SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-K/A
                                (Amendment No. 2)


|X| Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended June 30, 2002 or

|_| Transition report pursuant to Section 13 of 15(d) of the Securities Exchange
Act of 1934 for the transition period from ________________ to
__________________.

Commission file number: 0-27122

                             ADEPT TECHNOLOGY, INC.
             (Exact name of registrant as specified in its charter)



           California                                      94-2900635
(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                     Identification Number)

150 Rose Orchard Way, San Jose, California                   95134
 (Address of principal executive office)                   (zip code)

       Registrant's telephone number, including area code: (408) 432-0888

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



                                                 Name of each exchange
        Title of each class                      on which registered
        -------------------                      -------------------
              None                                       None

           Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, no par value
                                (Title of Class)

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.
                                 |X| Yes |_| No

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  the  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. |X|

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant,  based upon the closing  sale price of the common stock on September
9, 2002 as reported on the Nasdaq National Market, was approximately $7,417,948.
Shares of common  stock held by each officer and director and by each person who
controls 5% or more of the outstanding  voting power of the registrant have been
excluded in that such persons may be deemed to be affiliates. This determination
of affiliate  status is not  necessarily  a conclusive  determination  for other
purposes.

As of  September  9, 2002,  registrant  had  14,780,720  shares of common  stock
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  definitive  proxy  statement for the 2002 Annual  Meeting to be
held on November 15, 2002 are incorporated by reference into Part III hereof.


<PAGE>

                                     PART I

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This  Annual   Report  on  Form  10-K   contains   forward-looking   statements.
Forward-looking  statements are contained  principally in the sections  entitled
"Business,"  "Risk  Factors"  and  "Management's   Discussion  and  Analysis  of
Financial  Condition and Results of Operations."  These statements involve known
and unknown  risks,  uncertainties  and other factors which may cause our actual
results,  performance or achievements to be materially different from any future
results,   performances   or   achievements   expressed   or   implied   by  the
forward-looking  statements.  Forward-looking  statements  include,  but are not
limited to, statements about:

o    the current economic environment affecting us and the markets we serve;

o    sources of revenues and anticipated  revenues,  including the  contribution
     from the growth of new products and markets;

o    marketing and commercialization of our products under development;

o    our  estimates  regarding  our  capital  requirements  and  our  needs  for
     additional financing;

o    our ability to attract customers and the market acceptance of our products;

o    our ability to establish relationships with suppliers,  systems integrators
     and OEMs for the supply and distribution of our products;

o    plans  for  future   acquisitions   and  for  the   integration  of  recent
     acquisitions;

o    plans for future  products and services  and for  enhancements  of existing
     products and services; and

o    our intellectual property.

In some cases,  you can  identify  forward-looking  statements  by terms such as
"may,"  "intend,"   "might,"  "will,"  "should,"   "could,"  "would,"  "expect,"
"believe," "estimate,"  "predict,"  "potential," or the negative of these terms,
and similar expressions intended to identify forward-looking  statements.  These
statements reflect our current views with respect to future events and are based
on   assumptions   and   subject  to  risks  and   uncertainties.   Given  these
uncertainties,  you should not place  undue  reliance  on these  forward-looking
statements. We discuss many of these risks in this Annual Report on Form 10-K in
greater detail under the heading "Factors  Affecting Future Operating  Results."
Also, these  forward-looking  statements represent our estimates and assumptions
only as of the date of this  Annual  Report on Form 10-K,  and we  undertake  no
obligation to publicly update or revise these forward-looking statements.

In this  report,  unless the context  indicates  otherwise,  the terms " Adept,"
"we," "us," and "our" refer to Adept Technology, Inc., a California corporation,
and its subsidiaries.

This report  contains  trademarks and trade names of Adept and other  companies.
Adept has 167  trademarks of which 14 are registered  trademarks,  some of which
include the Adept Technology logo, HexSight, MetaControls, and FireBlox.

ITEM 1. BUSINESS

Our Company

We provide intelligent  production automation solutions to our customers in many
industries   including   the  food,   communications,   automotive,   appliance,
semiconductor,   photonics,  and  life  sciences  industries.   We  utilize  our
comprehensive  product  portfolio of high  precision  mechanical  components and
application  development  software to deliver automation solutions that meet our
customer's  increasingly  complex  manufacturing  requirements.   We  offer


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our  customers a  comprehensive  and tailored  automation  solution that we call
Rapid Deployment  Automation that reduces the time and cost to design,  engineer
and launch  products  into  high-volume  production.  Other  benefits of our RDA
solution  include  increased   manufacturing   flexibility  for  future  product
generations,  less customized  engineering and reduced  dependence on production
engineers.  We intend to continue to enhance our RDA  capabilities  by providing
differentiated,  value added integrated  systems to further  penetrate  selected
emerging markets. Our products currently include system design software, process
knowledge  software,  real-time  vision  and  motion  controls,  machine  vision
systems,  robot mechanisms,  precision  solutions and other flexible  automation
equipment.  In  recent  years,  we have  expanded  our robot  product  lines and
developed advanced software and sensing technologies that have enabled robots to
perform a wider range of  functions.  We have  recently  introduced  new systems
products, including our 1394 FireWire based distributed control architecture. As
a result  of our  introduction  and  marketing  of these new  systems,  sales of
systems may increase relative to our component sales in future periods,  causing
a change  in the  nature  and  composition  of our  revenues  over  time.  Also,
international sales comprise  approximately 40% to 60% of our total revenues for
any given quarter.

We  market  and  sell our  products  worldwide  through  more  than  250  system
integrators,  our direct sales force and OEMs.  System  integrators and OEMs add
application-specific  hardware  and  software  to our  products,  enabling us to
provide  solutions  to  a  diversified   industry  base,   including  the  food,
communications, electronics, automotive, appliance, semiconductor, photonics and
life sciences  industries.  Due to a worldwide  slowdown in the  communications,
consumer  electronics,  semiconductor and precision  assembly  markets,  our net
revenues  have been at extremely  low levels during this fiscal year compared to
previous years.

We were incorporated in California in 1983. Our principal  executive offices are
located at 150 Rose Orchard  Way,  San Jose,  California  95134.  Our  telephone
number at that address is (408) 432-0888.

Recent Developments

On October  29,  2001,  we  entered  into an  automation  alliance  for  optical
component and module manufacturing with JDS Uniphase Corporation.  This alliance
enabled Adept to be JDS Uniphase's  development  partner for optical  automation
processes and solutions, and JDS Uniphase made an investment of $25.0 million in
Adept  redeemable  convertible  preferred  stock as described  under the heading
"Liquidity and Capital Resources."

In  response to the  current  market  environment,  we  implemented  a worldwide
restructuring  program  during  fiscal 2002,  which was  implemented  in several
phases,  to realign our  businesses to the changes in our industry and decreases
in capital spending  throughout the industries we serve. In connection with this
program,  we took actions  including:  restructuring of  non-strategic  business
assets;  idling of leased facilities;  and workforce reductions and compensation
adjustments.  From the  beginning  of the first  quarter  through the end of the
third quarter, we recorded $17.7 million in restructuring  charges.  The charges
consist of $9.2 million in restructuring of non-strategic  business assets, $6.8
million in costs for the consolidation of excess facilities, and $1.7 million in
workforce reduction and compensation costs. In response to continued weakness in
demand,  we announced in July, a  restructuring  for the first quarter of fiscal
2003.  Adept intends to reduce its global  workforce by 24% in the first quarter
of fiscal  2003 and  implement  other cost saving  measures to reduce  operating
expenses.

In August 2002 we acquired Meta Control  Technologies,  Inc.  (Meta), a Delaware
corporation.  Meta develops,  designs,  manufactures  and markets  products that
automate a wide  range of  manufacturing  processes  requiring  precise  motion,
accurate  machine  vision  and  rapid  process  instrumentation.   Some  of  the
applications making use of our technology include  semiconductor and electronics
assembly,  micro-mechanical and fiber optic assembly,  laboratory automation and
discrete  process  automation.  Under the terms of the agreement,  we will issue
730,000 shares of our common stock to the shareholders of Meta. Additionally,  a
shareholder  of Meta and certain of its  affiliates  will receive  discounts and
royalties   based  on  certain   product   shipments   through  August  2008  in
consideration  for its shares of Meta stock. We do not believe this  acquisition
will have a material effect on our results of operation or financial  condition.
See "Liquidity and Capital  Resources" and Note 14 of our Notes to  Consolidated
Financial  Statements  included in this Annual Report on Form 10-K for a further
description.

In September 2002, we engaged  Broadview  International,  an investment bank, to
assist us in evaluating our current  business and strategic  focus as well as to
assess  possible  partners that would be  synergistic  when combined with Adept.

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         PRODUCTS AND TECHNOLOGY COMPRISING RAPID DEPLOYMENT AUTOMATION

Overview

Our  vision of making  automation  easy to install  is called  Rapid  Deployment
Automation,  or RDA. We have  developed a product  strategy to enable RDA.  This
product strategy includes  simulation tools to help design  automation  systems,
application  software packages that contain automation  process knowledge,  very
powerful  software and hardware for  real-time  distributed  motion  control and
integrated   sensing,   and  a  family  of  mechanisms  that  address  different
applications.

                                [GRAPHIC OMITTED]

RDA SYSTEM DESIGN

Production PILOT

Adept employs  simulation tools to help system integrators and end users to both
design automation  systems and evaluate product designs for ease of manufacture.
Adept's  simulation  products  allow machines to be modeled with 3D graphics and
then  animated  in  response to software  control  programs.  Mechanisms  can be
defined  graphically;  and the mathematics  necessary to animate them,  known as
kinematic models, are generated  automatically.  Dynamics of mechanisms can also
be  modeled,  which  enables  machine  cycle times to be  accurately  predicted.
Adept's  simulation  products can either create new computer  aided design (CAD)
geometry for simulations,  import CAD models from standard libraries of machines
and peripheral devices, or import models directly from common CAD systems.

Adept Digital Workcell

Adept  Digital  Workcell  allows  engineers  to program a workcell  with  actual
production  software without the physical robot or cell hardware.  Adept Digital
Workcell increases  productivity by allowing the user to anticipate cycle times,
logic errors,  location  errors,  collision errors and motor overload errors far
earlier in the development  process. In addition,  Adept Digital Workcell allows
users  to  quickly  generate  alternative  conceptual  layouts  and  cycle  time
estimates for project proposals.

RDA PROCESS KNOWLEDGE

Adept Assembly Information Manager (AIM)

Assembly  Information  Manager,  or AIM software,  simplifies  the  integration,
programming and operation of automation  workcells and lines.  AIM  accomplishes
this goal by  providing  a formal  method  for  capturing  application  specific
process   knowledge  and  then  allowing  users,  even  those  lacking  advanced
programming  expertise to use this  embedded  knowledge to accomplish a specific
task.

AIM  simplifies  the  implementation  of  intelligent  automation  workcells  by
combining  a point  and  click  graphical  user  interface  with  an  icon-based
programming method that does not require advanced computer  programming  skills.
This method combines  task-level  statements with a high performance,  real-time
database and a structure for representing process knowledge.

The AIM task  level  statements  allow the  developer  to specify at a very high
level what  operations  the workcell is to perform,  such as "insert a component
into a socket  using  vision to correct  for  irregularities."  This  command is
automatically  coupled  with  data  contained  in the  real-time  database  that
specifies the physical aspects of the workcell,  such as the location of a part.
The  information  contained in the databases can be created or downloaded from a
computer or simulation system at any time. Finally, the AIM system automatically
invokes the  routines  that  contain the process  knowledge  and dictate how the
specified  operation  will be  performed.  In this way, an AIM  workcell  can be
programmed by a person who understands as few as ten process actions rather than
hundreds of  programming  instructions  or  thousands  of lines of  conventional
software code.


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We sell several  application  specific  versions of AIM,  including  MotionWare,
which  addresses  motion  applications  such as  those  requiring  sophisticated
conveyor  tracking,  and VisionWare,  which simplifies the use of vision in both
guidance and  inspection  applications,  as well as other packages which address
dispensing,  packaging, flexible part feeding,  semiconductor wafer handling and
precision  photonics  bonding  operations.  In  addition,  end users and  system
integrators,  many of whom have  developed  their  own AIM  application-specific
packages,  can add process  knowledge.  AIM can be accessed  via the Windows 98,
2000, NT, and XP environments. AIM programs are written in the V+ language.

RDA REAL-TIME CONTROL

AdeptWindows

The  AdeptWindows  software  application  suite provides a PC user interface for
Adept   controllers  plus  additional   capabilities  that  allow  customers  to
effectively  integrate their  Microsoft  Windows based PC with Adept's robots or
AdeptVision systems. In addition to the PC user interface, the suite of programs
includes an off-line  program editor for creating robot and vision  programs,  a
TFTP server for  booting the  controller  over an  ethernet  network,  and a DDE
server that allows customers to communicate with other DDE-capable  applications
such as Microsoft Excel.

Adept DeskTop

The Adept  DeskTop is a new  Microsoft  Windows  application  that  provides  an
easy-to-use software  development  environment for Adept controllers and further
enhances the ability to interface a PC to an Adept  controller.  The development
environment  is  built  on top of a  library  of  ActiveX  controls  that can be
accessed  directly by C, C++,  or Visual  Basic PC  applications  to monitor and
control an Adept robot, motion control, or vision system in real time.

Adept AWC Controllers

Our controller products are currently based on the VersaModule Eurocard, or VME,
bus  architecture   standard,   but  are  migrating  to  a  distributed  control
architecture  which depends on high-speed  networks such as IEEE 1394  FireWire,
Ethernet, and DeviceNet, to link processors and sensors which may be distributed
around a  workcell.  A large array of  controller  configurations  are  possible
depending on the features  selected by the  customer.  Our VME  controllers  are
configured in four, five, or ten slot chassis.  All controllers include a system
processor module. Additional functionality can be incorporated by adding printed
circuit boards and additional software. For example,  motion control is added by
inserting  a motion  control  board.  Printed  circuit  boards  can be added for
machine vision and additional  communication  inputs and outputs. The controller
products  are sold  independently  for  machine  control and  inspection  vision
applications and are also sold as a component of the robot systems. The heart of
our VME machine  controllers is the  AdeptWindows  Controller  board,  or AWC, a
single  slot  central   processing  unit  board  based  on  Motorola   68040/060
processors.  All AWC boards include solid-state,  mass storage,  direct ethernet
connectivity,  DeviceNet  industrial data network connectivity and international
safety circuitry.

Our  AWC  controller  offers  plug-and-play  integration  of  personal  computer
hardware and software for users of the Windows platform.  Specifically, this new
technology  allows  customers  to do  all  development  work,  including  vision
applications, on personal computers using Windows 98, NT, 2000, and XP operating
systems. This open architecture product allows customers to combine the features
of our AIM and V+ software products with other personal  computer-based software
products using industry  standard software tools such as Active X, Visual Basic,
and Visual C++. Finally, all of our controller products support the same Windows
based  graphical user interface and can execute the same  application  programs,
thereby  allowing  software  development  investments  to be leveraged  across a
number of applications.

The  controller  includes  a number  of  technologically  advanced  capabilities
designed  specifically  to address  the  intelligent  automation  market.  These
capabilities  include  special  application  specific  integrated  circuits  for
controlling  direct-drive motors,  reading encoders, or sensors, and controlling
power up sequencing of complex high power systems.  The controller also includes
safety  circuits  that  meet  domestic  and  international   specifications  and
technology to protect the controller from voltage spikes,  electrical  noise and
power  brownouts.  Additionally the controller  features high wattage  switching
power amplifiers, and networking circuitry for local area network and industrial
data networks.

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Distributed Control Architecture

Adept invested heavily in developing an industrially  robust network technology.
We have implemented Adept SmartServo(TM),  a digital servo network for our robot
and  motion  control  products.  Adept  SmartServo  is  based  on the  IEEE-1394
standard,  also known as FireWire(R).  Initial products were introduced in 1999,
with the announcement of Adept SmartModules. The product line has since grown to
include a family of  controllers,  amplifiers,  motors  and  SmartServo  enabled
mechanisms  that replace most of the traditional  control and power  electronics
architecture with a digital servo network.

The impact to the product line has been sweeping.  The traditional panel mounted
power  amplifiers and their  attendant rack chassis and power supply,  have been
replaced by SmartAmps.  These  self-contained  single channel power  amplifiers,
with an on-board digital signal processor (DSP), are mounted directly on (or in)
the mechanism.  The Adept  SmartServo  architecture is a distributed  processing
network  architecture,  where the controller's CPU runs the trajectory  planner,
while the servo loop is closed in the SmartAmp.  This processing scheme delivers
high performance and flexibility,  but also demands a highly  deterministic time
based network.

In traditional robot architecture,  there are heavy  multi-conductor  cables and
connections  between the  controller's  motion control board and the power amps,
and  between  the  power  amps and the robot  mechanism.  These  cables  and the
traditional  motion  control /  interface  board are now  replaced  by the Adept
SmartServo network and its twisted pair physical layer.

In addition,  the Adept SmartServo  digital servo network also becomes the means
to add  controller  features.  In a  traditional  architecture,  the  controller
included expansion slots and their attendant power supply capacity,  connectors,
rack space and increased  footprint.  Now,  additional  features such as digital
I/O, general purpose motion control and additional  SmartServo mechanisms can be
added by simply connecting the module directly to the network.

Adept SmartController

Our newest  controller,  the Adept  SmartController is designed to work with the
Adept SmartServo(TM)  distributed servo control network.  SmartControllers offer
reduced  costs,  the  smallest  form  factor  in the  industry,  and  simplified
installation,  wiring,  and support  costs  while  maintaining  compliance  with
domestic and international safety  specifications.  The Adept SmartController CS
is the first member of a new family of high performance  distributed  motion and
vision controllers. The SmartController's network control architecture leverages
Adept's SmartAmp  technology,  which increases system scalability and modularity
while dramatically  reducing  controller size and cabling up to 70% from Adept's
industry  leading  MV  controller  family.  The  SmartController's   distributed
processing  architecture  improves  performance  by  freeing  up 30% more of the
processor's  resources.  The Adept SmartController CS comes fully configured for
standard applications that do not require vision or conveyor belt tracking.  The
Adept  SmartController  CX  includes  an  expansion  slot for  AdeptVision  sAVI
together with additional communication ports, conveyor belt tracking support and
more  CPU  capacity.  All  Adept  SmartControllers  feature  several  high-speed
communication interfaces, including Fast Ethernet and SmartServo.  SmartServo is
Adept's  new IEEE  1394-FireWire  based  communication  interface,  which is the
backbone  of  Adept's  new   distributed   controls   architecture.   All  Adept
SmartControllers  offer known  scalability  and  support for Adept's  SmartServo
compatible digital I/O and general motion expansion modules.

Adept V+

Our V+ real-time  programming  language  allows  software  developers  to create
automation  software  systems  and  is  the  key  enabling  technology  for  our
intelligent  automation  approach.   This  programming  environment  provides  a
high-level  language  coupled with a multitasking  operating system and built-in
capability for integrating robots, machine vision, sensors, workcell control and
general   communications.   These   capabilities   enable  the   development  of
sophisticated  application  software  that  can  adaptively  control  mechanical
systems  based upon  real-time  sensory input while  simultaneously  maintaining
communication with other factory equipment.

V+ offers the user approximately 300 instructions for programming an intelligent
automation  workcell.  It includes a


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trajectory generator and continuous path planner,  which compute the path of the
robot's tool in real-time  based upon  predefined data or sensory input. V+ also
includes a number of network communication  facilities and supports a variety of
standard  communication  protocols.  In  addition,  this  software  includes  an
operating system specifically designed for factory automation and robot control.
This  operating  system allows V+ to execute  dozens of tasks  concurrently  and
permits  control to pass between  tasks in a predictable  manner,  often several
times per  millisecond.  The V+ operating system also allows the installation of
additional  processors into the controller and automatically  reassigns tasks to
optimize  overall system  performance,  providing a key scalability  feature not
found  in other  controllers.  The  primary  development  environment  for V+ is
Windows  98, NT, 2000 and XP based and allows the  customer to utilize  industry
standard personal computers.

Adept Vision

AdeptVision  is a line of  machine  vision  products  that are  used  for  robot
guidance and inspection applications. For guidance applications,  AdeptVision is
added into the controller by inserting a printed  circuit board and enabling the
vision system  software.  The  integration  of our controller and vision systems
software enables high speed vision  applications  such as vision  servoing.  For
inspection  applications  such as  gauging  and  dimensioning,  the  AdeptVision
product  is  sold as an  integrated  inspection  vision  system  comprised  of a
controller with the vision board and software.

AdeptVision  features a unique  tool for robot and machine  guidance,  the Adept
ObjectFinder 2000.  ObjectFinder  quickly and robustly recognizes parts that are
randomly  positioned and have an unknown  orientation ranging up to 360 degrees.
Our vision  servoing  ability is critical for  precision  processes  such as the
assembly of electronic or fiber optic  components.  Our machine vision  software
can also measure part dimensions for inspection purposes.  Machine vision can be
used to acquire parts from stationary  locations or from conveyors.  Cameras can
be fixed in the workcell or attached to a robot.

We also offer  HexSight,  a  shrink-wrapped  library of machine vision  software
tools for OEMs and dedicated machine vision  integrators.  HexSight includes the
ObjectFinder locator tool in addition to other general purpose image enhancement
and analysis algorithms. These tools run directly in a PC environment and can be
adapted to run in an OEM's custom software solution.

RDA MECHANICAL COMPONENTS

We  provide  a large  number  of  automation  mechanisms  to  address  different
application  needs.  All of these  mechanisms are controlled by the software and
hardware control  architecture  described below.  This broad product line allows
system  integrators  and end  users to  develop  automation  solutions  for many
industries and applications.

Robot Mechanisms

We offer two floor standing Selective  Compliance  Assembly Robot Arm, or SCARA,
style robot mechanisms called the AdeptOne-XL and the AdeptThree-XL,  as well as
two table top robot mechanisms  called the Adept Cobra 600 and 800, all of which
are designed for assembly and material  handling  tasks.  SCARA robots utilize a
combination of rotary and linear joints for high speed, high precision  material
handling,   assembly  and  packaging.   The  Adept-XL  robots  use  direct-drive
technology. Direct-drive technology eliminates gears and linkages from the drive
train  of the  mechanism,  thereby  significantly  increasing  robot  speed  and
precision and improving the robot's product life,  reliability and accuracy. The
Adept Cobra series  robots are  light-duty  SCARA  mechanisms  that can be table
mounted and offer an efficient range of motions in limited space.

We also offer a family of linear modules called Adept SmartModules. These single
axis devices can be coupled  together by the user to form  application  specific
custom robot mechanisms ranging from 2 to 4 axes. Adept SmartModules are powered
by Adept  SmartAmps,  which  utilize the industry  standard  IEEE 1394  FireWire
protocol  to  combine  motion  control  signals  and  input/output  signals  for
transmission over a single high-speed cable. Adept SmartModules lowers costs and
installation  time  increasing  modularity  and  reducing the amount of software
programming  and  cabling  required  in a  workcell,  or a robotic  system  that
performs  a  specific  automation  function.  SmartModules  are also  offered in
single-axis  standalone  versions,  which can  operate  without  any  additional
controllers, saving cost and space for simple applications.


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We  also  offer a line of  semiconductor  wafer  handling  robots.  These  wafer
handling robots are supplied by Samsung  Corporation.  The AdeptVicron series is
designed  for  semiconductor  wafer  handling  applications  and consists of two
models:  the  AdeptVicron  300S (single  arm) and 310D (dual arm) models,  which
handle up to 300mm wafers.

In 2001 we expanded our product  line to include a family of 6 axis  articulated
mechanisms,  which are manufactured for us by Yaskawa Corporation.  The AdeptSix
300 is a tabletop robot well suited for precision assembly and material handling
applications.  The  AdeptSix  600 is a larger  floor  mount  robot for  material
handling and packaging applications.

High Precision Micro Positioners

Adept  NanoStages are a series of advanced  nanometer  positioners for alignment
applications  in fiber optic  assembly  and other high  precision  applications.
These devices  increase the  resolution  of our  mechanisms by a factor of 1000,
from 25 microns for our standard  robots to 25 nanometers for our standard micro
positioners.  To  demonstrate  the  precision  of the  resolution  for our micro
positioners,  the period at the end of the preceding  sentence is  approximately
225 microns, or 225,000  nanometers,  in size. Our micro positioners are capable
of resolutions  nearly 9,000 times smaller than the size of that period.  Unlike
many micro positioners, which were developed for laboratory environments,  these
products are durable, rigid,  production-ready  devices intended for integration
into continuous production factory environments. We offer various configurations
of  Adept  NanoStages  ranging  from one to six axes of  motion  for disc  drive
assembly,  semiconductor OEM applications, fiber optic component assembly, fiber
alignment, and laser welding.

Programmable Parts Feeder

Part feeding has historically been accomplished by designing custom devices that
could only accommodate a single part or class of parts. The Adept FlexFeeder 250
can be rapidly  reconfigured  through software to accommodate new products and a
wide variety of parts ranging from simple rectangular  objects to complex molded
or machined parts, thus preserving the flexibility of the workcell or production
line. The Adept  FlexFeeder 250 integrates  machine vision,  software and motion
control  technology with a simple  mechanical  device for separating  parts from
bulk bins. The Adept  FlexFeeder 250  recirculates the parts and separates them,
relying on vision to identify individual parts.

RDA PRECISION SOLUTIONS

In response to end customer and system  integrator needs, we now offer a growing
family  of  process  ready  platforms  for the  semiconductor,  electronics  and
photonics markets. These platform offerings include Flexible Front End and Wafer
Loader  systems  for the  semiconductor  tool  market,  Adept  NanoCell  for the
photonics  assembly  market,  Adept  ChadIQ for  electronics  assembly and Adept
NanoBonder  EBS for  epoxy  bonding  of  photonics  components.  These  platform
offerings integrate all automation  components on a single control architecture,
with a unified  graphical user  interface.  Typical  systems  include a material
handling mechanism such as SmartModules or AdeptSix robot, AdeptWindows or Adept
SmartController,  AdeptVision, AIM software and an integrated PC user interface.
Application specific components range from NanoStage  positioner,  semiconductor
tool loadports, and additional control and network interfaces.

We offer  semiconductor wafer handling solutions for both front-end and back-end
process original equipment manufacturers,  or OEMs. These offerings include both
standard and customized  products for contamination  control including  robotics
for wafer handling and  transport.  The Adept Flexible Front End Systems and the
Adept Wafer Loader  Systems,  including the Adept FFE 200 and the Adept FFE 300,
combine wafer sorting and handling,  wafer  cassette load ports,  wafer aligners
and mappers, and wafer ID functions into one compact integrated system; reducing
cycle times, process complexity and cost. Combining value-added wafer operations
such as wafer orientation, optical character recognition, or OCR, sort and merge
into a compact  front-end  system,  eliminates the need for wafer sorters in the
factory.

Our OEMs, system  integrators and end users can quickly configure these standard
platforms to add specific manufacturing processes. Platform products represent a
further  extension of our RDA strategy.  For industries  where high volumes of a
similar basic machine are needed, an integrated platform eliminates the time and
cost of  designing


                                       7
<PAGE>
equipment frames,  assembling and validating  control and mechanism products and
developing and debugging generic control software.

Financial  information regarding our three business segments is included in Note
12 of the Notes to  Consolidated  Financial  Statements  included in this Annual
Report on Form 10-K.

Customers

We sell our products to system integrators, end users and OEMs. End users of our
products  include  a  broad  range  of  manufacturing  companies  in  the  food,
communications,   automotive,  appliance,  semiconductor,  photonics,  and  life
sciences industries.  These companies use our products to perform a wide variety
of functions in assembly,  material handling and precision process applications,
including  mechanical assembly,  printed circuit board assembly,  dispensing and
inspection.  No customer  accounted  for more than 10% of our revenues in any of
the past three years.

SALES, DISTRIBUTION AND MARKETING

Sales and Distribution

We market our products  through system  integrators,  our direct sales force and
OEMs.

System Integrators. We ship a substantial portion of our products through system
integrators, and we view our relationships with these organizations as important
to  our  success.  We  have  established  relationships  with  over  250  system
integrators  worldwide that provide  expertise and process  knowledge for a wide
range  of  specific  applications.   In  the  United  States  and  Europe  these
relationships  are generally  mutually  nonexclusive and not limited to specific
geographical  territories.  In  certain  other  international  markets,  Adept's
integrator  relationships  may  include  limited  exclusive  arrangements  for a
limited  geographical  territory  in which the  integrator  markets and supports
Adept  functions  directly.  Generally a system  integrator  can  purchase  both
standard and  non-standard  Adept  solutions  and  components  as opposed to OEM
arrangements  where generally one standard component or solution is purchased in
higher volumes.

Direct  Sales  Force.  We employ a direct  sales force  which  directs its sales
efforts to end users to communicate the capabilities of our products and support
services and obtain up-to-date  information  regarding market requirements.  Our
sales force possesses expertise in automation solutions and advises end users on
alternative production line designs,  special application techniques,  equipment
sources and system  integrator  selection.  Our sales force works  closely  with
system  integrators  and OEMs to integrate our product line into their  systems,
provide  sales  leads to  certain  system  integrators  and  obtain  intelligent
automation  system quotes from system  integrators for end users. As of June 30,
2002, our North American sales organization included approximately 19 employees.
We have six North American  sales and customer  support  offices  located in San
Jose, California;  Southbury,  Connecticut;  Livermore,  California;  Charlotte,
North Carolina;  Cincinnati,  Ohio; and Dallas,  Texas. As of June 30, 2002, our
international  sales organization  included  approximately nine persons covering
Europe, Singapore, and South Korea.

Some of our larger  manufacturing end user customers,  to whom we sell directly,
have in-house  engineering  departments  that are comparable to a captive system
integrator.   These  end  user  customers   establish  a  corporate   integrator
relationship  with  us  offering  benefits  similar  to  those  provided  to our
integrator  distribution  channel,  however we may in some cases form  strategic
alliances for certain potentially high volume market  opportunities with greater
benefits  and  restrictions  to the  customer  than  exist in system  integrator
arrangements.

OEMs. Our OEM customers  typically purchase one standard product  configuration,
which the OEM integrates with  additional  hardware and software and sells under
the OEM's label to other resellers and end users.  Unlike our system  integrator
channel,  OEMs are responsible for all marketing,  sales,  customer  support and
maintaining the associated spare parts to service the end users of the product.

Marketing

Our marketing organization, which consisted of 22 employees as of June 30, 2002,
supports  our system  integrators,  direct  sales force and OEM  customers  in a
variety of ways.  Our  product  management  group  works with end users,

                                       8
<PAGE>

system integrators, corporate integrators and our sales engineers to continually
gather input on product performance and end user needs. This information is used
to enhance existing products and to develop new products. Our marketing programs
group generates and qualifies new business through industry trade shows, various
direct  marketing  programs  such  as  direct  mail  and  telemarketing,  public
relations efforts,  internet marketing and advertising in industry  periodicals.
This marketing team is responsible for tracking  customers and prospects through
our marketing database. Our marketing group also publishes a document called the
MV Partner  catalog,  which lists software and hardware  components that we have
certified  as  compatible  with our product  line.  We also expend  considerable
effort on the development of thorough  technical  documentation and user manuals
for  our  product  line,  and we  view  well-designed  manuals  as  critical  to
simplifying the installation, programming, use and maintenance of our products.

Services and Support

Our  service and support  organization,  which  consisted  of  approximately  76
full-time  employees as of June 30, 2002,  is designed to support our  customers
from the design of our automation  line through ongoing support of the installed
system. This organization  includes  approximately 16 consulting and application
engineers/programmers  based in a  number  of our  sales  and  customer  support
offices in the U.S.,  Europe and Asia.  This team is experienced in applying our
product line to solve a wide array of application  issues and operates toll-free
telephone support lines to provide advice on issues such as software programming
structure,  layout  problems  and  system  installation.  End users  and  system
integrators  can also hire these  experts on a consulting  basis to help resolve
new or difficult application issues.

We also maintain a team of  instructors,  consisting of four  individuals  as of
June 30,  2002,  who develop  training  courses on subjects  ranging  from basic
system  maintenance to advanced  programming.  These courses are geared both for
manufacturing  engineers  who  design  and  implement  automation  lines and for
operators who operate and maintain  equipment once it is in production,  and are
taught in Adept offices and customer sites throughout the world.

Our field  service  organization,  which  consisted of 16 persons as of June 30,
2002, maintains and repairs our products at the end user's facilities. Personnel
based at our service  centers also  provide  advice to customers on spare parts,
product upgrades and preventative maintenance. In addition, we provide fee based
service resources located inside some key customers'  facilities when the amount
of Adept product inside the customers production facility or the critical nature
of the process warrants the expense of a full time service resource.

Backlog

Our product backlog at June 30, 2002 was approximately $6.0 million, as compared
with approximately $10.5 million at June 30, 2001.

We  experienced  a  significant  decline  in orders  during  fiscal  year  2002,
reflecting   substantial  excess  manufacturing  capacity  across  most  of  the
industries we serve. In addition,  our backlog has historically been booked late
in the  quarter  and  shipped  primarily  in the  following  quarter.  Both  the
combination of a significant  decline in activity due to our  customers'  excess
capacity  throughout  the year and  timing of  bookings  in the  fourth  quarter
contributed  to the change in backlog at June 30,  2002 as  compared to June 30,
2001.

Increasingly  our business is  characterized  by  short-term  order and shipment
schedules.  Because  orders  constituting  our  current  backlog  are subject to
changes  in  delivery  schedules  and in  certain  instances  may be  subject to
cancellation  without  significant  penalty to the customer,  our backlog at any
date may not be indicative of demand for our products or actual net revenues for
any period in the future.

Research and Development

Our research and  development  efforts are focused on the design of  intelligent
automation  products,  which address the challenges of designing,  implementing,
installing,  operating and modifying  flexible  automated  production  lines. We
intend to focus our research and  development  efforts on the  development of an
integrated  product line,  which further  implements  our RDA approach and which
reduces cost, enhances performance and improves ease of use.


                                       9
<PAGE>

We have devoted,  and,  despite our expense  reductions  in connection  with our
restructuring,  intend to devote in the  future,  a  significant  portion of our
resources to research and development  programs. As of June 30, 2002, we had 100
persons  engaged  in  research,   development  and  engineering.  Our  research,
development and engineering  expenses were approximately $20.4 million for 2002,
$22.7 million for 2001 and $14.6 million for 2000 and  represented  35.8% of net
revenues for 2002, 22.7% for 2001 and 14.7% for 2000.

Manufacturing

Our  manufacturing  activities  include  the  selective  assembly,  testing  and
configuration of our products.  We believe that by performing these  operations,
we can better ensure the quality and  performance of our products.  We outsource
low value-added manufacturing operations,  including standard and build-to-print
fabricated  parts such as  machinery,  sheet  metal  fabrication  and  assembled
printed circuit boards. We also outsource some robot mechanism  manufacturing to
Hirata  Corporation  and Samsung  Electronics  Co.,  Ltd.  The  purchased  robot
mechanisms are tested to meet defined quality standards and then configured into
complete products,  which are tested again before shipment to the customer. This
strategy  enables  us  to  leverage  product   development,   manufacturing  and
management  resources  while retaining  greater  control over product  delivery,
final product configuration and the timing of new product introductions,  all of
which are critical to meeting customer expectations.

Our  manufacturing  organization  has expertise in mechanical,  electrical,  and
software assembly and testing.  Because outstanding quality and reliability over
the life of our products are key to customer  satisfaction and customers' repeat
purchases of automation products,  we believe our quality plans and organization
are  a  key  part  of  our  business  strategy.  Our  manufacturing  engineering
organization  develops  detailed  instructions  for all  manufacturing  and test
operations.  These instructions are established in writing,  implemented through
training of the manufacturing  workforce and monitored to assure compliance.  In
addition,  our manufacturing  organization works closely with vendors to develop
instructions and to remedy quality problems if they arise.

In February 2000, we were awarded ISO 9002  certification  from TUV Rheinland of
North America, Inc. The ISO 9000 series standards are internationally recognized
quality  management  standards  developed by the International  Organization for
Standardization   (ISO).  ISO  9002  registration   focuses  on  quality  system
requirements for a company's production,  delivery and servicing of products and
services around the world.

Employees

At June 30, 2002,  we had 398  employees  worldwide.  Of the total,  100 were in
research and development,  80 in sales and marketing, 76 in service and support,
101 in operations, and 41 in finance and administration.  In late July, 2002, we
announced an expense  reduction  plan for the first  quarter of fiscal year 2003
that  includes a reduction  in our global  workforce by an  additional  24% from
fiscal 2002 year end levels.

Competition

The market for intelligent automation products is highly competitive. We compete
with a number of robot companies,  motion control companies,  and machine vision
companies.   Many  of  our  competitors  in  the  robot  market  are  integrated
manufacturers of products that produce robotics  equipment  internally for their
own use and may also compete with our products for sales to other customers.

Our  principal  competitors  in the assembly  robot and linear  modules  markets
include   subsidiaries  of  Japanese  companies,   including  Fanuc  Ltd,  Epson
Corporation,  Yamaha Corporation, Denso Corporation and Intelligent Actuator. We
also compete with a narrow group of European companies, principally Robert Bosch
GmbH,  and some  divisions of Parker  Hannifin.  In the material  handling robot
market, we compete with the above companies,  as well as manufacturers of 6-axis
robots including Motoman, Kawasaki Robotics, Inc., Reis Robotics, Kuka Robotics,
Staubli Corporation and ABB Group.

Competition for certain products in the semiconductor atmospheric wafer handling
and  contamination  control markets comes from  Brooks-PRI  Automation and Asyst
Technologies,  Inc. Brooks has the largest installed base of Atmospheric robots,
and Asyst is the  leader in  isolation  technology  and 200  millimeter  and 300
millimeter load ports.


                                       10
<PAGE>

Our  principal  competitors  in the  market for motion  control  system  include
Allen-Bradley Co., a subsidiary of Rockwell  International  Corporation,  in the
United  States,  and Siemens AG in Europe.  In addition,  we face motion control
competition  from three major suppliers of motion control  boards,  Galil Motion
Control,  Inc., Motion Engineering,  Inc. and Delta Tau Data Systems, Inc. OEM's
and end users who engineer  their own custom  motion  control  systems  purchase
these  motion  control  boards.  In  the  machine  vision  market,  our  primary
competition is from Cognex Corporation and DVT Corporation.

Our principal  competition in the photonics  industry for high  precision  micro
positioners are Newport  Corporation,  Axsys, Melles Griot Inc.,  Aerotech,  and
Polytec PI, Inc.  Historically,  these companies have primarily  marketed to the
research community to supply positioners for use in laboratory environments.  We
also compete with Newport  Corporation and various automation solution providers
to deliver semi-automatic and fully automatic  manufacturing platforms for fiber
optic component assembly.  This market is in its early stages of development and
is changing  rapidly;  therefore,  new competitors could emerge with alternative
processes and solutions.

Intellectual Property

We  primarily  pursue  patent,   trademark  and  copyright  protection  for  our
technology  and products.  We currently  hold 17 patents and six pending  patent
applications  in the  United  States  and three  patents  outside  of the United
States.  There can be no assurance that patents will be issued from any of these
pending  applications  or that any claims in existing  patents,  or allowed from
pending  patent  applications,   will  be  sufficiently  broad  to  protect  our
technology.

ITEM 2. PROPERTIES

Our  headquarters  are located in a 92,000  square foot building we lease in San
Jose,  California.  The lease  expires in December  2003 and  provides for lease
payments of approximately $2.0 million in calendar year 2002 and $2.1 million in
calendar year 2003. Our principal  research and  development  and  manufacturing
facility  is located in a 75,000  square foot  building  we lease in  Livermore,
California.  The lease  expires in 2011 and provides for lease  payments of $1.4
million in  calendar  year 2003.  Additionally,  we were  obligated  to lease an
additional 145,000 square foot facility located in Livermore, which commenced in
March 2002 and  provides  for lease  payments of $2.7  million in calendar  year
2003. We lease a 12,000 square foot facility in Santa  Barbara,  California  for
our NanoMotion operations, which commenced on June 1, 2000. The lease expires in
May 2005 and provides for lease payments of  approximately  $229,000 in calendar
year 2003.  We lease a 10,500  square foot  facility in Quebec City,  Canada for
certain  machine vision sales,  research and development  activities.  The lease
expires in 2009 and  provides  for lease  payments of  approximately  $50,000 in
2003. We also lease facilities for sales and/or customer  training in Southbury,
Connecticut;  Southfield, Michigan; Charlotte, North Carolina; Cincinnati, Ohio;
Dallas,  Texas; Massy,  France;  Dortmund and Munich,  Germany;  Arezzo,  Italy;
Kenilworth,  United  Kingdom;  Seoul,  South Korea;  Singapore;  and Cerdanyola,
Spain.

In connection  with our fiscal 2002  restructuring,  we exited certain  existing
space in our headquarters in San Jose,  California,  an additional 10,417 square
foot building  adjacent to our  headquarters  in San Jose,  California,  a 4,449
square foot facility in Detroit,  Michigan, and a 26,000 square foot facility in
Livermore, California, all of which are under noncancellable lease agreements.

ITEM 3. LEGAL PROCEEDINGS

From time to time, we are party to various legal  proceedings or claims,  either
asserted or unasserted,  which arise in the ordinary course of our business.  We
have reviewed  pending  legal  matters and believe that the  resolution of these
matters  will not have a  material  adverse  effect on our  business,  financial
condition or results of operations.

Adept has in the past received  communications from third parties asserting that
we have infringed  certain  patents and other  intellectual  property  rights of
others, or seeking indemnification against alleged infringement. While it is not
feasible  to predict  or  determine  the  likelihood  or outcome of any  actions
against us, we believe the ultimate  resolution of these matters will not have a
material adverse effect on our financial position, results of operations or cash
flows.


                                       11
<PAGE>

Some end users of our products  have notified us that they have received a claim
of patent  infringement  from the Jerome H. Lemelson  Foundation,  alleging that
their use of our machine vision products infringes certain patents issued to Mr.
Lemelson.  In  addition,  we have  been  notified  that  other  end users of our
AdeptVision  VME  line  and the  predecessor  line of  Multibus  machine  vision
products have received  letters from Mr. Lemelson which refer to Mr.  Lemelson's
patent  portfolio  and offer the end user a license to the  particular  patents.
Some of these end users have notified us that they may seek indemnification from
us for any damages or expenses resulting from this matter.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

Adept's executive officers currently include:



      Name           Age                         Position
      ----           ---                         --------

Brian R. Carlisle    51      Chairman of the Board of Directors and Chief
                             Executive Officer
Bruce E. Shimano     53      Vice President, Research and Development, Secretary
                             and Director
Michael W. Overby    45      Vice President, Finance and Chief Financial Officer



Brian R. Carlisle has served as Adept's Chief Executive  Officer and Chairman of
the Board of Directors since he co-founded Adept in June 1983. From June 1980 to
June 1983, he served as General Manager of the West Coast Division of Unimation,
Inc., a manufacturer  of industrial  robots,  where he was  responsible  for new
product  strategy and  development  for  Unimation's  electric  robots,  control
systems, sensing systems and other robotics applications.  Mr. Carlisle received
B.S. and M.S. degrees in Mechanical  Engineering from Stanford  University.  Mr.
Carlisle was President of the U.S. Robotic  Industries  Association for 3 years,
served as General  Chair in May 2000 for the IEEE  International  Conference  on
Robotics and Automation, is currently a member of the Board of Directors for the
National Coalition for Manufacturing Sciences, and currently serves on the Board
of the National Coalition for Advanced Manufacturing.

Bruce E. Shimano has served as our Vice  President,  Research  and  Development,
Secretary and a director since he co-founded  Adept in June 1983.  Prior to that
time, he was Director of Software Development at Unimation. Mr. Shimano received
B.S., M.S. and Ph.D. degrees in Mechanical Engineering from Stanford University.

Michael W.  Overby has served as Adept's  Vice  President  of Finance  and Chief
Financial Officer since March 2000. From December 1999 to March 2000, Mr. Overby
held the position of Corporate  Controller at Adept. Prior to joining Adept, Mr.
Overby was the  financial  executive  for Digital  Generation  Systems,  Inc., a
leading provider of digital distribution  services to the broadcast  advertising
industry.  From  1996  to 1998  he was  Corporate  Controller  and  Director  of
Information Systems at Inprise Corporation,  formerly Borland, a public software
company.  Mr.  Overby holds a B.S. in Business  Administration  from  California
Polytechnic State University.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Market for Registrant's Common Stock and Related Shareholder Matters


                                       12
<PAGE>

Our  common  stock is traded on the  Nasdaq  National  Market  under the  symbol
"ADTK".  The following  table  reflects the range of high and low sale prices as
reported on the Nasdaq National Market for the quarters identified below:

<TABLE>
<CAPTION>

                                                               Three Months Ended
              Jun. 30,        Mar. 30,        Dec. 29,      Sep. 29,        Jun. 30,       Mar. 31,       Dec. 31,         Sep. 30,
                2002           2002            2001           2001            2001           2001           2000            2000
                ----           ----            ----           ----            ----           ----           ----            ----
<S>           <C>             <C>            <C>              <C>           <C>             <C>           <C>              <C>
High          $ 3.64          $ 4.70         $5.40            $10.60        $14.50          $31.38        $53.25           $58.19
Low           $ 1.50          $ 2.05         $3.05            $ 2.85        $ 7.45          $11.00        $12.38           $21.50
</TABLE>

At June 30, 2002, there were approximately 230 shareholders of record.

To date,  we have  neither  declared  nor paid cash  dividends  on shares of our
common stock. Shares of our outstanding  Preferred Stock are entitled to payment
of dividends  prior to payment of any dividends on our common stock as described
under the heading  "Liquidity  and Capital  Resources."  We currently  intend to
retain all future  earnings for our business and do not  anticipate  paying cash
dividends on our common stock in the foreseeable future.

Recent Sales of Unregistered Securities

On October 9, 2001, in connection with our acquisition of CHAD Industries, Inc.,
Adept issued 200,000 shares of its common stock to former  shareholders  of CHAD
Industries,  Inc. pursuant to an exemption from registration  under Regulation D
under the Securities Act of 1933, as amended.

On October 29, 2001 Adept issued 78,000 shares of Series A Convertible Preferred
Stock and 22,000 shares of Series B Convertible  Preferred Stock to JDS Uniphase
Corporation,  an accredited  investor,  for an aggregate  cash purchase price of
$25.0 million. The shares were issued pursuant to an exemption from registration
under  Regulation D under the Securities Act of 1933, as amended.  The Preferred
Stock may be  converted  into  shares of our common  stock at any time after the
earlier  of the  first  anniversary  of the  original  issue  date,  the  public
announcement of a liquidity  event, or an event of default,  such as bankruptcy,
or the  reporting by Adept of a cash  balance of less than $15.0  million at the
end of any fiscal quarter  through  September 30, 2002, and, in the absence of a
prior liquidity event or earlier conversion or redemption will be converted into
common stock upon the third anniversary of the original issue date, as described
under the heading "Liquidity and Capital Resources."

On  August  30,  2002,  in  connection  with  our  acquisition  of Meta  Control
Technologies,  Inc. and the  establishment  of an $800,000 line of credit with a
stockholder  of Meta,  Adept issued 830,000 shares of its common stock to former
stockholders of Meta pursuant to an exemption from registration under Regulation
D under the Securities Act of 1933, as amended.

Securities Authorized for Issuance under Equity Compensation Plans

The following table gives  information about our common stock that may be issued
upon  exercise of options  warrants and rights under all of our existing  equity
compensation plans as of June 30, 2002, including the Company's 1993 Stock Plan,
1995 Director Plan, and the 2001 Stock Option Plan,  (collectively,  the "Option
Plans").  For  a  description  of  such  plans,  see  Note  8 of  our  Notes  to
Consolidated Financial Statements included in this Annual Report on Form 10-K.
<TABLE>
<CAPTION>
<S>                                                 <C>                    <C>                    <C>
                                                                       Equity Compensation Plan Information
                                                   -----------------------------------------------------------------------------
                                                            (a)                   (b)                          (c)
                                                                                                      Number of securities
                                                    Number of securities                             remaining available for
                                                     to be issued upon       Weighted average     future issuance under equity
                                                        exercise of          exercise price of         compensation plans
                                                    outstanding options,   outstanding options,       (excluding securities
             Plan Category                               and rights             and rights          reflected in column (a))
</TABLE>

                                       13

<PAGE>
<TABLE>
<S>                                                            <C>             <C>                                  <C>
Equity compensation plans approved
  by security holders                                          2,683           $       8.88                         743
Equity compensation plans not
  approved by security holders (1)                               655                   3.22                       1,945
                                                        ------------           ------------                ------------
Total                                                          3,338           $       7.77                       2,688
                                                        ============           ============                ============
</TABLE>

(1) Issued under our 2001 Stock Option Plan, which does not require the approval
of and has not been approved by Adept's shareholders.

ITEM 6. SELECTED FINANCIAL DATA

The following  selected  financial data should be read in  conjunction  with the
Consolidated Financial Statements and Notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations"  included in this
Form 10-K.  The  historical  results are not  necessarily  indicative  of future
results.   On  July  16,  1999,  we  completed  the   acquisition  of  BYE/Oasis
Engineering,  Inc. in a pooling of interests transaction. The selected financial
data prior to June 30, 2000 has been restated to include the historical  results
of  BYE/Oasis  Engineering,  Inc.  Fiscal  2002 and  2001  results  include  the
financial  results of Pensar,  NanoMotion,  and  HexaVision  subsequent to their
acquisitions  on April 28, 2000, May 31, 2000, and July 21, 2000,  respectively.
Fiscal 2002 also  includes  the  financial  results for CHAD  subsequent  to its
acquisition on October 9, 2001.
<TABLE>
<CAPTION>

(in thousands, except per share data)                                                      Years Ended June 30,
                                                                        ------------------------------------------------------------
                                                                           2002         2001        2000         1999         1998
                                                                        ---------    ---------    ---------    ---------   ---------
<S>                                                                     <C>          <C>          <C>          <C>         <C>
Results of Operations:
Net revenues ........................................................   $  57,039    $ 100,313    $  99,212    $  87,374   $ 105,440
Cost of revenues ....................................................      37,868       65,303       56,173       47,902      60,841
                                                                        ---------    ---------    ---------    ---------   ---------
      Gross margin ..................................................      19,171       35,010       43,039       39,472      44,599
                                                                        ---------    ---------    ---------    ---------   ---------
Operating expenses:
      Research, development and engineering .........................      20,398       22,727       14,629       11,591      11,844
      Selling, general and administrative ...........................      28,994       36,002       29,503       24,676      26,890
      Restructuring and other non-recurring charges .................      17,659           --           --           --       2,756
      Merger-related charges (1) ....................................          --           --          988           --          --
      Amortization of goodwill and other intangibles ................         725        6,818          685           --          --
      Impairment of goodwill and other long-lived assets ............       6,608           --           --           --          --
      Gain on sale of assets ........................................      (1,566)          --           --           --          --
                                                                        ---------    ---------    ---------    ---------   ---------
Total operating expenses ............................................      72,818       65,547       45,805       36,267      41,490
                                                                        ---------    ---------    ---------    ---------   ---------
Operating income (loss) .............................................     (53,647)     (30,537)      (2,766)       3,205       3,109
Interest income, net ................................................         438          733          746          926         971
                                                                        ---------    ---------    ---------    ---------   ---------
Income (loss) before taxes and cumulative
   effect of change in accounting principle .........................     (53,209)     (29,804)      (2,020)       4,131       4,080

Provision for (benefit from) income taxes ...........................      (3,358)       5,396         (593)       1,620       1,819
                                                                        ---------    ---------    ---------    ---------   ---------
Net income (loss) before cumulative effect of change in
    accounting principle ............................................     (49,851)     (35,200)      (1,427)       2,511       2,261
Cumulative effect of change in accounting principle .................      (9,973)          --           --           --          --
                                                                        ---------    ---------    ---------    ---------   ---------
Net income (loss) ...................................................   $ (59,824)   $ (35,200)   $  (1,427)   $   2,511   $   2,261
                                                                        =========    =========    =========    =========   =========
Net income (loss) per share:(2)
  Before cumulative effect of change in accounting principle:
     Basic ..........................................................   $   (3.64)   $   (3.02)   $   (0.15)   $    0.27   $    0.25
                                                                        =========    =========    =========    =========   =========
     Diluted ........................................................   $   (3.64)   $   (3.02)   $   (0.15)   $    0.26   $    0.23
                                                                        =========    =========    =========    =========   =========
  After cumulative effect of change in accounting principle:
     Basic ..........................................................   $   (4.37)   $   (3.02)   $   (0.15)   $    0.27   $    0.25
                                                                        =========    =========    =========    =========   =========
     Diluted ........................................................   $   (4.37)   $   (3.02)   $   (0.15)   $    0.26   $    0.23
                                                                        =========    =========    =========    =========   =========
Number of shares used in computing per share amounts:(2)
     Basic ..........................................................      13,691       11,637        9,774        9,302       9,154
                                                                        =========    =========    =========    =========   =========
     Diluted ........................................................      13,691       11,637        9,774        9,484       9,689
                                                                        =========    =========    =========    =========   =========
</TABLE>
                                       14
<PAGE>

<TABLE>
<S>                                                                     <C>          <C>          <C>          <C>         <C>
Balance Sheet Data:
Cash, cash equivalents and short-term investments ...................   $  21,681    $  21,500    $  20,437    $  27,016   $  20,939
                                                                        =========    =========    =========    =========   =========
Working capital .....................................................      27,326       39,784       46,593       47,614      45,928
                                                                        =========    =========    =========    =========   =========
Total assets ........................................................      62,494       95,573       93,523       71,677      70,310
                                                                        =========    =========    =========    =========   =========
Long-term liabilities ...............................................       2,692        1,284        1,222           --          78
                                                                        =========    =========    =========    =========   =========
Redeemable convertible preferred stock ..............................      25,000           --           --           --          --
                                                                        =========    =========    =========    =========   =========
Total shareholders' equity ..........................................      15,904       71,482       70,728       55,186      53,399
                                                                        =========    =========    =========    =========   =========
</TABLE>


(1) In July 1999, we incurred charges of $988,000 relating to the acquisition of
BYE/OASIS.

(2) See  Notes 1 and 11 of  Notes to  Consolidated  Financial  Statements  for a
discussion of the computation of net income (loss) per share.

Quarterly Results of Operations (Unaudited)

In management's  opinion,  the unaudited quarterly data has been prepared on the
same basis as the audited  information and includes all adjustments  (consisting
only of normal recurring  adjustments)  necessary for a fair presentation of the
data for the periods  presented.  Adept's  results of operations have varied and
may continue to  fluctuate  significantly  from  quarter to quarter.  Results of
operations in any period  should not be considered  indicative of the results to
be expected  from any future  period.  We operate and report  financial  results
ending on the last  Saturday  of a 13-week  period  for each of our first  three
fiscal quarters and at June 30 for our fiscal year end. For convenience, we have
indicated  in this Annual  Report on Form 10-K our fiscal  quarters end on March
31, December 31 and September 30.

Fiscal 2002
<TABLE>
<CAPTION>



                                                                                  Three Months Ended,
                                              --------------------------------------------------------------------------------------
                                                                 (in thousands, except percentages and per share data)
                                              Jun. 30,              Mar. 31,              Dec. 31,              Sep. 30,
                                                2002                  2002                  2001                  2001
                                              --------              --------              --------              --------
<S>                                           <C>         <C>       <C>         <C>       <C>         <C>       <C>         <C>
Net revenues ...............................  $ 14,635    100.0%    $ 14,588    100.0%    $ 14,431    100.0%    $ 13,385    100.0%
Cost of revenues ...........................    10,103     69.0        9,856     67.6        9,172     63.6        8,737     65.3
                                              --------    -----     --------    -----     --------    -----     --------    -----
Gross margin ...............................     4,532     31.0        4,732     32.4        5,259     36.4        4,648     34.7
                                              --------    -----     --------    -----     --------    -----     --------    -----
Operating expenses:
   Research, development and engineering ...     4,967     33.9        5,008     34.3        4,585     31.8        5,838     43.6
   Selling, general and administrative .....     6,971     47.6        7,192     49.3        7,117     49.3        7,714     57.6
   Restructuring expenses ..................        --       --        5,323     36.5           --       --       12,336     92.2
   Amortization of goodwill and other
      intangibles ..........................       149      1.0          216      1.5          180      1.2          180      1.3
   Impairment of goodwill ..................     6,608     45.2           --       --           --       --           --       --
   (Gain) loss on sale of assets ...........    (1,566)   (10.6)          --       --           --       --                    --
                                              --------    -----     --------    -----     --------    -----     --------    -----
Total operating expenses ...................    17,129    117.1       17,739    121.6       11,882     82.3       26,068    194.7
                                              --------    -----     --------    -----     --------    -----     --------    -----
Operating loss .............................   (12,597)   (86.1)     (13,007)   (89.2)      (6,623)   (45.9)     (21,420)  (160.0)
Interest income, net .......................        95      0.6          123      0.9          137      1.0           83      0.6
                                              --------    -----     --------    -----     --------    -----     --------    -----
Loss before income taxes and cumulative
effect of change in accounting principle ...   (12,502)   (85.5)     (12,884)   (88.3)      (6,486)   (44.9)     (21,337)  (159.4)
Provision for (benefit from) income
  taxes ....................................      (570)    (3.9)       2,935    (20.1)          66      0.5           81      0.6
                                              --------    -----     --------    -----     --------    -----     --------    -----
Net loss before cumulative effect of
   change in accounting principle ..........  $(11,932)   (81.6)    $ (9,949)   (68.2)    $ (6,552)   (45.4)    $(21,418)  (160.0)
Cumulative effect of change in accounting
   principle ...............................  $     --       --     $     --       --     $     --       --     $ (9,973)   (74.5)
                                              --------    -----     --------    -----     --------    -----     --------    -----
Net loss ...................................  $(11,932)   (81.6)%   $ (9,949)   (68.2)%   $ (6,552)   (45.4)%   $(31,391)  (234.5)%
                                              ========    =====     ========    =====     ========    =====     ========    =====
Basic and diluted net loss per share:
   Before cumulative effect of change
      in accounting principle ..............  $  (0.85)             $  (0.72)             $  (0.48)             $  (1.63)
                                              ========              ========              ========              ========
   After cumulative effect of change in
     accounting principle ..................  $  (0.85)             $  (0.72)             $  (0.48)             $  (2.38)
                                              ========              ========              ========              ========
Basic and diluted number of shares
  used in computing per share amounts ......    13,976                13,829                13,567                13,169
                                              ========              ========              ========              ========
</TABLE>


                                       15
<PAGE>


The  cumulative  effect of change in  accounting  principle of $10.0 million was
originally reported in our results of operations in the Form 10-Q for the fiscal
quarter ended March 30, 2002,  when the amount of the impairment  under SFAS 142
was determined. However, because the impairment relates to the effective date of
SFAS  142,  or July 1,  2001 for  Adept,  the  cumulative  effect  of  change in
accounting principle is properly reflected in the fiscal quarter ended September
30, 2001 in the table above.

Fiscal 2001
<TABLE>
<CAPTION>


                                                                            Three Months Ended,
                                               -------------------------------------------------------------------------------------
                                                          (in thousands, except percentages and per share data)
                                               Jun. 30,              Mar. 31,              Dec. 31,              Sep. 30,
                                                 2001                  2001                  2000                  2000
                                               --------              --------              --------              --------
<S>                                            <C>         <C>       <C>         <C>       <C>         <C>       <C>         <C>
Net revenues ...............................   $ 20,745    100.0%    $ 23,913    100.0%    $ 28,034    100.0%    $ 27,621    100.0%
Cost of revenues ...........................     20,845    100.5       14,393     60.2       15,282     54.5       14,783     53.5
                                               --------    -----     --------    -----     --------    -----     --------    -----
Gross margin (loss) ........................       (100)    (0.5)       9,520     39.8       12,752     45.5       12,838     46.5
                                               --------    -----     --------    -----     --------    -----     --------    -----
Operating expenses:
   Research, development and engineering ...      7,671     37.0        5,182     21.6        5,008     17.9        4,866     17.6
   Selling, general and administrative .....     10,498     50.6        9,297     38.9        8,371     29.9        7,836     28.4
   Amortization of goodwill and other
      intangibles ..........................      1,798      8.6        2,077      8.7        1,518      5.4        1,425      5.2
                                               --------    -----     --------    -----     --------    -----     --------    -----
Total operating expenses ...................     19,967     96.2       16,556     69.2       14,897     53.2       14,127     51.2
                                               --------    -----     --------    -----     --------    -----     --------    -----
Operating loss .............................    (20,067)   (96.7)      (7,036)   (29.4)      (2,145)    (7.7)      (1,289)    (4.7)
Interest income, net .......................        313      1.5          165      0.7           66      0.3          189      0.7
                                               --------    -----     --------    -----     --------    -----     --------    -----
Loss before income taxes ...................    (19,754)   (95.2)      (6,871)   (28.7)      (2,079)    (7.4)      (1,100)    (4.0)
Provision for (benefit from) income
  taxes ....................................        568      2.8        4,828     20.2          385      1.4         (385)    (1.4)
                                               --------    -----     --------    -----     --------    -----     --------    -----
Net loss ...................................   $(20,322)   (98.0)%   $(11,699)   (48.9)%   $ (2,464)    (8.8)%   $   (715)    (2.6)%
                                               ========    =====     ========    =====     ========    =====     ========    =====

Basic and diluted net loss per share .......   $  (1.55)             $  (0.99)             $  (0.23)             $  (0.07)
                                               ========              ========              ========              ========
Basic and diluted number of shares used in
    computing per share amounts ............     13,101                11,795                10,886                10,743
                                               ========              ========              ========              ========
</TABLE>

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Overview

We provide intelligent  production automation solutions to our customers in many
industries   including   the  food,   communications,   automotive,   appliance,
semiconductor,   photonics,  and  life  sciences  industries.   We  utilize  our
comprehensive  product  portfolio of high  precision  mechanical  components and
application  development  software to deliver automation solutions that meet our
customer's  increasingly  complex  manufacturing  requirements.   We  offer  our
customers a comprehensive  and tailored  automation  solution that we call Rapid
Deployment  Automation  that  reduces the time and cost to design,  engineer and
launch products into  high-volume  production.  Our products  currently  include
system design software, process knowledge software,  real-time vision and motion
controls,  machine vision systems,  robot  mechanisms,  precision  solutions and
other flexible automation equipment. In recent years, we have expanded our robot
product lines and developed advanced software and sensing technologies that have
enabled  robots  to  perform  a wider  range  of  functions.  We  have  recently
introduced new systems  products,  including our 1394 FireWire based distributed
control architecture. As a result of our introduction and marketing of these new
systems, sales of systems may increase relative to our component sales in future
periods,  causing a change in the nature and  composition  of our revenues  over
time. Also,  international sales comprise  approximately 40% to 60% of our total
revenues for any given quarter.


                                       16
<PAGE>


We  market  and  sell our  products  worldwide  through  more  than  250  system
integrators,  our direct sales force and OEMs.  System  integrators and OEMs add
application-specific  hardware  and  software  to our  products,  enabling us to
provide  solutions  to  a  diversified   industry  base,   including  the  food,
communications, electronics, automotive, appliance, semiconductor, photonics and
life sciences industries. Historically, the food/pharmaceutical,  automotive and
appliance  industries  each comprised  between 12% and 16% of our total revenue,
while the consumer  electronics/telecommunications industry comprised 22% of our
total revenue and the semiconductor industry comprised 21% of total revenue. Due
to  a  worldwide   slowdown  in  the   communications,   consumer   electronics,
semiconductor  and  precision  assembly  markets,  our net revenues have been at
extremely  low levels  during this fiscal year  compared to previous  years.  In
fiscal  2002,   semiconductor  revenue  declined  80%  from  fiscal  2001  while
electronics and telecommunications revenue declined 48% from fiscal 2001. Across
all other industries,  revenue declined 35% from fiscal 2001. As a result of the
widely  divergent  declines in revenue by industry,  the revenue mix by industry
for fiscal 2002 was not consistent with the historical  revenue mix. The biggest
shift was between the food/pharmaceutical and semiconductor industries.  Revenue
from the food/pharmaceutical industry comprised 26% of fiscal 2002 revenue while
revenue  from the  semiconductor  industry  decreased  to only 8% of fiscal 2002
revenue.


In response to the continued weak global economic  conditions,  we implemented a
worldwide  restructuring  program during fiscal 2002,  which was  implemented in
several  phases,  to realign our  businesses  to the changes in our industry and
decreases in capital spending  throughout the industries we serve. In connection
with this program,  we took actions  including:  restructuring  of non-strategic
business  assets;  idling of leased  facilities;  and workforce  reductions  and
compensation  adjustments.  From the beginning of the first quarter  through the
end of the third quarter,  we recorded $17.7 million in  restructuring  charges.
The charges consist of $9.2 million in restructuring  of non-strategic  business
assets,  $6.8 million in costs for the consolidation of excess  facilities,  and
$1.7 million in  workforce  reduction  and  compensation  costs.  In response to
continued  weakness in demand,  we announced in July,  a  restructuring  for the
first quarter of fiscal 2003.  Adept  intends to reduce its global  workforce by
24% in the first quarter of fiscal 2003 and implement other cost saving measures
to  reduce  operating  expenses.  We expect  the  current  challenging  economic
environment to last for at least the next several quarters and the uncertainties
in the  business  environment  may  make it  necessary  for us to  take  further
actions,  as these and future  announced cost  reductions,  including  workforce
reductions,   or  other  benefits   expected  from  the   restructuring  may  be
insufficient  to align our  operations  with  customer  demand  and the  changes
affecting  our  industry,  or may be more  costly or  extensive  than  currently
anticipated.

This discussion  summarizes the significant  factors  affecting our consolidated
operating  results,  financial  condition,  liquidity  and cash flow  during the
three-year  period ended June 30, 2002, each year therein  referred to as fiscal
2002, 2001, and 2000. Unless otherwise indicated, references to any year in this
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operation refer to our fiscal year ended June 30. This discussion should be read
with the consolidated  financial  statements and financial  statement  footnotes
included in this Annual Report on Form 10-K.

Critical Accounting Policies

Management's  discussion and analysis of Adept's financial condition and results
of operations are based upon Adept's  consolidated  financial  statements  which
have been prepared in conformity with accounting  principles  generally accepted
in the United States.  The  preparation of these financial  statements  requires
management to make  estimates,  judgments and  assumptions  that affect 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.  On an on-going  basis,  we
evaluate  our  estimates,  including  those  related to fixed  price  contracts,
product returns, warranty obligations, bad debt, inventories, cancellation costs
associated with long term commitments,  investments,  intangible assets,  income
taxes, restructuring,  service contracts,  contingencies and litigation. We base
our estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making  estimates and judgments about the carrying value of assets and
liabilities  that are not readily  apparent from other  sources.  Estimates,  by
their nature, are based on judgment and available information. Therefore, actual
results could differ from those  estimates  and could have a material  impact on
our consolidated financial statements and it is possible that such changes could
occur in the near term.

We have identified the accounting  principles which we believe are most critical
to our reported financial status by


                                       17
<PAGE>
considering accounting policies that involve
the most  complex or  subjective  decisions  or  assessments.  These  accounting
policies described below include:

o    revenue recognition;

o    allowance for doubtful accounts;

o    inventories; o warranty reserve;

o    goodwill and other intangible assets;

o    long-lived assets; and

o    deferred tax valuation allowance.

For further discussion of our significant accounting policies,  refer to Note 1,
of the Notes to Consolidated Financial Statements in Item 8.

Revenue  Recognition.  We recognize product revenue, in accordance with SAB 101,
when persuasive evidence of a non-cancelable  arrangement  exists,  delivery has
occurred and/or services have been rendered, the price is fixed or determinable,
collectibility  is  reasonably  assured,   legal  title  and  economic  risk  is
transferred to the customer, and when an economic exchange has taken place. If a
significant  portion of the price is due after our normal payment  terms,  which
are 30 to 90 days from the invoice  date,  we account for the price as not being
fixed and determinable.  In these cases, if all of the other conditions referred
to above are met, we recognize the revenue as the invoice becomes due. In Japan,
we sell our products  through a reseller,  and we have separate  agreements with
this reseller for each of our product lines that it sells. For all RDA Real-Time
Control and RDA Mechanical Components with this reseller, we have a pass-through
arrangement, such that under this arrangement, we defer 100% of the revenue upon
shipment  and the reseller is not  obligated  to remit  payment to us until they
receive  payment from the end user.  When all other aspects of SAB 101 have been
satisfied,  we recognize  revenue upon payment from the end user.  For all other
product lines no pass through  arrangement  exists. For these products we follow
our normal revenue recognition policies.

We recognize  software  revenue,  primarily  related to our simulation  software
products,  in  accordance  with  the  American  Institute  of  Certified  Public
Accountants'  Statement  of  Position  97-2  ("SOP  97-2") on  Software  Revenue
Recognition.  License revenue is recognized on shipment of the product  provided
that no significant vendor or post-contract  support obligations remain and that
collection  of the  resulting  receivable  is  deemed  probable  by  management.
Insignificant  vendor and  post-contract  support  obligations  are accrued upon
shipment of the licensed product.  For software that is installed and integrated
by the customer,  revenue is recognized upon shipment assuming functionality has
already  been proven in prior sales and there are no  customizations  that would
cause  a  substantial  acceptance  risk.  For  software  that is  installed  and
integrated  by Adept,  revenue is recognized  upon  customer  signoff of a Final
Product Acceptance (FPA) form.

Service revenue includes  training,  consulting and customer  support.  Revenues
from training and consulting are recognized at the time the service is performed
and the customer has accepted the work.

For  long-term,  fixed  contracts,  we  recognize  revenue  and  profit  as work
progresses using the percentage-of-completion  method, which relies on estimates
of total  expected  contract  revenue  and  costs.  We  follow  this  method  as
reasonably  dependable  estimates of the revenue and costs applicable to various
stages of a contract can be made.  Recognized revenues and profit are subject to
revisions  as  the  contract  progresses  to  completion.  Revisions  in  profit
estimates  are charged to income in the period in which the facts that give rise
to the revision become known.

Deferred revenue  primarily relates to software support contracts sold. The term
of the software support contract is generally one year, and Adept recognizes the
associated  revenue  on a pro rata basis  over the life of the  contract,  or if
there are milestone payments, upon milestone achievement.

Allowance for Doubtful  Accounts.  We maintain  allowances for doubtful accounts
for  estimated  losses  resulting  from the  inability of our  customers to make
required payments.  We assess the customer's ability to pay based on a number of
factors,  including  our past  transaction  history with the customer and credit
worthiness of the customer.

                                       18
<PAGE>
Management  specifically  analyzes accounts receivable and historical bad debts,
customer concentrations, customer credit-worthiness, current economic trends and
changes in our  customer  payment  terms when  evaluating  the  adequacy  of the
allowances for doubtful  accounts.  We do not generally request  collateral from
our customers.  If the financial  condition of our customers were to deteriorate
in the future,  resulting in an impairment  of their  ability to make  payments,
additional allowances may be required.

Specifically  our policy is to record specific  reserves  against known doubtful
accounts.  Additionally, a general reserve is calculated based on the greater of
0.5%  of  consolidated  accounts  receivable  or  20% of  consolidated  accounts
receivable more than 120 days past due.  Specific reserves are netted out of the
respective  receivable balances for purposes of calculating the general reserve.
On an ongoing  basis,  we evaluate the credit  worthiness  of our  customers and
should the  default  rate change or the  financial  positions  of our  customers
change, we may increase the general reserve percentage.

Inventories.  Inventories  are  stated  at the  lower of  standard  cost,  which
approximates  actual  (first-in,  first-out  method)  or market  (estimated  net
realizable value). We perform a detailed assessment of inventory at each balance
sheet date,  which includes,  among other factors,  a review of component demand
requirements,  product  lifecycle  and product  development  plans,  and quality
issues.  As a result of this  assessment,  we write down inventory for estimated
obsolescence or unmarketable  inventory equal to the difference between the cost
of the  inventory and the estimated  market value based upon  assumptions  about
future demand and market conditions.  If actual demand and market conditions are
less  favorable  than  those  projected  by  management,   additional  inventory
write-downs may be required.

Manufacturing  inventory includes raw materials,  work-in-process,  and finished
goods. All work-in-process  inventories with work orders that are open in excess
of 180 days are fully written down. The remaining inventory valuation provisions
are based on an excess and obsolete systems report,  which captures all obsolete
parts and products and all other  inventory,  which have  quantities  on hand in
excess of one year's  projected  demand.  Individual  line item  exceptions  are
identified  for either  inclusion  or  exclusion  from the  inventory  valuation
provision.  The materials control group and cost accounting function monitor the
line item exceptions and make periodic adjustments as necessary.

Warranty Reserve. We provide for the estimated cost of product warranties at the
time  revenue  is  recognized.  While we engage  in  extensive  product  quality
programs and processes, including activity monitoring and evaluating the quality
of our  components  suppliers,  our warranty  obligation  is affected by product
failure  rates,  material usage and service labor and delivery costs incurred in
correcting a product  failure.  Should actual product  failure  rates,  material
usage,  service labor or delivery costs differ from our estimates,  revisions to
the estimated warranty liability would be required.

Goodwill and Other  Intangible  Assets.  The purchase  method of accounting  for
acquisitions  requires  extensive use of  accounting  estimates and judgments to
allocate  the excess of the purchase  price over the fair value of  identifiable
net assets of acquired companies allocated to goodwill.  Other intangible assets
primarily represent developed technology and non-compete covenants.

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting Standards No. 142, Goodwill and Other Intangible Assets
("SFAS 142").  Under SFAS 142,  goodwill (and  intangible  assets deemed to have
indefinite  lives)  are no  longer  amortized  but  are  subject  to  additional
impairment  tests whenever  indicators of impairment  are present,  and at least
annually.  Other  intangible  assets with finite lives are amortized  over those
useful lives.  We implemented  SFAS 142 on July 1, 2001.  SFAS 142 requires that
the first of two impairment tests be completed within six months of adoption. We
completed the  measurement of the impairment loss in the third quarter of fiscal
2002 and an impairment  loss of $10.0  million,  resulting  from the adoption of
SFAS 142,  was  recorded  as the  cumulative  effect  of a change in  accounting
principle  as of July 1, 2001.  SFAS 142 requires  goodwill to be evaluated  for
impairment  at least  annually  and we have chosen April 1 as the annual date to
conduct this  evaluation.  As of April 1, 2002 we recorded an impairment loss of
$6.6  million as a  component  of  operating  expenses as a result of the annual
impairment update.

Long-Lived Assets. We evaluate  long-lived assets used in operations,  including
goodwill and purchased intangible assets. The allocation of the acquisition cost
to  intangible  assets  and  goodwill  has a  significant  impact on our  future

                                       19
<PAGE>

operating  results as the  allocation  process  requires  the  extensive  use of
estimates and assumptions,  including estimates of future cash flows expected to
be generated by the acquired assets. An impairment review is performed  whenever
events or changes in  circumstances  indicate that the carrying value may not be
recoverable.  Factors we consider  important  which could  trigger an impairment
review include, but are not limited to, significant  under-performance  relative
to historical or projected future operating results,  significant changes in the
manner of use of the acquired  assets or the strategy for our overall  business,
and significant  industry or economic  trends.  When  impairment  indicators are
identified with respect to previously  recorded intangible assets, the values of
the assets are determined using discounted future cash flow techniques using our
weighted average cost of capital. Significant management judgment is required in
the forecasting of future operating results which are used in the preparation of
the projected  discounted cash flows and should  different  conditions  prevail,
material write downs of net intangible assets and/or goodwill could occur.

Deferred  Tax  Valuation  Allowance.  We record a valuation  allowance to reduce
deferred tax assets to the amount that is most likely to be  realized.  While we
have  considered  future  taxable  income and ongoing  prudent and  feasible tax
planning  strategies in assessing the need for the valuation  allowance,  in the
event we were to determine that we would be able to realize  deferred tax assets
in the  future  in excess  of our net  recorded  amount,  an  adjustment  to the
deferred tax asset would  increase  the income in the period such  determination
was made.  Likewise,  should we have a net deferred tax asset and determine that
we would not be able to realize all or part of our net deferred tax asset in the
future,  an  adjustment to the deferred tax assets would be charged to income in
the period that such determination was made.

Acquisitions

During the  three-year  period ended June 30, 2002, we acquired five  companies:
CHAD  Industries,   Inc.  (CHAD),   HexaVision  Technologies,   Inc.  NanoMotion
Incorporated,   Pensar-Tucson,   Inc.  and  BYE/OASIS.  These  acquisitions  are
described below.

CHAD Industries

On October 9, 2001,  Adept  completed the acquisition of CHAD  Industries,  Inc.
(CHAD), a design and manufacturing  company  specializing in precision  assembly
automation  based in Orange,  California.  The acquisition of CHAD is the latest
step in Adept's ongoing precision assembly automation strategy.  Adept leverages
CHAD's expertise in small part feeding,  precision  tooling design,  handling of
odd-form   components  to  add  capacity  in  precision   assembly   automation.
Additionally,  we support CHAD's line of odd-form  component  assembly machines.
Adept  acquired all of the  outstanding  common  shares of CHAD.  The results of
CHAD's  operations  have  been  included  in  Adept's   consolidated   financial
statements since October 9, 2001.

Under terms of the  acquisition  agreement,  the purchase price of $10.1 million
includes an aggregate of $8.4 million in cash, $150,000 in transaction costs and
200,000  shares of Adept common stock valued at $1.6  million.  The value of the
200,000  shares  issued was  determined  based on the average  closing  price of
Adept's  stock over the period of five trading days prior to June 27, 2001,  the
date of entry into the definitive  agreement.  Of the $8.4 million in cash, $4.2
million was paid as of the closing date on October 9, 2001, and $2.6 million and
$1.6 million are to be paid on October 9, 2002,  and 2003,  respectively.  These
future  payments are not  contingent  upon the  fulfillment of any employment or
other contingencies. In addition, Adept agreed to make cash payments of $242,000
and potential stock issuances consisting of 61,000 shares equal to approximately
$467,000  over a  period  of three  years  after  the  closing  date to  certain
specified employees of CHAD, which are contingent on the continued employment of
such employees. As such, those amounts have been appropriately excluded from the
purchase price and will be expensed as paid. This  acquisition was accounted for
under the purchase method of accounting.

HexaVision

On July 21, 2000, we completed the acquisition of HexaVision  Technologies Inc.,
now named Adept Technology Canada Co., a Canadian corporation.  HexaVision was a
machine vision research and development  company.  HexaVision's  core technology
incorporates  techniques  to  achieve  accuracies  up to 1/40th of a pixel  with
machine  vision  measurement  algorithms  that can increase our  performance  in
critical  and   demanding   applications   such  as  vision   servoing  for  the
microelectrical,  fiber optic,  semiconductor,  metrology and precision assembly
applications.

                                       20
<PAGE>

In connection with the acquisition, we paid $5.5 million in cash, which includes
transaction costs of $0.4 million,  and issued shares of our common stock to the
shareholders of HexaVision  with a value of $1.1 million.  We have accounted for
the  acquisition  under the  purchase  method of  accounting.  On July 21, 2001,
pursuant  to  the  terms  of  the  share  purchase  agreement  relating  to  the
acquisition of HexaVision,  we made the first anniversary cash payment and share
issuance  consisting of 116,000  shares of our common stock with a value of $1.1
million and released  $313,000 in cash from an escrow  account to the  employees
and former  shareholders  of  HexaVision.  On July 21, 2002,  we made the second
anniversary  cash payment of $53,000 and  released  $1.4 million in cash from an
escrow  account to the  employees and former  shareholders  of  HexaVision.  The
contingency  payments made and shares issued to the employees of HexaVision were
appropriately  recorded as operating expenses.  The contingent payments made and
shares  issued to the  former  shareholders  of  HexaVision  were  allocated  to
goodwill and accounted for as additional purchase price.

NanoMotion

On May 31, 2000, we completed the  acquisition  of  NanoMotion  Incorporated,  a
California  corporation.  NanoMotion was a manufacturer of ultra-high  precision
positioning and alignment devices. In connection with the acquisition, we issued
600,000 shares of our common stock to the  shareholders of NanoMotion  valued at
$21 per share,  which was the fair market  value of our common  stock at May 31,
2000 and paid  $250,000  in cash  and  incurred  $46,000  in  transaction  costs
resulting  in a total  purchase  price of $12.9  million.  The  acquisition  was
accounted  for under the  purchase  method of  accounting.  Our  acquisition  of
NanoMotion was completed to enhance our ability to offer intelligent  automation
solutions to the microelectrical,  fiber optic,  semiconductor,  metrology,  and
precision machining and precision assembly applications.

Pensar

On April 28, 2000,  we completed  the  acquisition  of  Pensar-Tucson,  Inc., an
Arizona  corporation.  Pensar  was  a  design  and  engineering  company,  which
integrates factory automation  systems.  In connection with the acquisition,  we
issued 100,000 shares of our common stock to the  shareholders  of Pensar valued
at $11.75  per share,  which was the fair  market  value of our common  stock at
April 28, 2000. In addition,  we paid $3.0 million in cash  incurred  $37,000 in
transaction  costs,  resulting in a total  purchase  price of $4.2 million.  The
acquisition was accounted for under the purchase method of accounting.  In March
2002, we closed the Tucson operations and wrote off all related assets.

For  further  discussion  of  these  acquisitions,  see  Note 2 to our  Notes to
Consolidated Financial Statements included in this Annual Report on Form 10-K.

BYE/OASIS

On July 16, 1999, we completed the acquisition of BYE/OASIS Engineering, Inc., a
Texas corporation.  BYE/OASIS was a manufacturer of environmental  filtering and
control systems,  which create a clean room  environment  inside a semiconductor
manufacturing  machine or tool,  and wafer  cassette  handling  devices  for the
microelectronics industry. In connection with the acquisition, we issued 720,008
shares of our common stock to the  shareholders  of BYE/OASIS.  In addition,  we
assumed  outstanding  options to acquire BYE/OASIS shares,  which were converted
into options to acquire 185,361 shares of our common stock.  The acquisition was
accounted for using the pooling of interests method, and, accordingly, all prior
period  consolidated  financial  statements  have been  restated  to include the
combined results of operations,  financial position and cash flows of BYE/OASIS.
Prior to the  merger,  BYE/  OASIS's  fiscal  year  ended on  September  30.  In
recording  the  business   combination,   BYE/OASIS's   prior  period  financial
statements have been restated to conform to our fiscal year. We incurred charges
of  $988,000  relating  to the  acquisition  of  BYE/OASIS  and the  closure  of
BYE/OASIS  facilities  in Texas.  Included in this  amount  were  merger-related
expenses of $558,000, expenses relating to the closure of facilities in Texas of
$195,000, and other expenses relating to the acquisition of $235,000.


                                       21
<PAGE>
Results of Operations

Comparison of Fiscal 2002 to 2001

Net Revenues.  Our net revenue  decreased by 43.2% to $57.0 million in 2002 from
$100.3 million in 2001. The dramatic decrease in revenue primarily resulted from
a reduction by our customers of their capital  expenditures in an effort to deal
with excess manufacturing capacity.  Following the significant drop in our first
quarter  revenue,  customers  continued to experience  uncertainty and cancelled
some orders and postponed placing others, which resulted in a further decline in
our  revenue in  subsequent  quarters.  As a result of the  current  challenging
economic environment,  we expect to experience continued pressure on our revenue
for at least  the  remainder  of  calendar  2002 and  until  worldwide  economic
conditions improve.

Our domestic sales were $25.2 million in 2002 compared to $63.9 million in 2001,
a decrease of 60.5%. Our international sales were $31.8 million in 2002 compared
to  $36.4  million  in  2001,  a  decrease  of  12.6%.  Both  our  domestic  and
international markets have been significantly impacted by the uncertain and weak
global  economic  conditions,  which have caused a dramatic  decrease in capital
spending by our customers, especially in the United States.

Gross  Margin.  Gross  margin as a  percentage  of net revenue was 33.6% in 2002
compared to 34.9% in 2001. We have  experienced  a downward  trend over the past
four quarters  associated with an  approximately  50% decrease in  manufacturing
volume.  As less labor and overhead  expense is absorbed into  inventory,  costs
become higher on a relative basis,  which is reflected in our lower margins.  We
have  taken  steps  to  reduce  our  overhead  and at the  same  time,  preserve
sufficient  capacity to react to any increase in demand.  Additionally,  we have
experienced  some normal costs associated with the introduction of new products.
We introduced  these new products  despite the weak current  demand because they
bring  additional  functionality  for our  customers  as well  as  provide  cost
improvements  for us. We expect to continue to  experience  fluctuations  in our
gross margin  percentage due to changes in volume,  changes in  availability  of
components, changes in product configuration and changes in sales mix.

Research,  Development  and  Engineering  Expenses.  Research,  development  and
engineering  expenses  declined  on  an  absolute  basis,  but  increased  as  a
percentage of net  revenues.  Research,  development  and  engineering  expenses
decreased  by 10.1% to $20.4  million,  or 35.8% of net  revenues in 2002,  from
$22.7  million,  or 22.7% of net  revenues in 2001.  Research,  development  and
engineering  expenses decreased at a slower rate than other expense items due to
our stated intention to maintain research,  development and engineering  efforts
required to  complete  several  initiatives  in product  development  crucial in
leveraging our position in the market to take advantage of future  opportunities
expected to arise in a recovering economy.  Expenses in 2002 include two of five
required  quarterly  expenditures  totaling  $2.0  million,  which  are  part of
commitments under a joint development agreement with JDS Uniphase Corporation.

Over the past several years,  we have been involved in several  federally-funded
consortiums,  which  partially  offset  some  of our  research  and  development
expenses.  We completed the last of these funded  projects in early 2001. We did
not enter into any such consortiums in fiscal 2002.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses  decreased  19.5%  to  $29.0  million  or  50.8% of net
revenues  in 2002 from  $36.0  million  or 35.9% of net  revenues  in 2001.  The
decreased  level  of  expense  was  primarily   attributable  to   restructuring
activities and other cost reduction measures  implemented over three quarters of
fiscal 2002. Cost reduction measures included salary cuts ranging from 5% to 20%
and company-wide  vacation weeks in the first, second and third fiscal quarters,
which resulted in  approximately  $1.2 million of expense savings as compared to
the prior year.  Additional cost reduction  measures  implemented as a result of
restructuring   activities   included   significant   reductions  in  headcount,
consolidation of facilities, elimination of some excess capacity and the sale of
certain  non-strategic  assets.  Restructuring  activities are described in more
detail below.  Salary and related  expenses were reduced by  approximately  $3.3
million  from  prior  year as a result  of  headcount  reductions.  Depreciation
expenses were reduced by approximately $0.6 million from the prior year and rent
and related expenses were reduced by  approximately  $0.5 million from the prior
year due to consolidation of facilities. Savings realized by quarter as a result
of the  combined  restructuring  and other cost  reduction  measures  during the
fiscal year were consistent with our projections and were as follows:

                                          Fiscal 2002
                         -----------------------------------------------
                                         (In thousands)
                             Q1          Q2          Q3          Q4
      Cost Savings       $  1,083    $   1,438   $  1,496    $  1,573


                                       22
<PAGE>

We expect  that  selling,  general and  administrative  expenses  will  decrease
through our continuing  efforts to reduce expenses in fiscal 2003 in response to
the general decline in the industries we serve. While these cost savings are not
expected to be offset by an increase in other expenses,  they may be offset by a
decrease in revenues  corresponding  to the general decline in the industries we
serve.


Restructuring  Charges. In connection with our 2002  restructuring,  we recorded
$17.7 million in restructuring  charges.  The charges consist of $9.2 million in
restructuring   of  non-strategic   business  assets,   $6.8  million  in  lease
commitments  for idle  facilities,  and $1.7 million in workforce  reduction and
compensation costs.  Workforce reduction related costs of $1.7 million represent
a reduction of  approximately  114 employees in most functional areas across all
three  of our  reportable  business  segments  and at June  30,  2002 all of the
affected employees have ceased employment with Adept. Lease commitments for idle
facilities  of $6.8  million  result  from the  consolidation  of  manufacturing
facilities in San Jose and Livermore,  California into our technology  center in
Livermore,  California,  plus the consolidation of certain support facilities in
Europe.  The  consolidation  of these facilities has resulted in operating lease
commitments in excess of our current and projected needs for leased  properties.
Asset  impairment  charges of $9.2 million  resulted from the exiting of certain
non-strategic  product  lines of $6.6 million and goodwill and other  intangible
assets  write-off of $2.6  million.  The goodwill  and other  intangible  assets
written off resulted from our acquisition of  Pensar-Tucson in April 2000, which
no longer has value to Adept due to the closure of our Tucson Arizona operations
in March 2002. As of June 30, 2002, the long term accrued  restructuring charges
relate to  future  rent  commitments  on  non-cancelable  lease  agreements.  We
completed  our 2002  restructuring  plan in the third quarter of fiscal 2002. In
response to continued  weakness in demand, we announced in July, a restructuring
for the first  quarter  of fiscal  2003.  Adept  intends  to reduce  its  global
workforce by 24% in the first  quarter of fiscal 2003 and  implement  other cost
saving  measures  to reduce  operating  expenses.  These  restructuring  charges
represent  our  concerted  efforts  to  respond  to the  current  demands of our
industry.  However, these and future announced cost reductions or other benefits
expected from the  restructuring,  may be  insufficient  to align our operations
with customer  demand and the changes  affecting  our  industry,  or may be more
costly or extensive than currently anticipated.

Goodwill and Other  Intangibles  Amortization.  Goodwill  and other  intangibles
amortization  in 2002  decreased to $0.7 million from $6.8 million in 2001.  The
decrease in goodwill and other  intangibles  amortization was a direct result of
the  adoption  of  SFAS  142,  effectively  discontinuing  the  amortization  of
goodwill.  Goodwill  is no longer  subject to  amortization,  but instead is now
subject to impairment  testing at least on an annual basis, as discussed in Note
4 of our Notes to  Consolidated  Financial  Statements  included  in this Annual
Report on Form 10-K.

Impairment of goodwill. We recorded a goodwill impairment charge of $6.6 million
as a result of our April 2002 annual impairment update required by SFAS 142. See
Note 4 of our Notes to Consolidated Financial Statements included in this Annual
Report on Form 10-K for further discussion.

Gain on Sale of Assets.  Net gain on sale of assets was $1.6 million in 2002. In
the  fourth  quarter of 2002,  we  completed  the sale of certain  non-strategic
assets of our SILMA business,  referred to as the CimStation  Inspection product
line.  The assets were sold for a purchase  price of $2.0 million of which $1.75
million was paid in cash and the  remaining  $250,000  was  deposited  in escrow
contingent on certain CimStation revenue projections for the period July 1, 2001
through  June 30, 2002 and are due to settle on or before  September  30,  2002.
Given the  severity of the market  downturn,  it is unlikely we will realize the
full contingency payment. In addition, we incurred $21,000 in transactions costs
related  to the  sale  of the  CimStation  Inspection  assets  resulting  in net
proceeds of $1.73 million. The gain on sale of the Cimstation  Inspection assets
was partially offset by a loss on sale of other assets of $0.18 million.

Interest  and Other  Income,  Net.  Interest  income,  net, in 2002 was $438,000
compared to $733,000 in 2001, with


                                       23
<PAGE>

higher average invested cash balances offset by lower average yields.

Provision for (Benefit  From) Income Taxes.  Our effective tax rate for 2002 was
(6%) as compared to 18% for 2001. Our tax rate for 2002 differs from the federal
statutory  income tax rate of 34%  primarily  due to a $3.6  million  tax refund
resulting from the carry back of our net operating loss from the year ended June
30,  2001.  This  refund  opportunity  arose as a result  of a recent  change in
applicable  law enacted on March 9, 2002,  which  extended the carry back period
from three to five tax years.  In 2001,  our tax rate  differed from the federal
statutory  rate of 34% primarily  due to the increase in valuation  allowance to
fully offset deferred tax assets.

Cumulative effect of change in accounting  principle.  We recorded $10.0 million
as a cumulative effect of change in accounting  principle in 2002 resulting from
our adoption of SFAS 142. We implemented  SFAS 142 on July 1, 2001 and completed
the measurement of the impairment loss in the third quarter of fiscal 2002. SFAS
142 requires  goodwill and  intangible  assets to be evaluated for impairment at
least annually beginning 2001.

Derivative Financial  Instruments.  Our foreign currency hedging program is used
to hedge our exposure to foreign currency  exchange risk on local  international
operational assets and liabilities.  Realized and unrealized gains and losses on
forward  currency   contracts  that  are  effective  as  hedges  of  assets  and
liabilities  are recognized in income.  We recognized a loss of $728,000 for the
year ended June 30, 2002 and a gain of $322,000  on forward  currency  contracts
for the year ended June 30, 2001.  Realized and  unrealized  gains and losses on
instruments  that  hedge firm  commitments  are  deferred  and  included  in the
measurement of the subsequent transaction;  however, losses are deferred only to
the extent of expected gains on the future  commitment at June 30, 2002. We have
deferred  recognition  of a  transaction  loss of  $83,500,  relating to foreign
exchange  contracts.  We will realize this transaction loss in the first quarter
of 2003.

Comparison of Fiscal 2001 to 2000

Net Revenues.  Our net revenues increased by 1.1% to $100.3 million in 2001 from
$99.2 million in 2000, with all of the revenue growth occurring in the first two
quarters of 2001.  During the last two quarters of 2001, we experienced  reduced
demand in our core  North  American  markets  of  electronics  & mobile  phones,
semiconductor,  photonics  automotive  as  well as some  softening  in our  base
business in Europe. We believe that substantial  excess  manufacturing  capacity
across most of the industries we serve contributed to this decline in activity.

Our domestic sales were $63.9 million in 2001 compared to $54.3 million in 2000,
an increase of 17.6%. The growth in domestic sales was principally  attributable
to increased sales to customers in the precision assembly and OEM industries.

Our international  sales were $36.4 million in 2001 compared to $44.9 million in
2000,  a  decrease  of  18.9%.  The  general  economic  downturn   significantly
negatively  affected our European markets.  This downturn,  coupled with pricing
pressures due to the strength of the U.S.  dollar against the euro,  contributed
to lower sales in 2001.

Gross  Margin.  Gross  margin as a  percentage  of net revenue was 34.9% in 2001
compared  to 43.4% in 2000.  The  decrease  in gross  margin  percentage  is due
primarily to a $5.8 million inventory write-down,  which was attributable to the
rapid decline in sales we experienced during the last quarter of fiscal 2001 and
associated  lower forecasted  demand for fiscal 2002. In addition,  margins were
generally negatively impacted by a significant decline in revenue with customers
in our base business,  especially the semiconductor  industry, and significantly
reduced shipments in relation to a relatively fixed overhead cost structure.

Research,  Development  and  Engineering  Expenses.  Research,  development  and
engineering  expenses  increased  by  55.4% to  $22.7  million,  or 22.7% of net
revenues in 2001,  from $14.6  million,  or 14.7% of net  revenues in 2000.  The
increase for the period was attributable  primarily to increased personnel costs
as research,  development  and  engineering  headcount  increased 28% during the
first nine months of the year ending June 30, 2001 from June 30, 2000, with more
than half of these employees  being hired as a result of our three  acquisitions
during  calendar year 2000.  In addition,  facilities  expenses  increased by $1
million or 422% attributable to the addition of the HexaVision  facility,  Santa
Barbara  facility and the new Livermore  building  that was occupied  during the
year ended June 30, 2001.


                                       24
<PAGE>
We spent much of fiscal 2001 in intense product  development  advancing our line
of controllers and integrating the products and technologies of the acquisitions
noted  previously,  and began  releasing new products based on the  technologies
resulting from our development  efforts in the third and fourth quarters.  These
new products  include the Nanoline  microstages  for precision  assembly and the
HexSight and Adept AVI vision systems for high  precision  assembly and material
handling.  In addition,  we invested  heavily in developing new products for our
base business  including  6-axis robots,  smaller and lower cost Smart Series of
controllers  and Cartesian  robots with  integrated  power  amplifiers.  We also
developed  the  NanoCell,  a  platform  to  integrate  these  technologies,  and
developed  two key processes  for  photonics  assembly,  epoxy bonding and laser
welding.

Over the past several years,  we have been involved in several  federally-funded
consortiums,  which  partially  offset  some  of our  research  and  development
expenses.  We completed the last of these funded projects in early 2001. Funding
from these  consortiums  were  $49,000 and $309,000 for the years ended June 30,
2001 and 2000, respectively.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses  increased  22.0%  to  $36.0  million  or  35.9% of net
revenues  in 2001 from  $29.5  million  or 29.7% of net  revenues  in 2000.  The
increased level of spending was primarily attributable to increased headcount of
15% from June 30, 2000 to June 30, 2001 and  compensation-related  expenses  and
additional costs from companies acquired.

Merger-Related   Charges.   There  were  no  merger-related   charges  in  2001.
Merger-related  charges were  $988,000 in 2000  relating to the  acquisition  of
BYE/OASIS  and the  closure of  BYE/OASIS  facilities  in Texas.  Merger-related
expenses were $558,000,  expenses relating to the closure of facilities in Texas
were $195,000 and other non-recurring  expenses relating to the acquisition were
$235,000.

Interest Income,  Net.  Interest income,  net, in 2001 was $733,000  compared to
$746,000 in 2000,  with higher  average  invested cash balances  offset by lower
average yields.

Provision for (benefit  from) Income Taxes.  Our effective tax rate for 2001 was
18% as  compared  to (29%)  for  2000.  Our tax rate for 2001  differs  from the
federal  statutory  income  tax rate of 34%  primarily  due to the  increase  in
valuation  allowance to fully offset Adept's  deferred tax assets.  In 2000, our
tax rate differed from the federal  statutory rate of 34% primarily due to items
not deductible for income tax purposes.

Derivative Financial  Instruments.  Our foreign currency hedging program is used
to hedge our exposure to foreign currency  exchange risk on local  international
operational assets and liabilities.  Realized and unrealized gains and losses on
forward  currency   contracts  that  are  effective  as  hedges  of  assets  and
liabilities  are recognized in income.  We recognized a gain of $322,000 for the
year ended June 30, 2001 and a loss of $50,000 for the year ended June 30, 2000.
Realized  and  unrealized  gains  and  losses on  instruments  that  hedge  firm
commitments  were  deferred and included in the  measurement  of the  subsequent
transaction;  however, losses were deferred only to the extent of expected gains
on the  future  commitment  at June  30,  2001.  We  deferred  recognition  of a
transaction loss of $62,000,  relating to foreign exchange contracts at June 30,
2001 and realized this transaction loss in the first quarter of 2002.

Impact of Inflation

The effect of  inflation on our  business  and  financial  position has not been
significant to date.

Long-Lived Assets

Financial information regarding the geographic areas of our long-lived assets is
included in Note 12 of our Notes to Consolidated  Financial  Statements included
in this Annual Report on Form 10-K.

Liquidity and Capital Resources

As of June 30, 2002,  we had working  capital of  approximately  $27.3  million,
including $21.7 million in cash equivalents and short-term investments.

During the year ended June 30,  2002,  cash and cash  equivalents  decreased  by
approximately $1.3 million. Net cash

                                       25
<PAGE>


used in operating activities of $18.2 million was primarily  attributable to the
net loss  adjusted by a  cumulative  effect of change in  accounting  principle,
goodwill impairment charges,  restructuring  charges,  decrease in fixed assets,
decrease  in  accounts  receivable,   and  decrease  in  inventory.  A  goodwill
impairment  charge of $10.0  million  was  reported  as a  cumulative  effect of
accounting  change  resulting from the adoption of SFAS 142. An additional  $6.6
million in goodwill impairment was reported as a component of operating expenses
as a result of the annual impairment update.  The restructuring  charges include
$3.4 million in severance and lease termination accruals and $9.2 million in net
asset impairment charges consisting of fixed asset,  demonstration equipment and
goodwill  write-offs.  Gross fixed assets decreased by $21.8 million and related
accumulated  depreciation  decreased  by $16.8  million  resulting  in net fixed
assets decrease of $5.0 million,  which is attributable to the asset  impairment
charges  described  above.  Additionally,  increased  collections  resulted in a
decrease in accounts  receivable of $9.4 million,  which was partially offset by
decreased accounts payable of $4.1 million and a decrease in deferred revenue of
$1.2 million.  The decrease in inventories of $3.5 million during the year ended
June 30, 2002 relates  primarily to a focused effort to reduce  inventories that
were built up in fiscal 2001, in  anticipation  of stronger  demand that did not
materialize.


Cash used in investing  activities  during the year ended June 30, 2002 was $9.6
million,  of which $8.4 million was  attributable  to the purchase price of CHAD
Industries.  Additionally, an increase in the purchase of short-term investments
of $36.0 million was partially  offset by the sale of short-term  investments of
$34.4  million.  We added $1.5 million in fixed assets and capital  equipment in
fiscal  2002,  of  which  $0.7  million  was  related  to  the   relocation  and
consolidation  of our  Livermore,  California  facilities,  and $0.8 million was
related to purchases of fixtures and equipment, offset by proceeds from the sale
of assets related to the CimStation  Inspection portion of our Silma business of
$1.73 million.

Net cash provided by financing  activities of $26.5 million is  attributable  to
$25.0 million in proceeds  received from the issuance of redeemable  convertible
preferred stock and $1.5 million in proceeds from common stock issued related to
our employee stock incentive program.

We  believe  that our  existing  cash and cash  equivalent  balances  as well as
short-term  investments  and  anticipated  cash  flow  from  operations  will be
sufficient to support our normal capital  requirements  for at least the next 12
months. If we pursue additional opportunities,  we may seek additional financing
sources.

In fiscal year 2003, we plan to purchase  capital items for  maintenance  of our
production,  introduction  of new products with near term revenue  impact or for
items that result in near term cash savings.  Therefore, we currently anticipate
net new capital  expenditures of approximately  $0.5 million in fiscal 2003. All
currently  planned  capital   expenditures  will  be  financed  out  of  ongoing
operations.

On April 9, 2001, we entered into  agreements  establishing  a revolving line of
credit,  consisting of two facilities,  with the CIT Group/Business Credit, Inc.
to borrow up to the lesser of $25.0  million  or the sum of 85% of our  eligible
domestic   accounts   receivables,   plus  90%  of  eligible   foreign  accounts
receivables,  less a dilution  reserve  equivalent  to one  percent of  eligible
domestic and foreign  accounts  receivables  for every one  percentage  point in
excess of a standard  five  percent  dilution  rate.  Effective as of August 26,
2002,  Adept and CIT  terminated  Adept's  revolving line of credit with CIT and
paid a  termination  fee of  $100,000.  Prior  to  termination,  we had  made no
borrowings under this revolving line of credit.


On  October  29,  2001,  we  completed  a private  placement  with JDS  Uniphase
Corporation of $25.0 million in our convertible  preferred  stock  consisting of
78,000 shares of Series A Convertible Preferred Stock (the "Series A Preferred")
and  22,000  shares of  Series B  Convertible  Preferred  Stock  (the  "Series B
Preferred"),  collectively (the "Preferred Stock").  Both the Series A Preferred
and the Series B Preferred are entitled to annual dividends at a rate of $15 per
share.  Dividends  are  cumulative  and are payable only in the event of certain
liquidity  events as defined in the  designation of preferences of the Preferred
Stock,  such as a change of control or liquidation  or dissolution of Adept.  No
dividends  on our common stock may be paid until  dividends  for the fiscal year
and any prior years on the Preferred Stock have been paid or set apart,  and the
Preferred Stock will participate in any dividends paid to the common stock on an
as-converted  basis.  The  Preferred  Stock may be converted  into shares of our
Common  Stock at any time  after the  earlier  of the first  anniversary  of the
original issue date, the public  announcement of a liquidity  event, or an event
of default,  such as bankruptcy,  or the reporting by Adept of a cash balance of
less than $15.0 million at the end of any fiscal quarter  through  September 30,
2002,


                                       26
<PAGE>

and, in the absence of a liquidity  event or earlier  conversion or  redemption,
will be converted  into common stock upon the third  anniversary of the original
issue date. The Preferred Stock may be converted into shares of our Common Stock
at a rate of the initial  purchase  price divided by a denominator  equal to the
lesser of $8.18,  or 75% of the 30 day average closing price of our Common Stock
immediately preceding the conversion date ("Conversion Date Price"). However, as
a result of a waiver of events of default  by the  preferred  stockholder  other
than in connection  with certain  liquidity  events that are not approved by the
Board  of  Directors  of  Adept,  in no  event  shall  the  denominator  for the
determination  of the conversion  rate with respect to the Series B Preferred be
less than $4.09 and with  respect to the Series A Preferred  be less than $2.05.
The Preferred Stock shall not be convertible, in the aggregate, into 20% or more
of our outstanding voting  securities.  No holder of Preferred Stock may convert
shares of Preferred Stock if, after the conversion,  the holder will hold 20% or
more of our outstanding voting securities.  Shares not permitted to be converted
remain  outstanding,  unless redeemed,  and become  convertible when such holder
holds less than 20% of our outstanding  voting  securities.  The Preferred Stock
has voting rights equal to the number of shares into which the  Preferred  Stock
could be converted as determined in the  designation of  preferences  assuming a
conversion rate of $250.00 divided by $8.18.

We have the  right,  but not the  obligation,  to redeem  shares of the Series A
Preferred  elected to be  converted by the  preferred  stockholder  which,  upon
conversion  would  use  the  denominator  of  $2.05  for  determination  of  the
conversion  rate , and would result in the issuance of shares of common stock in
excess of the number of shares of common stock issuable upon conversion  using a
denominator of $4.09 for the  conversion  rate. The number of shares of Series A
Preferred that Adept may elect to redeem would be calculated by subtracting  (i)
the number of shares of common stock that the shares of Series A Preferred  that
have  been  elected  to be  converted  would  be  convertible  into  based  on a
denominator  of $4.09  from (ii) the  number of shares of common  stock that the
shares of Series A Preferred  elected to be converted  would be  converted  into
based on a denominator of $2.05,  and then  determining  the number of shares of
Series A Preferred that this number of shares of common stock represents using a
denominator of $4.09.  The  redemption  price is equal to the sum of the initial
Preferred Stock price, plus all cumulated and unpaid  dividends.  The redemption
shall be paid in the form of a senior unsecured promissory note bearing interest
at a rate of 6% per  annum,  maturing  in two  years.  If we  redeem  shares  of
Preferred  Stock using a promissory  note, any  indebtedness  incurred while the
note is  outstanding  must be  subordinated  to the  note,  other  than  certain
ordinary course financings.  In addition, the holders of the Preferred Stock are
entitled to receive,  upon  liquidation,  the amount  equal to $250.00 per share
(adjusted for any stock splits or stock  dividends)  plus any unpaid  dividends.
The  liquidation  preference may be triggered by several  eventsconsisting  of a
change in  control of Adept,  a sale of  substantially  all of  Adept's  assets,
shareholder  approval of any plan of liquidation or dissolution or the direct or
indirect  beneficial  ownership of more than 50% of Adept's  common stock by any
person or entity.  Since such events may be outside of management's  control and
would trigger the payment of the Preferred  Stock  liquidation  preference,  the
Preferred  Stock are classified  outside of  shareholders'  equity as redeemable
convertible preferred stock in the accompanying consolidated balance sheet.

We entered into an  automation  development  alliance for optical  component and
module  manufacturing  with  JDS  Uniphase  in  October  2001.  As  part of this
agreement,   we  will  work  with  the  JDS   Uniphase's   internal   automation
organization,  Optical  Process  Automation,  or OPA, to develop  solutions  for
component  and  module  manufacturing   processes  and  specifically  sub-micron
tolerance  assemblies.  JDS  Uniphase  will  have  sole  rights  for  fiberoptic
application  of  new  products  and  technologies  developed  pursuant  to  this
alliance,   while  we  will  retain  the  right  to  market  such  products  and
technologies for use in other high precision industries served by Adept. As part
of this  agreement,  we have agreed to pay JDS  Uniphase up to $1.0  million per
quarter for the  following  five  quarters  for  development  provided by OPA of
products  and  technologies  that might be  applicable  to other high  precision
industries  served by Adept.  In the three  months  ended June 30,  2002,  Adept
completed the two of five quarterly expenditures of $1.0 million, which are made
pursuant to the joint  development  agreement with the accredited  investor.  At
June 30, 2002, the remaining  quarterly  expenditures  of $1.0 million are to be
made over the next three quarters for a total of $3.0 million.

Under terms of the acquisition  agreement of CHAD Industries,  Inc. (CHAD),  the
purchase  price of $10.1 million  includes an aggregate of $8.4 million in cash,
$150,000 in transaction costs and 200,000 shares of Adept common

                                       27
<PAGE>
stock valued at $1.6 million. Of the $8.4 million in cash, $4.2 million was paid
as of the closing date on October 9, 2001, and $2.6 million and $1.6 million are
to be paid on October  9,  2002,  and 2003,  respectively.  Additionally,  Adept
agreed  to  make  cash  payments  of  $242,000  and  potential  stock  issuances
consisting  of 61,000  shares equal to  approximately  $467,000 over a period of
three years after the closing date to certain specified employees of CHAD, which
are contingent on the continued employment of such employees.

In connection with our acquisition of Meta Control  Technologies,  Inc., (Meta),
we entered  into a $500,000  line of credit with Meta's  lender  terminating  in
September 2003 bearing interest at a rate of 1% plus the prime rate announced by
the Wall Street Journal from time to time. We also entered into a line of credit
for up to  $800,000  with a  stockholder  of Meta,  which,  in the  absence of a
material  change in  financial  condition or  impairment  of ability to repay as
determined in good faith by the lender and subject to registration of the shares
issued to the  lender,  permits  quarterly  borrowings  in  increments  of up to
$200,000  after December 15, 2002, at a rate of 1% plus the prime rate announced
by the Wall Street  Journal from time to time.  In  connection  with the line of
credit, 100,000 shares of our common stock were issued to the lender, subject to
certain cancellation rights. Any amounts borrowed under the line of credit shall
be due and payable by August 2006.

New Accounting Pronouncements

In June 2001, the FASB issued  Statement of Financial  Accounting  Standards No.
143, "Accounting for Asset Retirement  Obligations" ("SFAS 143") to be effective
for all fiscal years  beginning after June 15, 2002,  meaning  effective July 1,
2002 for Adept.  SFAS 143 establishes  accounting  standards for the recognition
and  measurement of an asset  retirement  obligation  and its  associated  asset
retirement  cost. It also  provides  accounting  guidance for legal  obligations
associated with the retirement of tangible  long-lived assets. We do not believe
the adoption of SFAS 143 will have a material  impact on our financial  position
or results of operations.

In August 2001,  the FASB issued SFAS 144,  "Accounting  for the  Impairment  or
Disposal of Long-Lived Assets",  which is effective for fiscal periods beginning
after  December 15, 2001, or July 1, 2002 for Adept.  SFAS 144 provides a single
accounting  model for,  and  supersedes  previous  guidance  on  accounting  and
reporting for the  impairment/disposal  of long-lived assets.  SFAS 144 sets new
criteria  for the  classification  of an asset  held-for-sale  and  changes  the
reporting  of  discontinued  operations.  We do not believe that the adoption of
SFAS 144 will have a material  impact on our  financial  position  or results of
operations.

In April 2002, the FASB issued SFAS 145, "Rescission of FASB Statement No. 4, 44
and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS 145
requires that any gains or losses on extinguishment of debt that were classified
as an  extraordinary  item in prior  periods  that are not unusual in nature and
infrequent in occurrence be  reclassified to other income  (expense),  beginning
fiscal 2003 for Adept. We do not believe that the adoption of SFAS 145 will have
a material impact on our financial position or results of operations.

In June 2002, the FASB issued SFAS 146,  "Accounting  for Costs  Associated with
Exit or Disposal Activities", which is effective for exit or disposal activities
that are initiated after December 31, 2002. SFAS 146, which nullifies EITF Issue
No. 94-3,  "Liability  Recognition for Certain Employee Termination Benefits and
Other  Costs  to Exit  and  Activity  (Including  Certain  Costs  Incurred  in a
Restructuring)," requires that a liability for a cost associated with an exit or
disposal  activity be recognized and measured  initially at fair value only when
the  liability  is  incurred.  We have not yet  determined  the impact  that the
adoption  of SFAS  146  will  have  on our  financial  position  or  results  of
operations, if any.

FACTORS AFFECTING FUTURE OPERATING RESULTS

Risks Related to Our Business

You should  not rely on our past  results  to  predict  our  future  performance
because our  operating  results  fluctuate due to factors which are difficult to
forecast, and which can be extremely volatile.

Our past revenues and other operating results may not be accurate  indicators of
our future  performance.  Our operating results have been subject to significant
fluctuations  in the past,  and we expect this to  continue  in the future.  The
factors that may contribute to these fluctuations include:

                                       28
<PAGE>

o    fluctuations in aggregate capital spending,  cyclicality and other economic
     conditions  domestically and  internationally  in one or more industries in
     which we sell our products;

o    changes in demand in the communications,  semiconductor,  electronics,  and
     photonics industries and other markets we serve;

o    a change in market  acceptance of our products or a shift in demand for our
     products;

o    new product introductions by us or by our competitors;

o    changes in product mix and pricing by us, our suppliers or our competitors;

o    pricing and related  availability  of components  and raw materials for our
     products;

o    our failure to manufacture a sufficient  volume of products in a timely and
     cost-effective manner;

o    our  failure  to  anticipate  the  changing  product  requirements  of  our
     customers;

o    changes in the mix of sales by distribution channels;

o    exchange rate fluctuations;

o    extraordinary events such as litigation or acquisitions;

o    decline  or  slower  than  expected  growth in those  industries  requiring
     precision assembly automation; and

o    slower than expected adoption of distributed controls architecture.

Our gross margins may vary greatly depending on the mix of sales of lower margin
hardware products, particularly mechanical subsystems purchased from third party
vendors, and higher margin software products.

Our operating results are also affected by general economic and other conditions
affecting the timing of customer orders and capital spending.  For example,  our
operations  during the third and fourth quarters of fiscal 1998, the first three
quarters of fiscal 1999,  the first  quarter of fiscal  2000,  and all of fiscal
2001 and 2002 were  adversely  affected  by a  continuing  downturn  in hardware
purchases by  customers in the  electronics  industry,  particularly  disk-drive
manufacturers and to a lesser extent communication  manufacturers.  In addition,
we have experienced  significantly reduced demand during this fiscal year in our
base industries,  especially the electronics and semiconductor  industry, as our
customers reduced inventories as they adjusted their businesses from a period of
high growth to lower rates of growth or downsizing.  We cannot  estimate when or
if a sustained  revival in these key hardware markets and the  semiconductor and
electronics industry will occur.

We  generally   recognize   product   revenue  upon  shipment  or,  for  certain
international sales, upon receipt and acceptance by the customers.  As a result,
our net revenues and results of operations  for a fiscal period will be affected
by the timing of orders  received and orders shipped during the period.  A delay
in  shipments  near the end of a fiscal  period,  for  example,  due to  product
development  delays or delays in  obtaining  materials  may cause  sales to fall
below expectations and harm our operating results for the period.

In addition,  our continued  investments  in research and  development,  capital
equipment  and  ongoing  customer  service and  support  capabilities  result in
significant fixed costs that we cannot reduce rapidly. As a result, if our sales
for a particular fiscal period are below expected levels,  our operating results
for the period could be materially adversely affected.

In the event that in some fiscal  quarter our net revenues or operating  results
fall below the  expectations of public market analysts and investors,  the price
of our common  stock may fall.  We may not be able to  increase  or sustain  our
profitability on a quarterly or annual basis in the future.


                                       29
<PAGE>
Sales of our products depend on the capital spending  patterns of our customers,
which tend to be cyclical;  we are currently  experiencing reduced demand in the
electronics  and  semiconductor  industries,  which  may  adversely  affect  our
revenues.

Intelligent  automation  systems  using our  products  can  range in price  from
$75,000  to several  million  dollars.  Accordingly,  our  success  is  directly
dependent  upon the capital  expenditure  budgets of our  customers.  Our future
operations  may be subject  to  substantial  fluctuations  as a  consequence  of
domestic and foreign economic  conditions,  industry  patterns and other factors
affecting capital spending. Although the majority of our international customers
are not in the  Asia-Pacific  region,  we believe  that any  instability  in the
Asia-Pacific  economies could also have a material adverse effect on the results
of our  operations as a result of a reduction in sales by our customers to those
markets.  Domestic or  international  recessions or a downturn in one or more of
our major markets,  such as the food,  communications,  automotive,  electronic,
appliance, semiconductor,  photonics and life sciences industries, and resulting
cutbacks  in  capital  spending  would  have a  direct,  negative  impact on our
business. We are currently experiencing reduced demand in most of the industries
we serve including the electronics and semiconductor  industries and expect this
reduced  demand to  adversely  affect  our  revenues  for at least the first two
quarters of fiscal  2003 or beyond.  During  fiscal  2001 and 2002,  we received
significantly  fewer  orders  than  expected,   experienced   delivery  schedule
postponements on several existing orders and had some order cancellations.  Such
changes in orders may adversely affect revenue for future quarters.

We sell some of our products to the semiconductor industry,  which is subject to
sudden,  extreme,  cyclical variations in product supply and demand. The timing,
length and  severity of these cycles are  difficult  to predict.  In some cases,
these  cycles  have  lasted  more  than  a  year.   The  industry  is  currently
experiencing  a  significant  downturn  due to  decreased  worldwide  demand for
semiconductors.  Semiconductor  manufacturers  may contribute to these cycles by
misinterpreting  the conditions in the industry and over- or  under-investing in
semiconductor  manufacturing  capacity  and  equipment.  We may  not be  able to
respond effectively to these industry cycles.

Downturns in the  semiconductor  industry  often occur in  connection  with,  or
anticipation  of, maturing product cycles for both  semiconductor  companies and
their customers and declines in general economic conditions.  Industry downturns
have  been  characterized  by  reduced  demand  for  semiconductor  devices  and
equipment,  production  over-capacity and accelerated decline in average selling
prices.  During a period of  declining  demand,  we must be able to quickly  and
effectively   reduce  expenses  and  motivate  and  retain  key  employees.   We
implemented  a  worldwide  restructuring  program in fiscal  2002 to realign our
businesses to the changes in our industry and our customers' decrease in capital
spending.  We intend to make further  cost  reductions  in the first  quarter of
fiscal 2003 to further  realign our business.  Despite this  restructuring,  our
ability to reduce  expenses  in response  to any  downturn in the  semiconductor
industry is limited by our need for  continued  investment  in  engineering  and
research and  development  and extensive  ongoing  customer  service and support
requirements.  The long lead time for  production  and  delivery  of some of our
products creates a risk that we may incur  expenditures or purchase  inventories
for  products  which we cannot  sell.  We believe  our future  performance  will
continue to be affected by the cyclical  nature of the  semiconductor  industry,
and thus, any future downturn in the semiconductor industry could therefore harm
our revenues and gross margin if demand drops or average selling prices decline.

Industry  upturns  have been  characterized  by abrupt  increases  in demand for
semiconductor  devices and equipment  and  production  under-capacity.  During a
period  of  increasing  demand  and  rapid  growth,  we must be able to  quickly
increase  manufacturing capacity to meet customer demand and hire and assimilate
a sufficient number of qualified personnel. Our inability to ramp-up in times of
increased  demand  could harm our  reputation  and cause some of our existing or
potential customers to place orders with our competitors.

Many of the key components and materials of our products come from single source
suppliers;  their  procurement  requires  lengthy lead times or supplies of such
components are limited.

We obtain many key  components  and  materials and some  significant  mechanical
subsystems from sole or single source  suppliers with whom we have no guaranteed
supply arrangements.  In addition, some of our sole or single sourced components
and mechanical  subsystems  incorporated into our products have long procurement
lead times.  Our reliance on sole or single source  suppliers  involves  certain
significant risks including:

                                       30
<PAGE>
o    loss of control over the manufacturing process;

o    potential absence of adequate supplier capacity;

o    potential  inability to obtain an adequate  supply of required  components,
     materials or mechanical subsystems; and

o    reduced  control  over  manufacturing   yields,   costs,  timely  delivery,
     reliability and quality of components, materials and mechanical subsystems.

We depend on Sanmina  Corporation  for the  supply of our  circuit  boards,  NSK
Corporation for the supply of our linear modules,  which are mechanical  devices
powered by an  electric  motor that move in a  straight  line,  and which can be
combined as building  blocks to form simple robotic  systems,  Yaskawa  Electric
Corp. for the supply of our 6-axis robots, Samsung Electronics Co., Ltd. for the
supply of semiconductor  robots,  Hirata Corporation for the supply of our Adept
Cobra 600 robot  mechanism  and Adept  Cobra  800 robot  mechanisms  and  Matrox
Electronic Systems Ltd. for the supply of our computer vision processors,  which
are used to digitize images from a camera and perform measurements and analysis.
If any one of these  significant  sole or single source suppliers were unable or
unwilling to manufacture the components,  materials or mechanical  subsystems we
need in the volumes we require, we would have to identify and qualify acceptable
replacements. The process of qualifying suppliers may be lengthy, and additional
sources may not be available to us on a timely basis, on acceptable  terms or at
all.  If  sufficient  quantities  of these  items  were not  available  from our
existing  suppliers and a relationship  with an alternative  vendor could not be
developed in a timely manner, shipments of our products could be interrupted and
reengineering  of  these  products  could  be  required.  In the  past,  we have
experienced   quality  control  or  specification   problems  with  certain  key
components provided by sole source suppliers,  and have had to design around the
particular  flawed item. In addition,  some of the components that we use in our
products  are in short  supply.  We have  also  experienced  delays  in  filling
customer  orders due to the failure of certain  suppliers to meet our volume and
schedule  requirements.  Some of our  suppliers  have also ceased  manufacturing
components  that we  require  for our  products,  and we have been  required  to
purchase  sufficient  supplies  for  the  estimated  life of its  product  line.
Problems of this nature with our suppliers may occur in the future.

Disruption  or  termination  of our  supply  sources  could  require  us to seek
alternative  sources of supply, and could delay our product shipments and damage
relationships with current and prospective customers,  any of which could have a
material adverse effect on our business.  If we incorrectly forecast product mix
for a particular period and we are unable to obtain  sufficient  supplies of any
components  or mechanical  subsystems on a timely basis due to long  procurement
lead times, our business, financial condition and results of operations could be
substantially  impaired.  Moreover,  if demand  for a product  for which we have
purchased a substantial amount of components fails to meet our expectations,  we
would be required to write off the excess  inventory.  A prolonged  inability to
obtain  adequate  timely  deliveries  of key  components  could  have a material
adverse effect on our business, financial condition and results of operations.

Because our product sales are seasonal,  we may not be able to maintain a steady
revenue stream.

Our product sales are seasonal. We have historically had higher bookings for our
products  during the June quarter of each fiscal year and lower bookings  during
the  September  quarter of each fiscal  year,  due  primarily to the slowdown in
sales to European  markets and summer  vacations.  In the event bookings for our
products in the June fiscal quarter are lower than  anticipated  and our backlog
at the end of the June fiscal  quarter is  insufficient  to compensate for lower
bookings in the September  fiscal  quarter,  our results of  operations  for the
September fiscal quarter and future quarters will suffer.

A  significant  percentage of our product  shipments  occur in the last month of
each fiscal quarter.  Historically,  this has been due in part, at times, to our
inability to forecast the level of demand for our products or of the product mix
for a particular fiscal quarter.  To address this problem we periodically  stock
inventory levels of completed robots,  machine controllers and certain strategic
components.  If shipments of our products fail to meet  forecasted  levels,  the
increased  inventory levels and increased  operating expenses in anticipation of
sales that do not materialize could adversely affect our business.

Orders constituting our backlog are subject to changes in delivery schedules and
customer cancellations resulting in lower than expected revenues.

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<PAGE>

Backlog  should  not be relied on as a measure  of  anticipated  demand  for our
products or future  revenues,  because the orders  constituting  our backlog are
subject to changes in delivery schedules and in certain instances are subject to
cancellation  without  significant  penalty to the customer.  Increasingly,  our
business is characterized by short-term order and shipment schedules. We have in
the past experienced  changes in delivery  schedules and customer  cancellations
that  resulted in our revenues in a given  quarter  being  materially  less than
would have been anticipated based on backlog at the beginning of the quarter. We
experienced  greater customer delays and cancellations in fiscal 2002,  compared
to prior  periods,  and this  increase may continue in future  periods.  Similar
delivery  schedule  changes and order  cancellations  may  adversely  affect our
operating results in the future.

Because we do not have long-term  contracts  with our customers,  they may cease
purchasing our products at any time.

We generally do not have  long-term  contracts  with our  customers and existing
contracts may be cancelled.  As a result,  our agreements  with our customers do
not provide any  assurance of future  sales.  Accordingly  our customers are not
required to make minimum  purchases and may cease purchasing our products at any
time without penalty.  Because our customers are free to purchase  products from
our competitors, we are exposed to competitive price pressure on each order. Any
reductions,  cancellations or deferrals in customer orders could have a negative
impact on our financial condition and results of operations.

We have recently begun to sell our new distributed controls architecture, and we
may not achieve customer acceptance of these new products.

We have  recently  begun  to  sell to  customers  our new  distributed  controls
architecture based on technology including our 1394 FireWire technology.  We are
devoting, and expect to devote in the future significant financial,  engineering
and management resources to expand our development, marketing and sales of these
products.  Commercial  success of these  products  depends  upon our ability to,
among other things;

o    accurately  determine  the  features  and  functionality  that our controls
     customers require or prefer;

o    successfully  design and implement  intelligent  automation  solutions that
     include these features and functionality;

o    enter  into  agreements   with  system   integrators,   manufacturers   and
     distributors; and

o    achieve market acceptance for our design and approach.

Our distributed  controls strategy may not achieve broad market acceptance for a
variety of reasons including:

o    companies who use machine controls may continue to use their current design
     and may not adopt our distributed architecture;

o    companies  may  decide  to adopt a  different  technology  than  IEEE  1394
     FireWire for their distributed controls;

o    companies may determine that the costs and resources  required to switch to
     our distributed architecture are unacceptable to them;

o    system integrators,  manufacturers,  and OEMs may not enter into agreements
     with us; and

o    competition from traditional, well-established controls solutions.

If we do not achieve  market  acceptance  of these  products,  our  business and
operating results will suffer.

We charge a standard  price most of our products which may make us vulnerable to
cost overruns.

Our operating  results  fluctuate when our gross margins vary. Our gross margins
vary for a number of reasons, including:


                                       32
<PAGE>

o    the mix of products we sell;

o    the average  selling  prices of products we sell  including  changes in the
     average discounts offered;

o    the  costs  to  manufacture,  service  and  support  our new  products  and
     enhancements;

o    the costs to customize our systems;

o    our efforts to enter new markets; and

o    certain  inventory  related  costs  including  obsolescence  of  products &
     components resulting in excess inventory.

We charge a standard  price for certain of our products,  including the products
that we have  added as a result  of our  acquisitions.  If the costs we incur in
completing  a customer  order for these  products  exceed our  expectations,  we
generally cannot pass those costs on to our customer.

We have significant fixed costs which are not easily reduced during a downturn.

While we have  reduced our absolute  amount of expenses in several  areas of our
operations  in  connection  with our  restructuring,  we  continue  to invest in
research and  development,  capital  equipment  and extensive  ongoing  customer
service and support capability  worldwide.  These investments create significant
fixed costs that we may be unable to reduce  rapidly if we do not meet our sales
goals.  Moreover,  if we fail to obtain a significant  volume of customer orders
for an  extended  period of time,  we may have  difficulty  planning  our future
production and inventory levels,  utilizing our relatively fixed capacity, which
could also cause fluctuations in our operating results.

We rely on systems integrators and OEMs to sell our products.

We believe that our ability to sell products to system integrators and OEMs will
continue  to  be  important  to  our  success.  Our  relationships  with  system
integrators  and OEMs  are  generally  not  exclusive,  and  some of our  system
integrators  and OEMs may expend a  significant  amount of effort or give higher
priority to selling  products  of our  competitors.  In the  future,  any of our
system  integrators or our OEMs may discontinue their  relationships  with us or
form additional competing  arrangements with our competitors.  The loss of, or a
significant  reduction in revenues from, system  integrators or OEMs to which we
sell a significant  amount of our product could negatively  impact our business,
financial condition or results of operations.

As we  enter  new  geographic  and  applications  markets,  we must  locate  and
establish  relationships  with  system  integrators  and  OEMs to  assist  us in
building  sales in those  markets.  It can take an  extended  period of time and
significant  resources  to  establish a  profitable  relationship  with a system
integrator or OEM because of product  integration  expenses  training in product
and  technologies  and sales  training.  We may not be  successful  in obtaining
effective new system  integrators or OEMs or in maintaining sales  relationships
with  them.  In the  event  a  number  of our  system  integrators  and/or  OEMs
experience  financial  problems,   terminate  their  relationships  with  us  or
substantially  reduce the amount of our products  they sell,  or in the event we
fail to build an effective systems  integrator or OEM channel in any existing or
new markets,  our business,  financial condition and results of operations could
be adversely affected.

In addition,  a substantial  portion of our sales is to system  integrators that
specialize in designing and building production lines for manufacturers. Many of
these companies are small operations with limited  financial  resources,  and we
have  from time to time  experienced  difficulty  in  collecting  payments  from
certain of these companies.  As a result, we perform ongoing credit  evaluations
of our  customers.  To the  extent  we are  unable  to  mitigate  this  risk  of
collections from system integrators, our results of operations may be harmed. In
addition,  due to their limited  financial  resources,  during  extended  market
downturns,  the viability of some system  integrators may be in question,  which
would also result in a reduction in our revenues.

Our products generally have long sales cycles and implementation  periods, which
increase our costs in obtaining


                                       33
<PAGE>

orders and reduces the predictability of our earnings.

Our products are technologically  complex.  Prospective customers generally must
commit  significant  resources  to test and evaluate our products and to install
and integrate them into larger systems. Orders expected in one quarter may shift
to another quarter or be cancelled with little advance notice as a result of the
customers' budgetary constraints, internal acceptance reviews, and other factors
affecting the timing of customers'  purchase decisions.  In addition,  customers
often require a significant number of product  presentations and demonstrations,
in some instances  evaluating  equipment on site,  before  reaching a sufficient
level of confidence  in the product's  performance  and  compatibility  with the
customer's  requirements  to place an order.  As a result,  our sales process is
often  subject  to  delays  associated  with  lengthy  approval  processes  that
typically accompany the design and testing of new products.  The sales cycles of
our products  often last for many months or even years.  In  addition,  the time
required for our  customers to  incorporate  our products into their systems can
vary significantly with the needs of our customers and generally exceeds several
months,  which  further  complicates  our  planning  processes  and  reduces the
predictability  of our  operating  results.  Longer sales  cycles  require us to
invest  significant  resources  in  attempting  to make sales,  which may not be
realized in the near term and therefore  may delay or prevent the  generation of
revenue.

If we are unable to identify  and make  acquisitions,  our ability to expand our
operations and increase our revenue may suffer.

In the  latter  half of fiscal  2000,  a  significant  portion of our growth was
attributable to acquisitions of other  businesses and  technologies.  In October
2001, we acquired CHAD Industries,  Inc., and we announced, in the first quarter
of fiscal 2003,  our entry into a definitive  agreement to acquire a controlling
interest in Meta  Control  Technologies,  Inc. We expect  that  acquisitions  of
complementary  companies,  products and  technologies in the future will play an
important role in our ability to expand our operations and increase our revenue.
We are continually reviewing  acquisition  candidates as part of our strategy to
market  intelligent  automation  solutions  targeted at the  precision  assembly
industry.  If we are unable to  identify  suitable  targets for  acquisition  or
complete  acquisitions  on acceptable  terms,  our ability to expand our service
offerings  and  increase  our  revenue may be  impaired.  Even if we are able to
identify  and acquire  acquisition  candidates,  we may be unable to realize the
benefits anticipated as a result of these acquisitions.

Any  acquisitions we make could disrupt our business,  increase our expenses and
adversely affect our financial condition or operations.

During fiscal 2000, we acquired Pensar,  NanoMotion and BYE/Oasis. In July 2000,
we acquired HexaVision. In October 2001, we acquired CHAD Industries and, in the
third quarter of fiscal 2003, we announced our entry into a definitive agreement
to acquire a  controlling  interest in Meta  Control  Technologies,  Inc.  These
acquisitions  introduced  us to  industries  and  technologies  in which we have
limited previous experience. In the future we may make material acquisitions of,
or large  investments in, other  businesses that offer products,  services,  and
technologies that management believes will further our strategic objectives.  We
cannot  be  certain  that  we  would  successfully   integrate  any  businesses,
technologies  or personnel that we might  acquire,  and any  acquisitions  might
divert  our  management's  attention  away from our core  business.  Any  future
acquisitions   or  investments  we  might  make  would  present  risks  commonly
associated with these types of transactions, including:

o    difficulty in combining the product offerings, operations, or work force of
     an acquired business;

o    potential loss of key personnel of an acquired business;

o    adverse effects on existing relationships with suppliers and customers;

o    disruptions of our on-going businesses;

o    difficulties in realizing our potential financial and strategic  objectives
     through the successful integration of the acquired business;

o    difficulty in  maintaining  uniform  standards,  controls,  procedures  and
     policies;


                                       34
<PAGE>

o    potential  negative  impact on results of operations due to amortization of
     goodwill,  other  intangible  assets  acquired or assumption of anticipated
     liabilities;

o    risks  associated with entering  markets in which we have limited  previous
     experience;

o    potential negative impact of unanticipated liabilities or litigation; and

o    the diversion of management attention.

The risks  described  above,  either  individually  or in the  aggregate,  could
significantly harm our business,  financial condition and results of operations.
We expect that future  acquisitions,  if any, could provide for consideration to
be paid in cash, shares of our common stock, or a combination of cash and common
stock.  In addition,  we may issue  additional  equity in connection with future
acquisitions,  which  could  result  in  dilution  of our  shareholders'  equity
interest.  Fluctuations in our stock price may make  acquisitions more expensive
or  prevent  us from  being  able to  complete  acquisitions  on terms  that are
acceptable to us.

Our  international  operations and sales may subject us to divergent  regulatory
requirements and other financial and operating risks that may harm our operating
results.

International  sales were $31.8 million for the fiscal year ended June 30, 2002,
$36.4 million for the fiscal year ended June 30, 2001, and $44.9 million for the
fiscal year ended June 30, 2000. This represented 55.7%, 36.3%, and 45.2% of net
revenues for the  respective  periods.  We also  purchase  some  components  and
mechanical subsystems from foreign suppliers. As a result, our operating results
are subject to the risks inherent in  international  sales and purchases,  which
include the following:

o    unexpected changes in regulatory requirements;

o    political, military and economic changes and disruptions;

o    transportation costs and delays;

o    foreign currency fluctuations;

o    export/import controls;

o    tariff regulations and other trade barriers;

o    higher freight rates;

o    difficulties in staffing and managing foreign sales operations;

o    greater   difficulty   in  accounts   receivable   collection   in  foreign
     jurisdictions; and

o    potentially adverse tax consequences.

Foreign exchange  fluctuations may render our products less competitive relative
to locally manufactured  product offerings,  or could result in foreign exchange
losses.  In order to maintain a competitive price for our products in Europe, we
may have to provide  discounts  or  otherwise  effectively  reduce  our  prices,
resulting in a lower margin on products sold in Europe.  Continued change in the
values  of  European  currencies  or  changes  in the  values  of other  foreign
currencies could have a negative impact on our business, financial condition and
results of operations.

In addition,  duty, tariff and freight costs can materially increase the cost of
crucial  components for our products.  We anticipate  that past turmoil in Asian
financial markets and the deterioration of the underlying economic conditions in
certain Asian countries may continue to have an impact on our sales to customers
located in or whose  projects are based in Asian  countries due to the impact of
restrictions on government spending imposed by the International


                                       35
<PAGE>
Monetary Fund on those  countries  receiving the  International  Monetary Fund's
assistance. In addition, customers in those countries may face reduced access to
working capital to fund component purchases, such as our products, due to higher
interest rates,  reduced bank lending due to contractions in the money supply or
the  deterioration  in the customer's or our bank's  financial  condition or the
inability to access local equity financing.

Maintaining  operations in different countries requires us to expend significant
resources to keep our operations  coordinated  and subjects us to differing laws
and regulatory regimes that may affect our offerings and revenue.

We may incur currency exchange-related losses in connection with our reliance on
our single or sole source foreign suppliers.

We  make   yen-denominated   purchases  of  certain  components  and  mechanical
subsystems  from certain of our sole or single  source  Japanese  suppliers.  We
remain subject to the  transaction  exposures  that arise from foreign  exchange
movements   between  the  dates  foreign   currency  export  sales  or  purchase
transactions are recorded and the dates cash is received or payments are made in
foreign currencies.  We experienced losses on instruments that hedge our foreign
currency  exposure in fiscal 2002 and may experience a loss on such  instruments
in the future.  Our current or any future currency  exchange strategy may not be
successful in avoiding  exchange-related  losses. Any exchange-related losses or
exposure may negatively affect our business,  financial  condition or results of
operations.

If our hardware  products do not comply with standards set forth by the European
Union, we will not be able to sell them in Europe.

Our hardware  products are required to comply with  European  Union Low Voltage,
Electro-Magnetic  Compatibility,  and Machinery Safety Directives.  The European
Union  mandates that our products carry the CE mark denoting that these products
are manufactured in strict  accordance to design  guidelines in support of these
directives.   These   guidelines   are   subject   to  change   and  to  varying
interpretation.  New guidelines  impacting  machinery design go into effect each
year.  To  date,  we have  retained  TUV  Rheinland  to help  certify  that  our
controller-based  products,  including  some  of  our  robots,  meet  applicable
European  Union  directives  and  guidelines.  Although our  existing  certified
products meet the requirements of the applicable  European Union directives,  we
cannot provide any assurance that future products can be designed, within market
window  constraints,  to  meet  the  future  requirements.  If any of our  robot
products or any other major hardware  products do not meet the  requirements  of
the European Union directives, we would be unable to legally sell these products
in Europe.  Thus,  our business,  financial  condition and results of operations
could be harmed.  Such  directives  and  guidelines  could change in the future,
forcing us to redesign or withdraw  from the market one or more of our  existing
products that may have been originally approved for sale.

Our hardware and software  products may contain  defects that could increase our
expenses  and  exposure to  liabilities  and or harm our  reputation  and future
business prospects.

Our hardware and software products are complex and, despite  extensive  testing,
our new or existing  products or  enhancements  may contain  defects,  errors or
performance  problems when first  introduced,  when new versions or enhancements
are released or even after these products or enhancements  have been used in the
marketplace  for a period of time. We may discover  product defects only after a
product has been  installed  and used by  customers.  We may  discover  defects,
errors or  performance  problems  in future  shipments  of our  products.  These
problems could result in expensive and time consuming  design  modifications  or
large  warranty  charges,  expose us to liability for damages,  damage  customer
relationships  and result in loss of market  share,  any of which could harm our
reputation and future business prospects. In addition, increased development and
warranty costs could reduce our operating profits and could result in losses.

The existence of any defects, errors or failures in our products could also lead
to product  liability claims or lawsuits against us or against our customers.  A
successful  product  liability claim could result in substantial cost and divert
management's attention and resources,  which could have a negative impact on our
business,  financial  condition and results of  operations.  Although we are not
aware of any  product  liability  claims to date,  the sale and  support  of our
products entail the risk of these claims.

The success of our business depends on our key employees.

                                       36
<PAGE>

We are highly dependent upon the continuing contributions of our key management,
sales, and product development personnel.  In particular,  we would be adversely
affected if we were to lose the  services  of Brian  Carlisle,  Chief  Executive
Officer and Chairman of the Board of  Directors,  who has  provided  significant
leadership to us since our inception, or Bruce Shimano, Vice President, Research
and  Development  and a Director,  who has guided our research  and  development
programs since  inception.  In addition,  the loss of the services of key senior
managerial,  technical or sales personnel  could impair our business,  financial
condition,  and results of operations.  We do not have employment contracts with
any of our executive  officers and do not maintain key man life insurance on the
lives of any of our key personnel.

Our future  success  depends on our  continuing  ability to attract,  retain and
motivate highly-qualified managerial, technical and sales personnel.

Competition  for qualified  technical  personnel in the  intelligent  automation
industry is intense.  Our  inability  to recruit and train  adequate  numbers of
qualified  personnel  on a timely  basis would  adversely  affect our ability to
design, manufacture, market and support our products.

In addition, our success will depend on our ability to hire and retain qualified
and experienced engineers, senior management,  sales and marketing personnel and
key  personnel  within other  functional  organizations.  Competition  for these
personnel  is intense,  particularly  in  geographic  areas  recognized  as high
technology  centers such as the Silicon Valley area, where our principal offices
are  located,  and other  locations  where we maintain  offices.  To attract and
retain  individuals  with the requisite  expertise,  we may be required to grant
large option or other  stock-based  incentive  awards,  which may be dilutive to
shareholders.  We may also be required to pay significant base salaries and cash
bonuses,  which could harm our operating results. If we do not succeed in hiring
and retaining candidates with appropriate qualifications, we will not be able to
grow our business and our operating results will be harmed.

If we become subject to unfair hiring claims,  we could be prevented from hiring
needed  personnel,  incur liability for damages and incur  substantial  costs in
defending ourselves.

Companies in our industry whose  employees  accept  positions  with  competitors
frequently claim that these  competitors have engaged in unfair hiring practices
or that the  employment of these persons would involve the  disclosure or use of
trade secrets.  These claims could prevent us from hiring  personnel or cause us
to incur  liability  for  damages.  We could  also  incur  substantial  costs in
defending  ourselves or our employees against these claims,  regardless of their
merits.  Defending ourselves from these claims could divert the attention of our
management away from our operations.

Our failure to protect our intellectual property and proprietary  technology may
significantly impair our competitive advantage.

Our  success  and ability to compete  depend in large part upon  protecting  our
proprietary technology.  We rely on a combination of patent, trademark and trade
secret  protection  and  nondisclosure  agreements  to protect  our  proprietary
rights.  The  steps  we  have  taken  may  not  be  sufficient  to  prevent  the
misappropriation of our intellectual property, particularly in foreign countries
where the laws may not protect our proprietary  rights as fully as in the United
States.  The patent and  trademark  law and trade secret  protection  may not be
adequate to deter third party infringement or  misappropriation  of our patents,
trademarks and similar proprietary rights. In addition,  patents issued to Adept
may be challenged,  invalidated or circumvented.  Our rights granted under those
patents may not provide  competitive  advantages to us, and the claims under our
patent  applications  may not be allowed.  We may be subject to or may  initiate
interference proceedings in the United States Patent and Trademark Office, which
can demand  significant  financial  and  management  resources.  The  process of
seeking  patent  protection  can be time consuming and expensive and patents may
not be issued  from  currently  pending or future  applications.  Moreover,  our
existing  patents or any new patents that may be issued may not be sufficient in
scope or strength to provide meaningful  protection or any commercial  advantage
to us.

We may in the future  initiate  claims or  litigation  against third parties for
infringement  of our  proprietary  rights  in order to  determine  the scope and
validity of our proprietary rights or the proprietary rights of our competitors.
These


                                       37
<PAGE>


claims could result in costly  litigation and the diversion of our technical and
management personnel.

We may face costly intellectual property infringement claims.

We have from time to time received  communications  from third parties asserting
that we are infringing certain patents and other intellectual property rights of
others  or  seeking  indemnification  against  such  alleged  infringement.  For
example, some end users of our products have notified us that they have received
a claim of patent infringement from the Jerome H. Lemelson Foundation,  alleging
that their use of our machine vision products  infringes  certain patents issued
to Mr. Lemelson.  In addition, we have been notified that other end users of our
AdeptVision  VME  line  and the  predecessor  line of  Multibus  machine  vision
products have received  letters from the Lemelson  Foundation which refer to Mr.
Lemelson's  patent  portfolio and offer the end user a license to the particular
patents.  As claims arise, we evaluate their merits.  Any claims of infringement
brought by third parties could result in protracted and costly litigation,  that
damages for  infringement,  and the necessity of obtaining a license relating to
one or more of our products or current or future technologies,  which may not be
available on commercially  reasonable terms or at all.  Litigation,  which could
result  in  substantial  cost  to us  and  diversion  of our  resources,  may be
necessary  to enforce our patents or other  intellectual  property  rights or to
defend us against claimed infringement of the rights of others. Any intellectual
property litigation and the failure to obtain necessary licenses or other rights
could have a material  adverse effect on our business,  financial  condition and
results of operations. Some of our end users have notified us that they may seek
indemnification  from us for damages or expenses  resulting from any claims made
by the Jerome H. Lemelson  Foundation.  We cannot predict the outcome of this or
any similar  litigation  which may arise in the future.  Litigation of this kind
may have a material  adverse  effect on our  business,  financial  condition  or
results of operations.

Risks Related to Our Industry

We face intense competition in the market for intelligent automation products.

The market for intelligent automation products is highly competitive. We believe
that the  principal  competitive  factors  affecting the market for our products
are:

o    product functionality and reliability;

o    price

o    customer service;

o    delivery; and

o    product features such as flexibility, programmability and ease of use.

We compete with a number of robot companies,  motion control companies,  machine
vision companies and simulation software companies. Many of our competitors have
substantially  greater financial,  technical and marketing resources than us. In
addition, we may in the future face competition from new entrants in one or more
of our markets.

Many of our  competitors  in the robot market are  integrated  manufacturers  of
products that produce  robotics  equipment  internally for their own use and may
also compete with our products for sales to other customers. Some of these large
manufacturing  companies  have  greater  flexibility  in  pricing  because  they
generate  substantial  unit volumes of robots for  internal  demand and may have
access  through their parent  companies to large amounts of capital.  Any of our
competitors  may seek to expand  their  presence  in other  markets  in which we
compete.

Our current or potential competitors may develop products comparable or superior
in terms of price and  performance  features to those  developed  by us or adapt
more quickly than we can to new or emerging technologies and changes in customer
requirements.  We may be required to make substantial  additional investments in
connection with our research, development,  engineering,  marketing and customer
service efforts in order to meet any competitive threat, so that we will be able
to  compete  successfully  in the  future.  We  expect  that  in the  event  the


                                       38
<PAGE>

intelligent  automation  market  expands,   competition  in  the  industry  will
intensify,  as additional  competitors enter our markets and current competitors
expand their product  lines.  Increased  competitive  pressure could result in a
loss of sales or market share, or cause us to lower prices for our products, any
of which could harm our business.

We offer  products  for  multiple  industries  and must face the  challenges  of
supporting the distinct needs of each of our markets.

We  market  products  for the  food,  communications,  electronics,  automotive,
appliance,  semiconductor,  photonics and life sciences  industries.  Because we
operate in multiple industries, we must work constantly to understand the needs,
standards and technical  requirements of several  different  industries and must
devote  significant   resources  to  developing  different  products  for  these
industries.  Our results of operations are also subject to the  cyclicality  and
downturns in these markets.  Product  development is costly and time  consuming.
Many of our products are used by our customers to develop,  manufacture and test
their own products.  As a result,  we must  anticipate  trends in our customers'
industries   and  develop   products   before  our   customers'   products   are
commercialized.  If we do not accurately predict our customers' needs and future
activities,  we may invest substantial  resources in developing products that do
not achieve broad market acceptance.  Our decision to continue to offer products
to a given market or to  penetrate  new markets is based in part on our judgment
of the size, growth rate and other factors that contribute to the attractiveness
of a particular  market.  If our product  offerings in any particular market are
not  competitive  or our  analyses of a market are  incorrect,  our business and
results of operations could be harmed.

We may not be able to keep up with the rapid  pace of  technological  change and
new product development that characterize the intelligent automation industry.

The intelligent  automation  industry is  characterized  by rapid  technological
change and new product  introductions  and  enhancements.  Our ability to remain
competitive  depends greatly upon the technological  quality of our products and
processes  compared to those of our competitors and our ability both to continue
to  develop  new and  enhanced  products  and to  introduce  those  products  at
competitive  prices  and on a timely  and  cost-effective  basis.  We may not be
successful  in  selecting,  developing  and  manufacturing  new  products  or in
enhancing our existing products on a timely basis or at all. Our new or enhanced
products may not achieve market acceptance.  Our failure to successfully select,
develop and manufacture new products, or to timely enhance existing technologies
and  meet  customers'   technical   specifications   for  any  new  products  or
enhancements on a timely basis, or to  successfully  market new products,  could
harm our  business.  If we  cannot  successfully  develop  and  manufacture  new
products or meet  specifications,  our  products  could lose market  share,  our
revenues and profits could decline, or we could experience operating losses. New
technology  or  product  introductions  by our  competitors  could  also cause a
decline in sales or loss of market acceptance for our existing products or force
us to significantly reduce the prices of our existing products.

From time to time we have experienced delays in the introduction of, and certain
technical and manufacturing  difficulties with, some of our products, and we may
experience  technical  and  manufacturing  difficulties  and  delays  in  future
introductions  of  new  products  and  enhancements.  Our  failure  to  develop,
manufacture  and sell new products in quantities  sufficient to offset a decline
in revenues from existing products or to successfully manage product and related
inventory transitions could harm our business.

Our success in developing,  introducing, selling and supporting new and enhanced
products  depends  upon a variety of  factors,  including  timely and  efficient
completion of hardware and software design and  development,  implementation  of
manufacturing  processes and effective  sales,  marketing and customer  service.
Because of the complexity of our products,  significant delays may occur between
a product's initial introduction and commencement of volume production.

The development and commercialization of new products involve many difficulties,
including:

o    the identification of new product opportunities;

o    the retention and hiring of appropriate research and development personnel;

o    the determination of the product's technical specifications;


                                       39
<PAGE>


o    the successful completion of the development process;

o    the  successful  marketing of the product and the risk of having  customers
     embrace new technological advances; and

o    additional  customer  service costs  associated with supporting new product
     introductions and/or effecting subsequent potential field upgrades.

The  development  of new products may not be completed in a timely  manner,  and
these products may not achieve  acceptance in the market. The development of new
products has required,  and will require,  that we expend significant  financial
and management  resources.  If we are unable to continue to successfully develop
new products in response to customer requirements or technological  changes, our
business may be harmed.

If we fail to adequately invest in research and development, we may be unable to
compete effectively.

We have  limited  resources  to allocate to research  and  development  and must
allocate our  resources  among a wide  variety of  projects.  Because of intense
competition in our industry, the cost of failing to invest in strategic products
is high. If we fail to adequately invest in research and development,  we may be
unable to compete effectively in the intelligent  automation markets in which we
operate.

If we do not comply with environmental regulations, our business may be harmed.

We are subject to a variety of  environmental  regulations  relating to the use,
storage,  handling,  and disposal of certain  hazardous  substances  used in the
manufacturing and assembly of our products.  We believe that we are currently in
compliance  with all material  environmental  regulations in connection with our
manufacturing operations,  and that we have obtained all necessary environmental
permits to conduct our business.  However, our failure to comply with present or
future regulations could subject us to a variety of consequences that could harm
our business, including:

o    the imposition of substantial fines;

o    suspension of production; and

o    alteration of manufacturing processes or cessation of operations.

Compliance with environmental  regulations could require us to acquire expensive
remediation equipment or to incur substantial  expenses.  Our failure to control
the use, disposal, removal, storage, or to adequately restrict the discharge of,
or assist in the cleanup of, hazardous or toxic substances,  could subject us to
significant  liabilities,  including  joint and several  liability under certain
statutes.  The  imposition of  liabilities of this kind could harm our financial
condition.

Failure to obtain export licenses could harm our business.

We must comply with U.S.  Department  of Commerce  regulations  in shipping  our
software  products  and  other  technologies  outside  the  United  States.  Any
significant  future  difficulty in complying could harm our business,  financial
condition and results of operations.

Risks Related to our Stock

Our stock price has fluctuated and may continue to fluctuate widely.

The market price of our common stock has fluctuated  substantially  in the past.
Between June 30, 2001 and June 30, 2002,  the sales price of our common  shares,
as reported on the Nasdaq National Market,  ranged from a low of $1.50 to a high
of $10.60 The market  price of our common  stock will  continue to be subject to
significant  fluctuations  in the future in  response  to a variety of  factors,
including:


                                       40
<PAGE>

o    the business environment,  including the operating results and stock prices
     of companies in the industries we serve;

o    future announcements  concerning our business or that of our competitors or
     customers;

o    the  introduction of new products or changes in product pricing policies by
     us or our competitors;

o    litigation regarding proprietary rights or other matters;

o    change in analysts' earnings estimates;

o    developments in the financial markets;

o    quarterly fluctuations in operating results; and

o    general conditions in the intelligent automation industry.

Furthermore,  stock prices for many companies,  and high technology companies in
particular,  fluctuate  widely  for  reasons  that  may be  unrelated  to  their
operating results. Those fluctuations and general economic, political and market
conditions, such as recessions,  terrorist actions or other military actions, or
international  currency  fluctuations,  as well as public  perception  of equity
values of publicly traded companies may adversely affect the market price of our
common  stock.  Failure of the  reported  price of our common  stock to meet the
minimum  trading prices required by the Nasdaq National Market or our failure to
meet other listed company requirements,  such as minimum shareholder's equity or
aggregate market value of the company's securities,  among others, may result in
shares of our common stock no longer being traded on Nasdaq National Market.

We may be subject to  securities  class action  litigation if our stock price is
volatile,  which could result in  substantial  costs,  distract  management  and
damage our reputation.

In the past,  securities class action  litigation has often been brought against
companies  following  periods  of  volatility  in  the  market  price  of  their
securities. Companies, like us, that are involved in rapidly changing technology
markets  are  particularly  subject  to  this  risk.  We may be  the  target  of
litigation of this kind in the future. Any securities litigation could result in
substantial  costs,  divert  management's   attention  and  resources  from  our
operations and negatively affect our public image and reputation.

We may need to raise additional  capital in the future,  and if we are unable to
secure  adequate  funds on  acceptable  terms,  we may be unable to execute  our
business plan or take  advantage of future  opportunities  essential to our long
term strategy.

If our capital  requirements vary significantly from those currently planned, we
may require additional financing sooner than anticipated, or in greater amounts.
If our existing cash balances and cash flow expected from future  operations are
not  sufficient to meet our liquidity  needs,  we will need to raise  additional
funds. If adequate funds are not available on acceptable terms or at all, we may
not be able to take  advantage of market  opportunities,  develop or enhance new
products,  pursue  acquisitions  that  would  complement  our  existing  product
offerings or enhance our  technical  capabilities,  execute our business plan or
otherwise respond to competitive pressures or unanticipated requirements.

The ability of our Board of  Directors to issue  preferred  stock could delay or
impede a change of control of the Company and may adversely  affect the price an
acquirer is willing to pay for our common stock.

The Board of Directors has the authority to issue, without further action by the
shareholders,  up to 5,000,000  shares of preferred  stock in one or more series
and to fix the price, rights, preferences,  privileges and restrictions thereof,
including dividend rights,  dividend rates,  conversion  rights,  voting rights,
terms of redemption,  redemption prices,  liquidation preferences and the number
of shares  constituting a series or the designation of such series,  without any
further vote or action by the Company's shareholders.  The issuance of preferred
stock,  while  providing  desirable  flexibility  in  connection  with  possible
acquisitions  and other corporate  purposes,  could have the effect of delaying,
deferring  or  preventing  a change in control of the  Company  without  further
action by the shareholders and may


                                       41
<PAGE>

adversely  affect the market  price of, and the voting and other  rights of, the
holders  of common  stock.  We have  issued  100,00  shares  of our  convertible
preferred stock for consideration of $25.0 million with a liquidation preference
that may be  triggered by events such as a change of control of our common stock
and that is  convertible  into shares of common stock as described in "Liquidity
and Capital Resources", which may affect the price an acquirer is willing to pay
for our common stock.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk for changes in interest  rates relates  primarily to
our  investment  portfolio.  We maintain an  investment  policy,  which seeks to
ensure the safety and  preservation  of our invested  funds by limiting  default
risk, market risk and reinvestment risk. The table below presents principal cash
flow amounts and related weighted-average interest rates by year of maturity for
our investment portfolio.

<TABLE>
<CAPTION>

                                                                                                                             Fair
                                                             2002             2003            2004           Total           Value
                                                          ----------       ----------      ----------      ----------       -------
                                                                         (in thousands)
<S>                                                       <C>               <C>            <C>             <C>              <C>

Cash equivalents
 Fixed rate .........................................     $   17,375               --              --      $   17,375       $17,375
 Average rate .......................................           1.27%              --              --            1.27%
Short term marketable securities
 Fixed rate .........................................     $    4,306               --              --      $    4,306       $ 4,306
 Average rate .......................................           1.98%              --              --            1.98%
                                                          ----------       ----------      ----------      ----------       -------

    Total Investment Securities .....................     $   21,681               --              --      $   21,681       $21,681
                                                          ==========       ==========      ==========      ==========       =======

 Average rate .......................................           1.41%              --              --            1.41%
</TABLE>


We mitigate  default risk by investing in high credit quality  securities and by
positioning our portfolio to respond appropriately to a significant reduction in
a credit rating of any investment  issuer of guarantor.  Our portfolio  includes
only  marketable  securities  with active  secondary or resale markets to ensure
portfolio liquidity and contains a prudent amount of diversification. We conduct
business  on a  global  basis.  Consequently,  we  are  exposed  to  adverse  or
beneficial movements in foreign currency exchange rates.

Our foreign  currency  hedging  program is used to hedge our exposure to foreign
currency   exchange  risk  on  local   international   operational   assets  and
liabilities.  We enter into foreign currency  forward  contracts to minimize the
impact of exchange rate fluctuations on certain foreign currency commitments and
balance sheet positions and may enter into foreign exchange forward contracts in
the future.  Realized and unrealized  gains and losses on instruments that hedge
firm  commitments are deferred and included in the measurement of the subsequent
transaction;  however,  losses are deferred only to the extent of expected gains
on future commitments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Consolidated  Financial  Statements and Financial Statement Schedules as of June
30, 2002 and 2001 and for each of the three  years in the period  ended June 30,
2002 are included in Items  15(a)(1)  and (2) included in this Annual  Report on
Form 10-K.


Supplementary  Financial  Data is included under Item 6 in this Annual Report on
Form 10-K.

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                                       42
<PAGE>


The  information  required by this item concerning our directors is incorporated
by reference from the section captioned "Election of Directors" contained in our
Proxy  Statement  related to the Annual  Meeting of  Shareholders  to be held on
November 15, 2002 to be filed by us with the Securities and Exchange  Commission
within 120 days of the end of our fiscal year  pursuant  to General  Instruction
G(3) of Form 10-K, referred to as the Proxy Statement.  The information required
by this  item  concerning  executive  officers  is set  forth  in Part I of this
Report. The information required by this item concerning compliance with Section
16(a)  of the  Exchange  Act is  incorporated  by  reference  from  the  section
captioned "Section 16(a) Beneficial Ownership Reporting Compliance" contained in
the Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

The  information  required by this item is  incorporated  by reference  from the
section captioned  "Executive  Compensation and Other Matters"  contained in the
Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  required by this item is  incorporated  by reference  from the
section  captioned   "Security   Ownership  of  Certain  Beneficial  Owners  and
Management" contained in the Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required by this item is  incorporated  by reference  from the
sections captioned "Compensation Committee Interlocks and Insider Participation"
and "Certain Transactions" contained in the Proxy Statement.

ITEM 14. CONTROLS AND PROCEDURES

Not Applicable.

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)(1) Financial Statements

The financial  statements  (including  the Notes thereto  listed in the Index to
Consolidated  Financial  Statements (set forth in Item 8 of Part II of this Form
10-K) are filed as part of this Annual Report on Form 10-K.

(a)(2) Financial Statement Schedules

The following  financial  statement  schedule is included herein:
Schedule II - Valuation and  Qualifying  Accounts  Additional  schedules are not
required  under the  related  schedule  instructions  or are  inapplicable,  and
therefore have been omitted.

(a)(3) Exhibits

2.1       Share  Purchase  Agreement  among Marc  Tremblay,  Alain Rivard,  Eric
          St-Pierre,  Pierre Boivin,  9044-0108 Quebec Inc.,  Societe Innovatech
          Quebec   et   Chaudiere-Appalaches,    Sofinov,   Societe   Financiere
          d'Innovation  Inc.,  Business  Development  Bank of Canada,  Christian
          Labbe,  Patrick Murphy and certain other  shareholders  named therein,
          Adept  Technology  Canada Holding Co., and Registrant,  dated July 21,
          2000  (incorporated  by reference  to Exhibit 2.1 to the  Registrant's
          Current  Report on Form 8-K/A filed with the  Securities  and Exchange
          Commission on October 25, 2000).+

3.1       Amended and  Restated  Articles  of  Incorporation  of the  Registrant
          (incorporated   by  reference  to  Exhibit  3.1  to  the  Registrant's
          Registration  Statement  on Form S- 1 (No.  33-98816)  (the "1995 Form
          S-1")).


                                       43
<PAGE>


3.2       Certificate  of  Amendment  of  Articles  of   Incorporation   of  the
          Registrant filed with the Secretary of State of California on November
          17, 2000 (incorporated by reference to Exhibit 3.2 to the Registrant's
          Registration Statement on Form S-1 (No. 333-48638)).

3.3       Bylaws  of  the  Registrant,  as  amended  to  date  (incorporated  by
          reference  to Exhibit 3.4 to the  Registrant's  Annual  Report on Form
          10-K for the fiscal year ended June 30, 2000) (the "2000 Form 10-K")).

3.4       Statement  of  Preferences  of Series A and Series B  Preferred  Stock
          (incorporated  by references to Exhibit 3.1 to the  Registrant's  Form
          10-Q for the fiscal quarter ended  September 29, 2001 (the "2002 First
          Quarter 10-Q")).

4.1       Form of Stock Certificate (incorporated by reference to Exhibit 4.2 to
          the 1995 Form S-1).

4.2       Securities  Purchase and Investor Rights agreement,  dated October 22,
          2001,   between   the   Registrant   and  JDS   Uniphase   corporation
          (incorporated by to Exhibit 4.1 to the Registrant's 2002 First Quarter
          10-Q.

10.1*     1993  Stock  Plan  as   amended,   and  form  of   agreement   thereto
          (incorporated   by  reference  to  Exhibit  4.1  to  the  Registrant's
          Registration  Statement  on Form S-8  filed  with the  Securities  and
          Exchange Commission on November 20, 2000, No. 333-50292).

10.2*     1998 Employee Stock  Purchase Plan as amended,  and form of agreements
          thereto  (incorporated by reference to Exhibit 4.1 to the Registrant's
          Registration  Statement  on Form S-8  filed  with the  Securities  and
          Exchange Commission on November 20, 2000, No. 333-50296).

10.3*     1995 Director  Option Plan as amended,  and form of agreement  thereto
          (incorporated  by reference to Exhibit 10.4 to the  Registrant's  Form
          10-K for the fiscal year ended June 30, 1997 (the "1997 Form 10-K")).

10.4      Form of  Indemnification  Agreement  between  the  Registrant  and its
          officers and directors  (incorporated  by reference to Exhibit 10.5 to
          the 1995 Form S-1).

10.5      Office  Building  Lease between  Registrant  and Puente Hills Business
          Center II dated May 20, 1993, as amended (incorporated by reference to
          Exhibit 10.6.2 to the 1995 Form S-1).

10.6      Lease  Agreement dated as of April 30, 1998 between the Registrant and
          the  Joseph  and Eda  Pell  Revocable  Trust  dated  August  18,  1989
          (incorporated by reference to Exhibit 10.9 to the 1998 Form 10-K).

10.7      Lease  Agreement  dated  June  1,  1998  between  the  Registrant  and
          Technology  Centre Associates LLC for the premises located at 180 Rose
          Orchard  Way,  San Jose,  California  (incorporated  by  reference  to
          Exhibit 10.10 to the 1998 Form 10-K).


                                       44
<PAGE>

10.8      First  Amendment  to Lease  Agreement  dated June 1, 1998  between the
          Registrant  and Technology  Centre  Associates LLC dated July 31, 1998
          (incorporated by reference to Exhibit 10.10.1 to the 1998 Form 10-K).

10.9      Lease Agreement  dated June 1, 1998 between  Registrant and Technology
          Centre  Associates  LLC for the  premises  located at 150 Rose Orchard
          Way, San Jose,  California  (incorporated by reference to Exhibit 10.2
          to the  Registrant's  Form 10-Q for the fiscal quarter ended September
          30, 2000 (the "2001 First Quarter Form 10-Q")).

10.11     Second  Amendment  to Lease  Agreement  dated March 31,  2000  between
          Registrant  and Technology  Centre  Associates LLC dated July 31, 1998
          (incorporated by reference to Exhibit 10.10.3 to the 2000 Form 10-K).

10.12     First  Addendum  to Lease  Agreement  dated  August 18,  1999  between
          Registrant  and Joseph and Eda Pell  Revocable  Trust dated August 18,
          1989  (incorporated  by reference to Exhibit  10.10.4 to the 2000 Form
          10-K).

10.13     Lease  Agreement  dated April 28, 2000 between  Registrant and Michael
          and  Diane   Edwards   for   premises   located  in  Tucson,   Arizona
          (incorporated by reference to Exhibit 10.10.5 to the 2000 Form 10-K).

10.14     Lease Agreement dated May 19, 2000 between  NanoMotion Inc. and United
          Insurance  Co. of  America  for  premises  located  at Santa  Barbara,
          California  (incorporated  by reference to Exhibit 10.10.6 to the 2000
          Form 10-K).

10.15**   Agreement between Registrant and Altron Systems Corporation  (acquired
          by Sanmina  Corporation)  dated  January  30,  1998  (incorporated  by
          reference to Exhibit 10.27 to the  Registrant's  Amended Annual Report
          on Form 10-K/A for the fiscal year ended June 30, 2000 (the "2000 Form
          10-K/A).

10.16     Agreement between  Registrant and Ramix Incorporated dated October 27,
          1998  (incorporated  by  reference  to Exhibit  10.28 to the 2000 Form
          10-K/A).

10.17     Robot Module Purchase and Service Agreement between Registrant and NSK
          Corporation  dated  January 19, 1995  (incorporated  by  reference  to
          Exhibit 10.29 to the 2000 Form 10-K/A).

10.18**   Original  Equipment  Manufacturer  Agreement  between  Registrant  and
          Hirata  Corporation dated January 31, 1995  (incorporated by reference
          to Exhibit 10.31 to the 2000 Form 10-K/A).

10.19**   Original  Equipment  Manufacturing  Agreement  between  Registrant and
          Samsung  Electronics Co., LTD dated February 26, 1999 (incorporated by
          reference to Exhibit 10.32 to the 2000 Form 10-K/A).


                                       45
<PAGE>

10.20**   Sublicense  Agreement  between SILMA  Division of Registrant and Adept
          Japan Co., LTD dated September 26, 2000  (incorporated by reference to
          Exhibit 10.33 to the 2000 Form 10-K/A).

10.21**   Original  Equipment  Manufacturing  Agreement  between  Registrant and
          Yaskawa  Electric  Corp.  dated  August  29,  2000   (incorporated  by
          reference to Exhibit 10.34 to the 2000 Form 10-K/A).

10.22     Industrial  R&D  Lease   Agreement  dated  October  31,  2000  between
          Registrant  and  Tri-Valley  Campus  I, LLC for  premises  located  at
          Livermore,  California  (incorporated  by reference to Exhibit 10.1 to
          the 2001 First Quarter Form 10-Q).

10.23     Amendment  No. 1 dated  September  9,  1997 to Office  Building  Lease
          between  Registrant and Puente Hills Business  Center II dated May 20,
          1993  (incorporated  by  reference  to Exhibit  10.3 to the 2001 First
          Quarter Form 10-Q).

10.24     Amendment No. 2 dated June 17, 1998 to Office  Building  Lease between
          Registrant  and Puente  Hills  Business  Center II dated May 20,  1993
          (incorporated  by reference to Exhibit 10.4 to the 2001 First  Quarter
          Form 10-Q).  $10.25 10.25 First Amendment to Export-Import Bank of the
          United States Working Capital  Guarantee  Program  Borrower  Agreement
          dated April 5, 2001 between Registrant,  the Export-Import Bank of the
          United States and The CIT Group/Business  Credit,  Inc. dated July 10,
          2001.  (incorporated by reference to Exhibit 10.34 to the Registrant's
          Annual  Report on Form 10-K for the fiscal  year  ended June 30,  2001
          (the "2001 Form 10-K").

10.26     Export-Import  Bank of the United  States  Working  Capital  Guarantee
          Program Borrower Agreement dated April 5, 2001 between Registrant, the
          Export-Import  Bank of the United  States  and The CIT  Group/Business
          Credit,  Inc.  (incorporated by reference to Exhibit 10.35 to the 2001
          Form 10-K).

10.27     Loan and Security  Agreement  (Non-Exim  Facility) dated April 5, 2001
          between   Registrant   and  The  CIT   Group/Business   Credit,   Inc.
          (incorporated by reference to Exhibit 10.36 to the 2001 Form 10-K).

10.28     Loan and  Security  Agreement  (Exim  Facility)  dated  April 5,  2001
          between   Registrant   and  The  CIT   Group/Business   Credit,   Inc.
          (incorporated by reference to Exhibit 10.37 to the 2001 Form 10-K).


10.29**   Supply,  Development  and License  Agreement  dated  October 22, 2001,
          between the Registrant and JDS Uniphase  Corporation  (incorporated by
          reference to Exhibit 10.1 to the 2002 First Quarter 10-Q).



                                       46
<PAGE>

10.30*    2001 Stock Option Plan  (incorporated  by reference to Exhibit 74.1 to
          the  Registrant's  Registration  Statement  on Form S-8 filed with the
          Securities   and  Exchange   Commission   on  October  11,  2001  (No.
          333-71374).


21.1      Subsidiaries of the Registrant  (incorporated  by reference to Exhibit
          21.1 to the Registrant's  Form 10-K for the fiscal year ended June 30,
          2002 (the "2002 Form 10-K")


23.1      Consent of Independent Auditors.


24.1      Power of Attorney  (incorporated  by  reference to Exhibit 24.1 to the
          2002 Form 10-K ).


----------


* Management contract or compensatory plan or arrangement.
**  Confidential  treatment  has been  requested as to certain  portions of this
exhibit.  An unredacted  version of this exhibit has been filed  separately with
the SEC.
+ Schedules have been omitted and will be provided to the SEC upon request.

(b) Reports on Form 8-K.

On April 26,  2002,  a Form 8-K was filed by Adept under Item 5  announcing  its
financial results for its third fiscal quarter ended March 30, 2002.

On May 9,  2002,  a Form 8-K was  filed  by Adept  under  Item  5announcing  its
completion of the sale of its assets of the CimStation Inspection business.

(c) Exhibits.


See Item 15(a)(3) above.


(d) Financial Statement Schedules.


See Item 15(a)(2) above.


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934, as amended, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                             ADEPT TECHNOLOGY, INC.



                        By: /s/ Michael W. Overby
                            -------------------------
                            Michael W. Overby
                            Vice President, Finance and
                            Chief Financial Officer


                                       47
<PAGE>


                        By: /s/ Brian R. Carlisle
                            -------------------------
                            Brian R. Carlisle
                            Chairman of the Board of Directors and
                            Chief Executive Officer



Date: February 3, 2003

                                  CERTIFICATION

I, Brian R.  Carlisle,  Chairman of the Board of Directors  and Chief  Executive
Officer of Adept Technology, Inc., certify that:

1.  I have  reviewed  this  amended  annual  report  on  Form  10-K/A  of  Adept
Technology, Inc.;

2. Based on my knowledge,  this annual report, as amended,  does not contain any
untrue  statement of a material fact or omit to state a material fact  necessary
to make the  statements  made,  in light of the  circumstances  under which such
statements  were made, not misleading with respect to the period covered by this
annual report, as amended; and

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this annual report,  as amended,  fairly present in all
material respects the financial condition,  results of operations and cash flows
of the  registrant as of, and for, the periods  presented in this annual report,
as amended.

Date: February 3, 2003



                        By: /s/ Brian R. Carlisle
                            --------------------------------------
                            Brian R. Carlisle
                            Chairman of the Board of Directors and
                            Chief Executive Officer
                            (Principal Executive Officer)



I, Michael W. Overby,  Vice President of Finance and Chief Financial  Officer of
Adept Technology, Inc., certify that:

1.  I have  reviewed  this  amended  annual  report  on  Form  10-K/A  of  Adept
Technology, Inc.;

2. Based on my knowledge,  this annual report, as amended,  does not contain any
untrue  statement of a material fact or omit to state a material fact  necessary
to make the  statements  made,  in light of the  circumstances  under which such
statements  were made, not misleading with respect to the period covered by this
annual report, as amended; and

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this annual report,


                                       48
<PAGE>

as amended,  fairly  present in all material  respects the financial  condition,
results of  operations  and cash  flows of the  registrant  as of, and for,  the
periods presented in this annual report, as amended.

Date: February 3, 2003



                        By: /s/ Michael W. Overby
                            -------------------------
                            Michael W. Overby
                            Vice President, Finance and
                            Chief Financial Officer
                            (Principal Financial Officer)



Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this  Report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>

      Signature                                    Title                                   Date
      ---------                                    -----                                   ----
<S>                      <C>                                                    <C>
/s/ Brian R. Carlisle    Chairman of the Board of Directors and Chief           February 3, 2003
---------------------    Executive Officer (Principal Executive Officer)
 (Brian R. Carlisle)

/s/ Michael W. Overby    Vice President, Finance and Chief Financial            February 3, 2003
---------------------    Officer (Principal Financial and Accounting
 (Michael W. Overby)     Officer)


/s/ Bruce E. Shimano*    Vice President, Research and Development,              February 3, 2003
---------------------    Secretary and Director
  (Bruce E. Shimano)

/s/ Ronald E. F. Codd*   Director                                               February 3, 2003
---------------------
 (Ronald E. F. Codd)

/s/ Michael P. Kelly*    Director                                               February 3, 2003
---------------------
  (Michael P. Kelly)

/s/ Cary R. Mock*        Director                                               February 3, 2003
---------------------
  (Cary R. Mock)
</TABLE>


*By:  /s/ Michael W. Overby
Attorney-in-Fact
)


                                       49
<PAGE>


                   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                             ADEPT TECHNOLOGY, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




Report of Ernst & Young, LLP, Independent Auditors.........................  50

Consolidated Balance Sheets at June 30, 2002 and June 30, 2001.............  51

Consolidated Statements of Operations for each of the three years
 in the period ended June 30, 2002.........................................  52

Consolidated Statements of Cash Flows for each of the three years
 in the period ended June 30, 2002.........................................  53

Consolidated Statements of Shareholders' Equity for each of the
 three years in the period ended June 30, 2002.............................  53

Notes to Consolidated Financial Statements.................................  54



                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Shareholders and Board of Directors
Adept Technology, Inc.


We  have  audited  the  accompanying   consolidated   balance  sheets  of  Adept
Technology,  Inc.  as of June 30, 2002 and 2001,  and the  related  consolidated
statements of operations,  shareholders'  equity, and cash flows for each of the
three years in the period  ended June 30,  2002.  Our audits also  included  the
financial  statement  schedule  listed  in the  Index  as Item  15(a)(2).  These
financial  statements  and  schedule  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule 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. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.


Since  the  date  of  completion  of our  audit  of the  accompanying  financial
statements  and initial  issuance of our report thereon dated July 29, 2002, the
Company,  as discussed in Note 13, has  experienced a reduction in revenues that
adversely  affects the Company's  current  results of operations  and liquidity.
Note 13 describes management's plans to address these issues.


In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of Adept
Technology,  Inc. at June 30, 2002 and 2001, and the consolidated results of its
operations  and its cash flows for each of the three  years in the period  ended
June 30, 2002, in conformity with accounting  principles  generally  accepted in
the United  States.  Also,  in our  opinion,  the  related  financial  statement
schedule,  when  considered in relation to the basic  financial  statements as a
whole,  presents  fairly in all  material  respects  the  information  set forth
therein.

As  described  in Note 4, the Company has changed its method of  accounting  for
goodwill upon adoption of Statement of Financial  Accounting  Standards No. 142,
Goodwill and Other Intangible Assets.


                                       50
<PAGE>
                                                   /s/ Ernst & Young LLP

San Jose, California
July 29, 2002

except for Note 13 as to which the date is January 22, 2003


                             ADEPT TECHNOLOGY, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                       June 30,            June 30,
                                                                                                         2002                2001
                                                                                                       ---------          ---------
ASSETS                                                                                                        (in thousands)
<S>                                                                                                    <C>                <C>
Current assets:
     Cash and cash equivalents ...............................................................         $  17,375          $  18,700
     Short-term investments ..................................................................             4,306              2,800
     Accounts receivable, less allowance for doubtful accounts of $832 in
          2002 and $742 in 2001 ..............................................................            12,500             21,272
     Inventories .............................................................................            11,189             17,750
     Deferred tax assets and other current assets ............................................               854              2,069
                                                                                                       ---------          ---------
         Total current assets ................................................................            46,224             62,591

Property and equipment at cost ...............................................................            12,688             34,520
Less accumulated depreciation and amortization ...............................................             6,965             23,789
                                                                                                       ---------          ---------
Property and equipment, net ..................................................................             5,723             10,731
Goodwill .....................................................................................             6,889             14,596
Other intangibles ............................................................................             1,124              1,736
Other assets .................................................................................             2,534              5,919
                                                                                                       ---------          ---------
         Total assets ........................................................................         $  62,494          $  95,573
                                                                                                       =========          =========

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND SHAREHOLDERS' EQUITY
 Current liabilities:
     Accounts payable ........................................................................         $   6,561          $  10,369
     Accrued payroll and related expenses ....................................................             2,463              5,267
     Accrued warranty ........................................................................             1,566              2,072
     Deferred revenue ........................................................................               637              2,061
     Accrued restructuring charges ...........................................................             1,909                 --

Accrued taxes.................................................................................             1,516              1,812
     Accrued amounts related to business acquisitions ........................................             2,730                 --
     Other accrued liabilities ...............................................................             1,516              1,226

                                                                                                       ---------          ---------
         Total current liabilities ...........................................................            18,898             22,807

Long term liabilities:
     Restructuring charges ...................................................................             1,450                 --
     Deferred income tax and other long term liabilities .....................................             1,242              1,284

Commitments and contingencies

Redeemable convertible preferred stock, no par value: 5,000 shares authorized,
  100 shares issued and outstanding at June 30, 2002; and none issued and
  outstanding at June 30, 2001
  (liquidation preference  - $25,000) ........................................................            25,000                 --

Shareholders' equity:
 Preferred stock, no par value:  5,000 shares authorized, none issued and
     outstanding .............................................................................                --                 --
 Common stock, no par value:  70,000 shares authorized, 14,051 shares issued
     and outstanding in 2002, and 13,165 shares in 2001 ......................................           107,384            103,138
 Accumulated deficit .........................................................................           (91,480)           (31,656)
                                                                                                       ---------          ---------
         Total shareholders' equity ..........................................................            15,904             71,482
                                                                                                       ---------          ---------
         Total liabilities, redeemable convertible preferred stock and shareholders'
           equity ............................................................................         $  62,494          $  95,573
                                                                                                       =========          =========
</TABLE>

See accompanying notes.


                                       51
<PAGE>

                             ADEPT TECHNOLOGY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                  Year Ended June 30,
                                                                                    -----------------------------------------------
                                                                                      2002               2001               2000
                                                                                    ---------          ---------          ---------
                                                                                           (in thousands, except per share data)
<S>                                                                                 <C>                <C>                <C>
Net revenues ..............................................................         $  57,039          $ 100,313          $  99,212
Cost of revenues ..........................................................            37,868             65,303             56,173
                                                                                    ---------          ---------          ---------
Gross margin ..............................................................            19,171             35,010             43,039
Operating expenses:
      Research, development and engineering ...............................            20,398             22,727             14,629
      Selling, general and administrative .................................            28,994             36,002             29,503
      Restructuring charges ...............................................            17,659                 --                 --
      Merger-related charges ..............................................                --                 --                988
      Amortization of goodwill and other intangibles ......................               725              6,818                685
      Impairment of goodwill ..............................................             6,608                 --                 --
      Gain on sale of assets ..............................................            (1,566)                --                 --
                                                                                    ---------          ---------          ---------
Total operating expenses ..................................................            72,818             65,547             45,805
                                                                                    ---------          ---------          ---------

Operating loss ............................................................           (53,647)           (30,537)            (2,766)

Interest income ...........................................................               441                745              1,031
Interest and other expense ................................................                 3                 12                285
                                                                                    ---------          ---------          ---------

Loss before income taxes and cumulative effect of change in
  accounting principle ....................................................           (53,209)           (29,804)            (2,020)
Provision for (benefit from) income taxes .................................            (3,358)             5,396               (593)
                                                                                    ---------          ---------          ---------
Loss before cumulative effect of change in accounting principle ...........           (49,851)           (35,200)            (1,427)
Cumulative effect of change in accounting principle .......................            (9,973)                --                 --
                                                                                    ---------          ---------          ---------
Net loss ..................................................................         $ (59,824)         $ (35,200)         $  (1,427)
                                                                                    =========          =========          =========

Basic and diluted net loss per share:

      Before cumulative effect of change in accounting principle ..........         $   (3.64)         $   (3.02)         $   (0.15)
      Cumulative effect of change in accounting principle .................             (0.73)                --                 --
                                                                                    ---------          ---------          ---------
      After cumulative effect of change in accounting principle ...........         $   (4.37)         $   (3.02)         $   (0.15)
                                                                                    =========          =========          =========

Number of shares used in computing per share amounts:

      Basic ...............................................................            13,691             11,637              9,774
                                                                                    =========          =========          =========
      Diluted .............................................................            13,691             11,637              9,774
                                                                                    =========          =========          =========
</TABLE>

See accompanying notes.

                             ADEPT TECHNOLOGY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                                      Year Ended June 30,
                                                                                             --------------------------------------
                                                                                                        (in thousands)
                                                                                               2002           2001           2000
                                                                                             --------       --------       --------
<S>                                                                                          <C>            <C>            <C>
Operating activities
 Net loss .............................................................................      $(59,824)      $(35,200)      $ (1,427)
 Adjustments to reconcile net loss to net cash used in operating activities:
    Cumulative effect of change in accounting principle ...............................         9,973             --             --
    Depreciation ......................................................................         3,011          3,646          3,140
</TABLE>

                                       52
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                          <C>            <C>            <C>
    Amortization ......................................................................           725          6,818            843
    Asset impairment charges ..........................................................         9,167             --             --
    Goodwill impairment ...............................................................         6,608             --             --
    Provision for inventory ...........................................................            --          4,839          1,256
    Deferred income taxes .............................................................           134          4,971           (834)
    (Gain) loss on disposal of property and equipment .................................           461             37            (50)
    Gain on sale of assets ............................................................        (1,566)            --             --
    Tax benefit from stock plans ......................................................            --             --            591
    Changes in operating assets and liabilities, net of effects of acquisitions:
       Accounts receivable ............................................................         9,384          4,358         (5,581)
       Inventories ....................................................................         3,469         (7,436)        (4,846)
       Other current assets ...........................................................         1,247            303           (152)
       Other assets ...................................................................         1,986         (1,024)        (1,279)
       Accounts payable ...............................................................        (4,114)        (1,207)         3,695
       Accrued expenses ...............................................................        (3,506)          (226)         2,071
       Other accrued liabilities ......................................................         1,301            803         (1,068)
       Accrued restructuring charges ..................................................         3,359             --             --
                                                                                             --------       --------       --------
    Net cash used in operating activities .............................................       (18,185)       (19,318)        (3,641)
                                                                                             --------       --------       --------

Investing activities
    Business acquisitions .............................................................        (8,365)        (7,050)        (3,250)
    Purchase of property and equipment ................................................        (1,475)        (8,523)        (2,406)
    Proceeds from the sale of property and equipment ..................................            --             --            116
    Proceeds from sale of assets ......................................................         1,729             --             --
    Purchases of short-term available-for-sale investments ............................       (35,906)       (36,500)       (44,117)
    Sales of short-term available-for-sale investments ................................        34,400         40,650         52,367
                                                                                             --------       --------       --------
    Net cash (used in) provided by investing activities ...............................        (9,617)       (11,423)         2,710
                                                                                             --------       --------       --------

Financing activities
    Proceeds from issuance of redeemable convertible preferred stock ..................        25,000             --             --
    Proceeds from issuance of common stock, net .......................................            --         32,424             --
    Proceeds from employee stock incentive program and employee
       Stock purchase plan, net of repurchases and cancellations ......................         1,477          3,530          2,602
                                                                                             --------       --------       --------
    Net cash provided by financing activities .........................................        26,477         35,954          2,602
                                                                                             --------       --------       --------
Increase (decrease) in cash and cash equivalents ......................................        (1,325)         5,213          1,671
Cash and cash equivalents, beginning of period ........................................        18,700         13,487         11,816
                                                                                             --------       --------       --------
Cash and cash equivalents, end of period ..............................................      $ 17,375       $ 18,700       $ 13,487
                                                                                             ========       ========       ========

Supplemental disclosure of noncash activities:

Inventory capitalized into property and equipment including related tax ...............      $     --       $     --       $    228
Issuance of common stock pursuant to terms of HexaVision and CHAD
 acquisition agreements ...............................................................      $  2,769       $     --       $     --
Cash paid during the period for:
 Interest .............................................................................      $      5       $     12       $     --
 Taxes paid (refunded) ................................................................      $ (2,903)      $   (264)      $  1,373
</TABLE>

See accompanying notes.

                             ADEPT TECHNOLOGY, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                    Retained
                                                                       Common Stock                 Earnings/             Total
                                                                 -------------------------        (Accumulated        Shareholders'
                                                                  Shares            Amount           Deficit)            Equity
                                                                 --------          --------          --------           --------
                                                                                          (in thousands)
<S>                                                               <C>              <C>               <C>                <C>
Balance at June 30, 1999 .................................          9,459          $ 50,215          $  4,971           $ 55,186

       Common stock issued under employee stock
          incentive program and employee
          stock purchase plan ............................            518             2,602                --              2,602
       Tax benefit from stock plans ......................             --               591                --                591
       Common stock issued in connection with
          acquisitions ...................................            700            13,776                --             13,776
       Net loss and comprehensive loss ...................             --                --            (1,427)            (1,427)
                                                                 --------          --------          --------           --------

Balance at June 30, 2000 .................................         10,677          $ 67,184          $  3,544           $ 70,728
</TABLE>

                                       53
<PAGE>

<TABLE>
<CAPTION>
<S>                                                               <C>              <C>               <C>                <C>
       Common stock issued under employee stock
          incentive program and employee stock
          purchase plan ..................................            488             3,530                --              3,530
       Common stock issued in conjunction with
          follow-on offering (less issuance
          costs of $1,056) ...............................          2,000            32,424                --             32,424
       Net loss and comprehensive loss ...................             --                --           (35,200)           (35,200)
                                                                 --------          --------          --------           --------

Balance at June 30, 2001 .................................         13,165          $103,138          $(31,656)          $ 71,482

       Common stock issued under employee stock
          incentive program and employee stock
          purchase plan ..................................            555             1,477                --              1,477
       Common stock issued in connection with
          acquisitions ...................................            331             2,769                --              2,769
       Net loss and comprehensive loss ...................             --                --           (59,824)           (59,824)
                                                                 --------          --------          --------           --------

Balance at June 30, 2002 .................................         14,051          $107,384          $(91,480)          $ 15,904
                                                                 ========          ========          ========           ========
</TABLE>
See accompanying notes.

                             ADEPT TECHNOLOGY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Organization

Adept  Technology,  Inc.  ("Adept" or the "Company") was incorporated  under the
laws of the  state  of  California  on  June  14,  1983.  The  Company  designs,
manufactures and sells factory  automation  components and systems for the food,
communications,   automotive,  appliance,  semiconductor,  photonics,  and  life
sciences industries throughout the world.

Basis of Presentation

The accompanying  consolidated  financial  statements for the three-year  period
ended  June 30,  2002  include  the  accounts  of  Adept  and its  wholly  owned
subsidiaries.   All  significant  intercompany  transactions  and  balances  are
eliminated upon consolidation.

The notes to the Company's  consolidated  financial statements are for the three
year period ended June 30, 2002. Unless otherwise  indicated,  references to any
year in these Notes to Consolidated  Financial Statements refer to the Company's
fiscal year ended June 30.

Use of Estimates

The  preparation  of the  financial  statements in  conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates and assumptions that affect 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. Actual results could differ from those estimates.

Foreign Currency Translation

The Company applies Financial Accounting Standards Board Statement No. 52 ("SFAS
52"),  "Foreign  Currency   Translation,"  with  respect  to  its  international
operations,  which are sales and  service  entities.  All  monetary  assets  and
liabilities  are  remeasured  at the  current  exchange  rate  at the end of the
period, nonmonetary assets and liabilities are remeasured at historical exchange
rates,  and revenues and expenses are  remeasured at average  exchange  rates in
effect  during the period.  A  translation  gain  resulting  from the process of
remeasuring foreign currency financial statements into U.S. dollars was $191,000
in 2002. Translation losses were $119,000, and $394,000 in 2001 and


                                       54
<PAGE>

2000, respectively.  Foreign currency transaction losses were $786,000, $326,000
and $17,000 in 2002, 2001 and 2000, respectively.

Cash, Cash Equivalents and Short-term Investments

The Company considers all highly liquid  investments  purchased with an original
maturity of three months or less to be cash equivalents.  Short-term investments
in marketable securities consist principally of debt instruments with maturities
between three and 12 months.  Investments  are  classified as  held-to-maturity,
trading, or available-for-sale at the time of purchase.

At June 30,  2002 and  2001,  all of the  Company's  investments  in  marketable
securities were classified as available-for-sale and were carried at fair market
value,  which  approximated  cost.  Fair market value is based on quoted  market
prices on the last day of the year. The cost of the securities is based upon the
specific identification method.


                                                                June 30,
                                                         -----------------------
                                                          2002             2001
                                                         -------         -------
                                                             (in thousands)
Cash and cash equivalents
     Cash ......................................         $ 6,709         $ 2,747
     Money market funds ........................          10,666          15,953
                                                         -------         -------
Cash and cash equivalents ......................         $17,375         $18,700
                                                         =======         =======

Short-term investments
     Certificates of deposit ...................         $     6         $    --
     Auction rate securities ...................           4,300           2,800
                                                         -------         -------
Short-term investments .........................         $ 4,306         $ 2,800
                                                         =======         =======



Realized  gains or losses,  interest,  and  dividends  are  included in interest
income.   Realized  and  unrealized  gains  or  losses  from  available-for-sale
securities were not material in 2002, 2001, or 2000.

Comprehensive Income

For the  three-year  period  ended  June 30,  2002,  there  were no  significant
differences between the Company's comprehensive loss and its net loss.

Inventories

Inventories are stated at the lower of standard cost, which approximates  actual
(first-in,  first-out  method) or market (estimated net realizable  value).  The
components of inventories are as follows:


                                                              June 30,
                                                     ---------------------------
                                                      2002                2001
                                                     -------             -------
                                                            (in thousands)
Raw materials ..........................             $ 4,952             $ 7,397
Work-in-process ........................               3,049               4,908
Finished goods .........................               3,188               5,445
                                                     -------             -------
                                                     $11,189             $17,750
                                                     =======             =======


                                       55
<PAGE>


Loans to Employees

Loans to employees,  which consist of amounts advanced to non-officer  employees
of the  Company in  connection  with  employee  relocation  and  retention,  are
summarized as follows:


                                                                  June 30,
                                                             -------------------
                                                             2002           2001
                                                             ----           ----
                                                               (in thousands)
Short-term loans to employees ....................           $ 25           $ 80
Long-term loans to employees .....................            162            415
                                                             ----           ----
                                                             $187           $495
                                                             ====           ====


Short-term  loans to employees are included in other current  assets.  Long-term
loans to employees are included in other assets.

Property and Equipment

Property and equipment are recorded at cost.

The components of property and equipment are summarized as follows:


                                                                   June 30,
                                                             -------------------
                                                               2002       2001
                                                             -------     -------
                                                                (in thousands)
Cost:
     Machinery and equipment ...........................     $ 3,042     $14,922
     Computer equipment ................................       5,806      14,779
     Office furniture and equipment ....................       3,840       4,819
                                                             -------     -------
                                                              12,688      34,520
     Accumulated depreciation and amortization .........       6,965      23,789
                                                             -------     -------
     Net property and equipment ........................     $ 5,723     $10,731
                                                             =======     =======


                                       56
<PAGE>


Depreciation  is computed  using the  straight-line  method  over the  estimated
useful lives of the assets, which range from three to five years.

Acquired Intangible Assets and Goodwill

Acquired  intangible  assets  consist of purchased  technology  and  non-compete
agreements  related  to the  Company's  acquisitions  accounted  for  using  the
purchase  method.  Prior to July 1,  2001,  and the  adoption  of  Statement  of
Financial Accounting Standard No. 142, amortization of these acquired intangible
assets and goodwill was calculated on a  straight-line  basis over the following
estimated useful lives of the assets:


        Purchased technology                2-4 years
        Non-compete agreements                4 years
        Goodwill                            2-4 years


Effective July 1, 2001, goodwill is no longer amortized but rather is subject to
annual impairment tests (see Note 4 -- Effect of New Accounting Standards).

Long-Lived Assets

The Company  periodically  assesses the impairment of long-lived  assets used in
operations,  including  acquired  intangible assets and goodwill,  in accordance
with the  provisions  of  Statement of Financial  Accounting  Standards  No. 121
("SFAS  121"),  Accounting  for the  Impairment  of  Long-Lived  Assets  and for
Long-Lived Assets to be Disposed of. An impairment review is performed  whenever
events or changes in  circumstances  indicate that the carrying value may not be
recoverable.  Factors the Company  considers  important  which could  trigger an
impairment review include, but are not limited to, significant under-performance
relative to  historical  or  projected  future  operating  results,  significant
changes  in the manner of use of the  acquired  assets or the  strategy  for the
Company's overall business,  and significant  industry or economic trends.  When
the Company  determines  that the carrying  value of the  intangible  assets and
goodwill may not be  recoverable  based upon the existence of one or more of the
above  indicators,  the Company  measures any  impairment  based on a discounted
future  cash  flow  method  using a  discount  rate  commensurate  with the risk
inherent in its current  business model.  Effective July 1, 2002,  impairment of
goodwill and  impairment of other acquired  intangible  assets is being assessed
according to new  accounting  guidelines  (see Note 4 - Effect of New Accounting
Standards).

Credit Facility

On April 9, 2001, the Company entered into  agreements  establishing a revolving
line of  credit,  consisting  of two  facilities,  with  the CIT  Group/Business
Credit,  Inc.  to borrow up to the lesser of $25.0  million or the sum of 85% of
our  eligible  domestic  accounts  receivables,  plus  90% of  eligible  foreign
accounts  receivables,  less a dilution  reserve  equivalent  to one  percent of
eligible  domestic and foreign  accounts  receivables  for every one  percentage
point in excess of a standard five percent dilution rate.

Revenue Recognition

The Company  recognizes  product  revenue in  accordance  with Staff  Accounting
Bulletin  No. 101,  when  persuasive  evidence of a  non-cancelable  arrangement
exists,  delivery has occurred and/or services have been rendered,  the price is
fixed or determinable,  collectibility  is reasonably  assured,  legal title and
economic risk is transferred to the customer,  and when an economic exchange has
taken place.  If a  significant  portion of the price is due after the Company's
normal payment terms, which are 30 to 90 days from the invoice date, the Company
accounts for the


                                       57
<PAGE>
price as not being fixed and  determinable.  In these cases, if all of the other
conditions  referred  to above are met,  the Company  recognizes  revenue as the
invoice  becomes due. For certain of the  Company's  products in Japan where the
Company maintains a pass-through  arrangement with its reseller,  all revenue is
deferred  until the  Company  receives  payment  from the end user.  Revenue  is
otherwise  deferred  until these elements  described  above are met. The Company
provides for the  estimated  cost of product  warranties  at the time revenue is
recognized.

The Company  recognizes  software  revenue,  primarily related to its simulation
software products, in accordance with the American Institute of Certified Public
Accountants'  Statement  of  Position  97-2  ("SOP  97-2") on  Software  Revenue
Recognition.  License revenue is recognized on shipment of the product  provided
that no significant vendor or post-contract  support obligations remain and that
collection  of the  resulting  receivable  is  deemed  probable  by  management.
Insignificant  vendor and  post-contract  support  obligations  are accrued upon
shipment of the licensed product.  For software that is installed and integrated
by the customer,  revenue is recognized upon shipment assuming functionality has
already  been proven in prior sales and there are no  customizations  that would
cause  a  substantial  acceptance  risk.  For  software  that is  installed  and
integrated  by Adept,  revenue is recognized  upon  customer  signoff of a final
product acceptance form.

Service revenue includes  training,  consulting and customer  support.  Revenues
from training and consulting are recognized at the time the service is performed
and the customer has accepted the work.

For long-term,  fixed contracts,  the Company  recognizes  revenue and profit as
work  progresses  using the  percentage-of-completion  method,  which  relies on
estimates of total expected contract revenue and costs. The Company follows this
method as reasonably dependable estimates of the revenue and costs applicable to
various  stages of a contract  can be made.  Recognized  revenues and profit are
subject to revisions  as the contract  progresses  to  completion.  Revisions in
profit  estimates  are  charged  to income in the period in which the facts that
give rise to the revision become known.

Deferred revenue  primarily relates to software support contracts sold. The term
of the software support contract is generally one year, and Adept recognizes the
associated  revenue  on a pro rata basis  over the life of the  contract,  or if
there are milestone payments, upon milestone achievement.

Concentration of Credit Risk

Financial  instruments that potentially subject the Company to concentrations of
credit risk consist primarily of cash  equivalents,  auction rate securities and
trade  receivables.  The  Company  places its cash  equivalents  and  short-term
investments with high credit-quality financial institutions. The Company invests
its excess cash in commercial  paper,  readily  marketable debt  instruments and
collateralized funds of U.S., state and municipal government entities. Adept has
established   guidelines   relative  to  credit  ratings,   diversification  and
maturities that seek to maintain safety and liquidity.

The Company manufactures and sells its products to system integrators, end users
and  OEMs  in  diversified  industries.  The  Company  performs  ongoing  credit
evaluations  of its  customers  and does not require  collateral.  However,  the
Company  may  require  customers  to make  payments in advance of shipment or to
provide a letter of credit.  The Company provides  reserves for potential credit
losses,  and such  losses have been within  management's  expectations.  Amounts
charged to bad debt expense were $319,000,  $214,000 and $516,000 in 2002,  2001
and 2000, respectively.

Research, Development and Engineering Costs

Research,  development  and  engineering  costs,  other than purchased  computer
software  and capital  equipment,  are  charged to expense  when  incurred.  The
Company received third party funding of $0 in 2002, $49,000 in 2001 and $309,000
in 2000. The Company has offset research,  development and engineering  expenses
by the third party funding as the Company  retains the rights to any  technology
that is developed.

Advertising Costs

Advertising  costs are expensed in the period incurred.  Advertising  costs were
$161,000 in 2002, $307,000 in 2001,

                                       58
<PAGE>
and $224,000 in 2000. The Company does not incur any direct response advertising
costs.

Income Taxes

The liability  method is used to account for income  taxes.  Deferred tax assets
and  liabilities  are  determined  based on  differences  between the  financial
reporting  and tax bases of assets and  liabilities  and are measured  using the
enacted  tax rates and laws that  will be in  effect  when the  differences  are
expected to reverse.

Stock-Based Compensation

The Company  generally  grants stock options to its employees for a fixed number
of shares with an exercise  price equal to the fair market value of the stock on
the date of grant.  As  permitted  under SFAS 123,  Accounting  for  Stock-Based
Compensation,  the Company has elected to follow Accounting  Principles Board of
Opinion  No.  25,  Accounting  for  Stock  Issued  to  Employees,   and  related
interpretations  in accounting  for stock awards to employees.  Accordingly,  no
compensation  expense is  recognized in the  Company's  financial  statements in
connection  with employee  stock awards where the exercise price of the award is
equal to the fair market value of the stock at the date of the award.

Net Income (Loss) Per Share

SFAS No. 128,  "Earnings Per Share" ("EPS"),  requires the presentation of basic
and diluted  EPS.  Basic EPS  excludes  dilution and is computed by dividing net
income (loss) available to common shareholders by the weighted-average number of
common  shares  outstanding  for the period.  Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were  exercised  or  converted  into common stock or resulted in the issuance of
common stock that then  participates  in the  earnings of the Company.  Dilutive
common equivalent shares consist of stock options  calculated using the treasury
stock method.

New Accounting Pronouncements

In June 2001, the FASB issued  Statement of Financial  Accounting  Standards No.
143,  Accounting for Asset Retirement  Obligations  ("SFAS 143"),  effective for
fiscal years  beginning  after June 15,  2002,  or July 1, 2002 for the Company.
SFAS 143 establishes accounting standards for the recognition and measurement of
an asset  retirement  obligation  and its  associated  retirement  cost. It also
provides  accounting   guidance  for  legal  obligations   associated  with  the
retirement  of tangible  long-lived  assets.  The  Company  does not believe the
adoption  of SFAS 143 will have a  material  impact on the  Company's  financial
position or results of operations.

In August 2001, the FASB issued Statement of Financial  Accounting Standards No.
144,  "Accounting  for the  Impairment or Disposal of Long-Lived  Assets" ("SFAS
144"),  which is effective for fiscal periods beginning after December 15, 2001,
or July 1, 2002 for the  Company.  SFAS 144 provides a single  accounting  model
for, and  supersedes  previous  guidance on,  accounting  and  reporting for the
impairment/disposal  of  long-lived  assets.  SFAS 144 sets new criteria for the
classification   of  an  asset   held-for-sale  and  changes  the  reporting  of
discontinued operations.  The Company does not believe that the adoption of SFAS
144 will  have a  material  impact  on its  financial  position  or  results  of
operations.

In April 2002, the FASB issued Statement of Financial  Accounting  Standards No.
145, "Rescission of FASB Statement No. 4, 44 and 64, Amendment of FASB Statement
No. 13, and  Technical  Corrections"  ("SFAS  145").  SFAS 145 requires that any
gains  or  losses  on   extinguishment  of  debt  that  were  classified  as  an
extraordinary  item  in  prior  periods  that  are not  unusual  in  nature  and
infrequent in occurrence be  reclassified to other income  (expense),  beginning
fiscal 2003, with early adoption  encouraged.  The Company does not believe that
the adoption of SFAS 145 will have a material  impact on its financial  position
or results of operations.

In June 2002, the FASB issued  Statement of Financial  Accounting  Standards No.
146,  "Accounting for Costs Associated with Exit or Disposal  Activities" ("SFAS
146"),  which is effective  for exit or disposal  activities  that are initiated
after  December  31,  2002.  SFAS 146,  which  nullifies  EITF  Issue no.  94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity  (Including  Certain  Costs  Incurred in a  Restructuring),"
requires  that a  liability  for a cost  associated  with an  exit  or  disposal
activity be recognized and

                                       59
<PAGE>

measured  initially  at fair  value only when the  liability  is  incurred.  The
Company has not yet  determined  the impact  that the  adoption of SFAS 146 will
have on its financial position or results of operations, if any.

Reclassifications

Certain amounts  presented in the financial  statements of prior years have been
reclassified to conform to the 2002 presentation.

2. Mergers and Acquisitions

During the three-year period ended June 30, 2002, Adept acquired five companies:
CHAD Industries Inc.,  HexaVision  Technologies Inc.,  NanoMotion  Incorporated,
Pensar-Tucson, Inc. and BYE/OASIS. These acquisitions are described below.

CHAD Industries Inc.

On October 9, 2001,  Adept  completed the acquisition of CHAD  Industries,  Inc.
(CHAD), a design and manufacturing  company  specializing in precision  assembly
automation  based in Orange,  California.  The acquisition of CHAD is the latest
step in Adept's ongoing photonics  automation  strategy.  Adept leverages CHAD's
expertise in small part feeding,  precision tooling design,  and the handling of
odd-form components to add capacity in photonics automation.  In addition, Adept
supports CHAD's line of odd-form component assembly machines. Adept acquired all
of the outstanding  common shares of CHAD. The results of CHAD's operations have
been  included in Adept's  consolidated  financial  statements  since October 9,
2001.


Under terms of the  acquisition  agreement,  the purchase price of $10.1 million
includes an aggregate of $8.4 million in cash, $150,000 in transaction costs and
200,000  shares of Adept common stock valued at $1.6  million.  The value of the
200,000  shares  issued was  determined  based on the average  closing  price of
Adept's  stock over the period of five trading days prior to June 27, 2001,  the
date of entry into the definitive  agreement.  Of the $8.4 million in cash, $4.2
million was paid as of the closing date on October 9, 2001, and $2.6 million and
$1.6 million are to be paid on October 9, 2002,  and 2003,  respectively.  These
future  payments are not  contingent  upon the  fulfillment of any employment or
other contingencies. In addition, Adept agreed to make cash payments of $242,000
and potential stock issuances consisting of 61,000 shares equal to approximately
$467,000  over a  period  of three  years  after  the  closing  date to  certain
specified employees of CHAD, which are contingent on the continued employment of
such employees. As such, those amounts have been appropriately excluded from the
purchase  price and will be  expensed  as paid.  As this  acquisition  was not a
qualified stock purchase under rules under the Internal  Revenue Code, Adept did
not allocate a tax basis to CHAD's goodwill and other intangibles.  As a result,
there is no tax  amortization  associated  with the  acquisition  of CHAD.  This
acquisition was accounted for under the purchase method of accounting.

Adept's  management is primarily  responsible  for  determining  purchase  price
allocations.  Adept  considered  a  number  of  factors,  including  independent
valuations,  in determining  the purchase price of CHAD,  which was allocated to
tangible assets,  goodwill and other intangible assets.  Goodwill represents the
excess of the purchase price of the net tangible and intangible  assets acquired
over their fair value.


For the CHAD acquisition,  below is a table of the acquisition cost and purchase
price allocation.



Acquisition Cost:
   Cash paid on closing ......................................           $ 4,150
   Cash paid after one year ..................................             2,592
   Cash paid after two years .................................             1,615
   Stock issued at closing ...................................             1,556
   Transaction costs .........................................               150
                                                                         -------
      Total acquisition cost .................................           $10,063
                                                                         =======


                                       60
<PAGE>

 Purchase Price Allocation:
   Net book value of assets acquired .........................           $   553
   Identified intangible assets ..............................               430
   Goodwill ..................................................             9,080
                                                                         -------
      Total ..................................................           $10,063
                                                                         =======



The following  unaudited pro forma summary  results of operations  data has been
prepared assuming that the CHAD acquisition had occurred at the beginning of the
period presented. The consolidated results are not necessarily indicative of the
results of future  operations  nor of results  that would have  occurred had the
acquisitions been consummated as of the beginning of the period presented.


(in thousands, except per share amounts)               2002             2001
                                                     ---------        ---------
Net revenues .................................       $  57,846        $ 106,113
Net loss .....................................       $ (60,179)       $ (35,755)
Basic and diluted net loss per share .........       $   (4.39)       $   (3.07)


HexaVision Technologies Inc.

On July 21, 2000, Adept acquired  HexaVision  Technologies Inc., now named Adept
Technology Canada Co. ("HexaVision"),  a Canadian corporation.  HexaVision was a
machine vision research and development company. Under the terms of the purchase
agreement, Adept initially paid $5.5 million in cash, which includes transaction
costs of $0.4 million, and issued shares of our common stock to the shareholders
of HexaVision  with a value of $1.1 million.  The  acquisition of HexaVision has
been accounted for under the purchase  method of accounting.  Adept has included
the  results  of  operations  of  HexaVision  in Adept's  results of  operations
beginning  July 21, 2000.  On July 21, 2001,  pursuant to the terms of the share
purchase  agreement  relating to the  acquisition  of  HexaVision,  Adept issued
116,000 shares of its common stock with a value of $1.1 million to the employees
and former  shareholders  of  HexaVision  and released  $313,000 in cash from an
escrow  account.  On July 21, 2002,  Adept made a second cash payment of $53,000
and released  $1.4 million in cash from an escrow  account to the  employees and
former  shareholders  of HexaVision.  The  contingency  payments made and shares
issued to the  employees  of  HexaVision  have been  appropriately  recorded  as
operating  expenses.  The  contingency  payments  made and shares  issued to the
former  shareholders of HexaVision have been allocated to goodwill and accounted
for as additional purchase price.


Adept's  management is primarily  responsible  for  determining  purchase  price
allocations.  Adept  considered  a  number  of  factors,  including  independent
valuations, in determining the purchase price of HexaVision, which was allocated
to tangible assets,  goodwill and other intangible assets.  Goodwill  represents
the excess of the  purchase  price of the net  tangible  and  intangible  assets
acquired over their fair value.  Other  intangible  assets  primarily  represent
developed technology and non-compete covenants.


For the HexaVision  acquisition,  below is a table of the  acquisition  cost and
purchase price allocation:


                                       61
<PAGE>

(in thousands)
Acquisition Cost:
   Cash ......................................................          $ 5,085
   Transaction costs .........................................              409
Contingency payments and share issuances:
    Common stock .............................................              794
    Cash .....................................................            1,267
                                                                        -------
      Total acquisition cost .................................          $ 7,555
                                                                        =======

Purchase Price Allocation
   Net liabilities assumed ...................................          $  (629)
   Developed and core technology .............................              201
   Goodwill ..................................................            7,983
                                                                        -------
      Total ..................................................          $ 7,555
                                                                        =======


The following  unaudited pro forma summary  results of operations  data has been
prepared assuming that the HexaVision  acquisition had occurred at the beginning
of the period presented. The consolidated results are not necessarily indicative
of the results of future  operations nor of results that would have occurred had
the acquisitions  been consummated as of the beginning of the period  presented.
As the  acquisition  was  completed on July 21, 2000,  pro forma results for the
fiscal  year ended June 30,  2001  would not differ  materially  from the actual
results.


(in thousands, except per share amounts)                                 2000
                                                                       --------
Net revenues ...............................................           $ 99,311
Net loss ...................................................           $ (5,502)
Basic and diluted net loss per share .......................           $  (0.56)


NanoMotion

On  May  31,  2000,  the  Company   completed  the   acquisition  of  NanoMotion
Incorporated,  a  California  corporation.  NanoMotion  was  a  manufacturer  of
ultra-high  precision  positioning  and  alignment  devices for  nanometer-scale
movement,  positioning  and  alignment  for the fiber optic,  semiconductor  and
metrology, or precision machining,  markets. In connection with the acquisition,
the Company issued 600,000 shares of its common stock valued at $21 per share to
the shareholders of NanoMotion which was the fair market value of Adept's common
stock at May 31, 2000, paid $250,000 in cash and incurred $46,000 in transaction
costs,  resulting in a total purchase price of $12.9 million. The acquisition of
NanoMotion  was  accounted  for as a  purchase,  and the  financial  results  of
NanoMotion have been included in Adept's  consolidated  financial  results since
May 31, 2000.

Pensar

On April 28, 2000, the Company completed the acquisition of Pensar-Tucson, Inc.,
an  Arizona  corporation.  Pensar was a design and  engineering  company,  which
integrates factory automation systems.  In connection with the acquisition,  the
Company  issued 100,000 shares of its common stock valued at $11.75 per share to
the  shareholders  of Pensar,  which was the fair market value of Adept's common
stock at April 28, 2000. In addition,  the Company paid $3.0 million in cash and
incurred  $37,000 in transaction  costs,  resulting in a total purchase price of
$4.2 million.  The  acquisition  was accounted for as a purchase.  The financial
results of Pensar have been included in


                                       62
<PAGE>

Adept's  financial  results  since April 28,  2000.  In March 2002,  the Company
closed its Tucson  operations and wrote off all related  assets  obtained in the
acquisition  of  Pensar-Tucson,  Inc. since these assets have no future value to
the Company.


Adept's  management is primarily  responsible  for  determining  purchase  price
allocations.  Adept  considered  a  number  of  factors,  including  independent
valuations,  in determining  the purchase price of NanoMotion and Pensar,  which
was allocated to goodwill and other intangible assets.  Goodwill  represents the
excess of the purchase price of the net tangible and intangible  assets acquired
over their estimated fair value.  Other intangible  assets  primarily  represent
developed technology.


For the NanoMotion and Pensar acquisitions,  below is a table of the acquisition
cost and purchase price allocation, in thousands:


Acquisition Cost:
Common stock ..............................................            $ 13,776
Cash ......................................................               3,250
Transaction costs .........................................                  83
                                                                       --------
     Total acquisition cost ...............................            $ 17,109
                                                                       ========
Purchase Price Allocation:
 Net tangible assets ......................................            $    230
  Developed and core technology ...........................               1,120
  Non-compete covenant ....................................                 380
  Goodwill ................................................              16,138
  Deferred tax liability ..................................                (759)
                                                                       --------
     Total ................................................            $ 17,109
                                                                       ========



BYE/OASIS

On  July  16,  1999,  the  Company   completed  the   acquisition  of  BYE/OASIS
Engineering, Inc., a Texas corporation.  BYE/OASIS was a leading manufacturer of
environmental  filtering and control systems and wafer cassette handling devices
for the  microelectronics  industry.  In connection  with the  acquisition,  the
Company  issued  720,008  shares  of its  common  stock to the  shareholders  of
BYE/OASIS.  In  addition,  the Company  assumed  outstanding  options to acquire
BYE/OASIS shares, which were converted into options to acquire 185,361 shares of
Adept's  common stock.  The  acquisition  was accounted for using the pooling of
interests  method  and  accordingly  all  prior  period  consolidated  financial
statements  have been  restated to include the combined  results of  operations,
financial position and cash flows of BYE/OASIS.  The Company incurred charges of
$988,000  relating to the  acquisition of BYE/OASIS and the closure of BYE/OASIS
facilities  in Texas.  Included in this amount were  merger-related  expenses of
$558,000,  expenses  relating to the closure of facilities in Texas of $195,000,
and other expenses relating to the acquisition of $235,000.

Prior to the merger,  BYE/OASIS's fiscal year ended on September 30. BYE/OASIS's
prior  period  financial  statements  have been  restated  to conform to Adept's
year-end.

The following information presents certain income statement data of the separate
companies for the periods preceding the merger:


                                       63
<PAGE>


(in thousands)                                                           1999
                                                                       --------
Net sales
  Adept ..................................................             $ 82,027
  BYE/OASIS ..............................................                5,347
                                                                       --------
     Total sales .........................................             $ 87,374
                                                                       ========
Net (loss) income
  Adept ..................................................             $  2,622
  BYE/OASIS ..............................................                 (111)
                                                                       --------
     Total net income (loss) .............................             $  2,511
                                                                       ========


Revenue  generated  for the period from July 1, 1999 through July 16, 1999 (date
of acquisition) was not significant.

3. Restructuring Charges


During the year ended June 30, 2002,  Adept  implemented  a plan to  restructure
certain of its operations across all three of its reportable  business segments.
Adept adopted a  restructuring  plan during the three months ended September 30,
2001  and  due to  market  conditions,  was  required  to  implement  additional
restructuring  measures  during the third  quarter of fiscal  2002.  Significant
items  comprising  the  September  30,  2001  restructuring  plan  included  the
following:  exit of  non-strategic  product  lines  including  SILMA  inspection
software  sales and  maintenance,  factory  automation  consulting and Multi-bus
controller   support;   consolidation  of  excess   manufacturing   and  support
facilities;  consolidation of the Company's European  operations;  reductions in
force and other salary  reduction  measures.  The major actions  comprising  the
third  quarter  of  fiscal  2002  restructuring  plan  included  the  following:
suspending current efforts focused on precision assembly  automation;  shut down
of the Company's Tucson,  Arizona facility;  the exit from  manufacturing  lease
commitments in Europe; and additional reductions in force.

The Company recorded total restructuring charges of $17.7 million related to the
actions identified.  Of the $17.7 million  restructuring  charge, Adept recorded
$5.3 million in the three  months ended March 30, 2002 and $12.4  million in the
three months ended September 30, 2001.


The restructuring  charges include employee  severance costs,  lease commitments
for idle facilities and asset impairment charges and are as follows:


<TABLE>
<CAPTION>

                                                    Amounts          Amounts       Amounts     Amounts
                                         Charges    Utilized        Utilized       Utilized   Utilized
                                         -------   Q1 Fiscal       Q1 Fiscal      Q2 Fiscal   Q2 Fiscal
         (in thousands)                               2002            2002           2002       2002
         --------------                               ----            ----           ----       ----
                                                      Cash          Non Cash         Cash      Non Cash
<S>                                      <C>        <C>           <C>          <C>           <C>
 Employee severance costs............    $ 1,692    $     555     $     ---    $     370     $     ---
 Lease commitments...................      6,800           88            98           94           ---
 Asset impairment charges............      9,167          ---         5,601          ---           ---
                                         -------    ---------     ---------    ---------     ---------
   Total.............................    $17,659    $     643     $   5,699    $     464     $     ---
                                         =======    =========     =========    =========     =========
</TABLE>




                                       64
<PAGE>


<TABLE>
<CAPTION>

                                        Amounts       Amounts      Amounts      Amounts
                                       Utilized      Utilized     Utilized      Utilized     Balance
                                       Q3 Fiscal     Q3 Fiscal    Q4 Fiscal    Q4 Fiscal     June 30,
         (in thousands)                   2002         2002          2002        2002          2002
         --------------                   ----         ----          ----        ----          ----
                                           Cash      Non Cash        Cash      Non Cash
<S>                                      <C>        <C>           <C>          <C>           <C>
 Employee severance costs............    $   187    $     ---     $     454    $     ---     $    126
 Lease commitments...................        336        2,573           472          ---        3,139
 Asset impairment charges............        ---        3,472           ---          ---           94
                                         -------    ---------     ---------    ---------     ---------
   Total.............................    $   523    $   6,045     $     926    $     ---     $  3,359
                                         =======    =========     =========    =========     =========
</TABLE>


Employee  severance costs of $1.7 million represent a reduction of approximately
114  employees  in most  functional  areas  across  all three of the  reportable
business segments and at June 30, 2002 all of the affected employees have ceased
employment with the Company.  The Company  expects to pay the remaining  accrued
severance by September 30, 2002.  Lease  commitments of $6.8 million  consist of
$4.2  million in  charges  resulting  from the  consolidation  of  manufacturing
facilities in San Jose and Livermore,  California into Adept's technology center
in Livermore,  California,  plus the consolidation of certain support facilities
in Europe. THE REMAINING $2.6 MILLION IN LEASE COMMITMENTS RELATES TO A NON-CASH
CHARGE  FOR EXCESS  PRODUCTION  FACILITIES  FOR WHICH THE  COMPANY  EXCHANGED  A
PREPAID  COMMITMENT  FEE  IN  ORDER  TO  SETTLE  FUTURE  OBLIGATIONS  ON  EXCESS
PRODUCTION  FACILITIES.  The  consolidation  of these facilities has resulted in
operating  lease  commitments  in excess of the Company's  current and projected
needs  for  leased  properties.   At  June  30,  2002,  the  long  term  accrued
restructuring  charges relate to future rent commitments on non-cancelable lease
agreements.  Payments  against these lease  commitments are expected to continue
for  eighteen  months to three  years  based on lease  terms.  Asset  impairment
charges of $9.2 million  consist of $6.6 million in abandoned  assets  resulting
from the  exiting of  certain  non-strategic  product  lines,  consolidation  of
facilities and goodwill and other  intangible  assets write-off of $2.6 million.
The abandoned  assets  include  leasehold  improvements  and computer and office
equipment  related to the exit of the SILMA inspection  software product line as
well as leasehold improvements, machinery and equipment, and computer and office
equipment related to the consolidation of manufacturing and support  facilities.
The abandoned assets also include the write off of enterprise  resource planning
system software associated with the closure of the Pensar-Tucson  facility.  The
goodwill and other  intangible  assets  written off resulted  from the Company's
acquisition  of  Pensar-Tucson  in April 2000,  which no longer has value to the
Company due to the closure of its Tucson, Arizona operations in March 2002.

Once the full effect of all restructuring  activities was realized, the Assembly
and  Material  Handling  business  segment  experienced  a reduction  in salary,
depreciation and rent related  expenses of approximately  $1.9 million a quarter
with no offsetting  decline in revenues.  The SILMA  Software  business  segment
experienced expense reductions of $0.6 million a quarter,  which was offset by a
decline in  revenues  of $0.6  million a  quarter.  The  Semiconductor  business
segment  experienced  expense  reductions  of $0.2  million  a  quarter  with no
offsetting decline in revenues.



                                       65
<PAGE>
4. Effect of New Accounting Standards - Goodwill and Other Intangible Assets

In  June  2001,  the  Financial   Accounting  Standards  Board  ("FASB")  issued
Statements  of Financial  Accounting  Standards No. 141,  Business  Combinations
("SFAS 141"), and No. 142,  Goodwill and Other  Intangible  Assets ("SFAS 142").
SFAS 141  requires  that  the  purchase  method  of  accounting  be used for all
business combinations initiated after June 30, 2001. Adept has adopted SFAS 141,
and this adoption did not have a material effect on Adept's  financial  position
or results of operations.

Under SFAS 142, goodwill (and intangible assets deemed to have indefinite lives)
will no longer be  amortized  but will be  subject to annual  impairment  tests.
Other  intangible  assets with finite lives will be amortized  over those useful
lives.  SFAS 142 requires  that the first of two  impairment  tests be completed
within six months of adoption.  Adept  implemented  SFAS 142 on July 1, 2001 and
completed the  measurement of the impairment loss in the third quarter of fiscal
2002. An impairment  loss of $10.0 million  resulting  from the adoption of SFAS
142 was recorded as a cumulative  effect of a change in accounting  principle as
of July 1,  2001.  SFAS  142  requires  goodwill  and  intangible  assets  to be
evaluated for  impairment  at least  annually and we have chosen April 1, as the
annual date to conduct this  evaluation.  As of April 1, 2002 Adept  recorded an
impairment loss of $6.6 million as a component of operating expenses as a result
of the annual impairment  update.  The impairment charges are determined using a
fair value approach, using the discounted cash flow method.

Prior to the  adoption  of SFAS  142,  amortization  expense  was  recorded  for
goodwill and other intangible  assets. The following sets forth a reconciliation
of net income and  earnings  per share  information  for the fiscal  years 2002,
2001and 2000 adjusted for the non-amortization provisions of SFAS 142.

<TABLE>
<CAPTION>
                                                                                             Fiscal year ended
                                                                           --------------------------------------------------------
            (in thousands)                                                 June 30, 2002        June 30, 2001         June 30, 2000
                                                                           -------------        -------------         -------------
<S>                                                                           <C>                  <C>                  <C>
Net loss before cumulative effect of change
   in accounting principle ..........................................         $(49,851)            $(35,200)            $ (1,427)
Add back goodwill amortization ......................................               --                6,097                  685
                                                                              --------             --------             --------
Adjusted net income .................................................         $(49,851)            $(29,103)            $   (742)
Cumulative effect of change in accounting principle .................           (9,973)                  --                   --
                                                                              --------             --------             --------
Net loss after cumulative effect of change
   in accounting principle ..........................................         $(59,824)            $(29,103)            $   (742)
Weighted average shares outstanding:
   Basic ............................................................           13,691               11,637                9,774
                                                                              ========             ========             ========
   Diluted ..........................................................           13,691               11,637                9,774
                                                                              ========             ========             ========
Basic and diluted earnings per common share:
Reported loss before cumulative effect of
  change in accounting principle ....................................         $  (3.64)            $  (3.02)            $  (0.15)
Add back goodwill amortization ......................................               --                 0.05                 0.07
                                                                              --------             --------             --------
Adjusted loss before cumulative effect of
  change in accounting principle ....................................         $  (3.64)            $  (2.97)            $  (0.08)
Cumulative effect of change in accounting principle .................            (0.73)                  --                   --
                                                                              --------             --------             --------
Adjusted net loss ...................................................         $  (4.37)            $  (2.97)            $  (0.08)
                                                                              ========             ========             ========
</TABLE>

Acquired Intangible Assets

In accordance  with SFAS 142, the  following is a summary of the gross  carrying
amount  and  accumulated  amortization,   aggregate  amortization  expense,  and
estimated amortization expense for the next five succeeding fiscal years related
to the intangible assets subject to amortization.


(in thousands)                                 As of June 30, 2002
                                  ----------------------------------------------
                                  Gross Carrying   Accumulated     Net Carrying
Amortized intangible assets          Amount        Amortization       Amount
  Developed technology ......       $ 1,751         $  (809)         $   942


                                       66
<PAGE>


  Non-compete agreements ....           380            (198)             182
                                    -------         -------          -------
     Total ..................       $ 2,131         $(1,007)         $ 1,124
                                    =======         =======          =======


The aggregate amortization expense for year ended June 30, 2002 totaled $725,000
and the estimated amortization expense for the next five years are as follows:


        (in thousands)                          Amount
                                                ------
        For fiscal year ended 2003              $  565
        For fiscal year ended 2004                 487
        For fiscal year ended 2005                  72
                                                ------
                                                $1,124
                                                ======


Goodwill


Consistent  with the guidance of SFAS 142,  Adept has chosen to apply the income
approach as its primary  indicator of value.  Adept has also utilized the market
approach  to confirm the  reasonableness  of the value  indicated  by the income
approach.  The specific methodologies employed included the discounted cash flow
method and the comparable company approach.  Based on the impairment analysis as
of July  1,  2001,  the  fair  values  of the  goodwill  of the  Nanomotion  and
HexaVision  reporting  units were less than their  respective  carrying  values.
Accordingly, there was evidence of goodwill impairment. in both reporting units.
Adept reported the $10.0 million  impairment as the cumulative  effect of change
in accounting principle upon the adoption of SFAS 142. Additionally, as a result
of the closure of Adept's Tucson,  Arizona operations in March 2002,  management
determined that the goodwill related to the  Pensar-Tucson  acquisition in April
2000 was impaired and recorded a goodwill impairment loss of $2.5 million during
the three months ended March 30, 2002.

In the fourth quarter of 2002,  Adept  performed the annual  impairment  update,
which  resulted  in a  goodwill  impairment  of $6.6  million.  This  impairment
primarily  results  from  declines  in  market  conditions   subsequent  to  the
acquisition  of CHAD in  October  2001.  At the time the  CHAD  acquisition  was
consummated,   the  Company  was  pursuing  its  precision  assembly  automation
strategy.  The  Company  expected  to leverage  CHAD's  expertise  in small part
feeding,  precision tooling design,  and the handling of odd-form  components to
add capacity in precision  assembly  automation.  The Company expected  revenues
from  precision  assembly  automation  to  be  incremental  to  CHAD's  odd-form
components  revenue  base.  At the time when the  Company  performed  its annual
impairment  update,  CHAD's  odd-form  component  business had declined by fifty
percent and  precision  assembly  automation  revenues had not  materialized  to
offset the decline.  The economic decline experience by the Company's  customers
inreased and expanded.  As a result, the current business forecast can no longer
support the goodwill that had been recorded at the time of the CHAD  acquisition
requiring the Company to book an impairment  charge. The impairment was recorded
as a component of operating expenses as required by SFAS 142.



The changes in the carrying  amount of goodwill for the year ended June 30, 2002
are as follows:

<TABLE>
<CAPTION>


(in thousands)                                        Nanomotion       HexaVision         Pensar            CHAD            Totals
                                                      ----------       ----------        --------         --------         --------
<S>                                                    <C>              <C>              <C>              <C>              <C>
Balance at June 30, 2001 ......................        $  8,542         $  3,599         $  2,455         $     --         $ 14,596
Additions to goodwill .........................             125            2,124               --            9,080           11,329
</TABLE>

                                       67
<PAGE>


<TABLE>
<S>                                                    <C>              <C>              <C>              <C>              <C>
Cumulative effect of change
   in accounting principle ....................          (8,667)          (1,306)              --               --           (9,973)
Impairment of goodwill ........................              --           (2,023)              --           (4,585)          (6,608)
Goodwill write-off related
   to closure of manufacturing facility .......              --               --           (2,455)              --           (2,455)
                                                       --------         --------         --------         --------         --------
Balance at June 30, 2002 ......................        $     --         $  2,394         $     --         $  4,495         $  6,889
                                                       ========         ========         ========         ========         ========
</TABLE>


The Nanomotion,  HexaVision, Pensar and CHAD reporting units all fall in the AMH
segment.

5. Derivative Financial Instruments

A foreign  currency  hedging program is used to hedge the Company's  exposure to
foreign  currency  exchange  risk  on  international   operational   assets  and
liabilities.  Realized  and  unrealized  gains and  losses on  forward  currency
contracts  that are effective as hedges of assets and  liabilities  are included
under selling, general and administrative expenses in the consolidated statement
of  operations.  A loss of $728,000 was  recognized  for the year ended June 30,
2002 and a gain of $322,000  was  recognized  for the year ended June 30,  2001.
Realized  and  unrealized  gains  and  losses on  instruments  that  hedge  firm
commitments  are  deferred  and included in the  measurement  of the  subsequent
transaction;  however,  losses are deferred only to the extent of expected gains
on the future commitment at June 30, 2002. The Company has deferred  recognition
of a transaction loss of $83,500,  relating to foreign exchange  contracts.  The
Company  realized this  transaction loss in the first quarter of fiscal 2003, as
an offset to the related foreign exchange gain.

6. Commitments and Contingencies

Commitments

Future  minimum lease  payments  under  non-cancelable  operating  leases are as
follows:


(in thousands)                                                            Leases
                                                                         -------
Fiscal Year
  2003 ...................................................               $ 8,036
  2004 ...................................................                 6,727
  2005 ...................................................                 5,360
  2006 ...................................................                 4,991
  2007 ...................................................                 4,903
  Later years ............................................                27,569
                                                                         -------
Total minimum lease payments .............................               $57,586
                                                                         =======


Rent expense was $6.4  million in 2002.  The Company did not record any sublease
income during fiscal 2002.  Rent expense,  net of sublease income of $16,000 and
$18,480, was $4.1 million in 2001 and $3.0 million in 2000, respectively.

Contingencies

Some end users of the  Company's  products  have  notified the Company that they
have  received  a claim of  patent  infringement  from the  Jerome  H.  Lemelson
Foundation,  alleging that their use of the Company's  machine  vision  products
infringes certain patents issued to Mr. Lemelson.  In addition,  the Company has
been notified that other end


                                       68
<PAGE>


users of the Company's AdeptVision VME line and the predecessor line of Multibus
machine vision  products have received  letters from Mr. Lemelson which refer to
Mr.  Lemelson's  patent  portfolio  and  offer  the end  user a  license  to the
particular  patents.  Certain end users have  notified the Company that they may
seek  indemnification  from the Company for damages or expenses  resulting  from
this  matter.  The  Company  cannot  predict  the outcome of this or any similar
litigation,  which may arise in the future.  However,  the Company  believes the
ultimate  resolution of these matters will not have a material adverse effect on
its financial position, results of operations or cash flows.

The Company has from time to time  received  communications  from third  parties
asserting that the Company is infringing  certain patents and other intellectual
property  rights  of  others,   or  seeking   indemnification   against  alleged
infringement. While it is not feasible to predict or determine the likelihood or
outcome of any actions  brought  against it, the Company  believes  the ultimate
resolution  of these  matters  will not have a  material  adverse  effect on its
financial position, results of operations or cash flows.

7. Redeemable Convertible Preferred Stock


On October 29, 2001,  Adept  completed a private  placement  with an  accredited
investor of $25.0 million in Adept  convertible  preferred  stock  consisting of
78,000 shares of Series A Convertible Preferred Stock (the "Series A Preferred")
and  22,000  shares of  Series B  Convertible  Preferred  Stock  (the  "Series B
Preferred"),  collectively (the "Preferred Stock").  Both the Series A Preferred
and the Series B Preferred are entitled to annual dividends at a rate of $15 per
share.  Dividends  are  cumulative  and are payable only in the event of certain
liquidity  events as defined in the  designation of preferences of the Preferred
Stock,  such as a change of  control  or a  liquidation  or  dissolution  of the
Company.  No dividends on its common stock may be paid until  dividends  for the
fiscal  year and any prior  years on the  Preferred  Stock have been paid or set
apart,  and the Preferred  Stock will  participate  in any dividends paid to the
common stock on an as-converted basis. The Preferred Stock may be converted into
shares  of  Adept's  common  stock at any time  after the  earlier  of the first
anniversary of the original issue date, the public  announcement  of a liquidity
event,  or an event of default,  such as  bankruptcy,  or the  reporting  by the
Company of a cash  balance  of less than $15.0  million at the end of any fiscal
quarter through  September 30, 2002, and, in the absence of a liquidity event or
earlier  conversion or redemption,  will be converted into common stock upon the
third  anniversary  of the  original  issue  date.  The  Preferred  Stock may be
converted into shares of Adept's Common Stock at a rate of the initial  purchase
price  divided by a denominator  equal to the lesser of $8.18,  or 75% of the 30
day average  closing  price of Adept  common  stock  immediately  preceding  the
conversion date ("Conversion Date Price").  However,  as a result of a waiver of
events of default by the preferred  stockholder  other than in  connection  with
certain  liquidity  events that are not  approved by the Board of  Directors  of
Adept, in no event shall the denominator for the determination of the conversion
rate with  respect to the Series B Preferred be less than $4.09 and with respect
to the Series A  Preferred  be less than $2.05.  The Series A Preferred  and the
Series B Preferred shall not be convertible,  in the aggregate, into 20% or more
of the outstanding  voting securities of Adept. No holder of Preferred Stock may
convert shares of Preferred Stock if, after the conversion, the holder will hold
20% or more of the Company's outstanding voting securities. Shares not permitted
to be converted remain outstanding, unless redeemed, and become convertible when
such holder holds less than 20% of the Company's  outstanding voting securities.
The  Preferred  Stock has voting rights equal to the number of shares into which
the Preferred  Stock could be converted  subject to terms of the  designation of
preferences assuming a conversion rate of $250.00 divided by $8.18.

The  Company  has the right,  but not the  obligation,  to redeem  shares of the
Series A Preferred elected to be converted by the preferred  stockholder  which,
upon  conversion  would use the  denominator of $2.05 for  determination  of the
conversion  rate , and would result in the issuance of shares of common stock in
excess of the number of shares of common stock issuable upon conversion  using a
denominator of $4.09 for the  conversion  rate. The number of shares of Series A
Preferred that Adept may elect to redeem would be calculated by subtracting  (i)
the number of shares of common stock that the shares of Series A Preferred  that
have  been  elected  to be  converted  would  be  convertible  into  based  on a
denominator  of $4.09  from (ii) the  number of shares of common  stock that the
shares of Series A Preferred  elected to be converted  would be  converted  into
based on a denominator of $2.05,  and then  determining  the number of shares of
Series A Preferred that this number of shares of common stock represents using a
denominator of $4.09.  The  redemption  price is equal to the sum of the initial
Preferred Stock price, plus all cumulated and unpaid


                                       69
<PAGE>

dividends.  The  redemption  shall  be paid in the  form of a  senior  unsecured
promissory  note  bearing  interest  at a rate of 6% per annum,  maturing in two
years. If Adept redeems shares of Preferred  Stock using a promissory  note, any
indebtedness  incurred while the note is outstanding must be subordinated to the
note, other than certain ordinary course financings. In addition, the holders of
the Preferred Stock are entitled to receive, upon liquidation,  the amount equal
to $250.00 per share (adjusted for any stock splits or stock dividends) plus any
unpaid  dividends.  The  liquidation  preference  may be  triggered  by  several
eventsconsisting of a change in control of Adept, a sale of substantially all of
Adept's assets,  shareholder  approval of any plan of liquidation or dissolution
or the  direct or  indirect  beneficial  ownership  of more than 50% of  Adept's
common  stock by any  person or  entity.  Since  such  events  may be outside of
management's  control  and would  trigger  the  payment of the  Preferred  Stock
liquidation   preference,   the  Preferred  Stock  are  classified   outside  of
shareholders'   equity  as  redeemable   convertible   preferred  stock  in  the
accompanying consolidated balance sheet.

The  Company  entered  into  an  automation  development  alliance  for  optical
component and module manufacturing with JDS Uniphase in October 2001. As part of
this  agreement,  Adept will work with the JDS  Uniphase's  internal  automation
organization,  Optical  Process  Automation,  or OPA, to develop  solutions  for
component  and  module  manufacturing   processes  and  specifically  sub-micron
tolerance  assemblies.  JDS  Uniphase  will  have  sole  rights  for  fiberoptic
application  of  new  products  and  technologies  developed  pursuant  to  this
alliance,  while  Adept  will  retain  the right to  market  such  products  and
technologies for use in other high precision industries served by Adept. As part
of this  agreement,  Adept has agreed to pay to JDS  Uniphase up to $1.0 million
per quarter for the following five quarters for  development  provided by OPA of
products  and  technologies  that might be  applicable  to other high  precision
industries  served by  Adept.  At June 30,  2002,  Adept  completed  two of five
quarterly  expenditures  of $1.0  million,  which are being made pursuant to the
joint development  agreement with the accredited investor. At June 30, 2002, the
remaining  quarterly  expenditures  of $1.0 million are to be made over the next
three quarters for a total of $3.0 million.

8. Shareholders' Equity

Preferred Stock

The Board of Directors has the authority to issue, without further action by the
shareholders,  up to 5,000,000  shares of preferred  stock in one or more series
and to fix the price, rights, preferences,  privileges and restrictions thereof,
including dividend rights,  dividend rates,  conversion  rights,  voting rights,
terms of redemption,  redemption prices,  liquidation preferences and the number
of shares  constituting a series or the designation of such series,  without any
further vote or action by the Company's shareholders.  The issuance of preferred
stock,  while  providing  desirable  flexibility  in  connection  with  possible
acquisitions  and other corporate  purposes,  could have the effect of delaying,
deferring  or  preventing  a change in control of the  Company  without  further
action by the shareholders and may adversely affect the market price of, and the
voting and other  rights of, the holders of common  stock.  This amount has been
reduced by  100,000  shares,  which  have  reserved  as  redeemable  convertible
preferred  stock in connection with the Company's  joint  development  agreement
with an accredited investor.

Common Stock

In August 2000, the Board of Directors  amended the Company's  Restated Articles
of  Incorporation,  approving an increase in the number of authorized  shares of
its common  stock from 25.0  million to 70.0 million  shares.  The  shareholders
approved this amendment on November 10, 2000.

The Company has reserved  shares of common stock for future issuance at June 30,
2002 as follows:

(in thousands)
Stock options outstanding ........................................         3,338
Stock options available for grant ................................         2,688
Conversion of redeemable convertible Preferred Stock .............         3,056
Employee stock purchase plan shares issued .......................         1,061
Employee stock purchase plan shares available for purchase .......           496
                                                                          ------
                                                                          10,639
                                                                          ======

                                       70
<PAGE>

Follow-on offering

On February  18,  2001,  the Company  completed a public  offering of its common
stock. The Company sold a total of two million shares of common stock at a price
of $18.00 per share.  The  offering  resulted in net  proceeds to the Company of
approximately $32.4 million, net of an underwriting discount of $2.5 million and
offering expenses of $1.1 million.

Stock Option Plans

The  Company's  1993 Stock Plan (the  "1993  Plan") was  adopted by the Board of
Directors in April 1993 and approved by the  shareholders of the Company in June
1993. The 1993 Plan provides for grants of incentive  stock options to employees
(including  officers and employee  directors) and nonstatutory  stock options to
employees  (including  officers and employee  directors) and  consultants of the
Company.  In  general,  options  and common  stock  purchased  pursuant to stock
purchase rights granted under the 1993 Plan vest and become exercisable starting
one year after the date of grant,  with 25% of the shares  subject to the option
exercisable  at that time and an additional  1/48th of the shares subject to the
option  becoming  exercisable  each  month  thereafter.  Upon the  voluntary  or
involuntary  termination  of  employment  (including  as a  result  of  death or
disability)  by a holder  of  unvested  shares  of the  Company's  common  stock
purchased  pursuant to stock  purchase  rights  granted under the 1993 Plan, the
Company may exercise an option to repurchase such shares at their original issue
price.  The terms of the options  granted under the 1993 Plan  generally may not
exceed ten years.  The Board of Directors  determines  the exercise price of the
options,  which must be at least  equal to the fair  market  value of the common
stock on the date of grant.

On August 12, 1999, the Board of Directors authorized an increase of one million
shares issuable under the 1993 Plan,  which was approved by the  shareholders in
November  1999.  In  August  2000,  the 1993  Plan was  amended  by the Board of
Directors to increase  the number of shares  authorized  for issuance  under the
1993 Plan by an additional  one million  shares.  This amendment was approved by
the Company's shareholders on November 10, 2000.

The Company's 1995 Director Option Plan (the "Director Plan") was adopted by the
Board of Directors  and approved by the  shareholders  of the Company in October
1995.   The  option   grants  under  the  Director   Plan  are   automatic   and
nondiscretionary,  and the  exercise  price of the options is at the fair market
value of the  Company's  common  stock on the date of grant.  A total of 150,000
shares of common stock has been reserved for issuance  under the Director  Plan.
During each of the years in the  two-year  period  ended June 30,  2002,  12,000
options were granted and no options were exercised.

The options may be  exercised  at the time or times  determined  by the Board of
Directors.

On August 9, 2001,  the Board of  Directors  adopted the 2001 Stock  Option Plan
(the "2001 Plan") and provided that 2,600,000 shares of common stock be reserved
for issuance under the 2001 Plan.  Options under the 2001 Plan may be granted to
employees  either  from  time  to  time at the  discretion  of the  Compensation
Committee of the Board of  Directors or  automatically  upon the  occurrence  of
specified events, including, without limitation, reduction of at will employees'
salaries and the  achievement  of performance  goals.  The exercise price of the
options is at the fair market value of the Company's common stock on the date of
the  grant.  Options  generally  vest  over  a  time  period  specified  by  the
Compensation  Committee.  However, at the Compensation  Committee's  discretion,
options granted for reduction of at will employees'  salaries will vest in equal
monthly  increments over the salary reduction period.  All stock options granted
under  the 2001 Plan have an  expiration  date of 10 years  from the date of the
grant.

The following  table  summarizes  option  activities  under the Company's  stock
option plans:


                                       71
<PAGE>
<TABLE>
<CAPTION>


                                                                                         Options
                                                            ------------------------------------------------------------------
                                                            Available        No. of Shares      Aggregate      Weighted Average
                                                            for Grant         Outstanding         Price         Exercise Price
                                                            ---------        -------------      ---------      ---------------
                                                                              (in thousands, except per share data)
<S>                                                           <C>              <C>               <C>               <C>
Balance at June 30, 1999 ............................           614              1,404              9,498             6.76
  Additional shares authorized ......................         1,000                 --                 --               --
  Granted ...........................................          (845)               845              5,765             6.83
  Canceled ..........................................           197               (197)            (1,268)            6.45
  Exercised .........................................            --               (308)            (1,518)            4.92
                                                              -----              -----           --------           ------
Balance at June 30, 2000 ............................           966              1,744           $ 12,477           $ 7.15
                                                              =====              =====           ========           ======
  Additional shares authorized ......................         1,000                 --                 --               --
  Granted ...........................................          (844)               844             16,285            19.29
  Canceled ..........................................           122               (122)            (2,584)           21.18
  Exercised .........................................            --               (252)            (1,370)            5.44
                                                              -----              -----           --------           ------
Balance at June 30, 2001 ............................         1,244              2,214           $ 24,808           $11.21
                                                              =====              =====           ========           ======
  Additional shares authorized ......................         2,600                 --                 --               --
  Granted ...........................................        (1,619)             1,619              5,852             3.61
  Canceled ..........................................           463               (463)            (4,594)            9.92
  Exercised .........................................            --                (32)              (120)            3.74
                                                              -----              -----           --------           ------
Balance at June 30, 2002 ............................         2,688              3,338           $ 25,946           $ 7.77
                                                              =====              =====           ========           ======
</TABLE>


The  following  table   summarizes   information   concerning   outstanding  and
exercisable options at June 30, 2002:

<TABLE>
<CAPTION>

                                      Options Outstanding                      Options Exercisable
                          --------------------------------------------      --------------------------
                                           Weighted
                                            Average          Weighted                        Weighted
                                           Remaining          Average                         Average
Range of Exercise           Options       Contractual        Exercise         Options        Exercise
     Prices               Outstanding        Life              Price        Exercisable        Price
-----------------         -----------     -----------        ---------      -----------     ----------
<C>                       <C>                <C>              <C>           <C>               <C>
$ 0.34  -  $ 2.45            46,116          7.09             $  1.30          27,366         $  0.51
$ 2.79  -  $ 2.84           496,853          9.84             $  2.79           9,855         $  2.79
$ 3.26  -  $ 4.64           909,352          9.07             $  3.72         430,379         $  3.55
$ 5.56  -  $ 7.00           786,502          6.07             $  6.39         675,214         $  6.43
$ 7.03  -  $ 8.40           354,540          8.39             $  7.71         131,869         $  7.58
$ 9.00  -  $13.81           338,765          7.37             $ 10.31         188,627         $ 10.69
$14.75  -  $24.50           381,765          8.09             $ 22.80         176,598         $ 24.12
$37.00  -  $49.75            23,812          8.21             $ 47.40          10,577         $ 47.31
                          ---------                                         ---------
$ 0.34  -  $49.75         3,337,705          8.09             $  7.77       1,650,485         $  8.15
                          =========                                         =========
</TABLE>


Employee Stock Purchase Plan

The 1998 Employee Stock Purchase Plan (the "1998 ESPP") has overlapping 12-month
offering periods that begin every six months,  starting on the first trading day
on or after May 1 and November 1 of each year. Each 12-month  offering period is
divided into two six-month purchase periods. The plan allows eligible employees,
through payroll deductions,  to purchase shares of the Company's common stock at
85% of fair market value on either the first day of the  offering  period or the
last day of the  purchase  period,  whichever  is  lower.  The plan  includes  a
provision for an annual automatic  increase in the number of shares reserved for
issuance by the lesser of (i) 300,000,  (ii) 3% of common stock  outstanding  on
the last day of the  prior  fiscal  year,  or  (iii) a lesser  amount  as may be
determined by the Board of Directors.

In May 2000,  the Board  approved  an  amendment  to the 1998 ESPP for  24-month
offering periods including four


                                       72
<PAGE>

six-month  purchase periods,  effective May 1, 2001 and approved an amendment to
the 1998 ESPP to  provide  for an annual  automatic  increase  in the  number of
shares  reserved for  issuance by the lesser of (i)  600,000,  (ii) 3% of common
stock  outstanding  on the last day of the prior fiscal year,  or (iii) a lesser
amount as may be determined by the Board of Directors.

As of June 30, 2002,  1,061,000 shares of the Company's common stock were issued
under the 1998 ESPP and 496,000 shares remain unissued under the 1998 ESPP.

Stock Based Compensation

At June 30,  2002,  the  Company  had  four  stock-based  compensation  plans as
described  above.  The Company  applies APB 25 and  related  interpretations  in
accounting for its compensation  plans.  Accordingly,  no compensation  cost has
been  recognized for its fixed stock option plans and its ESPP. If  compensation
cost for the  Company's  stock-based  compensation  plans  had  been  determined
consistent  with SFAS 123, the Company's net income (loss) and net income (loss)
per share would have been adjusted to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
(in thousands, except per share data)                                              June 30,
                                                                 -------------------------------------------
                                                                   2002              2001             2000
                                                                 --------          --------          -------
<S>                                                              <C>               <C>               <C>
Net (loss) income
As reported ............................................         ($59,824)         ($35,200)         ($1,427)
 Pro forma .............................................         ($67,196)         ($43,165)         ($5,532)

Basic and diluted net (loss) income per share
As reported ............................................         ($  4.37)         ($  3.02)         ($ 0.15)
 Pro forma .............................................         ($  4.91)         ($  3.71)         ($ 0.57)
</TABLE>

Because the method of accounting  prescribed by SFAS 123 has not been applied to
options  granted  prior to July 1, 1995 and future years will include the impact
of future stock option grants, the resulting pro forma compensation cost may not
be representative of that to be expected in future years. The fair value of each
option grant is estimated  on the date of grant using the  Black-Scholes  option
pricing model with the following weighted-average  assumptions for grants during
the years ended June 30, 2002, 2001 and 2000:  risk-free interest rates of 4.10%
for 2002,  3.83% for 2001 and 6.04%  for 2000;  a  dividend  yield of 0% for all
three years; a weighted-average  expected life of 7.86 years for 2002, 8.6 years
for 2001 and 3.1 years for 2000; and a volatility  factor of the expected market
price of the Company's common stock of 1.74 for 2002, 1.54 for 2001 and 1.02 for
2000.  The  weighted  average  grant date fair  value of  options  was $3.53 for
options granted in 2002, $18.86 in 2001 and $6.65 in 2000.

Compensation  cost is estimated  for the fair value of the  employees'  purchase
rights  under  the  ESPP  using  the  Black-Scholes  model  with  the  following
assumptions  for rights  granted in 2002,  2001 and 2000: a dividend yield of 0%
for all three years;  expected life of six months for all three years;  expected
volatility  of 2.17 for 2002,  1.17 for 2001 and 1.02 for 2000;  and a risk-free
interest rate of 4.63% for 2002,  5.6% for 2001 and 5.81% for 2000. The weighted
average fair market value of the  purchase  rights  granted was $4.38 for rights
granted in 2002, $8.19 in 2001 and $3.35 for 2000.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition, option models require the input of highly subjective
assumptions including the expected stock price volatility. Because the Company's
employee stock options have characteristics  significantly  different from those
of traded  options,  and  because  changes  in the  subjective  assumptions  can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options.

9. Employee Savings and Investment Plan

The Company  maintains a 401(k) savings and investment  plan in which  employees
are  eligible  to   participate.   The  Company   suspended  its  401K  matching
contributions to reduce costs beginning in January 2002. The Company's


                                       73
<PAGE>

matching  contributions  were  $255,000,  $600,000 and $274,000 for fiscal years
2002, 2001 and 2000, respectively.

10. Income Taxes

The provision for (benefit from) income taxes consists of the following:



(in thousands)                                        Year Ended June 30,
                                                 ------------------------------
                                                  2002        2001       2000
                                                 -------     -------    -------
Current:
  Federal ...................................    $    --     $    --    $   161
  State .....................................         --          --        (86)
  Foreign ...................................        243         425        166
                                                 -------     -------    -------
Total current ...............................        243         425        241
Deferred:
  Federal ...................................     (3,601)      4,033       (515)
  State .....................................         --         938       (319)
                                                 -------     -------    -------
Total deferred ..............................     (3,358)      4,971       (834)
                                                 -------     -------    -------
Provision for (benefit from) income taxes ...    $(3,358)    $ 5,396    $  (593)
                                                 =======     =======    =======


The  difference  between the provision  for (benefit  from) income taxes and the
amount  computed by applying  the  federal  statutory  income tax rate to (loss)
income before provision for (benefit from) income taxes is explained below:

<TABLE>
<CAPTION>

(in thousands)                                                                          Year Ended June 30,
                                                                         ----------------------------------------------
                                                                           2002               2001               2000
                                                                         --------           --------           --------
<S>                                                                      <C>                <C>                <C>
 Tax at federal statutory rate ..................................        $(21,487)          $(10,133)          $   (687)
 State taxes, net of federal benefit ............................          (1,248)            (1,387)               (33)
 Foreign taxes ..................................................             502                436                441
 Tax credits ....................................................             129             (1,082)              (791)
 Merger and acquisition related expenses ........................           5,547              1,373                255
 Non-deductible meals, entertainment and exchange losses ........             124                 65                125

Change in valuation allowance ...................................          13,025             16,179                 --
 Other ..........................................................              50                (55)                97
                                                                         --------           --------           --------
 Provision for (benefit from) income taxes ......................        $ (3,358)          $  5,396           $   (593)
                                                                         ========           ========           ========
</TABLE>


Significant  components of the Company's deferred tax assets and liabilities are
as follows:

<TABLE>
<CAPTION>

(in thousands)                                                                        June 30,
                                                                              ------------------------
                                                                                2002            2001
                                                                              --------        --------
<S>                                                                           <C>             <C>
Deferred tax assets:
</TABLE>


                                       74
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                           <C>             <C>
    Net operating loss carryforwards .....................................    $ 16,318        $  7,469
    Tax credit carryforwards .............................................       4,910           2,813
    Inventory valuation accounts .........................................       2,337           3,239
    Warranty accruals ....................................................         603             799
    Depreciation /amortization ...........................................       2,031             910
    Other accruals not currently deductible for tax purposes .............       2,575           3,275
    Capitalized research and development expenses ........................       1,944             660
    Other ................................................................       1,530             192
                                                                              --------        --------
    Total deferred tax assets ............................................      32,248          19,357
    Valuation allowance ..................................................     (31,819)        (18,794)
                                                                              --------        --------
    Net deferred tax assets ..............................................         429             563
                                                                              --------        --------

Deferred tax liabilities:
    Purchased intangibles ................................................        (429)           (563)
                                                                              --------        --------
    Net deferred tax liabilities .........................................        (429)           (563)
                                                                              --------        --------

Total net deferred tax assets ............................................    $     --        $     --
                                                                              ========        ========
</TABLE>


The Job Creation and Worker Assistance Act of 2002 was enacted on March 9, 2002,
allowing  five-year  carry back of net  operating  losses  generated in 2001 and
2002.  Consequently,  the Company  recorded a U.S. tax benefit of  approximately
$3,600,000 to reflect the carry back of the net operating loss generated in 2001
to obtain a refund of taxes previously paid.

For financial  reporting  purposes,  the Company's deferred tax assets have been
fully offset by a valuation  allowance due to uncertainties  about the Company's
ability to generate future taxable income. The change in the valuation allowance
was a net increase of approximately  $13.0 million and $17.9 million in 2002 and
2001, respectively.

The  accumulated  tax benefits  associated with employee stock options provide a
deferred benefit of approximately  $929,000,  which has been fully offset by the
valuation  allowance.  The deferred tax benefit  associated  the employee  stock
options will be credited to additional paid-in capital when realized.

At June 30, 2002, the Company had net operating loss  carryforwards  for federal
income tax  purposes  of  approximately  $44.3  million,  which  will  expire in
increments from 2003 through 2022 if unused.  The Company had net operating loss
carryforwards for state income tax purposes of approximately $1.2 million, which
will expire in increments from 2010 through 2012 if unused. The Company also had
credit  carryforwards  of  approximately  $3.8  million,  which  will  expire in
increments from 2003 through 2022 if unused. Utilization of a portion of the net
operating loss  carryforwards  and a portion of the tax credit  carryforwards is
limited to approximately $300,000 per year.

Pretax income  (losses) from foreign  operations was  approximately  $452,000 in
2002, $(754,000) in 2001, and $267,000 in 2000.

11. Net Loss Per Share

Net loss per share is calculated as follows:

<TABLE>
<CAPTION>

                                                                                                      Year Ended June 30,
                                                                                         ------------------------------------------
                                                                                           2002             2001            2000
                                                                                         --------         --------         --------
                                                                                           (in thousands, except per share amounts)
<S>                                                                                      <C>              <C>              <C>
Net loss before cumulative effect of change in accounting principle .............        $(49,851)        $(35,200)        $ (1,427)
Cumulative effect of change in accounting principle .............................        $ (9,973)        $     --         $     --
                                                                                         --------         --------         --------
</TABLE>


                                       75
<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                      <C>              <C>              <C>
Net loss after cumulative effect of change in accounting principle ..............        $(59,824)        $(35,200)        $ (1,427)
                                                                                         ========         ========         ========
 Weighted average shares outstanding:
     Basic ......................................................................          13,691           11,637            9,774
                                                                                         ========         ========         ========
     Diluted ....................................................................          13,691           11,637            9,774
                                                                                         ========         ========         ========

 Basic and diluted loss per common share:
     Loss before cumulative effect of change in accounting principle ............        $  (3.64)        $  (3.02)        $  (0.15)
     Cumulative effect of change in accounting principle ........................           (0.73)              --               --
                                                                                         --------         --------         --------
     Adjusted net loss ..........................................................        $  (4.37)        $  (3.02)        $  (0.15)
                                                                                         ========         ========         ========
</TABLE>


If the Company had reported  net income for the years ended June 30, 2002,  2001
or 2000,  the  calculation  of diluted net income per share would have  included
additional  common  equivalent  shares of approximately  515,000,  1,963,000 and
1,658,000,  respectively,  relating to  outstanding  employee  stock options not
included above (determined using the treasury stock method).

12. Segment Information

The Company has three reportable  business  segments,  the Assembly and Material
Handling ("AMH") operations  segment,  the Semiconductor  operations segment and
the SILMA Software operations segment.

The AMH operations segment provides intelligent automation software and hardware
products for assembly, material handling and packaging applications.

The  Semiconductor  operations  segment  provides  semiconductor   contamination
control  products,  such as, standard and customized  products for contamination
control (mini and micro  environments),  wafer  integration  and front-end wafer
handling and  transport  solutions  for  semiconductor  OEMs.  In addition,  the
segment provides end users guidance and inspection vision products and robots to
end users.

The  SILMA  Software   ("SILMA")   operations  segment  provides  3-D  graphical
simulation  tools for assembly process design,  simulation and analysis.  In the
fourth  quarter  of 2002,  Adept  completed  the sale of  certain  assets of the
CimStation Inspection portion of the SILMA business.  The assets were sold for a
purchase price of $2.0 million with $1.75 million paid in cash and the remaining
$250,000  contingent payment to be paid based on certain revenue projections for
the period July 1, 2001 through June 30, 2002 and are due to settle on or before
September 30, 2002.  Given the severity of the market  downturn,  it is unlikely
the Company will realize the full contingency payment.

The reportable segments are each managed separately because they manufacture and
distribute distinct products with different production processes.

The Company  evaluates  performance  and  allocates  resources  based on segment
revenues and segment  operating income (loss).  Segment  operating income (loss)
comprises  income  before   unallocated   research  and  development   expenses,
unallocated  selling,  general  and  administrative  expenses,  amortization  of
intangibles, interest income, interest and other expenses and income taxes.

Management  does not  fully  allocate  research  and  development  expenses  and
selling,  general  and  administrative  expenses  when making  capital  spending
decisions,  expense funding  decisions or assessing segment  performance.  There
were no intersegment sales or transfers between segments.

Segment  information for total assets and capital  expenditures is not presented
as such information is not used in measuring  segment  performance or allocating
resources among segments.


                                       76
<PAGE>
<TABLE>
<CAPTION>


(in thousands)                                                                                  Year Ended June 30,
                                                                                  -------------------------------------------------
                                                                                    2002                2001                2000
                                                                                  ---------           ---------           ---------
Revenue:
<S>                                                                               <C>                 <C>                 <C>
      Assembly and Material Handling operations ........................          $  49,118           $  80,474           $  81,454
      Semiconductor operations .........................................              3,146              14,085              12,438
      SILMA Software operations ........................................              4,775               5,754               5,320
                                                                                  ---------           ---------           ---------
          Total revenue ................................................          $  57,039           $ 100,313           $  99,212
                                                                                  =========           =========           =========

Operating (loss) income:
      Assembly and Material Handling operations ........................          $   1,853           $   4,281           $  19,378
      Semiconductor operations .........................................             (2,700)              1,479               1,674
      SILMA Software operations ........................................                (50)               (926)               (548)
                                                                                  ---------           ---------           ---------
      Segment profit (loss) ............................................               (897)              4,834              20,504

      Unallocated research, development and engineering
         and selling, general and administrative .......................            (29,324)            (28,553)            (21,597)
      Restructuring charges ............................................            (17,659)                 --                  --
      Merger-related charges ...........................................                 --                  --                (988)
      Amortization of goodwill and other intangibles ...................               (725)             (6,818)               (685)
      Impairment of goodwill ...........................................             (6,608)                 --                  --
      Gain on sale of assets ...........................................              1,566                  --                  --
      Interest income ..................................................                441                 745               1,031
      Interest expense .................................................                 (3)                (12)               (285)
                                                                                  ---------           ---------           ---------
       Loss before income taxes and cumulative effect of
        change in accounting principle .................................          $ (53,209)          $ (29,804)          $  (2,020)
                                                                                  =========           =========           =========
</TABLE>


Management  also assesses the Company's  performance,  operations  and assets by
geographic  areas, and therefore revenue and long-lived assets are summarized in
the following table:

<TABLE>
<CAPTION>

(in thousands)                                        Year Ended June 30,
                                              ----------------------------------
                                                2002         2001         2000
                                              --------     --------     --------
<S>                                           <C>          <C>          <C>
Revenue:
     United States ......................     $ 25,253     $ 63,896     $ 54,320
     Germany ............................        7,682       10,523       12,865
     France .............................       11,731       12,445       12,665
     Other European countries ...........        8,969       10,537       13,575
     All other countries ................        3,404        2,912        5,787
                                              --------     --------     --------
                                              $ 57,039     $100,313     $ 99,212
                                              ========     ========     ========

Long-lived assets:
     United States ......................     $ 15,812     $ 32,557     $ 24,888
     All other countries ................          458          426          469
                                              --------     --------     --------
          Total long-lived assets .......     $ 16,270     $ 32,983     $ 25,357
                                              ========     ========     ========

Total long-lived assets .................     $ 16,270     $ 32,983     $ 25,357
Other current assets ....................       46,224       62,590       68,166
                                              --------     --------     --------
          Total consolidated assets .....     $ 62,494     $ 95,573     $ 93,523
                                              ========     ========     ========
</TABLE>

No single customer  accounted for more than 10% of the Company's net revenues in
2002, 2001 or 2000.


                                       77
<PAGE>

13. Subsequent Event

Through  December 31, 2002, the Company has  experienced  reductions in revenues
and continued  operating losses.  These operating losses have adversely affected
the Company's  current  results of operations and  liquidity.  As of January 22,
2003,  management has reduced headcount and operating  expenses and is currently
pursuing various debt and equity financing  alternatives in order to improve its
liquidity. There can be no assurance that such financing will be available or at
terms acceptable to the Company.

14. Subsequent Event (unaudited)


In August 2002, the Company acquired Meta Control  Technologies,  Inc. (Meta), a
Delaware corporation.  Meta develops, designs, manufactures and markets products
that automate a wide range of manufacturing  processes requiring precise motion,
accurate  machine  vision  and  rapid  process  instrumentation.   Some  of  the
applications that make use of the Company's technology include semiconductor and
electronics  assembly,  micro-mechanical  and fiber optic  assembly,  laboratory
automation and discrete  process  automation.  Under the terms of the agreement,
the Company will issue 730,000 shares of its common stock to the shareholders of
Meta with a value of $1.1 million.  Additionally,  a certain shareholder of Meta
and certain of its  affiliates  will receive  discounts and  royalties  based on
certain product shipments through August 2008 in consideration for its shares of
Meta stock.  In  connection  with the  acquisition,  the Company  entered into a
$500,000 line of credit with Meta's lender  terminating  in September  2003 with
Meta's lender bearing  interest at a rate of 1% plus the prime rate announced by
the Wall Street  Journal from time to time.  The Company  entered into a line of
credit for up to $800,000 with a stockholder of Meta, which, in the absence of a
material  change in financial  condition or  impairment  of ability to repay and
subject  to  registration  of shares  issued to the  lender,  permits  quarterly
borrowings in increments of up to $200,000 after December 15, 2002, at a rate of
1% plus the prime rate  announced by the Wall Street  Journal from time to time.
In connection  with the line of credit,  100,000 shares of the Company's  common
stock were issued to the lender,  subject to certain  cancellation  rights.  Any
amounts  borrowed  under the line of credit  shall be due and  payable by August
2006.

Effective as of August 26, 2002,  the Company and CIT  mutually  terminated  the
Company's  revolving  line of credit  with CIT and the  Company  paid a $100,000
termination fee. Prior to termination,  the Company had made no borrowings under
this revolving line of credit.

                                   SCHEDULE II

                             ADEPT TECHNOLOGY, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<TABLE>
<CAPTION>
                                         Balance         Additions
                                            at           Charged to                            Balance
                                        Beginning        Costs and                             at End
         Description                    of Period         Expenses        Deductions (1)      of Period
         -----------                    ---------         --------        --------------      ---------
<S>                                      <C>               <C>               <C>                <C>
Year ended June 30, 2000:
 Allowance for doubtful accounts         $  716            $ 516             ($595)             $ 637

Year ended June 30, 2001:
 Allowance for doubtful accounts            637              214             ( 109)               742

Year ended June 30, 2002:
 Allowance for doubtful accounts            742              319             ( 229)               832
</TABLE>

(1) Includes write offs net of recoveries.


                                       78