Speedfam Ipec 8-K Speedfam-ipec and Memc Announce Litigation Settlement

[SPEEDFAM-IPEC LOGO]

For Immediate Release

CONTACT:	J. Michael Dodson
	Chief Financial Officer
	Lisa Lyscio
	Director, Investor Relations
	480/705-2119

SPEEDFAM-IPEC AND MEMC
ANNOUNCE LITIGATION SETTLEMENT

CHANDLER, Ariz., Oct. 5, 2001—SpeedFam-IPEC, Inc. and MEMC Electronic Materials, Inc. today announced that they have settled all litigation between the parties. In connection with this settlement, SpeedFam-IPEC has agreed to pay MEMC $1.8 million.

         Because this settlement agreement was reached prior to SpeedFam-IPEC filing its Form 10-Q for the first fiscal quarter of 2002, the company will record the impact of this settlement agreement in its first-quarter results. Accordingly, the company has recorded a $1.8-million adjustment to operating expenses, resulting in an adjusted net loss of $17 million, or $0.56 per share, for the first quarter ended September 1, 2001. Exclusive of this adjustment and a cumulative effect adjustment for the adoption of FAS 142, the net loss for the quarter was $12.6 million, or $0.42 per share.

         “Although we vigorously defended our best interests in these proceedings, we concluded that the best course of action for SpeedFam-IPEC and our customers was to settle this litigation,” said Richard Faubert, president and chief executive officer of SpeedFam-IPEC. “During this critical phase in the industry cycle, it is imperative that we maintain our focus on placing the Momentum^TM system at leading device manufacturers worldwide in order to position the company for success at the next industry upturn.”

SpeedFam-IPEC, Inc.

SpeedFam-IPEC, Inc. is a pioneer and innovator in the manufacture of chemical mechanical planarization (CMP) systems used in the fabrication of advanced semiconductor devices. With an extensive worldwide installed base, the company enables the development of next-generation integrated circuit technology through its leading-edge polishing systems. SpeedFam-IPEC also markets and distributes parts used in CMP and precision surface processing. With headquarters in Chandler, Ariz., and offices throughout the world, SpeedFam-IPEC is publicly traded on NASDAQ under the symbol SFAM. The company’s website is www.sfamipec.com.

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SPEEDFAM-IPEC AND MEMC ANNOUNCE LITIGATION SETTLEMENT PAGE 2 OF 2

This news release contains forward-looking statements about the next upturn and our success at the next upturn. These statements are subject to known and unknown risks and uncertainties. Actual results could differ. The economic downturn may continue longer than anticipated. The CMP market may not grow. We may not be able to maintain or increase our share of the CMP market due to many factors. We may encounter problems introducing Momentum, such as not having adequate manufacturing capacity, technological problems and lack of customer acceptance. We may not be able to achieve the high levels of customer satisfaction required to obtain repeat business from existing customers. We may not be successful in our efforts to develop new accounts. See SpeedFam-IPEC’s filings with the SEC, including the Annual Report on Form 10-K filed on August 24, 2001, for additional risks affecting the company.

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SPEEDFAM-IPEC, INC. AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars and shares in thousands, except per share data)

				First Quarter Ended
				September 1,			September 2,
				2001			20001
Net sales				$	41,082		$	73,019
Cost of sales					31,695			57,085
			Gross margin		9,387			15,934
Operating expenses:
	Research and development				12,388			16,557
	Selling, general and administrative				8,120			16,453
	Litigation settlement cost				1,800			—
	Restructuring charges				—			5,123
			Total operating expenses		22,308			38,133
Operating income (loss)					(12,921	)		(22,199	)
Other income (expense), net					(1,502	)		(121	)
Income (loss) from consolidated companies					(14,423	)		(22,320	)
Gain (loss) on sale of joint venture interest					—			(10,763	)
Equity in net earnings (loss) of affiliates					—			110
Income (loss) before cumulative effect of change in accounting principle					(14,423	)		(32,973	)
Cumulative effect of change in accounting principle					(2,582	)		(36,542	)
Net income (loss) attributable to common stockholders				$	(17,005	)	$	(69,515	)
Net income (loss) per share:
		Net income (loss) before cumulative effect of change in accounting principle		$	(0.48	)	$	(1.10	)
	Cumulative effect of change in accounting principle			$	(0.08	)	$	(1.23	)
			Net income (loss) attributable to common stockholders:
			Basic	$	(0.56	)	$	(2.33	)
			Diluted	$	(0.56	)	$	(2.33	)
Weighted average number of shares:
	Basic				30,223			29,818
	Diluted				30,223			29,818

¹ Restated for the adoption of SAB 101.

SPEEDFAM-IPEC, INC. AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

				September 1,		June 2,
				2001		20012
ASSETS
Current assets:
	Cash, cash equivalents and short-term investments			$	50,193	$	60,839
	Trade accounts receivable, net				46,592		60,619
	Inventories				86,564		83,857
	Shipped systems pending acceptance				8,735		13,953
	Other current assets				3,504		4,549
		Total current assets			195,588		223,817
Property, plant and equipment, net					73,248		75,241
Other assets					15,614		15,827
			Total assets	$	284,450	$	314,885
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Current portion of long-term debt			$	173	$	229
	Accounts payable				18,257		23,314
	Deferred revenue				34,443		46,281
	Other current liabilities				21,914		18,085
		Total current liabilities			74,787		87,909
	Long-term debt				115,105		115,124
	Other liabilities				4,976		5,911
			Total liabilities		194,868		208,944
Stockholders’ equity					89,582		105,941
			Total liabilities and stockholders’ equity	$	284,450	$	314,885

² Certain prior period amounts have been reclassified to conform to the current year presentation.