Table of Contents

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

**(Mark One)**

 

**x**** ****QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For thequarterly period ended March 31, 2010**

 

**or**

 

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

 

**For thetransition period from             to             **

 

**Commission file number 000-30941**

 

**AXCELIS TECHNOLOGIES, INC.**

(Exact name of registrant asspecified in its charter)

 

| **Delaware**                     | ** ** | **34-1818596**      |
|----------------------------------|------------|---------------------|
| (State or other  jurisdiction of | ** ** | (IRS Employer       |
| incorporation or  organization)  | ** ** | Identification No.) |

 

**108 Cherry Hill Drive**

**Beverly, Massachusetts 01915**

(Address of principalexecutive offices, including zip code)

 

**(978) 787-4000**

(Registrant’s telephonenumber, including area code)

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirementsfor the past 90 days.  Yes  x  No  o.

 

Indicate by check markwhether the registrant has submitted electronically and posted on its corporateWeb site, of any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T during the preceding12 months (or for such shorter period that the registrant was required tosubmit and post such files). Yes  o  No  o.

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2of the Exchange Act.

 

| Large accelerated filer o       |   | Accelerated filer o              |
|------------------------------------------------|--------|--------------------------------------------|
|                                           |   |                                       |
| Non-accelerated filer o              |   | Smaller reporting company x |
| (Do not check if a smaller  reporting company) |   |                                       |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act)  Yes  o  No  x

 

As of May 12, 2010there were 104,162,629 shares of the registrant’s common stock outstanding.

 

 

 

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Table of Contents

 

**Table ofContents**

 
| **PART I -  FINANCIAL INFORMATION** |
|------------------------------------------|
| **Item 1.**                              | **Financial  Statements.** | 3 |
|                                     | Consolidated Statement of Operations for the three  months ended March 31, 2010 and 2009 | 3 |
|                                     | Consolidated  Balance Sheets as of March 31, 2010 and December 31, 2009 | 4 |
|                                     | Consolidated Statements of Cash Flows for the three  months ended March 31, 2010 and 2009 | 5 |
|                                     | Notes to Consolidated Financial Statements | 6 |
| **Item 2.**                              | **Managements  Discussion and Analysis of Financial Condition and Results of Operations.** | 10 |
|                                     | Overview | 10 |
|                                     | Critical Accounting Estimates | 10 |
|                                     | Results of Operations | 11 |
|                                     | Liquidity and Capital Resources | 14 |
| **Item 3.**                              | **Quantitative  and Qualitative Disclosures About Market Risk.** | 14 |
| **Item 4.**                              | **Controls and  Procedures.** | 14 |
| **PART II - OTHER  INFORMATION**    |
| **Item  1.**                             | **Legal  Proceedings.** | 15 |
| **Item  1A.**                            | **Risk  Factors.** | 15 |
| **Item 2.**                              | **Unregistered  Sales of Equity Securities and Use of Proceeds.** | 15 |
| **Item 3.**                              | **Defaults Upon  Senior Securities.** | 15 |
| **Item 4.**                              | **(Removed and Reserved).** | 15 |
| **Item  5.**                             | **Other  Information.** | 15 |
| **Item  6.**                             | **Exhibits.** | 16 |

 

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**PART 1—FINANCIAL INFORMATION**

 

**Item 1. Financial Statements.**

 

**Axcelis Technologies, Inc.**

**Consolidated Statements ofOperations**

**(In thousands, except per share amounts)**

**(Unaudited)**

 
| ** **                                                     | ** ** | **Three months ended** | ** ** |
|----------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                     | ** ** | **March 31,**     | ** ** |
| ** **                                                     | ** ** | **2010**               | ** ** | **2009** | ** ** |
| Revenue                                                        |       |                   |       |   |   |
| Product                                                        |       | $                      | 40,278     |   | $ | 17,734 |   |
| Service                                                        |       | 8,222                  |       | 7,784 |   |
| Royalties, primarily from  SEN                                 |       | —                 |       | 210 |   |
|                                                           |       | 48,500                 |       | 25,728 |   |
| Cost of revenue                                                |       |                   |       |   |   |
| Product                                                        |       | 30,320                 |       | 18,232 |   |
| Service                                                        |       | 5,173                  |       | 4,489 |   |
|                                                           |       | 35,493                 |       | 22,721 |   |
|                                                           |       |                   |       |   |   |
| Gross profit                                                   |       | 13,007                 |       | 3,007 |   |
| Operating expenses                                             |       |                   |       |   |   |
| Research and development                                       |       | 9,133                  |       | 9,535 |   |
| Sales and marketing                                            |       | 6,604                  |       | 6,879 |   |
| General and administrative                                     |       | 7,700                  |       | 10,670 |   |
| Restructuring charges                                          |       | —                 |       | 984 |   |
|                                                           |       | 23,437                 |       | 28,068 |   |
|                                                           |       |                   |       |   |   |
| Loss from operations                                           |       | (10,430                | )          | (25,061 | ) |
|                                                           |       |                   |       |   |   |
| Other income (expense)                                         |       |                   |       |   |   |
| Gain on sale of SEN                                            |       | —                 |       | 1,080 |   |
| Equity loss of SEN                                             |       | —                 |       | (3,238 | ) |
| Interest income                                                |       | 29                     |       | 63 |   |
| Interest expense                                               |       | —                 |       | (1,676 | ) |
| Other, net                                                     |       | (407                   | )          | (205 | ) |
|                                                           |       | (378                   | )          | (3,976 | ) |
|                                                           |       |                   |       |   |   |
| Loss before income taxes                                       |       | (10,808                | )          | (29,037 | ) |
|                                                           |       |                   |       |   |   |
| Income taxes                                                   |       | 293                    |       | 118 |   |
|                                                           |       |                   |       |   |   |
| Net loss                                                       |       | $                      | (11,101    | ) | $ | (29,155 | ) |
|                                                           |       |                   |       |   |   |
| Net loss per share                                             |       |                   |       |   |   |
| Basic and diluted net loss  per share                          |       | $                      | (0.11      | ) | $ | (0.28 | ) |
|                                                           |       |                   |       |   |   |
| Shares used in computing  basic and diluted net loss per share |       |                   |       |   |   |
| Weighted average common  shares                                |       | 104,116                |       | 103,284 |   |

 

See accompanying Notes to these ConsolidatedFinancial Statements

 

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**AxcelisTechnologies, Inc.**

**ConsolidatedBalance Sheets**

**(Inthousands)**

**(Unaudited)**

 
| ** **                                     | ** ** | **March 31,  2010** | ** ** | **December 31,  2009** | ** ** |
|------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| **ASSETS**                                     |       |                     |       |                        |       |
| Current assets                                 |       |                     |       |                        |       |
| Cash and cash equivalents                      |       | $                        | 34,801     |                        | $          | 45,020 |   |
| Restricted cash                                |       | 6,843                    |       | 4,918                       |       |
| Accounts receivable, net                       |       | 34,293                   |       | 19,094                      |       |
| Inventories, net                               |       | 105,205                  |       | 114,558                     |       |
| Prepaid expenses and other current assets      |       | 10,474                   |       | 10,016                      |       |
| Total current assets                           |       | 191,616                  |       | 193,606                     |       |
|                                           |       |                     |       |                        |       |
| Property, plant and equipment, net             |       | 40,226                   |       | 40,868                      |       |
| Long-term restricted cash                      |       | —                   |       | 2,245                       |       |
| Other assets                                   |       | 12,700                   |       | 13,884                      |       |
|                                           |       | $                        | 244,542    |                        | $          | 250,603 |   |
| ** **                                     |       |                     |       |                        |       |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY** |       |                     |       |                        |       |
| Current liabilities                            |       |                     |       |                        |       |
| Accounts payable                               |       | $                        | 12,822     |                        | $          | 9,680 |   |
| Accrued compensation                           |       | 10,627                   |       | 9,267                       |       |
| Warranty                                       |       | 730                      |       | 638                         |       |
| Income taxes                                   |       | 1,099                    |       | 1,499                       |       |
| Deferred revenue                               |       | 5,295                    |       | 5,127                       |       |
| Other current liabilities                      |       | 3,760                    |       | 3,546                       |       |
| Total current liabilities                      |       | 34,333                   |       | 29,757                      |       |
|                                           |       |                     |       |                        |       |
| Long-term deferred revenue                     |       | 910                      |       | 563                         |       |
| Other long-term liabilities                    |       | 3,781                    |       | 3,884                       |       |
|                                           |       |                     |       |                        |       |
| Commitments and contingencies (Note 11)        |       |                     |       |                        |       |
| Stockholders’ equity                      |       |                     |       |                        |       |
| Preferred stock                                |       | —                   |       | —                      |       |
| Common stock                                   |       | 104                      |       | 104                         |       |
| Additional paid-in capital                     |       | 489,308                  |       | 488,321                     |       |
| Treasury stock                                 |       | (1,218                   | )          | (1,218                      | )          |
| Accumulated deficit                            |       | (287,048                 | )          | (275,947                    | )          |
| Accumulated other comprehensive income         |       | 4,372                    |       | 5,139                       |       |
|                                           |       | 205,518                  |       | 216,399                     |       |
|                                           |       | $                        | 244,542    |                        | $          | 250,603 |   |

 

Seeaccompanying Notes to these Consolidated Financial Statements

 

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**Axcelis Technologies, Inc.**

**Consolidated Statements of Cash Flow**

**(In thousands)**

**(Unaudited)**

 
| ** **                                                                  | ** ** | **Three months ended** | ** ** |
|-----------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                  | ** ** | **March 31,**     | ** ** |
| ** **                                                                  | ** ** | **2010**               | ** ** | **2009** | ** ** |
| **Cash flows from operating  activities**                                   |       |                   |       |   |   |
| Net loss                                                                    |       | $                      | (11,101)   |   | $ | (29,155) |   |
| Adjustments to reconcile net loss to net cash used  foroperating activities |       |                   |       |   |   |
| Undistributed loss of SEN                                                   |       | —                 |       | 3,238 |   |
| Depreciation and amortization                                               |       | 1,937                  |       | 1,861 |   |
| Gain on sale of SEN                                                         |       | —                 |       | (1,080 | ) |
| Deferred Taxes                                                              |       | 167                    |       | — |   |
| Accretion of premium on convertible debt                                    |       | —                 |       | 133 |   |
| Stock-based compensation expense                                            |       | 817                    |       | 858 |   |
| Provision for excess inventory                                              |       | 758                    |       | 4,727 |   |
| Changes in operating assets & liabilities                          |       |                   |       |   |   |
| Accounts receivable                                                         |       | (15,425                | )          | 6,228 |   |
| Inventories                                                                 |       | 8,252                  |       | 2,973 |   |
| Prepaid expenses and other current assets                                   |       | (362                   | )          | 1,615 |   |
| Accounts payable & other current  liabilities                      |       | 4,922                  |       | (3,297 | ) |
| Deferred revenue                                                            |       | 526                    |       | 11 |   |
| Income taxes                                                                |       | (408                   | )          | 76 |   |
| Other assets and liabilities                                                |       | 54                     |       | (270 | ) |
| Net cash used for operating activities                                      |       | (9,863                 | )          | (12,082 | ) |
| **Cash flows from investing  activities**                                   |       |                   |       |   |   |
| Expenditures for property, plant, and equipment                             |       | (263                   | )          | (213 | ) |
| Decrease in restricted cash                                                 |       | 319                    |       | — |   |
| Proceeds from sale of SEN                                                   |       | —                 |       | 129,377 |   |
| Net cash provided by investing activities                                   |       | 56                     |       | 129,164 |   |
| **Cash flows from financing  activities**                                   |       |                   |       |   |   |
| Repayment of convertible debt                                               |       | —                 |       | (83,344 | ) |
| Financing fees and other expenses                                           |       | (431                   | )          | — |   |
| Proceeds from exercise of stock options                                     |       | 32                     |       | — |   |
| Proceeds from Employee Stock Purchase Plan                                  |       | 169                    |       | 182 |   |
| Net cash used for financing activities                                      |       | (230                   | )          | (83,162 | ) |
| Effect of exchange rate changes on cash                                     |       | (182                   | )          | (371 | ) |
| Net increase (decrease) in cash and cash  equivalents                       |       | (10,219                | )          | 33,549 |   |
| Cash and cash equivalents at beginning of period                            |       | 45,020                 |       | 37,694 |   |
| Cash and cash equivalents at end of period                                  |       | $                      | 34,801     |   | $ | 71,243 |   |

 

Seeaccompanying Notes to these Consolidated Financial Statements

 

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**Axcelis Technologies, Inc.**

 

**Notes To Consolidated Financial Statements (Unaudited)**

 

**(All tabular amounts in thousands, except per share amounts)**

 

**Note 1. Nature of Business and Basis ofPresentation**

 

Axcelis Technologies, Inc.(“Axcelis” or the “Company”), is a worldwide producer of ion implantation, drystrip and other processing equipment used in the fabrication of semiconductorchips in the United States, Europe and Asia. In addition, the Company provides extensive aftermarket service andsupport, including spare parts, equipment upgrades, and maintenance services tothe semiconductor industry.

 

Until March 30, 2009,the Company owned 50% of the equity of a joint venture with Sumitomo HeavyIndustries, Ltd. (“SHI”) in Japan. Detailed information about the Company’s investment in the joint ventureis provided in Note 2.

 

During the three monthsended March 31, 2010, the Company experienced negative cash flows fromoperations of $9.9 million predominately driven by an $11.1 million netloss.   Cash and cash equivalents at March 31,2010 were $34.8 million, compared to $45.0 million at December 31,2009. The Company’s 2010 plan includes improvement in revenue and operatingcash flow and reduction in working capital as compared to 2009.  The Company believes that based on itscurrent market, revenue and expense forecasts, its existing cash and cashequivalents will be sufficient to satisfy its anticipated cash requirements.  During the quarter ended March 31, 2010the Company continued to benefit from improving market conditions and increasedcapacity utilization at customers’ manufacturing facilities. Industry forecastsproject this positive trend to continue throughout the remainder of 2010 andinto 2011. Should the market recovery not continue as expected, the Companybelieves it can control spending levels to provide sufficient liquidity tosupport operations through 2010. However, the absence of a continuing marketrecovery in 2010 would likely have a material effect on the Company’s liquidityentering 2011.

 

The accompanying unauditedconsolidated financial statements have been prepared in accordance withU.S.generally accepted accounting principles for interim financial informationand with the instructions to Form 10-Q and Article 10 ofRegulation S-X. Accordingly, they do not include all of the informationand footnotes required by generally accepted accounting principles for completefinancial statements. In the opinion of management, all adjustments, which areof a normal recurring nature, considered necessary for a fair presentation ofthese financial statements have been included. Operating results for theinterim periods presented are not necessarily indicative of the results thatmay be expected for other interim periods or for the year as a whole.

 

The balance sheet at December 31,2009 has been derived from the audited financial statements at that date butdoes not include all of the information and footnotes required by generallyaccepted accounting principles for complete financial statements. For furtherinformation, refer to the consolidated financial statements and footnotesthereto included in Axcelis Technologies, Inc.’s Annual Report on Form 10-Kfor the year ended December 31, 2009.

 

**Note 2. Sale of Investment in SEN**

 

Until March 30,2009, the Company owned 50% of the equity of a joint venture with SumitomoHeavy Industries, Ltd. (“SHI”) in Japan. This joint venture, which was known as SEN Corporation, an SHI andAxcelis Company (“SEN”), licensed technology from the Company relating to themanufacture of specified ion implantation products and had exclusive rights tomanufacture and sell these products in the territory of Japan.  On March 30, 2009, pursuant to a SharePurchase Agreement dated February 26, 2009, the Company sold to SHI all ofthe Company’s common shares in SEN in exchange for a cash payment of 13 billionYen, which resulted in proceeds of approximately $132.8 million before advisorfees and other expenses of $10.6 million. The sales price was determined through an arm’s length negotiation.  This transaction terminated all prioragreements among the three parties relating to the SEN joint venture.  In addition, the arbitration with SEN initiatedby Axcelis in Tokyo was dismissed.

 

In connection with thesale of its investment in SEN, on March 30, 2009, the Company and SENentered into a License Agreement pursuant to which the parties have crosslicensed each other to use certain patents and technical information on anon-exclusive, perpetual, royalty-free, worldwide basis, provided that theCompany and SEN received sole exclusive licenses for 4 years in the U.S. andJapan, respectively.  The licenses totechnical information cover only technical information shared by the partiesprior to the date of the license, so the license to SEN does not covertechnical information relating to the Optima HD and Optima XE. The

 

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licensealso excludes patents relating to Axcelis’ work in molecular implant andcertain patents developed for the Optima HD and Optima XE.  The parties provided each other with limitedwarranties regarding their right to grant these licenses, and indemnity withrespect thereto, but disclaim any warranty regarding the validity or freedomfrom infringement of the licensed intellectual property.  Neither party will provide any support forthe other party’s use of the licensed intellectual property.

 

The sale of the Company’sinvestment in SEN on March 30, 2009, resulted in a gain of approximately$1.1 million.  This gain includes netproceeds of $122.2 million (after payment of advisor fees and other costs of$10.6 million) and cumulative foreign translation gain of $23.5 million,previously recorded in other comprehensive income, reduced by the carryingvalue of the investment on the date of sale of $144.6 million.  The gain from the sale of the Company’sinvestment in SEN is recorded in other income.

 

On March 30, 2009, aportion of the proceeds of the sale were used to pay off, in full, the amountsdue to the holder of the Company’s 4.25% Convertible Senior SubordinatedNotes.  See Note 8.

 

**Note 3. Stock-Based Compensation**

 

The Company maintains theAxcelis Technologies, Inc. 2000 Stock Plan (the “2000 Plan”), a stockaward and incentive plan which permits the issuance of options, restrictedstock, restricted stock units and performance awards to selected employees,directors and consultants of the Company. The Company also maintains theAxcelis Technologies, Inc. Employee Stock Purchase Plan (the “ESPP”), anInternal Revenue Code Section 423 plan. The 2000 Plan and the ESPP aremore fully described in Note 14 to the consolidated financial statementsin the Company’s 2009 Annual Report on Form 10-K.

 

The Company recognizedstock-based compensation expense of $0.8 million and $0.9 million for thethree months ended March 31, 2010 and 2009, respectively.  These amounts include compensation expenserelated to restricted stock units, restricted stock, non-qualified stockoptions and stock expected to be issued under the ESPP.

 

**Note 4. Net Loss Per Share**

 

Basic earnings per share iscomputed by dividing income available to common stockholders (the numerator) bythe weighted-average number of common shares outstanding (the denominator) forthe period. The computation of diluted earnings per share is similar to basicearnings per share, except that the denominator is increased to includeadditional common shares that would have been outstanding if the potentiallydilutive common shares had been issued. Because the Company has net losses for the three-monthperiods ended March 31, 2010 and 2009, any potentially diluted commonshares related to outstanding stock options, restricted stock, restricted stockunits and convertible debt have been excluded from the calculation of net lossper share because the effect would be anti-dilutive.

 

**Note 5. Comprehensive Loss**

 

The components ofcomprehensive loss are as follows:

 
| ** **                               | ** ** | **Three months ended** | ** ** |
|------------------------------------------|------------|------------------------|------------|
| ** **                               | ** ** | **March 31,**     | ** ** |
| ** **                               | ** ** | **2010**               | ** ** | **2009** | ** ** |
| ** **                               | ** ** | **(in thousands)**     | ** ** |
|                                     |       |                   |       |
| Net loss                                 |       | $                      | (11,101    | ) | $ | (29,155 | ) |
| Other comprehensive loss                 |       |                   |       |   |   |
| Foreign currency translation adjustments |       | (767                   | )          | (11,789 | ) |
|                                     |       | $                      | (11,868    | ) | $ | (40,944 | ) |

 

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**Note 6. Inventories**

 

The components ofinventories are as follows:

 
| ** **                         | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                         | ** ** | **2010**           | ** ** | **2009**              | ** ** |
| ** **                         | ** ** | **(in thousands)** | ** ** |
|                               |       |               |       |                  |       |
| Raw materials                      |       | $                  | 67,472     |                  | $          | 69,661 |   |
| Work in process                    |       | 19,755             |       | 27,654                |       |
| Finished goods (completed systems) |       | 17,978             |       | 17,243                |       |
|                               |       | $                  | 105,205    |                  | $          | 114,558 |   |

 

When recorded, reservesreduce the carrying value of inventory to its net realizable value. The Companyestablishes inventory reserves when conditions exist that indicate inventorymay be in excess of anticipated demand or is obsolete based upon assumptionsabout future demand for the Company’s products or market conditions. TheCompany regularly evaluates the ability to realize the value of inventory basedon a combination of factors including forecasted sales or usage, estimatedproduct end- of- life dates, estimated current and future market value and newproduct introductions. Purchasing and usage alternatives are also explored tomitigate inventory exposure.  As of March 31,2010 and December 31, 2009, inventory is stated net of inventory reservesof $36.3 million and $37.0 million respectively.

 

**Note 7. Product Warranty**

 

The Company offers a one tothree year warranty for all of its products, the terms and conditions of whichvary depending upon the product sold. For all systems sold, the Company accruesa liability for the estimated cost of standard warranty at the time of systemshipment and defers the portion of systems revenue attributable to the fairvalue of non-standard warranty.  Costsfor non-standard warranty are expensed as incurred. Factors that affect theCompany’s warranty liability include the number of installed units, historicaland anticipated product failure rates, material usage and service labor costs.The Company periodically assesses the adequacy of its recorded liability andadjusts the amount as necessary.

 

Changes in the Company’sproduct warranty liability are as follows:

** **
| ** **                                                                      | ** ** | **Three months ended**  | ** ** |
|---------------------------------------------------------------------------------|------------|-------------------------|------------|
| ** **                                                                      | ** ** | **March 31,**      | ** ** |
| ** **                                                                      | ** ** | **2010**                | ** ** | **2009** | ** ** |
| ** **                                                                      | ** ** | **(in thousands)** | ** ** |
| Balance at December 31                                                     |       | $                       | 726        |   | $ | 3,530 |   |
| Warranties issued during  the period                                            |       | 463                     |       | 284 |   |
| Settlements made during the  period                                             |       | (546                    | )          | (695 | ) |
| Changes in estimate of liability for pre-existing warranties  during the period |       | 115                     |       | (874 | ) |
| Balance at March 31                                                        |       | $                       | 758        |   | $ | 2,245 |   |
| Amount classified as  current                                                   |       | $                       | 730        |   | $ | 2,089 |   |
| Amount classified as  long-term                                                 |       | 28                      |       | 156 |   |
| Total Warranty Liability                                                        |       | $                       | 758        |   | $ | 2,245 |   |

 

**Note 8. Financial Arrangements**

 

**Bank Credit Facility**

 

On March 12, 2010, theCompany amended its existing revolving credit facility with a bank. The amendedagreement provides for borrowings up to the lesser of $20 million orspecified percentages of the amounts of qualifying accounts receivable andinventory. The facility has certain financial covenants requiring the Companyto maintain minimum levels of operating results and 

 

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liquidity. Borrowings made under the facilitywill bear interest at the greater of 6% or the bank’s prime rate plus 2%. Theagreement will terminate on March 12, 2011.

 

The Company’s currentforecast projects that the Company will not be in compliance with all financialcovenants at the close of the second quarter.  The Company has executed a term sheet receivedfrom the bank providing for a modification to the revolving credit agreement byamending the financial covenants.  Thisterm sheet is subject to final approval by the bank.  Based on current forecasts, the Companybelieves it will be in compliance with the financial covenants, as proposed tobe modified in the term sheet, throughout 2010. The Company believes it will obtain final bank approval and close on themodifications to the bank credit facility by the end of May 2010.  However, there can be no assurance that suchfinal approval and closure will occur by the end of May or at all.  

 

The Company believes thatbased on its current market, revenue and expense forecasts, its existing cashand cash equivalents will be sufficient to satisfy its anticipated cashrequirements.

 

**Convertible Subordinated Debt**

 

On March 30, 2009,Axcelis used a portion of the proceeds of the sale of its interest in SEN (seeNote 2) to pay all amounts due (approximately $85 million) under anIndenture between Axcelis and U.S. Bank National Association, as trustee,relating to the Company’s 4.25% Convertible Senior Subordinated Notes,resulting in an extinguishment of the debt in full.

 

**Note 9. Income Taxes**

 

Income tax expense relatesprincipally to operating results of foreign entities in jurisdictions,primarily in Asia, where the Company earns taxable income. The Company hassignificant net operating losses in the United States and certain foreign taxjurisdictions and, as a result, does not pay significant income taxes in thosejurisdictions. Accordingly, the effective income tax rate is not meaningful.

 

**Note 10. Significant Customers**

 

For the three months ended March 31,2010, one customer accounted for approximately 16.6% of revenue. For the threemonths ended March 31, 2009, two customers accounted for approximately14.8% and 13.8% of revenue, respectively.

 

**Note 11. Contingencies**

 

**Litigation**

 

The Company is, from time totime, a party to litigation that arises in the normal course of its businessoperations.  The Company is not presentlya party to any litigation that it believes might have a material adverse effecton its business operations.

 

**Indemnifications**

 

The Company’s system salesagreements typically include provisions under which the Company agrees to takecertain actions, provide certain remedies and defend its customers againstthird-party claims of intellectual property infringement under specifiedconditions and to indemnify customers against any damage and costs awarded inconnection with such claims. The Company has not incurred any material costs asa result of such indemnifications and has not accrued any liabilities relatedto such obligations in the accompanying consolidated financial statements.

 

**Note 12. Recent Accounting Pronouncements**

 

In September 2009, theFASB issued a new accounting standard to provide guidance on revenuerecognition criteria for multiple-element arrangements. The new accountingstandard modifies the criteria used to separate elements in a multiple-elementarrangement by introducing the concept of best estimate of selling price,establishing a hierarchy of evidence for determining selling price (fairvalue), requiring the use of relative selling price method and prohibiting theuse of the residual method to allocate arrangement consideration among units ofaccounting. The new accounting standard also expands the disclosurerequirements for all multiple element arrangements and is effectiveprospectively for revenue arrangements entered into or materially modified infiscal years beginning on or after June 15, 2010 (January 1, 2011 fora calendar year-end entity). The Company is currently evaluating the impact ofadopting this pronouncement.

 

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**Item 2. Management’s Discussion and Analysis of Financial Condition and Resultsof Operations.**

 

Certain statements in “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” andelsewhere in this Form 10-Q are forward-looking statements that involverisks and uncertainties. Words such as may, will, should, would, anticipates,expects, intends, plans, believes, seeks, estimates and similar expressionsidentify such forward-looking statements. The forward-looking statementscontained herein are based on current expectations and entail various risks anduncertainties that could cause actual results to differ materially from thoseexpressed in such forward-looking statements. Factors that might cause such adifference include, among other things, those set forth or referred to under “Liquidityand Capital Resources” and “Risk Factors” and others discussed elsewhere inthis Form 10-Q. Readers are cautioned not to place undue reliance on theseforward-looking statements, which reflect management’s analysis only as of thedate hereof. We assume no obligation to update these forward-looking statementsto reflect actual results or changes in factors or assumptions affectingforward-looking statements, except as may be required by law.

 

**Overview**

 

The semiconductor capitalequipment industry is subject to significant cyclical swings in capitalspending by semiconductor manufacturers. Capital spending is influenced bydemand for semiconductors and the products using them, the utilization rate andcapacity of existing semiconductor manufacturing facilities and changes insemiconductor technology, all of which are outside of our control. As a result,our revenues and gross margins, to the extent affected by increases ordecreases in volume, fluctuate from year to year and period to period. Theindustry experienced a downturn beginning in the second half of 2008 whichextended through 2009, although signs of improvement began during the fourthquarter of 2009 and have continued through the first quarter of 2010.  Our gross margins are also affected by theintroduction of new products. We typically become more efficient inmanufacturing products as they mature. Our expense base is largely fixed anddoes not vary significantly with changes in volume. Therefore, we experiencefluctuations in operating results and cash flows depending on our revenues asdriven by the level of capital expenditures by semiconductor manufacturers.

 

The sizable expense ofbuilding, upgrading or expanding a semiconductor fabrication facility isincreasingly causing semiconductor companies to contract with foundries tomanufacture their semiconductors. In addition, consolidation and partneringwithin the semiconductor manufacturing industry is increasing. We expect thesetrends to continue to reduce the number of our potential customers. Thisgrowing concentration of Axcelis’ customers may increase pricing pressure ashigher percentages of our total revenues are tied to the buying decisions of aparticular customer or a small number of customers.

 

Although we believe that wehave competitive products, since mid-2008 challenging market conditions haveseverely limited our ability to increase sales and market share.  During this period, adverse market conditionssuch as credit constriction, higher unemployment, lower corporate earnings,lower business investment and lower consumer spending severely impacted manytechnology manufacturers and significantly lowered the demand for ourproducts.  In the quarter ended March 31,2010, we have seen signs that the economy, and the market for our products, arebeginning to improve leading to improved revenues.  Our expense base is reduced from earlierperiods due to cost reduction initiatives implemented in 2009 and 2008.

 

Operating results for theperiods presented are not necessarily indicative of the results that may beexpected for future interim periods or years as a whole.

 

**Critical Accounting Estimates**

 

Management’s discussion andanalysis of our financial condition and results of operations are based uponAxcelis’ consolidated financial statements, which have been prepared inaccordance with accounting principles generally accepted in the United States.The preparation of these financial statements requires management to makeestimates and judgments that affect the reported amounts of assets,liabilities, revenues and expenses, and related disclosure of contingent assetsand liabilities. On an on-going basis, we evaluate our estimates, includingthose related to revenue recognition, income taxes, accounts receivable,inventory and warranty obligations. Management’s estimates are based onhistorical experience and on various other assumptions that are believed to bereasonable under the circumstances, the results of which form the basis formaking judgments about the carrying values of assets and liabilities that arenot readily apparent from other sources. Actual results may differ from theseestimates under different assumptions or conditions.

 

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There has been no materialchange in the nature of our critical accounting estimates and judgments asdescribed in Management’s Discussion and Analysis of Financial Condition andResults of Operations included in our Annual Report on Form 10-K for theyear ended December 31, 2009.

 

**Results of Operations**

 

The following table setsforth our results of operations as a percentage revenue for the periodsindicated:

 

**Axcelis Technologies, Inc.**

**Consolidated Statements of Operations**

**Percentage of Revenue**

**(Unaudited)**

 
| ** **                     | ** ** | **Three months ended  March 31,** | ** ** |
|--------------------------------|------------|----------------------------------------|------------|
| ** **                     | ** ** | **2010**                               | ** ** | **2009** | ** ** |
| Revenue                        |       |                                   |       |   |   |
| Product                        |       | 83.0                                   | %          | 68.9 | % |
| Service                        |       | 17.0                                   |       | 30.3 |   |
| Royalties, primarily from  SEN |       | —                                 |       | 0.8 |   |
| Total revenue                  |       | 100.0                                  |       | 100.0 |   |
| Cost of revenue                |       |                                   |       |   |   |
| Product                        |       | 62.5                                   |       | 70.9 |   |
| Service                        |       | 10.7                                   |       | 17.4 |   |
| Total cost of revenue          |       | 73.2                                   |       | 88.3 |   |
|                           |       |                                   |       |   |   |
| Gross profit                   |       | 26.8                                   |       | 11.7 |   |
|                           |       |                                   |       |   |   |
| Operating expenses             |       |                                   |       |   |   |
| Research and development       |       | 18.8                                   |       | 37.1 |   |
| Sales and marketing            |       | 13.6                                   |       | 26.7 |   |
| General and administrative     |       | 15.9                                   |       | 41.5 |   |
| Restructuring charges          |       | —                                 |       | 3.8 |   |
| Total operating expenses       |       | 48.3                                   |       | 109.1 |   |
|                           |       |                                   |       |   |   |
| Loss from operations           |       | (21.5                                  | )          | (97.4 | ) |
|                           |       |                                   |       |   |   |
| Other income (expense)         |       |                                   |       |   |   |
| Gain on sale of SEN            |       | —                                 |       | 4.2 |   |
| Equity loss of SEN             |       | —                                 |       | (12.6 | ) |
| Interest income                |       | —                                 |       | 0.2 |   |
| Interest expense               |       | —                                 |       | (6.5 | ) |
| Other, net                     |       | (0.8                                   | )          | (0.8 | ) |
| Total other income  (expense)  |       | (0.8                                   | )          | (15.5 | ) |
|                           |       |                                   |       |   |   |
| Loss before income taxes       |       | (22.3                                  | )          | (112.9 | ) |
| Income taxes                   |       | 0.6                                    |       | 0.5 |   |
| Net loss                       |       | (22.9                                  | )%         | (113.4 | )% |

 

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**Three months ended March 31, 2010 in comparisonto the three months ended March 31, 2009**

 

**Revenue**

 

*Product*

 

Product revenue, which includessystems sales, sales of spare parts and product upgrades, was$40.3 million or 83.0% of revenue for the three months ended March 31,2010, compared with $17.7 million, or 68.9% of revenue for the threemonths ended March 31, 2009. The increase in product revenue in thethree-month period ended March 31, 2010 is attributable to thestrengthening of the semiconductor market and a related increase in capitalspending by semiconductor manufacturers.

 

A portion of our revenuefrom system sales is deferred until installation and other services related tofuture deliverables are performed. The total amount of deferred revenue at March 31,2010 and 2009 was $6.2 million and $14.4 million, respectively. Thedecline was mainly due to the decrease in systems sales in 2009.

 

*Service*

 

Service revenue, whichincludes the labor component of maintenance and service contracts and fees forservice hours provided by on-site service personnel, was $8.2 million, or17.0% of revenue for the three months ended March 31, 2010, compared with$7.8 million, or 30.3% of revenue, for the three months ended March 31,2009. Although service revenue should increase with the expansion of theinstalled base of systems, it can fluctuate period to period based on capacityutilization at customers’ manufacturing facilities, which affects the need forequipment service. The slight increase was due to an increase in fabricationutilization in the semiconductor industry.

 

*Royalties*

 

We had no royalty revenue inthe three months ended March 31, 2010 compared with $0.2 million, or0.8% of revenue for the three months ended March 31, 2009.  Royalties were earned primarily under ourprior license agreement with SEN. As a result of the sale of our investment in SEN, SENhas had no further royalty obligations since March 30, 2009.

 

*Ion Implant*

 

Included in total revenue of$48.5 million is revenue from sales of ion implantation products andservice which accounted for $41.3 million, or 85.2% of total revenue inthe three months ended March 31, 2010, compared with $22.2 million,or 86.3%, of total revenue for the three months ended March 31, 2009. Thedollar increase was due to the factors discussed above for product revenues.

 

*Aftermarket*

 

The Company’s productrevenues include sales of spare parts and product upgrades as well as completesystems. We refer to the business of selling spare parts and product upgrades,combined with the sale of maintenance labor and service contracts and servicehours, as the “aftermarket” business. Included in total revenue of $48.5million is revenue from our aftermarket business of $32.5 million for thethree months ended March 31, 2010, compared to $18.4 million for thethree months ended March 31, 2009. Aftermarket revenue generally increaseswith expansion of the installed base of systems but can fluctuate period toperiod based on capacity utilization at customers’ manufacturing facilities whichaffects the sale of spare parts and demand for equipment service. After hittingbottom in the first quarter of 2009 capacity utilization across the industry hasincreased in every subsequent quarter. This has resulted in successiveimprovements in aftermarket revenue each quarter, a trend that is expected tocontinue throughout 2010 based on industry projections.

 

**Gross Profit**

 

*Product*

 

Gross profit from productrevenue was 24.7% for the three months ended March 31, 2010, compared togross profit of (2.8%) for the three months ended March 31, 2009.   Approximately 9.9% of the 27.5% increase wasattributable to a lower provision for excess inventory. The remaining 17.6%increase in gross profit from product revenues is attributable to higher systemsales volume

 

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and the related favorable absorption of fixedoverhead costs, which accounted for 13.5%, and the favorable impact ofincreased parts and upgrade revenue at higher margins, which accounted for4.1%.

 

*Service*

 

Gross profit from servicerevenue was 37.1% for the three months ended March 31, 2010, compared to42.3% for the three months ended March 31, 2009. The decrease in grossprofit is attributable to changes in the mix of service contracts.

 

**Research and Development**

 

Research and developmentexpense was $9.1 million in the three months ended March 31, 2010, adecrease of $0.4 million, or 4.2%, compared with $9.5 million in thethree months ended March 31, 2009. The decrease was due to decreasedpayroll costs ($0.5 million) due to a reduction in research anddevelopment headcount and increased other miscellaneous expense($0.1 million).

 

Research and developmentexpense was attributable to the following activities for the three months endedMarch 31, 2010: 44% for new product development, 36% for improvement ofexisting products, and 20% for product testing.

 

**Sales and Marketing**

 

Sales and marketing expensewas $6.6 million in the three months ended March 31, 2010, a decreaseof $0.3 million, or 4.3%, compared with $6.9 million for the threemonths ended March 31, 2009. The decrease was due to decreased payrollcosts ($0.5 million) due to a reduction in sales and marketing headcount,offset by increased travel costs ($0.2 million).

 

**General and Administrative**

 

General and administrative expensewas $7.7 million for the three months ended March 31, 2010, adecrease of $3.0 million, or 28.0%, compared with $10.7 million inthe three months ended March 31, 2009. The decrease was primarily due todecreased professional fee expenses ($3.2 million), decreased othermiscellaneous expenses ($0.1 million) and increased payroll costs($0.3 million).

 

**Restructuring**

 

The Company incurred norestructuring charges in the three months ended March 31, 2010.  During the three months ended March 31,2009, we implemented a reduction in force to further reduce costs to mitigatedeteriorating industry fundamentals. This reduction in force resulted in arestructuring charge of $1.0 million for separation and outplacementcosts.

 

**Other Income (Expense)**

 

The sale of the Company’sinvestment in SEN in the first quarter of 2009 resulted in a gain ofapproximately $1.1 million. This gain includes net proceeds of$122.2 million and cumulative foreign translation gain of$23.5 million, previously recorded in other comprehensive income, reducedby the carrying value of the investment on the date of sale of$144.6 million.

 

Equity loss attributable toSEN was $3.2 million for the three months ended March 31, 2009.  As a result of the sale of the Company’sinvestment in SEN, subsequent to March 31, 2009, the Company will nolonger record equity income or loss from SEN.

 

Interest expense decreasedby $1.7 million for the three months ended March 31, 2010, comparedto the three months ended March 31, 2009. The decrease for the threemonths ended March 31, 2010 is due to the payment in full of theconvertible senior subordinated notes on March 30, 2009. At March 31,2010 the Company had no outstanding obligations incurring interest.

 

**Income Taxes**

 

We incur income tax expenserelating principally to operating results of foreign entities in jurisdictions,principally in Asia, where we earn taxable income. We have significant netoperating loss carryforwards in the United States and certain 

 

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foreign jurisdictions, principally Europe,and, as a result, we do not currently pay significant income taxes in thosejurisdictions and we do not recognize the tax benefit for such losses asdiscussed in Note 9 to the consolidated financial statements. Accordingly,our effective income tax rate is not meaningful.

 

**Liquidity and Capital Resources**

 

Our liquidity is affected bymany factors. Some of these relate specifically to the operations of ourbusiness, for example, the rate of acceptance of the Optima product line, andothers relate to the uncertainties of global economies, including theavailability of credit, and the condition of the overall semiconductorequipment industry.

 

We have net operating lossand tax credit carryforwards, the tax effect of which aggregate$90.2 million at December 31, 2009. These carryforwards, which expireprincipally between 2018 and 2028, are available to reduce future income taxliabilities in the United States and certain foreign jurisdictions. The sale ofour investment in SEN generated taxable income which we will off-set withexisting net operating loss carry forwards.

 

During the three monthsended March 31, 2010, the Company experienced negative cash flows fromoperations of $9.9 million, predominately driven by our $11.1 million net loss.Cash and cash equivalents at March 31, 2010 were $34.8 million,compared to $45.0 million at December 31, 2009.

 

On March 12, 2010, weamended our existing revolving credit facility with a bank. The amendedagreement provides for borrowings up to the lesser of $20 million orspecified percentages of the amounts of qualifying accounts receivable andinventory. The facility has certain financial covenants requiring us tomaintain minimum levels of operating results and liquidity. The Company’scurrent forecast projects that the Company will not be in compliance with allfinancial covenants at the close of the second quarter. The Company hasexecuted a term sheet received from the bank providing for a modification tothe revolving credit agreement by amending the financial covenants. This termsheet is subject to final approval by the bank. Based on current forecasts, theCompany believes it will be in compliance with the financial covenants, asproposed to be modified in the term sheet, throughout 2010. The Companybelieves it will obtain final bank approval and close on the modifications tothe bank credit facility by the end of May 2010. However, there can be noassurance that such final approval and closure will occur by the end of May orat all.

 

We believe that based on ourcurrent market, revenue and expense forecasts, our existing cash and cashequivalents will be sufficient to satisfy our anticipated cash requirements.Our 2010 forecast reflects revenue and gross margins consistent with ourunderstanding of customer plans, the improving market conditions currentlyforecasted by the industry (and experienced by the Company to date in 2010),and increasing capacity utilization at customers’ manufacturing facilities,which has had a positive impact on our aftermarket business for the pastseveral quarters. Forecasted operating expense levels are based on 2010 runrates. Should the market recovery in 2010 not proceed in accordance withindustry forecasts and our expectations, we believe we can control spendinglevels to provide sufficient liquidity to support operations through 2010.However, the absence of a continuing market recovery in 2010 would likely havea material effect on our liquidity entering 2011.

 

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

 

As of March 31, 2010,there have been no material changes to the quantitative information aboutmarket risk disclosed in Item 7A to our annual report Form 10-K forthe year ended December 31, 2009.

 

**Item 4. Controls and Procedures.**

 

**Evaluation of Disclosure Controls and Procedures**

 

Our management, with theparticipation of our principal executive officer and principal financialofficer, has evaluated the effectiveness of our disclosure controls andprocedures (as defined in Rule 13a-15(e) under the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”) as of the end of theperiod covered by this report (the “Evaluation Date”). Based on thisevaluation, our principal executive officer and principal financial officerconcluded that, as of the Evaluation Date, these disclosure controls andprocedures are effective.

 

**Changes in Internal Control over Financial Reporting**

 

There was no change in ourinternal control over financial reporting (as defined in Rule 13a-15(f) underthe Exchange Act) identified in connection with the evaluation of our internalcontrol that occurred during the first quarter of 2010 that has materiallyaffected, or is reasonably likely to materially affect, our internal controlover financial reporting.

 

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**PART II—OTHER INFORMATION**

 

**Item 1. Legal Proceedings.**

 

The Company is notpresently a party to any litigation that it believes might have a materialadverse effect on its business operations. The Company is, from time to time, a party to litigation that arises inthe normal course of its business operations.

 

**Item 1A. Risk Factors.**

 

As of March 31, 2010,there have been no material changes to the risk factors described inItem 1A to our annual report on Form 10-K for the year ended December 31,2009.

 

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.**

 

None.

 

**Item 3. Defaults Upon Senior Securities.**

 

The information responsiveto this item was previously disclosed in Form 8-K filed on January 15,2009.

 

**Item 4. (Removed and Reserved).**

 

 

**Item 5. Other Information.**

 

The following information isprovided in lieu of a Form 8-K.

 

The Annual Meeting ofStockholders of Axcelis Technologies, Inc. was held on May 7, 2010 atthe Company’s corporate offices in Beverly, Massachusetts. Out of 104,135,179shares of Common Stock (as of the record date of March 9, 2010 entitled tovote at the meeting, 86,011,811 shares, or 82.6%, were present in person or by proxy.

 

(a)*                                 **Electionof Directors.*  Each of thetwo directors nominated for election at the Annual Meeting was elected by aplurality of votes cast, to serve for a one year term ending in 2011, and untiltheir successors are elected. The vote was as follows:

 
| **Nominee**        | ** ** | **Number of  Votes For** | ** ** | **Number of  Votes Withheld** | ** ** |
|--------------------|------------|--------------------------|------------|-------------------------------|------------|
| Patrick H. Nettles |       | 59,234,473               |       | 3,335,955                     |       |
| Geoffrey Wild      |       | 59,790,184               |       | 2,780,244                     |       |

 

(b)*                                **Ratificationof Appointment of Auditors.*  A majority of the votes cast at the meetingwere voted in favor of the proposal to ratify the appointment by the Board ofDirectors of Ernst & Young LLP as the independent auditors of ourfinancial statements for the year ending December 31, 2010. The followingsets forth the tally of the votes cast on the proposal:

 
| **Number of  Votes For** | ** ** | **Number of  Votes Against** | ** ** | **Number of  Votes Abstaining** | ** ** |
|--------------------------|------------|------------------------------|------------|---------------------------------|------------|
| 84,253,054               |       | 468,011                      |       | 1,290,476                       |       |

 

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**Item 6. Exhibits.**

 

The following exhibits arefiled herewith:

 
| **Exhibit** | ** ** | ** **                                                                                                                                                                                                                                                                                                 |
|-------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **No**      | ** ** | **Description**                                                                                                                                                                                                                                                                                            |
| 3.1         |       | Amended  and Restated Certificate of Incorporation of the Company adopted May 6,  2009. Incorporated by reference to Exhibit 3.1 of the Company’s Current  Report on Form 8-K filed with the Commission on May 11, 2009.                                                          |
|        |       |                                                                                                                                                                                                                                                                                                       |
| 3.2         |       | Bylaws  of the Company, as amended as of August 8, 2007. Incorporated by  reference to Exhibit 3.2 of the Company’s Form 10-Q for the quarter  ended June 30, 2007, filed with the Commission on August 9, 2007.                                                             |
|        |       |                                                                                                                                                                                                                                                                                                       |
| 10.1        |       | Amended  and Restated Loan and Security Agreement dated as of March 12, 2010  between the Company and Axcelis Technologies CCS Corporation, as borrowers,  and Silicon Valley Bank. Filed herewith.                                                                                                   |
|        |       |                                                                                                                                                                                                                                                                                                       |
| 10.2        |       | Export-Import  Bank Loan and Security Agreement dated as of March 12, 2010 between the  Company and Axcelis Technologies CCS Corporation, as borrowers, and Silicon  Valley Bank. Filed herewith.                                                                                                     |
|        |       |                                                                                                                                                                                                                                                                                                       |
| 10.3        |       | Axcelis  Management Incentive Plan, as amended and restated by the Compensation Committee  of the Board of Directors on February 11, 2010. Incorporated by  reference to Exhibit 10.2 of the Company’s report on Form 10-K for  2009 filed with the Commission on March 15, 2010. |
|        |       |                                                                                                                                                                                                                                                                                                       |
| 31.1        |       | Certification  of the Principal Executive Officer under Exchange Act  Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley  Act), dated May 12, 2010. Filed herewith.                                                                                                           |
|        |       |                                                                                                                                                                                                                                                                                                       |
| 31.2        |       | Certification  of the Principal Financial Officer under Exchange Act  Rule 13a-14(a)/15d-14(a) (Section 302 of the Sarbanes-Oxley Act),  dated May 12, 2010. Filed herewith.                                                                                                           |
|        |       |                                                                                                                                                                                                                                                                                                       |
| 32.1        |       | Certification  of the Principal Executive Officer pursuant to Section 1350 of Chapter  63 of title 18 of the United States Code (Section 906 of the  Sarbanes-Oxley Act), dated May 12, 2010. Filed herewith.                                                                               |
|        |       |                                                                                                                                                                                                                                                                                                       |
| 32.2        |       | Certification  of the Principal Financial Officer pursuant to Section 1350 of Chapter  63 of title 18 of the United States Code (Section 906 of the  Sarbanes-Oxley Act), dated May 12, 2010. Filed herewith.                                                                               |

 

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**SIGNATURES**

 

Pursuant to the requirementsof the Securities Exchange Act of 1934, the Registrant has duly caused thisreport to be signed on its behalf by the undersigned, thereunto dulyauthorized.

 
|                     | AXCELIS TECHNOLOGIES, INC. |
|--------------------------|---------------------------------|
| DATED: May 12, 2010 | By:                             | /s/ STEPHEN G. BASSETT |
|                     |                            |   |
|                     |                            | Stephen G. Bassett |
|                     |                            | *Executive Vice President and Chief Financial  Officer  Duly Authorized Officer and Principal Financial Officer* |

 

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