Exhibit 99.1
			AXCELIS TECHNOLOGIES, INC.

	    Form 10-K for the year ended December 31, 2002

               FACTORS AFFECTING FUTURE OPERATING RESULTS


From time to time, we may make forward-looking public statements,
such as statements concerning our then expected future revenues or
earnings or concerning the prospects for our markets or our product
development, projected plans, performance, order procurement as well
as other estimates relating to future operations. Forward-looking
statements may be in reports filed under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), in registration statements
filed under the Securities Act of 1933, as amended (the "Securities
Act"), in press releases or informal statements made with the approval
of an authorized executive officer. The words or phrases "will likely
result," "are expected to," "will continue," "is anticipated,"
"estimate," "project," or similar expressions are intended to identify
"forward-looking statements" within the meaning of Section 21E of the
Exchange Act and Section 27A of the Securities Act, as enacted by the
Private Securities Litigation Reform Act of 1995.

We wish to caution you not to place undue reliance on these forward-looking
statements which speak only as of the date on which they are made. In
addition, we wish to advise you that the factors listed below, as well
as other factors that we may or may not have not currently identified,
could affect our financial or other performance and could cause our
actual results for future periods to differ materially from any opinions
or statements expressed with respect to future periods or events in any
current statement.

We will not undertake and specifically decline any obligation to
publicly release revisions to these forward-looking statements to
reflect either circumstances after the date of the statements or
the occurrence of events which may cause us to re-evaluate our
forward-looking statements.

In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act, we are hereby filing cautionary
statements identifying important factors that could cause our actual
results to differ materially from those projected in forward-looking
statements made by us or on our behalf.

If semiconductor manufacturers do not make sufficient capital
expenditures, our sales and profitability will be harmed.

	We anticipate that a significant portion of our new orders
will depend upon demand from semiconductor manufacturers who build
or expand fabrication facilities. If the rate of construction or
expansion of fabrication facilities declines, demand for our systems
will decline, reducing our revenues. This would also hurt our
profitability, because our continued investments in engineering,
research and development and marketing necessary to develop new products
and to maintain extensive customer service and support capabilities
limit our ability to reduce expenses in proportion to declining sales.

	A number of factors may cause semiconductor manufacturers to
make reduced capital expenditures, including the following.


Downturns in the semiconductor industry may further reduce demand for
our products, harming our sales and profitability.

	The semiconductor business is highly cyclical and the industry
has been in a severe down cycle since early in 2001, the length of
which cannot be predicted. This continues to reduce demand for new
or expanded fabrication facilities. Any continuing weakness or future
downturns or slowdowns in the industry may adversely affect our
financial condition.

Oversupply in the semiconductor industry reduces demand for capital
equipment, including our products.

	Inventory buildups in the semiconductor industry, resulting
in part from the down cycle, have produced a current oversupply of
semiconductors. This has caused semiconductor manufacturers to revise
capital spending plans, resulting in reduced demand for capital
equipment such as our products.  If this oversupply is not reduced by
increasing demand from the various electronics industries that use
semiconductors, which we cannot accurately predict, our sales and
profitability will be harmed.

Industry consolidation and outsourcing of semiconductor manufacturing
may reduce the number of our potential customers, harming our revenues.

	The substantial expense of building, upgrading or expanding a
semiconductor fabrication facility is increasingly causing semiconductor
companies to contract with foundries to manufacture their semiconductors.
In addition, consolidation and joint venturing within the semiconductor
manufacturing industry is increasing. We expect these trends to continue,
which will reduce the number of our potential customers.  This increased
concentration of our customers potentially makes our revenues more volatile
as a higher percentages of our total revenues are tied to a particular
customer's buying decisions.

If we fail to develop and introduce reliable new or enhanced products and
services that meet the needs of semiconductor manufacturers, our results
will suffer.

	Rapid technological changes in semiconductor manufacturing
processes require us to respond quickly to changing customer requirements.
Our future success will depend in part upon our ability to develop,
manufacture and successfully introduce new systems and product lines
with improved capabilities and to continue to enhance existing products,
including products that process 300 millimeter wafers. This will depend
upon a variety of factors, including new product selection, timely and
efficient completion of product design and development and of manufacturing
and assembly processes, product performance in the field and effective sales
and marketing. In particular:

* We must develop the technical specifications of competitive new
systems, or enhancements to our existing systems, and manufacture
and ship these systems or enhancements in volume in a timely manner.
* We will need to accurately predict the schedule on which our customers
will be ready to transition to new products, in order to accurately
forecast demand for new products while managing the transition from
older products.
* We will need to effectively manage product reliability or quality
problems that often exist with new systems, in order to avoid reduced
orders, higher manufacturing costs, delays in acceptance and payment
and additional service and warranty expenses.
* Our new products must be accepted in the marketplace.

	Our failure to meet any of these requirements will have a
material adverse effect on our operating results and profitability.

If we fail to compete successfully in the highly competitive
semiconductor equipment industry, our sales and profitability
will decline.

	The market for semiconductor manufacturing equipment is
highly competitive and includes companies with substantially greater
financial, engineering, manufacturing, marketing and customer service
and support resources than we have that may be better positioned to
compete successfully in the industry. In addition, there are smaller,
emerging semiconductor equipment companies that provide innovative
systems with technology that may have performance advantages over our
systems. Competitors are expected to continue to improve the design
and performance of their existing products and processes and to
introduce new products and processes with improved price and performance
characteristics. If we are unable to improve or introduce competing
products when demanded by the markets, our business will be harmed.
In addition, if competitors enter into strategic relationships with
leading semiconductor manufacturers covering products similar to those
sold or being developed by us, our ability to sell products to those
manufacturers may be adversely affected.

We have been dependent on sales to a limited number of large customers;
the loss of any of these customers or any reduction in orders from them
could materially affect our sales.

	Historically, we have sold a significant proportion of our products
and services to a limited number of fabricators of semiconductor products.
For example, in 2002, one of our customers, IBM, accounted for 14% of our
net sales, and our top ten customers accounted for 64% of our net sales.
None of our customers has entered into a long-term agreement requiring it
to purchase our products. Although the composition of the group comprising
our largest customers has varied from year to year, the loss of a significant
customer or any reduction or delays in orders from any significant customer,
including reductions or delays due to customer departures from recent buying
patterns, or market, economic or competitive conditions in the semiconductor
industry, could adversely affect us. The ongoing consolidation of
semiconductor manufacturers may also increase the harmful effect of
losing a significant customer.

Our quarterly financial results may fluctuate significantly and may fall
short of anticipated levels.

	We derive most of our revenues from the sale of a relatively small
number of expensive products to a small number of customers. The list prices
on these products range from $200,000 to over $4.0 million. At our current
sales level, each sale, or failure to make a sale, could have a material effect
on us in a particular quarter. Our lengthy sales cycle, coupled with customers'
competing capital budget considerations, make the timing of customer orders
uneven and difficult to predict. In a given quarter, a number of factors can
adversely affect our revenues and results, including changes in our product
mix, increased fixed expenses per unit due to reductions in the number of
products manufactured, and higher fixed costs due to increased levels of
research and development and expansion of our worldwide sales and marketing
organization. Our gross margins also may be affected by the introduction
of new products. We typically become more efficient in producing our
products as they mature.  For example, our gross margins in 2001 and 2002
were adversely affected in part as a result of the increased proportion of
systems sold to process 300 millimeter wafers. In addition, our backlog
at the beginning of a quarter typically does not include all orders required
to achieve our sales objectives for that quarter and is not a reliable
indicator of our future sales. As a result, our net sales and operating
results for a quarter depend on our shipping orders as scheduled during
that quarter as well as obtaining new orders for products to be shipped
in that same quarter. Any delay in, or cancellation of, scheduled
shipments or in shipments from new orders could materially and
adversely affect our financial results. Due to the foregoing factors,
we believe that period-to-period comparisons of our operating results
should not be relied upon as an indicator of our future performance.

We access the important Japanese market for ion implant through a joint
venture which we do not control.

We own 50% of the equity of a Japanese corporation called Sumitomo Eaton
Nova or SEN, to which we have granted an exclusive license to manufacture
and sell ion implanters in Japan.  The remaining 50% of the equity is owned
by Sumitomo Heavy Industries, Ltd., a Japanese manufacturer of industrial
machinery and shipbuilding.  Our joint venture agreement with Sumitomo gives
both owners veto rights, so that neither of us alone can effectively control
SEN.  SEN's business is subject to the same risks as our business.  Royalties
and income from SEN have been a substantial contribution to our earnings, and
a substantial decline in SEN's sales and income from operations could have a
material adverse effect on our net income.   As a result of this joint venture
structure, we have less control over SEN management than over our own
management and may not have timely knowledge of factors affecting SEN's
business.  In addition, given the equal balance of ownership, it is possible
that the SEN Board may be unable to reach consensus from time to time.
Neither Axcelis or Sumitomo has the right to buy out the other's interest in
EN and the SEN joint venture is perpetual, although termination provisions in
the license agreement  allow either SHI or Axcelis to effectively terminate
the joint venture at the end of 2004.  SEN has been a very valuable partner
to Axcelis since its formation and we expect to renew our license to SEN
for a further 5 year term.

From time to time, we have allowed SEN to sell implanters outside of Japan.
We allow these sales when the customer requests SEN products.  Such requests
tend to occur when SEN customers participate, as joint venturers or technical
advisors,  in fabrication facilities outside of Japan.  In those cases, the
financial benefit to Axcelis from the sale of a SEN implanter is less than
the financial  benefit of a sale of an Axcelis implanter, but our primary
goal to satisfy our customer with the product of their choice.  When these
sales are allowed, we act as exclusive agent for SEN to manage the terms of
the sales and to ensure that  they are consistent with our global product
and customer strategies.  We receive commissions from SEN on these extra-
territorial sales and assume most of the post-installation warranty
responsibility.


A decline in sales of our products and services to customers outside the
United States would hurt our business and profits.

	We are substantially dependent on sales of our products and
services to customers outside the United States, which accounted for
approximately  70%  62% and 51%, of our net sales in  2000 and 2001
and 2002, respectively. We anticipate that international sales will
continue to account for a significant portion of our net sales. Because
of our dependence upon international sales, our results and prospects
may be adversely affected by a number of factors, including:

* unexpected changes in laws or regulations resulting in more burdensome
governmental controls, tariffs, restrictions, embargoes or export license
requirements;
* difficulties in obtaining required export licenses;
* volatility in currency exchange rates;
* political and economic instability, particularly in Asia;
* difficulties in accounts receivable collections;
* extended payment terms beyond those customarily offered in the
United States;
* difficulties in managing distributors or representatives outside
the United States;
* difficulties in staffing and managing foreign subsidiary and branch
operations; and
* potentially adverse tax consequences.

Making more sales denominated in foreign currencies to counteract
the strong dollar may expose us to additional risks that could hurt
our results.

	Substantially all of our sales to date have been denominated
in U.S. dollars. Our products become less price competitive in countries
with currencies that are declining in value in comparison to the dollar.
This could cause us to lose sales or force us to lower our prices,
which would reduce our gross margins. Our equity income and royalty
income from SEN are denominated in Japanese yen, which exposes us to
some risk of currency fluctuations.  If it becomes necessary for us
to make more sales denominated in foreign currencies to counteract
the strong dollar, we will become more exposed to these risks.

We may not be able to maintain and expand our business if we are not
able to retain, hire and integrate additional qualified personnel.

	Our business depends on our ability to attract and retain
qualified, experienced employees. There is substantial competition
for experienced engineering, technical, financial, sales and marketing
personnel in our industry. In particular, we must attract and retain
highly skilled design and process engineers. Competition for such personnel
is intense, particularly in the areas where we are based, including the
Boston metropolitan area and the Rockville, Maryland area, as well as in
other locations around the world. If we are unable to retain our existing
key personnel, or attract and retain additional qualified personnel, we
may from time to time experience levels of staffing inadequate to develop,
manufacture and market our products and perform services for our customers.
As a result, our growth could be limited or we could fail to meet our
delivery commitments or experience deterioration in service levels or
decreased customer satisfaction, all of which could adversely affect our
financial results and cause the value of our notes and stock to decline.

Our dependence upon a limited number of suppliers for many components and
sub-assemblies could result in increased costs or delays in manufacture
and sales of our products.

	We rely to a substantial extent on outside vendors to manufacture
many of the components and subassemblies of our products. We obtain many
of these components and sub-assemblies from either a sole source or a
limited group of suppliers. Because of our reliance on outside vendors
generally, and on a limited group of suppliers in particular, we may be
unable to obtain an adequate supply of required components on a timely
basis, on price and other terms acceptable to us, or at all.

	In addition, we often quote prices to our customers and accept
customer orders for our products before purchasing components and
subassemblies from our suppliers. If our suppliers increase the cost
of components or subassemblies, we may not have alternative sources
of supply and may not be able to raise the price of our products to
cover all or part of the increased cost of components.

	The manufacture of some of these components and subassemblies
is an extremely complex process and requires long lead times. As a
result, we have in the past and may in the future experience delays
or shortages. If we are unable to obtain adequate and timely deliveries
of our required components or subassemblies, we may have to seek
alternative sources of supply or manufacture these components internally.
This could delay our ability to manufacture or to ship our systems on
a timely basis, causing us to lose sales, incur additional costs,
delay new product introductions and suffer harm to our reputation.

Our financial statements for the year ended December 31, 2000 included
in this Report may not be representative of our results as a separate
company.

	Our financial statements for the year ended December 31,
2000 include financial results for the six month period ending on
June 30, 2000 during which time Axcelis was a wholly-owned
subsidiary of Eaton Corporation.  To create separate financial
statements for that period and prior periods, we used the historical
bases of assets, liabilities and operating results of the
semiconductor equipment operations business of Eaton which was
separated from Eaton's other businesses on June 30, 2000. Accordingly,
the financial information for that period does not necessarily reflect
what our financial position, operating results and cash flows would
have been had we been a separate, stand-alone entity during that period.
Our costs and expenses for that period were allocated to our business
based on Eaton's internal expense allocation methodology, which charges
these expenses to operating locations based both on net working capital,
excluding short-term investments and short-term debt, and on property,
plant and equipment-net. While we believe this allocation methodology
is reasonable and allocated costs are representative of the operating
expenses that would have been incurred had we operated on a stand-alone
basis, such historical financial information is not necessarily
indicative of what our financial position, operating results and cash
flows will be in the future. We have not made adjustments to this
historical financial information to reflect any significant changes
that may occur in our cost structure and operations as a result of
our separation from Eaton, including increased costs associated with
being a publicly traded, stand-alone company.

In certain circumstances, we may need additional capital.

	Our capital requirements may vary widely from quarter to
quarter, depending on, among other things, capital expenditures,
fluctuations in our operating results, financing activities,
acquisitions and investments and inventory and receivables management.
We believe that our available cash, our credit line and our future cash
flow from operations will be sufficient to satisfy our working capital,
capital expenditure and research and development requirements for the
foreseeable future. This, of course, depends on the accuracy of our
assumptions about levels of sales and expenses, and a number of factors,
including those described in these "Risk Factors," could cause us to
require additional capital from external sources. In addition, in the
future, we may require or choose to obtain additional debt or equity
financing in order to finance acquisitions or other investments in
our business. Depending on market conditions, future equity financings
may not be possible on attractive terms and would be dilutive to the
existing holders of our common stock and convertible notes.  Our existing
credit agreement contains restrictive covenants and future debt
financings could involve additional restrictive covenants, all of which
may limit the manner in which we conduct our business.

We may incur costly litigation to protect our proprietary technology,
and if unsuccessful, we may lose a valuable asset or experience reduced
market share.

	We rely on a combination of patents, copyrights, trademark and
trade secret laws, non-disclosure agreements and other intellectual
property protection methods to protect our proprietary technology.
Despite our efforts to protect our intellectual property, our
competitors may be able to legitimately ascertain the non-patented
proprietary technology embedded in our systems. If this occurs, we
may not be able to prevent their use of this technology. Our means
of protecting our proprietary rights may not be adequate and our
patents may not be sufficiently broad to prevent others from using
technology that is similar to or the same as our technology. In
addition, patents issued to us have been, or might be challenged,
and might be invalidated or circumvented and any rights granted
under our patents may not provide adequate protection to us. Our
competitors may independently develop similar technology, duplicate
features of our products or design around patents that may be issued
to us. As a result of these threats to our proprietary technology,
we may have to resort to costly litigation to enforce or defend our
intellectual property rights.

	On January 8, 2001, we filed a lawsuit against Applied
Materials, Inc. ("Applied") in the United States District Court
for the District of Massachusetts. The complaint alleges that
Applied's medium current/high energy ion implanter machine
launched in November 2000 infringes our patent for ion implantation
equipment using radio frequency linear accelerator technology. We
have also alleged that Applied unlawfully interfered with our
existing and future contracts. On January 18, 2001, we filed a
motion for a preliminary injunction for the reason, among others,
that infringement at the time of industry transition between
equipment capable of handling 200 millimeter wafers and equipment
capable of handling 300 millimeter wafers would irreparably harm
us. Through this motion, we asked the court to stop Applied from
manufacturing, selling or offering to sell its medium current/high
energy ion implanter machine and to order Applied to remove all our
patented technology from implanters that Applied may have placed in
chipmakers' plants for process development trials. Applied filed
counterclaims of unfair competition, defamation and tortious
interference with prospective economic advantage, all of which,
it contends, arise from certain communications we allegedly made
about the lawsuit and its claims of infringement.

	In December 2002 the court issued  a claim construction,
interpreting the scope of our patent.  In March 2003 the court
made summary judgement rulings in light of the claim construction,
narrowing the scope of the infringement issues to be determined
by a jury in a trial set for May 2003.   We believe our claims
are meritorious and intend to pursue the matter vigorously.
Although there can be no assurance of a favorable outcome and
we have incurred significant legal expenses to pursue this
litigation, we do not believe that our pursuit of this matter
will have a material adverse effect on our financial condition,
results of operations or liquidity. In the event that Applied is
found not to have infringed, we expect that Applied will continue
to sell its medium current/high energy implanter as a new and
substantial competitor for sales of high energy/medium current
ion implantation equipment.

We might face intellectual property infringement claims or patent
disputes that may be costly to resolve and, if resolved against
us, could be very costly to us and prevent us from making and
selling our systems.

	From time to time, claims and proceedings have been or
may be asserted against us relative to patent validity or
infringement matters. Our involvement in any patent dispute or
other intellectual property dispute or action to protect trade
secrets, even if the claims are without merit, could be very
expensive to defend and could divert the attention of our
management. Adverse determinations in any litigation could
subject us to significant liabilities to third parties, require
us to seek costly licenses from third parties and prevent us from
manufacturing and selling our systems. Any of these situations
could have a material adverse effect on us and cause the value
of our common stock to decline.