<PAGE>

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

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-Q

                QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

     For Quarter Ended: JULY 31, 1999      Commission File Number 0-26714
                        -------------                             -------

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


           MASSACHUSETTS                                   04-2441829
           -------------                                   ----------
  (State or other jurisdiction of                       (I.R.S. Employer
   incorporation or organization)                     Identification Number)

                  80 WILSON WAY, WESTWOOD, MASSACHUSETTS 02090
                  --------------------------------------------
          (Address of principal executive offices, including area code)


                                 (781) 467-3500
                                 --------------
              (Registrant's telephone number, including area code)


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

                                 YES X   NO ______
                                    ---


         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

  Common Stock, par value $.01 per share                 13,356,390 shares
--------------------------------------------  ---------------------------------
                   Class                      Outstanding at September 3, 1999





                                  Page 1 of 19

<PAGE>

<TABLE>
<CAPTION>


                                 ADE CORPORATION
                                      INDEX


                                                                                                                   PAGE
                                                                                                                   ----
<S>                                                                                                                 <C>
PART I.  -  FINANCIAL INFORMATION

     Item 1.    Condensed Consolidated Financial Statements (unaudited)

                  Condensed Consolidated Balance Sheet-
                      July 31, 1999 and April 30, 1999                                                              3

                  Condensed Consolidated Statement of Operations-
                      Three Months Ended July 31, 1999 and 1998                                                     4

                  Condensed Consolidated Statement of Cash Flows -
                      Three Months Ended July 31, 1999 and 1998                                                     5

                  Notes to Unaudited Condensed Consolidated Financial Statements                                    6

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

PART II.  -  OTHER INFORMATION                                                                                     16

SIGNATURES                                                                                                         17

EXHIBIT INDEX                                                                                                      18
</TABLE>



                                       2
<PAGE>



                                 ADE CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                 (in thousands)


<TABLE>
<CAPTION>


                                                       July 31,          April 30,
                                                         1999              1999
                                                     ------------      ------------
                                                     (Unaudited)
ASSETS
Current assets:
<S>                                                      <C>               <C>
    Cash and cash equivalents                            $ 49,758          $  61,278
    Accounts receivable, net                               11,934             11,843
    Inventories                                            23,435             22,178
    Prepaid expenses and other current assets               8,395              8,007
    Deferred income taxes                                   6,459              7,419
                                                     -------------     --------------
                    Total current assets                   99,981            110,725

Fixed assets, net                                          29,259             28,268
Deferred income taxes                                       3,924              2,964
Investments                                                 3,403              3,869
Intangible assets, net                                      3,402              3,669
Restricted cash                                             3,483              3,533
Other assets                                                  392                402
                                                     -------------     --------------

                                                        $ 143,844          $ 153,430
                                                     -------------     --------------
                                                     -------------     --------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Current portion of long-term debt                   $     582          $     575
    Accounts payable                                        2,167              2,256
    Accrued expenses and other current liabilities         14,096             15,449
    Deferred income on sales to affiliates                    671              1,791
                                                     -------------     --------------
                    Total current liabilities              17,516             20,071

Long-term debt                                             12,379             12,537
                                                     -------------     --------------

STOCKHOLDERS' EQUITY:
    Common stock                                              133                133
    Capital in excess of par value                        100,442            100,146
    Retained earnings                                      13,440             20,625
                                                     -------------     --------------
                                                          114,015            120,904
    Deferred compensation                                     (66)               (82)
                                                     -------------     --------------
                                                          113,949            120,822
                                                     -------------     --------------

                                                        $ 143,844          $ 153,430
                                                     -------------     --------------
                                                     -------------     --------------


The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements


                                       3

<PAGE>



                                 ADE CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                (in thousands, except per share data, unaudited)


                                                                                            Three months
                                                                                            ended July 31,
                                                                                         1999         1998
                                                                                      ------------ -----------

<S>                                                                                    <C>          <C>
Revenue                                                                                $   12,362   $  24,028
Cost of revenue                                                                             7,249      13,457
                                                                                      ------------ -----------
          Gross profit                                                                      5,113      10,571
                                                                                      ------------ -----------

Operating expenses:
    Research and development                                                                5,556       6,652
    Marketing and sales                                                                     2,717       3,122
    General and administrative                                                              3,560       2,878
                                                                                      ------------ -----------
          Total operating expenses                                                         11,833      12,652
                                                                                      ------------ -----------
Loss from operations                                                                       (6,720)     (2,081)

Interest income, net                                                                          149         761
                                                                                      ------------ -----------
Loss before benefit from income taxes
   and equity in net loss of affiliated companies                                          (6,571)     (1,320)
Benefit from income taxes                                                                       -        (514)
                                                                                      ------------ -----------
Loss before equity in net loss of
    affiliated companies                                                                   (6,571)       (806)

Equity in net loss of affiliated companies                                                  (614)          (7)
                                                                                      ------------  -----------

Net loss                                                                                 $(7,185)   $    (813)
                                                                                      ------------  -----------
                                                                                      ------------  -----------

Basic loss per share                                                                      $(0.54)   $   (0.06)
Diluted loss per share                                                                    $(0.54)   $   (0.06)

Weighted average shares outstanding - basic                                                13,198      12,923
Weighted average shares outstanding - diluted                                              13,198      12,923
</TABLE>



The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements


                                       4
<PAGE>




                                 ADE CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                            (in thousands, unaudited)

<TABLE>
<CAPTION>


                                                                                    Three months ended
                                                                                         July 31,
                                                                                 1999              1998
                                                                             --------------    -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                             <C>                <C>
    Net loss                                                                    $  (7,185)         $  (813)
    Adjustments to reconcile net loss to
        net cash used in operating activities:
            Depreciation and amortization                                           1,591            1,731
            Equity in net loss of affiliated companies,
              net of dividends received                                               669              115
            Changes in assets and liabilities:
                Accounts receivable, net                                              (91)          (4,470)
                Inventories                                                        (1,257)          (2,357)
                Prepaid expenses and other current assets                            (388)           4,578
                Accounts payable                                                      (89)          (1,258)
                Accrued expenses and other current liabilities                     (1,353)             (17)
                Deferred income on sales to affiliate                              (1,120)            (490)
                                                                            --------------    -------------
                    Net cash used in operating activities                          (9,223)          (2,981)
                                                                            --------------    -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of fixed assets                                                      (2,299)          (1,125)
    Change in restricted cash                                                          50              125
    Advances to affiliated company                                                   (203)            (350)
    Increase in other assets                                                           10               11
                                                                            --------------    -------------
                    Net cash used in investing activities                          (2,442)          (1,339)
                                                                            --------------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Repayment of long-term debt                                                      (151)            (107)
    Proceeds from issuance of common stock                                            223              310
    Tax benefit related to the exercise of common stock options                        73                5
                                                                            --------------    -------------
                    Net cash provided by financing activities                         145              208
                                                                            --------------    -------------

Net  increase (decrease) in cash and cash equivalents                             (11,520)          (4,112)
Cash and cash equivalents, beginning of period                                     61,278           72,711
                                                                            --------------    -------------
Cash and cash equivalents, end of period                                         $ 49,758          $68,599
                                                                            --------------    -------------
                                                                            --------------    -------------
</TABLE>





                                       5
<PAGE>


                                 ADE CORPORATION
                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS





1. BASIS OF PREPARATION

      The accompanying unaudited condensed consolidated financial statements of
ADE Corporation (the "Company") include, in the opinion of management, all
adjustments (consisting only of normal and recurring adjustments) necessary for
a fair statement of the Company's financial position, results of operations and
cash flows at the dates and for the periods indicated. Results of operations for
interim periods are not necessarily indicative of those to be achieved for full
fiscal years.

      Pursuant to accounting requirements of the Securities and Exchange
Commission applicable to Quarterly Reports on Form 10-Q, the accompanying
unaudited condensed consolidated financial statements and these notes do not
include all disclosures required by generally accepted accounting principles for
complete financial statements. Accordingly, these statements should be read in
conjunction with the financial statements included in the Company's Annual
Report on Form 10-K for the fiscal year ended April 30, 1999.

     On June 11, 1998, pursuant to an Agreement and Plan of Merger (the "PST
Agreement"), the Company, through a wholly owned subsidiary, merged with Phase
Shift Technology, Inc. ("PST"), an Arizona corporation. PST designs,
manufactures, markets and services high-performance, non-contact surface
metrology equipment using advanced optical interferometric technology that
provides enhanced yield management for computer hard disk, semiconductor and
optics manufacturers. Pursuant to the PST Agreement, each outstanding share of
PST common stock was exchanged for two shares of the Company's common stock. A
total of 2,000,000 shares of the Company's common stock were issued in this
transaction. This transaction has been accounted for as a pooling-of-interests.
Accordingly, all financial statements presented have been restated as if the
merger took place at the beginning of such periods. There were no material
transactions between the Company and PST prior to the PST Agreement.


2. INVENTORIES

<TABLE>
<CAPTION>

      Inventories consist of the following:

                                             (in thousands)
                                        July 31,      April 30,
                                          1999          1999
                                       ------------  ------------
                                       (unaudited)

<S>                                       <C>           <C>
Raw materials                             $ 12,141      $ 13,190
Work-in-process                              9,573         8,211
Finished goods                               1,721           777
                                       -----------   -----------
                                          $ 23,435      $ 22,178
                                       -----------   -----------
                                       -----------   -----------
</TABLE>




                                       6
<PAGE>






3. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

      Accrued expenses and other current liabilities consist of the following:

<TABLE>
<CAPTION>

                                                                (in thousands)
                                                           July 31,     April 30,
                                                             1999          1999
                                                         -------------  -----------
                                                         (unaudited)

<S>                                                           <C>          <C>
Accrued salaries, wages, vacation pay and bonuses             $ 1,995      $ 1,901
Accrued commissions                                               594        1,305
Accrued warranty costs                                            934        1,340
Accrued severance, restructuring                                  763        1,246
Deferred revenue                                                7,845        6,070
Other                                                           1,965        3,587
                                                         -------------  ----------
                                                             $ 14,096     $ 15,449
                                                         -------------  ----------
                                                         -------------  ----------
</TABLE>




4. LOSS PER SHARE

      Basic loss per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted loss per share is computed using the weighted average number of
common shares outstanding and gives effect to all dilutive potential common
shares outstanding during the period. Potential common shares outstanding
include shares issuable upon the assumed exercise of dilutive stock options
reflected under the treasury stock method and shares issued in the PST merger
(Note 1) held in escrow. For each of the periods presented, basic and diluted
loss per share are the same due to the antidilutive effect of potential common
shares outstanding.




                                       7
<PAGE>




5. RESTRUCTURING CHARGES

     In January 1999, the Company implemented a restructuring of operations plan
designed to better align the Company's cost structure with its revenue
reductions resulting from the decline in capital equipment expenditures in the
semiconductor and computer hard disk industries. The plan includes workforce
reductions as well as the consolidation of manufacturing and other operational
facilities. The Company recorded restructuring charges of $2,318,000 in the
period ended January 31, 1999, comprised of the following: severance charges of
$1,202,000 related to the termination of 76 employees in general and
administrative, marketing and sales, manufacturing, and engineering functions;
$185,000 in lease termination penalties and $931,000 in non-cash fixed asset
impairments related to furniture, fixtures and building improvements on the
terminated leased facilities. The fair value of the impaired assets was
determined as their estimated salvage value at the time of their eventual
disposition increased by their estimated utility during their related service
period through disposition. The Company anticipates these impaired assets will
be removed from service on or about October 1999. As of July 31, 1999, the
Company had made lease termination payments of $185,000. Of the $1,202,000 in
severance costs in accrued expenses as of May 1, 1999, $440,000 was paid during
the quarter ended July 31, 1999. Consolidation expenses are expected to continue
through December 31, 1999.

Restructuring charge activity during the first quarter of fiscal 2000 and the
related accrual as of July 31, 1999 is as follows:

<TABLE>

<S>                                        <C>
Balance at May 1, 1999                     $ 1,202
Restructuring provision                        -
Severance payments                            (439)
                                           --------
Balance at July 31, 1999                   $   763
                                           --------
                                           --------
</TABLE>



6. SEGMENT REPORTING

The Company has three reportable segments: ADE Semiconductor Systems Group
("SSG"), ADE Phase Shift ("PST") and ADE Technologies ("ATI"). SSG manufactures
and markets metrology and inspection systems to the semiconductor wafer and
device manufacturing industries that are used to improve yield and capital
productivity. PST manufactures and markets high performance, non-contact surface
metrology equipment using advanced interferometric technology that provides
enhanced yield management to the data storage, semiconductor and optics
industries. ATI manufactures and markets high precision magnetic
characterization and non-contact dimensional metrology gaging systems primarily
to the data storage industry. Sales of the Company's stand-alone software
products and software consulting services are included in the "other" category.
The Company's reportable segments are determined based upon the nature of the
products, the external customers and customer industries and the sales and
distribution methods used to market the products. The Company evaluates
performance based upon profit or loss from operations. The Company does not
measure the assets allocated to the segments. Management fees representing
certain services provided by corporate offices have been allocated to each of
reportable segments based upon the usage of those services by each segment.
Additionally, other income (loss), the provision for (benefit from) income taxes
and the equity in earnings (losses) of affiliated companies are not included in
segment profitability.




                                       8
<PAGE>

                              ADE CORPORATION
                  NOTES TO UNAUDITED CONDENSED CONSOLIDATED
                           FINANCIAL STATEMENTS
<TABLE>
<CAPTION>


                                                       SSG         PST        ATI        OTHER       TOTAL
                                                    ----------- ---------- ----------- ---------- ------------
FOR THE QUARTER ENDED JULY 31, 1999
<S>                                                   <C>         <C>        <C>          <C>       <C>
    Revenue from external customers                   $  7,536    $ 1,235    $  1,827     $  124    $  10,722
    Intersegment revenue                                   114                     51         83    $     248
    Loss from operations                                (5,935)      (401)       (625)      (853)   $  (7,814)
    Depreciation and amortization expense                1,169          4         102         33    $   1,308
    Capital expenditures                                 2,283         33          24          7    $   2,347

FOR THE QUARTER ENDED JULY 31, 1998
    Revenue from external customers                  $  17,512    $ 3,070     $ 2,222     $  413    $  23,217
    Intersegment revenue                                    21          -         153        175    $     349
    Income (loss) from operations                      (2,410)      1,185        (582)      (502)   $  (2,309)
    Depreciation and amortization expense                  911          4         102         34    $   1,051
    Capital expenditures                                   852      3,401           6         74    $   4,333
</TABLE>


     The following is a reconciliation for the above items where aggregate
reportable segment amounts differ from amounts contained in the Company's
consolidated financial statements.

<TABLE>
<CAPTION>

                                                                  For the Quarter
                                                                   ended July 31,

                                                                 1999          1998
                                                               --------      --------
<S>                                                            <C>           <C>
Total external revenue for reportable segments                   10,722        23,217
Net impact of revenue recognition on sales to affiliate           1,640           811
                                                               --------      --------
Total Consolidated Revenue                                       12,362        24,028
                                                               --------      --------
                                                               --------      --------

Total operating profit (loss) from reportable segments           (7,814)       (2,309)
Net impact of intercompany gross profit eliminations
  and deferred profit on sales to affiliate                       1,094           228
                                                               --------      --------
Total Consolidated operating profit (loss)                       (6,720)       (2,081)
                                                               --------      --------
                                                               --------      --------
</TABLE>

                                       9
<PAGE>



                                 ADE CORPORATION
   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                                   OPERATIONS

INTRODUCTION

      ADE Corporation (the "Company") designs, manufactures, markets and
services highly precise, automated measurement, defect detection and handling
equipment with current applications in the production of semiconductor wafers,
semiconductor devices and computer disks.

     On June 11, 1998, pursuant to an Agreement and Plan of Merger (the "PST
Agreement"), the Company, through a wholly owned subsidiary, merged with Phase
Shift Technology, Inc. ("PST"), an Arizona corporation. PST designs,
manufactures markets and services high-performance, non-contact surface
metrology equipment using advanced optical interferometric technology that
provides enhanced yield management for computer hard disk, semiconductor and
optics manufacturers. Pursuant to the PST Agreement, each outstanding share of
PST common stock was exchanged for two shares of the Company's common stock. A
total of 2,000,000 shares of the Company's common stock were issued in this
transaction. This transaction has been accounted for as a pooling-of-interests.
Accordingly, all financial statements presented have been restated as if the
acquisition took place at the beginning of such periods. There were no material
transactions between the Company and PST prior to the PST Agreement.

      The following information should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included in this
Quarterly Report and the audited consolidated financial statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's Annual Report on Form 10-K for the fiscal
year ended April 30, 1999.

RESULTS OF OPERATIONS

RESTRUCTURING

     In January 1999, the Company commenced efforts to consolidate its
Charlotte, North Carolina operations into its Massachusetts facilities to better
align the Company's cost structure with prevailing semiconductor market
conditions and to position the Company with more efficient operations for the
expected industry recovery. Non-recurring expenses associated with this
consolidation incurred in the current period totaled $1,497,000. These
non-recurring expenses included travel, recruiting, and employee training and
have been included in general and administrative expenses. The Company
anticipates costs in future periods associated with replacing certain personnel
who have elected not to relocate to the Company's Massachusetts operations.


THREE MONTHS ENDED JULY 31, 1999 COMPARED TO THREE MONTHS ENDED JULY 31, 1998

      REVENUE. Revenue decreased 48.6% to $12.4 million in the first quarter of
fiscal 2000 from $24.0 million in the first quarter of 1999. Decreased sales of
the Company's products were primarily due to reduced demand for capital
equipment in the semiconductor wafer and device industries as well as the data
storage industry. Reduced demand in the semiconductor market resulted from
excess manufacturing capacity for 200mm wafers, continued delays in large-scale
production of 300mm wafers and an overall uncertainty about chip demand. For the
three months ended July 31, 1999, 75% of the Company's revenue was derived from
the semiconductor industry compared to 77 % for the year earlier period. The
Company remains uncertain about when growth in the semiconductor industry will
return. Similarly, the data storage industry has been in a period of excess
supply, which has resulted in lower production levels and reduced capital
equipment purchases. Consequently, revenue from the Company's metrology product
lines that are marketed to the data storage industry decreased. Data storage
industry revenue comprised 25% of total revenue for the three months ended July
31, 1999, compared to 23% for the year earlier period.

      GROSS MARGIN. Gross margin decreased to 41.4% in the first quarter of
fiscal 2000 from 44.0% in the first quarter of 1999. This decrease resulted
primarily from lower absorption of overhead expenses due to significantly



                                       10
<PAGE>





reduced manufacturing activity and costs associated with maintaining the
Company's worldwide customer service organization. The lower absorption of
overhead expenses impacted both the semiconductor and computer disk drive
product lines and resulted from fixed manufacturing costs that could not be
reduced proportionally with the decline in production sales volume, while costs
associated with the customer service organization were primarily incurred in the
semiconductor industry. Additionally, there was a significant decrease in sales
made through external sales representatives in certain foreign markets,
primarily in Asia. These sales typically carry a higher per unit selling price
than domestic sales or sales through distributors.

      RESEARCH AND DEVELOPMENT. Research and development expense decreased 16.5%
to $5.6 million in the first quarter of fiscal 2000 from $6.7 million in the
first quarter of 1999 and increased as a percentage of revenue to 44.9% from
27.7% in the first quarter of 1999. The decrease in expense resulted primarily
from decreased project materials and consulting expenditures related to the
Company's first generation surface inspection and wafer thickness 300mm tools
and other cost containment measures. The increase in expense as a percentage of
sales resulted from the significant decrease in revenue during the first quarter
of fiscal 2000 discussed above. The Company has increased development efforts to
enhance its existing 200mm and advanced 200mm wafer systems as its semiconductor
industry customers seek to improve their yields on 200mm wafers as well as
efforts to develop and enhance bridge tools, which can be used with either 200mm
or 300mm wafers. The Company also continues to develop new products for the
computer disk industry, including those which measure the magnetic properties of
materials used in manufacturing disk drives. The Company is committed to
continuing its investment in research and development to maintain its position
as a technological leader, which may necessitate continued research and
development spending at or above current levels.

      MARKETING AND SALES. Marketing and sales expense decreased 13.0% to $2.7
million in the first quarter of fiscal 2000 from $3.1 million in the first
quarter of 1999 and increased as a percentage of revenue to 22.0% from 13.0% in
the first quarter of 1999. The reduced expense resulted primarily from reduced
commissions expense related to a lower volume of sales made through external
sales representatives in certain foreign markets, primarily in Asia. The mix of
sales channels through which the Company's products are sold may have a
significant impact on the Company's marketing and sales expense and the results
in any period may not be indicative of marketing and sales expense for future
periods. The increase in marketing and sales expense as a percentage of revenue
resulted from the significant decrease in revenue during the first quarter of
fiscal 2000 discussed above.

      GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
23.7% to $3.6 million in the first quarter of fiscal 2000 from $2.9 million in
the first quarter of 1999 and increased as a percentage of revenue to 28.8% from
12.0% in the first quarter of 1999. Expenses increased primarily due to the
costs of the consolidation of the Charlotte operations into the Westwood,
Massachusetts facility.

      INTEREST INCOME, NET. Net interest income was $149,000 in the first
quarter of fiscal 2000 compared to $761,000 in the first quarter of 1999. The
decrease in interest income resulted primarily from lower interest returns on
reduced cash principal balances during the current period compared to the three
months ended July 31, 1999, and interest expense related to the Company's
obligations under separate $4.5 million, $4.0 million and $5.5 million
Industrial Development Bonds ("IDB") issued in June, 1999, December 1997, and
June 1996, respectively, through the various state and local bonding
authorities.

      INCOME TAXES. At April 30, 1999 the valuation allowance against deferred
tax assets was increased by $3 million, as the full value of the Company's net
operating loss carryforwards and temporary differences may not be realized. This
increase was based upon the evidence currently available to management. During
the quarter ended July 31, 1999, the deferred tax assets were increased by $2.3
million. The valuation allowance against the asset was also increased by the
same amount, resulting in no tax benefit being shown on the Statement of
Operations. In future quarters, if evidence available to management shows that
the deferred tax assets may not be utilized, it may be necessary to further
increase the reserve.

      EQUITY IN LOSS OF AFFILIATED COMPANIES. Equity in net loss of affiliated
companies was $614,000 in the first quarter of fiscal 2000 compared to equity in
net loss of affiliated companies of $7,000 in the first quarter of 1999. The
Company's affiliates sell primarily to the semiconductor industry and the
current period loss reflects the overall



                                       11
<PAGE>







downturn in the semiconductor industry. The Company remains uncertain about when
growth in the semiconductor industry will result in increased improved financial
results for its affiliates. Furthermore, there can be no assurance that any
overall growth in the semiconductor industry will result in increased
profitability for the Company's affiliates.


LIQUIDITY AND CAPITAL RESOURCES

      At July 31, 1999, the Company had $49.8 million in cash and cash
equivalents and $82.5 million in working capital. In addition, the Company had
$3.5 million in restricted cash used as security for a tax-exempt Industrial
Development Bond issued through the Massachusetts Industrial Finance Agency in
December 1997. Under the terms of the bond agreement, the Company may substitute
a letter of credit in an amount equal to approximately 105% of the outstanding
principal balance as collateral for the Company's obligations under the IDB,
assuming the Company has the ability to borrow under the Credit Facility
described below or another facility. Such actions would allow the restricted
cash balance to be used for general corporate purposes. The Company also has an
unsecured revolving line of credit facility (the "Credit Facility") with a bank,
with a maximum borrowing amount of $8 million. The Credit Facility provides the
Company the option of borrowing at either the bank's prime rate or the bank's
LIBOR rate plus 2%. The Credit Facility expires and all outstanding amounts
thereunder are due December 21, 1999. There were no borrowings outstanding under
the Credit Facility at July 31, 1999. At July 31, 1999, the Company was in
violation of certain financial covenants related to the Credit Facility, which
provides the bank with the right to withhold future advances under the Credit
Facility, to require cash deposits as security for any future advances or to
offset any and all of the Company's cash deposits with the bank against any
outstanding borrowings under the Credit Facility. The Company is currently in
negotiations with the bank to revise the terms of the Credit Facility to so that
it may borrow against it in the future if needed.

      Cash used in operating activities for the three months ended July 31, 1999
was $9.3 million. This amount resulted from a net loss of $7.2 million, adjusted
for non-cash charges of $2.0 million and a $4.1 million net decrease in working
capital accounts. Non-cash items consisted primarily of $1.6 million of
depreciation and amortization and $669,000 of the Company's share of the net
loss of affiliated companies.

      Cash used in investing activities was $2.4 million, primarily used for the
purchase of fixed assets.

      The Company anticipates investing approximately $2,300,000 in renovating
its Westwood, Massachusetts facility to accommodate the consolidation of its
semiconductor surface inspection operations from Charlotte, North Carolina.

      Cash provided by financing activities was $218,000, which consisted of
$369,000 of aggregate proceeds from the issuance of common stock and tax
benefits from the exercise of stock options, partially offset by $151,000 in
repayments of long-term debt.

      The Company expects to meet its next twelve months working capital needs
and capital expenditures primarily through its available cash and cash
equivalents.

YEAR 2000

     The Company has a Task Force that is assessing on a continuing basis the
nature, extent and cost of remediation of any Year 2000 ("Y2K") readiness issues
confronting the Company and its suppliers, customers and other critical third
parties. The project encompasses reviewing the Company's products and internal
systems, both information technology ("IT") and non-information technology
("non-IT") as well as the Year 2000 readiness of companies with which the
Company has a material relationship, including customers, suppliers, creditors,
financial organizations, utility providers and governmental agencies. This
assessment is continuing at each of its operating units and the Company has
identified certain requisite corrective actions.





                                       12
<PAGE>



      PRODUCTS. The Company utilizes Y2K testing guidelines prepared by a
consortium of semiconductor manufacturers. Corrective actions for software
included in the Company's products have included formulating software patches
that provide proper system operation or a combination of software patches and
upgrades that provide proper system operation and the reporting of the year
2000. These patches and upgrades have been or will be provided to customers. The
Company also sells software products that are bundled with or sold separately
from the Company's capital equipment products. The ability of a majority of
these software products to function as a Year 2000 ready product is dependent
upon the Year 2000 readiness of the user's operating system and any other
software with which the Company's products will interact. The readiness status
of specific Company products is posted on the Company's website located at
WWW.ADE.COM. The Company anticipates all testing and corrective actions related
to Year 2000 issues in its products will be completed by December 1999. However,
notwithstanding such efforts, any failure of the Company's products to perform,
including system malfunctions due to the onset of the Year 2000, could result in
claims against the Company, which could have a material adverse effect on the
Company's business, results of operations or financial condition.

     INFORMATION TECHNOLOGY. The Company has completed its review of its
internal software applications and has determined that all network systems and
server architecture are Y2K-ready. The Company utilizes standard, vendor
supplied software for its electronic mail, corporate communications, engineering
design, manufacturing and materials purchasing/planning, accounting, desktop and
database systems. The Company has contacted these vendors to obtain assurances
that these IT systems are or will be Y2K compliant. The failure of any such IT
system to be Y2K compliant could have a material adverse effect on the Company
and no assurance can be provided that all such programs will be implemented on a
timely basis.

     NON-INFORMATION TECHNOLOGY. The Company is aware of potential non-IT system
(building security, voice mail, telecommunications, utility and water systems,
etc.) risk associated with the Y2K issue and has evaluated its potential
exposure at each of its facilities. The Company anticipates that any necessary
renovation of its non-IT systems as well as the validation of any repairs will
be completed by November 1999. Formal queries to landlords, water, utility and
telecommunications providers for the Company's domestic and international
locations, and other third parties with whom the Company has material
relationships have been sent to these suppliers to assess the systems' Y2K
readiness.

     SUPPLIERS AND CUSTOMERS. The Company is in the process of inquiring of its
significant suppliers and customers the status of their Y2K readiness through
completion of a Year 2000 Readiness Supplier Questionnaire that has been
developed by a consortium of semiconductor manufacturers. All such requests have
been sent as of July 31, 1999 and the Company has received responses to
approximately 90% of these inquiries. Each of the responses received has
indicated the respective third party is or will be Y2K ready by December 31,
1999. However, the Company has no means of assuring that third parties will
achieve Y2K readiness. Furthermore, there can be no assurance that IT, non-IT
and other suppliers who have provided Y2K readiness documentation will be Y2K
compliant or that such documentation accurately and fully reflects the Y2K
readiness of their systems. The Company's assessments of the effects of Y2K on
the Company are based, in part, upon information received from third parties and
the Company's reliance on that information. The failure of any such supplier's
systems to be Y2K compliant may have a material adverse effect on the Company's
business, results of operations or financial condition.

     YEAR 2000 COSTS AND EXPENSES. The Company has used both internal and
external resources to address Y2K readiness and to program, test and implement
software for Y2K modifications. The Company specifically tracks the costs
associated with Task Force meetings (including related travel expenditures), Y2K
educational seminars, product software testing and patch development costs
(consulting and internal payroll costs), network server upgrades, internal
payroll costs related to the contacting of third parties to determine Y2K
status, and postage and related costs associated with providing patches and
upgrades to customers for software utilized in the Company's products. The
Company has not separately tracked the costs of utilizing its internal
information systems personnel in addressing its Y2K readiness, with these costs
principally relating to payroll and related benefits. Total costs for Y2K
readiness are currently estimated to be approximately $250,000, of which
approximately $156,000 have been incurred throughout all phases of the Y2K
project. Costs incurred to date have been and anticipated future costs are
expected to be funded through operations. As the Company continues to complete
its Y2K readiness plan, actual costs may exceed the current estimate.





                                       13
<PAGE>




CONTINGENCY PLANS. The Company's contingency plan with respect to the Y2K issue
is currently being developed. The Company is currently in the process of
reviewing the status of all third party suppliers. Replacement suppliers will be
identified for critical suppliers who the Company believes will not be Y2K
ready. The Company is considering contingency plans on a global basis relative
to systematic failure of electricity or telecommunications beyond the control of
the Company. There can be no assurance that any contingency plan measures will
mitigate the impact of Y2k problems.

     If unforeseen Y2K readiness efforts are required or if the cost of any
updating, modification or replacement of the Company's systems or products
exceeds the Company's estimates, the Y2K issue could result in material costs
and have a material adverse effect on the business, results of operations or
financial condition of the Company. There can be no assurance that the Company
will be successful in addressing Y2K problems as they relate to its products and
internal systems. In addition, there can be no assurance that the systems of
third parties with which the Company interacts will not suffer from Y2K
problems. Furthermore, Y2K problems that have been or may in the future be
identified with respect to the IT and non-IT systems of third parties having
widespread national and international interactions with persons and entities
generally (for example, certain systems of governmental agencies, utilities and
information and financial networks) could have a major impact on the Company's
financial condition or results of operations. The most reasonably likely worst
case Y2K scenario, in the event that the Company does not identify or fails to
fix material non-ready IT systems or non-IT systems operated by the Company or
third parties with which it has a material relationship, is the disruption of
its own business operations and/or those of customers, which could have a
material adverse effect on the Company's business and financial condition.
Another reasonably likely worst case scenario is a systematic failure beyond the
control of the Company, including but not limited to prolonged electrical or
telecommunications failures or general disruptions in global business
activities. Risks associated with such disruptions include, but are not limited
to, increased operating costs, disruption in product shipments, loss of customer
orders, and claims of mismanagement, misrepresentation or breach of contract,
any of which could have a material adverse effect on the Company. The Company is
in the process of attempting to quantify the financial impact the occurrence of
any of these worst case scenarios might have on the Company and prepare specific
contingency plans specific to each scenario.


OTHER RISK FACTORS

      Capital expenditures by semiconductor wafer and device manufacturers
historically have been cyclical as they in turn depend upon the current and
anticipated demand for integrated circuits. While the semiconductor industry
appears to be recovering from a severe down cycle, it is not clear when
semiconductor wafer manufacturers, who account for approximately 60% of the
Company's revenue, will be in a position to increase their purchases of capital
equipment. The computer disk drive industry has been in a period of oversupply
and excess manufacturing capacity and this has also had an adverse impact on the
Company. At July 31, 1999, the Company's backlog was $24.1 million, which
represents a 8.1% increase from the first quarter of fiscal 1999. The Company
remains uncertain about when growth in revenue will return. The Company
continues to evaluate its cost structure relative to expected revenue and will
continue to implement aggressive cost containment measures.

      The Company sells its semiconductor products to both wafer and device
manufacturers. Historically, the Company's semiconductor revenue has been
derived to a greater extent from wafer manufacturers than device manufacturers.
The Company also believes that any increase in short-term chip demand or
increases in semiconductor market capital expenditures is expected to impact
device manufacturers prior to wafer manufacturers as wafer manufacturers are
further down on the overall semiconductor industry supply chain. Capital
expenditures within the semiconductor industry are increasingly focused on yield
improvement rather than increased capacity. Certain customers of the Company
have experienced excess manufacturing capacity and are consolidating some of
their manufacturing facilities. Additionally, the Company believes that its
customer's capital equipment expenditures related to increased capacity will be
focused on replicating processes at multiple production locations, which has
increased the importance of the Company maintaining its position as a
technological leader.





                                       14
<PAGE>



      During the third quarter of fiscal 1999 the Company implemented a
restructuring plan to address the current downturn in the semiconductor and
computer hard disk industries which resulted in a pre-tax charge of $2.3
million. This restructuring plan includes a consolidation of facilities, a
write-down of fixed assets and employee severance costs. There can be no
assurance that this plan will be sufficient to address the Company's cost
structure relative to current and expected revenue and current market
conditions. Furthermore, the Company's success is dependent upon supplying
technologically superior products to the marketplace at appropriate times to
satisfy customer needs. Product development requires substantial investment and
is subject to technological risks. There can be no assurance that the Company
will be able to retain or attract personnel necessary for the continued
development of its business. Delays or difficulties in product development or
market acceptance of newly developed products could adversely affect the future
performance of the Company.



                                       15
<PAGE>






                                    PART II.

                                OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS:

                  None

ITEM 2.           CHANGES IN SECURITIES:

 .                 None

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES:

                  None

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

                   None

ITEM 5.           OTHER INFORMATION:

                  None

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K:

                  a. See Exhibit Index, Page 18
                  b. Reports on Form 8-K-None



                                       16
<PAGE>





                                          SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

ADE CORPORATION



Date: September 13, 1999           /s/ Mark D. Shooman
                                   -------------------
                                   Mark D. Shooman
                                   Vice President and Chief Financial Officer

Date: September 13, 1999           /s/ Robert C. Abbe
                                   ------------------
                                   Robert C. Abbe
                                   President and Chief Executive Officer



                                       17
<PAGE>



                                ADE CORPORATION
                                  EXHIBIT INDEX


Exhibit
-------

   27  Financial Data Schedule



                                       18