# UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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# FORM 10-K

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

# For the Fiscal Year Ended September 30, 2000

# OR

# [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES AND EXCHANGE ACT OF 1934

# For the Transition Period From ___________ to ____________

# Commission File Number0-25424

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SEMITOOL, INC.(Exact Name of Registrant as Specifited in Its Charter)

|Montana                                                       | 81-0384392                        
|------------------------------------------------------------- | ----------------------------------
|(State or other jurisdiction ofincorporation or organization) | I.R.S. EmployerIdentification No.)

Semitool, Inc.
                                           655 West Reserve Drive, Kalispell, Montana 59901
                                                            (406) 752-2107
                                     (Address, including zip code, and telephone number, including
                                        area code, of registrant's principal executive offices)

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

Yes [X] No [  ]

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

The approximate aggregate
market value of the voting stock held by non-affiliates of the registrant on
December 13, 2000 (based on the last reported sale price on the Nasdaq National
Market as of such date) was $183,328,576.

The number of shares of the
registrants Common Stock, no par value, outstanding as of December 13,
2000 was 28,312,600.

There is incorporated by
reference in Part III of this Annual Report on Form 10-K the information
contained in the registrants definitive proxy statement for its annual
meeting of shareholders to be held February 8, 2001.

Item 1.   Business

Introduction

Statements
contained in this Annual Report on Form 10-K which are not purely historical
facts are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. All statements other than statements of historical fact
are forward-looking statements for purposes of these provisions, including
without limitation, statements regarding trends in the semiconductor industry,
future product development, strategic business development, pursuit of new and
growing markets, competition, patent filings, results from operations, and the
adequacy of manufacturing facilities. In some cases, you can identify
forward-looking statements by the use of terminology such as may,
will, expects, plans,
anticipates, estimates, potential,
believes, can impact, continue, or the
negative thereof or other comparable terminology.

Management
cautions that forward-looking statements are subject to risks and uncertainties
that could cause our actual results to differ materially from those projected in
such forward-looking statements. These risks and uncertainties include, but are
not limited to, the cyclical nature of the semiconductor industry in general,
lack of market acceptance for new products, decreasing demand for our existing
products, impact of competitive products and pricing, product development,
commercialization and technological difficulties, capacity and supply constraint
difficulties and other risks detailed under the heading Risk Factors
and elsewhere herein.

Our
future results will depend on our ability to continue to enhance our existing
products and to develop and manufacture new products and to finance such
activities. There can be no assurance that we will be successful in the
introduction, marketing and cost-effective manufacture of any new products or
that we will be able to develop and introduce in a timely manner new products or
enhancements to our existing products and processes which satisfy customer needs
or achieve widespread market acceptance. We undertake no obligation to update
forward-looking statements to reflect subsequent events, changed circumstances,
or the occurrence of unanticipated events.

Overview

Semitool
was organized in 1979 and is a worldwide leader in the design, development,
manufacture and support of high performance wet chemical processing equipment
for use in fabrication of semiconductor devices. Our primary families of tools
are electrochemical deposition systems for the plating of copper interconnects
for integrated circuits and other metals for various applications including
semiconductor advanced packaging, and wafer surface preparation systems for
cleaning, stripping and etching processes. We provide our customers with this
suite of technologically innovative batch and single wafer processing tools that
leverages our core wet chemical expertise and our experience building and
supporting production-proven semiconductor fabrication equipment.

With
more than 21 years dedicated to the semiconductor and related industries, we
have applied our wet chemical expertise in design, engineering, process and
manufacturing to deliver innovations in electrochemical deposition and wafer
surface preparation to our global customer base. Our customers include many of
the major semiconductor device manufacturers worldwide, including Advanced Micro
Devices, Atmel, Conexant Systems, Fujitsu, IBM, Intel, Lucent Technologies,
Motorola, NEC, Philips Semiconductor, Seagate, Samsung, STMicroelectronics, TSMC
and UMC.

Industry Background

Semiconductor
devices, commonly called integrated circuits, or ICs, consist of components,
typically millions of microscopic transistors, which are interconnected with
metal circuitry to form the functional IC. Fabrication of an IC involves up to
350 complex and repetitive process steps, involving an array of manufacturing
equipment and chemical media. ICs are fabricated on substrates, or wafers, made
of a semiconductor material, most commonly silicon. The fabrication process
involves the deposition of multiple layers of insulating and conducting films,
along with cleaning, stripping and etching processes throughout the fabrication
to prepare the surface for the next step. There can be between eight and 30
thin, patterned layers in an IC. After the fabrication sequence, the wafer may
contain up to several hundred ICs. Individual ICs are derived from the wafer by
a process involving extremely fine sawing, or dicing, after which the wafer is
cleaved into separate ICs. The IC is then packaged by electrically
connecting it to pins via metal wires or contacts to allow insertion into an
electronic device, and encapsulating the IC into a polymer package.

Electronic
systems require increasingly complex ICs that operate at higher performance
levels, while at the same time using less power and generating less heat.
Fabrication of such advanced ICs requires increases in the number of fabrication
process steps, a reduction in device feature sizes, as well as innovations in IC
fabrication processes and manufacturing equipment.

Trends in Semiconductor Manufacturing

Development
of Smaller Feature Geometries. The development of smaller feature geometries,
0.18 micron and below, enables device manufacturers to produce greater numbers
of ICs per wafer. Yet as device geometry line widths decrease, manufacturing
yields become increasingly sensitive to the magnitude of processing defects.

Transition
to Copper. Aluminum alloys have traditionally been used to connect the millions
of transistors that make up each IC. As devices and features are reduced in
size, and device performance requirements increase, an electrical conductor with
superior conductivity is needed, and copper is evolving as the material of
choice to replace aluminum interconnects in ICs. Copper, however, cannot be
deposited reliably by traditional vacuum-based systems. Electrochemical
deposition, an alternative type of deposition, is an effective method to
reliably and uniformly deposit copper. In addition to the device performance
benefits, copper electrochemical deposition also results in lower cost and fewer
manufacturing steps. The unique chemical and physical properties of copper
require the IC manufacturer to use specialized fabrication equipment in place of
existing tools.

Migration
to 300 Millimeter Wafers. The migration to a larger 300 millimeter (12 inch)
wafer size lowers the manufacturing cost per IC by increasing the number of ICs
per wafer. Processing larger wafers requires the acquisition of specialized
equipment by IC manufacturers. Most 300 millimeter wafer processing cannot be
performed on previous generations of equipment, necessitating purchase of new
systems.

Electrochemical Deposition

Deposition
is the fabrication process in which a film of either electrically insulating or
electrically conductive material, such as aluminum or copper, is deposited on
the surface of the wafer. Traditional deposition methods involve placing wafers
in an ultra-high vacuum process chamber and introducing a variety of pure and
precisely metered gases while some form of energy is added to activate a
chemical reaction on the wafer surface. The result of the reaction is the
deposition of a thin layer of aluminum on the wafer. Traditional deposition
methods are expensive processes because of the high temperature and ultra-high
vacuum environment they require. Moreover, these methods are not well suited to
address the chemical properties of new interconnect materials, such as copper.

Electrochemical
deposition, by contrast, is a wet chemical process that involves plating a
semiconductor wafer in the process chamber of a tool at room pressure and
temperature. This process does not require the expense and time needed when
using an ultra-high vacuum environment, and in the case of copper plating,
results in the deposition of a uniform film of copper metal on the wafer. In
addition to copper deposition, electrochemical deposition can also be used for a
variety of other applications, including solder bumps for IC packaging, gold
bumps and interconnects for communications ICs and platinum deposition for
capacitors in memory circuits.

Cleaning, Stripping and Etching Processes

Cleaning,
stripping, etching or otherwise conditioning the surface of the wafer are
critical steps in the semiconductor fabrication process. Traditionally, these
wet chemical processing steps have been accomplished using specialized
equipment, called wet benches. Wet benches suffer from process limitations
inherent in their design, including inconsistent processing across the surface
of each wafer, lower throughput per square foot and particle contamination of
the wafers. Particle contamination, in particular, arises because contaminants
are easily transferred to the surface of processed wafers as they are moved in
and out of the liquids which the wet benches contain. This contamination
decreases yield and increases cost of the fabrication process.

In
contrast, spray tools used in the cleaning, stripping and etching processes
subject wafers to sequential spray applications of chemicals as the wafers are
spun at high speeds on their axes inside an enclosed process chamber. This
technology enables precise and uniform application of process chemicals,
enhanced process reliability because of reduced particle contamination, smaller
footprint tools and shorter process cycle times. Enhanced process reliability
and reduced particle contamination are increasingly critical as IC complexity
increases the number of wafer conditioning steps during the fabrication process,
as new materials, such as copper, which are hazardous to other parts of the
fabrication process, are introduced through plating, and as shrinking geometries
link ever smaller contamination levels to IC failure.

The Semitool Solution

Semitool
is a worldwide leader in the design, development, manufacture and support of
high performance wet chemical processing equipment for use in fabrication of
semiconductor devices. Our primary families of tools include electrochemical
deposition systems for the plating of copper interconnects for ICs and other
metals for various applications, and wafer surface preparation systems for
cleaning, stripping and etching processes. This suite of technologically
innovative batch and single wafer processing tools leverages our core wet
chemical expertise and our more than two decades of innovation and experience
building and supporting production-proven semiconductor fabrication equipment.

Electrochemical
Deposition Solutions. Our LT 210c, Paragon and Equinox family of electrochemical
deposition systems incorporates proprietary plating technology that operates at
room pressure and temperature and enables precisely controlled deposition of
copper film on a device-side down semiconductor wafer. We introduced the first
high-throughput copper plating tool in calendar year 1994 and continue to
develop innovative electrochemical deposition solutions. In addition to copper
deposition, our plating equipment is also used for a variety of other
applications, including solder bumps for IC packaging, gold bumps and
interconnects for communications ICs and platinum deposition for capacitors in
memory circuits.

Batch
Cleaning, Stripping and Etching Solutions. Our Spectrum and Magnum family of
automated cleaning, stripping and etching equipment uses a spray technology that
we developed to batch-process up to 52 wafers. Our tools spin the wafers in a
carrier rotated on its axis inside an enclosed process chamber and expose the
wafers to a sequenced spray of chemicals. This spray technology enables precise
and uniform application of process chemicals, enhanced process reliability
because of reduced particle contamination and shorter process cycle times. In
addition, our batch wet chemical platforms enable our proprietary,
cost-effective cleaning process, called HydrOzone. This process uses a spray of
deionized water and ozone gas as a cleaning agent in place of the costly and
environmentally harmful chemical solutions traditionally relied upon for
cleaning semiconductor wafers.

Single
Wafer, Cleaning, Stripping and Etching Solutions. Our Capsule cleaning modules
enable precise, side-selective application of chemicals to a wafer enclosed in a
controlled chamber. Capsule modules, either as process chambers on our
deposition tools or standing alone as our Millennium wet chemical processing
equipment, provide for both side-selective and wafer edge cleaning. This allows
the removal of copper and other contaminants hazardous to subsequent steps in
the IC fabrication process from the back and edges of the wafer.

Strategy

Our
objective is to be the leading provider of innovative wet chemical processing
equipment to semiconductor manufacturers worldwide. Our business strategy
incorporates the following key elements:

Maintain
and Expand Technology Leadership. We intend to continue investing in research
and development to maintain and expand our technological leadership position. We
believe that our proprietary electrochemical deposition systems, principally for
the plating of copper interconnects, and wafer cleaning, stripping and etching
systems, provides us with a technological advantage over competing wet chemical
semiconductor processing equipment. We believe that our technologies provide our
customers with critical performance, quality, process control and cost benefits.
We further believe that technical innovations will continue to be one of the
leading drivers for market acceptance of new semiconductor processing equipment.

Offer
a Broad Range of Products Incorporating Innovative Technologies. We offer a
broad range of differentiated products, including electrochemical deposition
equipment and cleaning, stripping and etching tools to semiconductor
manufacturers for use in diverse process applications. Since development and
introduction in 1979 of our first product, the SRD, or Spin Rinser/Dryer, we
have continued to enhance and expand our product offering in response to the
evolving needs of the semiconductor manufacturing industry.

Leverage
Process Technologies Across Markets and Applications. We believe our technology
and manufacturing expertise enables us to offer solutions to manufacturers of
other products, such as solder bumping for IC packaging, thin film heads and
hard disk media used for disk drives, MEMS, or micro electromechanical systems,
and ink jet print heads that use fabrication processes similar to those used by
semiconductor manufacturers.

Capitalize
on Design and Manufacturing Expertise. We intend to continue to identify those
design and manufacturing functions which add value to our products. We believe
we achieve a number of competitive advantages from our internal design
capabilities and selective vertical manufacturing integration, including the
ability to achieve cost and quality benefits, and to quickly bring new products
and product enhancements to market.

Products

Semitools
broad product suite of high performance, technologically innovative processing
tools leverages our core wet chemical expertise and more than two decades of
experience building production-proven semiconductor manufacturing equipment. Our
primary wet chemical processing solutions consist of electrochemical deposition
equipment, primarily for the plating of copper, as well as batch and single
wafer cleaning, stripping and etching tools. All of these solutions leverage and
extend our core spin-spray technologies, that apply process chemicals to wafers
spun on their axes at high speed inside an enclosed process chamber.

Complementing
our core products, we also provide container cleaning equipment that we
developed through an extension of our core spin-spray technology, precision
thermal processing tools and semiconductor manufacturing software control
systems.

The following table summarizes various features of our principal families of products:

`Calendar Year of                                           Approximate Price
Product Line                          Introduction            Principal Applications             Range Per Tool
___________________                __________________        ________________________       ______________________
                                                                                                (in thousands)
Electrochemical Deposition
Products
       Paragon                            2000                  Electro-Plating                   $2,800-$3,800
       LT 210c                            1998                  Electro-Plating                   $1,600-$2,600
       LT210                              1996                  Electro-Plating                   $1,100-$2,800
       Equinox                            1994                  Electro-Plating                    $575-$1,600

Batch Cleaning, Stripping
and Etching Products
       Sceptor SRD                        2000                  Clean                                $40-$70
       Sceptor SST                        2000                  Clean, Strip                        $550-$800
       Sceptor SAT                        2000                  Clean, Strip, Etch                  $650-$900
       Spectrum                           1998                  Clean, Strip, Etch                $1,200-$3,000
       Magnum                             1993                  Clean, Strip, Etch                 $900-$3,200
       SAT                                1981                  Clean, Strip, Etch                  $350-$900
       SST                                1980                  Clean, Strip                        $225-$850
       SRD                                1979                  Clean                               $15-$100

Single Wafer Cleaning, Stripping and
Etching Products
       Millennium                         1998                  Clean, Strip, Etch                $1,000-$2,200
       Equinox                            1986                  Clean, Strip, Etch                 $300-$1,000

Other Semiconductor
Equipment Products
       Storm                              1988                  Container Cleaning                  $275-$450
       VTP 1500                           1987                  Thermal Processing                 $800-$1,100

Software Control Systems
       SEMY APC                           1997                  Run-to-Run Control,                 $185-$275
                                                                Automatic Fault Detection`

As
a percentage of consolidated net sales for fiscal 2000 and 1999, electrochemical
deposition was 21.8% and 16.7%, cleaning, stripping and etching was 56.0% and
53.5%, parts, service and other was 14.9% and 19.4% and software control systems
was 7.3% and 10.4%, respectively.

Electrochemical Deposition Products

Paragon:
We introduced the Paragon, a new class of ECD tool, during fiscal 2000 This tool
integrates metrology, seed layer, ECD fill, clean, bevel etch and anneal in the
same platform. Paragon uses our newly developed CFD reactor to provide better
uniformity during the plating process.

LT210c:
This third-generation deposition system offers up to ten process chambers, and
utilizes two robots for wafer handling. The combination of small size, multiple
chambers and dual robots results in a highly productive system for high volume
manufacturing operations. The primary application for the LT 210c is in copper
deposition, but the system also deposits gold, platinum, solder and nickel
alloys. The LT210c includes our innovative Capsule process chamber for
post-electrochemical deposition cleaning and removal of copper contamination.

Equinox:
The Equinox system is an automated, single wafer processor for medium to low
production volumes and for research and development activities. This system is
offered with up to six process chambers and utilizes a single wafer handling
robot. It is offered for electrochemical deposition of copper, gold, platinum,
solder and nickel alloys.

Batch Cleaning, Stripping and Etching Products

Sceptor:
During 2000 we introduced our Sceptor line of spray solvent tools and
rinser/dryers. The Sceptor products have double the wafer capacity of our
standard SST and rinser/dryers while using approximately the same amount of
clean room space. This allows an existing fab the ability to increase throughput
without adding space.

Spectrum:
The Spectrum is our most advanced automated batch process tool. It is a compact
modular system, with a footprint 40% smaller than our previous Magnum family of
tools. It is dedicated to specific cleaning, stripping and etching processes,
including our HydrOzone process which uses deionized, or DI water, and ozone gas
to replace sulfuric acid based processing, and is designed for high volume
manufacturing. The Spectrum tool incorporates our most advanced software and
control systems and can include both spray and immersion processing modules.

Magnum:
The Magnum is a fully automated batch process tool capable of integrating
modules for corrosive, caustic and solvent applications. It can be integrated
with spray, as well as immersion technology for addressing a wide range of
manufacturing challenges. Processing up to 52 wafers in a process chamber in a
carrier-less mode, the Magnum offers precise process control and flexibility.

SAT:
The SAT, or Spray Acid Tool, applies corrosive and caustic process media to
semiconductor wafers for removal of various contaminants, including particles,
metals, organic material, oxides and chemical films. It also provides extremely
uniform etching performance. The SAT is a manually loaded system, running
batches of 25 wafers and performing sequential processing whereby the process
media is brought to the semiconductor wafers and delivered as a spray. It is
offered in one, two and three chamber models. Our HydrOzone process can also be
used on the SAT platform.

SST:
The SST, or Spray Solvent Tool, applies solvent process media to semiconductor
wafers for removal of photoresist, etch polymers, polyimides and organic
contaminants. The SST performs sequential processing, by applying solvents and
rinse agents, such as DI water, for cleaning, and nitrogen gas for drying. This
manually loaded system runs batches of 25 wafers at a time in the process
chamber. It is offered in one and two process chamber models.

SRD:
The SRD, or Spin Rinser/Dryer, is a highly efficient cleaning system utilizing
DI water to remove chemical residue, particles, and other water-removable
contaminants. The SRD provides Dl cleaning with minimal amounts of water, in a
small footprint tool. It is offered in one, two and three chamber models and
processes wafers in batches of 25.

Single Wafer Cleaning, Stripping, and Etching Products

Millennium:
The Millennium, which is based on the design of our compact LT210c platform, is
an advanced single wafer processor with up to ten process chambers and two wafer
handling robots, This system incorporates our Capsule side-selective processing
module and can also be equipped with spray, immersion and vapor process chambers
for addressing a wide range of high volume, leading edge applications.

Equinox:
The Equinox system allows the combination of caustics, corrosives and solvents
in a single cluster tool in the cleaning, stripping and etching processes.
Suitable for medium to low production volumes and for research and development
applications, this system is offered with up to six process chambers and
utilizes a single wafer handling robot.

Other Semiconductor Equipment Products

Storm:
The Storm is a single chamber system used for the cleaning of wafer transport
containers. It processes batches of containers simultaneously, thereby offering
high productivity in a space efficient system.

VTP
1500: The VTP 1500 is our vertical thermal processor, featuring batch
applications for thermal deposition of oxide, nitride and polysilicon films. It
also is used for various anneal processes where precise control of temperature
and rate of change of temperature is required. Our VTP 1500 features our
patented double-lift system, which allows wafers to remain stationary, reducing
cycle time and providing more precise process control.

Software Control Systems

SEMY
APC: Our SEMY APC, or Advanced Process and Equipment Control, software systems
provide automatic fault detection and run-to-run control of semiconductor
manufacturing equipment. This automated and integrated control results in
improved productivity, reduced scrap, increased device yield through improved
process control, and better equipment utilization by providing for predictive
maintenance.

Customers, Sales and Marketing

Our
customers include leading worldwide semiconductor manufacturers. The following
is a representative list of our largest United States and international
customers, each having purchased approximately $2.0 million or more in fiscal
2000:

`Advanced Micro Devices         LSI Logic               Sharp
Atmel                          Lucent Technologies     Silicon Manufacturing Partners
Chartered Silicon Partners     Micron                  Sony
Conexant                       Motorola                STMicroelectronics
Cypress                        NEC                     Systems on Silicon Manufacturing
FASL                           Philips                 TSC
Fujitsu                        RF Micro Devices        United Microelectronics
Hyundai                        Samsung                 Unitive Electronics
IBM                            Sanyo                   Vitesse Semiconductor
Intel                          Seagate                 White Oak Semiconductor`

One customer, Motorola, accounted for over 10% of our net sales in fiscal 2000.

We believe that our worldwide sales, service and customer support organizations are important to the long-term success of our
customer relationships.

International
sales, primarily in Europe and Asia, accounted for approximately 38.3%, 52.8%
and 58.0% of total net sales for fiscal 1998, 1999 and 2000, respectively. We
market and sell our products in the United States through our sales organization
which includes direct sales personnel and a limited number of independent sales
representatives. We currently have sales and service offices located throughout
the United States and Europe. Also, we have a direct sales and customer support
organization located in Japan, Singapore and Korea with independent sales
representatives serving China, Japan, Taiwan, and the United States. To enhance
our sales capabilities, we maintain demonstration and process development
laboratories at our facility in Kalispell, Montana and a demonstration
laboratory in Japan.

Field
service personnel and application engineers service customers in the United
States, Europe, Japan and Asia, directly providing warranty service,
post-warranty service and equipment installation. Field service engineers are
located at nine sites throughout the United States, including dedicated
site-specific engineers at certain customer locations pursuant to customer
agreements. To further ensure customer satisfaction, we also provide service and
maintenance training, as well as process application training for our
customers personnel on a fee basis. We maintain an inventory of spare
parts strategically located throughout the world, which allows us to provide
same day or overnight delivery in most instances.

Backlog

Consolidated
orders backlog increased 91.7% to $110.2 million at September 30, 2000, from
approximately $57.5 million at September 30, 1999. At September 30, 2000,
semiconductor equipment orders represented 92.9% of consolidated orders backlog
compared with 97.7% at September 30, 1999.

We
include in backlog those customer orders for which we have written customer
authorization and for which shipment is scheduled within the next twelve months.
Orders are generally subject to cancellation or rescheduling by customers with
limited or no penalty. As the result of systems ordered and shipped in the same
quarter, possible changes in customer delivery, cancellations and shipment
delays, the backlog at any particular date and the new orders bookings for any
particular period are not necessarily indicative of actual sales for any
succeeding period. In particular, during periods of downturns in the
semiconductor industry we have experienced significant delays relating to orders
that were previously included in our consolidated orders backlog.

Manufacturing

Most
of the semiconductor equipment manufacturing is conducted at our facilities
located in Kalispell, Montana. Our manufacturing operations include metals and
plastics fabrication and finishing capabilities; component parts and final
product assembly; and extensive product testing capabilities. Manufacturing
personnel work closely with product development engineers to ensure that
products are engineered for manufacturability, affording a smooth transition
from prototype to full scale production. Component and product prototyping is
performed internally. Software Control Systems operations are conducted at our
facility in Phoenix, Arizona.

Research and Development

The
market for semiconductor equipment and software control systems is characterized
by rapid technological change and product innovation. We believe that continued
timely development of products for both existing and new markets is necessary to
remain competitive. Therefore, we devote significant resources to programs
directed at developing new and enhanced products, as well as new applications
for existing products. We maintain extensive demonstration and process
development laboratories at our facilities in Montana, including a clean room
for testing and developing products. Research and development personnel work
directly with customers to provide process solutions, develop new processes and
to design and evaluate new equipment.

Expenditures
for research and development, which are expensed as incurred, were approximately
$24.5 million in fiscal 1998, $20.9 million in fiscal 1999 and $23.4 million in
fiscal 2000. These expenditures as a percentage of our net sales represented
approximately 9.8% in fiscal 2000, 17.0% in fiscal 1999 and 13.6% in fiscal
1998.

Competition

The
markets in which we compete are highly competitive. We face substantial
competition from established competitors, certain of which have greater
financial, marketing, technical and other resources, broader product lines, more
extensive customer support capabilities, and larger sales organizations and
customer bases. We may also face competition from new domestic and overseas
market entrants. Significant competitive factors in the semiconductor equipment
market and other markets in which we compete include system performance and
flexibility, cost of ownership, the size of each manufacturers installed
customer base, customer service and support and breadth of product line. We
believe that we compete favorably on the basis of these factors.

Patents and Other Intellectual Property

Our
success depends in significant part on the technically innovative features of
our products. We currently hold 84 U.S. patents, some with pending foreign
counterparts, have 104 U.S. patent applications pending and intend to file
additional patent applications as we deem appropriate. There can be no assurance
that patents will be issued from any of our pending applications or that
existing or future patents will be sufficiently broad to protect our technology.
While we attempt to protect our intellectual property rights through patents,
copyrights and non-disclosure agreements, there can be no assurance that we will
be able to protect our technology, or that competitors will not be able to
develop similar technology independently. In addition, the laws of certain
foreign countries may not protect our intellectual property to the same extent
as the laws of the United States. Moreover, there can be no assurance that our
existing or future patents will not be challenged, invalidated or circumvented,
or that the rights granted thereunder will provide meaningful competitive
advantages to us. In any of such events, our business, financial condition,
results of operations and cash flows could be harmed.

In
addition, we rely on trade secret protection for our technology, in part through
confidentiality agreements with our employees, consultants and third parties.
However, employees may breach these agreements, and we may not have adequate
remedies for any breach. In any case, others may come to know about or determine
our trade secrets through a variety of methods.

We
also rely to a lesser extent on technology developed and licensed from third
parties. These licenses may not continue to be available to us on commercially
reasonable terms in the future. The loss of existing technology licenses could
harm the performance of our existing services until equivalent technology can be
identified, obtained and integrated. Failure to obtain new technology licenses
may result in delays or reductions in the introduction of new and existing
features, functions or services, which would harm our business.

From time to time, we receive letters alleging patent infringement or inviting us to take a license to other parties' patents.
We evaluate these letters on a case-by-case basis. Offers such as these may lead to litigation if we reject the opportunity to obtain
the license.

There
has been substantial litigation regarding patent and other intellectual property
rights in semiconductor-related industries. Although we are not aware of any
infringement by our products of any patents or proprietary rights of others,
further commercialization of our products could provoke claims of infringement
from third parties. Any such claims could have a material adverse effect on our
financial condition, and adverse determinations in any litigation could also
harm our business, financial condition, results of operations and cash flows. We
can give no assurance that third parties will not claim patent infringement in
the future.

Employees

At
September 30, 2000, we had 1344 full time employees and 211 temporary workers
worldwide. None of our employees is represented by a labor union, and we have
never experienced a work stoppage or strike. We consider our employee relations
to be good.

Facilities

We
own five facilities around the world. We have two manufacturing facilities
located on sites in Kalispell, Montana with approximately 200,000 square feet in
the aggregate. We also own a building and land located in Cambridge, England
which serves as our European sales and customer service headquarters and a
building and land located in Coopersburg, Pennsylvania, which serves as a
manufacturing facility for our Rhetech, Inc. subsidiary. In addition, in fiscal
1999, we purchased a building and land in Phoenix, Arizona to house our Semy
Engineering, Inc. subsidiary. All the facilities above support our Semiconductor
Equipment segment, except our Phoenix, Arizona facility which supports our
Software Control Systems segment. We believe that our existing manufacturing
facilities will be adequate to meet our requirements for the foreseeable future
and that suitable additional or substitute space will be available as needed. We
also lease seventeen other smaller facilities worldwide, which are used as sales
and customer service centers.

Legal Matters

In
July 1998, Mitsubishi Silicon America Corporation, successor to Siltec
Corporation, filed suit against us in the United States Federal District Court
for the District of Oregon (Case No. CV-98-826AA). The lawsuit alleges breach of
warranties and seeks damages and attorneys fees of approximately $5.4
million. The trial is scheduled to commence in February, 2001. We believe the
lawsuit to be without merit and are contesting the action vigorously. However,
given the inherent uncertainty of litigation, there can be no assurance that the
ultimate outcome will be in our favor. Further, regardless of the ultimate
outcome, there can be no assurance that the diversion of managements
attention, and any costs associated with the lawsuit, will not have a material
adverse effect on our financial condition, results of operations or cash flows.

In
August 1998, we filed suit against Novellus Systems, Inc. in the United States
District Court for the Northern District of California (Case No. C-98-3089 DLJ),
alleging infringement of two of our patents relating to single substrate
processing tools used in electrochemical deposition of copper onto semiconductor
wafers. We seek damages for past infringement, a permanent injunction
prohibiting future infringement, treble damages for willful infringement,
prejudgment interest and attorneys fees. Novellus answered the complaint
by denying all of the allegations and counter-claiming for declaratory judgment
of invalidity and noninfringement and attorneys fees. Novellus filed a
motion for summary judgment of noninfringement, which motion was granted on
March 17, 2000, and judgment was subsequently entered on May 12, 2000 dismissing
the case. We filed an appeal to the United States Court of Appeals for the
Federal Circuit on May 15, 2000 seeking review of the ruling on the motion for
summary judgment. Briefs have been filed by both parties, but no hearing date
has been scheduled.

We
are subject to other legal proceedings and claims which have arisen in the
ordinary course of our business and have not been finally adjudicated. Although
there can be no assurance as to the ultimate disposition of these matters, it is
the opinion of our management, based upon the information available at this
time, that the currently expected outcome of these matters, individually or in
the aggregate, will not have a material adverse effect on our results of
operations, financial condition or cash flows.

Risk Factors

You
should carefully consider the following information about these risks, together
with the other information contained in this Annual Report on Form 10-K. The
following risk factors may cause actual results to differ materially from those
in any forward-looking statements contained in the Business,
Managements Discussion and Analysis of Financial Condition and
Results of Operations or elsewhere in this report or made in the future by
us or our representatives.

Cyclicality
in the semiconductor industry has historically led to substantial decreases in
demand for our systems and may from time to time continue to do so.

Our
operating results are subject to significant variation due to the cyclical
nature of the semiconductor industry. Our business depends upon the capital
expenditures of semiconductor manufacturers, which, in turn, depend upon the
current and anticipated market demand for semiconductors and products using
semiconductors. The semiconductor industry experienced a downturn in 1998 and
1999 which seriously harmed our operating results during that period. Typically,
the semiconductor equipment industry has experienced more pronounced decreases
in net sales than the semiconductor industry as a whole. Our net sales decreased
from $194.0 million in fiscal 1997 to $180.5 million in fiscal 1998, and to
$122.5 million in fiscal 1999 and rebounded to $239.4 million in fiscal 2000.

Although
there are indications that the semiconductor industry may continue to improve in
fiscal 2001, the rate of improvement is expected to be much lower than in fiscal
2000:

the semiconductor industry may experience other, possibly more severe and prolonged, downturns in the future;

any continued recovery of the semiconductor industry may not result in an increased demand by semiconductor manufacturers
for capital         equipment or our products; and

the semiconductor industry may not continue to improve.

Any
future downturn in the semiconductor industry, or any failure of that industry
to fully recover from its recent downturn, will harm our business, financial
condition, results of operations and cash flows.

Our operating results have in the past varied and probably will continue to vary significantly in the future from quarter to
quarter, causing volatility in our stock price.

Our
quarterly operating results have varied significantly in the past and may
continue to do so in the future, which could cause our stock price to decline.
Some of the factors that may influence our operating results and subject our
common stock to extreme price and volume fluctuations include:

changes in customer demand for our systems, which is influenced by economic conditions in the semiconductor industry;

demand for products that use semiconductors;

market acceptance of our systems and those of our customers and changes in our product offerings;

the timing, cancellation or delay of customer orders and shipments;

product development costs, including research, development, engineering and
marketing expenses associated with our introduction of new         products and product
enhancements; and

the levels of our fixed expenses relative to our net sales.

In
light of these factors and the cyclical nature of the semiconductor industry, we
expect to continue to experience significant fluctuations in quarterly and
annual operating results. Moreover, many of our expenses are fixed in the
short-term which, together with the need for continued investment in research
and development, marketing and customer support, limits our ability to reduce
expenses quickly. As a result, declines in net sales could harm our business,
financial condition, results of operations and cash flows.

Our
net sales may vary significantly from quarter to quarter due to relatively small
fluctuations in our unit sales.

During
any quarter, a significant portion of our net sales may be derived from the sale
of a relatively small number of systems. For example, our batch processing tools
range in price from approximately $15,000 to $3.2 million per tool and our
single wafer processing tools for cleaning, stripping and etching range in price
from $300,000 to $2.2 million per tool. Accordingly, a small change in the
number of tools we sell may also cause significant changes in our operating
results. This, in turn, could cause fluctuations in the market price of our
common stock.

Variations in the amount of time it takes for us to sell our systems may cause fluctuations in our operating results, which
could cause our stock price to decline.

Variations
in the length of our sales cycles could cause our net sales, and thus our
business, financial condition, operating results and cash flows, to fluctuate
widely from period to period. This variation could cause our stock price to
decline. Our customers generally take a long time to evaluate many of our
products before committing to make a purchase. We expend significant resources
educating and providing information to our prospective customers regarding the
uses and benefits of our systems. The length of time it takes us to make a sale
depends upon many factors, including:

the efforts of our sales force and our independent sales representatives;

the complexity of the customer's fabrication processes;

the internal technical capabilities and sophistication of the customer; and

capital expenditure budget cycle of our customers.

Because
of the number of factors influencing the sales cycle, the period between our
initial contact with a potential customer and the time when we recognize revenue
from that customer, if ever, varies widely in length. Our sales cycle typically
ranges from one to twelve months. Sometimes our sales cycle can be much longer,
particularly with our international customers. The subsequent build cycle, or
the time it takes us to build a product to customer specifications after
receiving an order, typically ranges from one to six months. During these
cycles, we commit substantial resources to our sales efforts in advance of
receiving any revenue, and we may never receive any revenue from a customer
despite our sales efforts.

When
a customer purchases one of our systems, that customer often evaluates the
performance of the system for a lengthy period before potentially purchasing any
more of our systems. The number of additional products a customer may purchase
from us, if any, often times depends on many factors, including a
customers capacity requirements. The period between a customers
initial purchase and subsequent purchases, if any, often varies from two to
twelve months or longer, and variations in length of this period could cause
further fluctuations in our operating results and possibly in our stock price.

Rapid
technological change could make our products obsolete or unmarketable for
specific applications.

We
operate in an industry that is subject to evolving industry standards, rapid
technological changes, rapid changes in customer demands and the rapid
introduction of new, higher performance systems with shorter product life
cycles. As a result, we expect to continue to make significant investments in
research and development. Although, historically, we have had adequate funds
from operations to devote to research and development, there can be no assurance
that such funds will be available in the future or, if available, that they will
be adequate. Also, we must manage product transitions successfully, since
announcements or introductions of new products by us or our competitors could
adversely affect sales of our existing products and cause these existing
products to become obsolete or unmarketable for specific purposes. There can be
no assurance that we will be able to develop and introduce new products or
enhancements to our existing products on a timely basis or in a manner which
satisfies customer needs or achieves widespread market acceptance. Any
significant delay in releasing new systems could adversely affect our
reputation, give a competitor a first-to-market advantage or allow a competitor
to achieve greater market share. The failure to adjust to rapid technological
change could harm our business, financial condition, results of operations and
cash flows.

Our electrochemical deposition products may become obsolete or technological changes may reduce or limit increases in equipment
consumption, particularly for copper interconnects.

Our
business is to a large extent affected by the adoption of our family of
electrochemical deposition tools, primarily for copper interconnect plating
applications. Accordingly, our business would suffer if these products became
obsolete or if sales of these products decreased. Our success depends on our
ability to keep pace with technological changes and advances in the
semiconductor industry and to adapt and improve our products in response to
evolving customer needs and industry trends. Since its inception the
semiconductor industry has experienced rapid technological change in the design,
manufacture, performance and application of ICs and these changes are expected
to continue in the future. Therefore, one or more developments in the
semiconductor industry may render our products obsolete or less important to the
IC manufacturing process, including:

increased competition from new or existing competitors who produce electrochemical deposition equipment;

the adoption of a new process for fabricating interconnects on ICs; and

advances in deposition technology that make it possible to deposit metal interconnects, such as copper, without our
electrochemical         deposition process.

Failure
of our products to gain market acceptance would adversely affect our financial
condition.

We
believe that our growth prospects depend upon our ability to gain customer
acceptance of our products and technology. Market acceptance of products depends
upon numerous factors, including compatibility with existing manufacturing
processes and products, perceived advantages over competing products and the
level of customer service available to support such products. Moreover,
manufacturers often rely on a limited number of equipment vendors to meet their
manufacturing equipment needs. As a result, market acceptance of our products
may be adversely affected to the extent potential customers utilize a
competitors manufacturing equipment. There can be no assurance that growth
in sales of new products will continue or that we will be successful in
obtaining broad market acceptance of our systems and technology.

We
expect to spend a significant amount of time and resources to develop new
systems and refine existing systems. In light of the long product development
cycles inherent in our industry, these expenditures will be made well in advance
of the prospect of deriving revenue from the sale of any new systems. Our
ability to commercially introduce and successfully market any new systems is
subject to a wide variety of challenges during this development cycle, including
start-up bugs, design defects and other matters that could delay introduction of
these systems to the marketplace. In addition, since our customers are not
obligated by long-term contracts to purchase our systems, our anticipated
product orders may not materialize, or orders that do materialize may be
cancelled. As a result, if we do not achieve market acceptance of new products,
we may not be able to realize sufficient sales of our systems in order to recoup
research and development expenditures. The failure of any of our new products to
achieve market acceptance would harm our business, financial condition, results
of operation and cash flows.

Our
ability to reduce costs is limited by our ongoing need to invest in research and
development.

Our
industry is characterized by the need for continued investment in research and
development as well as customer service and support. As a result of our need to
maintain our spending levels in these areas, our operating results could be
materially harmed if our net sales fall below expectations. In addition, because
of our emphasis on research and development and technological innovation, our
operating costs may increase further in the future. We expect our research and
development expenses to increase in absolute dollars for the foreseeable future.

If
the semiconductor industry fails to broadly accept copper as a replacement for
aluminum as the wiring choice for advanced semiconductor devices, our copper
plating products may not achieve market acceptance.

Industries
that use semiconductors are demanding increasingly complex, higher performance
devices. Traditionally, semiconductor devices have used aluminum alloys to
connect the transistors. However, we believe that as interconnects become
increasingly smaller, copper is evolving as a replacement for aluminum as the
wiring choice for advanced ICs. Our plating products are designed for plating
copper on the wafer for copper interconnects and for cleaning the wafer after
the plating process. If the semiconductor industry as a whole does not
transition to copper interconnects, our copper plating and associated cleaning
products will not achieve market acceptance or profitability.

Intense
competition in the markets in which we operate may reduce the demand for our products.

The markets in which we compete are highly competitive. We face substantial competition from established competitors, some of
which have:

greater financial, marketing, technical and other resources;

broader product lines;

more extensive customer support capabilities; and

larger sales organizations and customer bases.

We
may also face competition from new market entrants. Significant competitive
factors in the semiconductor equipment market and other markets, in which we
compete, include system performance and flexibility, cost of ownership, the size
of each manufacturers installed customer base, customer service and
support capabilities and breadth of product lines. In order to remain
competitive, we must maintain a high level of investment in research and
development, marketing and customer service while controlling operating
expenses. There can be no assurance that we will have sufficient resources to
continue to make such investments or that our products will continue to be
viewed as competitive as a result of technological advances by competitors or
changes in semiconductor processing technology. Our competitors may also
increase their efforts to gain and retain market share through competitive
pricing. Such competitive pressures may necessitate significant price reductions
by us or result in lost orders which could harm our business, financial
condition, results of operations and cash flows. Moreover, there has been
significant merger and acquisition activity among our competitors and potential
competitors. These combinations may provide such competitors and potential
competitors with a competitive advantage over us by enabling them to more
rapidly expand their product offerings and service capabilities to meet a
broader range of customer needs. Many of our customers and potential customers
are relatively large companies that require global support and service for their
semiconductor manufacturing equipment. Our larger competitors have more
extensive infrastructures than we do, which could place us at a disadvantage
when competing for the business of global semiconductor device manufacturers.

We
expect our competitors to continue to improve the design and performance of
their products. There can be no assurance that our competitors will not develop
enhancements to, or future generations of, competitive products that will offer
superior price or performance features, or that new processes or technologies
will not emerge that render our products less competitive or obsolete. As a
result of the substantial investment required to integrate capital equipment
into a production line, we believe that once a manufacturer has selected certain
capital equipment from a particular vendor, the manufacturer generally relies
upon that vendor to provide equipment for the specific production line
application and may seek to rely upon that vendor to meet other capital
equipment requirements. Accordingly, we may be at a competitive disadvantage for
a protracted period of time with respect to a particular customer if that
customer utilizes a competitors manufacturing equipment. There can be no
assurance that we will be able to compete successfully in the future.

Compliance
with environmental regulations may be very costly, and the failure to comply
could result in liabilities, fines and cessation of our business.

We
are subject to a variety of governmental regulations related to the discharge or
disposal of toxic, volatile or otherwise hazardous chemicals. Current or future
regulations could require us to purchase expensive equipment or to incur other
substantial expenses to comply with environmental regulations. Any failure by us
to control the use of, or adequately restrict the discharge or disposal of,
hazardous substances could subject us to future liabilities, result in fines
being imposed on us, or result in the suspension of production or cessation of
our manufacturing operations.

Due
to our significant level of international sales, we are subject to operational,
financial and political risks such as currency fluctuations, unexpected changes
in regulatory requirements, tariffs, political and economic instability, adverse
tax consequences, outbreaks of hostilities and difficulties in managing foreign
sales representatives and staffing foreign branch operations.

Our
net sales attributable to customers outside the United States as a percentage of
our total net sales were approximately 38.3% in fiscal 1998, 52.8% in fiscal
1999 and 58.0% in fiscal 2000. We expect net sales outside the United States to
continue to represent a significant portion of our future net sales. Sales to
customers outside the United States are subject to various risks, including:

exposure to currency fluctuations;

political and economic instability;

unexpected changes in regulatory requirements in each of the countries outside the United States in which we operate;

tariffs and other market barriers in each of the countries outside the United States in which we operate;

potentially adverse tax consequences in each of the countries outside the United States in which we operate;

outbreaks of hostilities, particularly in Taiwan and Korea;

difficulties in managing foreign sales representatives and distributors in each of the countries outside the United States in
which we         operate; and

difficulties in staffing
and managing foreign branch operations in each of the countries outside the
United States in which we operate.

In
addition, because a majority of our international sales are denominated in U.S.
Dollars, our ability to compete overseas could be adversely affected by a
strengthening U.S. Dollar. Moreover, although we endeavor to meet technical
standards established by foreign standards setting organizations, there can be
no assurance that we will be able to comply with changes in foreign standards in
the future. Our inability to design products to comply with foreign standards or
any significant or prolonged decline in our international sales could harm our
business, financial condition, results of operations and cash flows.

If
the protection of our proprietary rights is inadequate, our business could be
harmed.

Our
success depends in significant part on the technically innovative features of
our products. We currently hold 84 U.S. patents, some with pending foreign
counterparts, have 104 U.S. patent applications pending and intend to file
additional patent applications as we deem appropriate. There can be no assurance
that patents will issue from any of our pending applications or that existing or
future patents will be sufficiently broad to protect our technology. While we
attempt to protect our intellectual property rights through patents, copyrights
and non-disclosure agreements, there can be no assurance that we will be able to
protect our technology, or that competitors will not be able to develop similar
technology independently. In addition, the laws of certain foreign countries may
not protect our intellectual property to the same extent as the laws of the
United States. Moreover, there can be no assurance that our existing or future
patents will not be challenged, invalidated or circumvented, or that the rights
granted thereunder will provide meaningful competitive advantages to us. In any
of such events, our business, financial condition, results of operations and
cash flows could be harmed.

There
has been substantial litigation regarding patent and other intellectual property
rights in semiconductor-related industries. Although we are not aware of any
infringement by our products of any patents or proprietary rights of others,
further commercialization of our products could provoke claims of infringement
from third parties. In the future, litigation may be necessary to enforce
patents issued to us, to protect trade secrets or know-how owned by us or to
defend us against claimed infringement of the rights of others and to determine
the scope and validity of the proprietary rights of others. Any such litigation
could result in substantial cost and diversion of effort by us, which by itself
could have a material adverse effect on our financial condition, results of
operations and cash flows. Further, adverse determinations in such litigation
could result in our loss of proprietary rights, subject us to significant
liabilities and damages to third parties, require us to seek licenses from third
parties or prevent us from manufacturing or selling our products, any of which
could harm our business, financial condition, results of operations and cash
flows.

For
example, in August 1998, we filed suit against Novellus Systems, Inc. in the
United States District Court for the Northern District of California (Case No.
C-98-3089 DLJ), alleging infringement of two of our patents relating to single
substrate processing tools used in electrochemical deposition of copper onto
semiconductor wafers. We sought damages for past infringement, a permanent
injunction prohibiting future infringement, treble damages for willful
infringement, prejudgment interest and attorneys fees. Novellus answered
the complaint by denying all of the allegations and counter-claiming for
declaratory judgment of invalidity, noninfringement and attorneys fees.
Novellus filed a motion for summary judgment of noninfringement, which motion
was granted on March 17, 2000, and judgment was subsequently entered on May 12,
2000 dismissing the case. We filed an appeal to the United States Court of
Appeals for the Federal Circuit on May 15, 2000, seeking review of the ruling on
the motion for summary judgment. We can provide no assurance of the prospect of
our success in such litigation.

Our
efforts to protect our intellectual property may be less effective in some
foreign countries where intellectual property rights are not as well protected
as in the United States.

In
fiscal 2000, approximately 58.0% of our net sales was derived from sales in
foreign countries, including certain countries in Asia such as Japan, Korea and
Taiwan. The laws of some foreign countries do not protect our proprietary rights
to as great an extent as do the laws of the United States, and many U.S.
companies have encountered substantial problems in protecting their proprietary
rights against infringement in such countries, some of which are countries in
which we have sold and continue to sell systems. For example, Taiwan is not a
signatory to the Patent Cooperation Treaty, which is designed to specify rules
and methods for defending intellectual property internationally. In Taiwan, the
publication of a patent prior to its filing would invalidate the ability of a
company to obtain a patent. Similarly, in contrast to the United States where
the contents of patents remain confidential during the patent prosecution
process, the contents of a patent are published upon filing which provides
competitors an advanced view of the contents of a patent application prior to
the establishment of patent rights. There is a risk that our means of protecting
our proprietary rights may not be adequate in these countries. Our competitors
in these countries may independently develop similar technology or duplicate our
systems. If we fail to adequately protect our intellectual property in these
countries, it would be easier for our competitors to sell competing products in
those countries.

We depend on our key customers.

Our
ten largest customers accounted for 54.6% of net sales in fiscal 1998, 50.9% in
fiscal 1999 and 47.9% in fiscal 2000. We expect this decrease in reliance on our
largest customers to continue. Although the composition of our largest customers
has changed from year to year, the loss of, or a significant curtailment of
purchases by, one or more of our key customers or the delay or cancellation of a
large order could cause our net sales to decline significantly which would harm
our business, financial condition, results of operations and cash flows.
Similarly, delays in payments by key customers could have a significant impact
on our cash flows.

There
is a limited number of mostly large companies operating in the highly
concentrated, capital intensive semiconductor industry. Accordingly, we expect
that we will continue to depend on a small number of large companies for a
significant portion of our net sales. In addition, as large semiconductor
manufacturers seek to establish closer relationships with their suppliers, we
expect that our customer base will become even more concentrated.

Our dependence on key suppliers could delay shipments and increase our costs.

Some
components and subassemblies included in our products are obtained from a single
source or a limited group of suppliers. The loss of, or disruption in, shipments
from these sole or limited source suppliers could in the short-term adversely
affect our business and results of operations. Further, a significant increase
in the price of one or more of these components could harm our business,
financial condition, results of operations and cash flows.

Anti-takeover
provisions in our charter documents could adversely affect the rights of the
holders of our common stock.

The
anti-takeover provisions of Montana law and our Articles of Incorporation and
bylaws may make a change of control of Semitool difficult, even if a change of
control would be beneficial to our shareholders. Our Articles of Incorporation
authorize our Board of Directors to issue preferred stock in one or more series
and to fix the rights, preferences, privileges and restrictions granted to or
imposed upon any unissued shares of preferred stock and to fix the number of
shares constituting any series and the designations of such series, without
further vote or action by the shareholders. Although we have no present plans to
issue any preferred stock, we view the authorized preferred stock as a financing
vehicle. In addition, under Montana law and our charter documents, our Board of
Directors may adopt additional anti-takeover measures in the future.

Any
anti-takeover provisions, including any issuance of preferred stock, could have
the effect of discouraging a third party from making a tender offer or otherwise
attempting to gain control of us. In addition, these provisions could limit the
price that investors might be willing to pay in the future for shares of our
common stock.

Competitive
conditions in our industry may lead to increased price competition or loss of
market share for our products.

Due
to intense competitive conditions in the semiconductor equipment industry, we
have from time to time selectively reduced prices on our systems in order to
protect our market share, and competitive pressures may necessitate further
price reductions. Our competitors are likely to announce the introduction of new
products or lower prices which will affect the prices of our systems and the
level of discounts we grant our customers. To the extent that any of our
semiconductor equipment systems are not distinguished from those of our
competitors by significant technological advantages, we may experience increased
price competition or loss of market share with respect to those systems.

We must attract and retain key personnel to help direct and support our future growth. Competition for such personnel in our
industry is high.

Our
success depends to a significant degree upon the continued contributions of our
key management, engineering, sales and marketing, customer support, finance and
manufacturing personnel. The loss of any of these key personnel, particularly
our Chairman, President and Chief Executive Officer Raymon F. Thompson, who
would be extremely difficult to replace, could harm our business and operating
results. We do not have key person life insurance on any of our executives. In
addition, at times in our industry, we have often experienced significant
employee attrition, and we may experience further attrition in the event of a
future downturn. Further, to support future growth, we will need to attract and
retain additional qualified employees. Competition for such personnel in our
industry is intense, and we may not be successful in attracting and retaining
qualified senior executives and other employees.

We
manufacture substantially all of our equipment at a single facility, and any
prolonged disruption in the operations of that facility could have a material
adverse effect on our net sales.

We
manufacture substantially all of our equipment in our primary manufacturing
facility located in Kalispell, Montana. Our manufacturing processes are highly
complex and require sophisticated and costly equipment and a specially designed
facility. As a result, any prolonged disruption in the operations of our
manufacturing facility, whether due to technical or labor difficulties,
destruction or damage as a result of a fire or any other reason, could seriously
harm our ability to satisfy our customer order deadlines. If we cannot timely
deliver our systems, our net sales could suffer a material adverse effect.

We
rely upon independent sales representatives for a significant portion of our
sales, and a disruption in our relationships with these representatives could
have a negative impact on our sales in China, Japan and Taiwan.

Historically,
a substantial portion of our sales have been made through independent sales
representatives and distributors. We expect that sales through independent sales
representatives and distributors will represent a material portion of our sales
for the next several years. In particular, all our sales in China and Taiwan and
some sales in Japan will continue to be made through independent sales
representatives and distributors for the next several years. In some locations,
our independent sales representatives also provide field service to our
customers. The activities of these representatives are generally not within our
control. A reduction in the sales or service efforts or financial viability of
any of our independent sales representatives and distributors, or a
deterioration or termination of any of our relationships with them, could harm
our net sales, our financial results and our ability to support our customers.

Since
a substantial portion of our net sales are derived from sales in foreign
countries that are denominated in U.S. Dollars, we could experience a
significant decline in sales or experience collection problems in the event the
U.S. Dollar becomes more expensive relative to local currencies.

A
substantial portion of our international sales are denominated in U.S. Dollars.
As a result, if the U.S. Dollar rises in value in relation to foreign
currencies, our systems will become more expensive to customers outside the
United States and less competitive with systems produced by competitors outside
the United States. Such conditions could negatively impact our international
sales. Foreign sales also expose us to collection risk in the event it becomes
more expensive for our foreign customers to convert their local currencies into
U.S. Dollars.

If we deliver systems with defects, our credibility will be harmed and the sales and market acceptance of our systems will
decrease.

Our
systems are complex and sometimes have contained errors, defects and bugs when
introduced. If we deliver systems with errors, defects or bugs, our credibility
and the market acceptance and sales of our systems could be harmed. Further, if
our systems contain errors, defects or bugs, we may be required to expend
significant capital and resources to alleviate such problems. Defects could also
lead to product liability as a result of lawsuits against us or against our
customers. We have agreed to indemnify our customers in some circumstances
against liability arising from defects in our systems. Our product liability
policy currently provides only limited coverage per claim. In the event of a
successful product liability claim, we could be obligated to pay damages which
are not covered by product liability insurance or which are significantly in
excess of our product liability insurance limits.

Our backlog may not result in future net sales.

We
schedule the production of our systems based in part upon order backlog. Due to
possible customer changes in delivery schedules and cancellations of orders, our
backlog at any particular date is not necessarily indicative of actual sales for
any succeeding period. In addition, while we evaluate each customer order on a
case by case basis to determine qualification for inclusion in backlog, there
can be no assurance that amounts included in backlog will ultimately result in
future sales. A reduction in backlog during any particular period, or the
failure of our backlog to result in future sales, could harm our business.

We
have experienced a period of rapid growth and if we are not able to successfully
manage this and future growth, our business, financial condition and results of
operations could be significantly harmed.

We
have recently experienced a significant growth in net sales. Our net sales
increased 95.4% from approximately $122.5 million during the fiscal year 1999 to
approximately $239.4 million during fiscal year 2000. In addition, our
consolidated orders backlog increased 91.7% from approximately $57.5 million at
September 30, 1999 to $110.2 million at September 30, 2000. We cannot assure you
we will be able to continue to maintain or increase the level of net sales in
future periods. Further, this growth has placed, and is expected to continue to
place, a significant strain on our management and operations. If we are unable
to effectively manage this growth, our business, financial condition and results
of operations and cash flows could be significantly harmed.

Our stock price may be volatile and our common stock may be thinly traded, which could cause investors to lose a substantial
part of their investments in our common stock.

The
stock market in general, and the stock prices of technology companies in
particular, have recently experienced volatility which has often been unrelated
to the operating performance of any particular company or companies. If market
or industry-based fluctuations continue, our stock price could decline
regardless of our actual operating performance and investors could lose a
substantial part of their investments. The market price of our common stock will
likely fluctuate in response to a number of factors, including the following:

variations in our operating results;

announcements by us or our competitors of significant contracts or acquisitions;

our failure to meet the performance estimates of securities analysts;

changes in financial estimates of our net sales and operating results by securities analysts;

stock market price and volume fluctuations attributable to inconsistent trading volume levels; and

general stock market conditions.

We
could be subject to class action litigation due to stock price volatility,
which, if it occurs, will distract our management and could result in
substantial costs or large judgments against us.

In
the past, securities class action litigation has often been brought against
companies following periods of volatility in the market prices of their
securities. Securities litigation could result in substantial costs and divert
our managements attention and resources, which could cause harm to our
business, financial condition and results of operations and cash flows.

Changes
to accounting standards and rules could adversely affect the amount and timing
of recognition of revenue.

In
December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, or SAB 101, Revenue Recognition in Financial
Statements. SAB 101 provides guidance on applying generally accepted
accounting principles to revenue recognition issues in financial statements. The
SEC has delayed implementation of SAB 101 until the fourth quarter of fiscal
years beginning after December 15, 1999. When we adopt SAB 101 in the fourth
quarter of fiscal 2001, we will recognize revenue when we substantially complete
the terms of the applicable sales arrangement. While we have not fully assessed
the impact on us of the adoption of SAB 101, we believe that it may require a
significant amount of our net sales to be deferred, which could be partially or
totally offset by the recognition of net sales for products shipped in prior
periods, as required by SAB 101. Any change in our revenue recognition policy
resulting from the implementation of SAB 101 would be reported as a change in
accounting principle in the year ending September 30, 2001 with a restatement of
prior quarters in fiscal 2001 to reflect the effect of the change. We are also
considering potential changes to the terms of our agreements for equipment sales
that could mitigate the impact of SAB 101. In addition, we may need to
renegotiate the financial covenants under our line of credit agreement. As a
result, while SAB 101 would not affect the fundamental aspects of our operations
as measured by our shipments and cash flows, implementation of SAB 101 could
have an adverse effect on our reported results of operations.

Item 2.  Properties

We
own five facilities around the world. We have two manufacturing facilities
located on sites in Kalispell, Montana with approximately 200,000 square feet in
the aggregate. We also own a building and land located in Cambridge, England
which serves as our European sales and customer service headquarters and a
building and land located in Coopersburg, Pennsylvania, which serves as a
manufacturing facility for our Rhetech, Inc. subsidiary. In addition, in fiscal
1999, we purchased a building and land in Phoenix, Arizona to house our Semy
Engineering, Inc. subsidiary. All the facilities above support our Semiconductor
Equipment segment, except our Phoenix, Arizona facility which supports our
Software Control Systems segment. We believe that our existing manufacturing
facilities will be adequate to meet our requirements for the foreseeable future
and that suitable additional or substitute space will be available as needed. We
also lease seventeen other smaller facilities worldwide, which are used as sales
and customer service centers.

We are subject to a variety of governmental regulations related to the discharge or disposal of toxic, volatile, or
otherwise hazardous chemicals used on Semitool's premises.  We believe that we are in material compliance with these regulations and
that we have obtained all necessary environmental permits to conduct our business. Nevertheless, current or future regulations could
require us to purchase expensive equipment or to incur other substantial expenses to comply with environmental regulations.  Any
failure by us to control the use of, or adequately restrict the discharge or disposal of, hazardous substances could subject us to
future liabilities, result in fines being imposed on us, or result in the suspension of production or cessation of our manufacturing
operations.

Item 3.  Legal Proceedings

In
July 1998, Mitsubishi Silicon America Corporation, successor to Siltec
Corporation, filed suit against us in the United States Federal District Court
for the District of Oregon (Case No. CV-98-826AA). The lawsuit alleges breach of
warranties and seeks damages and attorneys fees of approximately $5.4
million. The trial is scheduled to commence in February, 2001. We believe the
lawsuit to be without merit and are contesting the action vigorously. However,
given the inherent uncertainty of litigation, there can be no assurance that the
ultimate outcome will be in our favor. Further, regardless of the ultimate
outcome, there can be no assurance that the diversion of managements
attention, and any costs associated with the lawsuit, will not have a material
adverse effect on our financial condition, results of operations or cash flows.

In
August 1998, we filed suit against Novellus Systems, Inc. in the United States
District Court for the Northern District of California (Case No. C-98-3089 DLJ),
alleging infringement of two of our patents relating to single substrate
processing tools used in electrochemical deposition of copper onto semiconductor
wafers. We seek damages for past infringement, a permanent injunction
prohibiting future infringement, treble damages for willful infringement,
prejudgment interest and attorneys fees. Novellus answered the complaint
by denying all of the allegations and counter-claiming for declaratory judgment
of invalidity and noninfringement and attorneys fees. Novellus filed a
motion for summary judgment of noninfringement, which motion was granted on
March 17, 2000, and judgment was subsequently entered on May 12, 2000 dismissing
the case. We filed an appeal to the United States Court of Appeals for the
Federal Circuit on May 15, 2000 seeking review of the ruling on the motion for
summary judgment. Briefs have been filed by both parties, but no hearing date
has been scheduled.

We
are subject to other legal proceedings and claims which have arisen in the
ordinary course of our business and have not been finally adjudicated. Although
there can be no assurance as to the ultimate disposition of these matters, it is
the opinion of our management, based upon the information available at this
time, that the currently expected outcome of these matters, individually or in
the aggregate, will not have a material adverse effect on our results of
operations, financial condition or cash flows.

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

No
matters were submitted to the shareholders for a vote during the fourth quarter
of the fiscal year.

Item 5.  Market for Semitool's Common Stock and Related Shareholder Matters

Our Common Stock is traded
under the symbol SMTL principally on the Nasdaq National Market. The
approximate number of shareholders of record at December 13, 2000 was 129 and
the reported last sale price of our common stock on the Nasdaq National Market
was $11.75. The high and low sales prices for our common stock reported by the
Nasdaq National Market are shown below.

`Common Stock Price Range
                                              Fiscal Year
                                          Ended September 30,

                                 2000                          1999(1)
                           High          Low             High             Low
First Quarter              $7.81        $4.00            $4.25           $2.13
Second Quarter            $26.63        $6.75            $4.69           $3.00
Third Quarter             $21.75       $11.13            $5.00           $3.00
Fourth Quarter            $19.25        $9.88            $6.94           $4.19`

Since our initial public offering of Common Stock in February of 1995, the Company has never declared or paid any cash dividend nor
has any intent to do so in the near future.

(1) Retroactively restated to reflect a two-for-one stock split on March 28, 2000.

Item 6.  Selected Financial Data

This summary should be read
in conjunction with the consolidated financial statements and related notes
included elsewhere herein.

`Year Ended September 30,
                                                    2000         1999         1998         1997          1996

Statement of Operations Data:
Net sales                                        $239,447     $122,528     $180,501     $193,952      $174,204
Gross profit                                      126,701       57,648       90,979       91,090        84,631
Income (loss) from operations                      36,669      (12,741)       8,087       20,432        24,182
Net income (loss)                                  24,426       (6,745)       4,805       12,523        15,136
Basic earnings (loss) per share(1)                   0.87        (0.24)        0.17         0.46          0.55
Diluted earnings (loss) per share(1)                 0.85        (0.24)        0.17         0.45          0.55
Average number of basic common shares(1)           28,062       27,594       27,566       27,352        27,302
Average number of diluted common shares(1)         28,783       27,594       27,808       27,666        27,716

Balance Sheet Data:
Working capital                                    79,498       52,308       52,408       50,047        43,797
Total assets                                      202,660      131,884      127,990      131,725       114,954
Short-term debt                                    21,724       10,541        3,596        4,393         4,374
Long-term debt and capital leases                   3,653        3,911        3,836        3,364         3,637
Shareholders' equity                              108,632       81,025       86,694       81,580        68,003`

(1) Retroactively restated to reflect a two-for-one stock split on March 28, 2000.

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

Caution - Forward Looking Statements

Statements
contained in this Managements Discussion and Analysis of Financial
Condition and Results of Operations and elsewhere in this Annual Report on
Form 10-K which are not purely historical facts are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical fact are forward-looking statements for
purposes of those provisions, including without limitation, statements regarding
use of sales, service and support organizations, the contribution of
international sales to net sales, fiscal year 2001 sales, gross margins,
research and development, the renewal of our revolving line of credit, costs of
manufacturing, interest expense, future balances, the sufficiency of funds, and
effects of new accounting standards. In some cases, you can identify
forward-looking statements by the use of terminology such as may,
will, expects, plans,
anticipates, estimates, potential,
believes, can impact continue, or the
negative thereof or other comparable terminology.

Management
cautions that forward-looking statements are subject to risks and uncertainties
that could cause our actual results to differ materially from those projected in
such forward-looking statements. These risks and uncertainties include, but are
not limited to, the cyclical nature of the semiconductor industry in general,
lack of market acceptance for new products, decreasing demand for our existing
products, impact of competitive products and pricing, product development,
commercialization and technological difficulties, capacity and supply constraint
difficulties and other risks detailed herein.

Our
future results will depend on our ability to continue to enhance our existing
products and to develop and manufacture new products and to finance such
activities. There can be no assurance that we will be successful in the
introduction, marketing and cost-effective manufacture of any new products or
that we will be able to develop and introduce in a timely manner new products or
enhancements to our existing products and processes which satisfy customer needs
or achieve widespread market acceptance. The Company undertakes no obligation to
update forward-looking statements to reflect subsequent events, changed
circumstances, or the occurrence of unanticipated events.

Overview

Semitool
is a worldwide leader in the design, development, manufacture, and support of
high performance wet chemical processing equipment for use in the fabrication of
semiconductor devices. Our primary families of tools include electrochemical
deposition systems for the plating of copper interconnects for integrated
circuits and other metals for various applications including semiconductor
advanced packaging, and wafer surface preparation systems for cleaning,
stripping and etching processes. This suite of technologically innovative batch
and single wafer processing tools leverages our core wet chemical expertise and
our experience building and supporting production-proven semiconductor
fabrication equipment.

With
more than 21 years dedicated to the semiconductor and related industries, we
have applied our wet-chemical expertise in design, engineering, process and
manufacturing to deliver innovations in electrochemical deposition and wafer
surface preparation to our global customer base. Our customers include many of
the major semiconductor manufacturers worldwide, including Advanced Micro
Devices, Atmel, Conexant Systems, Fujitsu, IBM, Intel, Lucent Technologies,
Motorola, NEC, Philips Semiconductor, Seagate, Samsung, STMicroelectronics, TSMC
and UMC.

We
report our business in two segments, the Semiconductor Equipment segment and the
Software Control Systems segment. The Semiconductor Equipment segment is our
largest segment and its primary products are batch and single wafer processing
equipment. Our Software Control Systems segments primary product provides
advance process control for most types of manufacturing equipment used in the
semiconductor manufacturing front-end processes and real-time operating data to
fab management.

We
sell our products both in the United States and internationally. In fiscal 2000,
our sales distribution by geographic area was 42.0% in the United States, 25.7%
in Europe, 13.4% in Japan and 18.9% in Asia and all others. This compares with
47.2% in the United States, 24.0% in Europe, 18.7% in Japan and 10.1% in Asia
and all others in fiscal 1999. Worldwide sales, service and support are
primarily provided through our employees in the United States, Europe, Japan,
Korea and Singapore and through the use of independent sales representatives in
China, Japan, Taiwan, and the United States. We anticipate that international
sales will continue to account for a significant portion of net sales, although
the percentage of international sales and the geographic distribution may
fluctuate from period to period.

Revenue
from sales of products is generally recognized at the time the product is
shipped. Service contract revenue is recognized ratably over the period of the
related contract. Software revenue is recognized when there is persuasive
evidence of an arrangement, the software has been delivered, the price is fixed
and determinable and collectibility is probable in accordance with the American
Institute of Certified Public Accountants Statement of Position 97-2
Software Revenue Recognition.

Results of Operations

The following table sets forth our consolidated results of operations for the periods indicated expressed as a percentage of net
sales:

`Year Ended September 30,
                                                --------------------------------------------

                                                   2000             1999             1998
                                                ----------       ----------       ----------
Statement of Operations Data:
     Net sales                                       100.0%           100.0%           100.0%
     Cost of sales                                    47.1             53.0             49.6
                                                ----------       ----------       ----------
     Gross profit                                     52.9             47.0             50.4
                                                ----------       ----------       ----------

     Operating expenses:
         Selling, general and administrative          27.8             40.4             32.3
         Research and development                      9.8             17.0             13.6
                                                ----------       ----------       ----------
         Total operating expenses                     37.6             57.4             45.9
                                                ----------       ----------       ----------
     Income (loss) from operations                    15.3            (10.4)             4.5
     Other income (expense), net                      (0.3)             1.5             (0.5)
                                                ----------       ----------       ----------
     Income (loss) before income taxes                15.0             (8.9)             4.0
     Income taxes                                     (4.8)            (3.4)             1.4
                                                ----------       ----------       ----------
     Net income (loss)                                10.2%            (5.5)%            2.6%
                                                ==========       ==========       ==========`

Results of Operations for the Fiscal Years Ended September 30, 2000, 1999 and 1998

Net
Sales. Net sales were $239.4 million, $122.5 million and $180.5 million for
fiscal 2000, 1999, and 1998. The increase in net sales from fiscal 1999 to
fiscal 2000 was primarily driven by the growth in the semiconductor industry and
by changing technology with regard to electrochemical deposition.
Electrochemical deposition sales were influenced by the increasing use of copper
interconnects and technology changes in chip packaging. Net sales were also
higher for our yield management products.

The
overall decline in net sales from fiscal 1998 to fiscal 1999 was primarily
attributable to the reduction of capital equipment spending by our customers in
response to excess manufacturing capacity in the semiconductor industry and the
Asian economic decline. Partially offsetting the decline in net sales in the
Semiconductor Equipment segment due to these factors was a small increase in
Software Control Systems segment sales.

Net
sales for the Semiconductor Equipment segment were $221.8 million, $109.6
million and $168.9 million for fiscal 2000, 1999 and 1998. Relative
contributions to consolidated net sales of this segments product lines for
fiscal 2000 were 21.8% for electrochemical deposition, 56.0% for cleaning,
stripping and etching and 14.9% for parts, service and other. For fiscal 1999,
the relative contribution to consolidated net sales was 16.7% for
electrochemical deposition, 53.5% for cleaning, stripping and etching and 19.4%
for parts, service and other. In fiscal 2000, sales were up significantly in all
categories listed above when compared to fiscal 1999. Customer purchases were
for new technology needs and increasing their capacity. Fiscal 2000 demand for
electrochemical deposition and automated batch clean, stripping and etching
tools was particularly strong. Electrochemical deposition product net sales were
$52.2 million, an increase of $31.8 million over fiscal 1999.

The
fiscal 1999 Semiconductor Equipment segment sales decline from fiscal 1998 of
35.1% was due to lower sales in all product lines, which was primarily the
result of the semiconductor industry downturn. However, the sales decline in our
thermal products, which is included in parts, service and other, was relatively
greater than the general industry decline due to a shift of marketing and sales
resources away from that product line. In fiscal 1999 electrochemical deposition
net sales declined from the prior year, but the percentage decline for this
product line was significantly lower than the percentage decline for all other
product lines in this segment.

Net sales for the Software Control Systems segment were $19.4 million, $13.3 million and $11.8 million for fiscal 2000, 1999
and 1998. This included internal sales of $1.8 million, $413,000 and $181,000 for fiscal 2000, 1999 and 1998, respectively, which are
eliminated in the consolidated statement of operations.  The sales increases for fiscal 1999 to fiscal 2000 and from fiscal 1998 to
fiscal 1999 were attributable to growing product acceptance and semiconductor industry growth in fiscal 2000.

Recent
announcements by companies in the semiconductor device and end-user markets
concerning increasing inventory levels and possible reductions in capacity
utilization have created an uncertain business outlook in these markets. Because
of these conditions our visibility into fiscal 2001 is less clear.

Gross
Profit. Our gross margins were 52.9%, 47.0% and 50.4% for fiscal 2000, 1999 and
1998. The increase in gross margins from fiscal 1999 to fiscal 2000 was
primarily attributable to higher capacity utilization, lower warranty cost as a
percent of sales, and product sales mix.

The
decrease in gross margin from fiscal 1998 to fiscal 1999 was attributable to a
number of factors, including primarily the effect of lower capacity utilization,
higher obsolete inventory write-offs in the Semiconductor Equipment segment and
changes in sales mix in both segments.

Selling,
General and Administrative. Selling, general and administrative expenses were
$66.6 million, $49.5 million and $58.4 million for fiscal 2000, 1999 and 1998.
As a percent of net sales, selling, general and administrative expenses were
27.8%, 40.4% and 32.3% for fiscal 2000, 1999 and 1998. Selling, general and
administrative expenses decreased as a percent of sales from fiscal 1999 to 2000
as we were able to leverage the fixed components of these expenses as sales
increased. The absolute dollar increase in selling, general and administrative
expenses of $17.1 million in fiscal 2000 compared to fiscal 1999 was a result of
higher staffing and commission costs related to the higher level of sales. The
absolute decline in selling, general and administrative expenses in fiscal 1999
compared to fiscal 1998 of $8.8 million was the net result of cost reductions
and lower sales volumes.

Research
and Development. Research and development expenses were $23.4 million, $20.9
million and $24.5 million for fiscal 2000, 1999 and 1998. As a percent of sales,
research and development expenses were 9.8%, 17.0% and 13.6% for fiscal 2000,
1999 and 1998. The $2.6 million absolute increase in fiscal 2000 from fiscal
1999 was a result of research and development for 300 millimeter product
applications, enhancements to electrochemical deposition technologies and a
higher development level associated with the increased sales activity. As a
percent of sales, fiscal 2000s spending level was more in line with
historical spending levels. In fiscal 1999, research and development expense was
lower in absolute dollars than fiscal 1998s expense but increased as a
percent of sales as spending was not reduced in proportion to fiscal 1999s
sales decline in anticipation of an industry recovery.

Research
and development expenses for fiscal 1999 were 14.9% below fiscal 1998s
expense level. During this period, projects in the Semiconductor Equipment
segment included the development of the LT 210c linear copper plating tool, the
development of the high throughput fully automated Spectrum, the Millennium
platform, and the HydrOzone cleaning process, among others. The Semiconductor
Equipment segments research and development activities were focused on the
electrochemical deposition and cleaning, stripping and etching product lines.

Income
(Loss) from Operations. Income from fiscal 2000 operations for our Semiconductor
Equipment segment was $33.7 million compared to a loss of $13.0 million and
income of $8.6 million for fiscal 1999 and 1998. Fiscal 2000 sales increased at
a faster rate than many of the operating expenses and combined with the effect
of improved gross margin to produce record operating income.

The
primary reason for the loss in fiscal 1999 and the decrease in income from
operations from fiscal 1998 was due to the general decline in the semiconductor
industry. In fiscal 1999, this segments selling, general and
administrative expenses and research and development expenses were reduced from
fiscal 1998 levels in response to the lower net sales in fiscal 1999 compared to
fiscal 1998. The loss from operations in fiscal 1999 was also due in part to a
substantial portion of our selling, general and administrative expenses and our
research and development expenses being fixed in the short term. In fiscal 1999,
the Semiconductor Equipment segments selling, general and administrative
expenses were also affected by higher litigation expenses.

Income
(loss) from operations for the Software Control Systems segment was income of
$4.3 million, income of $572,000 and a loss of $381,000 for fiscal 2000, 1999,
and 1998. The increase in fiscal 2000 income from operations from fiscal 1999
was primarily attributable to higher sales and gross margins. Margins improved
due to a more mature product line, decreased amortization of capitalized
software and reduced hardware costs. This was partially offset by increased
research and development expenses on an absolute dollar basis. The increase from
fiscal 1998 to 1999 is due to the recovery in the semiconductor industry and
growing product acceptance. Gross margins increased slightly from fiscal 1999
compared to fiscal 1998. Selling expenses increased in fiscal 1999 compared to
fiscal 1998 in response to increased sales, but research and development
expenses decreased during the same period as a major development project was
completed in fiscal 1998.

Other
Income (Expense), Net. Other income (expense), net was expense of $749,000 for
fiscal 2000, income of $1.8 million for fiscal 1999, and expense of $807,000 for
fiscal 1998. A major expense component was interest of approximately $1.1
million, $401,000, and $559,000 for fiscal 2000, 1999, and 1998. In fiscal 2000
and fiscal 1999, other income, net included foreign exchange gains of $407,000
and $1.2 million, respectively. The foreign exchange gain consisted of net gains
and losses resulting from the re-measurement of our accounts denominated in
non-U.S. currencies into U.S. Dollars, which is our functional currency, and net
gains and losses on forward contracts. The net exchange gains were due primarily
to fluctuations of the U.S. Dollar against the Japanese Yen.

Income
Taxes. The fiscal 2000 income tax provision was $11.5 million compared to a $4.2
million tax benefit in fiscal 1999 and a $2.5 million income tax provision for
fiscal 1998. The effective income tax rates for fiscal 2000, 1999 and 1998 were
32.0%, 38.4% and 34.0%, respectively. The anticipated tax rate for fiscal 2001
is 33.0%.

Liquidity and Capital Resources

Cash
used in operating activities was $4.1 million for the year ended September 30,
2000, as compared to $9.8 million used in operating activities for the year
ended September 30, 1999. During fiscal 2000, cash used in operations was lower
as compared to fiscal 1999 primarily due to increases in net income, accounts
payable and accrued liabilities, which were partially offset by increases in
account receivable and inventory. These increases reflected higher sales in
fiscal 2000. In fiscal 1999, cash was used in operations because of the net
loss, substantial increases in inventory, accounts receivable and income tax
refund receivable and a decrease in accrued warranty and installation, which
were partially offset by an increase in accounts payable and other accrued
liabilities.

As
of September 30, 2000, we had accounts receivable of $78.5 million and inventory
of $72.5 million as compared to $38.4 million and $41.7 million respectively as
of September 30, 1999. We expect future accounts receivable and inventory
balances to fluctuate with net sales. As is customary in the semiconductor
manufacturing equipment industry, products are generally built to fill specific
customer orders, with typical order fulfillment times ranging from four to six
weeks for certain products to six months or more for more complex products.
Accordingly, while our finished goods inventory accounts for 6.9% of total
inventory, overall inventory levels tend to fluctuate with the level and type of
orders received. Currently, the tools with the longest average cycle times are
the Semiconductor Equipment segments automated batch and single wafer
processing tools.

Cash
used in investing activities for fiscal 2000 was $7.0 million as compared to
cash provided by investing activities of $739,000 for the year ended September
30, 1999. Cash used to purchase plant, property and equipment in fiscal 2000 was
$5.4 million, compared to $2.0 million in fiscal 1999. Cash used for investments
in intangible assets, which primarily consisted of intellectual property rights,
was approximately $1.7 million in fiscal 2000 as compared to $654,000 for fiscal
1999.

Cash
provided by financing activities for fiscal 2000 consisted of cash provided by
the exercise of stock options of $3.1 million and net borrowing of $10.3 million
on our line of credit and other short-term debts and the repayment of
approximately $405,000 on long-term debt and capitalized leases. This compares
with financing activities for fiscal 1999 of $6.7 million of additional net
borrowings under our line of credit and other short-term debt to fund operations
and payments on long-term debt and capital leases of $636,000.

As
of September 30, 2000, our principal sources of liquidity consisted of
approximately $6.7 million of cash and cash equivalents and $20.2 million
available under our $40 million revolving line of credit. The credit facility is
with Bank of America, N.A. and bears interest at the banks prime lending
rate or, at our option for loan amounts of $500,000 or more, at LIBOR plus 1.5%.
As of September 30, 2000, the interest rate was 9.5%. Our revolving line of
credit expires on April 1, 2001. The credit agreement has various restrictive
covenants, including a prohibition against pledging or in any way encumbering
current or operating assets during the term of the credit agreement and the
maintenance of various financial ratios. We are in discussions with Bank of
America, N.A. for renewal of our revolving line of credit and we expect to
complete the renewal prior to April 1, 2001, however, there can be no assurance
that we will be successful in obtaining a renewal.

We
believe that cash and cash equivalents, funds expected to be generated from
operations and funds available from the expected renewal of our bank line of
credit will be sufficient to meet our planned operating and capital requirements
during the next twelve months, including approximately $7.0 million to purchase
property, plant and equipment. We believe that success in our industry requires
substantial capital in order to maintain the flexibility to take advantage of
opportunities as they arise. We may, from time to time, as market and business
conditions warrant, invest in or acquire complementary products, technologies or
businesses. We may sell additional equity or debt to fund such activities or to
fund greater than anticipated growth and currently have a shelf registration in
place with an aggregate public offering price of $75 million. The sale of
additional equity securities or the issuance of equity securities in a business
combination could result in dilution to our shareholders.

Litigation

In
July 1998, Mitsubishi Silicon America Corporation, successor to Siltec
Corporation, filed suit against us in the United States Federal District Court
for the District of Oregon (Case No. CV-98-826AA). The lawsuit alleges breach of
warranties and seeks damages and attorneys fees of approximately $5.4
million. The trial is scheduled to commence in February, 2001. We believe the
lawsuit to be without merit and are contesting the action vigorously. However,
given the inherent uncertainty of litigation, there can be no assurance that the
ultimate outcome will be in our favor. Further, regardless of the ultimate
outcome, there can be no assurance that the diversion of managements
attention, and any costs associated with the lawsuit, will not have a material
adverse effect on our financial condition, results of operations or cash flows.

In
August 1998, we filed suit against Novellus Systems, Inc. in the United States
District Court for the Northern District of California (Case No. C-98-3089 DLJ),
alleging infringement of two of our patents relating to single substrate
processing tools used in electrochemical deposition of copper onto semiconductor
wafers. We seek damages for past infringement, a permanent injunction
prohibiting future infringement, treble damages for willful infringement,
prejudgment interest and attorneys fees. Novellus answered the complaint
by denying all of the allegations and counter-claiming for declaratory judgment
of invalidity and noninfringement and attorneys fees. Novellus filed a
motion for summary judgment of noninfringement, which motion was granted on
March 17, 2000, and judgment was subsequently entered on May 12, 2000 dismissing
the case. We filed an appeal to the United States Court of Appeals for the
Federal Circuit on May 15, 2000 seeking review of the ruling on the motion for
summary judgment. Briefs have been filed by both parties, but no hearing date
has been scheduled.

We
are subject to other legal proceedings and claims which have arisen in the
ordinary course of our business and have not been finally adjudicated. Although
there can be no assurance as to the ultimate disposition of these matters, it is
the opinion of our management, based upon the information available at this
time, that the currently expected outcome of these matters, individually or in
the aggregate, will not have a material adverse effect on our results of
operations, financial condition or cash flows.

New Accounting Pronouncements

In
June 1998, Statement of Financial Accounting Standards No. 133 (SFAS 133),
Accounting for Derivative Instruments and Hedging Activities was
issued. SFAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives), and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. SFAS 133, as amended, is effective for the Company in fiscal
2001. The Company does not believe the application of this standard will have a
material effect on its results of operations, financial condition or cash flows.

In
December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, or SAB 101, Revenue Recognition in Financial
Statements. SAB 101 provides guidance on applying generally accepted
accounting principles to revenue recognition issues in financial statements. The
SEC has delayed implementation of SAB 101 until the fourth quarter of fiscal
years beginning after December 15, 1999. When we adopt SAB 101 in the fourth
quarter of fiscal 2001, we will recognize revenue when we substantially complete
the terms of the applicable sales arrangement. While we have not fully assessed
the impact on us of the adoption of SAB 101, we believe that it may require a
significant amount of our net sales to be deferred, which could be partially or
totally offset by the recognition of net sales for products shipped in prior
periods, as required by SAB 101. Any change in our revenue recognition policy
resulting from the implementation of SAB 101 would be reported as a change in
accounting principle in the year ending September 30, 2001 with a restatement of
prior quarters in fiscal 2001 to reflect the effect of the change. We are also
considering potential changes to the terms of our agreements for equipment sales
that could mitigate the impact of SAB 101. In addition, we may need to
renegotiate the financial covenants under our line of credit agreement. As a
result, while SAB 101 would not affect the fundamental aspects of our operations
as measured by our shipments and cash flows, implementation of SAB 101 could
have an adverse effect on our reported results of operations.

Item 7a.  Quantitative and Qualitative Disclosures About Market Risk

Market Risks

Market risks relating to our operations result primarily from changes in interest rate and changes in foreign currency exchange
rates.

As
of September 30, 2000, we had approximately $4.0 million in long-term debt and
approximately $21.4 million in short-term debt. Our long-term debt bears
interest at a fixed rate. As a result, changes in the fixed rate interest market
would change the estimated fair value of the fixed rate long-term debt. We
believe that a 10% change in the long-term interest rate would not have a
material effect on our business, financial condition, results of operations or
cash flows.

All
of our international operations are subject to inherent risks in conducting
business abroad, including fluctuation in the relative value of currencies. We
manage this risk and attempt to reduce such exposure through an economic hedge
using short-term forward exchange contracts. At September 30, 2000, we held
forward contracts to sell Japanese Yen with a face value of $15.6 million, a
market value of $15.4 million and an unrealized gain of approximately $200,000.
However, the impact of movements in currency exchange rates on forward contracts
is offset to the extent of receivables denominated in Japanese Yen. The effect
of a 10% change in foreign exchange rates on hedged transactions involving
Japanese Yen forward exchange contracts and the underlying transactions would
not be material to our financial condition, results of operations or cash flows.
We do not hold or issue derivative financial instruments for trading or
speculative purposes.

Item 8.  Financial Statements and Supplementary Data

The financial statements and supplementary data listed in Item 14(a)(1) and 14(a)(2) of this Form 10-K are incorporated into this
Item 8 of Part II of this Form 10-K.

Unaudited Quarterly Consolidated Financial Data
Amounts In Thousands, Except Per Share Data

`Quarter
                                                     First         Second          Third          Fourth
2000
Net sales                                      $    49,555    $    54,308    $    64,910     $    70,674
Gross profit                                        25,817         29,467         33,718          37,699
Net income                                           3,731          5,188          6,928           8,579
Basic earnings per share                              0.14           0.18           0.24            0.30
Diluted earnings per share                            0.13           0.18           0.24            0.30

1999
Net sales                                      $    30,422    $    25,816    $    29,838     $    36,452
Gross profit                                        14,737         11,927         14,622          16,362
Net income (loss)                                   (1,141)        (2,967)        (2,735)             98
Basic and diluted earnings (loss) per share          (0.04)         (0.11)         (0.10)           0.00`

Fiscal year 1999 fourth quarter results include a reduction in the Company's effective income tax rate that increased net income by
$479,000, or $0.02 per diluted share.

All per share amounts have
been retroactively restated to reflect a two-for-one stock split on March 28,
2000.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
                  Financial Disclosures

None.

Item 10. Executive Officers and Directors

The following table sets
forth certain information with respect to the executive officers and directors
of the Company:

`Name                 Age                             Position
   Raymon F. Thompson                 59   Chairman of the Board, President and Chief Executive
                                           Officer
   Timothy C. Dodkin                  51   Senior Vice President
                                           Managing Director, Semitool Europe, Ltd.
   William A. Freeman                 57   Senior Vice President and Chief Financial Officer
   Gregory L. Perkins                 57   Vice President, Operations
   Dana R. Scranton                   45   Vice President, Strategic Marketing
   Larry A. Viano                     46   Secretary, Treasurer, Controller and Principal
                                           Accounting Officer
   Howard E. Bateman (1)              66   Director
   Richard A. Dasen (1)(2)            58   Director
   Daniel J. Eigeman (2)              66   Director
   L. Peter Larson (2)                61   Director
-----------`

(1)      Member of the Compensation and Stock Option Committee.

(2)      Member of the Audit Committee.

The following sets forth the background of each of the Company's executive officers and directors, including the principal occupation
of those individuals for the past five years:

Raymon F. Thompson founded Semitool in 1979 and serves as our Chairman, President and Chief Executive Officer.  In 1979, Mr. Thompson designed,
patented and introduced the first on-axis spin rinser/dryer for the semiconductor industry.  Mr. Thompson serves on the Boards of Directors of Semitool Europe, Ltd. and Semitool Japan KK.

Timothy C. Dodkin has been employed by us since 1985 and has served on our Board of Directors since 1998.  Mr. Dodkin served as our European Sales
Manager from 1985 to 1986 when he became Senior Vice President, Managing Director of Semitool Europe, Ltd.  Prior to joining us, Mr. Dodkin worked at Cambridge Instruments, a semiconductor
equipment manufacturer, for ten years in national and international sales.

William A. Freeman joined the Company in 1998, and is Senior Vice President and Chief Financial Officer.  Prior to joining us and
since 1995, Mr. Freeman was an independent management consultant.  Prior to 1995, he worked for 22 years at Zurn Industries, Inc., a
diversified manufacturing, engineering, and construction company.  At Zurn, Mr. Freeman served in division management positions
before being appointed Senior Vice President - Chief Financial Officer in 1986, and President in 1991.  Mr. Freeman also serves on
the Board of Directors of NPC International, Inc., a Nasdaq-listed company.

Gregory L. Perkins joined the Company in 1990 as Vice President, Manufacturing and, since 1994, has served as our Vice President,
Operations.  Prior to joining us, Mr. Perkins served as General Manager for Modulair, Inc., a manufacturer of clean rooms, from 1987
to 1990.

Dana R. Scranton has served as the Company's Vice President, Strategic Marketing since December 2000.  Mr. Scranton has 10 years of
experience with Semitool in the areas of engineering, product management and marketing.  Mr. Scranton has a total of 15 years
experience in the semiconductor capital equipment business.

Larry A. Viano joined the Company in 1985 and serves as our Secretary, Treasurer, Principal Accounting Officer and Controller.  Mr.
Viano serves on the Board of Directors of Semitool Europe, Ltd. and Semitool Japan KK.  He is a Certified Public Accountant.

Howard E. Bateman has served on the Company's Board of Directors since 1990. Mr. Bateman  formerly owned and operated Entech, a
Pennsylvania company that was an independent sales representative for our products from 1979 to 1996.

Richard A. Dasen has served on the Company's Board of Directors since 1984. From 1974 to 1992, Mr. Dasen owned and managed Evergreen
Bancorporation, a multi-bank holding company. Since 1992, Mr. Dasen has been an independent businessman.

Daniel J. Eigeman has served on the Company's Board of Directors since 1985. From 1971 to 1993, Mr. Eigeman was President of Eigeman,
Hanson & Co., P.C., an accounting firm, and was a shareholder of Junkermier, Clark, Campanella, Stevens, P.C., CPAs from 1993 to
1999. Mr. Eigeman currently serves as director of CPA Mutual Insurance of America, Inc.

L. Peter Larson was appointed a director of the Company in December 2000, to fill the unexpired term of Calvin S. Robinson, who
passed away in June 2000.  Mr. Larson currently serves as Chairman of the Board of American Timber Company and previously served as
its President and Chief Executive Officer from 1978 to 2000.  Mr. Larson is the President and Chief Executive Officer of L. Peter
Larson Company and is a General Partner of Larson-Sparling Limited Partnership.  Since 1985, Mr. Larson has served on the Board of
Directors of Glacier Bancorp, Inc., a Nasdaq-listed company.

The executive officers are elected each year by the Board of Directors to serve for a one-year term of office.

The information concerning compliance with Section 16(a) of the Securities and Exchange Act of 1934, as amended, required under this
item is contained in our Proxy Statement to be filed in connection with our 2001 Annual Meeting of Shareholders under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance" and is incorporated herein by reference.

Item 11.  Executive Compensation

The information concerning compensation of executive officers and directors required under this item is contained in our Proxy
Statement to be filed in connection with our 2001 Annual Meeting of Shareholders under the caption "Executive Compensation," and is
incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

The information concerning certain principal holders of securities and security ownership of executive officers and directors
required under this item is contained in our Proxy Statement to be filed in connection with our 2001 Annual Meeting of Shareholders
under the caption "Security Ownership of Certain Beneficial Owners and Management" and is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

The information concerning certain relationships and related transactions required under this item is contained in our Proxy
Statement to be filed in connection with our 2001 Annual Meeting of Shareholders under the caption "Certain Transactions," and is
incorporated herein by reference.

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

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

1.     Financial Statements:
              ________________















2.        Financial Statement Schedules:
              ________________________



3.        Exhibits:
              _______

(a)        The exhibits listed below are filed as part of this Annual Report on
      Form 10-K or are incorporated herein by reference:

`Exhibit No.                                          Description

3.1           Restated Articles of Incorporation of the Company (1)
3.5           Amended Bylaws of Semitool, Inc. (4)
3.6           Amended Bylaws of Semitool, Inc. (5)
3.7           Amended Bylaws of Semitool, Inc. (8)
3.8           Amendment to the Restated Articles of Incorporation of the Company (9)
3.9           Correction to the Amendment of the Restated Article of Incorporation of the Company (9)
10.12         Agreement  between the Company and the Semitool European Companies (1)
10.13         Aircraft Lease Agreement, dated April 1, 1996, between the Company
              and Mr. Thompson (2)
10.16         Business Loan Agreement, dated September 30, 1997, between the Company and the Bank of America NT&SA doing business as
              Seafirst Bank (3)
10.17         Promissory Note, dated September 29, 1997, between the Company and the
              Bank of America National Trust and Savings Association doing business as Seafirst Bank (3)
10.18         Loan Modification Agreement, dated September 29, 1997 between the Company and The Bank of America National Trust And
              Savings Association doing business as Seafirst Bank (3)
10.19         Loan Modification Agreement, dated October 2, 1997 between the Company and the Bank of America National Trust And
              Savings Association doing business as Seafirst Bank (3)
10.20         Loan Modification Agreement, dated October 2, 1997 between the Company and the Bank of America National Trust And
              Savings Association doing business as Seafirst Bank (3)
10.21         Promissory Note, dated March 26, 1998 between Rhetech, Inc. and
              CoreStates Bank, N.A. (4)
10.22         Mortgage, Assignment of Leases and Security Agreement, dated
              March 26, 1998 between Rhetech, Inc. and CoreStates Bank, N.A. (4)
10.23         Promissory Note, dated March 26, 1998 between Rhetech, Inc. and
              CoreStates Bank, N.A. (4)
10.24         Mortgage, Assignment of Leases and Security Agreement, dated
              March 26, 1998 between Rhetech, Inc. and CoreStates Bank, N.A. (4)
10.25         Employment Agreement between William A. Freeman and
              Semitool, Inc. dated February 20, 1998 (4)
10.26         Employment Agreement between Fabio Gualandris and
              Semitool, Inc. dated April 21, 1998 (6)
10.27         Business Loan Agreement, dated September 30, 1998, between the Company
              and the Bank of America NT&SA doing business as Seafirst Bank (6)
10.28         Promissory Note, dated September 30, 1998, between the Company and the
              Bank of America National Trust and Savings Association doing business
              as Seafirst Bank (6)
10.29         First Amendment to Business Loan Agreement between Bank of America
              NT&SA doing business as Seafirst Bank and Semitool, Inc. (7)
10.30         Employment Agreement between Gary Spray and Semitool, Inc. dated
              May 5, 1999 (7)
10.31         Employment Agreement between Kazuyo N. Heinink and Semitool, Inc. dated
              July 29, 1999 (8)
10.32         Business loan agreement, dated July 5, 2000, between the Company and Bank of America (10)
10.33         Promissory Note, dated July 5, 2000, between the Company and Bank of      America (10)
10.34         Corporate Resolution to Borrow, dated July 5, 2000, between the Company and Bank of America (10)
10.35         Employment Agreement between Jurek Koziol and Semitool, Inc. dated March 23, 2000 (10)
21.1          Subsidiaries of Registrant (11)
23.1          Consent of Independent Accountants (11)
27            Financial data schedule (11)
99.2          Amended and Restated Semitool, Inc. 1994 Stock Option Plan (4)`

(1)    Incorporated herein by reference to the identically numbered exhibits to the Company's Registration Statement on Form S-1 (File
No. 33-87548), which became effective on February 2, 1995.

(2)    Incorporated herein by reference to the identically numbered exhibits to the Company's Annual Report on Form 10-K, date of
report September 30, 1996.

(3)    Incorporated herein by reference to the identically numbered exhibits to the Company's Annual Report on Form 10-K, date of
report September 30, 1997.

(4)    Incorporated herein by reference to the identically numbered exhibit to the Company's Quarterly Report on Form 10-Q, date of
report March 31, 1998.

(5)    Incorporated herein by reference to the identically numbered exhibit to the Company's Quarterly Report on Form 10-Q, date of
report June 30, 1998.

(6)    Incorporated herein by reference to the identically numbered exhibit to the Company's Annual Report on Form 10-K, date of report
September 30, 1998.

(7)    Incorporated herein by reference to the identically numbered exhibit to the Company's Quarterly Report on Form 10-Q, date of
report June 30, 1999.

(8)    Incorporated herein by reference to the identically numbered exhibits to the Company's Annual Report on Form 10-K, date of
report September 30, 1999.

(9)    Incorporated herein by reference to the identically numbered exhibit to the Company's Quarterly Report on Form 10-Q, date of
report March 31, 2000.

(10)   Incorporated herein by reference to the identically numbered exhibit to the Company's Quarterly Report on Form 10-Q, date of
report June 30, 2000.

(11)   Filed herewith.

(b)    Reports on Form 8-K.

1. On July 5, 2000, Semitool, Inc. filed a report on Form 8-K announcing certain additions to the management of the Company.

1. On July 6, 2000, Semitool, Inc. filed a report on Form 8-K announcing the Company's SpectrumE product.

1. On July 10, 2000, Semitool, Inc. filed a report on Form 8-K announcing that the Company is licensing its copper ECD seed
                  layer technology to Shipley Company, L.L.C.

1. On July 10, 2000, Semitool, Inc. filed a report on Form 8-K announcing the Company's Paragon, an ECD Cluster processing
                  tool.

(c)     Exhibits.  The Exhibits listed in Item 14(a)(3)(a) hereof are filed as part of this Annual Report on Form 10-K or are
      incorporated herein by reference.

(d)     Financial Statement Schedules.  See Item 14(a)(2) above.

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.

`Dated:  December 22, 2000                          SEMITOOL, INC.





                                     By: /s/Raymon F. Thompson
                                         Raymon F. Thompson
                                         Chairman, President and Chief Executive Officer`

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

`Signature                                 Title                              Date



/s/Raymon F. Thompson
-------------------------------
Raymon F. Thompson                    Chairman of the Board                       December 22, 2000
                                      President, and Chief Executive
                                      Officer
                                      (Principal Executive Officer)



/s/William A. Freeman
-------------------------------
William A. Freeman                    Senior Vice President                       December 22, 2000
                                      and Chief Financial Officer



/s/Larry A. Viano
-------------------------------
Larry A. Viano                        Secretary, Treasurer, Controller            December 22, 2000
                                      and Principal Accounting Officer



/s/Howard E. Bateman
-------------------------------
Howard E. Bateman                                Director                         December 22, 2000



/s/Richard A. Dasen
-------------------------------
Richard A. Dasen                                 Director                         December 22, 2000



/s/Timothy C. Dodkin
-------------------------------
Timothy C. Dodkin                     Director and                                December 22, 2000
                                      Senior Vice President



/s/Daniel J. Eigeman
-------------------------------
Daniel J. Eigeman                                Director                         December 22, 2000



/s/L. Peter Larson
-------------------------------
L. Peter Larson                                  Director                         December 22, 2000`

Board of Directors and Shareholders

Semitool, Inc.

In our opinion, the
consolidated financial statements listed in the index appearing under Item
14(a)(1) present fairly, in all material respects, the financial position of
Semitool, Inc. and its subsidiaries at September 30, 2000 and September 30,
1999, and the results of their operations and their cash flows for each of the
three years in the period ended September 30, 2000 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 index appearing
under Item 14(a)(2) presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements. These financial statements and financial statement
schedule are the responsibility of the Companys management; our
responsibility is to express an opinion on these financial statements and
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.

/s/PricewaterhouseCoopers LLP

Boise, Idaho
October 31, 2000

`ASSETS
                                                                                           2000            1999
                                                                                        -----------     -----------
Current assets:
   Cash and cash equivalents                                                            $     6,711     $     4,789
   Trade receivables, less allowance for doubtful accounts
      of $314 and $271 in 2000 and 1999                                                      78,486          38,366
   Inventories                                                                               72,467          41,667
   Income tax refund receivable                                                               1,055           3,944
   Prepaid expenses and other current assets                                                  2,237           2,607
   Deferred income taxes                                                                      7,235           5,928
                                                                                        -----------     -----------
         Total current assets                                                               168,191          97,301
Property, plant and equipment, net                                                           29,915          30,336
Intangibles, less accumulated amortization of $4,605 and $3,574 in 2000 and 1999              3,843           3,406
Other assets, net                                                                               711             841
                                                                                        -----------     -----------
         Total assets                                                                   $   202,660     $   131,884
                                                                                        ===========     ===========

                               LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Note payable to bank                                                                 $    21,383     $    10,160
   Accounts payable                                                                          28,246          14,602
   Accrued commissions                                                                        2,523           1,018
   Accrued warranty and installation                                                         13,701           9,045
   Accrued payroll and related benefits                                                       8,154           3,691
   Income taxes payable                                                                       8,722              --
   Other accrued liabilities                                                                  2,624           3,974
   Customer advances                                                                          2,938           2,119
   Long-term debt and capital leases, due within one year                                       341             381
   Payable to shareholder                                                                        61               3
                                                                                        -----------     -----------
         Total current liabilities                                                           88,693          44,993
Long-term debt and capital leases, due after one year                                         3,653           3,911
Deferred income taxes                                                                         1,682           1,955
                                                                                        -----------     -----------
      Total liabilities                                                                      94,028          50,859
                                                                                        -----------     -----------

Commitments and contingencies (Note 9)

Shareholders' equity:
   Preferred stock, no par value, 5,000 shares authorized, no
      shares issued and outstanding                                                              --              --
   Common stock, no par value, 75,000 shares authorized,
      28,307 and 27,629 shares issued and outstanding in 2000 and 1999                       44,621          41,464
   Retained earnings                                                                         63,435          39,009
   Accumulated other comprehensive income                                                       576             552
                                                                                        -----------     -----------
         Total shareholders' equity                                                         108,632          81,025
                                                                                        -----------     -----------
         Total liabilities and shareholders' equity                                     $   202,660     $   131,884
                                                                                        ===========     ===========`

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

`2000           1999           1998
                                                    ----------     ----------     ----------

Net sales                                           $  239,447     $  122,528     $  180,501
Cost of sales                                          112,746         64,880         89,522
                                                    ----------     ----------     ----------

Gross profit                                           126,701         57,648         90,979
                                                    ----------     ----------     ----------

Operating expenses:
    Selling, general and administrative                 66,588         49,515         58,356
    Research and development                            23,444         20,874         24,536
                                                    ----------     ----------     ----------
       Total operating expenses                         90,032         70,389         82,892
                                                    ----------     ----------     ----------

Income (loss) from operations                           36,669        (12,741)         8,087
                                                    ----------     ----------     ----------

Other income (expense):
    Interest income                                         63            243             64
    Interest expense                                    (1,063)          (401)          (559)
    Other, net                                             251          1,954           (312)
                                                    ----------     ----------     ----------
                                                          (749)         1,796           (807)
                                                    ----------     ----------     ----------
Income (loss) before income taxes                       35,920        (10,945)         7,280
Income taxes                                            11,494         (4,200)         2,475
                                                    ----------     ----------     ----------

Net income (loss)                                   $   24,426     $   (6,745)    $    4,805
                                                    ==========     ==========     ==========

Earnings (loss) per share:
Basic                                               $     0.87     $    (0.24)    $     0.17
Diluted                                             $     0.85     $    (0.24)    $     0.17

Weighted average common shares:
Basic                                                   28,062         27,594         27,566
Diluted                                                 28,783         27,594         27,808`

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

`Common Stock
                                           -------------------------

                                                                                            Accumulated
                                             Number                                            Other
                                               of                         Retained         Comprehensive
                                             Shares         Amount        Earnings         Income (Loss)      Total
                                           ---------------------------------------------------------------------------

Balance October 1, 1997                        27,511     $   40,590     $   40,949          $       41     $   81,580
     Net income                                    --             --          4,805                  --          4,805
     Exercise of stock options                     73            342             --                  --            342
     Income tax effect of nonqualified
         stock options                             --            316             --                  --            316
     Other comprehensive loss                      --             --             --                (349)          (349)
                                           ----------     ----------     ----------          ----------     ----------

Balance September 30, 1998                     27,584         41,248         45,754                (308)        86,694
     Net loss                                      --             --         (6,745)                 --         (6,745)
     Exercise of stock options                     45            216             --                  --            216
     Other comprehensive income                    --             --             --                 860            860
                                           ----------     ----------     ----------          ----------     ----------

Balance September 30, 1999                     27,629         41,464         39,009                 552         81,025
     Net income                                    --             --         24,426                  --         24,426
     Exercise of stock options                    678          3,138             --                  --          3,138
     Income tax effect of nonqualified
         stock options                             --             19             --                  --             19
     Other comprehensive income                    --             --             --                  24             24
                                           ----------     ----------     ----------          ----------     ----------

Balance September 30, 2000                     28,307     $   44,621     $   63,435          $      576     $  108,632
                                           ==========     ==========     ==========          ==========     ==========`

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

`2000         1999         1998
                                                                   --------     --------     --------

Operating activities:
  Net income (loss)                                                $ 24,426     $ (6,745)    $  4,805
  Adjustments to reconcile net income (loss) to net
     cash provided by (used in) operating activities:
        (Gain) loss on disposition of assets                            291         (157)         623
        Depreciation and amortization                                 7,912       10,351       10,423
        Provisions for losses on accounts receivable                     43           51        1,318
        Deferred income tax                                          (1,580)        (454)         308
        Change in:
          Trade receivables                                         (39,434)      (1,902)       3,993
          Inventories                                               (31,603)      (7,995)       2,593
          Income tax refund receivable                                2,889       (3,944)          --
          Prepaid expenses and other current assets                     363         (353)        (282)
          Shareholder payable                                            58          (75)          71
          Other assets, net                                            (192)        (422)         113
          Accounts payable                                           13,860        3,760       (7,234)
          Accrued commissions                                         1,505           83         (915)
          Accrued warranty and installation                           4,658       (2,939)       2,150
          Accrued payroll and related benefits                        4,465         (589)      (1,924)
          Other accrued liabilities                                  (1,338)       1,788          972
          Customer advances                                             819         (264)         660
          Income taxes payable                                        8,740           --       (2,670)
                                                                   --------     --------     --------
             Net cash provided by (used in) operating
             activities                                              (4,118)      (9,806)      15,004
                                                                   --------     --------     --------

Investing activities:
  Purchases of property, plant and equipment                         (5,392)      (1,988)      (9,759)
  Increase in intangible assets                                      (1,736)        (654)      (2,826)
  Proceeds from sale of property                                         99        3,381           63
                                                                   --------     --------     --------
             Net cash provided by (used in) investing
             activities                                              (7,029)         739      (12,522)
                                                                   --------     --------     --------

Financing activities:
  Proceeds from exercise of stock options                             3,138          216          342
  Borrowings under line of credit                                   106,925       15,845       75,440
  Repayments under line of credit                                   (97,255)      (8,685)     (76,440)
  Proceeds from long-term debt                                           --           --        1,100
  Repayments of long-term debt and capital leases                      (405)        (636)        (410)
  Proceeds from short-term debt                                       7,188           --           --
  Repayments of short-term debt                                      (6,517)        (413)        (255)
                                                                   --------     --------     --------
             Net cash provided by (used in) financing
             activities                                              13,074        6,327         (223)
                                                                   --------     --------     --------

Effect of exchange rate changes on cash and cash equivalents             (5)         242          (32)
                                                                   --------     --------     --------
Net increase (decrease) in cash and cash equivalents                  1,922       (2,498)       2,227
Cash and cash equivalents at beginning of year                        4,789        7,287        5,060
                                                                   --------     --------     --------
Cash and cash equivalents at end of year                           $  6,711     $  4,789     $  7,287
                                                                   ========     ========     ========`

`2000         1999         1998
                                                                   --------     --------     --------
Supplemental disclosures of cash flow information:
  Cash paid (received) during the year for:
     Interest                                                      $  1,242     $    370     $    569
     Income taxes                                                     1,675         (431)       5,263

Supplemental disclosures of non-cash financing and
  investing activity:
     Assets acquired by incurring debt and capital leases          $    107     $    501     $    668
     Income tax effect of nonqualified stock options                     19           --          316`

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

`2000            1999           1998
                                                      -----------    -----------    -----------

Net income (loss)                                     $    24,426    $    (6,745)   $     4,805
Foreign currency translation adjustment                        24            860           (349)
                                                      -----------    -----------    -----------
             Total comprehensive income (loss)        $    24,450    $    (5,885)   $     4,456
                                                      ===========    ===========    ===========`

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

1.     Company Organization and Summary of Significant Accounting Policies:

Semitool, Inc. (Semitool) and subsidiaries (the Company) designs, manufactures, markets and
services equipment and software control products used in the manufacture of
semiconductors as well as other products requiring similar processes including
thin film heads, compact disc masters, flat panel displays and hard disk media.
The Company has two reportable segments, Semiconductor Equipment and Software
Control Systems. Semitool has various subsidiaries which operate sales and
service offices in certain geographic areas.

Significant accounting policies followed by the Company are:

Principles of Consolidation

The consolidated financial statements include the accounts of Semitool and its wholly-owned subsidiaries: Semitool Europe
         Ltd., (United Kingdom); Semitool Halbleitertechnik Vertriebs GmbH, (Germany); Semitool France SARL; Semitool Italia SRL;
         Semitool Japan KK; Semitool Korea, Inc.; Semitool (Asia) Pte Ltd., (Singapore); Semitool Schweiz, GmbH (Switzerland);
         Semitool FSC, Inc.; Semy Engineering, Inc. (Semy) and Rhetech, Inc. (Rhetech).

All significant intercompany accounts and transactions are eliminated in consolidation.

Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results inevitably will differ from those
estimates, and such differences may be material to the consolidated financial
statements.

Cash Equivalents

The Company considers cash equivalents to consist of short-term, highly liquid
investments with remaining maturities at time of purchase of three months or
less. Substantially all of its cash and cash equivalents are held by major
financial institutions. At times such balances may be in excess of the federal
insurance limit.

Inventories

Inventories are carried at the lower of first-in, first-out (FIFO) cost or market. The
Company periodically reviews its inventories to identify slow moving and
obsolete inventories to record such inventories at net realizable values. It is
reasonably possible that the Companys estimates of net realizable values
could change in the near term due to technological and other changes.

Property, Plant and Equipment

Property, plant and equipment is stated at cost. Depreciation and amortization is  provided using the straight-line method
         with estimated useful lives as follows:

`Buildings and improvements                             10-40 years
            Machinery and equipment                                  2-5 years
            Furniture, fixtures and leasehold improvements           3-7 years
            Vehicles and aircraft                                   5-10 years`

Major additions and betterments are capitalized. Costs of maintenance and repairs
which do not improve or extend the lives of the respective assets are expensed
when incurred. When items are disposed of, the related costs and accumulated
depreciation are removed from the accounts and any gain or loss is recognized.

Intangible Assets

Intangible assets include the cost of internally developed software and legal costs associated with obtaining patents.

Costs incurred for internally developed software products and enhancements after
technological feasibility and marketability have been established for the
related product are capitalized and are stated at the lower of cost or net
realizable value. Amortization is provided based on the greater of the amount
computed using (a) the ratio that current gross revenues for a product bears to
the total of current and anticipated future gross revenues for that product, or
(b) the straight-line method over the remaining economic life of the product,
estimated at three years. Net capitalized software costs were approximately
$420,000 and $1.3 million as of September 30, 2000 and 1999 and amortization of
such costs was $927,000, $1,105,000 and $877,000 for the years ended September
30, 2000, 1999 and 1998, respectively.

The cost of patents is amortized on a straight-line basis over the lesser of 17  years or the estimated product life.

It is reasonably possible that estimates of future gross revenues for software
products, the estimated remaining product life, or both could change in the near
term due to technological and other changes which would result in a reduction in
the carrying value of capitalized software development costs and patents.

Revenue Recognition

Revenue from sales of products is generally recognized at the time the product is
shipped. Service contract revenue is recognized ratably over the period of the
related contract. Software revenue is recognized when there is persuasive
evidence of an arrangement, the software has been delivered, the price is fixed,
and determinable and collectibility is probable in accordance with the
AICPAs Statement of Position 97-2 Software Revenue
Recognition.

Accrued Warranty and Installation

The Companys obligations at time of shipment for installation and warranty are
accrued concurrently with the revenue recognized. The Company has made a
provision for its warranty and installation obligations based upon historical
costs incurred for such obligations adjusted, as necessary, for current
conditions and factors. Due to the significant uncertainties and judgments
involved in estimating the Companys warranty and installation obligations,
including changing product designs and specifications, the ultimate amount
incurred for warranty and installation costs could change in the near term from
the Companys current estimate.

Foreign Currency

Except for Semitool Japan KK, where the functional currency is the Japanese Yen, the
functional currency for the Companys foreign operations is the U.S.
Dollar, in which most of our sales and purchases are denominated. For these
foreign operations, realized gains and losses from foreign currency transactions
and unrealized gains and losses from re-measurement of the financial statements
of the foreign operations into the functional currency are included in the
consolidated statements of operations.

Semitool Japan KK, invoices its customers in Yen. Gains of $673,000 and $1.2 million and
a loss of $44,000 in 2000, 1999, and 1998 are included in Other Income (Expense)
in the Consolidated Statements of Operations and unrealized gains and losses
from remeasurement of the financial statements are reflected as a component of
Other Comprehensive Income (Loss).

Foreign Currency Exchange Contracts

The Company uses foreign currency exchange contracts, which typically mature within
one year, as part of an overall risk-management strategy. These instruments are
used as an economic hedge of receivables denominated in Yen. Transaction gains
and losses on these contracts and the related receivables are recognized in the
consolidated statements of operations. The impact of movements in currency
exchange rates on forward foreign exchange contracts generally offsets the
related impact on the underlying items being hedged, and therefore net foreign
currency gains and losses on these transactions historically have not been
material. However, during fiscal 1999, significant receivables were not hedged
which resulted in net foreign currency gains of $1.2 million. In entering into
these forward contracts, the Company has assumed the risk that might arise from
the possible inability of counterparties to meet the terms of their contracts.
The Company does not expect any losses as a result of counterparty defaults. The
Company does not hold or issue derivative financial instruments for trading or
speculative purposes.

As of September 30, 2000 and 1999, the Company had foreign currency exchange
contracts to sell 1.7 billion Yen (US $16.3 million) and 1.2 billion Yen (US
$11.2 million), respectively, at contracted forward rates maturing at various
dates in fiscal years 2000, 2001 and 2002.

Research and Development Costs

Costs of research and development are expensed as incurred.

Earnings (Loss) Per Share

Basic earnings per share is computed using the weighted average number of common
shares outstanding. Diluted earnings per share is computed using the weighted
average number of common shares outstanding and potential common shares, except
when they are antidilutive. Potential shares result from the assumed exercise of
outstanding stock options. Diluted earnings per share excludes the effects of
antidilutive stock options of 35,000, 1,778,900 and 346,000 in fiscal 2000, 1999
and 1998, respectively.

The following table sets forth the computation of basic and diluted earnings (loss)
per common share for the years ended September 30, 2000, 1999 and 1998 (in
thousands):

`2000       1999       1998
    Numerator:
      Net income (loss) used for basic and diluted
      earnings (loss) per share                             $  24,426  $  (6,745) $   4,805
                                                            =========  =========  =========

    Denominator:
      Average common shares used for basic
      earnings (loss) per share                                28,062     27,594     27,566
      Effects of dilutive stock options                           721         --        242
                                                            ---------  ---------  ---------

    Denominator for diluted earnings (loss) per share          28,783     27,594     27,808
                                                            =========  =========  =========`

Stock Split

The authorized shares of the Companys capital stock were increased from
30,000,000 to 75,000,000 at the February 8, 2000 Annual Meeting of Shareholders.
The Company completed a two-for-one stock split in the form of a 100% stock
dividend on March 28, 2000. All references in the financial statements to the
number of shares, per share amounts and market prices of the Companys
common stock have been retroactively restated to reflect the increased number of
common shares outstanding.

New Accounting Pronouncements

In June 1998, Statement of Financial Accounting Standards No. 133 (SFAS 133),
Accounting for Derivative Instruments and Hedging Activities was
issued. SFAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives), and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. SFAS 133, as amended, is effective for the Company in fiscal
2001. The Company does not believe the application of this standard will have a
material effect on its results of operations, financial condition or cash flows.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, or SAB 101, Revenue Recognition in Financial
Statements. SAB 101 provides guidance on applying generally accepted
accounting principles to revenue recognition issues in financial statements. The
SEC has delayed implementation of SAB 101 until the fourth quarter of fiscal
years beginning after December 15, 1999. When we adopt SAB 101 in the
fourth quarter of fiscal 2001, we will recognize revenue when we substantially
complete the terms of the applicable sales arrangement. While we have not fully
assessed the impact on us of the adoption of SAB 101, we believe that it may
require a significant amount of our net sales to be deferred, which could be
partially or totally offset by the recognition of net sales for products shipped
in prior periods, as required by SAB 101. Any change in our revenue recognition
policy resulting from the implementation of SAB 101 would be reported as a
change in accounting principle in the year ending September 30, 2001 with a
restatement of prior quarters in fiscal 2001 to reflect the effect of the
change. We are also considering potential changes to the terms of our agreements
for equipment sales that could mitigate the impact of SAB 101. In addition, we
may need to renegotiate the financial covenants under our line of credit
agreement. As a result, while SAB 101 would not affect the fundamental aspects
of our operations as measured by our shipments and cash flows, implementation of
SAB 101 could have an adverse effect on our reported results of operations.

2.     Inventories:

Inventories at September 30, 2000 and 1999 are summarized as follows (in thousands):

`2000          1999

         Parts and raw materials                 $   36,251    $   23,930
         Work-in-process                             31,203        11,852
         Finished goods                               5,013         5,885
                                                 ----------    ----------

                                                 $   72,467    $   41,667
                                                 ==========    ==========`

3.     Property, Plant and Equipment:

Property,
plant and equipment at September 30, 2000 and 1999 is summarized as follows (in
thousands):

`2000         1999

     Buildings and improvements                           $  19,011    $  16,340
     Machinery and equipment                                 25,631       23,396
     Furniture, fixtures and leasehold improvements          11,552       10,812
     Vehicles and aircraft                                    5,288        5,406
                                                          ---------    ---------
                                                             61,482       55,954
     Less accumulated depreciation and amortization         (33,806)     (29,849)
                                                          ---------    ---------
                                                             27,676       26,105
     Land and land improvements                               2,239        4,231
                                                          ---------    ---------

                                                          $  29,915    $  30,336
                                                          =========    =========`

Equipment under capital leases and accumulated amortization thereon were approximately
$603,000 and $171,000, respectively, as of September 30, 2000, and approximately
$501,000 and $51,000, respectively, as of September 30, 1999.

4.     Note Payable to Bank:

The Company has an uncollateralized line of credit totaling $40 million under an
agreement with Bank of America. Borrowings under the line of credit bear
interest at the banks prime lending rate (9.5% at September 30, 2000) or
at LIBOR plus 1.5% with the line of credit expiring on April 1, 2001. The line
of credit requires monthly interest payments only, until April 1, 2001 with the
then outstanding balance repayable in monthly principal and interest payments
over a three-year period ending April 1, 2004. At September 30, 2000, there were
$19.8 million of advances outstanding on the line of credit. The line of credit
agreement provides for a quarterly commitment fee on any unused portion.
Additionally, the agreement has various restrictive covenants, including a
prohibition against pledging or in any way encumbering current or operating
assets during the term of the agreement and the maintenance of various financial
ratios. The Company expects to renew this credit facility prior to April 1,
2001.

5.     Long-Term Debt and Capital Leases:

Long-term
debt and capital leases at September 30, 2000 are summarized as follows (in
thousands):

`Mortgage term note payable in monthly installments of
        $23 including interest at a blended rate of 5.5%, maturing on
        September 1, 2014. (A)                                                      $    2,634
     Mortgage term note payable to First Union National Bank in monthly
        installments of $6, including interest at 7.5% until
        March 30, 2005 and thereafter at the Bank's national commercial
        rate plus 1.0% per annum, maturing on March 30, 2008. (B)                          442
     Mortgage term note payable to the Pennsylvania Industrial
        Development Authority (PIDA) in monthly installments of $6,
        including interest at 4.25%, maturing on December 1, 2008. (B)                     474
     Capitalized lease obligation payable in monthly installments of
        779 Yen (US $7), including interest at 3.2% and property taxes at
        1.4%, maturing on April 1, 2004.  Collateralized by equipment.                     286
     Capitalized lease obligation payable in monthly installments of
        215 Yen (US $2), including interest at 2.2% and property taxes at
        1.4%, maturing on November 1, 2003.  Collateralized by equipment.                   71
     Capitalized lease obligation payable in monthly installments of
        214 Yen (US $2), including interest at 3.0% and property taxes at
        1.4%, maturing on September 1, 2004.  Collateralized by equipment.                  87
                                                                                    ----------
                                                                                         3,994
     Less current portion                                                                  341
                                                                                    ----------
                                                                                    $    3,653
                                                                                    ==========`

(A)The
mortgage term notes payable are collateralized by a first lien deed of trust on
the Kalispell office and manufacturing facility and by all fixtures and personal
property of the Company necessary for the operation of the facility. The Montana
State Board of Investments provided 80% of the financing with Bank of America
providing the remaining 20%. The notes are personally guaranteed by Raymon F.
Thompson, the Companys chairman, and are subject to the restrictive
covenants described in Note 4.

(B)The
mortgage term note payable to First Union National Bank is collateralized by a
first lien deed of trust on the Coopersburg, Pennsylvania office and
manufacturing facility and by all fixtures and personal property of Rhetech,
Inc. necessary for the operation of the facility. The mortgage term note payable
to PIDA is collateralized by a second lien upon the premises in Coopersburg,
Pennsylvania upon which the Rhetech, Inc. office and manufacturing facility
resides, and is subordinate only to the $540,000 mortgage, dated March 26, 1998,
between Rhetech, Inc. and First Union National Bank. The net book value of
assets pledged under the agreements was $2.2 million at September 30, 2000.

Principal
maturities for long-term debt and capital leases at September 30, 2000, are
summarized as follows (in thousands):

`Year Ending                            Notes          Capital
               September 30,                          Payable         Leases
               ----------------------------------------------------------------

                   2001                              $      224      $      134
                   2002                                     242             134
                   2003                                     256             134
                   2004                                     271              79
                   2005                                     286              --
            Thereafter                                    2,271              --
            Less interest and property taxes                 --             (37)
                                                     ----------      ----------
                                                     $    3,550      $      444
                                                     ==========      ==========`

6.     Employee Benefit and Stock Option Plans:

Semitool maintains a profit-sharing plan and trust under Section 401(k) of the Internal
Revenue Code. Under the terms of the plan, U.S. employees may make voluntary
contributions to the plan. Semitool contributes a matching amount equal to 50%
of the employees voluntary contribution up to 5% of the employees
compensation. Semitool may also make non-matching contributions to the plan,
which are determined annually by the Board of Directors. Total profit sharing
contribution cost for this plan was approximately $1.1 million, $1.2 million and
$1.1 million for the years ended September 30, 2000, 1999 and 1998,
respectively.

Semitool Europe Ltd. maintains a defined contribution pension agreement. This pension
agreement is open to all employees with more than three months of service. The
employer and employee contributions are invested in each individual
members personal pension plan with a United Kingdom insurance company. The
employer has an obligation to make contributions at one-half of the contribution
rate paid by the employee, subject to a rate between 2.5% and 5.0% of the
employees salary. The total pension cost for this plan for the years ended
September 30, 2000, 1999 and 1998 approximated $48,000, $36,000 and $59,000,
respectively.

The Companys other foreign subsidiaries do not operate their own pension
plans, but retirement benefits are generally provided to employees through
government plans operated in their respective countries.

In December 1994, the Board of Directors adopted and the shareholders approved the
Semitool, Inc. 1994 Stock Option Plan (the Option Plan). A total of 1,800,000
shares of common stock were reserved for issuance under the Option Plan. In
February 1997 and again in 1998 and 1999, the Option Plan was amended to
increase the number of shares of common stock available for issuance thereunder
by 400,000 shares per amendment for a total increase of 1,200,000. The total
shares reserved for the Option Plan is 3,000,000 at September 30, 2000. Options
granted under the Option Plan generally become exercisable at a rate of 5% per
quarter commencing three months after the grant date. Semitool may grant options
that qualify as incentive stock options to employees and nonqualified stock
options to employees, officers and directors, independent contractors and
consultants. The Option Plan also provides for automatic grants of nonqualified
stock options to independent directors. The Option Plan will terminate in
December 2004 unless terminated earlier at the discretion of the Board of
Directors. At September 30, 2000, 770,789 shares were available for future
issuance under the Option Plan. Options are granted at an exercise price equal
to the market price of the common stock and no compensation expense has been
recognized in 2000, 1999 or 1998 under the Option Plan.

The
following summary shows stock option activity for the three years ended
September 30, 2000:

`Weighted-
                                                                        Average
                                          Number of              Exercise Price
     Stock Option Activity                   Shares                   per Share
     -----------------------        ---------------            ----------------

     October 1, 1997                      1,196,646                       $5.07
     Granted                                859,000                       $5.64
     Exercised                              (73,018)                      $4.68
     Forfeited                             (251,280)                      $5.86
                                    ---------------            ----------------

     September 30, 1998                   1,731,348                       $5.25
     Granted                                291,000                       $4.59
     Exercised                              (44,950)                      $4.81
     Forfeited                             (198,498)                      $5.75
                                    ---------------            ----------------

     September 30, 1999                   1,778,900                       $5.10
     Granted                                443,500                       $8.82
     Exercised                             (677,504)                      $4.63
     Forfeited                             (439,811)                      $5.00
                                    ---------------            ----------------

     September 30, 2000                   1,105,085                       $6.81
                                    ===============            ================`

The
following tables summarize information about stock options outstanding at
September 30, 2000:

`Options Outstanding
                             ----------------------------------------------------
                                                         Weighted-
                                                           Average      Weighted-
                                                         Remaining        Average
                                          Number       Contractual       Exercise
     Range of                     Outstanding at              Life          Price
     Exercise Prices          September 30, 2000        (in years)      per Share
                             -------------------     -------------    -----------

       $3.19   -  $4.63                  185,950               5.5          $3.97
       $4.88   -  $7.31                  763,210               7.9          $6.42
       $7.50  -  $10.00                   48,300               6.8          $8.21
      $12.00  -  $18.00                   97,125               9.5         $13.23
      $19.19  -  $19.25                   10,500               9.4         $19.19
                             -------------------     -------------    -----------

                                       1,105,085               7.6          $6.81
                             ===================     =============    ===========`

`Options Exercisable
                             ----------------------------------------------------
                                                         Weighted-
                                                           Average      Weighted-
                                                         Remaining        Average
                                          Number       Contractual       Exercise
     Range of                     Exercisable at              Life          Price
     Exercise Prices          September 30, 2000        (in years)      per Share
                             -------------------     -------------    -----------

       $3.19   -  $4.63                  134,450               5.5          $4.14
       $4.88   -  $7.31                  250,030               7.9          $6.18
       $7.50  -  $10.00                   25,500               6.8          $7.55
      $12.00  -  $18.00                   11,230               9.5         $14.76
      $19.19  -  $19.25                    1,025               9.4         $19.19
                             -------------------     -------------    -----------

                                         422,235               7.6          $5.83
                             ===================     =============    ===========`

The number and weighted-average exercise prices of options exercisable at September 30, 2000, 1999 and 1998 are summarized as
      follows:

`2000         1999         1998

      Number exercisable                                 422,235      839,836      598,934

      Weighted-average exercise price per share            $5.83        $5.00        $5.04`

The exercise and sale of certain qualified options resulted in the treatment of
those options as nonqualified options for tax purposes. As a result, the Company
received tax benefits associated with those options of $316,000 in 1998 and
$19,000 in 2000, which has been recorded as additional capital.

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123 (SFAS No. 123) Accounting for Stock-Based
Compensation. Had compensation cost for the Option Plan been determined
based on the fair value consistent with the provisions of SFAS No. 123, the
Companys net income (loss) and earnings (loss) per share would have been
changed to the pro forma amounts shown below (in thousands, except for per share
amounts):

`2000         1999         1998
    Net income (loss):
       As reported                           $   24,426   $   (6,745)  $    4,805
       Pro forma                             $   23,844   $   (7,199)  $    4,526

    Diluted earnings (loss) per share:
       As reported                           $     0.85   $    (0.24)  $     0.17
       Pro forma                             $     0.83   $    (0.26)  $     0.16`

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2000, 1999 and 1998, respectively: dividend yield
of 0% for all years; expected volatility of 76.0%, 70.0% and 66.0%; risk-free
interest rates of 6.4%, 5.44% and 5.49%; and expected lives of 4.6, 4.6 and 4.9
years. The weighted-average fair value of stock options granted during the years
ended September 30, 2000, 1999 and 1998, was $5.69, $2.77 and $3.35, respectively.

7.     Income Taxes:

The provision (benefit) for income taxes for the years ended September 30, 2000, 1999 and 1998 consists of the following (in
      thousands):

`2000           1999         1998
         Federal:
              Current                   $   9,181     $  (3,973)    $   1,487
              Deferred                     (1,799)         (446)          231
         State:
              Current                       2,184          (374)          489
              Deferred                        219          (483)           77
         Foreign:
              Current                       1,709           601           191
              Deferred                         --           475            --
                                        ---------     ---------     ---------
                                        $  11,494     $  (4,200)    $   2,475
                                        =========     =========     =========`

Domestic and foreign components of income (loss) before income taxes for the years ended
September 30, 2000, 1999 and 1998 are as follows (in thousands):

`2000            1999           1998

         Domestic                      $    31,162    $   (12,074)   $     6,897
         Foreign                             4,758          1,129            383
                                       -----------    -----------    -----------
                                       $    35,920    $   (10,945)   $     7,280
                                       ===========    ===========    ===========`

The
components of the deferred tax assets and liabilities as of September 30, 2000
and 1999 are as follows (in thousands):

`2000              1999
      Deferred tax assets:
           Accrued warranty and installation                      $   4,092        $   2,786
           Net operating loss carryforwards                             617            1,451
           Research and experimentation credit carryforward              --              626
           Other accrued liabilities                                    747              596
           Inventory                                                  1,957              991
           Covenant not to compete                                      317              300
           Other                                                        122              125
                                                                  ---------        ---------
      Total deferred tax assets                                       7,852            6,875
      Less valuation allowance                                         (617)            (947)
                                                                  ---------        ---------
      Net deferred tax assets                                         7,235            5,928
                                                                  ---------        ---------

      Deferred tax liabilities:
           Depreciation and amortization                             (1,204)          (1,547)
           Other                                                       (478)            (408)
                                                                  ---------        ---------
      Total deferred tax liabilities                                 (1,682)          (1,955)
                                                                  ---------        ---------
      Net deferred tax asset                                      $   5,553        $   3,973
                                                                  =========        =========`

The Company has established a valuation allowance of $617,000 at September 30, 2000
and $947,000 at September 30, 1999 to reduce the deferred tax asset related to
the net operating loss carryforwards in its Japanese and Asian subsidiaries.

The Company has net operating loss carryforwards of $594,000 in Japan that expire in
fiscal years 2001 and 2002, and $1,230,000 in Singapore that have no expiration.

Cumulative undistributed earnings of foreign subsidiaries, for which no U.S. income or
foreign withholding taxes have been recorded, was approximately $4.5 million at
September 30, 2000. Such earnings are expected to be reinvested indefinitely.
Determination of the amount of unrecognized deferred tax liability with respect
to such earnings is not practicable. The additional taxes payable on the
earnings of foreign subsidiaries, if remitted, would be substantially offset by
U.S. tax credits for foreign taxes already paid.

The differences between the consolidated provision (benefit) for income taxes and
income taxes computed using income (loss) before income taxes and the U.S.
federal income tax rate for the years ended September 30, 2000, 1999 and 1998
are as follows (in thousands):

`2000         1999          1998

    Amount computed using the statutory rate              $   12,572   $   (3,721)   $    2,475
    Increase (decrease) in taxes resulting from:
       State taxes, net of federal benefit                     1,562         (747)          374
       Effect of foreign taxes                                   (71)         196            73
       Research and experimentation credit                      (775)        (626)         (790)
       Foreign sales corporation benefit                      (1,546)         (97)         (272)
       (Decrease) increase in valuation allowance               (330)         714           233
       Other, net                                                 82           81           382
                                                          ----------   ----------    ----------
                                                          $   11,494   $   (4,200)   $    2,475
                                                          ==========   ==========    ==========`

8.     Related Party Transactions:

Semitool has agreements with Mr. Raymon F. Thompson, the Companys chairman and a
shareholder, to lease aircraft. Under these agreements, rent expense was
approximately $684,000, $474,000 and $1.3 million for the years ended September
30, 2000, 1999 and 1998, respectively. On November 1, 1999, Semitool entered
into an agreement to lease an aircraft hangar from an entity owned by Mr.
Thompson. Rental expense associated with this lease was approximately $37,000
for the year ended September 30, 2000. The rental rate for fiscal 2001 will be
$60,000 per month for both the aircraft and the hangar; the lease terms are
month-to-month.

Periodically, Semitool advances funds to Mr. Thompson and pays certain expenses for the
benefit of Mr. Thompson. These advances are offset by amounts payable to
Mr. Thompson under the agreements described in the preceding paragraph. Net
advances to (from) Mr. Thompson are charged interest at the Companys
borrowing rate for short-term funds. Associated with these advances, Mr.
Thompson paid the Company interest of $3,932 in 1998.

Semitool purchased raw materials approximating $441,000 for the year ended September 30, 1998, respectively, from a company
      previously owned by Mr. Thompson.  Mr. Thompson sold his holdings of this company in December of 1997.

9.     Commitments and Contingencies:

The Company has various operating lease agreements for equipment and office space
that expire through the year 2005. Total rent expense for the years ended
September 30, 2000, 1999 and 1998, exclusive of amounts paid to a related party
as described in Note 8, was approximately $1.6 million, $1.6 million, and $2.1
million, respectively. At September 30, 2000, future rental payments under these
agreements are as follows (in thousands):

`Year Ending
                       September 30,                Total
                       -------------                -----

                         2001                      $  1,347
                         2002                           929
                         2003                           704
                         2004                           190
                         2005                            40
                         Thereafter                       3
                                                   --------
                                                   $  3,213
                                                   ========`

In July 1998, Mitsubishi Silicon America Corporation, successor to Siltec
Corporation filed suit against us in the United States Federal District Court
for the District of Oregon (Case No. CV-98-826AA). The lawsuit alleges breach of
warranties and seeks damages and attorneys fees of approximately $5.4
million. The trial is scheduled to commence in February, 2001. We believe the
lawsuit to be without merit and are contesting the action vigorously. However,
given the inherent uncertainty of litigation , there can be no assurance that
the ultimate outcome will be in our favor. Further, regardless of the ultimate
outcome, there can be no assurance that the diversion of managements
attention, and any costs associated with the lawsuit, will not have a material
adverse effect on our financial condition, results of operations or cash flows.

In August 1998, we filed suit against Novellus Systems, Inc. in the United States
District Court for the Northern District of California (Case No. C-98-3089 DLJ),
alleging infringement of two of our patents relating to single substrate
processing tools used in electrochemical deposition of copper onto semiconductor
wafers. We seek damages for past infringement, a permanent injunction
prohibiting future infringement, treble damages for willful infringement,
prejudgment interest and attorneys fees. Novellus answered the complaint
by denying all of the allegations and counter-claiming for declaratory judgment
of invalidity and noninfringement and attorneys fees. Novellus filed a
motion for summary judgment of noninfringement, which motion was granted on
March 17, 2000, and judgment was subsequently entered on May 12, 2000 dismissing
the case. We filed an appeal to the United States Court of Appeals for the
Federal Circuit on May 15, 2000 seeking review of the ruling on the motion for
summary judgment. Briefs have been filed by both parties, but no hearing date
has been scheduled.

We are subject to other legal proceedings and claims which have arisen in the
ordinary course of our business and have not been finally adjudicated. Although
there can be no assurance as to the ultimate disposition of these matters, it is
the opinion of our management, based upon the information available at this
time, that the currently expected outcome of these matters, individually or in
the aggregate, will not have a material adverse effect on our results of
operations, financial condition or cash flows.

10.     Shareholders' Equity:

The Board of Directors has the authority to issue preferred stock of Semitool in one
or more series and to fix the rights, privileges, preferences and restrictions
granted to or imposed upon any unissued shares of preferred stock, without
further vote or action by the common shareholders.

On
March 28, 2000, the Company completed a two-for-one stock split in the form of a
100% common stock dividend.

The Company filed a registration statement on Form S-3 with the Securities and
Exchange Commission on June 16, 2000, which was subsequently amended on
September 1, 2000 in order to convert it to a shelf registration of
the securities of the Company with an aggregate public offering price of $75
million. All costs related to the registration have been expensed in fiscal
2000.

11.     Financial Instruments and Certain Concentrations:

The Company has estimated the fair value of its financial instruments including cash
and cash equivalents, payable to shareholder, note payable to bank and long-term
debt. The fair value estimates are made at a discrete point in time based on
relevant market information and information about the financial instruments.
Fair value estimates are based on judgments regarding current economic
conditions, risk characteristics of various financial instruments, and other
factors. These estimates are subjective in nature and involve uncertainties and
matters of significant judgment and, therefore, cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.
Accordingly, the estimates are not necessarily indicative of what the Company
could realize in a current market exchange.

The following methods and assumptions were used to estimate the fair value of each
class of financial instruments at September 30, 2000 and 1999 for which it is
practicable to estimate that value:

Cash and Cash Equivalents - The carrying value of cash and cash equivalents
approximates fair value due to the nature of the cash         investments.

Payable to Shareholder - The carrying value of the shareholder payable approximates fair
value due to the fact that the note carries a         variable interest rate.

Note Payable to Bank - The carrying value of the note payable to bank approximates
fair value due to the fact that the note bears a         negotiated variable interest
rate.

Long-Term Debt - The fair value of notes payable is based on the discounted value of
contractual cash flows using an estimated discount         rate of 9.50% and 8.25% at
September 30, 2000 and 1999, respectively, which the Company could currently
obtain for debt with similar         remaining maturities.

The
estimated fair value of financial instruments at September 30, 2000 and 1999,
consisted of the following (in thousands):

`2000                         1999
                                      Carrying       Fair          Carrying       Fair
                                       Amount        Value          Amount        Value
                                    ----------------------       ----------------------
    Cash and cash equivalents       $   6,711    $   6,711       $   4,789    $   4,789
    Payable to shareholder                 61           61               3            3
    Note payable to bank               21,383       21,383          10,160       10,160
    Long-term debt                      3,550        2,902           3,838        3,321`

At
September 30, 2000 and 1999, trade receivables of the Company were
primarily from companies in the semiconductor industry, and included
approximately $49.6 million and $24.5 million, respectively, of foreign
receivables. Accordingly, the Company is exposed to concentrations of credit
risk. The Company routinely assesses the financial strength of its customers.

12.     Operating Segment and Geographic Information:

The Companys reportable segments have been determined based on the nature of
its operations, products offered to customers and information used by the chief
operating decision maker as defined by SFAS 131. The Companys two
reportable segments are Semiconductor Equipment and Software Control Systems.

The Semiconductor Equipment segments primary products perform cleaning and
electroplating processes. The Software Control Systems segments primary
products are designed to provide advance process control and operational data
reporting for most of the front-end process equipment in a fab. The
Semiconductor Equipments current product offerings qualify for aggregation
under SFAS 131 as the products are manufactured and distributed in the same
manner, have similar economic characteristics and are sold to the same customer
base.

Consolidated
sales to one major customer represented 10.4% of total consolidated net sales
for the year ended September 30, 2000. No other customer represented more than
10% of total consolidated net sales for any period presented.

The accounting policies of the segments are the same as those described in the
Summary of Significant Accounting Policies note. Segment operating
results are measured based on income (loss) from operations. Internal sales are
based on internal transfer prices. Internal sales reflect sales of products from
the Software Control Systems segment to the Semiconductor Equipment segment.
Segment assets consist of assets that are identified to reportable segments.

Financial information by
operating segment for 2000, 1999 and 1998 is summarized as follows (amounts in
thousands):

`Total
                               Equipment         Software            Software
                                Segment           Segment             Segment      Eliminations      Consolidated

Net Sales                      External      External    Internal
2000                           $221,831       $17,616      $1,781     $19,397           $(1,781)           $239,447
1999                            109,646        12,882         413      13,295              (413)            122,528
1998                            168,902        11,599         181      11,780              (181)            180,501

Income (Loss) from
 Operations
2000                             33,704                                 4,330            (1,365)             36,669
1999                            (12,996)                                  572              (317)            (12,741)
1998                              8,587                                  (381)             (119)              8,087

Segment Assets
2000                            193,573                                11,264            (2,177)            202,660
1999                            125,162                                 8,767            (2,045)            131,884
1998                            120,082                                 9,986            (2,078)            127,990

Capital Expenditures
 for Long-Lived Assets
2000                              7,698                                   311                                 8,009
1999                              5,404                                 1,106                                 6,510
1998                             10,171                                 5,115                                15,286

Depreciation and
 Amortization Expense
2000                              6,538                                 1,374                                 7,912
1999                              8,657                                 1,694                                10,351
1998                              9,010                                 1,413                                10,423`

Financial information by
geographic location for 2000, 1999 and 1998 is summarized as follows (amounts in
thousands):

`United                                          Asia &
                                States         Europe           Japan            Other         Consolidated
Net Sales, by
 customer location
2000                           $100,486       $61,490           $32,167         $45,304            $239,447
1999                             57,784        29,346            22,963          12,435             122,528
1998                            111,282        47,788            15,529           5,902             180,501

Property, Plant and
 Equipment, Net
2000                             24,326         3,850             1,521             218              29,915
1999                             24,742         3,640             1,695             259              30,336
1998                             31,512         4,275               198             317              36,302`

`Exhibit No.                                 Description

3.1             Restated Articles of Incorporation of the Company (1)
3.5             Amended Bylaws of Semitool, Inc. (4)
3.6             Amended Bylaws of Semitool, Inc. (5)
3.7             Amended Bylaws of Semitool, Inc. (8)
3.8             Amendment to the Restated Articles of Incorporation of the Company (9)
3.9             Correction to the Amendment to the Restated Articles of Incorporation of the Company (9)
10.12           Agreement  between the Company and the Semitool European
                Companies (1)
10.13           Aircraft Lease Agreement, dated April, 1996, between the Company and
                Mr. Thompson (2)
10.16           Business Loan Agreement, dated September 30, 1997, between the Company and the
                Bank of America NT; SA doing business as Seafirst Bank (3)
10.17           Promissory Note, dated September 29, 1997, between the Company and the Bank of
                America National Trust and Savings Association doing business as Seafirst Bank (3)
10.18           Loan Modification Agreement, dated September 29, 1997 between the Company and
                the Bank of America National Trust And Savings Association doing business as
                Seafirst Bank (3)
10.19           Loan Modification Agreement, dated October 2, 1997 between the Company and
                the Bank of America National Trust And Savings Association doing business as
                Seafirst Bank (3)
10.20           Loan Modification Agreement, dated October 2, 1997 between the Company and
                the Bank of America National Trust And Savings Association doing business as
                Seafirst Bank (3)
10.21           Promissory Note, dated March 26, 1998 between Rhetech, Inc. and
                CoreStates Bank, N.A. (4)
10.22           Mortgage Assignment of Leases and Security Agreement, dated March 26,
                1998 between Rhetech, Inc. and CoreStates Bank, N.A. (4)
10.23           Promissory Note, dated March 26, 1998 between Rhetech, Inc. and
                CoreStates Bank, N.A. (4)
10.24           Mortgage Assignment of Leases and Securities Agreement, dated March 26,
                1998 between Rhetech, Inc. and CoreStates Bank, N.A. (4)
10.25           Employment Agreement between William A. Freeman and Semitool, Inc.
                dated February 20, 1998 (4)
10.26           Employment Agreement between Fabio Gualandris and Semitool, Inc.
                dated April 21, 1998 (6)
10.27           Business Loan Agreement, dated September 30, 1998, between the Company and the
                Bank of America NT; SA doing business as Seafirst Bank (6)
10.28           Promissory Note, dated September 30, 1998, between the Company and the Bank of
                America National Trust and Savings Association doing business as Seafirst Bank(6)
10.29           First Amendment to Business Loan Agreement between Bank of American NT&SA
                doing business as Seafirst Bank and Semitool, Inc. (7)
10.30           Employment Agreement between Gary Spray and Semitool, Inc. dated
                May 5, 1999 (7)
10.31           Employment Agreement between Kazuyo N. Heinink and Semitool, Inc. dated
                July 29, 1999 (8)
10.32           Business loan agreement, dated July 5, 2000, between the Company and Bank of America (10)
10.33           Promissory Note, dated July 5, 2000, between the Company and Bank of    America (10)
10.34           Corporate Resolution to Borrow, dated July 5, 2000, between the Company and Bank of America (10)
10.35           Employment agreement between Jurek Koziol and Semitool, Inc. dated March 23, 2000 (10)
21.1            Subsidiaries of Registrant (11)
23.1            Consent of Independent Accountants (11)
27              Financial data schedule (11)
99.2            Amended and Restated Semitool, Inc. 1994 Stock Option Plan (4)`

(1)    Incorporated herein by reference to the identically numbered exhibits to the Company's Registration Statement on Form S-1 (File
No. 33-87548), which became effective on February 2, 1995.

(2)    Incorporated herein by reference to the identically numbered exhibits to the Company's Annual Report on Form 10-K, date of
report September 30, 1996.

(3)    Incorporated herein by reference to the identically numbered exhibits to the Company's Annual Report on Form 10-K, date of
report September 30, 1997.

(4)    Incorporated herein by reference to the identically numbered exhibit to the Company's Quarterly Report on Form 10-Q, date of
report March 31, 1998.

(5)    Incorporated herein by reference to the identically numbered exhibit to the Company's Quarterly Report on Form 10-Q, date of
report June 30, 1998.

(6)    Incorporated herein by reference to the identically numbered exhibit to the Company's Annual Report on Form 10-K, date of report
September 30, 1998.

(7)    Incorporated herein by reference to the identically numbered exhibit to the Company's Quarterly Report on Form 10-Q, date of
report June 30, 1999.

(8)    Incorporated herein by reference to the identically numbered exhibits to the Company's Annual Report on Form 10-K, date of
report September 30, 1999.

(9)    Incorporated herein by reference to the identically numbered exhibit to the Company's Quarterly Report on Form 10-Q, date of
report March 31, 2000.

(10)   Incorporated herein by reference to the identically numbered exhibit to the Company's Quarterly Report on Form 10-Q, date of
report June 30, 2000.

(11)   Filed herewith.

`Additions
                                                                --------------------------
                                                Balance at      Charged to     Charged                      Balance
                                                beginning       Costs and      to Other                     at end
                                                of Period       Expenses       Accounts        Deductions   of Period
                                                ------------    -----------    -----------     -----------  -----------

Year ended September 30, 2000:
  Deducted from asset accounts:
   Allowance for doubtful accounts                 $    271       $     93       $     --       $     50       $    314
   Inventory allowance                                  339          3,227             --             --          3,566
   Allowance for deferred tax asset valuation           947             --             --            330            617

Year ended September 30, 1999:
  Deducted from asset accounts:
   Allowance for doubtful accounts                    1,542             51             --          1,322a           271
   Inventory allowance                                1,000          2,260             --          2,921b           339
   Allowance for deferred tax asset valuation           233            714             --             --            947

Year ended September 30, 1998:
  Deducted from asset accounts:
   Allowance for doubtful accounts                      224          1,318             --             --          1,542
   Inventory allowance                                  876            124             --             --          1,000
   Allowance for deferred tax asset valuation            --            233             --             --            233`

a)     Reduction of allowance for doubtful accounts and related receivable account to reflect the write-off of uncollectible
     receivables.

b)     Reduction of allowance for inventory obsolescence and related inventory account to reflect the write-off of obsolete
     inventory.