UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

AMENDMENT NO. 1 TO FORM 10-K

For the transition period from                 to                

Commission file number   000-30941

AXCELIS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

Preferred Share Purchase Rights

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  ý    No  o.

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes  ý  No  o.

Aggregate market value of the voting stock held by nonaffiliates of the registrant as of June 30, 2004: $1,234,768,164

Number of shares outstanding of the registrant’s Common Stock, $0.001 par value, as of March 4, 2005: 100,180,688

Documents incorporated by reference:

Portions of the definitive Proxy Statement for Axcelis Technologies, Inc.’s Annual Meeting of Stockholders to be held on May 12, 2005 are incorporated by reference into Part III of this Form 10-K.

AMENDMENT NO. 1

EXPLANTORY NOTE

We are filing this amendment to our Annual Report on Form 10-K for the fiscal year ended December 31, 2004, originally filed with the Securities and Exchange Commission on March 15, 2005, solely for the purpose of complying with Regulation S-X, Rule 3-09. Rule 3-09 requires that Form 10-K, but not the annual shareholders’ report, contain separate financial statements for unconsolidated subsidiaries and investees accounted for by the equity method when such entities are individually significant.

We have determined that our 50% owned joint venture with Sumitomo Heavy Industries, Ltd., known as Sumitomo Eaton Nova Corporation (“SEN”), which is not consolidated in the Axcelis Technologies, Inc. financial statements (and is accounted for under the equity method) was significant under Rule 3-09 in relationship to the Axcelis Technologies, Inc. financial results for the year ended December 31, 2004. Since SEN’s fiscal year ended after the date of the filing of our Form 10-K, Rule 3-09 provides that the SEN financial statements may be filed as an amendment to our Form 10-K within 90 days after the end of SEN’s fiscal year ended March 31, 2005.

Therefore, this Form 10-K/A amends the following portions of the Axcelis Technologies Form 10-K filed on March 15, 2005:

•           Item 8 is being amended by submitting the financial statements of SEN for the fiscal years ended March 31, 2005, 2004 and 2003 (the “SEN Financial Statements”) as a separate section of this report immediately following Item 15;

•              Item 15 is being amended to:

•              include the list of the SEN Financial statements being filed herewith as required by Item 15(a); and

•              add to the list of exhibits and exhibits filed in accordance with Item 601 of Regulation S-K an Exhibit 23.2,

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Consent of Ernst & Young - Independent Auditors relating to the SEN Financial Statements, as required by Item 15(c).

As required by Rule 3-09, we will determine with respect to each future fiscal year, whether SEN has been significant with respect to Axcelis’ financial results for such year, and file SEN financial statements as necessary to comply with Rule 3-09.

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of the Company’s Form 10-K, as originally filed on March 15, 2005, and as amended by this form 10-K/A:

(1)(A) Financial Statements of Axcelis Technologies, Inc.:

(2)          Financial Statement Schedules:

Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2004, 2003 and 2002

All other schedules for which provision is made in the applicable regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

(b) Exhibits

The exhibits filed as part of this Form 10-K are listed on the Exhibit Index immediately preceding such Exhibits, which Exhibit Index is incorporated herein by reference.

(c) Financial Statement Schedules

The response to this portion of Item 15 is submitted as a separate section of this report.

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Report of Independent Auditors

The Board of Directors

Sumitomo Eaton Nova Corporation

We have audited the accompanying consolidated balance sheets of Sumitomo Eaton Nova Corporation (the “Company”) as of March 31, 2005 and 2004, and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended March 31, 2005, all expressed in Japanese yen.  Our audits also included the translation of these statements as of and for the year ended March 31, 2005 into U.S. dollars on the basis described in Note 1.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  We were not engaged to perform an audit of the Company’s internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion the financial statements referred to above expressed in Japanese yen present fairly, in all material respects, the consolidated financial position of Sumitomo Eaton Nova Corporation at March 31, 2005 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 31, 2005, in conformity with accounting principles generally accepted in the United States.  Also, in our opinion, the financial statements expressed in U.S. dollars as of and for the year ended March 31, 2005, when considered in relation to the basic financial statements taken as a whole, have been properly translated on the basis described in Note 1.

As discussed in Note 1 to the Consolidated Financial Statements, effective July 1, 2003, the Company adopted the provisions of Emerging Issues Task Force Issue No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables.”

Tokyo, Japan

May 20, 2005

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Sumitomo Eaton Nova Corporation

Consolidated Statements of Income

See accompanying notes to consolidated financial statements.

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Sumitomo Eaton Nova Corporation

Consolidated Balance Sheets

See accompanying notes to consolidated financial statements.

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Sumitomo Eaton Nova Corporation

Consolidated Statements of Shareholders’ Equity

See accompanying notes to consolidated financial statements.

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Sumitomo Eaton Nova Corporation

Consolidated Statements of Cash Flows

See accompanying notes to consolidated financial statements.

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Sumitomo Eaton Nova Corporation

Notes to Consolidated Financial Statements

March 31, 2005

Note 1.  Nature of Business and Significant Accounting Policies

General

Sumitomo Eaton Nova Corporation (the “Company”) was established on April 1, 1983 under the Commercial Code of Japan.  The Company is owned equally by Sumitomo Heavy Industries, Ltd. (“SHI”), a Japanese corporation, and Axcelis Technologies, Inc. (“Axcelis”), a U.S. corporation.  The Company designs, manufactures, sells and repairs ion implantation equipment and semiconductor equipment primarily for Japanese semiconductor manufacturing customers under a license agreement with Axcelis.

The Company and its wholly-owned subsidiary maintain their records and prepare their financial statements in accordance with accounting principles generally accepted in Japan.  Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to conform with accounting principles generally accepted in the United States of America.  These adjustments were not recorded in the statutory books of account.

Basis of Financial Statements

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary.  All significant intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  The actual results could differ from those estimates.

Foreign Currency

The Company’s functional currency is the Japanese yen.  Transaction gains and losses, which arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency, are included in the results of operations as incurred.  Transaction gains and losses in each of the years in the three year period ended March 31, 2005 were not material.

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The accompanying consolidated financial statements expressed in U.S. dollars have been prepared for use in conjunction with the preparation of the consolidated financial statements of Axcelis and have been translated into U.S. dollars in accordance with Statement of Financial Accounting Standards No. 52, Foreign Currency Translation.  Assets and liabilities are translated using the exchange rate in effect at year-end.  Statement of income items are translated using the average rates for the year.  The effects of these translation adjustments are accumulated and included in accumulated other comprehensive loss, a separate component of shareholders’ equity.

Cash Equivalents

All highly liquid investments with a maturity of three months or less when purchased are considered to be cash equivalents.

Inventories

Inventories are stated at the lower of cost or market, cost being determined by the average method.

Long-Lived Assets

Property, plant and equipment is stated on the basis of cost.  Depreciation is computed by the declining-balance method over the estimated useful lives of the respective assets (buildings – 6 to 40 years; machinery – 4 to 13 years; and furniture, fixtures and automobiles – 2 to 20 years) except for buildings purchased after April 1, 1998, which are depreciated on the straight-line basis over 31 years.

Long-lived assets are reviewed for impairment losses whenever events or changes in circumstances indicate the carrying amount may not be recoverable.  The asset would be considered impaired when the future net undiscounted cash flows generated by the asset are less than its carrying value.  An impairment loss would be recognized based on the amount by which the carrying value of the asset exceeds its fair value.

Accumulated Other Comprehensive Income (Loss)

At March 31, 2003, accumulated other comprehensive income (loss) was comprised of a minimum pension liability of ¥(10,356) thousand.

At March 31, 2004 and 2005, accumulated other comprehensive income (loss) on a U.S. dollar basis was comprised of an accumulated foreign currency translation adjustment of U.S.$13,874 thousand and U.S.$11,264 thousand, respectively.

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Concentration of Credit Risk

Financial instruments, which potentially expose the Company to concentrations of credit risk, consist primarily of trade notes and accounts receivable.  These financial instruments are carried at cost less an allowance for doubtful accounts, which approximates fair value.  Substantially all of the Company’s notes and accounts receivable are due from companies in the semiconductor industry located in Japan.  The Company performs ongoing credit evaluations of its customers’ financial condition and provides an allowance for specific doubtful notes and accounts receivable and generally does not require collateral to secure the notes and accounts receivable.

For the year ended March 31, 2003, three customers accounted for net sales of 15%, 13% and 11%.  Three customers accounted for net sales of 21%, 13% and 8% for the year ended March 31, 2004.  For the year ended March 31, 2005, three customers accounted for net sales of 17%, 13%, and 10%, respectively.

At March 31, 2004 and 2005 accounts receivables from one customer approximated 15% and 14% of consolidated trade receivables, respectively.

Revenue Recognition

For revenue arrangements prior to July 1, 2003, the Company recognized sales at the later of the time of shipment to the customer or the transfer of risk of ownership (which is generally upon customer inspection for machinery sales to domestic customers).  The cost of system installation at the customer’s site was accrued at the time of shipment for installation and acceptance testing performance obligations incurred at the time of sales.  Management believes the customer’s post delivery acceptance provisions and the installation process have been established to be routine, commercially inconsequential and perfunctory because the process is a replication of the pre-shipment procedures.  The majority of the Company’s systems are designed and tailored to meet the customer’s specifications as outlined in the contract between the customer and the Company.  To ensure that the customer’s specifications are satisfied, per contract terms, the systems are tested at the Company’s facilities prior to shipment, normally with the customer present, under conditions that substantially replicate the customer’s production environment and the customer’s criteria are confirmed to have been met.  The Company has never failed to successfully complete a system installation.  The Company has a demonstrated history of customer acceptance subsequent to shipment and installation of these systems.

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In November 2002, the Financial Accounting Standards Board’s Emerging Issues Task Force reached a consensus on Issue No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”).  This issue addresses the determination of whether an arrangement involving more than one deliverable contains more than one unit of accounting and how the arrangement consideration should be measured and allocated to the separate units of accounting.  EITF 00-21 became effective for revenue arrangements entered into in periods beginning after June 15, 2003.

For revenue arrangements occurring on or after July 1, 2003, the Company has revised its revenue recognition policy to comply with the provisions of EITF 00-21.  The Company’s revenue transactions include sales of systems under multiple element arrangements.  Revenue under these arrangements is allocated to all elements, except systems, based upon their estimated fair market value.  The amount of revenue allocated to systems is calculated on a residual method.  Under this method, the total value of the arrangement is allocated first to the undelivered elements based on the greater of the fair value of the undelivered elements or the portion of the sales price that will not be received until the elements are delivered, with the residual amount being allocated to systems revenue.  The amount allocated to installation is based upon hourly rates and the estimated time to complete the service.  The fair value of all other elements is based upon the price charged when these elements are sold separately.  System revenue and installation revenue are generally recognized at the time of customer acceptance.

Service revenue includes revenue from spare parts, maintenance services and equipment overhaul services.  Revenue related to maintenance service contracts is recognized ratably over the duration of the contracts.  Revenue related to equipment overhauls is recognized upon completion of the service.  Revenue related to spare parts is recognized upon the later of shipment or when title and risk of loss passes to the customer.

Under the provisions of EITF 00-21, the Company has accounted for this change in accounting principle on a prospective basis for revenue arrangements occurring on or after July 1, 2003.  The impact of this change for the year ended March 31, 2004 was to decrease net income by ¥642,631.  The pro-forma effect of this accounting change, had it been applied consistently for the years ended March 31, 2003 and 2004 is as follows:

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Shipping and Handling Costs

Shipping and handling costs are included in cost of products sold.

Research and Development Costs

Research and development costs are expensed in the year in which such costs are incurred, except for costs relating to equipment that is acquired or constructed for research and development activities and have alternative future uses.  Research and development expense for the years ended March 31, 2003, 2004 and 2005 was ¥1,528,782 thousand, ¥1,665,889 thousand and ¥3,002,413 thousand (U.S.$27,916 thousand), respectively, and was included in selling, general and administrative expenses in the accompanying consolidated statements of income.

Retirement Benefits

The cost of retirement benefits for seconded employees is incurred by and reimbursed to SHI (see Note 6).  The provision for accrued employees’ retirement benefits represents the cost for employees who have been employed directly by the Company (see Note 9).

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46 “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51” (“FIN 46”).  FIN 46 provides a new consolidation model, which determines control and consolidation based on potential variability in gains and losses.  The adoption of FIN 46 did not have any impact on the Company’s consolidated financial statements.

In November 2004 the FASB issued Statement of Financial Accounting Standards No. 151 (“SFAS 151”) “Inventory Costs, an amendment of ARB 43, Chapter 4.”  SFAS 151 amends the guidance in ARB 43, Chapter 4, “Inventory Pricing” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage).  SFAS 151 requires that idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as current period charges.  In addition, SFAS 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities.  SFAS 151 is effective for inventory costs incurred during fiscal years beginning after June 15 2005, however early adoption is permitted for inventory costs incurred during fiscal years beginning after November 2004.  The Company plans to adopt SFAS 151 on January 1, 2006.  The Company is assessing what effect, if any, adopting SFAS 151 will have on its financial position or results of operations.

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Note 2.  Trade Receivable

The components of trade receivables, net follow:

Note 3.  Inventories

The components of inventories follow:

Note 4.  Property, Plant and Equipment, Net

The components of property, plant and equipment, net follow:

In 2005, the Company determined that certain machinery used in its research and development activities had no current or future and was disposed of.  As a result, the Company recorded a loss on disposal of ¥584 million, which was included in selling, general and administrative expenses in the accompanying consolidated statements of income.

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Note 5.  Product Warranty

The Company offers a one year warranty for all of its products, the terms and conditions of which vary depending upon the product sold.  The Company estimates the costs that may be incurred under its warranty and records a liability in the amount of such costs at the time product revenue is recognized.  Factors that affect the Company’s warranty include the number of installed units, historical and anticipated product failure rates, material usage and service labor costs.  The Company periodically assesses the adequacy of its recorded warranty and adjusts the amount as necessary.

Changes in the Company’s product warranty (included in other current liabilities on the consolidated balance sheets) for the years ended March 31, 2004 and 2005 are as follows:

Note 6.  Transactions with Affiliates

Transactions with affiliates for the years ended March 31, 2003, 2004 and 2005 were as follows:

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Balances due from and to affiliates at March 31, 2004 and 2005 were as follows:

Pension funding for the seconded employees (employees on temporary assignment) is provided through a plan administered by SHI.  Under this arrangement, the Company is billed monthly for the pension costs attributable to those individuals.  Under the terms of the pension agreement with SHI, no additional costs related to earned benefits are to be borne by the Company.  Pension contributions paid to SHI for the years ended March 31, 2003, 2004 and 2005 were ¥155,201 thousand, ¥158,155 thousand and ¥138,227 thousand (U.S.$1,285 thousand), respectively.

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Note 7.  Financing Arrangements

Leases

Rental expenses for equipment, land and office space for the years ended March 31,
2003, 2004 and 2005 amounted to ¥331,178 thousand, ¥278,315 thousand and ¥268,802 thousand (U.S.$2,499 thousand), respectively.  Future minimum non-cancelable rental commitments at March 31, 2005 under operating leases are as follows:

Note 8.  Income Taxes

Income taxes include corporation, enterprise, and inhabitants’ taxes which, in the aggregate, resulted in a statutory tax rate of approximately 41.74% in 2003 and 2004 and 40.44% in 2005.  The difference between income tax expense and the amount computed by applying the statutory income tax rate to income before income taxes is summarized as follows:

In March 2003, the Japanese government enacted a tax law change that resulted in a decrease in the aggregate statutory tax rate for the Company’s fiscal year beginning on April 1, 2004.  The effect of this change on the Company’s 2003 income tax expense is included in the above table as the change in future statutory tax rate.

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Deferred income taxes reflect the net tax effect of the temporary differences between the amounts of the assets and liabilities recorded for financial and income tax purposes.  Significant components of the Company’s deferred tax assets as of March 31, 2004 and 2005 were as follows:

Note 9.  Employees’ and Directors’ Retirement Benefits

The Company has a defined benefit pension plan that covers substantially all employees.  Benefits under the plan are based on the employees’ compensation as of the date of retirement and years of service.  The Company’s policy is to fund amounts which are actuarially determined to provide the plan with sufficient assets to meet future benefit payment requirements.  Assets of the plan are invested in equity securities, debt securities, money market instruments, and insured products.

The Company also provides certain defined benefits to its statutory auditors and directors who are not statutory auditors, directors or employees of SHI, Axcelis or one of their affiliates.  Their benefits are based on years of service, compensation at retirement and position.  This plan is unfunded.

The measurement date used to determine the pension obligation for the benefit plan is December 31.

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The reconciliation of beginning and ending balances of the projected benefit obligation and plan assets, and the funded status of the Company’s plans are as follows: