  <C> <C>        <C>
             First Quarter.    N/A   N/A N/A  N/A  $0.00     $0.00
                            ------ ----- ---  ---  -----      -----
             Second Quarter    N/A   N/A N/A  N/A  $0.00     $0.00
                            ------ ----- ---  ---  -----      -----
             Third Quarter. $16.25 $8.97 N/A  N/A  $0.00     $0.00
                            ------ ----- ---  ---  -----      -----
             Fourth Quarter $16.00 $7.51 N/A  N/A  $0.00(1)  $0.00
                            ------ ----- ---  ---  -----      -----
                            ------ ----- ---  ---  -----      -----
</TABLE>
(1) Dividend of one common stock purchase right per share of Mykrolis common
    Stock outstanding was declared on November 29, 2001 to shareholders of
    record December 31, 2001.

                                      13

<PAGE>

Item 6.  Selected Financial Data.

   The following table sets forth selected historical financial information
derived from our audited consolidated and combined balance sheets at December
31, 2001, 2000, 1999 and 1998 and our audited consolidated and combined
statement of operations for the years then ended and from our unaudited
combined balance sheet at December 31, 1997 and our unaudited combined
statement of operations for the year ended December 31, 1997. Our combined
financial statements for periods prior to March 31, 2001 include amounts that
have been derived from the consolidated financial statements and accounting
records of Millipore using the historical results of operations and historical
basis of assets and liabilities of our business. The selected historical
financial information includes allocations of Millipore corporate expenses
related to our business, including centralized research and development, legal,
accounting, employee benefits, officers' salaries, real estate, insurance,
information technology services, distribution, treasury and other Millipore
corporate and infrastructure costs. These expense allocations have been
determined on a basis that Millipore and we consider to be a reasonable
reflection of the utilization of services provided or the benefit received by
us. However, the consolidated and combined financial information included
herein may not necessarily reflect our operating results, financial position
and cash flows in the future or what they would have been had we been a
separate, stand-alone entity during all periods presented.

   You should read our "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our consolidated and combined
financial statements and related notes included elsewhere in this document for
a further explanation of the financial data summarized here.

<TABLE>
<CAPTION>
                                                                   Year Ended December 31,
                                                    -------------------------------------------------
                                                      2001      2000      1999      1998      1997
                                                    --------  --------  --------  --------  ---------
                                                            (In thousands, except per share data)
<S>                                                 <C>       <C>       <C>       <C>       <C>
Statement of Operations Data:
Net sales.......................................... $215,274  $355,540  $206,345  $180,613  $ 263,478
Cost of sales......................................  137,621   174,545   107,154   120,147    134,922
                                                    --------  --------  --------  --------  ---------
   Gross profit....................................   77,653   180,995    99,191    60,466    128,556
Selling, general and administrative expenses.......   80,724    96,469    75,052    70,400     82,048
Research and development expenses..................   19,837    23,175    19,309    21,492     27,411
Purchased research and development expense.........       --        --        --        --    121,033 (1)
Litigation settlement..............................       --        --        --     3,666         --
Restructuring and other charges....................   17,478      (320)   (1,221)    7,120         --
                                                    --------  --------  --------  --------  ---------
   Operating income (loss).........................  (40,386)   61,671     6,051   (42,212)  (101,936)
Other expense, net.................................   (1,096)   (1,395)      (83)     (823)    (1,680)
                                                    --------  --------  --------  --------  ---------
   Income (loss) before income taxes...............  (41,482)   60,276     5,968   (43,035)  (103,616)
Income tax expense (benefit).......................   26,145    22,905     2,685   (15,923)     6,096
                                                    --------  --------  --------  --------  ---------
Net income (loss).................................. $(67,627) $ 37,371  $  3,283  $(27,112) $(109,712)
                                                    --------  --------  --------  --------  ---------
Basic and diluted earnings (loss) per share........ $  (1.92) $   1.15  $   0.10  $  (0.83) $   (3.38)
Shares used in computing basic and diluted earnings
  (loss) per share.................................   35,262    32,500    32,500    32,500     32,500

                                                                        December 31,
                                                    -------------------------------------------------
                                                      2001      2000      1999      1998      1997
                                                    --------  --------  --------  --------  ---------
                                                                       (In thousands)
Balance Sheet Data:
Working capital.................................... $153,526  $130,037  $ 78,055  $ 41,794  $  47,162
Total assets.......................................  289,490   299,031   244,507   219,126    223,790
Invested equity....................................       --   246,489   197,658   182,353    163,685
Shareholders' equity...............................  243,547        --        --        --         --
</TABLE>
--------
(1) Purchased research and development expense reflects the acquisition of
    Tylan General, Inc. in January 1997 before income taxes.

                                      14

<PAGE>

Item 7.  Management's Discussion and Analysis of Financial Condition and
Results of Operations.

   You should read the following discussion of our financial condition and
results of operations with the consolidated and combined financial statements
and notes to the consolidated and combined financial statements included
elsewhere in this document. This discussion contains forward-looking statements
and involves numerous risks and uncertainties, including, but not limited to,
those described in the "Risk Factors" section of this report. Our actual
results may differ materially from those contained in any forward-looking
statements.

  Overview

   We are a worldwide developer, manufacturer and supplier of liquid and gas
delivery systems, components and consumables used to precisely measure,
deliver, control and purify the process liquids, gases and chemicals, as well
as the deionized water, photoresists and vacuum systems, that are utilized in
the semiconductor manufacturing process. We also provide capital equipment
repair services to our customers. Our products include membrane and metal-based
filters, housings, precision liquid dispense filtration pumps, resin-based gas
purifiers and mass flow and pressure controllers. Mass flow and pressure
controllers provide precise measurement and control of mass flow rates of gases
that are introduced into the semiconductor and other electronics manufacturing
process chamber. Our products are used by our customers in manufacturing
operations to remove contaminants in process fluid streams and process gas
applications, to measure and control flow rates in process gas streams and to
control and monitor pressure and vacuum levels in process chambers.

   Our products are sold globally through a direct sales force and through
distributors in selected regions. Our customers are located worldwide and we
currently manufacture our products at five sites located in the United States
and Japan. In 2001, as part of our worldwide manufacturing rationalization
plan, we relocated some US manufacturing operations and closed our
manufacturing facility, in Swindon, England. We anticipate opening a new
manufacturing facility in New England during the first half of 2002 to replace
the Jaffrey, New Hampshire manufacturing facility that we plan to exit as part
of the separation from Millipore.

  Our Separation from Millipore

   On October 3, 2000, Millipore Corporation ("Millipore") announced its plan
to spin-off its microelectronics business which serves the semiconductor
industry and certain related industries with products needed to manufacture
semiconductor devices as well as a range of other products that now comprises
the Company. On October 16, 2000, Mykrolis Corporation was incorporated in
Delaware as a wholly-owned subsidiary of Millipore to receive Millipore's
microelectronics business and to be the spun off company. Our business
historically has been operated as a fully integrated business unit of
Millipore. On March 31, 2001, Millipore transferred to us substantially all of
the assets and liabilities associated with its microelectronics business. We
completed our initial public offering of 7 million shares of common stock on
August 9, 2001 receiving net proceeds of approximately $94.0 million, after
deducting underwriting commissions and offering expenses. We retained
approximately $75.0 million of the net proceeds and paid the balance to
Millipore as repayment of amounts outstanding under the credit agreement with
Millipore and as payment of amounts due under the separation note. After the
initial public offering, Millipore owned 32.5 million shares, or approximately
82.3%, of our total outstanding common stock. Millipore has declared a stock
dividend of all of the shares of common stock of Mykrolis owned by Millipore
and has announced that it intends to distribute the Mykrolis shares that it
owns on February 27, 2002.

   In connection with our separation from Millipore, we entered into agreements
with Millipore under which Millipore agreed to provide services to us during a
transition period after the separation date. The agreements relate to
facilities services, information technology services, distribution, accounting,
finance and other services and arrangements. Under these agreements, we
reimburse Millipore for the cost of these services. The duration of each of the
different transition services varies depending on the anticipated time it will
take for us to replace the service, but is generally for a one-year period. In
addition, we have entered into agreements with Millipore for

                                      15

<PAGE>

membrane manufacturing and supply, research and development, product
distribution and contract manufacturing, generally for a five-year period. Many
of the agreements may be extended beyond the initial transition period by
mutual agreement of the parties. The agreements do not necessarily reflect the
costs of obtaining the services from unrelated third parties or of our
providing the applicable services ourselves. However, we believe that
purchasing these services from Millipore provides us with an efficient means of
obtaining these services during the transition period. In addition, we have
agreed to provide transition services to Millipore, for which we are reimbursed
at our cost.

   As these transition agreements expire without renewal, we must negotiate new
agreements with various third parties as a separate, stand-alone entity. There
can be no assurance that the terms we will be able to negotiate for these
agreements will be as favorable as those we enjoyed as part of Millipore. In
addition, as part of Millipore, we benefited from various economies of scale
including shared global administrative functions, facilities and volume
purchase discounts. We expect that our costs and expenses could increase as a
result of the loss of these economies of scale, although the amount is not
determinable at this time.

  Restructuring and Other Charges and Non-recurring Separation Expenses

   During the third quarter of 2001, we recorded a restructuring charge of $4.9
million in response to the prolonged duration and severity of the current
semiconductor industry downturn. The restructuring charge included
approximately $2.5 million of employee severance costs, $0.7 million write-off
of leasehold improvements and $1.7 million of net exit costs on leased
property. Key initiatives of the restructuring included:

  .  Reducing the Company's workforce in the U.S., Asia and Europe in order to
     resize the Company. This action was completed during the third quarter of
     2001.

  .  Discontinuation of the Company's plan to renovate its leased office space
     in Bedford, Massachusetts and instead exit that facility. This action was
     completed during the third quarter of 2001.

   These third quarter restructuring initiatives resulted in the elimination of
153 positions worldwide. Notification to employees was completed in the third
quarter of 2001, however a number of these employees will continue in their
existing positions through the first quarter of 2002 with their related salary
costs charged to operations as incurred. In 2001, approximately $2.2 million of
restructuring reserve, consisting of $1.7 million in severance and associated
benefits for 145 employees, was paid in addition to $0.5 million of leasehold
and other exit costs. At December 31, 2001, approximately $0.7 million of
employee severance costs remained accrued and we expect that such amounts will
be substantially paid by the end of the first quarter of 2002. The leasehold
and other exit costs at December 31, 2001 were approximately $2.0 million and
will be substantially paid by the lease expiration date in fiscal year 2005.

   In addition, during the first quarter of 2001, we recorded restructuring and
other charges of $12.6 million in connection with our separation from Millipore
to improve our manufacturing asset utilization and resize our overall cost
structure. The restructuring and other charges included approximately $11.3
million of employee severance costs, approximately $1.0 million of equipment
and leasehold improvements write-off and approximately $0.3 million of lease
cancellation costs. Key initiatives of the restructuring included:

  .  Consolidating manufacturing operations to eliminate redundant
     manufacturing processes. We are in the process of relocating the
     operations of two of our manufacturing facilities in the U.S. and we
     closed our manufacturing facility in England. This important step in the
     consolidation of our manufacturing operations is expected to be
     substantially completed in the first quarter of 2002.

  .  Realigning our European organizational structure to focus on our operating
     business units, thereby consolidating our sales and administrative
     activities into fewer locations that are closer to our customer base. We
     completed this transition during the fourth quarter of 2001.

                                      16

<PAGE>

  .  Reducing our administrative and management infrastructure costs in Asia.
     These cost reductions are expected to result in lower overhead for
     administrative and management infrastructure through reduced facility
     costs and administrative positions. This program was completed during the
     fourth quarter of 2001.

  .  Reducing our workforce in the U.S. in order to address changes in the
     demand for our products due to the current semiconductor industry
     downturn. This action was completed during the second quarter of 2001.

   The first quarter restructuring initiatives resulted in the elimination of
205 positions worldwide. Notification to employees was completed in the first
quarter of 2001. However, a number of these employees will continue in their
existing positions through the first quarter of 2002 with their related salary
costs charged to operations as incurred. For the year ended December 31, 2001,
approximately $9.5 million of the restructuring was utilized consisting of $8.2
million in severance and associated benefits for 140 employees and $1.3 million
of leasehold and other costs. At December 31, 2001, approximately $3.1 million
of restructuring costs remained accrued. We believe that such amounts will be
substantially paid by the end of the first quarter of 2002.

   These combined restructuring initiatives are expected to yield annualized
savings of approximately $16.2 million. The savings will result from reduced
wages and facility-related costs and depreciation. The savings will be
reflected in costs of sales, selling, general and administrative expenses and
research and development expenses. The savings began in the second quarter of
2001 but are not expected to be fully realized until the first quarter of 2002.

   In addition, in connection with our separation from Millipore and the
implementation of our worldwide manufacturing strategy, we expect to incur
incremental, non-recurring operating costs and expenses. In 2001, these costs
and expenses amounted to approximately $5.7 million. During 2002 and 2003 we
estimate that these incremental, separation related, non-recurring costs and
expenses could amount to approximately $4.0 million. These anticipated costs
and expenses are associated with the following:

  .  Continued implementation of our manufacturing strategy, including our plan
     to open a new manufacturing facility and to relocate production activities
     to this new facility. These expenses will include severance costs,
     retention bonuses and increased depreciation due to decreases in the
     estimated useful lives of fixed assets and leasehold improvements. In 2001
     these expenses amounted to approximately $0.9 million. We estimate that
     these non-recurring costs and expenses could amount to approximately $1.0
     million during 2002 and 2003. We expect that the majority of these costs
     will be incurred during 2002.

  .  Other incremental separation-related costs and expenses including legal
     fees, marketing expenses related to establishing a new brand identity,
     retention bonuses, depreciation expense due to decreases in the estimated
     useful lives of fixed assets and leasehold improvements. These costs and
     expenses totaled $4.8 million in 2001. During 2002, we anticipate
     incurring additional similar costs and expenses totaling approximately
     $3.0 million.

   We will also incur other third party costs, fees and expenses relating to
our separation from Millipore. Such costs, fees and expenses include, among
others, costs relating to designing and constructing our computer
infrastructure and implementing treasury, real estate, pension and records
retention management services. We expect to outsource these services and
functions and are negotiating service agreements with new service providers. We
expect these future costs to be consistent with the historical costs incurred
for these services.

Basis of Presentation

   Our combined financial statements for periods prior to March 31, 2001
include amounts that have been derived from the consolidated financial
statements and accounting records of Millipore using the historical results of
operations and historical basis of assets and liabilities of our business. We
believe the assumptions underlying the combined financial statements are
reasonable. However, the combined financial information

                                      17

<PAGE>

included herein may not necessarily reflect our operating results, financial
position and cash flows in the future or what they would have been had we been
a separate, stand-alone entity during the periods presented. Because a direct
ownership relationship did not exist among all our various units, Millipore's
net investment in us is shown in lieu of shareholders' equity in the combined
financial statements prior to the separation. We began accumulating retained
earnings (accumulated deficit) on April 1, 2001, following the effective date
of the separation agreement with Millipore, pursuant to which our assets and
liabilities were transferred to us. Beginning April 1, 2001, our consolidated
financial statements include all our wholly-owned subsidiaries and our assets
and liabilities. All material intercompany transactions and balances between
and among our subsidiaries have been eliminated.

   Prior to April 1, 2001 Millipore allocated certain corporate expenses,
including centralized research and development, legal, accounting, employee
benefits, officers' salaries, facilities, insurance, information technology
services, distribution, treasury and other Millipore corporate and
infrastructure costs. These expense allocations were determined on a basis that
Millipore and we consider to be a reasonable assessment of the utilization of
services provided or the benefit received by us. Effective April 1, 2001, we
entered into transition service agreements with Millipore for Millipore to
provide specified functions and for us to reimburse Millipore for the cost of
these functions. The agreements do not necessarily reflect the costs of
obtaining the services from unrelated third parties or of our providing the
applicable services ourselves. However, we believe that purchasing these
services from Millipore provides us with an efficient means of obtaining these
services during the transition period.

   In addition, we have agreed to provide transition services to Millipore, for
which we are reimbursed at our cost. During 2001, these amounts totaled $1.7
million related to manufacturing, distribution, research and development and
management services included in cost of sales, research and development and
selling, general and administrative expenses.

   Allocated costs included in the accompanying consolidated and combined
statements of operations are as follows:

<TABLE>
<CAPTION>
                    Allocated costs           Year Ended December 31,
                    ---------------           -----------------------
                                               2001    2000    1999
                                              ------- ------- -------
          <S>                                 <C>     <C>     <C>
          Cost of sales...................... $ 2,233 $ 5,951 $ 5,726
          Selling, general and administrative   7,350  33,798  24,363
          Research and development...........     679   2,346   2,592
                                              ------- ------- -------
             Total........................... $10,262 $42,095 $32,681
</TABLE>

   For the nine months from the separation on March 31, 2001 through December
31, 2001, services purchased by us under the transition service agreements with
Millipore are as follows.

<TABLE>
<CAPTION>
                                                    Nine months
                                                       ended
                          Purchased costs           December 31,
                          ---------------           ------------
                                                        2001
                                                    ------------
                <S>                                 <C>
                Cost of sales......................    $3,279
                Selling, general and administrative     3,675
                Research and development...........     1,082
                                                       ------
                   Total...........................    $8,036
</TABLE>


                                      18

<PAGE>

Critical Accounting Policies and Estimates

   Our discussion and analysis of our financial condition and results of
operations are based upon our consolidated and combined financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the US. The preparation of these financial statements requires us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates, including
those related to product returns, bad debts, inventories, investments,
intangible assets, income taxes, warranty obligations, restructuring, pensions
and other post-retirement benefits, and contingencies and litigation. We base
our estimates on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.

   We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of the consolidated
and combined financial statements. We maintain allowances for doubtful accounts
for estimated losses resulting from the inability of our customers to make
required payments. If the financial condition of our customers were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required. We write down our inventory for
estimated obsolescence or unmarketable inventory equal to the difference
between the cost of inventory and the estimated market value based upon
assumptions about future demand and market conditions. If actual market
conditions are less favorable than those projected by management, additional
inventory write-downs may be required.

   Our net sales consist of revenue from sales of products net of trade
discounts and allowances. We recognize revenue when evidence of an arrangement
exists, contractual obligations have been satisfied, title and risk of loss
have been transferred to the customer and collection of the resulting
receivable is reasonably assured. At the time revenue is recognized, we provide
for the estimated cost of product warranties and reduces revenue for estimated
product returns if allowed for under contractual arrangements. Our warranty
obligation is effected by product failure rates and service delivery costs
incurred in correcting a product failure. Should such failure rates or costs
differ from these estimates, accrued warranty costs would be adjusted. Revenue
from services is recognized when the services are provided. Our service revenue
was less than 3.0% of total net sales for each of the three years ended
December 2001, 2000 and 1999.

   Our valuation allowance against the deferred tax assets is based on our
assessments of historical pre-tax income and projected pre-tax income for early
future periods. We are undertaking tax planning initiatives designed to
generate future U.S. taxable income. As we generate future taxable income in
the U.S. against which these tax assets may be applied, some portion or all of
the valuation allowance would be reversed and an increase in net income would
consequently be reported in future years.

   Millipore uses a centralized approach to cash management and the financing
of its operations. Prior to
April 1, 2001, our cash deposits were transferred to Millipore on a regular
basis and netted against Millipore's net investment. As a result, none of
Millipore's cash, cash equivalents or debt at the corporate level were
allocated to us in our combined financial statements through the second quarter
of 2001. Changes in Millipore's net investment include our net earnings plus
net cash transfers to or from Millipore. After the separation but prior to the
initial public offering, cash deposits were netted against amounts outstanding
under our separation revolving credit agreement with Millipore.

   For the years ended December 31, 2001, 2000 and 1999 we purchased products
from Millipore for inclusion in our products sold to third parties totaling
$3.0 million, $4.0 million and $4.0 million, respectively. Products sold to
Millipore by us totaled $1.6 million for the year ended December 31, 2001 and
were not material for the years ended December 31, 2000 and 1999.

                                      19

<PAGE>

Results of Operations

   Our results of operations for the years ended December 31, 2001, 2000 and
1999 in dollars and as a percentage of total net sales were as follows:

<TABLE>
<CAPTION>
                                             Year Ended December 31,   Year Ended December 31,
                                             ----------------------  --------------------------
                                              2001    2000    1999     2001       2000    1999
                                             ------  ------  ------   -----       -----  -----
                                                  (In millions)      (As a percent of net sales
<S>                                          <C>     <C>     <C>     <C>         <C>     <C>
Net sales................................... $215.3  $355.5  $206.3   100.0%     100.0%  100.0%
Cost of sales...............................  137.6   174.6   107.1    63.9       49.1    51.9
                                             ------  ------  ------   -----       -----  -----
   Gross profit.............................   77.7   180.9    99.2    36.1       50.9    48.1
Selling, general and administrative expenses   80.7    96.4    75.1    37.5       27.1    36.4
Research and development expenses...........   19.8    23.1    19.3     9.2        6.5     9.4
Restructuring and other charges.............   17.5    (0.3)   (1.2)    8.1       (0.1)   (0.6)
                                             ------  ------  ------   -----       -----  -----
Operating income (loss).....................  (40.3)   61.7     6.0   (18.7)      17.4     2.9
Other expense, net..........................   (1.1)   (1.4)     --    (0.5)      (0.4)     --
                                             ------  ------  ------   -----       -----  -----
   Income (loss) before income taxes........  (41.4)   60.3     6.0   (19.2)      17.0     2.9
Income tax expense (benefit)................   26.2    22.9     2.7    12.2        6.4     1.3
                                             ------  ------  ------   -----       -----  -----
Net income (loss)........................... $(67.6) $ 37.4  $  3.3   (31.4)%     10.5%    1.6%
</TABLE>

Operating trends and recent developments

   Throughout 2001, we have experienced and we are continuing to experience
weak demand for our liquid and gas delivery systems, components and consumables
from a number of our large customers. These customers have placed fewer orders
as they attempt, we believe, to manage their demand and their inventories in
response to weakness in their market. As a result, our revenues and our
operating income decreased in 2001 as compared to 2000. There can be no
assurance as to the extent or duration of this cyclical downturn or as to its
impact on us. We have taken actions to reduce capital expenditures, operating
costs and expenses in response to these recent adverse trends. In addition to
the two restructuring actions taken during 2001, the top 150 employees in the
Company have taken a temporary salary reduction based on a sliding scale of up
to 20 percent of annualized salary. No salary increases will be granted in
2002. However, in the midst of this downturn, we continue to support our
customers around the world and to fund key research and development programs
for future growth. In response to customer needs and as a result of our
research and development activities, we successfully introduced approximately
10 new products during 2001.

Year Ended December 31, 2001 Compared to Years Ended December 31, 2000 and 1999

   Net Sales.  Net sales were $215.3 million in 2001, which represented a 39%,
or a $140.2 million decrease when compared to 2000 as the current semiconductor
industry downturn continues to impact our industry severely. New semiconductor
plant constructions and upgrades began to decline rapidly late in the first
quarter of 2001 due to industry-wide over-capacity and resulted in a decline in
our microelectronics hardware sales. In addition, sales of consumable
purification products also declined, although to a lesser extent, as
semiconductor fabrication plants focused on achieving manufacturing
efficiencies and reducing materials costs. As a result of these trends, we
experienced a significant decline in our revenues in the first, second and
third quarters of 2001, although falling order rates began to level-off during
the fourth quarter of 2001.

   During 2000, net sales increased 72.3% to $355.5 million from $206.3 million
in 1999. The net sales increase in 2000 was primarily due to a recovery in the
semiconductor industry as well as the impact of our new product introductions.
Beginning in the middle of 1997 and continuing throughout 1998, the
semiconductor industry entered a cyclical downturn. During 1999, the industry
came out of this downturn and the Asian economies rebounded. By 2000,
semiconductor manufacturing volumes as well as our sales achieved unprecedented
levels.

                                      20

<PAGE>

   Net sales and net sales growth by geography are summarized in the table
below. Local currency net sales growth represents the growth in net sales based
on Mykrolis' 2001 budgeted foreign currency exchange rates for all periods
presented, thereby excluding the impact of fluctuations in the actual foreign
currency rates. Management uses this presentation to evaluate net sales growth
because we believe that the local currency results provide a clearer
presentation of the underlying net sales trends.

<TABLE>
<CAPTION>
                                                  Net Sales by Geographic
                          Net Sales in US Dollars         Region
                          ----------------------- ----------------------
                           2001    2000    1999    2001      2000   1999
                          ------  ------  ------  -----     -----  -----
                               (In millions)      (As a percentage of net
                                                          sales)
          <S>             <C>     <C>     <C>     <C>       <C>    <C>
          North America.. $ 70.4  $138.0  $ 80.0   32.7%     38.8%  38.8%
          Japan..........   78.6   133.3    74.9   36.5      37.5   36.3
          Asia...........   39.5    51.7    26.0   18.4      14.6   12.6
          Europe.........   26.8    32.5    25.4   12.4       9.1   12.3
                          ------  ------  ------  -----     -----  -----
          Total net sales $215.3  $355.5  $206.3  100.0%    100.0% 100.0%
                          ------  ------  ------  -----     -----  -----
</TABLE>

<TABLE>
<CAPTION>
                                                  Net sales
                                    Net sales     Growth in
                                  Growth in US      Local
                                     Dollars     Currencies
                                  ------------  ------------
                                  2001    2000  2001    2000
                                  -----   ----  -----   ----
                  <S>             <C>     <C>   <C>     <C>
                  North America.. (49.0)% 72.5% (49.1)% 71.2%
                  Japan.......... (41.0)  78.0  (33.8)  70.5
                  Asia........... (23.6)  98.8  (18.0)  92.6
                  Europe......... (17.5)  28.0  (21.1)  47.0
                  Total net sales (39.4)  72.3  (36.0)  70.5
</TABLE>

   As a general matter, a weaker U.S. dollar will favorably affect our sales
growth. During 2001 as compared to 2000, the Japanese yen weakened against the
U.S. dollar by approximately 13% and the Euro weakened against the U.S. dollar
by approximately 3%. The net effect of currency translation in 2001, including
the impact of the declining Euro and Japanese yen, resulted in a decrease in
reported net sales growth by 3.4% over the preceding year. Conversely, in 2000,
the net effect of currency translation, including the impact of the Japanese
yen strengthening against the U.S. dollar by approximately 5% and the Euro
weakening against the U.S. dollar by approximately 15% during the year,
resulted in an increase in reported net sales growth of 1.8%.

   Gross Profit Margins.  Gross profit margins were 36.1% in 2001, 50.9% in
2000 and 48.1% in 1999. The decrease in 2001 is primarily due to reductions in
product demand and production volume resulting in reduced leverage on our
manufacturing overhead as well as an inventory provision in response to the
current downturn. This incremental inventory provision represented 2.7
percentage points of margin decline. We have responded to this change in demand
during the first and third quarters of 2001 by restructuring our manufacturing
operations. We are continuing to assess the impact of the ongoing industry
downturn on manufacturing operations. Gross profit margins of 50.9% in 2000
were higher than in prior years primarily due to increased operating leverage
resulting from higher production volume and manufacturing yield, partially
offset by the inflationary impact of major electronic component shortages.

   We perform a detailed assessment of inventory at each balance sheet date,
which includes a review of, among other factors, demand requirements, product
lifecycle and product development plans, and quality issues. Based on this
analysis, we record adjustments, when appropriate, to reflect inventory at net
realizable value.

   Operating Expenses.  Our operating expenses decreased 1.0% in 2001 from
$119.2 million in 2000 to $118.0 million and increased 27.9% in 2000 from $93.2
million in 1999. Excluding the impact of restructuring items, operating
expenses declined by 15.9% in 2001 from $119.5 million in 2000 to $100.5
million and grew

                                      21

<PAGE>

26.6% in 2000 from $94.4 million in 1999. As a percentage of net sales,
pro-forma operating expenses, excluding restructuring and other charges and
non-recurring separation related costs, increased to 44.5% in 2001 from 33.6%
in 2000 and 45.8% in 1999.

   Selling, general and administrative expenses decreased 16.3% or $15.7
million, from $96.4 million in 2000 to $80.7 million in 2001 and increased
28.4% in 2000 from $75.1 million in 1999. In 2001, excluding $4.8 million of
non-recurring separation related costs and expenses, selling, general and
administrative expenses decreased by 21.3% or $20.5 million. The decrease in
2001 was due to lower selling, general and administrative head count primarily
as a result of the restructuring programs initiated in the first and third
quarters of 2001 as well as a series of actions to reduce discretionary
spending in response to the current industry downturn. In 2000 compared to
1999, we invested in sales, customer support and marketing resources to cope
with the increased demand for our products. Also, in 2000, the strong sales and
profit performances resulted in increased incentive compensation payments.

   Research and development expenses were $19.8 million in 2001 a decrease of
14.3% or $3.3 million compared to the 2000 expense of $23.1 million. This
decrease is due to reduced spending in response to the current industry
downturn. However, we intend to continue to fund key research and development
programs despite the current business condition. Key elements of our 2001
research and development expenses were related to the development of the next
generation 300mm products in the area of copper electrochemical plating,
chemical mechanical planarization and deep ultra-violet photolithography
applications. Additional investments were made to develop future generation of
chemical management technologies for advanced wafer cleans applications, as
well as DeviceNet(TM) enabled product lines. Another major element of our 2001
research and development expenses relates to the continued development of next
generation 300mm products. Research and development expenses increased 19.7% in
2000 from $19.3 million in 1999. During 2000, we focused on novel technology
development and licensing for advanced copper interconnect and photolithography
applications. Additional investments were made to develop in-house copper
plating capability. We also focused on photochemical dispense systems, which
are specifically designed to address advanced deep ultraviolet
photolithography. We believe that our customers will migrate toward the 0.13
micron technology during the next upturn and that our new generation of high
value added products resulting from these research and development investments
are well positioned to respond to this trend.

   Restructuring and other Charges.  Our operating results in 2001 included a
total of $17.5 million of restructuring and other charges. During the first
quarter of 2001, we recorded restructuring and other charges of $12.6 million
in connection with our separation from Millipore to improve our manufacturing
asset utilization and resize our overall cost structure. The restructuring and
other charges included $11.3 million of employee severance costs, a $1.0
million write-off of equipment and leasehold improvements and $0.3 million of
lease cancellation costs. During the third quarter of 2001, we recorded an
additional restructuring charge of $4.9 million in response to the prolonged
duration and severity of the semiconductor industry downturn. This
restructuring charge included $2.5 million of employee severance costs, a $0.7
million write-off of equipment and leasehold improvements, and $1.7 million of
exit costs on leased property. We expect these combined restructuring
initiatives to yield annual savings of approximately $16.2 million.

   Other Expense, Net. In 2001, other expense, net includes foreign currency
transaction exchange losses of $2.2 million and a $0.4 million loss on
investments in 20%-50% owned entities accounted for under the equity method
offset by interest income of $0.7 million, royalty income from Millipore of
$0.6 million and $0.2 million other income. In 2000, other expense, net
included the $3.0 million write-off of investment holdings in a privately held
U.S. company offset by $0.9 million in foreign currency transaction exchange
gains and income of $0.7 million on investments in 20%-50% owned entities
accounted for under the equity method. In 1999, other expense, net amounted to
$0.1 million, including foreign currency transaction exchange losses partially
offset by income on investments in 20%-50% owned entities accounted for under
the equity method.

   Income Tax Expense.  Income taxes were calculated on a separate return basis
as if we filed tax returns separately from Millipore. However, we will be
included in the Millipore consolidated federal tax return until the

                                      22

<PAGE>

date that Millipore distributes our shares to its shareholders. Millipore is
managing its consolidated tax position for the benefit of its entire portfolio
of businesses, and its tax strategies are not necessarily reflective of the tax
strategies that we would have followed or will follow as a stand-alone company.
We will continue to evaluate our tax position and to evaluate our effective tax
rate depending on the geographic mix of our earnings and the continued
development of our tax strategies.

   In 2001, we recorded income tax expense of $26.2 million on a pre-tax loss
of $41.4 million. This expense is primarily attributable to the valuation
allowance against foreign tax credits on unremitted earnings of our foreign
subsidiaries of approximately $18 million and other U.S. deferred tax assets of
approximately $11.2 million. SFAS 109, "Accounting for Income Tax," requires
that we establish a valuation allowance or reserve when, based on an evaluation
of objective verifiable evidence, we believe there is a likelihood that some
portion or all of the deferred tax assets will not be realized. In the second
quarter of 2001, we recorded a valuation allowance for the majority of these
tax assets based on our assessment of historical pre-tax income and the
significant deterioration in our projected pre-tax income for early future
periods given the significant uncertainty surrounding the prolonged cyclical
downturn in the semiconductor industry.

   Our valuation allowance against the deferred tax assets is based on our
assessments of historical pre-tax income and projected pre-tax income for early
future periods. We are undertaking tax planning initiatives designed to
generate future U.S. taxable income. As we generate future taxable income in
the U.S. against which these tax assets may be applied, some portion or all of
the valuation allowance would be reversed and an increase in net income would
consequently be reported in future years.

   In 2000 and 1999, we recorded income tax expenses of $22.9 million and $2.7
million on pre-tax income of $60.3 million and $6.0 million respectively.

Liquidity and Capital Resources

   Historically and until our separation from Millipore, effective March 31,
2001, Millipore managed our overall capital requirements on a centralized basis
including management of cash and debt. Millipore retained cash receipts
associated with our business on a daily basis and provided funds to cover our
disbursements. Accordingly, we have reported neither cash or cash equivalents
nor debt at December 31, 2000 or 1999. Between April 1, 2001 and the date of
our initial public offering, Millipore provided a line of credit to us pursuant
to a separation revolving credit agreement to support our cash requirements
during this interim period. We retained approximately $75.0 million of the net
proceeds from our initial public offering and used the remaining net proceeds
and available cash as repayment of amounts outstanding under that revolving
credit agreement and as payment to discharge a separate term note owed to
Millipore in connection with the separation (the "Separation Note").

   During 2001, our net cash provided by operating activities was $18.1
million. The net cash provided by operating activities resulted from a series
of initiatives aimed at optimizing our working capital. In the second half of
2001, our gross inventory was reduced by $9.9 million. On a full year basis our
gross inventory increased by $3.7 million. The collection of accounts
receivable contributed $54.4 million. We ended 2001 with a DSO of 88 days, in
line with the year ended 2000, despite the increase of the relative share of
revenues generated in Japan and Asia where regional business practices result
in longer collection periods. This positive effect was offset by the reduction
in accounts payable of $16.5 million and the change in other operating assets
and liabilities of $12.8 million. Our cash flows from operations reflected a
net use of cash of $10.0 million and $1.4 million in 2000 and 1999
respectively. The increase in cash flows used in operations in 2000 was
primarily attributed to growth in accounts receivable and inventory due to a
significant sales volume increase that more than offset increased net income.
Inventory levels increased due to stocking levels of new products and efforts
to increase customer service levels through increased product availability. The
net use of cash from operations in 1999 of $1.4 million was primarily
attributed to an increase in accounts receivable and inventory levels as a
result of an increase in sales volume, which more than offset improved net
income and increased accounts payable.


                                      23

<PAGE>

   Cash flow used in investing activities consisted of capital expenditures for
property, plant and equipment of $10.5 million, $11.8 million and $4.2 million
in the years ended December 31, 2001, 2000 and 1999, respectively. In 2001,
cash flows used in investing activities were primarily used in relation to the
purchase of production and research and development equipment, and the
replacement of our manufacturing capacity needed as a result of our separation
from Millipore. Expenditures in 2000 were $7.6 million higher than in 1999 due
to additional spending on machinery and equipment in our Allen, Texas, Jaffrey,
New Hampshire, Bedford, Massachusetts and Yonezawa, Japan facilities to
increase manufacturing capacity to support increased demand for our products.
In 2002, we anticipate to spend between $15 million and $20 million in
production and research and development equipment and facilities. The majority
of the capital spending in 2002 will be used in programs related to our
separation from Millipore to establish our new combined manufacturing and
corporate headquarter facility in New England.

   Cash flows from financing activities of $75.6 million for the year ended
December 31, 2001 resulted from the receipt of $94 million of net proceeds from
the sale of our stock in our initial public offering and net transfers from
Millipore of $0.7 million offset by the payment of a $19.1 million Separation
Note to Millipore. From April 1, 2001 through the consummation of our initial
public offering in August 2001, we borrowed $27.5 million under the separation
revolving credit agreement with Millipore that was repaid from the proceeds of
our initial public offering. The amount of the Separation Note represented
amounts determined by agreement between us and Millipore to ensure that all net
proceeds of our initial public offering in excess of $75 million would be
payable to Millipore. Cash flows from financing activities for the years ended
December 31, 2000 and 1999 were $21.9 million and $5.6 million respectively and
resulted from capital contributions from Millipore. These cash transfers from
Millipore for the years ended December 31, 2000 and 1999 reflect changes in the
cash financing required to fund our capital expenditures and operating
activities. As of December 31, 2001, we did not have any major outstanding
contractual capital commitments.

   Pursuant to the terms of the lease for our Bedford, Massachusetts facility,
the landlord has an option to sell the facility to us at any time prior to
November 2005, the end of the lease term, at 90% of the then current fair
market value excluding the value of our lease. We estimate that the current
fair market value of the facility is approximately $15.8 million. If our cash
flows from operations and short term borrowings are less than we expect, we may
need to incur debt or issue additional equity in order to fulfill this purchase
obligation.
   Our liquidity is affected by many factors, some of which are based on the
normal ongoing operations of our business and some of which arise from
uncertainties related to global economies. We believe that our net proceeds
from our initial public offering of $75 million together with cash flows
generated from operations will be sufficient to satisfy our working capital,
capital expenditure, restructuring and research and development requirements
for an eighteen-month period following the initial public offering. We expect
that our cash flow needs beyond this period will be satisfied through cash flow
generated from operations together with short-term commercial borrowings or the
issue of debt or additional equity securities. Prior to the distribution, our
ability to incur debt may be limited by the covenants in Millipore's existing
debt agreements. Further, in the event that we decide to make a strategic
acquisition or investment, we may need to incur additional debt or issue
additional equity. However, no commitments for any such borrowing or financings
have been obtained and there can be no assurance that any such borrowing or
financing will be available to us on favorable terms or at all. If we are
unable to obtain necessary financing, we may not have sufficient cash to
operate our business.

  Revolving Credit Facility

   On December 10, 2001 we terminated discussions with Fleet National Bank and
Fleet Securities, Inc., with respect to a short-term secured revolving credit
facility to provide for borrowings of up to $20 million. We decided that in
light of our cash and cash equivalents position, our anticipated cash needs,
and the credit facility terms that were available to us, the benefits achieved
by entering into the credit facility would be outweighed by the costs involved
and the impairment of our operational flexibility.

                                      24

<PAGE>

   As noted above we believe that until at least February of 2003 our cash
resources together with our anticipated cash flow from operations will be
sufficient to satisfy our working capital, capital expenditure, and research
and development requirements as well as to fund the previously announced
restructuring programs undertaken in the first and third quarters of 2001. We
expect that our cash flow needs beyond this fourteen month period will be
satisfied through cash flow generated from operations together with short-term
commercial borrowings or the issue of debt or additional equity securities.
However, no commitments for any such borrowing or financing have been obtained
and there can be no assurance that any such borrowing or financing will be
available to us on favorable terms or at all.

Qualitative and Quantitative Disclosure Relating to Market Risks

   Historically, our exposure to foreign currency exchange rate risk has been
managed on an enterprise-wide basis as part of Millipore's risk management
strategy. We do not currently hold derivative financial instruments and
continue to evaluate our future hedging strategy. We sell our products in many
countries and a substantial portion of our net sales and a portion of our costs
and expenses are denominated in foreign currencies. Approximately 67% of our
net sales in the year ended December 31, 2001 were derived from customers
located outside of the U.S., principally in Asia including Japan, where we also
manufacture our products. This exposes us to risks associated with changes in
foreign currency that can adversely impact revenues, net income and cash flow.
In addition, we are potentially subject to concentrations of credit risk,
principally in accounts receivable, as historically we have relied on a limited
number of customers for a substantial portion of our net sales. We perform
ongoing credit evaluations of our customers and we generally do not require
collateral. Our major customers are large, well-established microelectronics
companies that have historically paid their accounts receivable balances with
us.

  Implementation of the Euro.

   On January 1, 1999, 11 member countries of the European Union established
fixed conversion rates between their existing sovereign "legacy" currencies,
and adopted the Euro as their new common legal currency. As of that date, the
Euro began trading on currency exchanges and while the legacy currencies
remained legal tender in the participating countries for a transition period
between January 1, 1999 and January 1, 2002. In the first quarter of 1999, we
began, where applicable, invoicing customers and intercompany transactions in
the Euro. In connection with the transition to the Euro, we have assessed and
adjusted our pricing/ marketing strategy over the past three years in order to
ensure that we remain competitive in a broader European market. We have fully
implemented these adjustments and do not anticipate any future costs associated
with these adjustments. During December 2001, we completed the upgrade of our
computer applications to enable business transactions to be executed correctly
in the Euro effective January 1, 2002. Based on current information and
assessments, we do not expect that the Euro conversion will have a material
adverse effect on our business, results of operations or financial condition.

Recently Issued Accounting Pronouncements

   SFAS 141 and SFAS 142- In July 2001, the Financial Accounting Standards
Board (FASB) issued Statements Nos. 141 and 142 (SFAS 141 and SFAS 142),
"Business Combinations" and "Goodwill and Other Intangible Assets." SFAS 141
replaces APB 16 and eliminates pooling-of-interests accounting and goodwill
amortization in prospective periods. It also provides guidance on purchase
accounting related to the recognition of intangible assets and accounting for
negative goodwill. SFAS 142 requires that goodwill be tested annually for
impairment using a two-step process. The first step is to identify a potential
impairment and, in transition, this step must be measured as of the beginning
of the fiscal year. However, a company has six months from the date of adoption
to complete the first step. The second step of the goodwill impairment test
measures the amount of the impairment loss (measured as of the beginning of the
year of adoption), if any, and must be completed by the end of the our fiscal
year. Intangible assets deemed to have an indefinite life will be tested for
impairment using a one-step process which compares

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<PAGE>

the fair value to the carrying amount of the asset as of the beginning of the
fiscal year. Any impairment loss resulting from the transitional impairment
tests will be reflected as a cumulative effect of a change in accounting
principle. We have not yet determined what effect these impairment tests will
have on our consolidated results of operations, financial position or cash
flows.

   We will adopt the provisions of SFAS 142 in our quarter ended March 31,
2002. We are in the process of preparing for the adoption of SFAS 142 and are
making the determinations as to what its reporting units are and what amounts
of goodwill, intangible assets, other assets, and liabilities should be
allocated to those reporting units. We expect that we will no longer record
$0.9 million of annual amortization expense relating to existing goodwill and
indefinite-lived intangibles, as currently classified in the consolidated and
combined statement of operations for the year ended December 31, 2001.

   SFAS 143--In August 2001, the FASB issued Statement No. 143, "Accounting for
Asset Retirement Obligations" ("SFAS 143"), which provides the accounting
requirements for retirement obligations associated with tangible long-lived
assets. This Statement requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which it is
incurred. This Statement is effective for our 2003 fiscal year, and early
adoption is permitted. The adoption of SFAS 143 is not expected to have an
impact on our consolidated results of operations, financial position or cash
flows.

   SFAS 144--In October 2001, the FASB issued Statement No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which
excludes from the definition of long-lived assets goodwill and other
intangibles that are not amortized in accordance with SFAS 142. SFAS 144
requires that long-lived assets to be disposed of by sale be measured at the
lower of carrying amount or fair value less cost to sell, whether reported in
continuing operations or in discontinued operations. SFAS 144 also expands the
reporting of discontinued operations to include components of an entity that
have been or will be disposed of rather than limiting such discontinuance to a
segment of a business. This Statement is effective for our 2002 fiscal year,
and early adoption is permitted. We expect SFAS 144 will not have a material
effect on our consolidated results of operations, financial position or cash
flows.

Factors and Uncertainties that may Affect Future Results

   The matters discussed in this Annual Report on Form 10-K, include
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are based on current management
expectations and are subject to substantial risks and uncertainties, which
could cause actual results to differ materially from the results expressed in,
or implied by, these forward-looking statements. When used herein or in such
statements, the words "anticipate", "believe", "estimate", "expect", "may",
"will", "should" or the negative thereof and similar expressions as they relate
to Mykrolis or its management are intended to identify such forward-looking
statements. Potential risks and uncertainties that could affect our future
operating results include the risk factors described elsewhere in this Annual
Report on Form 10-K as well as the following:

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<PAGE>

                  RISKS RELATING TO OUR BUSINESS AND INDUSTRY

Our business depends substantially on semiconductor industry capital spending,
which is characterized by periodic fluctuations that may cause a reduction in
demand for our products.

   Our business depends substantially upon the capital expenditures of
semiconductor device manufacturers, which in turn depend upon the demand for
semiconductors and other products utilizing semiconductors. We estimate that
approximately 90% of our sales during 2001, 2000 and 1999 were to semiconductor
capital equipment manufactures, and we expect that sales to such customers will
continue to account for a substantial majority of our sales. Reductions in
demand for the products manufactured by semiconductor capital equipment
manufacturers and semiconductor device manufacturers will restrict our ability
to grow our business and cause our sales and profitability to decline.
Historically, the semiconductor market has been highly cyclical and has
experienced periods of overcapacity, resulting in significantly reduced demand
for capital equipment used to make semiconductors. For example, the
semiconductor industry is currently experiencing a significant decline, which
is causing a number of our customers to reduce their orders. The recent
downturn has had an adverse effect on our recent operating results. Our net
sales for 2001 were $215.3 million, representing a $140.2 million or 39.4%
decline from out net sales in 2000. Our 2001 financial information also
reflects a negative currency effect on both sales and profitability due to the
declining value of the Japanese yen and the Euro versus the US dollar. We also
experienced downturns in 1996 and 1998. During the 1998 downturn, our annual
net sales declined approximately $82.9 million, or 31% from the prior year.
There is typically a three to six month lag between a change in capital
expenditures within the semiconductor industry and the related impact on the
demand for our products. If the current downturn continues for any significant
period of time, it will inhibit our growth and cause our sales and
profitability to decline significantly.

The semiconductor industry is subject to rapid demand shifts, which are
difficult to predict. As a result, our inability to meet demand in response to
these rapid shifts may cause a reduction in our market share.

   Our ability to increase sales of our products, particularly our capital
equipment products, depends in part upon our ability to ramp up the use of our
manufacturing capacity for such products in a timely manner and to mobilize our
supply chain. In order to meet the demands of our customers, we may be required
to ramp up our manufacturing capacity in as little as a few months. If we are
unable to expand our manufacturing capacity on a timely basis or to manage such
expansion effectively, our customers could seek such products from other
suppliers, and our market share could be reduced. Because demand shifts in the
semiconductor industry are rapid and difficult to foresee, we may not be able
to increase capacity quickly enough to respond to such an increase in demand.

Our annual and quarterly operating results are subject to fluctuations as a
result of rapid demand shifts and our insignificant level of backlog and if we
fail to meet the expectations of securities analysts or investors, our share
price may decrease significantly.

   Our sales and operating results can vary significantly from quarter to
quarter and year to year. Because our expense levels are relatively fixed in
the short-term, an unanticipated decline in revenue in a particular quarter
could disproportionately affect our net income in that quarter. In addition, we
make a substantial portion of our shipments shortly after we receive the order,
and therefore we operate with an insignificant level of backlog. As a
consequence of the just-in-time nature of shipments and the low level of
backlog, our results of operations may decline quickly and significantly in
response to changes in order patterns or rapid decreases in demand for our
products. We anticipate that fluctuations in operating results will continue in
the future. Such fluctuations in our results could cause us to fail to meet the
expectations of securities analysts or investors, which could cause our share
price to decline substantially. We believe that period-to-period comparisons of
our results of operations may not be meaningful, and you should not rely upon
them as indicators of our future performance.

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<PAGE>

Because we are subject to order and shipment uncertainties and many of our
costs are fixed, any significant changes, cancellations or deferrals could
cause our revenue and profitability to decline or fluctuate.

   As is typical in the microelectronics industry, we do not usually obtain
long-term purchase orders or commitments from our customers. Instead, we work
closely with our customers to develop non-binding forecasts of the future
volume of orders. Customers may cancel their orders, change production
quantities from forecasted volumes or delay production for reasons beyond our
control. Order cancellations or deferrals could cause us to hold inventory for
longer than anticipated, which could reduce our profitability, restrict our
ability to fund our operations and cause us to incur unanticipated reductions
or delays in our revenue. Our customers often change their orders multiple
times between initial order and delivery. Such changes usually relate to
quantities or delivery dates, but sometimes relate to the specifications of the
products we are supplying. If a customer does not timely pay for these
products, we could incur significant charges against our income. In addition,
our profitability may be affected by the generally fixed nature of our costs.
Because a substantial portion of our costs are fixed, we may experience and
currently are experiencing deterioration in gross margins when volumes decline.
From time to time, we make capital investments in anticipation of future
business opportunities. If we are unable to obtain the anticipated business,
our revenue and profitability may decline.

If we are unable to maintain our technological expertise in design and
manufacturing processes, we will not be able to successfully compete.

   We believe that our future success will depend upon our ability to develop
and provide products that meet the changing needs of our customers, including
the transition from the use of 200 millimeter wafers to 300 millimeter wafers,
the shrinking of integrated circuit line-widths and the use of new classes of
materials, such as copper, titanium nitride and organic and inorganic
dielectric materials, which are materials that have either a low or high
resistance to the flow of electricity. This requires that we successfully
anticipate and respond to technological changes in manufacturing processes in a
cost-effective and timely manner. Our inability to develop the technical
specifications for any of our new products or enhancements to our existing
products or to manufacture and ship these products or enhancements in volume in
a timely manner could harm our business prospects and significantly reduce our
sales. In addition, if new products have reliability or quality problems, we
may experience reduced orders, higher manufacturing costs, delays in acceptance
and payment, additional service and warranty expense and damage to our
reputation.

Our competitive position will be weakened if semiconductor device manufacturers
do not require semiconductor capital equipment manufacturers to design our
products into new generations of their equipment.

   New products designed by semiconductor capital equipment manufacturers
typically have a lifespan of five to ten years. Our competitive success depends
on our products being designed into new generations of equipment for the
semiconductor industry. In some cases, semiconductor device manufacturers may
direct semiconductor capital equipment manufacturers to use a specified
supplier's product in their equipment. Accordingly, our success will depend in
part on our ability to have semiconductor device manufacturers specify that our
products be used at their semiconductor fabrication facilities. If our products
are not specified by semiconductor equipment manufacturers, our net sales may
be reduced during the lifespan of our customers' products.

Because our sales are concentrated on a small number of key customers, our
revenue and profitability may materially decline if one or more of our key
customers do not continue to purchase our existing and new products in
significant quantities.

   We depend and expect to continue to depend on a small number of customers
for a large portion of our business, and changes in our customers' orders have
had a significant impact on our operating results. In 2001, 2000 and 1999, our
top customer accounted for approximately 14%, 18% and 13%, respectively, of our
net sales. In those same periods, net sales to our ten largest customers
accounted for approximately 33%, 39% and 31%,

                                      28

<PAGE>

respectively, of our net sales. In addition, we sell products to systems
integrators who then sell components, which include our products, to some of
our major customers. If any one of our key customers decides to purchase
significantly less from us or to terminate its relationship with us, our
revenue and profitability may decline significantly. We could lose our key
customers or significant sales to our key customers because of factors beyond
our control, such as a significant disruption in our customers' businesses
generally or in a specific product line. For example, we are currently
experiencing softening demand for our products as a result of the downturn in
the semiconductor industry. These customers may stop incorporating our products
into their products with limited notice to us and suffer little or no penalty
for doing so. In addition, if any of our customers merge, we may experience
lower overall sales from the merged companies. Because one of our strategies
has been to develop long-term relationships with a few key customers in the
product areas in which we focus and because we have a long product design and
development cycle for most of our products and prospective customers typically
require lengthy product qualification periods prior to placing volume orders,
we may be unable to replace these customers quickly or at all.

Competition from existing or new companies in the microelectronics industry
could cause us to experience downward pressure on prices, fewer customer
orders, reduced margins, the inability to take advantage of new business
opportunities and the loss of market share.

   We operate in a highly competitive industry. We compete against many
domestic and foreign companies that have substantially greater manufacturing,
financial, research and development and marketing resources than we do. In
addition, some of our competitors may have more developed relationships with
our existing customers than we do, which may enable them to have their products
specified for use more frequently by these customers. We also face competition
from the manufacturing operations of our current and potential customers, who
continually evaluate the benefits of internal manufacturing versus outsourcing.
As more original equipment manufacturers dispose of their manufacturing
operations and increase the outsourcing of their products to liquid and gas
delivery system and other component companies, we may face increasing
competitive pressures to grow our business in order to maintain our market
share. If we are unable to maintain our competitive position, we could
experience downward pressure on prices, fewer customer orders, reduced margins,
the inability to take advantage of new business opportunities and a loss of
market share.

We conduct a significant amount of our sales activity and manufacturing efforts
outside the United States, which subjects us to additional business risks and
may cause our profitability to decline due to increased costs.

   Sales by our international subsidiaries to customers outside the United
States accounted for approximately 67% of our net sales in 2001, 61% of our net
sales in 2000, and 61% of our net sales in 1999. We anticipate that
international sales will continue to account for a majority of our net sales.
In addition, a number of our key domestic customers derive a significant
portion of their revenues from sales in international markets. We also
manufacture a significant portion of our products outside the United States and
are dependent on international suppliers for many of our parts. We intend to
continue to pursue opportunities in both sales and manufacturing
internationally. Our international operations are subject to a number of risks
and potential costs that could adversely affect our revenue and profitability,
including:

  .  unexpected changes in regulatory requirements that could impose additional
     costs on our operations or limit our ability to operate our business;

  .  greater difficulty in collecting our accounts receivable and longer
     payment cycles than is typical in domestic operations;

  .  changes in labor conditions and difficulties in staffing and managing
     foreign operations;

  .  liability for foreign taxes assessed at rates higher than those applicable
     to our domestic operations; and

  .  political and economic instability.

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<PAGE>

   In the past, we have incurred costs or experienced disruptions due to the
factors described above and expect to do so in the future. For example, our
operations in Asia, and particularly Korea, Taiwan and Japan, have been
negatively impacted in the past as a result of regional economic instability,
most recently in 1998. In addition, Taiwan accounts for a growing portion of
the world's semiconductor manufacturing. There are currently strained relations
between China and Taiwan. Any adverse developments in those relations could
significantly disrupt the worldwide production of semiconductors, which would
lead to reduced sales of our products.

Fluctuations in the value of the US dollar in relation to other currencies may
lead to lower gross margins or may cause us to raise prices, which could result
in reduced sales.

   Foreign currency exchange rate fluctuations could have an adverse effect on
our net sales and results of operations. Approximately 67% of our net sales in
2001 and 61% of our net sales in 2000 were denominated in foreign currencies.
Unfavorable foreign currency fluctuations could require us to increase prices
to foreign customers, which could result in lower net sales by us to such
customers. Alternatively, if we do not adjust the prices for our products in
response to unfavorable foreign currency fluctuations, our profitability could
decline. In addition, sales made by our foreign subsidiaries are denominated in
the currency of the country in which these products are sold, and the currency
we receive in payment for such sales could be less valuable at the time of
receipt versus the time of sale as a result of foreign currency exchange rate
fluctuations.

   If we need to shift the production of any of our products to a manufacturing
facility in a different country, we could face additional costs as a result of
foreign currency exchange rate fluctuations impact the relocation costs and the
relocated operations.

We incur significant cash outlays over lengthy time periods in order to
research, develop, manufacture and market new products, which may never reach
market or may have limited market acceptance.

   We make significant cash expenditures to research, develop and market new
products. For example, we incurred $19.8 million of research and development
expense in 2001 and $23.2 million in 2000. The development period for a product
can be as long as three years. Following development, it may take an additional
two to three years for the market size of that product to reach a substantial
level. We cannot be certain of the success of a new product. A product concept
may never progress beyond the development stage or may only achieve limited
acceptance in the marketplace. If this occurs, we do not receive a direct
return on our expenditures and may not even realize any indirect benefits.
Additionally, capacity expansion may be necessary in order to manufacture a new
product. If sales levels do not increase to offset the additional fixed
operating expenses associated with any such expansion, our revenue and
profitability could decline and our prospects could be harmed.

We depend on our suppliers, some of which are the sole source for our raw
materials and components, and our production would be substantially curtailed
if these suppliers are not able to meet our demands and alternative sources are
not available.

   We purchase raw materials and components from third parties to complete our
customers' orders, and some of these raw materials and components are ordered
from sole-source suppliers. Although we work with our customers and suppliers
to minimize the impact of shortages in raw materials and components, we
sometimes experience short-term adverse effects due to price fluctuations and
delayed shipments. In the past, there have been industry-wide shortages of
electronic components, particularly memory and logic devices. If a significant
shortage of raw materials or components were to occur, we may have to delay
shipment. Supply shortages of particular components will likely substantially
curtail production of products using these components. In addition, while most
of our significant customer contracts permit periodic reviews of pricing based
on decreases and increases in the prices of raw materials and components, we
are not always able to pass on price increases to our customers and significant
price increases from our suppliers could cause our profitability to decline.
The loss of any of these or other significant suppliers, delays in shipments,
the inability of a supplier to meet performance

                                      30

<PAGE>

and quality specifications or delivery schedules or our inability to pass along
price increases could cause our revenue and profitability to decline
significantly.

We may acquire other businesses or form joint ventures that could negatively
affect our profitability, increase our debt and dilute your ownership of our
company.

   As part of our business strategy, we expect to address gaps in our product
offerings, diversify into complementary product markets or pursue additional
technology and customers through acquisitions or joint ventures. As a result,
we may enter markets in which we have no or limited prior experience.
Competition for acquiring attractive businesses in our industry is substantial.
In executing this part of our business strategy, we may experience difficulty
in identifying suitable acquisition candidates or in completing selected
transactions at appropriate valuations. If we were to make any acquisitions, we
may not be able to integrate these acquisitions successfully into our existing
business and we could assume unknown or contingent liabilities or experience
negative effects on our reported results of operations from acquisition-related
charges and amortization of acquired technology, goodwill and other
intangibles. We may experience difficulties in operating in foreign countries
or over significant geographical distances and in retaining key employees or
customers of an acquired business, and our management's attention could be
diverted from other business issues. We may not identify or complete these
transactions in a timely manner, on a cost effective basis or at all, and we
may not realize the benefits of any acquisition or joint venture.

We may not have financing for future strategic acquisitions and we may be
limited in the amount of equity we can issue in acquisitions, which may prevent
us from addressing gaps in our product offerings, improving our technology or
increasing our manufacturing capacity.

   If we are able to identify acquisition candidates, we may finance such
acquisitions with substantial debt or with potentially dilutive issuances of
equity securities. Our ability to successfully complete acquisitions in the
future will depend upon the availability of financing and the market value of
our stock. In particular, we expect to fund future acquisitions in whole or in
part by issuing additional equity. If the price of our equity is low or
volatile, we may not be able to acquire other companies. Further, any equity
issued would dilute your ownership of us. Also, under applicable tax rules
related to tax-free spin-off transactions, we will be significantly limited for
at least two years in our ability to issue shares of our common stock for
acquisitions. Our acquisition strategy could require us to incur substantial
amounts of indebtedness. As of December 31, 2001, we had no debt outstanding.
Our future level of indebtedness could have consequences for our business,
including:

  .  greater vulnerability to the cyclical nature of our industry and the
     effects of rapid demand shifts affecting our business;

  .  dedication of a substantial portion of our cash flow from operations to
     repayment of debt, limiting the availability of cash for working capital,
     capital expenditures or acquisitions which may be attractive to us; and

  .  reduced flexibility in planning for, or reacting to, changes in our
     business and industry.

   Furthermore, if we raise funds through the issuance of debt, the debt
securities issued will likely have rights, preferences and privileges senior to
those of holders of our common stock in the event of a liquidation or
otherwise, and the terms of the debt securities may impose restrictions on our
operations. We cannot assure you that financing for acquisitions will be
available on terms acceptable to us, or at all, and if we need to incur debt
for acquisitions or any other purpose prior to the distribution, we will be
restricted by the terms of Millipore's existing indebtedness.

Loss of any of our key personnel could hurt our business because of their
experience in the microelectronics industry and their technological expertise.
Similarly, our inability to attract and retain new qualified personnel could
inhibit our ability to operate and grow our business successfully.

   We depend on the services of our key senior executives and other
technological experts because of their experience in the microelectronics
industry and their technical expertise. The loss of the services of one or

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<PAGE>

several of our key employees or an inability to attract, train and retain
qualified and skilled employees, specifically engineering and sales personnel,
could result in the loss of customers or otherwise inhibit our ability to
operate and grow our business successfully. In particular, after our separation
from Millipore, we will have to develop and implement a new administrative and
managerial infrastructure. Our future success depends on the successful
development and implementation of this infrastructure and our ability to
expand, integrate and retain our management team. In addition, our ability to
successfully integrate acquired facilities or businesses depends, in part, on
our ability to retain and motivate key management and employees hired by us in
connection with the acquisition.

If we are unable to protect our intellectual property rights, our business and
prospects could be harmed.

   Our future success and competitive position depend in part upon our ability
to obtain and maintain proprietary technology used in our principal product
families. We rely, in part, on patent, trade secret and trademark law to
protect that technology. We routinely enter into confidentiality agreements
with our employees. However, there can be no assurance that these agreements
will not be breached, that we will have adequate remedies for any breach or
that our confidential and proprietary information and technology will not be
independently developed by or become otherwise known to third parties. We have
obtained a number of patents relating to our products and have filed
applications for additional patents. We cannot assure you that any of our
pending patent applications will be approved, that we will develop additional
proprietary technology that is patentable, that any patents owned by or issued
to us will provide us with competitive advantages or that these patents will
not be challenged by any third parties. Patent filings by third parties,
whether made before or after the date of our filings, could render our
intellectual property less valuable. Competitors may misappropriate our
intellectual property, and disputes as to ownership of intellectual property
may arise. In addition, if we do not obtain sufficient international protection
for our intellectual property, our competitiveness in international markets
could be significantly impaired, which would limit our growth and future
revenue. Furthermore, there can be no assurance that third parties will not
design around our patents.

Protection of our intellectual property rights may result in costly litigation.

   We may from time to time be required to institute litigation in order to
enforce our patents, copyrights or other intellectual property rights, to
protect our trade secrets, to determine the validity and scope of the
proprietary rights of others or to defend against claims of infringement. Such
litigation could result in substantial costs and diversion of resources and
could negatively affect our sales, profitability and prospects regardless of
whether we are able to successfully enforce our rights. For example, in 1998,
we settled a patent lawsuit in which each party claimed infringement of a
patent by the other. In connection with the settlement, we incurred a charge of
approximately $3.7 million and agreed to a cross-license of the two patents at
issue. In connection with future intellectual property infringement claims, we
will not have the benefit of asserting counterclaims based on Millipore's
intellectual property portfolio, and we will not be able to offer licenses to
Millipore's intellectual property in order to resolve claims.

Our ability to manufacture and sell our products and develop new products in
response to competitive pressures could be restricted or delayed, and we could
incur significant expenses, if we are unable to obtain necessary licenses to
the proprietary technology of others.

   We license and will continue to license technology used in the manufacture
and distribution of our products from third parties. Our inability to acquire
any third-party licenses, or integrate the related third-party technologies
into our products, could result in delays in our product developments and
enhancements until equivalent technologies can be identified, licensed or
integrated. We may also require new licenses in the future as our business
grows and technology evolves. We cannot assure you that these licenses will be
available to us on commercially reasonable terms, if at all.

If we infringe on the proprietary technology of others, our business and
prospects could be harmed.

   Our commercial success will depend, in part, on our ability to avoid
infringing or misappropriating any patents or other proprietary rights owned by
third parties. If we are found to infringe or misappropriate a third

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<PAGE>

party's patent or other proprietary rights, we could be required to pay damages
to such third party, alter our products or processes, obtain a license from the
third party or cease activities utilizing such proprietary rights, including
making or selling products utilizing such proprietary rights. If we are
required to obtain a license from a third party, there can be no assurance that
we will be able to do so on commercially favorable terms, if at all. We are
currently a defendant in a lawsuit in Japan instituted by Kurabo Industries
Ltd. regarding the alleged infringement of one of its Japanese patents. Kurabo
Industries Ltd. has alleged $11 million in damages and is seeking an injunction
against our future use of the technology at issue. There can be no assurances
that we will prevail in this litigation. The patent at issue expires in 2003.

We are subject to a variety of environmental laws which could cause us to incur
significant expenses.

   In addition to other regulatory requirements affecting our business, we are
subject to a variety of federal, state, local and foreign regulatory
requirements relating to the use, disposal, clean-up of, and human exposure to,
hazardous chemicals. We generate and handle materials that are considered
hazardous waste under applicable law. If we fail to comply with any present or
future regulations, we could be subject to future liabilities or the suspension
of production. In addition, compliance with these or future laws could restrict
our ability to expand our facilities or build new facilities or require us to
acquire costly equipment, incur other significant expenses or modify our
manufacturing processes.

                RISKS RELATED TO OUR SEPARATION FROM MILLIPORE

Our historical financial information may not be representative of our results
as a stand-alone company and, therefore, may not be reliable as an indicator of
our historical or future results.

   We do not have an operating history as an independent company. Millipore did
not account for us, and we were not operated, as a stand-alone entity for all
of the periods presented. The historical combined financial information we have
included in this document has been derived in part from Millipore's
consolidated financial statements and may not be indicative of our financial
position, results of operations or cash flows in the future nor is it
necessarily indicative of what our financial position, results of operations or
cash flows would have been had we been a stand-alone entity for all of the
periods presented. This is primarily a result of the following factors:

  .  our historical combined financial statements reflect allocations for
     periods prior to our separation from Millipore, primarily with respect to
     general corporate and research expenses; these allocations may be less
     than the general corporate and research expenses we will incur in the
     future as a stand-alone company; and

  .  our historical combined financial statements do not fully reflect the
     significant changes that we expect to occur in the future as a result of
     our separation from Millipore, and the distribution of our stock to its
     shareholders by Millipore, including changes in how we fund our
     operations, conduct research and tax planning and manage employee matters.

   Following our separation from Millipore, we expect to incur incremental
non-recurring operating costs and expenses associated with marketing expenses
related to establishing a new brand identity, legal fees, retention bonuses,
depreciation expense due to decreases in the estimated useful lives of fixed
assets and leasehold improvements and other separation related costs. During
2002 and 2003, we expect to incur approximately $3.8 million of such costs and
expenses associated with our separation from Millipore.

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We have limited history operating as a stand-alone company, and we may be
unable to continue to effectively implement the changes necessary to operate as
a stand-alone company, or we may incur greater costs as a stand-alone company
that may cause our profitability to decline.

   Prior to our separation, Millipore conducted our business as a division
through various subsidiaries rather than as a stand-alone company. In addition,
Millipore performed various corporate functions for us, including the following:

  .  information technology;

  .  finance and accounting;

  .  public relations;

  .  employee relations;

  .  investor relations; and

  .  legal and tax functions.

   Until the distribution, and in some cases even after the distribution, we
will rely on Millipore for various transitional services. We currently use
Millipore's systems to support our operations, including systems for managing
inventory, order processing, shipping, accounting, payroll and internal
computing operations. Many of these systems are proprietary to Millipore and
are very complex. These systems have been modified, and are in the process of
being further modified, to enable us to separately track items related to our
business. These modifications, however, may result in unexpected system
failures or the loss or corruption of data. We are in the process of creating
our own systems and business functions to replace many of the systems and
business functions that Millipore provides us. We may not be successful in
implementing these systems or transitioning data from Millipore's systems to
ours in a timely manner. If we do not have in place our own systems and
business functions or if we do not have agreements with other providers of
these services once our transitional services agreement with Millipore expires,
we may not be able to effectively operate our business, and our profitability
may decline.

   Any failure or significant downtime in Millipore's or our own information
systems could prevent us from taking customer orders, shipping products or
billing customers and could cause delays in production and delivery of our
products and could harm our business and prospects. In addition, Millipore's
and our information systems require the services of employees with extensive
knowledge of these information systems and the business environment in which we
operate.

We currently use Millipore's operational and administrative infrastructure, and
our ability to satisfy our customers and operate our business will suffer if we
do not develop our own infrastructure quickly and cost effectively.

   We currently have office space in Millipore's Bedford, Massachusetts campus.
We have entered into arrangements with Millipore under the master transitional
services agreement to continue to use its facilities until we can transition
all of our personnel and equipment to our new facilities. This transition is
expected to be completed on or after the distribution date. We are building an
independent business infrastructure following our separation from Millipore,
and we expect to make capital expenditures of approximately $8 million in
connection with the opening of a new headquarters, R & D and manufacturing
facility. If we are unable to successfully transition our operations to this
new facility and build our independent business infrastructure in a timely
fashion, we may incur significant additional costs and our business and
prospects will be harmed.

We currently use Millipore's manufacturing infrastructure, and our ability to
meet our customer's demands will suffer if we do not successfully transition
our manufacturing requirements to our own facilities.

   We are in the process of transitioning our manufacturing capabilities from
Millipore facilities to our own facilities and have entered into transition
agreements with Millipore relating to the manufacture and distribution

                                      34

<PAGE>

of specified products for limited periods of time. Pursuant to our worldwide
manufacturing rationalization plan, we have of consolidated a number of our
existing manufacturing facilities We anticipate opening a new headquarters,
research and development and manufacturing facility during the first half of
2002 and anticipate moving between 10% and 20% of our overall manufacturing
operations from our existing domestic and foreign manufacturing facilities to
this new facility over the next two to three years. The new facility is
expected to replace the Jaffrey, New Hampshire manufacturing facility that we
plan to exit as part of the separation from Millipore. With respect to our new
headquarters, research and development and manufacturing facility, there can be
no assurance that we will be able to identify an acceptable location or enter
into an agreement for such facility on favorable terms or at all. In addition,
even if we obtain an acceptable facility, we may face unforeseen delays or
costs in transitioning our manufacturing activities to this facility. The
manufacture of our products is highly complex and requires sophisticated and
costly equipment, and we might not be able to successfully transition the
production to a different facility. As a result, any prolonged disruption in
the operations of any of our manufacturing facilities or any unforeseen delays
in shifting manufacturing operations to our new facility to be opened outside
the United States, whether due to technical or labor difficulties, destruction
or damage to the facility or other reasons, could result in increased costs and
reduced revenues and profitability and could harm our prospects.

Following our separation from Millipore, we will not have access to the
research and development resources that were previously available to us, which
could limit our research and development activities, thereby inhibiting our
ability to develop new products in response to competitive pressures and
harming our business and prospects.

   Prior to our separation from Millipore, many research and development
projects were conducted through the centralized Millipore research group.
Following our separation from Millipore, while our research and development
personnel have been transferred to us in accordance with the terms of the
separation agreements, we do not have access to any other resources or
personnel in Millipore's research group other than in specific limited
circumstances outlined in our research agreement with Millipore. As a result,
we will not have access to all of the research and development facilities and
resources that were previously available to us, and we may not be able to
manage projects as successfully as we have in the past. If we are unable to
continue to successfully develop new products and technology through internal
research and development activities, we may not be able to maintain our market
position or successfully grow our business and our business and prospects may
be harmed.

Our agreements with Millipore limit our ability to use Millipore's technology
to fields of use in the microelectronics industry and may prevent us from
expanding our business beyond the microelectronics industry.

   Our use of Millipore's technology is governed by the separation agreements,
such as the master patent license agreement and the master trade secret and
know-how agreement. The licenses granted by these agreements prohibit our use
of Millipore's technology in fields of use outside of the microelectronics
industry. In general, where technology is used both by Millipore in the
manufacture of its products and by us in the manufacture of our products,
Millipore retained ownership of the technology and granted to us a license to
use the technology limited to fields of use in the microelectronics industry.
In some cases, Millipore transferred ownership of the technology to us and
retained an exclusive license to the technology in its fields of use in the
biopharmaceutical and related industries. Under the master patent license
agreement and the master trade secret and know-how agreement, we may sell
products using Millipore's technology only to customers in the microelectronics
industry, as defined in the agreements, and we may not transfer the technology
except in limited circumstances. These restrictions could limit our ability to
expand our business into markets outside the microelectronics industry, which
could limit our growth.

Until to the anticipated distribution, Millipore will have substantial control
over our business operations.

   Millipore currently beneficially owns approximately 82.3% of the outstanding
shares of our common stock. As a result, Millipore has significant control over
our business, policies and affairs. For example, Millipore has

                                      35

<PAGE>

the power to appoint new management, prevent or cause a change of control,
alter the terms of our separation agreements with Millipore, allocate business
opportunities that may be suitable for us and approve any action requiring the
approval of the holders of our common stock, including adopting amendments to
our certificate of incorporation and approving mergers or sales of all or
substantially all of our assets. The interests of Millipore may differ from the
interests of other Mykrolis shareholders. Shareholders other than Millipore
will not be able to affect the outcome of any shareholder vote prior to the
distribution of our stock to the Millipore shareholders, and Millipore may not
complete the distribution of our stock to Millipore's shareholders. Millipore
is not prohibited from selling a controlling interest in us to a third party.

Because the distribution of our shares by Millipore is subject to conditions,
the distribution may not occur and we may not achieve many of the expected
benefits of our separation from Millipore, we may lose many of our employees
and our business and stock price may suffer.

   The Millipore Board of Directors has declared a dividend distribution of the
32,500,000 of our shares that it holds to Millipore shareholders of record on
February 13, 2002, payable on February 27, 2002. However, Millipore is not
obligated to make such a distribution, and the distribution may not occur by
that time or at all. Millipore has advised us that it would not complete the
distribution if its board of directors determines that the distribution is no
longer in the best interest of Millipore and its shareholders. Millipore has
received a ruling from the Internal Revenue Service that the distribution will
be tax-free to Millipore shareholders and that our separation from Millipore
qualifies as a reorganization. Until this distribution occurs, the risks
relating to Millipore's control of us will continue to be relevant to our
shareholders. If the distribution is delayed or not completed at all, the
liquidity of our shares will be severely constrained unless and until Millipore
elects to sell some of its significant ownership. Other than lock-up agreement
with the underwriters in our initial public offering (which expired on February
6, 2002), there are no limits on these sales and the sale or potential sale by
Millipore could adversely affect the market price of our stock. In addition,
because of the limited number of publicly-traded shares of our common stock
until the distribution occurs, relatively small trades of our stock will have a
disproportionate effect on our stock price. Also, if Millipore does not
distribute its shares, we may face significant difficulty hiring and retaining
key personnel, many of whom may be attracted by the potential of operating our
business as a fully independent entity.

We will not be able to rely on Millipore to fund our future capital
requirements, and financing from other sources may not be available on
favorable terms or at all.

   In the past, our capital needs have been satisfied by Millipore. However,
after our initial public offering, Millipore has no longer provided funds to
finance our working capital or other cash requirements. We cannot assure you
that financing from other sources, if needed, will be available on favorable
terms or at all. We will likely not be able to obtain financing with interest
rates as favorable as those that Millipore could obtain. In addition, following
our separation from Millipore but prior to the distribution by Millipore of our
capital stock owned by them, we will be subject to the restrictive covenants
contained in the indentures governing Millipore's publicly-traded bonds which
prohibit us, until such time as Millipore owns less than 50% of our capital
stock, from creating or incurring any lien on our properties or assets unless
Millipore's bonds are secured by an equal and ratable lien on the same
properties or assets. We may not be able to obtain a line of credit on
favorable terms or at all and these covenants may limit or restrict our ability
to obtain a short-term line of credit prior to the distribution.

If the transitional services being provided to us by Millipore are not
sufficient to meet our needs, or if we are not able to replace these services
after our agreements with Millipore expire, we will be unable to manage
critical operational functions of our business.

   Millipore has agreed to provide transitional services to us, including
services related to:

  .  information technology support services;

  .  supply chain management;

                                      36

<PAGE>

  .  research and development;

  .  product order administration;

  .  customer support;

  .  manufacture of membranes;

  .  product distribution; and

  .  buildings and facilities, including office and manufacturing space.

   Although Millipore is contractually obligated to provide us with these
services, these services may not be provided at the same level as when we were
part of Millipore, and we may not be able to obtain the same benefits. These
transitional service arrangements generally have a term of five years following
the separation in the case of manufacturing and research services and one year
following the separation in most other cases. After the expiration of these
various arrangements, we may not be able to replace the transitional services
or enter into appropriate leases or other agreements in a timely manner or on
terms and conditions, including cost, as favorable as those we will receive
from Millipore. In particular, the manufacture of membranes involves the use of
proprietary processes and equipment that belong to Millipore. As a result,
after the expiration of the membrane manufacture agreement, we must acquire or
design our own manufacturing equipment and develop our own processes to replace
these proprietary processes and equipment.

   These agreements were made in the context of a parent-subsidiary
relationship and were negotiated in the overall context of our separation from
Millipore. The prices charged to us under these agreements may be lower than
the prices that we may be required to pay third parties for similar services or
the costs of similar services if we undertake them ourselves and accordingly,
following the expiration of our agreements with Millipore, our costs to procure
these services may increase.

Our directors and executive officers may have conflicts of interest because of
their ownership of Millipore common stock and because one is also a director
and non-executive chairman of Millipore.

   Many of our directors and executive officers have a substantial amount of
their personal financial portfolios in Millipore common stock and options to
purchase Millipore common stock. In addition, their unvested options to
purchase Millipore common stock may not convert into options to purchase our
common stock if the distribution does not occur. Ownership of Millipore common
stock by our directors and officers after our separation from Millipore could
create, or appear to create, potential conflicts of interest when directors and
officers are faced with decisions that could have different implications for
Millipore and us. In addition, C. William Zadel, our Chairman and Chief
Executive Officer and one of our directors, is also the non-executive chairman
and a director of Millipore. He will have obligations to both companies and may
have conflicts of interest with respect to matters potentially or actually
involving or affecting us, such as acquisitions and other corporate
opportunities that may be suitable for both Millipore and us. Because our
certificate of incorporation provides, in accordance with Section 122(17) of
the Delaware General Corporation Law, that we have renounced any interest in
future business opportunities that are presented to Millipore, its subsidiaries
other than us, or our officers or directors who are also employees or directors
of Millipore or its subsidiaries other than us at the time the opportunity is
presented, these conflicts may not ultimately be resolved on favorable terms
for us. In addition, because Section 122(17) of the Delaware General
Corporation Law was only recently enacted, there is no case law testing the
statutory provision and little other guidance interpreting it. As a result, the
Delaware courts may interpret the statute in the future in a manner not
anticipated by Millipore or us or the statute may be modified or amended in the
future in a manner not anticipated by Millipore or us.

                                      37

<PAGE>

We may have potential business conflicts of interest with Millipore with
respect to our past and ongoing relationships and, because of Millipore's
controlling ownership, we may not resolve these conflicts on the most favorable
terms to us.

   Conflicts of interest may arise between Millipore and us in a number of
areas relating to our past and ongoing relationships, including:

  .  labor, tax, employee benefit, intellectual property, indemnification and
     other matters arising from our separation from Millipore;

  .  employee retention and recruiting;

  .  the sale or distribution by Millipore of all or any portion of its
     ownership interest in us;

  .  the nature, quality and pricing of transitional services Millipore has
     agreed to provide us;

  .  business opportunities that may be attractive to both Millipore and us; and

  .  the terms of the non-competition provisions contained in the separation
     agreements between Millipore and us, which govern Millipore's ability to
     compete with us.

   We may not be able to resolve any potential conflicts, and even if we do,
the resolution may be less favorable than if we were dealing with an
unaffiliated party. The agreements we have entered into with Millipore may be
amended upon agreement between the parties. While we are controlled by
Millipore, Millipore may be able to require us to agree to amendments to these
agreements that may be less favorable to us than the current terms of the
agreements.

Our ability to engage in acquisitions and other strategic transactions using
our stock is subject to limitations because of the federal income tax
requirements for a tax-free distribution.

   For the distribution of our stock by Millipore to qualify as tax-free to
Millipore and its shareholders, Millipore must own at least 80% of the voting
power of our voting stock at the time of the distribution. In order to satisfy
the requirements for a tax-free distribution, we may not issue additional stock
prior to the distribution if it would reduce Millipore's voting power below
this 80% threshold. Thus, before the distribution, we may issue to persons
other than Millipore only a limited amount of our stock in acquisitions or
otherwise without affecting the tax-free status of the distribution. In
addition, for the distribution of our stock by Millipore to qualify as tax-free
to Millipore, there must not be a change in ownership of 50% or more in either
the voting power or value of either our stock or Millipore's stock that is
considered to be part of a plan or a series of related transactions related to
Millipore's intended distribution of our stock to its shareholders. For this
purpose, a change in ownership may include the issuance of our common stock or
Millipore's common stock in acquisitions and other similar strategic
transactions or for compensation of employees and others. If there is a direct
or indirect acquisition of our stock or Millipore's stock by one or more
persons during the four-year period beginning two years prior to and ending two
years after the distribution, it will be presumed to be part of a plan or a
series of related transactions related to Millipore's intended distribution of
our stock, and the distribution will be taxable to Millipore unless the
presumption is successfully rebutted. The direct or indirect acquisition of our
stock can include open market transactions. As a result, if within two years of
the distribution any person or group of persons acting pursuant to a
coordinated plan acquires 50% or more of our common stock, including through
open market transactions, that is part of a plan or series of related
transactions with the distribution by Millipore of our common stock, the
distribution will be taxable to Millipore. Pursuant to our tax sharing
agreement with Millipore, we may be responsible for the tax imposed on
Millipore if the distribution fails to qualify as tax-free. For the above
reasons, we are limited in our ability to use our stock for acquisitions and
other similar strategic transactions or for compensation of employees and
others. Many of our competitors have issued their stock to complete
acquisitions, to expand their product offerings and speed the development of
new technology, and to attract and retain employees and other key personnel.
Therefore, these competitors may have a significant competitive advantage over
us.

                                      38

<PAGE>

We may be responsible for income tax liabilities that relate to the proposed
distribution of shares of our common stock by Millipore and for other tax
liabilities.

   Millipore has received a tax ruling from the IRS to the effect that the
distribution will qualify as a tax-free distribution for U.S. federal income
tax purposes. The tax ruling is binding on the IRS, and can be relied upon by
Millipore provided that the factual representations and assumptions made in
Millipore's request are true. We are not aware of any facts or circumstances
that would cause such representations and assumptions to be untrue. Our tax
sharing agreement with Millipore provides that we will be responsible for
certain taxes imposed on Millipore, us or our respective subsidiaries if (i) we
or one or more of our shareholders are responsible for the distribution's
failure to qualify for tax-free treatment, or (ii) the distribution of our
shares subsequently becomes taxable to Millipore as a result of a change of
ownership of 50% or more of the voting power or value of our stock. The process
for determining whether a change of ownership has occurred under the tax rules
is complex. If we do not carefully monitor our compliance with these rules we
might inadvertently cause or permit a change of ownership to occur, triggering
our obligation to indemnify Millipore pursuant to the tax sharing agreement. In
addition, our obligation to indemnify Millipore in the event that a change of
ownership causes the distribution not to be tax-free could discourage or
prevent a third party from making a proposal to acquire our company. If the
distribution by Millipore was determined to be taxable, the U.S. federal income
tax payable by Millipore as a result of the distribution for which we have
agreed to indemnify Millipore would be equal to 35% of the difference between
the market value of the distributed stock on the date of the distribution and
the tax basis of such stock. Assuming a market value of $16.00 per share for
the distributed stock, the U.S. federal income tax payable by Millipore would
equal approximately $128.3 million. If we were required to pay any of the taxes
described above, the payment would significantly harm our business, financial
position, results of operations and cash flow. In addition, under the tax
sharing agreement that we entered into with Millipore, we are responsible for
tax liabilities and adjustments with respect to those Millipore foreign
subsidiaries which we acquired pursuant to our separation from Millipore for
periods prior to that separation. As we operate independently of Millipore we
may adopt tax strategies different from those Millipore has followed which
could impact our tax liability.

We have agreed to convert the unvested Millipore stock options held by our
officers and employees as of the distribution date into options to purchase
shares of our common stock at a conversion rate based on the then market prices
of the shares and any significant increase in the price of Millipore's common
stock or decrease in our stock price prior to the distribution date could
result in additional dilution to shareholders purchasing shares in this
offering.

   Many of our officers and employees have unvested options to purchase
Millipore common stock that will convert into options to purchase our common
stock at the time of the distribution. These options will be converted using a
formula that is based on the relative values of Millipore common stock and our
common stock at the time of the conversion, which we expect to be at the time
the distribution occurs. Because our conversion obligation depends on the value
of these stocks, the number of our shares to be issued cannot be determined at
this time. Our obligation could result in a significant number of our shares
being subject to substituted awards, depending on the values of Millipore
common stock and our common stock at the time of conversion.

                                      39

<PAGE>

   RISKS RELATED TO THE SECURITIES MARKETS AND OWNERSHIP OF OUR COMMON STOCK

Substantial sales of common stock, including sales by index funds, may occur in
connection with the distribution of our stock by Millipore, which could cause
our stock price to decline.

   If Millipore distributes all of the shares of our common stock that it owns
to Millipore shareholders after this offering, substantially all of these
shares will be eligible for immediate resale in the public market. We are
unable to predict whether significant amounts of common stock will be sold in
the open market in anticipation of, or following, this distribution, or by
Millipore if the distribution does not occur. We are also unable to predict
whether a sufficient number of buyers will be in the market at that time. A
portion of Millipore's common stock is held by index funds tied to the Standard
& Poor's 500 Index or other stock indices. If our stock is not included in
these indices at the time of Millipore's distribution of our common stock,
these index funds will be required to sell our stock that they receive in the
distribution. As of December 31, 2001, index funds held less than 5% of
Millipore's common stock. Some other institutional shareholders are not allowed
by their charters to hold stock of companies that do not pay dividends. Because
we currently do not intend to pay dividends, we expect that these shareholders
will sell the shares of our common stock distributed to them. As of December
31, 2001, approximately 85% of Millipore's common stock was held by
institutional investors, including index funds. Any sales of substantial
amounts of our common stock in the public market, or the perception that such
sales might occur, whether as a result of the distribution or otherwise, could
cause the market price of our common stock to decrease. Millipore has the sole
discretion, subject to a lock-up agreement with the underwriter of our initial
public offering (which expired on February 6, 2002), to determine the timing,
structure and terms of its distribution of our common stock, all of which may
also affect the level of market transactions in our common stock.

Our securities have had only a limited market, and we cannot assure you that
our stock price will not decline.

   There has been only a limited public market for our common stock, and an
active public market for our common stock may not develop or be sustained after
the distribution of our stock by Millipore to its shareholders. The market
price of our common stock may be subject to significant fluctuations after this
offering. Among the factors that could affect our stock price are:

  .  quarterly variations in our operating results;

  .  changes in revenue or earnings estimates or publication of research
     reports by analysts;

  .  speculation in the press or investment community;

  .  strategic actions by us or our competitors, such as acquisitions or
     restructurings;

  .  actions by institutional shareholders or by Millipore prior to its
     distribution of our stock;

  .  general market conditions; and

  .  domestic and international economic factors unrelated to our performance.

   The stock markets in general, and the markets for high technology stocks in
particular, have experienced extreme volatility that has often been unrelated
to the operating performance of particular companies. These broad market
fluctuations may cause the trading price of our common stock to decrease.

Provisions in our charter documents, Delaware law, the Internal Revenue Code
relating to Millipore's distribution of our common stock and our shareholder
rights plan may delay or prevent an acquisition of us, which could decrease the
value of your shares.

   Our certificate of incorporation and bylaws, Delaware law and our
shareholder rights plan contain provisions that could make it harder for a
third party to acquire us without the consent of our board of directors,
although these provisions have little significance while we are controlled by
Millipore. These provisions include

                                      40

<PAGE>

a classified board of directors and limitations on actions by our shareholders
by written consent. In addition, our board of directors has the right to issue
preferred stock without shareholder approval, which could be used to dilute the
stock ownership of a potential hostile acquirer. Our shareholder rights plan
will permit our shareholders to purchase shares of our common stock at a 50%
discount upon the occurrence of specified events, including the acquisition by
anyone of 15% or more of our common stock, unless such event is approved by our
board of directors. Delaware law also imposes restrictions on mergers and other
business combinations between us and any holder of 15% or more of our
outstanding common stock. Although we believe these provisions provide for an
opportunity to receive a higher bid by requiring potential acquirers to
negotiate with our board of directors, these provisions apply even if the offer
may be considered beneficial by shareholders. If a change of control or change
in management is delayed or prevented, the market price of our common stock
could suffer. In addition, an acquisition or further issuance of our common
stock could trigger the application of Section 355(e) of the Internal Revenue
Code or prevent Millipore from distributing "control" of us as defined in
Section 368(c) of the Internal Revenue Code. Under the tax sharing agreement,
we would be required to indemnify Millipore for the resulting tax and this
indemnity obligation might discourage, delay or prevent a change of control
that shareholders may consider favorable.

Your percentage ownership in us may be diluted by future issuances of capital
stock, which could reduce your influence over matters on which shareholders
vote.

   Our board of directors has the authority, without action or vote of our
shareholders, to issue all or any part of our authorized but unissued shares.
These issuances would dilute your percentage ownership interest, which will
have the effect of reducing your influence over matters on which our
shareholders vote. In addition, if the issuances are made at prices that
reflect a discount from the then current trading price of our common stock,
your interest in the book value of our common stock might be diluted.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

   The information called for by this item is set forth under the heading
"Market Risk" in Management's Discussion and Analysis contained in Item 7 above
which information is hereby incorporated by reference.

Item 8.  Financial Statements and Supplementary Data.

   The information called for by this item is set forth in the Consolidated and
Combined Financial Statements and Schedule covered by the Report of Independent
Accounts at the end of this report, commencing at the pages indicated below:

<TABLE>
<S>                                                                                                <C>
Consolidated and Combined Statements of Operations for the years ended December 31, 2001, 2000 and
  1999............................................................................................  F-2
Consolidated and Combined Balance Sheets at December 31, 2001 and 2000............................  F-3
Consolidated and Combined Statements of Shareholders' Equity and Comprehensive Income (Loss) for
  the years ended December 31, 2001, 2000 and 1999................................................  F-4
Consolidated and Combined Statements of Cash Flows for the years ended December 31, 2001, 2000 and
  1999............................................................................................  F-5
Notes to Consolidated and Combined Financial Statements...........................................  F-6
Report of Independent Accountants................................................................. F-29
Quarterly Results (Unaudited)..................................................................... F-30
Financial Statement Schedule for the years ended December 31, 2001, 2000 and 1999................. F-31
</TABLE>

   All of the foregoing Consolidated and Combined Financial Statements and
Schedule are hereby incorporated in this Item 8 by reference.

                                      41

<PAGE>

Item 9.  Disagreements on Accounting and financial Disclosure.

   This term is not applicable.

                                   PART III

Item 10.  Directors and Executive Officers of Mykrolis.

   The information called for by this item with respect to registrant's
directors and compliance with Section 16(a) of the Securities Exchange Act of
1934 as amended is set forth under the caption "Management and Election of
Directors--Nominees for Election as Directors" in Mykrolis' definitive Proxy
Statement for Mykrolis' Annual Meeting of Shareholders to be held on April 26,
2002, and to be filed with the Securities and Exchange commission on or after
March 20, 2002, which information is hereby incorporated herein by reference.

   Information called for by this item with respect to registrant's executive
officers is set forth under "Executive Officers of Millipore" in Item 1 of this
report.

Item 11.  Executive Compensation.

   The information called for by this item is set forth under the caption
"Management and Election of Directors--Executive Compensation" in Mykrolis'
definitive Proxy Statement for Mykrolis' Annual Meeting of Shareholders to be
held on April 26, 2002, and to be filed with the Securities and Exchange
Commission on or about March 20, 2002, which information is hereby incorporated
herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

   The information called for by this item is set forth under the caption
"Ownership of Mykrolis Common Stock" in Mykrolis' definitive Proxy Statement
for Mykrolis' Annual Meeting of Shareholders to be held April 26, 2002, and to
be filed with the Securities and Exchange Commission on or about March 20,
2002, which information is hereby incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions.

   The information called for by this item with respect to registrant's
directors relationships and related transactions is set forth under the caption
"Management and Election of Directors--Nominees for Election as Directors" in
Mykrolis' definitive Proxy Statement for Mykrolis' Annual Meeting of
Shareholders to be held on April 26, 2002, and to be filed with the Securities
and Exchange Commission on or about March 20, 2002, which information is hereby
incorporated herein by reference.

                                      42

<PAGE>

                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)

   1. Financial Statements.

   The Consolidated and Combined Financial Statements listed under Item 8 of
this report and in the Index to Financial Statements and Supplementary Data on
page F-1 of this report which is incorporated by reference.

   2. Financial Statements Schedules.

   The Financial Statement Schedule listed under Item 8 of this report and in
the Index to Financial Statements and Supplementary Data on page F-1 of this
report which is incorporated by reference.

   3. List of Exhibits.

      A. The following exhibits are incorporated by reference:

<TABLE>
<CAPTION>
Reg. S-K
  Item
 601(b)                 Document Incorporated               Referenced Document on file with the Commission
Reference ------------------------------------------------- -----------------------------------------------
<C>       <S>                                               <C>
  (2)     Form of Master Separation and Distribution        Exhibit 2.1 to Form S-1 Registration Statement
          Agreement.                                        (No. 333-57182)

          Form of General Assignment and Assumption         Exhibit 2.2 to Form S-1 Registration Statement
          Agreement                                         (No. 333-57182)

  (3)     Restated Certificate of Incorporation of Mykrolis Exhibit 3.1 to Form S-1 Registration Statement
          Corporation                                       (No. 333-57182)

          Amended and Restated By-laws of Mykrolis          Exhibit 3.2 to Form S-1 Registration Statement
          Corporation                                       (No. 333-57182)

          Form of certificate representing shares of        Exhibit 3.3 to Form S-1 Registration Statement
          Common Stock, $.01 par value per share            (No. 333-57182)

          Form of Common Stock Rights Agreement             Exhibit 1 to Form 8-K Current Report, filed
                                                            December 10, 2001 [Commission File
                                                            No. 001-1611]

          Form of Common Stock Purchase Right               Exhibit 2 to Form 8-K Current Report, filed
          Certificate (included as Annex I to the Form of   December 10, 2001 [Commission File
          Common Stock Rights Agreement)                    No. 001-1611]

          Summary of Common Stock Purchase Rights           Exhibit 3 to Form 8-K Current Report, filed
          (included as Annex II to the Form of Common       December 10, 2001 [Commission File
          Stock Rights Agreement)                           No. 001-1611]

  (10)    Form of 2001 Equity Incentive Plan*               Exhibit 10.1 to Form S-1 Registration Statement
                                                            (No. 333-57182)

          Form of 2001 Non-Employee Director Stock          Exhibit 10.2 to Form S-1 Registration Statement
          Option Plan*                                      (No. 333-57182)

          Form of 2001 Employee Stock Purchase Plan         Exhibit 10.3 to Form S-1 Registration Statement
                                                            (No. 333-57182)

          Form of Indemnification Agreement*                Exhibit 10.4 to Form S-1 Registration Statement
                                                            (No. 333-57182)

          Lease Agreement dated November 25, 1985           Exhibit 10.5 to Form S-1 Registration Statement
          between Roger G. Little, Trustee of SPI Trust,    (No. 333-57182)
          and Millipore Corporation relating to facilities
          located at Patriots Park, Bedford, Massachusetts
</TABLE>
--------
* A "management contract or compensatory plan"

                                      43

<PAGE>

<TABLE>
<CAPTION>
Reg. S-K
  Item
 601(b)
Reference              Document Incorporated              Referenced Document on file with the Commission
---------  ---------------------------------------------- ------------------------------------------------
<C>        <S>                                            <C>

    10     Lease Agreement, dated December 19, 1997,      Exhibit 10.6 to Form S-1 Registration Statement
  [Cont'd] between EBP3, Ltd. and Millipore Corporation   (No. 333-57182)
           relating to facilities located in Allen, Texas

           Master Patent Assignment                       Exhibit 10.7 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Master Patent License Agreement                Exhibit 10.8 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Master Patent Grantback License Agreement      Exhibit 10.9 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Master Trademark Assignment                    Exhibit 10.10 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Master Trademark Assignment                    Exhibit 10.10 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Master Trademark License Agreement             Exhibit 10.11 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Master Invention Disclosure Assignment         Exhibit 10.12 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Master Trade Secret and Know-How Agreement     Exhibit 10.13 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Tax Sharing Agreement                          Exhibit 10.14 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Employee Matters Agreement                     Exhibit 10.15 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Master Transitional Services Agreement         Exhibit 10.16 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Reorganization of Operations Outside the U.S.  Exhibit 10.17 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Membrane Manufacture and Supply Agreement      Exhibit 10.18 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Research Agreement                             Exhibit 10.19 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Product Distribution Agreement                 Exhibit 10.20 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Millipore Contract Manufacturing Agreement     Exhibit 10.21 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Mykrolis Contract Manufacturing Agreement      Exhibit 10.22 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Form of Separation Note                        Exhibit 10.23 to Form S-1 Registration Statement
                                                          (No. 333-57182)

           Separation Revolving Credit Agreement          Exhibit 10.24 to Form S-1 Registration Statement
                                                          (No. 333-57182)

   (21)    Subsidiaries of Mykrolis Corporation           Exhibit 21.1 to Form S-1 Registration Statement
                                                          (No. 333-57182)
</TABLE>

                                      44

<PAGE>

   B. The following Exhibits are filed as exhibits to this Amendment Report on
Form 10-K:


<TABLE>
<CAPTION>
 Reg. S-K
Item 601(b)
 Reference                           Documents Filed Herewith
 ---------                           ------------------------
<C>         <S>
   (10)     Mykrolis Corporation Amended and Restated 2001 Employee Stock Purchase Plan

   (24)     Power of Attorney
</TABLE>

(b) Reports on Form 8-K.

   On December 10, 2001 registrant filed a Form 8-K Current Report reporting
that:

   (i) on November 29, 2001 Mykrolis Corporation executed a Common Stock Rights
       Agreement with Equiserve Trust Company NA., as rights agent;

  (ii) on November 29, 2001 the Board of Directors of Mykrolis Corporation
       declared a dividend of one purchase right for each share of Common Stock
       of Mykrolis Corporation outstanding on December 31, 2001; and

 (iii) on December 10, 2001 registrant terminated discussions with Fleet
       National Bank and Fleet Securities, Inc. with respect to a short term
       secured revolving credit facility to provide for borrowings of up to
       $20,000,000.

                                      45

<PAGE>

                                  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.

                                          MYKROLIS CORPORATION

Dated: February 15, 2002
                                          By /s/ C. William Zadel
                                             -------------------------------
                                            C. William Zadel, Chairman, Chief
                                                    Executive Officer,
                                                      and Director

   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 capacity and on the dates indicated.

          Signature                       Title                   Date
          ---------                       -----                   ----

    /S/ C. WILLIAM ZADEL*     Chairman, Chief Executive     February 15, 2002
-----------------------------   Officer, and Director
      C. William Zadel

      /S/ BERTRAND LOY        Vice President, Treasurer and February 15, 2002
-----------------------------   Chief Financial Officer
        Bertrand Loy

       /S/ DONNA WARGO        Corporate Controller and      February 15, 2002
-----------------------------   Chief Accounting Officer
         Donna Wargo

     MICHAEL A. BRADLEY*      Director                      February 15, 2002
-----------------------------
     Michael A. Bradley

     ROBERT E. CALDWELL*      Director                      February 15, 2002
-----------------------------
     Robert E. Caldwell

     MICHAEL P.C. CARNS*      Director                      February 15, 2002
-----------------------------
     Michael P.C. Carns

    DANIEL W. CHRISTMAN*      Director                      February 15, 2002
-----------------------------
     Daniel W. Christman

       THOMAS O. PYLE*        Director                      February 15, 2002
-----------------------------
       Thomas O. Pyle

By*
    /S/ PETER W. WALCOTT
-----------------------------
      Peter W. Walcott,
      Attorney-in-Fact

                                      46

<PAGE>

                             MYKROLIS CORPORATION

             INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<S>                                                                                                <C>
Consolidated and Combined Statements of Operations for the years ended December 31, 2001, 2000 and
  1999............................................................................................  F-2

Consolidated and Combined Balance Sheets at December 31, 2001 and 2000............................  F-3

Consolidated and Combined Statements of Shareholders' Equity and Comprehensive Income (Loss) for
  the years ended December 31, 2001, 2000 and 1999................................................  F-4

Consolidated and Combined Statements of Cash Flows for the years ended December 31, 2001, 2000 and
  1999............................................................................................  F-5

Notes to Consolidated and Combined Financial Statements...........................................  F-6

Report of Independent Accountants................................................................. F-29

Quarterly Results (Unaudited)..................................................................... F-30

Financial Statement Schedule for the years ended December 31, 2001, 2000 and 1999................. F-31
</TABLE>

                                      F-1

<PAGE>

                             MYKROLIS CORPORATION

              CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                            Year ended December 31,
                                                                     ------------------------------------
                                                                        2001          2000        1999
                                                                      --------      --------    --------
                                                                     (In thousands, except per share data
<S>                                                                  <C>           <C>         <C>
Net sales........................................................... $215,274      $355,540    $206,345
Cost of sales.......................................................  137,621       174,545     107,154
                                                                      --------      --------    --------
   Gross profit.....................................................   77,653       180,995      99,191
Selling, general and administrative expenses........................   80,724        96,469      75,052
Research and development expenses...................................   19,837        23,175      19,309
Restructuring and other charges.....................................   17,478          (320)     (1,221)
                                                                      --------      --------    --------
   Operating income (loss)..........................................  (40,386)       61,671       6,051
Other expense, net..................................................   (1,096)       (1,395)        (83)
                                                                      --------      --------    --------
Income (loss) before income taxes...................................  (41,482)       60,276       5,968
Income tax expense..................................................   26,145        22,905       2,685
                                                                      --------      --------    --------
Net income (loss)................................................... $(67,627)     $ 37,371    $  3,283
                                                                      --------      --------    --------
Basic and diluted earnings (loss) per share......................... $  (1.92)     $   1.15    $   0.10
Shares used in computing basic and diluted earnings (loss) per share   35,262        32,500      32,500
</TABLE>



 The accompanying notes are an integral part of the consolidated and combined
                             financial statements

                                      F-2

<PAGE>

                             MYKROLIS CORPORATION

                   CONSOLIDATED AND COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                             December 31,
                                                                                         -------------------
                                                                                           2001       2000
                                                                                         --------   --------
                                                                                         (In thousands except
                                                                                             share data)
                                         ASSETS
<S>                                                                                      <C>        <C>
Current assets:
Cash and cash equivalents............................................................... $ 82,831   $     --
Accounts receivable (less allowance for doubtful accounts of $1,670 in 2001 and $1,497
  in 2000)..............................................................................   34,817     95,248
Inventories.............................................................................   60,436     62,640
Income tax receivable (note 7)..........................................................    9,000         --
Deferred income taxes...................................................................      924      8,554
Other current assets....................................................................    1,348      1,266
                                                                                         --------   --------
       Total current assets.............................................................  189,356    167,708
Property, plant and equipment, net......................................................   69,100     73,784
Deferred income taxes...................................................................    4,872     22,697
Goodwill (less accumulated amortization of $3,845 in 2001 and $2,929 in 2000)...........   14,454     15,620
Other intangible assets (less accumulated amortization of $20,417 in 2001 and $16,995 in
  2000).................................................................................    7,288     10,655
Other assets............................................................................    4,420      8,567
                                                                                         --------   --------
       Total assets..................................................................... $289,490   $299,031
                                                                                         --------   --------

                          LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable--Millipore Corporation.............................................. $  1,928   $     --
   Accounts payable.....................................................................    5,402     20,574
   Accrued income taxes.................................................................    9,616         --
   Accrued expenses.....................................................................   18,884     17,097
                                                                                         --------   --------
       Total current liabilities........................................................   35,830     37,671
Other liabilities.......................................................................   10,113     14,871
Commitments and contingencies (note 13)
Shareholders' equity:
   Shareholder's net investment.........................................................       --    253,732
   Preferred stock, par value $.01 per share, 5,000,000 shares authorized; no shares
     issued and outstanding.............................................................       --         --
   Common stock, par value $.01 per share, 250,000,000 shares authorized; 39,500,000
     shares issued and outstanding......................................................      395         --
   Additional paid-in capital...........................................................  326,618         --
   Accumulated deficit..................................................................  (61,590)        --
   Accumulated other comprehensive loss.................................................  (21,876)    (7,243)
                                                                                         --------   --------
       Total shareholders' equity.......................................................  243,547    246,489
                                                                                         --------   --------
       Total liabilities and shareholders' equity....................................... $289,490   $299,031
                                                                                         --------   --------
</TABLE>

 The accompanying notes are an integral part of the consolidated and combined
                             financial statements

                                      F-3

<PAGE>

                             MYKROLIS CORPORATION

         CONSOLIDATED AND COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
                        AND COMPREHENSIVE INCOME (LOSS)

                                (In thousands)

<TABLE>
<CAPTION>
                                           Common
                                           Shares
                                        -------------
                                                                                            Accumulated
                                                      Additional Shareholder's                 Other         Total
                                                       Paid-In        Net      Accumulated Comprehensive Shareholders'
                                        Shares Amount  Capital    Investment     Deficit   Income (Loss)    Equity
                                        ------ ------ ---------- ------------- ----------- ------------- -------------
<S>                                     <C>    <C>    <C>        <C>           <C>         <C>           <C>
Balance December 31, 1998..............           --         --    $ 184,780          --     $ (2,427)     $182,353
Net change in unearned compensation....           --         --         (295)         --           --          (295)
Net transfers from Millipore
 Corporation...........................           --         --        5,632          --           --         5,632
Comprehensive income:
   Net income..........................           --         --        3,283          --           --         3,283
   Foreign currency translations.......           --         --           --          --        6,685         6,685
                                        ------  ----   --------    ---------    --------     --------      --------
Comprehensive income

Balance December 31, 1999..............           --         --      193,400          --        4,258       197,658
Net change in unearned compensation....           --         --        1,107          --           --         1,107
Net transfers from Millipore
 Corporation...........................           --         --       21,854          --           --        21,854
Comprehensive income:
   Net income..........................           --         --       37,371          --           --        37,371
   Foreign currency translations.......           --         --           --          --      (11,501)      (11,501)
                                        ------  ----   --------    ---------    --------     --------      --------
Comprehensive income

Balance December 31, 2000..............           --         --      253,732          --       (7,243)      246,489
Net change in unearned compensation
 and Other stock-based compensation....           --        503        3,240          --           --         3,743
Net transfers from (to) Millipore
 Corporation...........................           --      1,850       (1,141)         --           --           709
Payment of separation note to Millipore
 Corporation...........................           --    (19,095)          --          --           --       (19,095)
Transfer to common stock and
 additional Paid-in capital............ 32,500   325    249,469     (249,794)         --           --            --
Issuance of common stock-net of
 expenses..............................  7,000    70     93,891           --          --           --        93,961
Comprehensive loss:
   Net loss............................           --         --       (6,037)    (61,590)          --       (67,627)
   Foreign currency translations.......           --         --           --          --      (14,633)      (14,633)
                                        ------  ----   --------    ---------    --------     --------      --------
Comprehensive loss

Balance December 31, 2001.............. 39,500  $395   $326,618    $      --    $(61,590)    $(21,876)     $243,547
                                        ======  ====   ========    =========    ========     ========      ========
</TABLE>
<TABLE>
<CAPTION>




                                            Total
                                        Comprehensive
                                        Income (Loss)
                                        -------------
<S>                                     <C>
Balance December 31, 1998..............
Net change in unearned compensation....
Net transfers from Millipore
 Corporation...........................
Comprehensive income:
   Net income..........................   $  3,283
   Foreign currency translations.......      6,685
                                          --------
Comprehensive income                         9,968
                                          ========
Balance December 31, 1999..............
Net change in unearned compensation....
Net transfers from Millipore
 Corporation...........................
Comprehensive income:
   Net income..........................     37,371
   Foreign currency translations.......    (11,501)
                                          --------
Comprehensive income                        25,870
                                          ========
Balance December 31, 2000..............
Net change in unearned compensation
 and Other stock-based compensation....
Net transfers from (to) Millipore
 Corporation...........................
Payment of separation note to Millipore
 Corporation...........................
Transfer to common stock and
 additional Paid-in capital............
Issuance of common stock-net of
 expenses..............................
Comprehensive loss:
   Net loss............................    (67,627)
   Foreign currency translations.......    (14,633)
                                          --------
Comprehensive loss                        $(82,260)
                                          ========
Balance December 31, 2001..............

</TABLE>


 The accompanying notes are an integral part of the consolidated and combined
                             financial statements

                                      F-4

<PAGE>

                             MYKROLIS CORPORATION

              CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 Year ended December 31,
                                                                              ----------------------------
                                                                                2001      2000      1999
                                                                              --------  --------  --------
                                                                                     (In thousands)
<S>                                                                           <C>       <C>       <C>
Cash flows from operating activities:
 Net income (loss)........................................................... $(67,627) $ 37,371  $  3,283
 Adjustments to reconcile net income (loss) to net cash provided by (used in)
   operating activities:
   (Income) loss on equity method investments................................      268     2,318       (34)
   Restructuring and other charges...........................................   17,478      (320)   (1,221)
   Depreciation and amortization.............................................   15,057    12,834    14,339
   Amortization of unearned compensation.....................................      595     1,177       571
   Deferred income taxes.....................................................   25,455    (2,230)    2,995
   Change in operating assets and liabilities:...............................
     Decrease (increase) in accounts receivable, net.........................   54,369   (35,298)  (25,884)
     Increase in inventories.................................................     (181)  (28,577)   (6,786)
   Increase in accounts payable--Millipore Corporation.......................    1,928        --        --
     (Decrease) increase in accounts payable.................................  (16,477)    3,626     8,505
     (Increase) decrease in other operating assets...........................   (6,550)     (326)      193
     (Decrease) increase in other operating liabilities......................   (6,214)     (623)    2,613
                                                                              --------  --------  --------
       Net cash provided by (used in) operating activities...................   18,101   (10,048)   (1,426)

Cash flows from investing activities:
 Additions to property, plant and equipment..................................  (10,516)  (11,806)   (4,206)
       Net cash used in investing activities.................................  (10,516)  (11,806)   (4,206)
Cash flows from financing activities:
 Borrowings under separation revolving credit agreement with Millipore
   Corporation...............................................................   27,512        --        --
 Payment of borrowings under separation revolving credit agreement with
   Millipore Corporation.....................................................  (27,512)       --        --
 Net proceeds from the issuance of common stock..............................   93,961        --        --
 Payment of separation note to Millipore Corporation.........................  (19,095)       --        --
 Net transfers from Millipore Corporation....................................      709    21,854     5,632
                                                                              --------  --------  --------
       Net cash provided by (used in) financing activities...................   75,575    21,854     5,632
Effect of foreign exchange rates on cash and cash equivalents................     (329)       --        --
                                                                              --------  --------  --------
Net increase in cash and cash equivalents....................................   82,831        --        --
Cash and cash equivalents at beginning of period.............................       --        --        --
                                                                              --------  --------  --------
Cash and cash equivalents at end of period................................... $ 82,831  $     --  $     --
Supplemental disclosure of cash flow information:
Cash paid during the year for :..............................................
Income Taxes................................................................. $ 10,145  $     --  $     --
                                                                              --------  --------  --------
</TABLE>

                                      F-5

<PAGE>

                             MYKROLIS CORPORATION

            NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

                (In thousands except share and per share data)

1.  Background and Basis of Presentation

  Background

   On October 3, 2000, Millipore Corporation ("Millipore") announced its plan
to spin-off as a separate company, Millipore's microelectronics business which
serves the semiconductor industry and certain related industries with products
needed to manufacture semiconductor devices as well as a range of other
products. On October 16, 2000, Mykrolis Corporation (the "Company") was
incorporated in Delaware as a wholly-owned subsidiary of Millipore to receive
Millipore's microelectronics business and to be the spun off company.
Initially, 10,000 shares of the Company's common stock $.01 par value were
authorized and issued. In March 2001, the Company adopted an Amended and
Restated Certificate of Incorporation which, among other things, increased the
authorized capital of the Company to 250,000,000 shares of common stock, $0.01
par value and 5,000,000 shares of preferred stock, $.01 par value per share. On
March 31, 2001, Millipore transferred to the Company substantially all of the
assets and liabilities associated with its microelectronics business (the
"Separation") except for certain pension and retirement liabilities that will
be transferred at the spin-off distribution. In addition, as it was impractical
in some jurisdictions to transfer certain account balances to different legal
entities at the Separation date, Millipore retained certain of the Company's
accounts payable and accounts receivable balances and the Company assumed
certain of Millipore's accounts payable and accounts receivable balances. Prior
to the Separation the Company's business had been operated as a fully
integrated business unit of Millipore. On July 12, 2001, the Company's Board of
Directors declared a 3,250-for-1 stock split increasing the issued and
outstanding common stock to 32,500,000 shares, all of which were owned by
Millipore.

   On August 9, 2001 the Company completed its initial public offering ("IPO")
of 7,000,000 shares of Mykrolis common stock, representing approximately 17.7%
of the Company's 39,500,000 total shares of common stock outstanding. The
Company received net proceeds from the IPO of approximately $93,961, after
deducting underwriting commissions and offering expenses. The Company has
retained $75,000 of the net proceeds and paid the balance to Millipore as
repayment of amounts outstanding under certain notes due to Millipore in
connection with the Separation. After completion of the IPO, Millipore owned
approximately 82.3% of the Company's outstanding shares of common stock.
Millipore has announced that it intends to distribute the 32,500,000 shares of
the Company's common stock that it owns to Millipore shareholders through a
tax-free dividend (the "Distribution") on February 27, 2002. The Distribution
by Millipore is subject to conditions, which may not occur by the contemplated
time or at all (see Note 15--Subsequent Events).

  Basis of Presentation

   The combined financial statements for periods prior to March 31, 2001
include amounts that have been derived from the consolidated financial
statements and accounting records of Millipore using the historical results of
operations and historical basis of assets and liabilities of the Company's
business. Management believes the assumptions underlying the combined financial
statements are reasonable. However, the combined financial information included
herein may not necessarily reflect the Company's operating results, financial
position and cash flows in the future or what they would have been had the
Company been a separate, stand-alone entity during the periods presented.
Because a direct ownership relationship did not exist among all the various
units comprising the Company, Millipore's net investment in the Company is
shown as shareholders' equity in the combined financial statements prior to the
Separation. The Company began accumulating retained earnings (accumulated
deficit) on April 1, 2001, following the effective date of the Separation,
pursuant to which substantially all of the assets and liabilities of the
Company's business were transferred to the Company. Beginning April 1, 2001,
the Company's consolidated financial statements include all wholly-owned
subsidiaries and assets and liabilities of the Company. All material
intercompany transactions and balances between and among the Company's
subsidiaries have been eliminated.


                                      F-6

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


   Prior to April 1, 2001, Millipore allocated certain corporate expenses,
including centralized research and development, legal, accounting, employee
benefits, officers' salaries, facilities, insurance, information technology
services, distribution, treasury and other Millipore corporate and
infrastructure costs. These expense allocations were determined on a basis that
Millipore and the Company considered to be a reasonable assessment of the
utilization of services provided or the benefit received by the Company.
Effective April 1, 2001, the Company and Millipore entered into transition
service agreements for Millipore to provide specified functions and for the
Company to reimburse Millipore for the cost of providing these services. The
agreements do not necessarily reflect the costs of obtaining the services from
unrelated third parties or of the Company providing the applicable services
itself. However, management believes that purchasing these services from
Millipore provides the Company with an efficient means of obtaining these
services during the transition period. In addition, the Company has agreed to
provide transition services to Millipore, for which the Company will be
reimbursed at its cost.

   Millipore uses a centralized approach to cash management and the financing
of its operations. Prior to the Separation, cash deposits from the Company were
transferred to Millipore on a regular basis and netted against Millipore's net
investment. As a result, none of Millipore's cash, cash equivalents or debt at
the corporate level were allocated to the Company in the combined financial
statements at December 31, 2001. Changes in Millipore's net investment include
net earnings of the Company plus net cash transfers to or from Millipore. After
the Separation but prior to the IPO, the Company's cash deposits were netted
against the Separation Revolving Credit Agreement (see Note 12--Transactions
with Millipore).

2.  Summary of Significant Accounting Policies

  Principles of Consolidation and Combination

   The consolidated and combined financial statements include the accounts of
the Company. Intercompany balances and transactions have been eliminated.
Investments in affiliated companies that are 20%-50% owned entities are
accounted for under the equity method of accounting.

  Reclassifications


   Certain reclassifications have been made to prior year statements to conform
to the 2001 presentation.

  Use of Estimates

   The preparation of financial statements requires the Company to make
estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, the Company evaluates its
estimates, including those related to product returns, bad debts, inventories,
investments, intangible assets, income taxes, warranty obligations,
restructuring, pensions and other post-retirement benefits, and contingencies
and litigation. The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions.

  Translation of Foreign Currencies

   Assets and liabilities of the Company's foreign operations, for which the
local currency is the functional currency, are translated into U.S. dollars at
exchange rates prevailing on the balance sheet date. Revenues and

                                      F-7

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)

expenses are translated at the average exchange rates prevailing during the
year and elements of invested equity are translated at historical rates.
Foreign currency translation gains and losses relating to invested equity of
such operations are reported separately as a component of accumulated other
comprehensive income (loss) in shareholders' equity. The aggregate transaction
gains and losses are included in the consolidated and combined statements of
operations as a component of other expense, net.

  Cash and Cash Equivalents

   The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents. Cash equivalents are primarily
comprised of money market funds. The carrying amounts approximate fair value
due to the short maturities of these instruments.

   The Company's policy is to place its cash and cash equivalents with high
quality financial institutions to limit the amount of credit exposure.

  Inventories

   The Company values its inventories at lower of cost or market on a first-in,
first-out (FIFO) basis.

  Property, Plant and Equipment

   Property, plant and equipment is recorded at cost. Expenditures for
maintenance and repairs are charged to expense while the costs of significant
improvements, which extend the life of the underlying asset, are capitalized.
Assets are depreciated primarily using straight-line methods. Upon retirement
or sale, the cost of assets disposed and the related accumulated depreciation
are eliminated and related gains or losses are reflected in income.

   The estimated useful lives of the Company's depreciable assets are as
follows:

<TABLE>
<S>                            <C>
Leasehold Improvements........ Shorter of the life of the lease or the improvement
Buildings and Improvements.... 10-40 Years
Production and Other Equipment 3-15 Years
Software...................... 3 years
</TABLE>

  Goodwill and Other Intangibles

   Goodwill represents the excess of the purchase price over the fair value of
net identifiable assets acquired and liabilities assumed and is amortized on a
straight-line basis over an estimated useful life of 20 years. Other intangible
assets consist primarily of patents, acquired technology, trade names and
licenses. These assets are recorded at cost and amortized on a straight-line
basis over periods ranging from 3 to 12 years. Goodwill and other intangible
assets primarily resulted from the Company's acquisition of Tylan General, Inc.
in January 1997.

  Long-Lived Assets

   On a periodic basis the value of property, plant and equipment and
intangible assets is reviewed to determine if an impairment has taken place due
to changed business conditions or technological obsolescence. When such events
occur, the Company compares the carrying amount of the assets to undiscounted
expected future cash flows. The amount of such impairment if any, is computed
by comparing the discounted future cash

                                      F-8

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)

flows associated with the underlying intangible asset to the current net book
value. If impairment exists, the net book value of the intangible asset is
reduced accordingly .

  Income Taxes

   Historically, the Company's results of operations have been included in
Millipore's consolidated income tax returns. Income tax expense (benefit)
reported in the Company's consolidated and combined statements of operations
has been calculated on a separate tax return basis. However, Millipore managed
its tax position for the benefit of its entire portfolio of businesses and its
tax strategies are not necessarily reflective of the tax strategies that the
Company would have followed or will follow as a separate stand-alone company.

   The asset and liability approach is used to recognize deferred tax assets
and liabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of assets and
liabilities. The Company provides a valuation allowance against net deferred
tax assets if, based on the available evidence, it is more likely than not that
some or all of the deferred tax assets will not be realized.

  Revenue Recognition

   Net sales consist of revenue primarily from sales of products net of trade
discounts and allowances. Revenue from sales of products is recognized when
evidence of an arrangement exists, contractual obligations have been satisfied,
title and risk of loss have been transferred to the customer and collection of
the resulting receivable is reasonably assured. Revenue from services is
recognized when the services are provided.

  Research and Development Costs

   Research and development costs are charged to expense as incurred.

  Other Income (Expense)

   Other income (expense) includes foreign currency transaction exchange gains
and losses, income and losses on investments in 20%-50% owned entities
accounted for under the equity method and royalty income from Nihon Millipore
(see Note 12--Transactions with Millipore). On a periodic basis, the value of
equity method and other investments is reviewed to determine if impairment has
taken place.

  Earnings (Loss) Per Share

   Basic earnings (loss) per share are calculated by dividing net income (loss)
by the weighted average number of common shares outstanding during the
reporting period. Diluted earnings per share (diluted EPS) reflect the
potential dilutive effect, calculated using the treasury stock method, of
additional common shares that are issuable upon exercise of outstanding stock
options.

   The diluted share base for the year ended December 31, 2001 excluded the
potential dilutive effect related to outstanding stock options, calculated
using the treasury stock method, due to their anti-dilutive effect as a result
of the Company's net loss.

                                      F-9

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


   As discussed in Note 1, "Background and Basis of Presentation," the Company
effected a stock split resulting in 32,500,000 common shares outstanding. Basic
and diluted earnings (loss) per share for the years ended December 31, 2000 and
1999 have been computed by dividing the net income (loss) for each period by
the 32,500,000 common shares outstanding subsequent to completion of the
recapitalization.

  Concentration of Credit Risk

   Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of accounts receivable. The
Company performs ongoing credit evaluations of its customers and generally does
not require collateral.

  Warranty Costs

   The Company provides for estimated warranty costs at the time of the product
sale.

  Stock-Based Compensation

   The Company measures compensation expense for its stock-based employee
compensation using the intrinsic value method and provides pro forma
disclosures of net income (loss) and net earnings (loss) per share as if the
fair value method had been applied in measuring compensation expense.

   Equity instruments issued to non-employees for goods or services are
accounted for at fair value and are marked to market until service is complete
or a performance commitment date is reached.

  Other Comprehensive Income (Loss)

   Comprehensive income (loss) includes net income (loss) and the change in
accumulated other comprehensive income (loss). The Company's accumulated other
comprehensive income (loss) shown on the consolidated and combined balance
sheets consists of foreign currency translation adjustments which are not
adjusted for income taxes since they relate to indefinite investments in
non-U.S. operations.

3.  Restructuring Programs and Other Charges

  2001 Restructuring and Other Charges

   During the third quarter of 2001, the Company recorded a restructuring
charge of $4,922 in response to the prolonged duration and severity of the
current semiconductor industry downturn. The restructuring charge included
$2,495 of employee severance costs, a $726 write-off of leasehold improvements
and $1,701 of net exit costs on leased properties. Key initiatives of the
restructuring included:

  .  Reducing the Company's workforce in the U.S., Asia and Europe in order to
     resize the Company. This action was completed during the third quarter of
     2001.

  .  Discontinuation of the Company's plan to renovate leased office space in
     Bedford, Massachusetts and instead exit that facility. This action was
     completed during the third quarter of 2001.

   The restructuring initiatives resulted in the elimination of 153 positions
worldwide. Notification to employees was completed in the third quarter of
2001, however a number of these employees will continue in their existing
positions through the first quarter of 2002 with their related salary costs
charged to operations as

                                     F-10

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)

incurred. During the year ended December 31, 2001, approximately $2,240 of the
restructuring, consisting of $1,765 in severance and associated benefits for
145 employees and $475 related to leasehold and other costs, was utilized. At
December 31, 2001, approximately $730 of employee severance costs remained
accrued and the Company believes that such amounts will be substantially paid
by the end of the first quarter of 2002. The leasehold and other exit costs at
December 31, 2001 was approximately $1,952 and the Company believes that such
amount will be substantially paid by the lease expiration date in fiscal year
2005.

   The following is a summary of the Q3 2001 restructuring for the year ended
December 31, 2001:

<TABLE>
<CAPTION>
                                                                Balance at
                               Restructuring   Cash   Non-cash December 31,
                                  Charges    Activity Activity     2001
                               ------------- -------- -------- ------------
     <S>                       <C>           <C>      <C>      <C>
     Employee severance costs.    $2,495      $1,765    $--       $  730
     Leasehold and other costs     2,427         475     --        1,952
                                  ------      ------    ---       ------
        Total.................    $4,922      $2,240     --       $2,682
</TABLE>

   During the first quarter of 2001, the Company recorded restructuring and
other charges of $12,556 in connection with the Company's separation from
Millipore to improve the Company's manufacturing asset utilization and resize
the Company's overall cost structure. The restructuring and other charges
included $11,260 of employee severance costs, a $946 write-off of equipment and
leasehold improvements and $350 of lease cancellation costs. Key initiatives of
the restructuring program included:

  .  Consolidating manufacturing operations to eliminate redundant
     manufacturing processes. The Company is in the process of relocating some
     of the operations of two of its manufacturing facilities in the U.S. and
     downsizing its manufacturing facility in England. The consolidation of the
     Company's manufacturing operations is expected to be completed in the
     first quarter of 2002.

  .  Realigning the Company's European organizational structure to focus on the
     Company's operating business units, thereby consolidating the Company's
     sales and administrative activities into fewer locations that are closer
     to the Company's customer base. The Company completed this transition
     during 2001.

  .  Reducing the Company's administrative and management infrastructure costs
     in Asia. These cost reductions are expected to result in lower overhead
     for administrative and management infrastructure in Asia and were achieved
     through reduced facility costs and administrative positions during 2001.

  .  Reducing the Company's workforce in the U.S. in order to address changes
     in the demand for the Company's products due to the current semiconductor
     industry downturn. This action was completed during the second quarter of
     2001.

   The first quarter restructuring initiatives resulted in the elimination of
205 positions worldwide. Notification to employees was completed in the first
quarter of 2001, however a number of these employees will continue in their
existing positions through the first quarter of 2002 with their related salary
costs charged to operations as incurred. As of December 31, 2001, approximately
$9,438 of the restructuring, consisting of $8,177 of severance and associated
benefits for 140 employees and $1,261 of leasehold and other costs, was
utilized. At December 31, 2001, approximately $3,118 of restructuring costs
remained accrued and the Company believes that such amounts will be
substantially paid by the end of the first quarter of 2002.

                                     F-11

<PAGE>

   The following is a summary of the Q1 2001 restructuring program and other
charges for the year ended December 31, 2001:

<TABLE>
<CAPTION>
                               Restructuring                    Balance at
                                 and Other     Cash   Non-cash December 31,
                                  Charges    Activity Activity     2001
                               ------------- -------- -------- ------------
     <S>                       <C>           <C>      <C>      <C>
     Employee severance costs.    $11,260     $5,029   $3,148     $3,083
     Leasehold and other costs      1,296         --    1,261         35
                                  -------     ------   ------     ------
        Total.................    $12,556     $5,029   $4,409     $3,118
</TABLE>

  1998 Restructuring and Other Charges

   In the third quarter of 1998, Millipore recorded restructuring and other
charges of $7,499 to consolidate certain manufacturing operations and
discontinue non-strategic product lines consisting of semiconductor fab
monitoring and control software and various filtration devices. The
restructuring and other charges of $7,499 included $5,009 of employee severance
costs for approximately 460 positions, $1,729 for the write-off of tangible
assets and $761 of supply contract termination costs.

   During the third quarters of 2000 and 1999 , the Company reevaluated the
accrual for the restructuring and reversed $320 and $1,221, respectively, of
the remaining balance. The reversals reflected lower estimates for severance
cost attributed to higher levels of attrition than originally anticipated and
affected employees filling open positions at Millipore that resulted from
improved business conditions.

   Following is a summary of the 1998 restructuring and other charges balance
at December 31, 2001, 2000 and 1999:

<TABLE>
<CAPTION>
                             Balance at  Reversal                Balance at
                            December 31,    of      Non- cash   December 31,
                                2000     Reserve    Activity        2001
                            ------------ -------- ------------- ------------
   <S>                      <C>          <C>      <C>           <C>
   Employee severance costs    $   --     $   --     $   --         $ --
   Other costs.............       174         --        174           --
                               ------     ------     ------         ----
      Total................    $  174     $   --     $   --         $ --
                               ======     ======     ======         ====

                             Balance at  Reversal                Balance at
                            December 31,    of        Cash      December 31,
                                1999     Reserve  Disbursements     2000
                            ------------ -------- ------------- ------------
   Employee severance costs    $  320     $  320     $   --         $ --
   Other costs.............       174         --         --          174
                               ------     ------     ------         ----
      Total................    $  494     $  320     $   --         $174
                               ======     ======     ======         ====

                             Balance at  Reversal                Balance at
                            December 31,    of        Cash      December 31,
                                1998     Reserve  Disbursements     1999
                            ------------ -------- ------------- ------------
   Employee severance costs    $2,354     $  887     $1,147         $320
   Other costs.............       761        334        253          174
                               ------     ------     ------         ----
      Total................    $3,115     $1,221     $1,400         $494
                               ======     ======     ======         ====
</TABLE>

                                     F-12

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


4. Basic and Diluted Earnings (Loss) per Share

   The following table sets forth the computation of basic and diluted earnings
(loss) per share for the year ended December 31, 2001, 2000 and 1999:

<TABLE>
<CAPTION>
                                                            2001     2000    1999
                                                          --------  ------- -------
<S>                                                       <C>       <C>     <C>
Numerator:
   Net income (loss)..................................... $(67,627) $37,371 $ 3,283
                                                          ========  ======= =======
Denominator:
   Basic and diluted weighted average shares outstanding.   35,262   32,500  32,500
Net income (loss) per share:
   Basic and diluted..................................... $  (1.92) $  1.15 $  0.10
</TABLE>

5. Statement of Operations Information

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                                    ------------------------
                                                     2001     2000     1999
                                                    -------  -------  ------
  <S>                                               <C>      <C>      <C>
  Included in costs and operating expenses
     Depreciation of property, plant and equipment. $10,049  $ 8,093  $9,279
                                                    =======  =======  ======
  Other expense
     Gain (loss) on foreign currency transactions..  (2,165)     923    (117)
     Loss on private equity investment.............      --   (2,990)     --
     Royalty income from Millipore Corporation.....     605       --      --
     Interest income and other.....................     919       --      --
     Income (loss) from equity method investments..    (455)     672      34
                                                    -------  -------  ------
     Other expense, net............................ $(1,096) $(1,395) $  (83)
                                                    =======  =======  ======
</TABLE>

   The loss on investment relates to the write-off of a cost method investment
in a privately held company.

6.  Balance Sheet Information

<TABLE>
<CAPTION>
                                                      December 31,
                                                   ------------------
                                                     2001      2000
                                                   --------  --------
         <S>                                       <C>       <C>
         Inventories
            Raw materials......................... $ 39,294  $ 31,128
            Work in process.......................    7,345    12,194
            Finished goods........................   13,797    19,318
                                                   --------  --------
                                                   $ 60,436  $ 62,640
                                                   ========  ========
         Property, plant and equipment
            Land.................................. $  1,712  $  1,975
            Leasehold improvements................   26,964    27,026
            Buildings and improvements............   26,251    26,167
            Production and other equipment........   50,605    59,062
            Construction in progress..............    7,960     5,778
            Less: accumulated depreciation........  (44,392)  (46,224)
                                                   --------  --------
                                                   $ 69,100  $ 73,784
                                                   ========  ========
         Accrued expenses
            Accrued employee payroll and benefits. $ 11,709  $  7,974
            Accrued warranty......................    1,308     1,456
            Other accrued expenses................    5,867     7,667
                                                   --------  --------
                                                   $ 18,884  $ 17,097
                                                   ========  ========
</TABLE>

                                     F-13

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


7.  Income Taxes

   The Company's income tax expense (benefit) is summarized as follows for the
year ended December 31:

<TABLE>
<CAPTION>
                                                          2001     2000     1999
                                                        --------  -------  ------
<S>                                                     <C>       <C>      <C>
Domestic and foreign income (loss) before income taxes:
   Domestic............................................ $(43,461) $40,845  $3,002
   Foreign.............................................    1,979   19,431   2,966
                                                        --------  -------  ------
                                                        $(41,482) $60,276  $5,968
                                                        ========  =======  ======
Domestic and foreign income tax expense (benefit):
   Domestic............................................ $ 17,388  $11,429  $1,153
   Foreign.............................................   10,169    9,586   1,382
   State...............................................   (1,412)   1,890     150
                                                        --------  -------  ------
                                                        $ 26,145  $22,905  $2,685
                                                        ========  =======  ======
Current and deferred income tax expense (benefit):
   Current............................................. $    631  $25,135  $ (310)
   Deferred............................................   25,514   (2,230)  2,995
                                                        --------  -------  ------
                                                        $ 26,145  $22,905  $2,685
                                                        ========  =======  ======
</TABLE>

   A summary of the differences between the Company's consolidated and combined
effective tax rate and the United States statutory federal income tax rate is
as follows:

<TABLE>
<CAPTION>
                                                        2001    2000  1999
                                                        -----   ----  -----
    <S>                                                 <C>     <C>   <C>
    U.S. statutory income tax rate.....................  35.0%  35.0%  35.0%
    State income tax, net of federal income tax benefit   2.2    2.0    1.6
    Foreign sales corporation income not taxed.........   (--)  (1.3) (15.5)
    Impact of foreign operations....................... (22.7)    --     --
    Nondeductible goodwill amortization................  (6.9)   2.3   23.9
    Valuation allowance................................ (70.6)    --     --
                                                        -----   ----  -----
    Effective tax rate................................. (63.0)% 38.0%  45.0%
                                                        =====   ====  =====
</TABLE>

   Significant components of the Company's deferred tax assets and liabilities
are as follows:

<TABLE>
<CAPTION>
                                                         2001     2000
                                                       --------  -------
       <S>                                             <C>       <C>
       Intercompany and inventory related transactions $  5,644  $ 6,608
       Pensions.......................................    3,625    4,864
       Postretirement benefits other than pensions....      525      389
       Bad debts......................................      189      214
       Restructuring..................................    2,083       --
       Net operating loss.............................    3,242       --
       Tax credits on unremitted earnings.............   18,070   18,026
       Depreciation...................................   (1,370)    (582)
       Other, net.....................................    3,075    1,732
                                                       --------  -------
                                                         35,083   31,251
       Less: valuation allowance......................  (29,287)      --
                                                       --------  -------
       Net deferred tax asset......................... $  5,796  $31,251
</TABLE>

                                     F-14

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


   At December 31, 2001, the Company has foreign tax credit carryforwards of
approximately $202 that expire in the year 2006. Net operating loss
carryforwards (net of assumed carryback on a separate return basis) of $8,622
expire in the year 2021. The $9,000 income tax receivable relates to the net
operating loss carryback determined on a separate return basis. In accordance
with the tax sharing agreement, Millipore does not intend to allow the Company
to carryback the net operating loss, therefore the receivable and benefit will
be adjusted at Distribution.

   The valuation allowance is primarily recorded against foreign tax credits on
unremitted earnings of our foreign subsidiaries of $18,070 and other U.S.
deferred tax assets of $11,217. SFAS 109, "Accounting for Income Tax," requires
that the Company establish a valuation allowance when, based on an evaluation
of objective verifiable evidence, the Company believes there is a likelihood
that some portion or all of the deferred tax assets will not be realized.
During 2001, the Company recorded a valuation allowance for these tax assets
based on management's assessments of historical pre-tax income and of the
significant deterioration in projected pre-tax income for early future periods
given the uncertainty surrounding the prolonged cyclical downturn in the
semiconductor industry.

8.  Stock Plans

  Non-Employee Director Stock Option Plan

   During 2001, the Company adopted the 2001 Non-Employee Director Stock Option
Plan (the "Directors Plan"). The Directors Plan allows for the issuance of
250,000 shares of common stock. Under the Directors Plan, each Non-Employee
Director who was in office prior to the initial public offering of the
Company's common stock, was automatically granted options to purchase 10,000
shares of common stock, unless such Non-Employee Director had previously
received such a grant prior to the date of the initial public offering. Each
newly elected eligible director is granted options to purchase 10,000 shares of
common stock on the date of his or her first election. Following the initial
grant, each director is automatically awarded options to purchase 5,000 shares
of common stock for each subsequent year of service as a director. The exercise
price of the stock options may not be less than the fair market value of the
stock at the date of grant. At December 31, 2001, 50,000 options were
outstanding.

  Employees' Stock Purchase Plan

   During 2001, the Company adopted the 2001 Employee Stock Purchase Plan
("ESPP"). The maximum number of shares which may be issued under the ESPP is
1,000,000 shares of authorized but unissued common stock. The ESPP allows
eligible employees to purchase the stock at 85% of the lesser of the fair
market value of the common stock on the Offering Date of such Offering Period,
or the fair market value of the shares on the Purchase Date applicable to the
shares being purchased during such Offering Period. Offering Periods consist of
twenty-four month periods, commencing on April 1 and October 1 of each year and
ending on the second March 31 and September 30, respectively, occurring
thereafter. The first day of an Offering Period is the Offering Date. Each
Offering Period consists of four consecutive Purchase Periods of six month
durations. The last day of each Purchase Period is the Purchase Date for such
Purchase Period.

   The ESPP also contains an initial transitional offering (the "Initial Plan
Offering") commencing November 1, 2001 and concluding on the later of March 31,
2002 or the third business day following the date of the distribution of the
common stock of the Company by Millipore Corporation to its shareholders in
accordance with the Master Separation and Distribution Agreement. The Offering
Date for the Initial Plan Offering is the first day of the Initial Offering
Period and the single Purchase Date for the Initial Plan Offering is the last
day of the Initial Offering Period. All eligible employees are entitled to
participate, and can purchase the stock at 85%

                                     F-15

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)

of the lesser of the fair market value of the shares on the Offering Date of
the Initial Plan Offering or the fair market value of the shares on the
Purchase Date of the Initial Plan Offering.

   Each employee may purchase up to 10% (up to a maximum of $25,000) of
eligible compensation. No shares were issued under the ESPP as of December 31,
2001.

   Prior to the Separation, employees of the Company were eligible to
participate in the Millipore Employees' Stock Purchase Plan ("Millipore ESPP").
The Millipore ESPP allowed eligible employees to purchase Millipore stock at
85% of the lesser of the fair market value of the common stock on June 1, the
beginning of the plan year, or the closing price at the end of each subsequent
quarter. Each employee could purchase up to 10% (up to a maximum of $25,000) of
eligible compensation.

  Shareholder Rights Plan

   The Board of Directors of the Company adopted a shareholder rights plan (the
"Rights Plan") pursuant to which the Company declared a dividend on November
29, 2001 to its shareholders of record on December 31, 2001 of the right to
purchase (a "Right") one additional share of the Company's common stock for
each share of common stock owned, at a price of $130.00 for each share. The
Rights Plan is designed to protect shareholders from attempts by others to
acquire the Company on terms or by using tactics that could deny all
shareholders the opportunity to realize the full value of their investment. The
Rights are attached to the shares of our common stock until certain triggering
events occur. The Rights authorize the holders to purchase shares of our common
stock at a 50% discount from market value upon the occurrence of specified
triggering events, including, unless approved by the board of directors, an
acquisition by a person or group of specified levels of beneficial ownership of
the Company's common stock or a tender offer for the Company's common stock.
The common stock purchase rights are redeemable by us for $.01 and will expire
in March of 2011. One of the events which will trigger the common stock
purchase rights is the acquisition, or commencement of a tender offer, by a
person (an Acquiring Person, as defined in the shareholder rights plan), other
than the Company or any subsidiaries of the Company or employee benefit plans,
of 15% or more of the outstanding shares of our common stock. An acquiring
person may not exercise a common stock purchase right. Until the Distribution
of our shares, Millipore is excluded from the definition of acquiring person.

  Equity Incentive Plan

   During 2001, the Company adopted the 2001 Equity Incentive Plan (the "2001
Plan"). The 2001 Plan provides for the issuance of stock-based and other
incentive awards to selected employees, directors, and other persons (including
both individuals and entities) who provide services to the Company or its
Affiliates. The Board of Directors determines the term of each option, option
price, number of shares for which each option is granted, whether restrictions
will be imposed on the shares subject to options, and the rate at which each
option is exercisable. The exercise price for incentive stock options may not
be less than the fair market value per share of the underlying common stock on
the date granted (110% of fair market value in the case of holders of more than
10% of the voting stock of the Company). The 2001 plan allows for the issuance
of 6,000,000 shares of common stock. At December 31, 2001, 1,913,089 shares
were available for issuance under the 2001 Plan.

   Prior to the Separation date and in prior years, certain employees of the
Company were granted stock options and restricted stock under Millipore's
stock-based compensation plan. The Millipore 1999 Stock Incentive Plan (the
"Millipore Plan") provided for the issuance of stock options and restricted
stock to key employees as incentive compensation. The exercise price of a stock
option was equal to the fair market value of

                                     F-16

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)

Millipore's common stock on the date the option was granted and its term was
generally ten years and vested over four years. Unvested stock options
outstanding under the Millipore Plan will be converted to stock options of the
Company at the Distribution. The conversion of Millipore stock options into the
Company's stock options will be done in such a manner that (1) the aggregate
intrinsic value of the options immediately before and after the exchange are
the same, (2) the ratio of the exercise price per option to the market value
per option is not reduced, and (3) the vesting provisions and option period of
the replacement Company options are the same as the original vesting terms and
option period of the Millipore options. As of December 31, 2001, the Company's
employees held 500,836 unvested Millipore stock options including those options
held by certain Millipore corporate management employees who became employees
of the Company on the Separation date.

   The Millipore Plan also provided that the restricted stock, which is awarded
to key members of senior management at no cost to them, cannot be sold,
assigned, transferred or pledged during a restriction period which is normally
four years but in some cases may be less. In most instances, shares are subject
to forfeiture should employment terminate during the restriction period. The
restricted stock is recorded at its fair market value on the award date and the
related deferred compensation is amortized to selling, general and
administrative expenses over the restriction period. The allocated portion of
compensation expense attributable to the Company's employees was $595 in 2001,
$1,177 in 2000, and $571 in 1999. At December 31, 2001 and 2000, the Company's
employees held 26,182 and 55,500 shares of restricted stock; respectively and
the related total deferred compensation included in the consolidated and
combined statements of shareholders' equity and total comprehensive income
(loss) was $139 and $730, respectively. All of the restricted shares of
Millipore held by the Company's employees vested on February 11, 2002. This
modification will result in an additional compensation charge in the first
quarter of 2002. (see Note 15--Subsequent Events).

   The Company's stock option activity under the 2001 Plan is presented as
follows:

<TABLE>
<CAPTION>
                                                   2001
                                      -------------------------------
                                                             Weighted
                                                             Average
                                                             Exercise
                                       Shares   Option Price  Price
                                      --------- ------------ --------
           <S>                        <C>       <C>          <C>
           Outstanding at January 1..        --           --      --
              Granted................ 4,286,441 $9.10-$15.00  $13.04
              Exercised..............        --           --      --
              Canceled...............   199,530 $9.10-$15.00  $14.82
                                      --------- ------------  ------
           Outstanding at December 31 4,086,911 $9.10-$15.00  $12.95
                                      ---------
           Exercisable at December 31        --           --      --
</TABLE>

   Weighted average grant date fair value $8.52.

                                     F-17

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


   The following table summarizes information about stock options at December
31, 2001:

<TABLE>
<CAPTION>
                    Options Outstanding               Options Exercisable
      ----------------------------------------------- --------------------
                                 Weighted    Weighted             Weighted
                                  Average    Average              Average
                                 Remaining   Exercise             Exercise
      Option Price Outstanding Life in Years  Price   Exercisable  Price
      ------------ ----------- ------------- -------- ----------- --------
      <S>          <C>         <C>           <C>      <C>         <C>
         $9.10        343,876        3.1      $ 9.10       --      $ 9.10
         $11.60     1,867,435        6.3      $11.60       --      $11.60
         $15.00     1,875,600        6.4      $15.00       --      $15.00
                    ---------      -----                 ----
      $9.10-$15.00  4,086,911                              --
</TABLE>

  Accounting for Stock-Based Compensation

   The Company applies the intrinsic value method prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," in
accounting for stock options granted to employees. Pro forma net earnings
information as required by SFAS No. 123, "Accounting for Stock-Based
Compensation," has been determined as if the Company had accounted for employee
stock options granted to the Company employees under SFAS No. 123's fair value
method. As described above, prior to the Separation date, certain employees of
the Company were granted stock options under Millipore's stock-based
compensation plan. During 2001, the Company adopted its own plan, which
provides for the issuance of stock-based awards to employees, directors, and
other persons who provide services to the Company or its affiliates. The fair
value of options granted under both the Company's and Millipore's stock-based
plan were estimated at grant date using a Black-Scholes option pricing model
with the following weighted-average assumptions: expected life ranging from
three to five years in 2001 and of five years in 2000 and 1999; dividend rate
of $0, $0.44, and $0.44 in 2001, 2000, and 1999, respectively; risk-free
interest rates of 4.3%, 5.3%, and 6.2% in 2001, 2000, and 1999, respectively;
and volatility of 80% in 2001, 45% in 2000, and 35% in 1999.

   The pro-forma expense amounts assume that the fair value assigned to the
option grants was amortized over the vesting period of the options, which
ranges from one to four years for the Company's plan and four years for the
Millipore plan, while the fair value assigned to grants under the stock
purchase plan is recognized in full at the date of grant. The pro forma effect
on reported net income (loss) and earnings (loss) per share of recognizing
compensation expense in accordance with SFAS No. 123 would have been as follows.

<TABLE>
<CAPTION>
                     December 31,             2001     2000    1999
                     ------------           --------  ------- ------
            <S>                             <C>       <C>     <C>
            Net income (loss) as reported.. $(67,627) $37,371 $3,283
            Pro-forma net income (loss)....  (70,448)  35,784  2,245

            Basic and diluted pro-forma EPS $  (2.00) $  1.10 $ 0.07

</TABLE>

9.  Employee Retirement Plans

   At the Distribution date, the Company will assume responsibility for certain
of the pension benefits and the other post-retirement benefits for employees
whose last work assignment prior to the Distribution was with the Company.
These employees are collectively referred to as "Mykrolis Employees." The
pension liabilities that are assumed by the Company and the liabilities related
to the other post-retirement benefits as well as the related expenses have been
reflected in the consolidated and combined financial statements for all years
presented.

   Prior to the Separation, the U.S. employees of the Company participated in
Millipore's non-contributory defined benefit pension plan, which covered
substantially all U.S. employees. The Mykrolis Employees

                                     F-18

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)

maintained their vested and unvested rights in the Millipore pension plans
after the Separation date. However, the liabilities related to these rights
were not assumed by the Company and therefore are not reflected in the
consolidated and combined balance sheets of the Company. Millipore allocated to
the Company net periodic pension costs related to Mykrolis employees that
participated in this plan. No contribution was required for 2001, 2000, or
1999, as the plan was adequately funded.

  Savings and Investment Plan and Participation Plan

   The majority of the Company's U.S. employees are covered under the Mykrolis
Corporation Savings and Investment Plan (the "Savings and Investment Plan"),
that was adopted by the Company in March 2001. The Savings and Investment Plan
allows employees to make certain tax-deferred voluntary contributions upon hire
date. Mykrolis matches 50% of participant contributions, up to a maximum of 6%
of the participant's compensation. Millipore had a similar plan prior to the
Separation date where Millipore matched 25% of certain tax-deferred voluntary
contributions after one year of service. The Savings and Investment Plan also
has a profit sharing component whereby Mykrolis can make a discretionary
contribution based on the Company's performance.

   Prior to April 1, 2001, all U.S. employees of the Company are covered under
the Millipore Corporation Participation Plan (the "Participation Plan"), which
is a defined contribution plan. Contributions to the Millipore Participation
Plan are allocated among the U.S. employees of the Company who have completed
at least two years of continuous service on the basis of the compensation they
received during the year for which the contribution is made.

   The total combined expenses under the Savings and Investment Plan and
Participation Plan was $2,198 in 2001, $2,972 in 2000 and $2,395 in 1999.

  Supplemental Savings and Retirement Plan

   Mykrolis offers a Supplemental Savings and Retirement Plan (the
"Supplemental Plan") to certain senior executives that allows certain salary
deferral benefits that would otherwise be lost by reason of restrictions
imposed by the Internal Revenue Code limiting the amount of compensation which
may be deferred under tax-qualified plans. The liabilities related to these
rights were assumed by the Company at the Separation, and are therefore
reflected in the consolidated and combined balance sheets. During 2001, the
Company's expense was $48. Millipore had a similar plan prior to the
Separation, of which the Company's expense was $190 and $568 in 2000 and 1999,
respectively.

  Japan Retirement and U.S. Post-Retirement Benefit Plans

   Substantially all the Company's U.S. employees are covered under several
unfunded defined benefit post-retirement benefit plans, which are sponsored by
Millipore. The plans provide medical and life insurance benefits and are,
depending on the plan, either contributory or non-contributory. The employees
of the Company's subsidiary in Japan ("Nihon Mykrolis") are covered in a
defined benefit pension plan.

                                     F-19

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


   The tables below set forth the estimated net periodic cost and funded status
of the Nihon Mykrolis Pension Plan and the U.S. Post-Retirement Benefit Plan.

<TABLE>
<CAPTION>
                                                    Nihon Mykrolis   U.S. Post Retirement
                                                     Pension Plan          Benefits
                                                   ----------------  -------------------
                                                    2001     2000      2001        2000
                                                   -------  -------   -------    -------
<S>                                                <C>      <C>      <C>         <C>
Change in benefit obligation:
   Benefit obligation at beginning of year........ $11,747  $11,131  $ 1,444     $ 1,110
   Service cost...................................     854    1,008       95         149
   Interest cost..................................     268      318       63          89
   Amendments/Curtailment gain....................      --       --     (175)         --
   Actuarial loss (gain)..........................  (1,813)   2,178     (396)         96
   Foreign exchange impact........................  (1,439)  (1,284)     N/A         N/A
   Benefits paid..................................    (839)  (1,604)      --          --
                                                   -------  -------   -------    -------
   Benefit obligation at end of year.............. $ 8,778  $11,747  $ 1,031     $ 1,444
                                                   =======  =======   =======    =======
Change in plan assets:
   Fair value of plan assets at beginning of year. $ 2,511  $ 2,372      N/A         N/A
   Actual return on plan assets...................    (448)     254      N/A         N/A
   Company contributions..........................     186      159      N/A         N/A
   Foreign exchange impact........................    (313)    (274)     N/A         N/A
                                                   =======  =======   =======    =======
Fair value of plan assets at end of year.......... $ 1,936  $ 2,511      N/A         N/A
                                                   -------  -------   -------    -------
Funded status..................................... $(6,842) $(9,236) $(1,031)    $(1,444)
Unrecognized net loss (gain)......................   2,334    3,527     (382)        (14)
                                                   -------  -------   -------    -------
Accrued benefit cost.............................. $(4,508) $(5,709) $(1,413)    $(1,458)
                                                   =======  =======   =======    =======
</TABLE>

<TABLE>
<CAPTION>
                                                 Nihon Mykrolis   U.S. Post Retirement
                                                  Pension Plan          Benefits
                                                ----------------  -------------------
                                                2001  2000  1999  2001     2000  1999
                                                ----  ----  ----  ----     ----  ----
<S>                                             <C>   <C>   <C>   <C>      <C>   <C>
Weighted average assumptions as of December 31:
   Discount rate............................... 2.50% 3.00% 3.00% 7.00%    7.50% 8.00%
   Expected return on plan assets.............. 1.50% 1.50% 1.50%  N/A      N/A   N/A
   Rate of compensation increase............... 3.00% 3.00% 3.00%  N/A      N/A   N/A
</TABLE>

   For postretirement healthcare, a 10.0% annual rate of increase in the per
capita cost of covered health care benefits was assumed for fiscal year 2002.
The rate was assumed to decline gradually to 5.0% by 2009, and remain at that
level thereafter.

<TABLE>
<CAPTION>
                                                                     U.S. Post Retirement
                                         Nihon Mykrolis Pension Plan       Benefits
                                         --------------------------  -------------------
                                           2001       2000    1999    2001    2000  1999
                                          ------     ------  ------  -----    ----  ----
<S>                                      <C>         <C>     <C>     <C>      <C>   <C>
Components of net periodic benefit cost:
   Service cost......................... $  854      $1,008  $  978  $  95    $149  $142
   Interest cost........................    267         317     296     64      88    58
   Expected return on plan assets.......    (36)        (34)    (30)   N/A     N/A   N/A
   Amortization of unrecognized gain....     --          --      --    (28)    (17)  (16)
   Recognized actuarial loss............    113          55     117     --      --    --
                                          ------     ------  ------  -----    ----  ----
   Net periodic benefit cost............  1,198       1,346   1,361    131     220   184
   Curtailment cost.....................     --          --      --   (175)     --    --
                                          ------     ------  ------  -----    ----  ----
   Total benefit cost (income).......... $1,198      $1,346  $1,361  $ (44)   $220  $184
                                          ======     ======  ======  =====    ====  ====
</TABLE>

                                     F-20

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


   Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change in
the assumed health care cost trend rates would have the following effects.

<TABLE>
<CAPTION>
                                                            1% Point 1% Point
                                                            Increase Decrease
                                                            -------- --------
   <S>                                                      <C>      <C>
   Effect on total of services and interest cost components   $ 32    $ (26)
   Effect on postretirement benefit obligations............    205     (175)
</TABLE>

10.  Business Segment Information

   The Company has one reportable segment that develops, manufactures and sells
consumables and capital equipment to semiconductor fabrication companies and
other companies using similar manufacturing processes, as well as OEM suppliers
to those companies. The Company also provides capital equipment warranty and
repair services to customers in this segment. The Company's products include
membrane and metal based filters, housings, precision liquid dispense
filtration pumps, resin based gas purifiers and mass flow and pressure
controllers. The products are used by customers in manufacturing operations to
remove contaminants in liquid and gas processes, to purify liquids and gases,
to measure and control flow rates and to control and monitor pressure and
vacuum levels during the manufacturing process. The Company's products are sold
worldwide through a direct sales force and through distributors in selected
regions.

  Geographical Information:

   The Company attributes net sales and long-lived assets to different
geographic areas on the basis of the location of the customer. Net sales for
each of the years ended December 31, 2001, 2000 and 1999 along with long-lived
asset information as of December 31, 2001 and 2000 by geographic area in U.S.
dollars is presented as follows:

<TABLE>
<CAPTION>
                                          Net Sales
                                  --------------------------
                                   Year Ended December 31,
                                  --------------------------
                                    2001     2000     1999
                                  -------- -------- --------
                    <S>           <C>      <C>      <C>
                    United States $ 70,393 $138,055 $ 80,026
                    Japan........   78,562  133,348   74,897
                    Asia.........   39,494   51,684   26,061
                    Europe.......   26,825   32,453   25,361
                                  -------- -------- --------
                       Total..... $215,274 $355,540 $206,345
                                  ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
                                      Long-Lived Assets
                                      -----------------
                                        2001     2000
                                      -------  --------
                        <S>           <C>      <C>
                        United States $72,730  $ 79,557
                        Japan........  16,662    26,044
                        Asia.........     865     1,365
                        Europe.......     585       562
                                      -------  --------
                           Total..... $90,842  $107,528
                                      =======  ========
</TABLE>

                                     F-21

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


11.  Significant Customers and Concentration of Risk

   Historically, the Company has relied on a limited number of customers for a
substantial portion of its net sales. During the fiscal years ended December
31, 2001, 2000 and 1999 revenues from one customer represented 14%, 18% and
13%, respectively of total net sales. Accounts receivable for this customer was
approximately $2.7 million and $10.3 million at December 31, 2001 and 2000,
respectively. There were no other customers that accounted for more than 10% of
revenues or accounts receivable during any of these periods.

12.  Related Party Transactions

Transactions with Millipore

   For purposes of governing certain of the ongoing relationships between the
Company and Millipore at and after the Separation and to provide for an orderly
transition, the Company and Millipore entered into various agreements at the
Separation date. A brief description of each of the agreements follows.

  Master Separation and Distribution Agreement

   The separation agreement contains the key provisions relating to the
Separation, the Company's initial funding, initial public offering and the
Distribution. The agreement lists the documents and items that the parties
delivered in order to accomplish the transfer of assets and liabilities from
Millipore to the Company, effective on the Separation date. The agreement also
contains conditions that must occur prior to the Offering and the Distribution.
The parties also entered into ongoing covenants that survive the transactions,
including covenants to establish interim service level agreements, exchange
information, notify each other of changes in their accounting principles and
resolve disputes in particular ways.

  General Assignment and Assumption Agreement

   The General Assignment and Assumption Agreement identifies the assets that
Millipore transferred to the Company and the liabilities that the Company
assumed from Millipore in the Separation. In general, the assets transferred
and the liabilities assumed are those that appear on the combined balance
sheet, after adjustment for certain assets and liabilities that were retained
by Millipore and for activity that occurs between the balance sheet date and
the Separation.

  Separation Revolving Credit Agreement and Separation Note

   The Separation Revolving Credit Agreement (the "Credit Agreement") provided
for Millipore to lend the Company funds between the Separation date and the
date of the IPO in order to fund the Company's working capital needs and to
settle any amounts payable by the Company related to the retention by Millipore
of specified assets and liabilities of the Company and the retention by the
Company of specified Millipore assets and liabilities that could not be
transferred at the Separation due to restrictions imposed by foreign laws or
because such transfer was not practical. The net outstanding balance of $27,512
was paid to Millipore pursuant to the terms of this Credit Agreement from
proceeds generated from the IPO and cash generated from operations between the
Separation date and the IPO date. There was no interest expense associated with
the Credit Agreement.

   The Separation Note provided for a payment by the Company to Millipore out
of the proceeds from the IPO. Millipore contributed its microelectronics
business to the Company in exchange for shares of the Company's common stock
plus the Separation Note. The amount of the Separation Note was determined by
agreement

                                     F-22

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)

between Millipore and the Company to ensure that all net proceeds of the IPO in
excess of $75,000 would be payable to Millipore. The principal balance of the
Separation Note was calculated by deducting from the net IPO proceeds (i) the
outstanding balance under the Credit Agreement as described above, and (ii) the
$75,000 retained by the Company for general corporate purposes from the IPO
proceeds. As a result, $19,095 was paid to Millipore as payment of the
Separation Note. There was no interest expense associated with this note.

  Master Transitional Services Agreement

   The Master Transitional Services Agreement governs the terms and conditions
upon which interim transitional services will be provided to each of the
Company and Millipore. The nature of the services include facilities,
engineering, information technology, equipment usage, financial accounting,
distribution and warehousing and human resources administration. The Company
and Millipore will also provide each other additional services as the Company
and Millipore may identify from time to time after the Separation. Specific
charges for such services are generally intended to allow the Company providing
the service to recover direct costs plus expenses, without profit.

  Membrane Manufacture and Supply Agreement

   The Membrane Manufacture and Supply Agreement enables the Company to
manufacture certain membranes in the same production areas and with the same
processes as were available to the Company prior to the Separation for both its
own use and sale. Under the agreement, Millipore leases this space and
manufacturing equipment to the Company for five years. This agreement also
provides for the supply of certain membranes manufactured by either the Company
or Millipore to the other party at costs appropriate to that of a third party
contract manufacturer.

  Product Distribution Agreement

   The Company and Millipore have historically sold products of the other
company within their respective fields of use. The Product Distribution
Agreement allows each company to purchase products from the other company at
prices representing discounts off published list prices.

  Research Agreement

   The Research Agreement defines specific research projects that Millipore
will perform for the Company on a contract basis and the process for conducting
such research.

  Employee Matters Agreement

   The Employee Matters Agreement outlines how Millipore and the Company
allocate responsibility for and liability related to the employment of those
employees of Millipore who became the Company's employees. The agreement also
contains provisions describing the Company's benefit and equity plans. On or
before the Distribution, the Company expects to establish employee benefit
plans comparable to those of Millipore for its active, inactive and former
employees. However, in certain cases, certain of its employees will continue to
participate in the Millipore benefit plans. The transfer to the Company of
employees at certain of Millipore's international operations, and of certain
pension and employee benefit plans, may not take place until the Company
receives consents or approvals or has satisfied other applicable requirements.

                                     F-23

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


  Contract Manufacturing Agreements

   The Millipore Contract Manufacturing Agreement provides for Millipore to
manufacture certain products for resale by the Company at prices subject to
annual increases equal to actual increases in Millipore's cost to manufacture
these products. There are no minimum or maximum purchase requirements, subject
to binding three-month forecasts that may increase or decrease by 25% without
penalty. The Company may not resell these products into Millipore's
biopharmaceutical business. This agreement has a term of five years, unless
terminated by the Company on sixty days prior written notice. The Company has
also agreed to manufacture parts for Millipore for use in Millipore's products
on substantially similar terms pursuant to the Mykrolis Contract Manufacturing
Agreement.

  Plan of Reorganization of Operations Outside of the U.S.

   This plan sets forth the steps and actions to be taken in order to separate
the Company's business conducted outside of the U.S. from the bioscience
businesses conducted outside the U.S. and being retained by Millipore. It
details the legal entity structure for the Company and the actions being taken
to transfer employees, assets and operations to these legal entities in
compliance with local laws and regulations.

  Tax Sharing Agreement

   The Company and Millipore entered into a Tax Sharing Agreement, which will
govern the Company's and Millipore's respective rights, responsibilities and
obligations after the Distribution with respect to taxes for the periods ending
on or before the Distribution. In addition, the Tax Sharing Agreement provides
a basis to allocate any liability for taxes that are incurred as a result of
the restructuring activities undertaken to implement the Separation. If the
Distribution fails to qualify as a tax-free distribution under Section 355 of
the Internal Revenue Code because of the acquisition of the Company's stock or
assets, or some other actions of the Company, then the Company will be solely
liable for any resulting corporate taxes. Generally, Millipore indemnifies the
Company for any tax liability resulting from adjustments due to an amended
return, claim for refund or a tax audit, relating to Millipore or any domestic
subsidiary for periods prior to Separation. However, the Company is responsible
for tax liabilities of Millipore foreign subsidiaries that were transferred to
the Company in the Separation for periods prior to the Separation.

  Intellectual Property Agreements

   Under the intellectual property agreements, Millipore transferred to the
Company its rights in specified patents, specified trademarks and other
intellectual property related to the Company's current business and research
and development efforts. Millipore and the Company will each license the other
under selected patents and other intellectual property the right to use those
patents and other intellectual property in their respective businesses, subject
to field of use restrictions. Millipore and the Company each have an option,
exercisable within the first five years of the agreements, to be licensed under
specified patents of the other issued on patent applications with effective
filing dates before the Separation date, subject to field of use restrictions
and the payment of a royalty. The Company was also assigned know-how that is
used in the manufacture of its products as of the Separation date. The
agreements include certain rights to sublicense for both parties. The Company
is licensed to use the Millipore trademark for up to three years with certain
field of use limitations.

  Royalty Agreement

   During 2001, Mykrolis entered into a royalty agreement with Nihon Millipore,
which provides Nihon Millipore the right to use certain intellectual property
that was developed by Mykrolis in connection with the

                                     F-24

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)

bioscience business. As a result of this agreement, $605 in royalty income from
Millipore was recognized and recorded in other expense, net for the year ended
December 31, 2001.

  Income and expenses

   For the years ended December 31, 2001, 2000 and 1999 the Company purchased
products from Millipore for inclusion in its products sold to third parties
totaling $2,955, $3,949, $4,024, respectively. Products sold to Millipore
totaled $1,593 for the year ended December 31, 2001 and were not material for
the years ended December 31, 2000 and 1999.

   For the nine months from the Separation on April 1, 2001 through December
31, 2001, services purchased under the transition service agreements between
Millipore and the Company are as follows.

<TABLE>
<CAPTION>
                                                    Nine months
                                                       ended
                                                    December 31,
                          Purchased costs               2001
                          ---------------           ------------
                <S>                                 <C>
                Cost of sales......................    $3,279
                Selling, general and administrative     3,675
                Research and development...........     1,082
                                                       ------
                   Total...........................    $8,036
</TABLE>

   For the nine months from the Separation on April 1, 2001 through December
31, 2001, services provided to Millipore related to manufacturing,
distribution, research and development and management are as follows.

<TABLE>
<CAPTION>
                                                 Nine months ended
                                                   December 31,
                       Costs provided                  2001
                       --------------            -----------------
             <S>                                 <C>
             Cost of sales......................      $1,186
             Selling, general and administrative         222
             Research and development...........         269
                                                      ------
                Total...........................      $1,677
</TABLE>

   In addition, prior to the Separation on March 31, 2001, the Company's
combined financial statements include costs and expenses allocated from
Millipore for centralized research and development, legal, accounting, employee
benefits, officers' salaries, facilities, insurance, information technology
services, distribution, treasury and other Millipore corporate and
infrastructure costs. These allocations were determined on bases that Millipore
and the Company considered to be a reasonable assessment of the utilization of
services provided or the benefit received by the Company. The allocation
methods included relative sales, headcount, square footage and specific
identification. Allocated costs included in the accompanying consolidated and
combined statements of operations are presented below.

<TABLE>
<CAPTION>
                                              Year Ended December 31,
                                              -----------------------
                    Allocated costs            2001    2000    1999
                    ---------------           ------- ------- -------
          <S>                                 <C>     <C>     <C>
          Cost of sales...................... $ 2,233 $ 5,951 $ 5,726
          Selling, general and administrative   7,350  33,798  24,363
          Research and development...........     679   2,346   2,592
                                              ------- ------- -------
             Total........................... $10,262 $42,095 $32,681
</TABLE>

                                     F-25

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


  Net Transfers To/From Millipore Corporation

   As described in Note 1, prior to the Separation on March 31, 2001, changes
in Millipore's net investment included, net earnings (losses) of the Company
and net transfers (to)/from Millipore. Components of the net transfers are as
follows:

<TABLE>
<CAPTION>
                                                          Year ended December 31,
                                                      ------------------------------
     Net Transfers To/From Millipore Corporation        2001      2000       1999
     -------------------------------------------      --------  ---------  ---------
<S>                                                   <C>       <C>        <C>
Cash transfers to Millipore.......................... $(99,782) $(324,632) $(178,493)
Cash transfers from Millipore........................   88,379    304,391    151,444
Costs allocated from Millipore.......................   10,262     42,095     32,681
                                                      --------  ---------  ---------
Net transfers (to)/from Millipore prior to Separation $ (1,141) $  21,854  $   5,632
Net transfers from Millipore after Separation........    1,850         --         --
                                                      --------  ---------  ---------
Total transfers from Millipore....................... $    709  $  21,854  $   5,632
</TABLE>

   Cash transfers to Millipore relate primarily to cash collected on accounts
receivable that are transferred to the Millipore centralized cash management
account prior to March 31, 2001. In addition, cash transfers from Millipore
relate to direct operating costs, capital expenditures and income taxes paid by
Millipore on the Company's behalf. Allocated costs represent the Company's
share of allocated costs incurred and paid by Millipore prior to March 31, 2001.

  Average Shareholder's Net Investment/Equity

   The annual average of Millipore's net investment in the Company was $223,566
and $189,090 for the years ended December 31, 2000 and 1999 respectively.

  Officer Loan

   In 1999, Millipore made a loan to an executive officer of the Company, which
was collateralized by real estate held by the executive. During 2001, the loan
was fully paid. The loan receivable of $450 is included in other assets in the
consolidated and combined balance sheet at December 31, 2000.

13.  Commitments and Contingencies

  Leases

   The Company's operating lease agreements cover sales offices, manufacturing
and warehouse space. These leases have expiration dates through 2008. Certain
land and building leases contain renewal options for periods ranging from one
to ten years and purchase options at fair market value. Under the lease terms
relating to the Company's Bedford, Massachusetts facility, the Company has an
option to purchase the facility at fair market value between June 2005 and
November 2005, the expiration date of the lease, and the lessor has the option
to sell the facility to the Company at 90% of the then current fair market
value prior to November 2005. Rental expense was $7,425 in 2001, $6,775 in 2000
and $7,469 in 1999. The 2001 rental expense includes $2,876 of transitional
service agreement costs associated with the sharing of space owned by
Millipore. The Company anticipates relocating certain of our operations from
the Millipore owned facilities during the first half of 2002. At December 31,
2001, future minimum rents payable under noncancelable leases with initial
terms exceeding one year were as follows:

                                     F-26

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


<TABLE>
                                <S>       <C>
                                2002..... $3,905
                                2003.....  3,365
                                2004.....  3,162
                                2005.....  3,157
                                2006.....  2,452
                                2007-2008  1,764
</TABLE>

  Legal Proceedings

   In July 2000, Kurabo Industries Ltd. sued the Company in the Osaka District
Court, Osaka, Japan. This suit alleges that certain filter cartridges
manufactured in Japan by a subsidiary of the Company, Nihon Mykrolis KK
("NMKK") infringes a Japanese patent held by the plaintiff. The suit seeks
$11,000 in damages and an injunction against the future use of these filter
cartridges. NMKK has responded to this suit by denying any infringement. The
Company does not expect this suit to have a material adverse impact on its
financial position or results of operations.

   The Company is also subject to a number of other claims and legal
proceedings which, in the opinion of the Company's management, are incidental
to the Company's normal business operations. In the opinion of the Company,
although final settlement of these suits and claims may impact the Company's
financial statements in a particular period, they will not, in the aggregate,
have a material adverse effect on the Company's financial position, results of
operations or cash flows.

14.  Recent Accounting Pronouncements

   SFAS 141 and SFAS 142- In July 2001, the Financial Accounting Standards
Board (FASB) issued Statements Nos. 141 and 142 (SFAS 141 and SFAS 142),
"Business Combinations" and "Goodwill and Other Intangible Assets." SFAS 141
replaces APB 16 and eliminates pooling-of-interests accounting and goodwill
amortization in prospective periods. It also provides guidance on purchase
accounting related to the recognition of intangible assets and accounting for
negative goodwill. SFAS 142 requires that goodwill be tested annually for
impairment using a two-step process. The first step is to identify a potential
impairment and, in transition, this step must be measured as of the beginning
of the fiscal year. However, a company has six months from the date of adoption
to complete the first step. The second step of the goodwill impairment test
measures the amount of the impairment loss (measured as of the beginning of the
year of adoption), if any, and must be completed by the end of the our fiscal
year. Intangible assets deemed to have an indefinite life will be tested for
impairment using a one-step process which compares the fair value to the
carrying amount of the asset as of the beginning of the fiscal year. Any
impairment loss resulting from the transitional impairment tests will be
reflected as the cumulative effect of a change in accounting principle. The
Company has not yet determined what effect these impairment tests will have on
its consolidated results of operations, financial position or cash flows.

   The Company will adopt the provisions of SFAS 142 in our quarter ended March
31, 2002. The Company is in the process of preparing for the adoption of SFAS
142 and are making the determinations as to what its reporting units are and
what amounts of goodwill, intangible assets, other assets, and liabilities
should be allocated to those reporting units. The Company expects that it will
no longer record $916 of annual amortization expense relating to its existing
goodwill and indefinite-lived intangibles, as currently classified in the
consolidated and combined statement of operations for the year ended December
31, 2001.

                                     F-27

<PAGE>

                             MYKROLIS CORPORATION

     NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS--(Continued)

                (In thousands except share and per share data)


   SFAS 143--In August 2001, the FASB issued Statement No. 143, "Accounting for
Asset Retirement Obligations" ("SFAS 143"), which provides the accounting
requirements for retirement obligations associated with tangible long-lived
assets. This Statement requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which it is
incurred. This Statement is effective for the Company's 2003 fiscal year, and
early adoption is permitted. The adoption of SFAS 143 is not expected to have
an impact on the Company's consolidated results of operations, financial
position or cash flows.

   SFAS 144--In October 2001, the FASB issued Statement No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which
excludes from the definition of long-lived assets goodwill and other
intangibles that are not amortized in accordance with SFAS 142. SFAS 144
requires that long-lived assets to be disposed of by sale be measured at the
lower of carrying amount or fair value less cost to sell, whether reported in
continuing operations or in discontinued operations. SFAS 144 also expands the
reporting of discontinued operations to include components of an entity that
have been or will be disposed of rather than limiting such discontinuance to a
segment of a business. This Statement is effective for the Company's 2002
fiscal year, and early adoption is permitted. The Company does not expect SFAS
144 will have a material effect on the Company's consolidated results of
operations, financial position or cash flows.

15.  Subsequent Events

   On January 28, 2002, the Board of Directors of Millipore Corporation
declared a stock dividend of all of the shares of Mykrolis Corporation owned by
Millipore. The dividend will be distributed on February 27, 2002, to Millipore
shareholders of record on February 13, 2002. As discussed in footnote 1,
Millipore currently owns 32,500,000 shares of Mykrolis common stock, which
represents approximately 82.3% of the total outstanding common stock of
Mykrolis.

   On February 14, 2002, the Board of Directors of Millipore Corporation
accelerated the vesting of all restricted shares of Millipore common stock held
by the Company's employees to February 11, 2002. This modification will result
in an additional compensation charge of $522 in the first quarter of 2002.

                                     F-28

<PAGE>

                       Report of Independent Accountants

To the Board of Directors and Shareholders' of Mykrolis Corporation

   In our opinion, the consolidated and combined financial statements listed in
the accompanying index present fairly, in all material respects, the financial
position of Mykrolis Corporation and its subsidiaries (the "Company") a
majority-owned subsidiary of Millipore Corporation ("Millipore") at December
31, 2001 and 2000, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2001 in conformity
with accounting principles generally accepted in the United States of America.
In addition, in our opinion, the financial statement schedule listed in the
accompanying index presents fairly, in all material respects, the information
set forth there in when read in conjunction with the related consolidated and
combined financial statements. These financial statements and the financial
statement schedule are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in
the United States of America, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

   The Company was comprised of Millipore's microelectronics business which was
historically integrated with the businesses of Millipore; consequently, as
indicated in Note 1, these financial statements have been derived from the
consolidated financial statements and accounting records of Millipore, and
reflect significant assumptions and allocations. Moreover, as indicated in Note
1, the Company relies on Millipore for administrative, management, research and
other services. Accordingly, these consolidated and combined financial
statements do not necessarily reflect the financial position, results of
operations, and cash flows of the Company had it been a stand-alone company.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
February 11, 2002, except for Note 15, as to which the date is February 14,
  2002.


                                     F-29

<PAGE>

Quarterly Results of Operations (unaudited)

   We have experienced, and expect to continue to experience, significant
fluctuations in our quarterly results. Our expense levels are based, in part,
on expectations of future revenues. If revenue levels in a particular quarter
do not meet expectations, operating results are adversely affected. The
following table sets forth our unaudited operating results for our last eight
quarters. The information has been derived from our unaudited consolidated and
combined financial statements that, in our opinion, reflect all normal,
recurring adjustments necessary for a fair presentation. The operating results
for any quarter are not necessarily indicative of results for any future period.

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                    ---------------------------------------------------------------------------
                                    Dec. 31,  Sept. 30, June 30,  Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
                                      2001      2001      2001      2001     2000     2000      2000     2000
                                    --------  --------- --------  -------- -------- --------- -------- --------
<S>                                 <C>       <C>       <C>       <C>      <C>      <C>       <C>      <C>
Net sales.......................... $ 36,184  $ 39,683  $ 56,383  $83,024  $100,005  $91,692  $86,204  $77,639
Cost of sales......................   28,395    29,081    36,636   43,509    50,336   45,945   40,234   38,030
                                    --------  --------  --------  -------  --------  -------  -------  -------
  Gross profit.....................    7,789    10,602    19,747   39,515    49,669   45,747   45,970   39,609
Selling, general and administrative
 expenses..........................   16,005    19,178    20,265   25,276    23,792   25,467   24,168   23,042
Research and development expenses..    3,535     4,890     5,560    5,852     6,509    6,139    5,491    5,036
Restructuring and other charges....       --     4,922        --   12,556        --     (320)      --       --
                                    --------  --------  --------  -------  --------  -------  -------  -------
   Operating income (loss).........  (11,751)  (18,388)   (6,078)  (4,169)   19,368   14,461   16,311   11,531
Other income (expense), net........     (247)      169      (715)    (303)      858      281   (2,716)     181
                                    --------  --------  --------  -------  --------  -------  -------  -------
   Income (loss) before income
    taxes..........................  (11,998)  (18,219)   (6,793)  (4,472)   20,226   14,742   13,595   11,712
Income tax expense.................    2,500     1,500    20,580    1,565     7,686    5,602    5,166    4,451
                                    --------  --------  --------  -------  --------  -------  -------  -------
Net income (loss).................. $(14,498) $(19,719) $(27,373) $(6,037) $ 12,540  $ 9,140  $ 8,429  $ 7,261
                                    --------  --------  --------  -------  --------  -------  -------  -------
Basic and diluted earnings (loss)..
  Per share........................ $  (0.37) $  (0.54) $  (0.84) $ (0.19) $   0.39  $  0.28  $  0.26  $  0.22
Shares used in computing basic And
 diluted earnings (loss) per Share.   39,500    36,423    32,500   32,500    32,500   32,500   32,500   32,500
</TABLE>

   The following table sets forth our financial information stated as a
percentage of net sales for the past nine quarterly periods:

<TABLE>
<CAPTION>
                                                                  Three Months Ended
                                       ------------------------------------------------------------------------
                                       Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
                                         2001     2001      2001     2001     2000     2000      2000     2000
                                       -------- --------- -------- -------- -------- --------- -------- --------
<S>                                    <C>      <C>       <C>      <C>      <C>      <C>       <C>      <C>
Net sales.............................  100.0%    100.0%   100.0%   100.0%   100.0%    100.0%   100.0%   100.0%
                                        -----     -----    -----    -----    -----     -----    -----    -----
Cost of sales.........................   78.5%     73.3%    65.0%    52.4%    50.3%     50.1%    46.7%    49.0%
                                        -----     -----    -----    -----    -----     -----    -----    -----
   Gross profit.......................   21.5%     26.7%    35.0%    47.6%    49.7%     49.9%    53.3%    51.0%
Selling, general and administrative
 expenses.............................   44.2%     48.3%    35.9%    30.4%    23.8%     27.8%    28.0%    29.7%
Research and development expenses.....    9.8%     12.3%     9.9%     7.0%     6.5%      6.7%     6.4%     6.5%
Restructuring and other charges.......     --      12.4%      --     15.1%      --       (.4)%     --       --
                                        -----     -----    -----    -----    -----     -----    -----    -----
   Operating income (loss)............  (32.5)%   (46.3)%  (10.8)%   (4.9)%   19.4%     15.8%    18.9%    14.8%
Other income (expense), net...........   (0.7)%      .4%    (1.3)%   (0.4)%     .9%       .3%    (3.2)%     .2%
                                        -----     -----    -----    -----    -----     -----    -----    -----
   Income (loss) before income taxes..  (33.2)%   (45.9)%   12.1%    (5.3)%   20.3%     16.1%    15.7%    15.0%
Income tax expense....................    6.9%      3.8%    36.5%     1.9%     7.7%      6.1%     6.0%     5.7%
                                        -----     -----    -----    -----    -----     -----    -----    -----
Net income (loss).....................  (40.1)%   (49.7)%  (48.6)%   (7.2)%   12.6%     10.0%     9.7%     9.3%
                                        -----     -----    -----    -----    -----     -----    -----    -----
</TABLE>

                                     F-30

<PAGE>

                       Valuation and Qualifying Accounts

                                (In thousands)

<TABLE>
<CAPTION>
                                                   Balance at Additions Additions Deductions   Balance
                                                   beginning   charged   charged     from      at end
                   Description                     of period  to income to other  reserves(1) of period
                   -----------                     ---------- --------- --------- ----------- ---------
<S>                                                <C>        <C>       <C>       <C>         <C>
Reserves deducted from assets to which they apply:
Allowance for Doubtful Accounts:..................
   Year ended December 31, 1999...................     847       918      (130)      (800)        835
   Year ended December 31, 2000...................     835       428       285        (51)      1,497
   Year ended December 31, 2001...................   1,497       392       198       (417)      1,670
</TABLE>
--------
(1) Accounts written off

                                     F-31