Axcelis Announces Financial Results for Fourth Quarter and Full Year 2006.

Company reports strong results across the board and significant increase in system orders

BEVERLY, Mass. -- Axcelis Technologies, Inc. (Nasdaq: ACLS) today announced financial results for the fourth quarter and full year ended December 31, 2006. The Company reported revenues of $123.3 million, compared to $122.8 million for the third quarter of 2006. Net income for the fourth quarter was $15.6 million, or $0.15 per share, compared to net income for the third quarter of 2006 of $12.5 million, or $0.12 per share. In the corresponding quarter for the previous year, the Company reported revenues of $92.9 million, and net loss of $1.3 million, or $0.01 per share, which included restructuring and related costs of $1.7 million, or $0.02 per diluted share.

For the full year 2006, the Company reported revenues of $461.7 million compared with $372.5 million in 2005. Net income for the year was $40.8 million, or $0.40 per share. In 2005, the Company reported a net loss of $3.9 million, or $0.04 per share, which included relocation and restructuring charges of $11.4 million, or $0.11 per share.

Commenting on the Company's performance, Chairman and CEO Mary Puma said, "Axcelis delivered strong results across the board, and achieved a 66% quarter over quarter increase in system orders. Our operating results for 2006 exceeded our expectations, reflecting the strength of our core businesses and our early penetrations with our new Optima platform. Our actions in 2006 have laid the cornerstones for continued growth, which will include compelling market share gains from the Optima HD high current product line."

Fourth Quarter Detail

Shipments and Margins

Shipments before provision for deferred revenue for the fourth quarter totaled $103.8 million. This compares to $128.1 million in the third quarter of 2006.

Geographically, Axcelis' systems shipments were to: Asia, 36%; North America, 38%; and Europe, 26%.

The ion implantation business accounted for 63% of total shipments in the fourth quarter while other products (dry strip, curing and RTP) accounted for 37%.

Service revenue (service labor, spare parts and consumables) was $43.2 million for the quarter, compared to $42.1 million in the third quarter of 2006.

Gross margin for the fourth quarter was 41.6%, compared to 43.4% in the preceding quarter.

Orders and Backlog

Orders (new systems bookings and service) received for the fourth quarter totaled $140.9 million, compared to $101.1 million for the third quarter of 2006. New systems bookings, excluding service, amounted to $97.7 million compared to $59 million for the preceding quarter.

Backlog plus deferred systems revenue at quarter end was $124.8 million. Backlog consists of systems only (i.e., excluding service contracts) that are generally scheduled to ship within six months.

Balance Sheet

Cash, cash equivalents and marketable securities increased by $22.0 million to $215.8 million at December 31, 2006. The Company ended the quarter with working capital of $284.9 million.

SEN Corporation, an SHI and Axcelis Company ("SEN")

Axcelis owns 50% of SEN, a Japanese company that is licensed to make and sell certain Axcelis ion implanters in Japan. SEN's operating results for the quarters ended December 31, 2006, and September 30, 2006, are as follows (in millions):

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Business Outlook

Stephen Bassett, Axcelis executive vice president and CFO, commented, "Our anticipated ramp of Optima implanter shipments will drive revenue growth in the latter half of 2007, resulting in an overall increase in revenues for the year. Given timing of revenue recognition, our first quarter 2007 forecast does not reflect this upward trend."

Axcelis' financial outlook for the first quarter of 2007 includes revenues in the range of $90.0 million to $100.0 million. Gross margins in the first quarter are expected to be in the range of 42% to 43%. The Company forecasts first quarter earnings per share in the range of $0.02 to $0.06 per share.

Axcelis assumes no responsibility to update guidance. Axcelis will only confirm or update guidance via a press release.

Fourth Quarter 2006 Conference Call

The Company will be hosting a conference call today, Wednesday, January 31, 2007, beginning at 5:00 pm ET. The purpose of the call is to discuss fourth quarter and full year 2006 results and to provide guidance for the first quarter of 2007.

The call will be available to interested listeners via an audio webcast that can be accessed through Axcelis' home page at www.axcelis.com, or by dialing 1-800-479-1628 (1-719-457-2729 outside North America). Participants calling into the conference call will be requested to provide the company name: Axcelis Technologies, the conference leader: Maureen Hart, and pass code: #4728559. A webcast replay will be available from 8:00 pm ET on January 31, 2007 until 5:00 pm ET March 2, 2007.

Safe Harbor Statement

This document contains forward-looking statements under the SEC safe harbor provisions. These statements, which include our guidance for future financial performance, are based on management's current expectations and should be viewed with caution. They are subject to various risks and uncertainties, many of which are outside the control of the Company, including the timing of orders and shipments, the conversion of orders to revenue in any particular quarter, or at all, our ability to implement successfully our profit plans, the continuing demand for semiconductor equipment, relative market growth, continuity of business relationships with and purchases by major customers, competitive pressure on sales and pricing, increases in material and other production costs that cannot be recouped in product pricing and global economic, political and financial conditions. These risks and other risk factors relating to Axcelis are described more fully in the most recent Form 10-K filed by Axcelis and in other documents filed from time to time with the Securities and Exchange Commission.

About Axcelis Technologies, Inc.

Axcelis Technologies, Inc., headquartered in Beverly, Massachusetts, provides innovative, high-productivity solutions for the semiconductor industry. Axcelis is dedicated to developing enabling process applications through the design, manufacture and complete life cycle support of ion implantation, rapid thermal processing, and cleaning and curing systems. Axcelis also licenses its 50% owned joint venture, SEN Corporation, an SHI and Axcelis Company, to manufacture and sell certain implant products in Japan. The company's Internet address is: www.axcelis.com.

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