What changed in this filing

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Item 9A. Controls and Procedures

2025-02-28 compared with 2024-02-23 · 146 added, 136 removed, 941 unchanged (23% of the section changed)

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and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect

misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Directors, Executive Officers and Corporate Governance.

A portion of the information required by Item 10 of Form 10-K is incorporated by reference from the information responsive thereto contained in the sections in Axcelis Proxy Statement for the Annual Meeting of Stockholders to be held May 9, 2024 (the “Proxy Statement”) captioned:

A portion of the information required by Item 10 of Form 10-K is incorporated by reference from the information responsive thereto contained in the sections in the Axcelis Proxy Statement for the Annual Meeting of Stockholders to be held May 7, 2025 (the “Proxy Statement”) captioned:

● “Proposal 1:

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2025 expressed an unqualified opinion thereon.

Adoption of ASU 2023-07 Segment Reporting (Topic 280)

As discussed in Note 2 to the consolidated financial statements, the Company changed its segment disclosures in 2024 and 2023 due to the adoption of ASU No.

2023-07, Segment Reporting.

Basis for Opinion

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Auditing management’s recognition of revenue was challenging because of the higher extent of audit effort and because the amounts are material to the consolidated financial statements and related disclosures.

During our risk assessment process, we identified a higher inherent risk related to revenue

primarily due to the size of the account, as well as the focus on revenue from readers of the financial statements.

During our risk assessment process, we identified a higher inherent risk related to revenue primarily due to the size of the account, as well as the focus on revenue from readers of the financial statements.

How We Addressed the Matter in Our Audit

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Twelve months ended

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency translation adjustments

Amortization of actuarial net gain and other adjustments from pension plan, net of tax

Total other comprehensive income (loss)

Total other comprehensive (loss) income

Comprehensive income

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Inventories, net

Prepaid income taxes

Prepaid expenses and other current assets

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Issuance of stock under Employee Stock Purchase Plan

Issuance of restricted common shares

Issuance of restricted shares of common stock

Stock-based compensation expense

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Issuance of stock under Employee Stock Purchase Plan

Issuance of restricted common shares

Issuance of restricted shares of common stock

Stock-based compensation expense

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Change in pension obligation, net of tax

Exercise of stock options

Issuance of stock under Employee Stock Purchase Plan

Issuance of restricted common shares

Issuance of restricted shares of common stock

Stock-based compensation expense

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Accretion of discounts and premiums on marketable securities

Currency loss on foreign denominated transactions

Unrealized currency loss on foreign denominated transactions

Mark-to-market adjustment on forward exchange contracts

Changes in operating assets and liabilities:

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Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

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Axcelis Technologies, Inc.

(“Axcelis” or the “Company”) was incorporated in Delaware in 1995, and is a worldwide producer of ion implantation and other processing equipment used in the fabrication of semiconductor chips in the United States, Europe and Asia.

(“Axcelis” “We” or the “Company”) was incorporated in Delaware in 1995, and is a worldwide producer of ion implantation and other processing equipment used in the fabrication of semiconductor chips in the United States, Europe and Asia.

In addition to equipment, we provide extensive aftermarket lifecycle products and services, including spare parts, equipment upgrades, maintenance services and customer training.

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For the years ended December 31, 2024, 2023, and 2022 we had foreign exchange losses of $ 9.1 million, $ 0.5 million, and $ 6.6 million, respectively.

(d) Cash, Cash Equivalents and Short-term Investments

(d) Derivative Instruments

We are exposed to certain risks relating to our ongoing business operations, including market risks relating to fluctuations in foreign currency exchange rates.

We have entered into forward exchange contracts in order to mitigate risks associated with fluctuations in exchange rates on forecasted transactions denominated in foreign currencies and to minimize the impact of foreign currency fluctuations on our earnings and cash flows.

These contracts have month-to-month settlement dates.

As of December 31, 2024, we had open contracts with a notional value of $ 112.0 million.

We measure these instruments at fair value and recognize assets or liabilities associated with the fair value on these open contracts on the Consolidated Balance Sheets at the end of each reporting period.

At December 31, 2024, the recognized unrealized gain

on these forward exchange contracts was approximately $ 0.3 million.

Unrealized gains and losses are shown in our cash flows from operating activities within our Consolidated Statement of Cash Flows.

We have not designated these forward exchange contracts as hedging instruments and we record changes in the fair values at each measurement date in Other, net on the Consolidated Statements of Operations.

For the year ended December 31, 2024, we recorded $ 9.1 million of gain on forward currency exchange contracts.

We do not offset fair value amounts of derivative instruments.

We do not use derivative instruments for speculative purposes.

(e) Cash, Cash Equivalents and Short-term Investments

Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of ninety days or less.

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Income related to these securities is recorded in interest income in the Consolidated Statements of Operations .

(e) Inventories

(f) Inventories

Inventories are carried at the lower of cost or net realizable value, determined using the first-in, first-out (“FIFO”) method.

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If actual market conditions become less favorable than those projected by management, additional inventory write-downs may be required.

(f) Property, Plant and Equipment and Leased Assets

(g) Property, Plant and Equipment and Leased Assets

Property, plant and equipment are stated at cost, less accumulated depreciation and amortization.

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Expenditures greater than $ 2.5 thousand for renewals and betterments are capitalized and depreciated over their useful lives.

(g) Impairment of Long-Lived Assets

(h) Impairment of Long-Lived Assets

We record impairment losses on long-lived assets when events and circumstances indicate that these assets might not be recoverable.

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This could be caused by strategic decisions made in response to economic and competitive conditions, the impact of the economic environment on our customer base, or a material adverse change in our relationships with significant customers.

(h) Concentration of Risk and Off-Balance Sheet Risk

(i) Concentration of Risk and Off-Balance Sheet Risk

Financial instruments that potentially subject us to concentrations of credit risk are principally cash equivalents, short-term investments and accounts receivable.

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Government and Agency Securities and deposit accounts.

We have no significant off-balance-sheet risk such as currency exchange contracts, option contracts or other hedging arrangements.

Other than our currency exchange contracts, we have no significant off-balance sheet risk relating to option contracts or other hedging arrangements.

Our exposure to market risk for changes in interest rates relates primarily to cash equivalents and short-term investments.

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Our customers consist of semiconductor chip manufacturers located throughout the world and net sales to our ten largest customers accounted for 45.9 %, 51.7 % and 59.4 % of revenue in 2024, 2023 and 2022, respectively.

For the year ended December 31, 2023, we had no customers representing 10 % or greater of total revenue.

For the year ended December 31, 2022, we had two customers representing 13.1 % and 11.5 % of total revenue, respectively.

For the years ended December 31, 2024 and December 31, 2023, we had no customers representing 10 % or greater of total revenue.

For the year ended December 31, 2022, we had two customers representing 13.1 % and 11.5 % of total revenue, respectively.

As of December 31, 2024, we had one customer account for 10.0 % of consolidated accounts receivable.

As of December 31, 2022, we had two customers account for 19.4 % and 11.5 % of consolidated accounts receivable, respectively.

As of December 31, 2023, we had one customer account for 12.2 % of consolidated accounts receivable.

Some of the components and sub-assemblies included in our products are obtained either from a sole source or a limited group of suppliers.

Disruption to our supply source, resulting either from economic conditions or other factors, could affect our ability to deliver products to our customers.

(i) Revenue Recognition

(j) Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers or (“ASC 606”).

Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration we expect to receive in exchange for those goods or services.

Under ASC 606, revenue is recognized when a customer obtains control of

promised goods or services in an amount that reflects the consideration we expect to receive in exchange for those goods or services.

We measure revenue based on the consideration specified in the customer arrangement, and revenue is recognized when the performance obligations in the customer arrangement are satisfied.

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Performance obligations promised in a contract are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the good or service either on its own or together with other available resources, and are distinct in the context of the contract, whereby the transfer of the good or service is separately identifiable from other promises in the contract.

To the extent a contract includes multiple promised goods and services, we must apply judgment to determine whether promised goods and services

are capable of being distinct and distinct in the context of the contract.

To the extent a contract includes multiple promised goods and services, we must apply judgment to determine whether promised goods and services are capable of being distinct and distinct in the context of the contract.

If these criteria are not met, the promised goods and services are accounted for as a combined performance obligation.

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Variable consideration has not been identified as a significant component of the transaction price for any of our transactions.

For those transactions where all performance obligations will be satisfied within one year or less, we apply the practical expedient outlined in ASC 606-10-32-18.

For those transactions where all performance obligations will be satisfied within one year or less, we apply the

practical expedient outlined in ASC 606-10-32-18.

This practical expedient allows us not to adjust promised consideration for the effects of a significant financing component if we expect at contract inception that the period between when we transfer the promised good or service to a customer and when the customer pays for that good or service will be one year or less.

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We use a cost plus margin approach in determining the SSP for any materials related performance obligations (such as upgrades, spare parts, systems).

To determine the SSP for labor related performance obligations (such as the labor component of installation), we use

directly observable inputs based on the standalone sale prices for these services.

To determine the SSP for labor related performance obligations (such as the labor component of installation), we use directly observable inputs based on the standalone sale prices for these services.

5) Recognize revenue when or as we have satisfied a performance obligation

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Progress in the satisfaction of these performance obligations is measured using an input method of either time elapsed in the case of fixed period contracts, or labor hours expended, in the case of project-based contracts.

(j) Recognizing Assets related to Recoverable Customer Contract Costs

(k) Recognizing Assets related to Recoverable Customer Contract Costs

We recognize an asset related to incremental costs incurred by us to obtain a contract with a customer if we expect to recover those costs.

used in satisfying performance obligations in the future, and the costs are expected to be recovered.

We will recognize an asset from costs incurred to fulfill a contract only if such costs relate directly to a contract with an entity that we can specifically identify, the costs incurred will generate or enhance resources that will be used in satisfying performance obligations in the future, and the costs are expected to be recovered.

Any assets recognized related to costs to obtain or fulfill a contract are amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates.

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Based on the nature of our commission agreements, all commissions are expensed as incurred based upon the expectation that the amortization period would be one year or less.

(k) Shipping and Handling Costs

(l) Shipping and Handling Costs

Shipping and handling costs are included in cost of revenue.

(l) Stock-Based Compensation

(m) Stock-Based Compensation

We generally recognize compensation expense for all stock-based payments to employees and directors, including grants of stock options and restricted stock units, based on the grant-date fair value of those stock-based payments.

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See Note 13 for additional information relating to stock-based compensation.

(m) Income Taxes

(n) Income Taxes

We record income taxes using the asset and liability method.

Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and operating loss and tax credit carryforwards.

Our consolidated financial statements contain certain deferred tax assets which have arisen primarily as a result of operating losses, as well as other temporary differences between financial and tax basis accounting.

We establish a valuation allowance if the likelihood of realization of the deferred tax assets is reduced based on an evaluation of objective verifiable evidence.

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See Note 18 for additional information relating to income taxes.

(n) Computation of Net Income per Share

Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period.

The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued, calculated using the treasury stock method.

(o) Computation of Net Income per Share

Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of shares of common stock outstanding (the denominator) for the period.

The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive shares of common stock had been issued, calculated using the treasury stock method.

The components of net income per share are as follows:

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Net income per share

Diluted weighted average common shares outstanding does not include restricted stock units outstanding to purchase 6,025 , 4,929 and 2,554 common equivalent shares for the periods ended December 31, 2023, 2022 and 2021, respectively, as their effect would have been anti-dilutive.

(o) Accumulated Other Comprehensive Loss

Diluted weighted average shares of common stock outstanding does not include restricted stock units outstanding to purchase 122,294 , 6,025 and 4,929 common equivalent shares for the periods ended December 31, 2024, 2023 and 2022, respectively, as their effect would have been anti-dilutive.

(p) Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss, net of tax, by component, for the year ended December 31, 2024:

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Balance at December 31, 2023

Other comprehensive income and pension reclassification

Other comprehensive loss and pension reclassification

Balance at December 31, 2024

(p) Recent Accounting Guidance

(q) Recent Accounting Guidance

In November 2023 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280):

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ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

A public entity should apply ASU 2023-07 retrospectively to all prior periods presented in the consolidated financial statements.

The Company is currently evaluating the impact of ASU 2023-07 on its future consolidated financial statements and related disclosures.

We adopted ASU 2023-07 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 17 for related disclosures.

In December 2023 the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740):

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The Company is currently evaluating the impact of ASU 2023-09 on its future consolidated financial statements and related disclosures.

In November 2024 the FASB issued Accounting Standards Update 2024-03, Income Statement—Reporting Comprehensive Income—Expense 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 amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption presented on the face of the income statement as well as a qualitative description of the amounts remaining in the relevant expense captions that are not separately disaggregated quantitatively.

ASU 2024-03 also requires a public entity to disclose the total amount of selling expenses and the entity’s definition of selling expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

A public entity should apply ASU 2024-03 either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of ASU 2024-03 on its future consolidated financial statements and related disclosures.

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.

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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 (i) of Note 2, Summary of Significant Accounting Policies.

Our revenue recognition policies are set forth in Section (j) 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 “CS&I” or “aftermarket.”

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:

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Balance, end of the period

* Amount is net of a reclassification of $ 12.7 million from deferred revenue to refund liability for the year ended December 31, 2024.

Contract liabilities are reflected as deferred revenue on the consolidated balance sheet.

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Long-term deferred revenue of $ 43.5 million as of December 31, 2024 relates to prepayments made prior to system delivery as well as to extended warranty performance obligations that we expect to be completed in excess of the next 12 months but within the next 24 months .

The majority of our system transactions have payment terms that are 90 % due upon shipment of the tool and 10 % due upon installation.

Aftermarket transaction payment terms are such that payment is due either within 30 or 60 days of service provided or delivery of parts.

The majority of our system transactions have either (1) payment terms that are 90 % due upon shipment of the system and 10 % due upon acceptance or (2) a pre-shipment deposit ranging from 20 % to 60 %, with the remainder due upon shipment, less 10 % due at acceptance.

Aftermarket transaction payment terms are such that payment is due either within 30 or 60 days of service provided or parts delivered.

Cash, cash equivalents and restricted cash

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Total cash, cash equivalents and restricted cash

As of December 31, 2023, we had $ 6.7 million in restricted cash which relates to a $ 5.9 million cash collateral relating to our lease for our headquarters in Beverly, Massachusetts, a $ 0.7 million letter of credit relating to workers’ compensation insurance and a $ 0.1 million deposit relating to customs activity.

As of December 31, 2024, we had $ 7.6 million in restricted cash which relates to a $ 5.9 million cash collateral relating to our lease for our headquarters in Beverly, Massachusetts, a $ 0.9 million letter of credit for customs purposes, a $ 0.7 million letter of credit relating to workers’ compensation insurance and a $ 0.1 million deposit relating to customs activity.

Accounts Receivable and Allowance for Credit Losses

All trade receivables are reported on the Consolidated Balance Sheets at their amortized cost adjusted for any write-offs and net of allowances for credit losses.

Axcelis maintains an allowance for credit losses, which represents an estimate of expected losses over the remaining contractual life of its receivables considering current market conditions and estimates for supportable forecasts when appropriate.

The estimate is a result of the Company’s ongoing assessments and evaluations of collectability, historical loss experience, and future expectations in estimating credit losses in its receivable portfolio.

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When recorded, inventory reserves are intended to reduce the carrying value of inventories to their net realizable value.

We establish inventory reserves when conditions exist that indicate inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand for our products or market conditions.

We establish inventory reserves when conditions exist that indicate inventory may be in excess of anticipated

demand or is obsolete based upon assumptions about future demand for our products or market conditions.

We regularly evaluate our ability to realize the value of inventories based on a combination of factors including the following:

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Purchasing and usage alternatives are also explored to mitigate inventory exposure.

In 2023, we recorded a decrease of $ 1.5 million in inventory reserves.

In 2024, we recorded an increase of $ 0.6 million in inventory reserves.

At December 31, 2024 and 2023, inventories are stated net of inventory reserves of $ 5.8 million and $ 5.2 million, respectively.

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For those lease agreements that do not indicate the applicable discount rate, we use our incremental borrowing rate.

The value of the right-of-use asset is initially determined based on the net present value of the associated

liability, and is adjusted for deferred costs and possible impairments, if any.

The value of the right-of-use asset is initially determined based on the net present value of the associated liability, and is adjusted for deferred costs and possible impairments, if any.

We have made the following policy elections:

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Finance lease assets are recorded net of accumulated depreciation of $ 46.4 million and include $ 0.6 million of prepaid financing costs as of December 31, 2023.

All of our office locations support selling and servicing functions.

We also have a manufacturing facility in South Korea.

Lease expense, depreciation expense relating to finance leased assets and interest expense relating to our finance lease obligation recognized within our consolidated statement of operations for the twelve-month periods ended December

31, 2023, 2022 and 2021 are as follows:

Our operating lease office locations support local selling and servicing functions.

Our Axcelis Asia Operations Center facility in South Korea is used to manufacture our products for Asia-based customers.

We lease a logistics and flex manufacturing center in Beverly, Massachusetts to support our principal product manufacturing operations at our corporate headquarters.

December 31, 2024, 2023 and 2022 are as follows:

Classification

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Total lease cost

* Product / services, sales and marketing and general and administrative expense also includes short-term lease and variable lease costs of approximately $ 2.1 million, $ 1.8 million and $ 1.9 million for the years ended December 31, 2023, 2022 2021, respectively.

* Product / services, sales and marketing and general and administrative expense also includes short-term lease and variable lease costs of approximately $ 2.1 million, $ 2.1 million and $ 1.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Our corporate headquarters, shown below under finance leases, has an original lease term of 22 years .

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operating lease interest calculated using estimated corporate borrowing rate.

The table above does not include options to renew lease terms that are not reasonably certain of being exercised, nor leases signed but not yet commenced as of December 31, 2023.

The table above does not include options to renew lease terms that are not reasonably certain of being exercised as of December 31, 2024.

Lease term and discount rate

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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, 2023, we had a security deposit of $ 5.9 million related to this lease.

On April 5, 2023, we terminated the Senior Secured Credit Facilities Credit Agreement, as amended (the “Credit Agreement”), with Silicon Valley Bank that we entered into on July 31, 2020.

The Credit Agreement provided for a revolving credit facility covering borrowings and letters of credit in an aggregate principal amount not to exceed $ 40.0 million.

Our obligations under the Credit Agreement were secured by a security interest, senior to any current and future debts and to any security interest, in all of our rights, title, and interest in, to and under substantially all of our assets, subject to limited exceptions, including permitted liens.

Upon termination, these liens and all other obligations under the credit agreement, were released.

A letter of credit issued by Silicon Valley Bank, a division of First Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as Receiver for Silicon Valley Bridge Bank, N.A.) as successor to Silicon Valley Bank in the amount of $ 5.9 million securing our lease on our corporate headquarters was terminated on December 28, 2023.

The underlying cash collateral held at Silicon Valley Bank was released on December 28, 2023, in conjunction with the letter of credit termination.

A replacement, cash collateralized letter of credit was issued on December 14, 2023 with UBS Bank USA and is classified as long-term restricted cash on our balance sheet at December 31, 2023.

As of December 31, 2024, 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, 2024.

Employee Benefit Plans

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The 2012 Equity Plan, as amended, reserves 9.5 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 7.76 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.

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.

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In general, retiring employees will have one year after termination of employment to exercise vested options.

The Company settles stock option exercises with newly issued common shares.

The Company settles stock option exercises with newly issued shares of common stock.

Restricted stock units granted to employees during 2024 had both service-based vesting provisions and performance-based vesting provisions.

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Unvested restricted stock unit awards expire upon termination of service to the Company.

We settle restricted stock units upon vesting with newly issued common shares.

We settle restricted stock units upon vesting with newly issued shares of common stock.

No restricted stock was granted during the three year period ended December 31, 2024.

As of December 31, 2024, there were 0.5 million shares available for grant under the 2012 Equity Plan.

As of December 31, 2023, there were three thousand options outstanding and 0.5 million unvested restricted stock units outstanding under the 2012 Stock Plan.

As of December 31, 2024, there were no options outstanding and 0.5 million unvested restricted stock units outstanding under the 2012 Stock Plan.

(b) Employee Stock Purchase Plan

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As of December 31, 2024, there were approximately 0.9 million shares reserved for issuance and available for purchase under the 2020 ESPP, with 19,268 shares purchased on that date to be issued pending settlement.

Less than 0.1 million shares were purchased under the 2020 ESPP for each of the years ended December 31, 2023, 2022 and 2021.

For the purpose of valuing stock options with service conditions, we use the Black-Scholes option pricing model to calculate the grant-date fair value of an award.

Weighted-average expected volatility

Weighted-average expected term

Risk-free interest rate

Expected dividend yield

There were no stock option awards granted in 2023 and 2022.

0.1 million shares were purchased under the 2020 ESPP for the year ended December 31, 2024.

Less than 0.1 million shares were purchased under the 2020 ESPP for both of the years ended December 31, 2023 and 2022.

The fair value of the Company’s restricted stock units is calculated based upon the fair market value of the Company’s stock at the date of grant.

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The benefit of tax deductions in excess of recognized compensation cost is reported in the consolidated statements of cash flows as part of cash flows from operating activities.

Axcelis had tax deductions in excess of recognized compensation cost of $ 10.2 million for the year ended December 31, 2023 which resulted in a tax benefit of $ 2.2 million.

(e) Stock Option Awards

The following table summarizes the stock option activity for the year ended December 31, 2023:

(in thousands)

Outstanding at December 31, 2022

Outstanding at December 31, 2023

Exercisable at December 31, 2023

Options Vested at December 31, 2023

The total intrinsic value, which is defined as the difference between the market price at exercise and the price paid by the employee to exercise the options, for options exercised during the years ended December 31, 2023, 2022 and 2021 was $ 0.2 million, $ 5.4 million and $ 12.8 million, respectively.

For both the years ended December 31, 2023 and 2022, 750 stock options vested, respectively.

No stock options vested for the year ended December 31, 2021.

As of December 31, 2023, there was less than $ 0.1 million of unrecognized compensation cost related to non-vested stock options granted under the 2012 Equity Incentive Plan.

(f) Restricted Stock Units and Restricted Stock

For the year ended December 31, 2024, the tax deductions in excess of recognized compensation cost had no material impact.

(e) Restricted Stock Units and Restricted Stock

Restricted stock units represent the Company’s unfunded and unsecured promise to issue shares of the common stock at a future date, subject to the terms of the Award Agreement issued under the 2012 Equity Incentive Plan.

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Vesting activity above reflects shares vested before net share settlement.

As of December 31, 2023, there was $ 31.7 million of total forfeiture-adjusted unrecognized compensation cost related to non-vested restricted stock units

granted under the 2012 Equity Incentive Plan.

As of December 31, 2024, there was $ 37.0 million of total forfeiture-adjusted unrecognized compensation cost related to non-vested restricted stock units granted under the 2012 Equity Incentive Plan.

That cost is expected to be recognized over a weighted-average period of 2.6 years.

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Government Securities and Agency Investments)

Mark-to-market adjustment on forward exchange contracts

December 31, 2023

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(a) Purchase Commitments

We have contracts and purchase orders for inventory and other expenditures of $ 304.1 million at December 31, 2023, approximately $ 293.8 million are expected to occur in 2024.

We have contracts and purchase orders for inventory and other expenditures of $ 187.5 million at December 31, 2024, approximately $ 178.6 million of which are expected to occur in 2025.

(b) Litigation

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Substantially all sales are made directly by us to our customers located in the United States, Europe and Asia Pacific.

The Company’s 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 Company’s single operating segment for the years ended December 2024, 2023, and 2022:

Year ended December 31,

(in thousands)

Cost of revenue

Research and development

Sales and marketing

General and administrative

Total other income (expense)

Income tax provision

Segment Net Income

Reconciliation of profit or loss Adjustments and reconciling items

The above table includes depreciation expense and amortization expense of $ 15.8 million, $ 13.1 million and $ 11.6 million, for the years ended December 31, 2024, 2023, and 2022, respectively.

Our ion implantation systems product line includes high current, medium current and high energy implanters.

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State income taxes

Effect of change in valuation allowance

Foreign income tax rate differentials

Stock-based compensation

Internal revenue code section 162(m) limitation

Credit expirations

Credit generation

Discrete items, net

GILTI inclusion

Foreign-derived intangible income

Research and other tax credits

Stock-based compensation

Nondeductible compensation

Effect of change in valuation allowance

Unrecognized tax benefits

Income tax provision

Significant components of long-term deferred income taxes are as follows:

Deferred income taxes reflect the effect of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes.

The tax effects of the temporary differences were as follows:

Year ended December 31,

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Our deferred tax assets and liabilities are measured at the enacted tax rate expected to apply when these temporary differences are expected to be realized or settled.

At December 31, 2023, we had $ 53.4 million of net deferred tax assets worldwide relating to capitalized R&D costs and other temporary differences, which are available to reduce income taxes in future years.

The increase in our deferred tax assets from the prior year was primarily due to a $ 20.0 million increase relating to capitalized R&D costs.

At December 31, 2024, we maintained a $ 14.7 million valuation allowance in the U.S.

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This represents an increase of $ 3.8 million from the prior year.

At December 31, 2023, we had state net operating loss carryforwards of $ 0.1 million.

State net operating losses will expire between 2024 and 2034.

At December 31, 2023, we have foreign net operating loss carryforwards of $ 0.2 million.

The majority of our foreign net operating losses have an unlimited carryforward period.

At December 31, 2024, we had research and development and other tax credit carryforwards of $ 17.4 million.

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These credits can be used to reduce future federal and state income tax liabilities and expire principally between 2025 and 2036.

A provision of the Tax Cuts and Jobs Act (“TCJA”) took effect in 2022, creating a significant change to our treatment of research and experimental expenditures.

Historically, businesses had the option of deducting R&D expenses in the year incurred or capitalizing and amortizing the costs over five years.

The TCJA provision eliminates this option and requires R&D expenses associated with research conducted in the U.S.

to be capitalized and amortized over a five-year period.

For expenses associated with research outside of the United States, R&D expenses are capitalized and amortized over a 15-year period.

The Company has included the tax impact of capitalizing and amortizing these costs over the required periods in their tax provision for the year ended December 31, 2023.

We consider the undistributed earnings of our foreign subsidiaries as of December 31, 2024 to be indefinitely reinvested and, accordingly, no U.S.

income taxes have been provided thereon.

As of December 31, 2023, the amount of cash associated with indefinitely reinvested foreign earnings was approximately $ 11.8 million.

We have not, nor do we anticipate the need to, repatriate funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements.

As of December 31, 2024, there is no cash associated with indefinitely reinvested foreign earnings.

We did not, nor do we anticipate the need to, repatriate funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business.

We and our subsidiaries file income tax returns in the U.S.

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We believe that we have appropriate support for the income tax positions taken and to be taken on our tax returns and that our accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.

At December 31, 2023, we had unrecognized tax benefits related to uncertain tax positions of $ 11.9 million, $ 8.3 million of which is recorded as a long-term liability, and the remainder of which reduced the Company’s state deferred tax assets and the offsetting valuation allowance.

At December 31, 2024, we had unrecognized tax benefits related to uncertain tax positions of $ 12.5 million, $ 9.0 million of which is recorded as a long-term liability, and the remainder of which reduced the Company’s state deferred tax

assets and the offsetting valuation allowance.

We recognized $ 0.7 million in interest and penalty expenses for the year ended December 31, 2024 relating to these uncertain tax positions.

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Decreases in unrecognized tax benefits related to settlements with tax authorities

Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitation

Increases in unrecognized tax benefits as a result of tax positions taken during the current period

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Incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed with the Commission on May 11, 2022 .

Certificate of Amendment to the Restated Certificate of Incorporation of the Company filed May 9, 2024.

Incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed with the Commission on May 9, 2024 .

Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934.

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Axcelis Technologies, Inc.

2012 Equity Incentive Plan, as approved by stockholders on May 14, 2019 and as amended by the Board of Directors on August 11, 2022.

Incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q for the quarter ended September 30, 2022 filed with the Commission on November 3, 2022 .

2012 Equity Incentive Plan, as amended by the Board of Directors on November 13, 2024.

Filed herewith .

Axcelis Management Incentive Plan, as amended and restated by the Compensation Committee of the Board of Directors on February 11, 2010.

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Incorporated by reference to Exhibit 10.1 of the Company’s report on Form 8-K filed with the Commission on April 18, 2023 .

Form of Executive Separation Pay Agreement between the Company and each of its executive officers, including Lynnette C.

Fallon, Greg Redinbo, Douglas Lawson, Gerald M.

Blumenstock, Christopher Tatnall and James G.

Coogan, having dates from May 15, 2019 to September 29, 2023.

Form of Executive Separation Pay Agreement between the Company and each of its executive officers other than Russell J.

Low, including Gregory F.

Redinbo, Gerald M.

Blumenstock, Christopher J.

Tatnall, James G.

Coogan and Eileen J.

Evans, having dates from September 6, 2022 to December 12, 2024.

Incorporated by reference to Exhibit 10.2 of the Company’s Form 10-Q for the quarter ended June 30, 2019 filed with the Commission on August 7, 2019 .

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Incorporated by reference to Exhibit 10.24 of the Company’s Form 10-K for the year ended December 31, 2014 filed with the Commission on March 11, 2015.

Executive Compensation Clawback Policy, as adopted by the Board of Directors on August 10, 2023.

Filed herewith .

Ethical Business Conduct at Axcelis, revised through January 2003.

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2023 Insider Trading Policy, as adopted by the Board of Directors on August 10, 2023.

Filed herewith .

Incorporated by reference to Exhibit 19.1 of the Company’s report on Form 10-K filed with the Commission on February 23, 2024 .

Subsidiaries of the Company.

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Filed herewith.

Executive Compensation Clawback Policy, as adopted by the Board of Directors on August 10, 2023.

Incorporated by reference to Exhibit 10.14 of the Company’s Form 10-K filed with the Commission on February 23, 2024 .

The following materials from the Company’s Form 10-K for the year ended December 31, 2024, formatted in eXtensible Business Reporting Language (XBRL):

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AXCELIS TECHNOLOGIES, INC.

/s/ Russell Low

/s/ Russell J.

President and Chief Executive Officer

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February 27, 2025

February 23, 2024

/s/ Joseph P.

/s/ Gregory B.

February 27, 2025

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February 27, 2025

/s/ Necip Sayiner

February 27, 2025

Necip Sayiner

/s/ Thomas St.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures