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To: Cary Salsberg who wrote (1284)	11/2/1997 4:37:00 PM
From: Sam Citron	Read Replies (1) \| Respond to of 2946

Cary, From ILC 10K: PRODUCTS - MERCURY XENON SHORT ARC LAMPS ("STEPPER LAMPS") - ---------------------------------------------------------- In fiscal 1995, the Company began commercial shipment of a new product, the mercury xenon short arc lamp ("stepper lamp"), which is used to expose patterns during the fabrication of semiconductor wafers. ILC is currently shipping a complete line of 1,000 and 2,000 watt stepper lamps. Each lamp, fully utilized, lasts for approximately 1-2 months. Accordingly, the Company expects that the product will generate a high repeat business. The market for stepper lamps is currently dominated by a Japanese competitor of the Company. ILC has invested heavily in ensuring the quality of its stepper lamps since end users perceive substantial risk in switching suppliers. In addition, ILC's stepper lamp does not require the end user to modify any of its maintenance procedures. The Company has worked extensively over the last four years with major U.S. end users of stepper equipment to qualify its stepper lamps at the major semi-conductor fabrication facilities. 2 <PAGE> PRODUCTS - MERCURY XENON SHORT ARC LAMPS ("STEPPER LAMPS") (CONTINUED) - ---------------------------------------------------------------------- During fiscal 1995, ILC established itself as the only qualified United States supplier of short arc stepper lamps used in semiconductor chip manufacturing equipment, a market that has been dominated by foreign manufacturers. In 1996, ILC's lamps were qualified by a number of key customers including IBM, Intel, Integrated Solutions, Inc. (ISI), and others. The failure of the Company's stepper lamp to achieve or sustain market acceptance would have a material adverse effect on the Company's results of operations. SC