Financial Analysis

Note 19. Merger On September 30, 2025, the Company, Victory Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company (Merger Sub), and Veeco Instruments Inc., a Delaware corporation (Veeco), entered into an Agreement and Plan of Merger (the Merger Agreement). Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions specified therein, Merger Sub shall be merged with and into Veeco (the Merger), with Veeco surviving as a wholly-owned subsidiary of the Company. At the effective time of the Merger (the Effective Time), each share of common stock, par value $0.01 per share, of Veeco (Veeco Common Stock), issued and outstanding immediately prior to the Effective Time (other than shares that are owned by the Company, Veeco or Merger Sub or any wholly owned subsidiary of the Company, Veeco or Merger Sub) will be converted into the right to receive 0.3575 (the Exchange Ratio) newly issued shares of Company common stock (the Company Common Stock) (the Common Stock Merger Consideration). No fractional shares of the Company will be issued in the Merger, and Veeco stockholders will receive cash in lieu of fractional shares as part of the merger consideration (the Fractional Shares Cash Amount, and the Fractional Shares Cash Amount together with the Common Stock Merger Consideration will be referred to as the Merger Consideration), as specified in the Merger Agreement. The Merger Agreement may be terminated upon the mutual w …

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Note 16. Commitments and Contingencies In addition to the finance and operating leases discussed in Note 9, we have purchase commitments and other contingency considerations. See Footnote 19 for contingency considerations related to the proposed merger with Veeco Instruments Inc. (a) Purchase Commitments We have contracts and purchase orders for inventory and other expenditures of $178.0 million at December 31, 2025, approximately $171.0 million of which are expected to occur in 2026. (b) Litigation We are not presently a party to any litigation that we believe might have a material adverse effect on our business operations. We are, from time to time, a party to litigation that arises in the normal course of our business operations. (c) Indemnifications Our system sales agreements typically include provisions under which we agree to take certain actions, provide certain remedies and defend our customers against third-party claims of intellectual property infringement under specified conditions and to indemnify customers against any damage and costs awarded in connection with such claims. We have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in the accompanying consolidated financial statements. …

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Note 11. Financing Arrangements On January 30, 2015, we sold our corporate headquarters facility for the sale price of $48.9 million. As part of the sale, we also entered into a 22-year lease agreement with the buyer. The sale leaseback is accounted for as a financing arrangement for financial reporting purposes and, as such, we recorded a financing obligation of $42.3 million as of December 31, 2025, $1.6 million of which is classified within current liabilities. The associated lease payments include both an interest component and payment of principal, with the underlying liability being extinguished at the end of the original lease term. As of December 31, 2025, we had a security deposit of $5.9 million related to this lease in the form of a cash collateralized letter of credit issued with UBS Bank USA, which is classified as long-term restricted cash on our balance sheet at December 31, 2025. …

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Note 13. Stock Award Plans and Stock-Based Compensation (a) Equity Incentive Plans We maintain the Axcelis Technologies, Inc. 2012 Equity Incentive Plan (the 2012 Equity Plan or the Plan), which became effective on May 2, 2012. The 2012 Equity Plan, as amended, reserves 12.5 million shares of common stock, $0.001 par value, for grant and permits the issuance of options, stock appreciation rights, restricted stock, restricted stock units, stock equivalents and awards of shares of common stock that are not subject to restrictions or forfeiture to selected employees, directors, and consultants of the Company. The total number of shares reserved for issuance under the Plan is the sum of 10.76 million shares approved by the shareholders, and 1.78 million shares added in accordance with the terms of the Plan as a result of the expiration or forfeiture of awards granted under our prior equity plan. Shares that are not issued under an award (because such award expires, is terminated unexercised or is forfeited) revert back to the Plan. The term of stock options granted under the Plan is specified in the award agreements. Unless a lesser term is otherwise specified by the Compensation Committee of the Companys Board of Directors, option awards under the 2012 Equity Plan will expire seven years from the date of grant. Under the terms of the Plan, the exercise price of a stock option may not be less than the fair market value of a share of the Companys common stock on the date of grant. …

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Note 15. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. (a) Fair Value Hierarchy The accounting guidance for fair value measurement requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market …

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Note 18. Income Taxes Income before income taxes is as follows: Year ended December 31, 2025 2024 2023 (in thousands) United States $ 118,896 $ 222,160 $ 270,842 Foreign 19,353 8,114 7,757 Income before income taxes $ 138,249 $ 230,274 $ 278,599 Provision for income taxes is as follows: Year ended December 31, 2025 2024 2023 (in thousands) Current: United States Federal $ 22,762 $ 38,963 $ 46,871 State 1,122 2,026 1,985 Foreign 4,824 3,887 3,498 Total current 28,708 44,876 52,354 Deferred: Federal (10,478) (13,758) (18,526) State 279 205 (440) Foreign (498) (2,041) (1,052) Total deferred (10,697) (15,594) (20,018) Income tax provision $ 18,011 $ 29,282 $ 32,336 Reconciliation of income taxes at the United States Federal statutory rate to the effective income tax rate of 13.0% is as follows: Year ended December 31, 2025 2024 2023 Dollar Percentage Dollar Percentage Dollar Percentage (dollars in thousands) Adjusted Pre-Tax Book Income $ 138,249 $ 230,274 $ 278,599 U.S. Federal Statutory Tax Rate 29,032 21.0 % 48,358 21.0 % 58,506 21.0 % State Income Taxes, net of federal income tax benefit* 1,271 0.9 % 1,828 0.8 % 1,220 0.4 % Foreign Tax Effects South Korea Withholding Taxes 552 0.4 % 3,268 1.4 % 5,062 1.8 % Other (221) (0.2) % (265) (0.1) % 211 0.1 % Other Jurisdictions 512 0.3 % 378 0.2 % 533 0.2 % Tax Credits Research and Development Credit (3,030) (2.2) % (4,142) (1.8) % (4,577) (1.6) % Effect of Cross-Border Tax Laws Foreign-derived intangible income (12,241) (8.9) % (20,4 …

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"(r) Recent Accounting Guidance In December 2023 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (""ASU 2023-09"") . We adopted ASU 2023-09 within this Annual Report on Form 10-K and we applied the update retrospectively for all prior periods presented in the consolidated financial statements. See Note 18 for related disclosures. ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 addresses investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. In November 2024 the FASB issued Accounting Standards Update 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). ASU 2024-03 is intended to enhance the disclosures for expenses for all public entities in accordance with ASC Topic 220, Income Statement-Reporting Comprehensive Income . ASU 2024-03 addresses investor requests for more detailed information about expenses, specifically cost of sales and selling, general, and administrative expenses (SG&A). ASU 2024-03 requires a public entity to disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortiz …

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Note 12. Employee Benefit Plans (a) Defined Contribution Plan We maintain the Axcelis Long-Term Investment Plan, a defined contribution plan. Eligible employees may contribute up to 35% of their compensation on a before-tax basis subject to Internal Revenue Service (IRS) limitations. Highly compensated employees may contribute up to 16% of their compensation on a before-tax basis subject to IRS limitations. In 2025, 2024 and 2023, we provided an employer match of 50% of employees pre-tax contributions on the first 6% of eligible compensation. Total related matching contribution expense was $3.1 million, $3.4 million and $3.4 million, for 2025, 2024 and 2023, respectively. (b) Other Compensation Plans We operate in foreign jurisdictions that require lump sum benefits, payable based on statutory regulations, for voluntary or involuntary termination. Where required, an annual actuarial valuation of the benefit plans is obtained. We have recorded an unfunded liability of $3.6 million and $3.1 million at December 31, 2025 and 2024, respectively, for costs associated with these compensation plans in foreign jurisdictions. The following table presents the classification of these liabilities in the Consolidated Balance Sheets: Year ended December 31, 2025 2024 (in thousands) Long-term: Other long-term liabilities 3,623 3,117 Total liabilities $ 3,623 $ 3,117 The expense recorded in connection with these plans was $1.7 million for each of the years ended December 31, 2025, 2024 and 20 …

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Note 3. Revenue We design, manufacture and service ion implantation and other processing equipment used in the fabrication of semiconductor chips and sell our products to leading semiconductor chip manufacturers worldwide. We offer a complete line of high energy, high current and medium current implanters for all application requirements. In addition, we provide extensive aftermarket lifecycle products and services, including used tools, spare parts, equipment upgrades, maintenance service and customer training. Our revenue recognition policies are set forth in Section (k) of Note 2, Summary of Significant Accounting Policies. (a) Alternative Operational Revenue Categories used by Management To reflect the organization of our business operations, management reviews revenue in two categories: revenue from sales of new systems and revenue arising from the sale of used systems, parts and labor to customers who own systems, which we refer to as Customer Solutions & Innovation (CS&I) or aftermarket. Below are the revenues by categories used by management for the periods covered in this report: Year ended December 31, 2025 2024 2023 Systems $ 571,019 $ 782,559 $ 883,604 Aftermarket 268,029 235,306 247,000 Total Revenue $ 839,048 $ 1,017,865 $ 1,130,604 (b) Economic Factors Affecting our Revenue: Geographic Breakdown of Revenue Global economic conditions have a direct impact on our revenue. We are substantially dependent on sales of our products and services to customers out …

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Note 17. Business Segment and Geographic Region Information We operate in one business segment, which is the manufacture of capital equipment for the semiconductor chip manufacturing industry. The principal market for semiconductor capital equipment is semiconductor chip manufacturers. Substantially all sales are made directly by us to our customers located in the United States, Europe and Asia Pacific. The Companys chief operating decision maker (CODM) is our chief executive officer. The CODM assesses financial performance for the company and decides how to allocate resources based on consolidated net income, such as determining the amount of resources to allocate to research and development projects, stock repurchases, or other growth opportunities. Segment asset information is provided to the CODM but it is not used to allocate resources. The following table presents selected financial information with respect to the Companys single operating segment for the years ended December 2025, 2024, and 2023: Year ended December 31, 2025 2024 2023 (in thousands) Revenue: $ 839,048 $ 1,017,865 $ 1,130,604 Less: Cost of revenue 462,200 563,211 639,303 Research and development 108,958 105,497 96,907 Sales and marketing 65,368 68,046 62,805 General and administrative 83,207 70,317 65,794 Total other income 18,934 19,480 12,804 Income tax provision 18,011 29,282 32,336 Segment Net Income $ 120,238 $ 200,992 $ 246,263 Reconciliation of profit or loss Adjustments and reconciling items - - …

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"Note 2. Summary of Significant Accounting Policies The accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the footnotes. (a) Basis of Presentation The accompanying consolidated financial statements include the consolidated accounts of the Company and its wholly-owned, controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Events occurring subsequent to December 31, 2025 have been evaluated for potential recognition or disclosure in the consolidated financial statements. (b) Use of Estimates The preparation of these consolidated 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 the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, the realizable value of accounts receivable and inventories, warranty reserves, valuing stock-based compensation instruments and reserves relating to tax assets and liabilities. Actual amounts could differ from these estimates. Changes in estimates are recorded in the period in which they becom …

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Note 14. Stockholders Equity We may issue up to 75 million shares of common stock without additional shareholder approval. At December 31, 2025 and 2024, there were 30.7 million and 32.4 million outstanding shares of common stock, respectively. …

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