##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K

|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended March 27,
    2004                                                
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-22114

Asyst Technologies, Inc.

(Exact name of registrant as specified in its
charter)


|                                                                   |  |                                          
|------------------------------------------------------------------ |  | -----------------------------------------
|California                                                         |  | 94-2942251                               
|(State or other jurisdiction of
    incorporation or organization) |  | (Federal Employer
    Identification No.)

48761 Kato Road, Fremont, California
94538

(Address of principal executive
offices)


(510) 661-5000

(Registrants telephone number, including
area code)


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

None


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

Common Stock, no par value.


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 report), and
(2) has been subject to such filing requirements for the
past
90 days.  Yes þ

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
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  o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the
Act).  Yes þ

The aggregate market value of voting stock held
by non-affiliates of the registrant based upon the closing sales
quotation of the common stock on September 30, 2003 was
approximately $558,304,097.

There were 47,155,983 shares of common stock, no
par value, outstanding as of May 31, 2004.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrants proxy statement
to be filed pursuant to Regulation 14A within 120 days
after Registrants fiscal year ended March 27, 2004
are incorporated by reference into Part III of this report.



---








---










ASYST TECHNOLOGIES, INC.

TABLE OF CONTENTS

|              |  |                                                                                                    |    |          |    | 
|------------- |  | -------------------------------------------------------------------------------------------------- | -- | -------- | -- | 
|              |  |                                                                                                    |    | Page No.
|              |  |                                                                                                    |    |         
|PART I       
|Item 1.       |  | Business                                                                                           |    |          | 2  | 
|Item 2.       |  | Properties                                                                                         |    |          | 12 | 
|Item 3.       |  | Legal Proceedings                                                                                  |    |          | 12 | 
|Item 4.       |  | Submission of Matters to a Vote of
    Security Holders                                            |    |          | 13 | 
|             
|PART II      
|Item 5.       |  | Market for the Registrants Common Equity
    and Related Stockholder Matters                      |    |          | 14 | 
|Item 6.       |  | Selected Consolidated Financial Data                                                               |    |          | 15 | 
|Item 7.       |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations          |    |          | 16 | 
|Item 7A.      |  | Quantitative and Qualitative Disclosures About
    Market Risk                                     |    |          | 37 | 
|Item 8.       |  | Financial Statements and
    Supplementary Data                                                    |    |          | 39 | 
|Item 9.       |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure           |    |          | 40 | 
|Item 9A.      |  | Controls and Procedures                                                                            |    |          | 40 | 
|             
|PART III     
|Item 10.      |  | Directors and Executive Officers of the
    Registrant Legal Proceedings                           |    |          | 41 | 
|Item 11.      |  | Executive Compensation                                                                             |    |          | 41 | 
|Item 12.      |  | Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters |    |          | 41 | 
|Item 13.      |  | Certain Relationships and
    Related Transactions                                                 |    |          | 41 | 
|Item 14.      |  | Principal Accountant Fees and Services                                                             |    |          | 41 | 
|             
|PART IV      
|Item 15.      |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                                |    |          | 42 | 
|Signatures    |  |                                                                                                    | 80 |         
|EXHIBIT 10.33
|EXHIBIT 10.34
|EXHIBIT 10.35
|EXHIBIT 10.36
|EXHIBIT 10.37
|EXHIBIT 10.38
|EXHIBIT 10.39
|EXHIBIT 10.40
|EXHIBIT 10.41
|EXHIBIT 10.42
|EXHIBIT 10.43
|EXHIBIT 21.1 
|EXHIBIT 23.1 
|EXHIBIT 31.1 
|EXHIBIT 31.2 
|EXHIBIT 32   



1



---



##### Table of Contents



PART I

FORWARD LOOKING STATEMENTS

Except for the historical information contained
herein, the following discussion includes forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933, and Section 21E of the Securities Exchange Act
of 1934 that involve risks and uncertainties. We intend such
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and we are
including this statement for purposes of complying with these
safe harbor provisions. We have based these forward-looking
statements on our current expectations and projections about
future events. Our actual results could differ materially. These
forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties and
assumptions, including those set forth in this section as well
as those under the caption, Managements Discussion
and Analysis of Financial Condition and Results of
Operations.

Words such as expect,
anticipate, intend, plan,
believe, estimate and variations of such
words and similar expressions are intended to identify such
forward-looking statements. Our actual results could differ
materially from those anticipated in the forward-looking
statements as a result of certain factors, including but not
limited to those discussed in Risk Factors in this
report and our other SEC filings. We undertake no obligation to
publicly update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this report
might not occur. The following discussion of our financial
condition and results of operations should be read in
conjunction with our consolidated financial statements and the
related notes included elsewhere in this report.

ASYST, the Asyst logo, FLUOROTRAC, KPOD, ADU and
MANUFACTURING CONNECTIVITY are registered trademarks of Asyst
Technologies, Inc. or its subsidiaries in the United States or
in other countries. AXYS, Fastrack, Fastmove, Fastload, Fastore,
Asyst-SMIF System, SMIF-Pod, SMIF-FOUP, SMIF-Arms, SMIF-Indexer,
SMIF-LPI, SMIF-LPO, SMIF-LPT, SMIF-E, Versaport, Plus, Inx,
Advan Tag, Link-Manager, Smart-Fab, Smart-Tag, Smart-Station,
Smart-Storage, Smart-Traveler, Smart-Comm, Substrate Management
System, Reticle Management System, Wafer Management System,
Global Lot Server and Fluorotrac Auto Id System are trademarks
of Asyst Technologies, Inc. or its subsidiaries in the United
States or in other countries. All other brands, products, or
service names are or may be trademarks or service marks of, and
are used to identify, products or services of their respective
owners.




Item
1  Business

Overview

We develop, manufacture, sell and support
integrated hardware and software automation systems primarily
for the semiconductor, and secondarily for the flat panel
display, or FPD, manufacturing industries. Our systems are
designed to enable semiconductor and FPD manufacturers to
increase their manufacturing productivity and yields, and to
protect their investment in fragile materials and
work-in-process. We believe that our systems are becoming
increasingly important because of several trends in the
manufacturing of semiconductors and FPDs:



| |   |                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The transition to larger diameter silicon wafers
    and larger FPD glass plates, which require automated handling
    because of ergonomic issues and increased yield risk. 
|
| |  | Continuing decreases in semiconductor device line
    widths, which require higher levels of cleanliness in the
    manufacturing process.                                   
|
| |  | Advances in new semiconductor manufacturing
    materials, such as copper, which may introduce additional
    contamination into the semiconductor manufacturing plant (fab).
|
| |  | Continuing customer requirements for enhanced
    manufacturing productivity and return on capital.                                                                          
|
| |  | Growing inter-dependency of connectivity software.                                                                                                                           

2



---



##### Table of Contents



We sell our systems directly to semiconductor and
FPD manufacturers, as well as to original equipment
manufacturers, or OEMs, that make production equipment for sale
to semiconductor manufacturers.

Business Developments

Common Stock
Offering.In November 2003, we
sold 6,900,000 shares of our common stock, including exercise of
the underwriters over-allotment option, at an offering
price to the public of $15.17 per share which reflects the
closing market price on the date of the offering. We received
total proceeds of $99.0 million, net of the related
issuance fees and costs of $5.7 million.

Fiscal 2004
Acquisitions.In April 2003, our
majority-owned joint venture, Asyst Shinko, Inc., or ASI,
acquired the portion of Shinko Technologies, Inc. that provides
ongoing support to ASIs North American AMHS customers from
Shinko Electric Co., Ltd.

Recent Appointments of Executive
Officers.In October 2003, the
Company appointed David L. White as Senior Vice President and
Chief Financial Officer. In September 2003, the Company
appointed Stephen Debenham as Vice President and General Counsel.

Fiscal 2004 Employee Reduction and Completed
Outsourcing Transition. We reduced
approximately 35.0 percent of our headcount in
April 2003, due to ongoing weakness in our business, our
decision to outsource manufacturing, and the sale of two
discontinued operations and our wafer carrier business. Over the
past two years, we have reduced our workforce from a peak of
approximately 1,800 employees to 530 employees, not including
the employees of our Asyst Shinko joint venture, as of
March 31, 2004. In October 2002, we began
transitioning substantially all of our U.S. manufacturing to
Solectron Corporation, and completed this transition in
June 2003.

Fiscal 2004 Year-end Date

We close our books on the last Saturday of each
quarter and thus the actual date of the year-end, March 27,
2004, is different from the year-end date used throughout this
Form 10-K report. For convenience of presentation and
comparison to prior fiscal years ended March 31, we refer
throughout this report to a fiscal year ended March 31,
2004. However, all references to our fiscal year ended
March 31, 2004 means our actual fiscal year ended
March 27, 2004.

Industry Background

In recent years, advances in semiconductor
production equipment and facilities have supported the
continuation of historical trends toward production of chips
with ever smaller line widths on ever larger wafers. Most
semiconductor production continues to rely on process wafers
with diameters of 200mm. However, we estimate that approximately
20 fabs are currently operating production lines utilizing
300mm wafers and more new fabs are expected to be built for
300mm wafers. Concurrently, line widths for the many advanced
production chips have decreased to 0.13 micron and are
expected to decrease further. In addition, the increasing cost
of semiconductor manufacturing equipment and facilities
continues to push chip manufacturers to maximize the
productivity of these investments. Keeping pace with these
trends presents semiconductor manufacturers with a number of
technical and economic challenges.

In response to these challenges, many chip
manufacturers use automation systems to maximize tool
utilization and to minimize wafer mishandling, misprocessing and
contamination. We believe that semiconductor manufacturers will
increase their commitments to these solutions in their 300mm
fabs, given the significant cost of a 300mm fab, the value of
work-in-process inventory, and the ergonomic issues introduced
by the significantly increased weight and bulk of loaded 300mm
wafer carriers.

As device dimensions decrease, the harmful
effects of microscopic contamination during the manufacturing
process increase, heightening the need for isolation of wafers
throughout manufacturing and controlled environments around
tools. Isolation technology allows for control of the
environment in the immediate vicinity of the in-process wafers
and the tools. Wafers are enclosed in sealed carriers, or pods,
which provide additional environmental control during storage,
transport and loading and unloading of the tools. Pods holding

3



---



##### Table of Contents



wafers up to 200mm are known as standard
mechanical interface pods, or SMIF-Pods, and pods holding 300mm
wafers are known as front-opening unified pods, or FOUPs. In
both the SMIF and FOUP processes, the carrier is docked with an
automated system that typically includes a load port or other
door-opening device and a robotic transfer arm to move the wafer
from the carrier to the tool. An enclosure with engineered
airflows surrounds and encapsulates this system. Because wafer
carriers fully encapsulate the wafers during transport between
process steps and during tool loading and unloading, these
devices also help protect the wafers from accidental damage due
to mishandling.


Semiconductor manufacturers are also increasingly
automating the tracking, sorting, stocking and transport of
wafers throughout the fab, as well as wafer carrier loading and
unloading at the tool. In 200mm manufacturing, these
technologies are employed to reduce the risk of misprocessing,
to efficiently track and manage work-in-process inventory, and
to speed the movement of wafers between manufacturing steps. In
300mm manufacturing, these technologies take on added importance
because of the ergonomic issues associated with human transport
and loading of heavy, bulky 300mm wafer carriers.

The FPD manufacturing industry uses automated
transport and robotic handling systems primarily because of the
substantial size and weight of FPD glass plates and panels.

The Asyst Solution

We offer a comprehensive line of integrated
automation systems for the semiconductor manufacturing industry.
These solutions provide two distinct benefits to semiconductor
manufacturers:

Increased Manufacturing
Productivity.We believe that
semiconductor manufacturers are able to attain a higher level of
productivity and performance from their equipment by integrating
our products into their manufacturing processes. With our
automated transportation, loading and wafer handling solutions,
tool idle time is reduced and timely wafer delivery is improved,
thereby increasing equipment utilization and productivity. In
addition, our connectivity software solutions help to improve
chipmakers access to automation performance information,
which aids troubleshooting of tool down time issues that can
impair productivity.

Higher Yields.Our
isolation technology, robotics solutions and automated transport
and loading systems provide semiconductor manufacturers with
efficient contamination control throughout the wafer
manufacturing process and greater protection from wafer
mishandling, resulting in more rapid achievement of higher
yields. Our work-in-process materials management and
connectivity software permits wafer level identification,
tracking and logistics management, and minimizes yield loss due
to misprocessing.

In FPD manufacturing, we provide automated
material handling systems, or AMHS, that embody nearly identical
technology to our vehicle-based AMHS for chip fabs, but on a
much larger scale to accommodate the greater size and weight of
FPD glass plates. These systems are critical to the movement of
material in FPD manufacturing because the weight and bulk of the
latest generations of FPD glass plates make human transport
impossible.

Strategy

We believe that our historical success has been
driven by our ability to develop, manufacture, market, install
and support products that provide unique value to customers. Our
continuing strategy is to focus on the development or
acquisition of products and capabilities that deliver
productivity and yield benefits to customers. We are focused on
maintaining and enhancing our relationships with chip and FPD
manufacturers and with OEM equipment manufacturers to inform
product development and maintain high customer satisfaction. We
also continue to focus on operational excellence to support
product quality, on-time delivery, and company-wide efficiency.
Following are our six principal growth and operating strategies:

Further Penetrate the Markets for 300mm and
FPD AMHS.Our Asyst Shinko joint
venture company, or ASI, is a leader in AMHS. We have captured a
total of 20 interbay and intrabay AMHS installations to date as
of May 15, 2004 in 300mm fabs, compared to 12 installations
for our nearest competitor. We have begun to penetrate the
market for FPD AMHS, having largely completed the AMHS
installation for a large

4



---



##### Table of Contents



Gen 5 FPD fab in South Korea and more recently
substantially completing Phase One of a new Gen 6 FPD fab
in the same country. Based on the anticipated size and number of
fab construction and expansion projects that we believe will
move forward over the next two to three years, we believe that
our combined market opportunity over that period for 300mm
semiconductor AMHS and FPD AMHS is significant. We have a small
market position in AMHS for 200mm chip fabs and believe that,
based on our expectations of a small number of new 200mm fabs
and fab expansions, we have a small but material market
opportunity in 200mm AMHS. In addition to our Asyst Shinko
technology, we have developed a unique continuous-flow AMHS
system called FasTrack. We have demonstrated
FasTracks ability to move wafers through the fab
significantly faster than competitive systems in certain
applications. We currently are pursuing opportunities to combine
the Asyst Shinko vehicle-based technologies with FasTrack,
creating a hybrid AMHS solution tailored to the mixed-throughput
needs of semiconductor fabs. We believe that our market
leadership in 300mm AMHS, combined with the unique capabilities
of our FasTrack system, positions us to capture increased market
share in both FPD and 300mm AMHS.


Focus on Portal
Automation.Essentially all 300mm
wafer fabrication equipment requires an automated atmospheric
front-end (portal) solution that enables the clean,
automated transfer of wafers from the wafer carrier to the tool
and back again. As a result, most manufacturers of process and
metrology tools pre-integrate portals with their tools before
shipping to the end customer. This integration can be
accomplished in two ways: (1) The OEM can purchase or
manufacture various automation components  loadports,
atmospheric robotics, wafer ID systems  and perform
the mechanical and software integration necessary to make the
components work smoothly together as a system, or (2) The
OEM can purchase a fully integrated portal from a third-party
supplier such as Asyst. We participate in all aspects of the
atmospheric tool front-end market and are a leading supplier of
components such as loadports and robotics and of fully
integrated portals. We increasingly have seen OEMs seeking to
focus on their core competencies at the tool level, and choosing
to outsource the production of components and portals. In its
April 2004 report, Dataquest estimated this merchant market
for atmospheric tool front-end products at $300 million for
calendar year 2003. We believe that the total market, including
captive production being done by OEMs and contract manufacturing
by small assemblers not tracked by Dataquest, was closer to
$450 million in 2003. We believe that our product offerings
provide price/performance advantages and we are continuing to
invest in both our component and portal products to take
advantage of this significant market opportunity.

Leverage 200mm Market
Leadership.We have a very strong
200mm market position. As many chip manufacturers are slowly
recovering from the industrys severe cyclical downturn
from 2000, we believe that the transition to 300mm manufacturing
will take time. As a result, we believe that 200mm fabs will
continue to operate for many years and that these operators will
seek to extend the useful lives of these fabs by adding higher
technology equipment and/or implementing Asysts isolation
technology. In the case of technology upgrades, such as fabs
moving to smaller line widths or adding copper-interconnects, we
believe that fabs will make concurrent purchases of isolation
products as they seek to maximize the yields and productivity of
the new equipment. We plan to continue to promote the benefits
of our technology and to leverage our leadership position
throughout the 200mm market.

Capitalize on the Emerging Market in
China.Because of our 200mm market
leadership and our strong customer relationships and long
history of success with the foundries of Asia, we have enjoyed
strong initial success in the emerging wafer fabrication market
in China. During the past three fiscal years we have received
large SMIF orders from a total of five fab operators
representing seven separate 200mm fabs in China. We plan to
continue to leverage our competitive advantages in this market,
which is expected to see the development of a significant number
of new 200mm and 300mm fabs over the next several years.

Further Penetrate the Japanese
Market.We have seen a significant
increase in fab expansion activity in Japan during the past
year. In addition, we have become an important supplier to
Japanese equipment makers, which continue to have a strong
presence in the world market. We have a strong engineering,
sales and support capability in Japan and intend to continue our
penetration of both Japanese chipmakers and Japanese OEMs.

Focus on Supply Chain
Excellence.In fiscal 2003, we made
the strategic decision to begin to transition all of our U.S.
manufacturing operations to Solectron Corporation, a leading
contract manufacturer of

5



---



##### Table of Contents



electronics products, and to begin to transition
our supply chain to lower cost geographic regions. Our strategic
objectives are four-fold: (1) to sharpen our focus on our
core competencies of developing, selling and supporting our
automation products, (2) to reduce our fixed manufacturing costs
and improve our ability to efficiently scale manufacturing
through cyclical upturns and downturns, (3) to improve our
product quality and on-time delivery performance by partnering
with a world-class manufacturing organization, and (4) to
improve gross margins through labor and material cost
reductions. We believe that progress toward these objectives
will provide us with substantial competitive advantages, as to
the best of our knowledge none of our key competitors have
outsourced their production to the same extent.


Products



| |                           
| | --------------------------
| | Tool Automation Components

Our tool automation components are designed to
automate the rapid transfer of wafers and other substrates
between manufacturing equipment and wafer and substrate carriers
while maintaining an ultra-clean environment throughout the
transfer. These components are sold to OEMs for integration with
their tools or directly to fabs that are adding isolation
technology to existing equipment as a manufacturing process
enhancement. Our tool automation components include multiple
types of 200mm and 300mm loadports and substrate-handling
robotics.



| |          
| | ---------
| | Loadports

We are a leading supplier of automated systems
that provide the interface between the fab and manufacturing
equipment, or loadports. The IsoPort, our latest
generation loadport for the 300mm market, has received strong
customer acceptance since its introduction in 2002. We offer a
variety of other input/output systems designed to address a
broad range of customer applications and equipment types. These
include FL-300s, SMIF-LPTs, SMIF-Arms, SMIF-Indexers, SMIF-LPIs,
SMIF-LPOs, Versaport 2200s, and related products.



| |                            
| | ---------------------------
| | Substrate-Handling Robotics

We offer comprehensive robotic substrate handling
solutions to the semiconductor and related industries. Our
robotics products transfer semiconductor wafers and substrates
of all diameters, liquid crystal display (LCD) and plasma
display substrates, and other substrates like rigid disks used
in disk drive handling between the substrate carrier, the tool
interface system and the tool itself. These products include
robots, prealigners and elevators specifically designed for
atmospheric, harsh environment, and wet chemical process
applications. We also use our robots and prealigners in our
Plus Portal Front-End Solutions and our line of wafer
sorter products.



| |        
| | -------
| | Systems

Our systems include wafer sorters and fully
integrated atmospheric tool front-end solutions (portals). Our
sorters are sold to semiconductor makers and our portals are
typically sold to OEM tool manufacturers.



| |        
| | -------
| | Portals

Our line of portal solutions combines our
expertise in isolation systems, work-in-process materials
management, substrate handling robotics and connectivity
solutions to provide a complete, integrated, automated front-end
for process and metrology equipment. For the OEM, use of a
portal solution substantially reduces the labor and engineering
resources required to assemble and integrate a front-end
solution in-house. Portals also can simplify the installation
and set-up of the tool and associated front-end upon arrival at
the end customer. Our Plus Portal line combines our
components  atmospheric robots, environmental control
systems, integrated input/output interfaces, automated ID and
tracking systems, and connectivity software  into an
integrated solution for OEMs. Our newest portal offering, the
Spartan Integrated Portal, achieves portal functionality
through a unified, minimalist approach that uses significantly
fewer components, thereby reducing alignment and
interoperability issues between components and simplifying
maintenance and repair.

6



---



##### Table of Contents



We believe the Spartan offers significantly
higher performance than our current Plus Portal line, in
addition to higher reliability and ease of integration. Because
Spartan was designed for volume manufacturing, we believe that
it also will provide cost advantages to customers as well as
margin advantages to us.




| |        
| | -------
| | Sorters

Our sorters are used to rearrange wafers between
manufacturing processes, experiments, and single wafer
processing, without operator handling, which helps to increase
fab yields. Sorters also avoid the mishandling of wafers by
enabling the tracking and verification of each wafer throughout
the production process. During fiscal 2004, we introduced the
Spartan sorter, which is based on the same basic hardware
platform as the Spartan Portal.



| |     
| | ----
| | AMHS

Automated Material Handling Systems, or AMHS,
automate the stocking, transport and tool loading of silicon
wafer containers and FPD glass plates in fabs. Our Asyst Shinko
line of products includes wafer stockers, inter-bay transport
systems, and intra-bay transport and tool loading systems. Our
FasTrack line of products includes micro-stocking shelves,
conveyor-based track systems, and multi-axis intra-bay carrier
management and tool loading solutions.



| |                       
| | ----------------------
| | Connectivity Solutions



| |                
| | ---------------
| | Auto-ID Systems

The Asyst SMART-Traveler System allows
semiconductor manufacturers to reduce manufacturing errors and
to achieve cycle time and equipment utilization improvements by
improving their abilities to manage work-in-process inventory.
The Asyst SMART-Traveler System includes both infra-red and
radio-frequency based products for automated wafer and reticle
identification. The SMART-Tag is an electronic memory device
that combines display, logic and communication technologies to
provide process information, such as wafer lot number and next
processing steps, about the wafers inside the carrier. AdvanTag
automated ID uses a radio-frequency based identification tag
that can be attached to or embedded into wafer and reticle
carriers. The Asyst SMART-Traveler System also includes the
SMART-Comm, a multiplexing and communication protocol converting
device that increases operator and tool efficiency in
semiconductor facilities by optimizing communications and
minimizing hardware and software layers.



| |                      
| | ---------------------
| | Connectivity Software

We are the largest merchant provider of the
industry-standard software driver protocol for communications
between tools and fab host systems, known as SECS/ GEM. In
fiscal 2004 we began marketing more advanced software solutions
that provide additional functionality to support
trouble-shooting of automation communication errors,
e-diagnostics, advanced process control, and other applications.

Customers

Semiconductor manufacturers drive our sales by
building new fabs or expanding capacity, adding isolation
technology, or upgraded process technology. For many years
leading up to the fourth calendar quarter of 2000, the majority
of our sales were direct to semiconductor manufacturers. During
fiscal 2002 and fiscal 2003, as the industry began migrating to
300mm wafer fabs, OEMs began purchasing a significant proportion
of our equipment solutions for integration with their tools. Net
sales to OEMs represented 40.0 percent and
59.0 percent of our total net sales for the fiscal years
ended March 31, 2003 and 2002, respectively. Subsequent to
the formation of our joint-venture, Asyst Shinko, in
October 2002, which sells its AMHS products directly to
semiconductor and FPD manufacturers, net sales to OEMs have
declined on a percentage basis to 25.2 percent of our sales
in fiscal 2004.

Our net sales to any particular semiconductor or
FPD manufacturer customer are dependent on the number of fabs
the customer is constructing and the number of fab upgrades the
customer undertakes. As

7



---



##### Table of Contents



major projects are completed, the amount of sales
to these customers will decline unless they undertake new
projects. Our net sales to any particular OEM are dependent on
the extent to which our automation products are designed-in to
the OEMs product line and the unit shipments of that
product line. During fiscal 2004, two customers, L.G. Philips
and Taiwan Semiconductor Manufacturing Corp., each accounted for
more than 10.0 percent of sales.


Our ten largest customers based on cumulative
sales during fiscal year 2004, arranged alphabetically, were:



| |                                                                                                                                                                                                 | 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
| | Applied Materials, Elpida, Intel, KLA Tencor,
    L.G. Philips, NEC, Powerchip, Semiconductor Manufacturing
    International Corp., Taiwan Semiconductor Manufacturing Corp.
    and Trecenti. | 

Sales and Marketing

We sell our products principally through a direct
sales force in the United States, Japan, Europe and the Asia/
Pacific region. Our sales organization is based in California,
and our U.S. field sales personnel are stationed in
Massachusetts, New York and Texas. Japan is supported by sales
and service offices in Tokyo, Nagoya and Yokohama and a software
distributor. The European market is supported through offices in
Crawley, United Kingdom, Paris, France and Dresden, Germany, and
is augmented by a distributor based in Israel. The Asia/ Pacific
region is supported through sales and service offices in
Hsinchu, Taichung, and Tainan, Taiwan; Singapore; Kuching and
Kulim, Malaysia; Shanghai and Tianjin, Peoples Republic of
China; and Seoul, South Korea. We supplement our direct sales
efforts in Asia/ Pacific through a distributor in China.

International sales, which consist mainly of
export sales from the United States, accounted for approximately
78.9 percent, 65.0 percent, and 55.0 percent of
total sales for fiscal years 2004, 2003 and 2002, respectively.
In fiscal 2004, approximately 60.0 percent of total net
sales originated from Asyst Japan, Inc., or AJI, and Asyst
Shinko, or ASI. A portion of these sales was invoiced in
Japanese yen and subject to fluctuating currency exchange rates.

The sales cycle to new customers ranges from six
to 12 months from initial inquiry to placement of an order,
depending on the type and complexity of the project and the time
required to communicate the nature and benefits of our systems.
For sales to existing customers, the sales cycle is relatively
short. The sales cycle for follow-on orders by OEM customers can
be as short as two to three weeks. The sales cycle for AMHS
products tends to be longer than for our other products because
of substantial specification and other pre-sales activity
related to an AMHS order.

Research and Development

Research and development efforts are focused on
enhancing our existing products and developing and introducing
new products in order to maintain technological leadership and
meet a wider range of customer needs. Our research and
development expenses were approximately $36.4 million,
$40.1 million and $39.0 million during fiscal years 2004,
2003, and 2002, respectively.

Our research and development employees are
involved in mechanical and electrical engineering, software
development, micro-contamination control, product documentation
and support. Our central research and development facilities
include a prototyping lab and a cleanroom used for product
research, development and equipment demonstration purposes.
These research and development facilities are primarily located
in Fremont, California. In addition, we maintain a research and
development facility in Hsin-Chu, Taiwan, which is focused on
research and development efforts related to AMHS and other
projects on an as-needed basis. AJI conducts research and
development activities related to atmospheric robotics at its
facility in Nagoya, Japan, and ASI conducts AMHS-related
research and development at its facility in Ise, Japan.

Manufacturing

Our manufacturing activities consist of
assembling and testing components and sub-assemblies, which are
then integrated into finished systems. While we use standard
components whenever possible, many mechani-

8



---



##### Table of Contents



cal parts, metal fabrications and castings are
made to our specifications. Once our systems are completed, we
perform final tests on all electronic and electromechanical
sub-assemblies and cycle products before shipment.


In October 2002, we began transitioning our
U.S-based manufacturing operations to Solectron Corporation, a
provider of outsourced manufacturing services. As of
May 2004, most of our U.S.-based products were manufactured
by Solectron and shipped out of Solectrons facilities in
Singapore. We currently manufacture certain robotics products in
AJIs facilities in Nagoya, Japan, representing
approximately 10.0 percent of our fiscal 2004 net sales.
Asyst-Shinko products are manufactured at its facilities in Ise,
Japan. During fiscal 2003 we sold our AMP and SemiFab
manufacturing subsidiaries.

Competition

We currently face direct competition in all of
our served markets. Many of our competitors have extensive
engineering, manufacturing and marketing capabilities and some
have greater financial resources than those available to us. The
markets for our products are highly competitive and subject to
rapid technological changes.

Brooks Automation, Inc., or Brooks, and TDK
Corporation of Japan are our primary competitors in the area of
loadports. Our SMART-Traveler System products face competition
from bar code technology, Brooks (through its acquisition of
Hermos) and Omron. We also compete with several companies in the
robotics area, including, but not limited to, Brooks, Newport
Corp., Rorze Corporation and Yasukawa-Super Mecatronics
Division. In the area of AMHS, we face competition primarily
from Daifuku Co., Ltd., Murata Co., Ltd. and Brooks. Our wafer
sorters compete primarily with products from Recif, Inc. and
Brooks.

Although most of our competitors currently do not
compete with us across our entire line of integrated automation
systems, we expect that many will attempt to do so in the
future. In addition, many OEMs maintain their own captive
automation manufacturing and integration capabilities, which is
a substantial impediment to our penetration of these OEMS. We
anticipate that many OEMs will continue to maintain their own
captive automation manufacturing capabilities.

We believe that the principal competitive factors
in our market are the technical capabilities and characteristics
of systems and products offered, interoperability with other
components and systems, technological experience and know how,
product breadth, proven product performance, quality and
reliability, ease of use, flexibility, a global, trained,
skilled field service support organization, the effectiveness of
marketing and sales, and price. We believe that we compete
favorably with respect to the foregoing factors.

We expect that our competitors will continue to
improve the design and performance of their products and to
introduce new products with competitive performance
characteristics. We believe we will be required to maintain a
high level of investment in research and development and sales
and marketing in order to remain competitive.

Intellectual Property

We pursue patent, trademark and/or copyright
protection for most of our products. We currently hold 98 issued
United States patents (with foreign equivalents) and 64 foreign
patents, have 20 pending patent applications in the United
States, 149 pending foreign patent applications, and intend to
file additional patent applications as appropriate. Our patents
expire between 2004 and 2021. 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.

There has been substantial litigation regarding
patent and other intellectual property rights in
semiconductor-related industries. While we intend to protect our
intellectual property rights vigorously, there can be no
assurance that any of our patents will not be challenged,
invalidated or avoided, or that the rights granted thereunder
will provide us with competitive advantages. Litigation may be
necessary to enforce our patents, to protect our trade secrets
or know how, to defend us against claimed infringement of the
rights of others, or to determine the scope and validity of the
patents or other intellectual rights of others. Any such
litigation could result in substantial cost and divert the
attention of management, which by itself could have a material
adverse

9



---



##### Table of Contents



effect on our financial condition and operating
results. Further, adverse determinations in such litigation
could result in our loss of intellectual property rights,
subject us to significant liabilities to third parties, require
us to seek licenses from third parties or prevent us from
manufacturing or selling our products, any of which could have a
negative impact on our financial condition and results of
operations. For more information regarding litigation in which
we are currently engaged, please see
Item 3  Legal Proceedings below.


We also rely on trade secrets and proprietary
technology that we seek to protect, in part, through
confidentiality agreements with employees, consultants and other
parties. There can be no assurance that these agreements will
not be breached, that we will have adequate remedies for any
breach, or that our trade secrets will not otherwise become
known to or independently developed by others. Also, the laws of
some foreign countries do not protect our intellectual property
rights to the same extent as the laws of the United States.

Backlog

Our backlog was approximately
$167.7 million, $81.8 million and $61.5 million as of
the fiscal years ended March 31, 2004, 2003, and 2002,
respectively. We include in our backlog only orders for which a
customers purchase order has been received and a delivery
date within 12 months has been specified. As backlog may be
cancelled or delayed by customers with limited or no penalty,
our backlog is not necessarily indicative of future revenues or
earnings.

Employees

As of March 31, 2004, we employed 530
persons on a full-time basis, excluding employees at ASI.
Additionally, we employed 26 persons on a temporary basis. We
have never had a work stoppage or strike. Approximately 200
employees of ASI are represented by a labor union. We consider
our employee relations to be good. During fiscal year 2003 and
the first quarter of fiscal 2004, we restructured certain U.S.
and international operations in response to continued difficult
market conditions. As a result of these restructuring
activities, we terminated the employment of approximately 472
full-time employees in fiscal 2003 and approximately 284
full-time employees in fiscal 2004, respectively, from our
operations in the United States and our international operations.

Financial Information by Business Segment and
Geographic Data

As a result of our 51.0 percent ownership of
the common stock of ASI which was formed in October 2002,
we now operate and track our results in two segments: Fab
Automation Solutions and Automated Material Handling Systems, or
AMHS. Fab Automation Solutions include interface products,
substrate-handling robotics, auto-ID systems, sorters and
connectivity software. AMHS products include automated transport
and loading systems for semiconductor fabs and flat panel
display manufacturers. The chief operating decision maker is our
Chief Executive Officer. Information concerning segments is
included in Note 13 of Notes to the Consolidated Financial
Statements and is incorporated herein by reference.

Environmental Compliance

Our operations are subject to certain federal,
state and local regulatory requirements relating to the use,
storage, discharge and disposal of hazardous chemicals used
during the manufacturing processes. We believe that our
operations are currently in compliance in all material respects
with applicable regulations and do not believe that costs of
compliance with these laws and regulations will have a material
effect on our capital expenditures, operating results or
competitive position. Currently we have no commitments with
environmental authorities regarding any compliance related
matters. However, there can be no assurance that additional
environmental matters will not arise in the future or that costs
will not be incurred with respect to sites as to which no
problem is currently known.

10



---



##### Table of Contents



Additional Information and Governance
Matters

The Company was incorporated in California on
May 31, 1984.

The Companys website is www.asyst.com.

The Company makes the following filings available
on its website as soon as reasonably practicable after they are
electronically filed with or furnished to the SEC: our Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and any amendments to those
reports filed or furnished under applicable provisions of the
Securities Exchange Act of 1934 and SEC rules. You may access
these filings on our website at http://www.asyst.com by clicking
on Investor Relations, and then SEC
Filings. Within the SEC Filings section, we
provide a link to view our SEC filings referred to above, and a
separate groupings link to view the Section 16 filings
(Forms 3, 4 and 5) that our directors and officers
(and, if applicable, more than 10.0 percent stockholders)
make to report initial beneficial ownership and changes in
beneficial ownership of our common stock.

The Companys Code of Business Conduct is
applicable to the Companys directors, officers and
employees, and meets the definition of a code of ethics as
defined by the SEC. The code also includes a section entitled
Special Obligations of our CEO and CFO applicable to
our principal executive, principal financial and principal
accounting officers that contains specific standards applicable
to these senior officers with responsibilities for disclosure to
investors and financial reporting. We have made the code
available on our website, by clicking on Investor
Relations, and then Corporate Governance. As
permitted by SEC rules, we have posted the code on our website
in lieu of filing the code as an exhibit to this Form 10-K.
Other information concerning our board of directors is also
available under the Corporate Governance link.

Under Nasdaq listing standards, the Company may
grant waivers of the Code of Business Conduct for directors and
officers only if approved by the board of directors, and must
make any such waivers along with the reasons for the waivers
publicly available by filing a Form 8-K within 5 business
days. Under SEC rules, the Company is required to file a
Form 8-K to disclose any amendment of the code (other than
non-substantive amendments) or any explicit or implicit waiver
of the code (i.e., any material departure from the code) granted
to the chief executive officer, chief financial officer,
principal accounting officer or controller, or persons
performing similar functions, if the waiver relates to matters
contained in the SECs definition of a code of ethics. As
permitted by SEC rules, the Company intends to satisfy the
requirement under SEC rules to disclose amendments and waivers
of the code by posting this information on the Companys
website under the Corporate Governance link indicated above. To
the extent the Nasdaq rules do not permit this alternate means
of disclosure allowed by SEC rules, the Company will file a
Form 8-K to report waivers, if any.

All of the filings and governance documents
available under the Investor Relations link on our website are
free of charge.

11



---



##### Table of Contents






Item
2  Properties

We are headquartered in Fremont, California and
maintain the following facilities:

|                       |  |                                   |  |               |         |                  |  |                        |  |                    
|---------------------- |  | --------------------------------- |  | ------------- | ------- | ---------------- |  | ---------------------- |  | -------------------
|                       |  |                                   |  | Square        |         |                  |  |                       
|                       |  |                                   |  | Footage       |         |                  |  |                       
|Location               |  | Functions                         |  | (approximate) |         | Lease Expiration |  | Facilities by Segments
|                       |  |                                   |  |               |         |                  |  |                       
|Fremont, California    |  | Corporate headquarters, R&D       |  |               | 91,275  |                  |  | October 2005           |  | Fab Automation     
|Fremont, California    |  | Administration, R&D               |  |               | 35,360  |                  |  | January 2006           |  | Fab Automation     
|Fremont, California    |  | Administration, R&D               |  |               | 35,360  |                  |  | February 2008          |  | Fab Automation/AMHS
|Andover, Massachusetts |  | Sales and support                 |  |               | 5,308   |                  |  | September 2006         |  | Fab Automation     
|Austin, Texas          |  | Sales and support                 |  |               | 20,000  |                  |  | April 2006             |  | Fab Automation     
|Nagoya, Japan          |  | Administration, manufacturing,    |  |               | 66,500  |                  |  | Owned                  |  | Fab Automation     
|                       |  | R&D                               |  |               |         |                  |  |                        |  |                    
|Tokyo, Japan           |  | Administration, sales and support |  |               | 3,023   |                  |  | January 2005           |  | Fab Automation     
|Yokohama, Japan        |  | Administration, sales and support |  |               | 14,466  |                  |  | March 2004             |  | Fab Automation     
|Hsin-Chu City, Taiwan  |  | Administration, sales and support |  |               | 5,821   |                  |  | May 2005               |  | Fab Automation/AMHS
|Tainan Hsien, Taiwan   |  | Administration, sales and support |  |               | 1,200   |                  |  | September 2004         |  | Fab Automation     
|Taichung City, Taiwan  |  | Administration, sales and support |  |               | 12,000  |                  |  | February 2005          |  | Fab Automation     
|Shanghai, China        |  | Sales and support                 |  |               | 3,000   |                  |  | March 2005             |  | Fab Automation/AMHS
|Shanghai, China        |  | Sales and support                 |  |               | 4,000   |                  |  | September 2005         |  | Fab Automation/AMHS
|Crawley, UK            |  | Sales and support                 |  |               | 5,500   |                  |  | November 2011          |  | Fab Automation     
|Dresden, Germany       |  | Sales and support                 |  |               | 2,377   |                  |  | September 2004         |  | Fab Automation     
|Genting, Singapore     |  | Sales and support                 |  |               | 3,687   |                  |  | September 2004         |  | Fab Automation     
|Jaian Utama, Malaysia  |  | Sales and support                 |  |               | 1,000   |                  |  | August 2004            |  | Fab Automation     
|Kulim, Malaysia        |  | Sales and support                 |  |               | 755     |                  |  | July 2005              |  | Fab Automation     
|Ise, Japan             |  | Administration, manufacturing,    |  |               | 176,120 |                  |  | September 2007         |  | AMHS               
|                       |  | R&D                               |  |               |         |                  |  |                        |  |                    
|Tokyo, Japan           |  | Sales and support                 |  |               | 3,540   |                  |  | April 2005             |  | AMHS               

In addition to the above facilities, there are a
number of properties under lease that we do not currently use or
occupy at this time. These properties include a total of
approximately 117,000 square feet of leased office space. Some
of these properties are presently subleased. We are actively
exploring options to market these surplus properties for
sublease or sale or to negotiate early termination agreements
for the leases in question.

We completed the sale of land in Fremont,
California, in the quarter ended September 30, 2003. The
net proceeds from the sale were $12.1 million. We had
intended to construct corporate headquarters facilities on the
land and subsequently decided not to build these facilities. In
the first quarter of fiscal 2004 we recorded a $6.9 million
write-down based on our latest estimate of market value as
supported by the pending sale agreement at the time. We
previously entered into a purchase agreement in
September 2002 to sell the land for $19.0 million, net
of selling expenses. This transaction did not close. As a
result, a $7.1 million write-down was recorded in the
second quarter in fiscal 2003. We initially leased the property
and purchased the land from the lessor on October 22, 2001
for $41.1 million, and paid the lessor approximately
$2.9 million for engineering costs incurred in preparation
for making leasehold improvements to the land. Based upon market
data at June 30, 2001 and our non-cancelable commitment to
purchase the land, we estimated that the then market value of
the land had been impaired and recorded a $15.0 million
write-down to its estimated market value during the quarter
ended June 30, 2001.




Item 3  Legal
Proceedings

On October 28, 1996, we filed suit in the
United States District Court for the Northern District of
California against Empak, Inc., Emtrak, Inc., Jenoptik AG, and
Jenoptik Infab, Inc., alleging, among other things, that certain
products of these defendants infringe our United States Patents
Nos. 5,097,421 (the 421 patent) and 4,974,166
(the 166 patent). Defendants filed answers and
counterclaims asserting various defenses, and the issues
subsequently were narrowed by the parties respective
dismissals of various claims,

12



---



##### Table of Contents



and the dismissal of defendant Empak pursuant to
a settlement agreement. The remaining patent infringement claims
against the remaining parties proceeded to summary judgment,
which was entered against us on June 8, 1999. We thereafter
took an appeal to the United States Court of Appeals for the
Federal Circuit. On October 10, 2001, the Federal Circuit
issued a written opinion, Asyst Technologies, Inc. v. Empak, 268
F.3d 1365 (Fed. Cir. 2001), reversing the decision of the trial
court, and remanding the matter to the trial court for further
proceedings. The case was subsequently narrowed to the 421
patent, and we sought monetary damages for defendants
infringement, equitable relief, and an award of attorneys
fees. On October 9, 2003, the court: (i) granted
defendants motion for summary judgment to the effect that
the defendants had not infringed our patent claims at issue and
(ii) directed that judgment be entered for defendants. We
have filed a notice of appeal of both the order and the entry of
judgment against us. The court also denied defendants
motion for judgment as to the invalidity of our asserted
patents. Defendants have filed a notice of appeal as to the
courts denial of that motion.


On February 25, 2003, Mihir Parikh, our
former Chief Executive Officer and Chairman of the Board, filed
a demand for arbitration with the American Arbitration
Association against us, alleging breach of his employment
agreement, wrongful termination in violation of public policy,
discrimination based on age, race and national origin, fraud and
deceit, defamation and violation of the California Labor Code.
On March 4, 2003, Dr. Parikh resigned as a member of
our Board of Directors. On June 17, 2003, Dr. Parikh
filed an amended demand for arbitration adding as respondents
our Chief Executive Officer and Chairman of the Board, Stephen
S. Schwartz, and three outside directors, Walter W. Wilson,
Stanley J. Grubel and Anthony E. Santelli to all claims
other than the breach of contract claim. Dr. Parikh sought
compensatory damages in excess of $5.0 million plus
punitive damages and attorneys fees. The matter has since
been resolved pursuant to a settlement and release agreement
entered into by the parties, and the claims underlying the
action have been dismissed with prejudice. We recorded severance
and associated costs of $1.3 million related to the
settlement in the quarter ended December 31, 2003.

From time to time, we are also involved in other
legal actions arising in the ordinary course of business. We
have incurred certain costs while defending these matters. There
can be no assurance third party assertions will be resolved
without costly litigation, in a manner that is not adverse to
our financial position, results of operations or cash flows or
without requiring royalty payments in the future which may
adversely impact gross margins. Litigation is inherently
unpredictable, and we cannot predict the outcome of the legal
proceedings described above with any certainty. Because of
uncertainties related to both the amount and range of losses in
the event of an unfavorable outcome in the lawsuits listed above
or in certain other pending proceedings for which loss estimates
have not been recorded, we are unable to make a reasonable
estimate of the losses that could result from these matters. As
a result, no losses have been accrued for the legal proceedings
described above in our financial statements as of March 31,
2004.




Item 4  Submission of
Matters to a Vote for Security Holders

No matters were submitted to a vote of security
holders during the fourth quarter.

13



---



##### Table of Contents



PART II




Item 5  Market for the
Registrants Common Equity and Related Stockholder
Matters

Price Range of Common Stock

Since September 22, 1993, our common stock
has been traded on the Nasdaq National Market under the symbol
ASYT. The price per share reflected in the following
table represents the range of high and low closing prices for
our common stock as reported on the Nasdaq National Market for
the periods indicated.

|                                  |  |      |       |     |  |   |       | 
|--------------------------------- |  | ---- | ----- | --- |  | - | ----- | 
|                                  |  | High |       | Low
|                                  |  |      |       |    
|April 1  June 30, 2002           |  | $    | 20.41 |     |  | $ | 14.06 | 
|July
    1  September 30, 2002   |  | $    | 19.26 |     |  | $ | 6.04  | 
|October
    1  December 31, 2002 |  | $    | 8.58  |     |  | $ | 3.51  | 
|January
    1  March 31, 2003    |  | $    | 10.71 |     |  | $ | 5.42  | 
|April 1  June 30, 2003           |  | $    | 7.93  |     |  | $ | 3.70  | 
|July
    1  September 30, 2003   |  | $    | 15.64 |     |  | $ | 6.61  | 
|October
    1  December 31, 2003 |  | $    | 20.14 |     |  | $ | 14.31 | 
|January
    1  March 27, 2004    |  | $    | 19.15 |     |  | $ | 7.99  | 

Approximate Number of Equity Security
Holders

There were approximately 354 record holders of
our common stock as of May 17, 2004.

Dividends

We have not paid any cash dividends since our
inception and do not anticipate paying cash dividends in the
foreseeable future.

14



---



##### Table of Contents






Item 6  Selected
Consolidated Financial Data

We acquired companies in fiscal 2004, 2003, 2002,
2001 and 2000, and our implementation of SAB No. 101,
SFAS No. 142 and SFAS No. 144 has impacted the year
over year comparability of the selected financial data. We
adopted SAB No. 101 on April 1, 2000, SFAS
No. 142 and SFAS No. 144 on April 1, 2002. The
following table reflects selected consolidated financial data
(in thousands, except per share amounts):

|                                                                                                                                          |                                                                                                                                           |                              |         |        |   |      |          |        |   |      |          |        |   |   |         |        |   |   |         |        | 
|----------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | ------- | ------ | - | ---- | -------- | ------ | - | ---- | -------- | ------ | - | - | ------- | ------ | - | - | ------- | ------ | 
|                                                                                                                                          |                                                                                                                                           |                             
|                                                                                                                                          |                                                                                                                                           | Fiscal Years Ended March, 31
|                                                                                                                                          |                                                                                                                                           |                             
|                                                                                                                                          |                                                                                                                                           | 2004                         |         | 2003   |   | 2002 |          | 2001   |   | 2000
|                                                                                                                                          |                                                                                                                                           |                              |         |        |   |      |          |        |   |     
|Consolidated Statements of Operations
    Data:                                                                                           |                                                                                                                                           |                              |         |        |   |      |          |        |   |      |          |        |   |   |         |        |   |   |         |       
|Net sales                                                                                                                                 |                                                                                                                                           | $                            | 301,642 |        |   | $    | 259,495  |        |   | $    | 183,234  |        |   | $ | 491,542 |        |   | $ | 225,554 |       
|Gross profit                                                                                                                              |                                                                                                                                           |                              | 53,189  |        |   |      | 75,052   |        |   |      | 40,928   |        |   |   | 185,746 |        |   |   | 103,055 |       
|In-process research and development of
    acquired businesses                                                                            |                                                                                                                                           |                              |        |        |   |      | 7,832    |        |   |      | 2,000    |        |   |   |        |        |   |   | 4,884   |       
|Income (loss) from operations                                                                                                             |                                                                                                                                           |                              | (87,322 | )      |   |      | (83,603  | )      |   |      | (132,084 | )      |   |   | 43,106  |        |   |   | 15,456  |       
|Gain on sale of wafer and reticle carrier
    product line                                                                                |                                                                                                                                           |                              |        |        |   |      | 28,420   |        |   |      |         |        |   |   |        |        |   |   |        |       
|Income (loss) from continuing operations
    before discontinued operations and cumulative effect of a change
    in accounting principle |                                                                                                                                           |                              | (83,449 | )      |   |      | (114,773 | )      |   |      | (97,514  | )      |   |   | 29,532  |        |   |   | 10,019  |       
|Discontinued operations, net of income tax                                                                                                |                                                                                                                                           |                              |        |        |   |      | (21,096  | )      |   |      | (51,403  | )      |   |   |        |        |   |   |        |       
|Cumulative effect of change in accounting
    Principle, net of income tax                                                                |                                                                                                                                           |                              |        |        |   |      |         |        |   |      |         |        |   |   | (2,506  | )      |   |   |        |       
|Net income (loss)                                                                                                                         |                                                                                                                                           |                              | (83,449 | )      |   |      | (135,869 | )      |   |      | (148,917 | )      |   |   | 27,026  |        |   |   | 10,019  |       
|Basic net income (loss) per share:                                                                                                        |                                                                                                                                           |                              |         |        |   |      |          |        |   |      |          |        |   |   |         |        |   |   |         |       
|                                                                                                                                          | Income (loss) from continuing operations
    before discontinued operations and cumulative effect of a change
    in accounting principle |                              | $       | (2.00  | ) |      | $        | (3.06  | ) |      | $        | (2.76  | ) |   | $       | 0.90   |   |   | $       | 0.36   | 
|                                                                                                                                          | Discontinued operations, net of income taxes                                                                                              |                              | $       |       |   |      | $        | (0.56  | ) |      | $        | (1.45  | ) |   | $       |       |   |   | $       |       | 
|                                                                                                                                          | Cumulative effect of a change in accounting
    principle, net of income tax                                                              |                              | $       |       |   |      | $        |       |   |      | $        |       |   |   | $       | (0.08  | ) |   | $       |       | 
|                                                                                                                                          | Shares used in basic earnings per share
    calculation                                                                                   |                              |         | 41,805 |   |      |          | 37,489 |   |      |          | 35,373 |   |   |         | 32,697 |   |   |         | 27,639 | 
|Diluted net income (loss) per share:                                                                                                      |                                                                                                                                           |                              |         |        |   |      |          |        |   |      |          |        |   |   |         |        |   |   |         |       
|                                                                                                                                          | Income (loss) from continuing operations
    before discontinued operations and cumulative effect of a change
    in accounting principle |                              | $       | (2.00  | ) |      | $        | (3.06  | ) |      | $        | (2.76  | ) |   | $       | 0.85   |   |   | $       | 0.32   | 
|                                                                                                                                          | Discontinued operations, net of income taxes                                                                                              |                              | $       |       |   |      | $        | (0.56  | ) |      | $        | (1.45  | ) |   | $       |       |   |   | $       |       | 
|                                                                                                                                          | Cumulative effect of a change in accounting
    principle, net of income tax                                                              |                              | $       |       |   |      | $        |       |   |      | $        |       |   |   | $       | (0.07  | ) |   | $       |       | 
|                                                                                                                                          | Shares used in diluted net income (loss) per
    share calculation                                                                        |                              |         | 41,805 |   |      |          | 37,489 |   |      |          | 35,373 |   |   |         | 34,928 |   |   |         | 30,986 | 

15



---



##### Table of Contents



|                                 |                                                                           |                              |   |         |  |      |   |         |  |      |   |         |  |  |   |         |  |  |   |         | 
|-------------------------------- | ------------------------------------------------------------------------- | ---------------------------- | - | ------- |  | ---- | - | ------- |  | ---- | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                 |                                                                           |                             
|                                 |                                                                           | Fiscal Years Ended March, 31
|                                 |                                                                           |                             
|                                 |                                                                           | 2004                         |   | 2003    |  | 2002 |   | 2001    |  | 2000
|                                 |                                                                           |                              |   |         |  |      |   |         |  |     
|Consolidated Balance Sheet Data: |                                                                           |                              |   |         |  |      |   |         |  |      |   |         |  |  |   |         |  |  |   |        
|                                 | Cash and cash equivalents, restricted cash and
    short-term investments |                              | $ | 119,764 |  |      | $ | 99,302  |  |      | $ | 84,629  |  |  | $ | 90,249  |  |  | $ | 106,088 | 
|                                 | Working capital                                                           |                              |   | 127,573 |  |      |   | 89,723  |  |      |   | 122,594 |  |  |   | 179,154 |  |  |   | 171,550 | 
|                                 | Total assets                                                              |                              |   | 473,609 |  |      |   | 395,225 |  |      |   | 344,415 |  |  |   | 408,432 |  |  |   | 329,200 | 
|                                 | Long-term debt and capital leases, net of
    current portion             |                              |   | 91,074  |  |      |   | 114,812 |  |      |   | 90,331  |  |  |   | 3,683   |  |  |   | 910     | 
|                                 | Shareholders equity                                                      |                              |   | 103,109 |  |      |   | 68,034  |  |      |   | 164,937 |  |  |   | 302,463 |  |  |   | 233,106 | 




Item 7  Managements
Discussion and Analysis of Financial Condition and Results of
Operations

The following discussion of our financial
condition and results of operations should be read in
conjunction with our consolidated financial statements and the
related notes included elsewhere in this Annual Report on
Form 10-K. This discussion contains forward-looking
statements, which involve risk and uncertainties. Our actual
results could differ materially from those anticipated in the
forward looking statements as a result of certain factors,
including but not limited to those discussed in Risk
Factors and elsewhere in this Annual Report.

Overview

We develop, manufacture, sell and support
integrated automation systems primarily for the semiconductor,
and secondarily for the flat panel display, or FPD,
manufacturing industries. Our systems are designed to enable
semiconductor and FPD manufacturers to increase their
manufacturing productivity and yield and to protect their
investment in fragile materials and work-in-process.

We sell our systems directly to semiconductor and
FPD manufacturers, as well as to original equipment
manufacturers, or OEMs, that integrate our systems with their
equipment for sale to semiconductor manufacturers.

In response to the industry downturn, we have
reduced costs in several areas. We reduced approximately
35.0 percent of our headcount in April 2003, due to
ongoing weakness in our business, our outsourcing of
manufacturing, and the sale of two discontinued operations and
our wafer carrier business. We also announced plans to outsource
our Japanese manufacturing operations. In October 2002, we
began transitioning substantially all of our U.S. manufacturing
to Solectron Corporation, which we believe will reduce our fixed
manufacturing costs and improve our ability to respond to sales
fluctuations. The transition was substantially completed in
June 2003. Over the past two years, we have reduced our
workforce from a peak of approximately 1,800 employees to 530
employees, not including employees of Asyst Shinko, as of
March 31, 2004.

We sell our products principally through a direct
sales force worldwide. Our functional currency is the U.S.
dollar, except in Japan where our functional currency is the
Japanese yen. The costs and expenses of our international
subsidiaries are recorded in local currency, and foreign
currency translation adjustments are reflected as a component of
Accumulated other comprehensive income in our
condensed consolidated balance sheets.

On October 16, 2002, we established a joint
venture with Shinko called Asyst Shinko, Inc, or ASI. The joint
venture develops, manufactures and markets market-leading AMHS
with principal operations in Tokyo and Ise, Japan. Under terms
of the joint venture agreement, we acquired 51.0 percent of
the joint venture for approximately $67.5 million of cash
and transaction costs. Shinko contributed its entire AMHS
business, including intellectual property and other assets,
installed customer base and approximately 250 employees. We
acquired ASI to enhance our presence in the 300mm AMHS and flat
panel display markets. The acquisition has been accounted for as
a purchase transaction in accordance with SFAS No. 141 and,
accordingly, the

16



---



##### Table of Contents



results of ASI are included in the consolidated
financial statements for the periods subsequent to its
acquisition.


In April 2003, ASI acquired the portion of
Shinko Technologies, Inc. that provides ongoing support to
ASIs North American AMHS customers from Shinko Electric,
Co., Ltd., Shinko. ASI renamed this subsidiary Asyst Shinko
America, or ASAM.

In May 2002, Asyst Connectivity
Technologies, Inc., or ACT, a wholly-owned subsidiary of Asyst,
purchased substantially all of the assets of domainLogix
Corporation, or DLC, a Delaware corporation.

In May 2001, we acquired 100.0 percent
of the common stock of GW Associates, Inc., or GW, a California
corporation.

In fiscal 2000, we acquired a majority ownership
percentage of MECS, a Japanese engineering and robotics
manufacturing company, and in fiscal 2003 our ownership
percentage increased 2.1 percent to 98.9 percent. MECS
is now merged into AJI, our wholly-owned subsidiary.

Critical Accounting Policies and
Estimates



| |        
| | -------
| | General

Our discussion and analysis of our financial
condition and results of operations are based upon our
consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial
statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates,
including those related to allowance for doubtful accounts,
inventories, investments, deferred tax assets, income taxes,
warranty obligations and restructuring and impairment charges.
We base our estimates on historical experience and on various
other assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or
conditions.

We believe the following critical accounting
policies affect our more significant judgments and estimates
used in the preparation of our consolidated financial statements.



| |                    
| | -------------------
| | Revenue Recognition

We recognize revenue in accordance with SEC Staff
Accounting Bulletin No. 104, or SAB 104, Revenue
Recognition. We recognize revenue when persuasive evidence
of an arrangement exists, delivery has occurred or services have
been rendered, the sellers price is fixed or determinable,
and collectibility is reasonably assured. Some of our products
are large volume consumables that are tested to industry and/or
customer acceptance criteria prior to shipment. Revenue for
these types of products is recognized at shipment.

Certain of our product sales are accounted for as
multiple-element arrangements. If we have met defined customer
acceptance experience levels with both the customer and the
specific type of equipment, we recognize the product revenue at
the time of shipment and transfer of title, with the remainder
when the other elements, primarily installation, have been
completed. Other products are highly customized systems that
cannot be completed or adequately tested to customer
specifications prior to shipment from the factory. We do not
recognize revenue for these products until formal acceptance by
the customer.

Revenues from long-term contracts are recognized
using the percentage-of-completion method of contract
accounting, based on the ratio that costs incurred to date bear
to estimated total costs at completion. Because of the size,
complexity and duration of the projects, significant judgment is
required to estimate the total cost of the project. When using
the percentage of completion method, revisions in revenue and
cost estimates are recorded in the periods in which the facts
that require such revisions become known and losses, if any, are
provided for in the period in which such losses are first
identified by management. We utilize the

17



---



##### Table of Contents



percentage-of-completion method due to the
significance of the service effort and the length of time of the
contracts.


Revenue for spare parts is recognized on
shipment. Revenue related to maintenance and service contracts
is recognized ratably over the duration of the contracts.
Unearned maintenance and service contract revenue is not
significant and is included in accrued liabilities.

We account for software revenue recognition in
accordance with the American Institute of Certified Public
Accountants Statement of Position 97-2, Software
Revenue Recognition. Revenues for integration software
work are recognized on a percentage-of-completion basis.
Software license revenue, which is not material to the
consolidated financial statements, is recognized when the
software is shipped; payment is due within one year;
collectibility is probable and there are no significant
obligations remaining.



| |                                    
| | -----------------------------------
| | Allowance for Doubtful
    Accounts

We estimate our allowance for doubtful accounts
based on a combination of specifically identified amounts and a
general reserve calculated based on the aging of receivables. If
circumstances change (such as an unexpected material adverse
change in a major customers ability to meet its financial
obligations to us or its payment trends), we may adjust our
estimates of the recoverability of amounts due to us.



| |                   
| | ------------------
| | Inventory Reserves

We evaluate the recoverability of all inventory,
including raw materials, work-in-process, finished goods, and
spare parts to determine whether adjustments for impairment are
required. Inventory which is obsolete or in excess of our demand
forecast is fully reserved. If actual demand is lower than our
forecast, additional inventory write-downs may be required.



| |                                         
| | ----------------------------------------
| | Goodwill and Other Intangible
    Assets

We perform an annual goodwill impairment test in
the third quarter of each fiscal year using a two-step process.
The first step of the test identifies when impairment may have
occurred, while the second step of the test measures the amount
of the impairment, if any. To determine the amount of the
impairment, we estimate the fair value of our reporting segments
that contain goodwill, based primarily on expected future cash
flows, reduce the amount by the fair value of identifiable
intangible assets other than goodwill (also based primarily on
expected future cash flows), and then compare the unallocated
fair value of the business to the carrying value of goodwill. To
the extent goodwill exceeds the unallocated fair value of the
business, an impairment expense is recognized. In connection
with the annual impairment analysis for goodwill, we assessed
the recoverability of the intangible assets subject to
amortization in accordance with SFAS No. 144.



| |                 
| | ----------------
| | Warranty Accrual

Our warranty policy generally states that we will
provide warranty coverage for a pre-determined amount of time,
generally 15 to 24 months, for material and labor to repair
and service our equipment. In fiscal 2003, we outsourced all of
our products manufactured in the United States to Solectron
Corporation. Solectron assumes the warranty liability for the
first 12 months on products it manufacturers, with Asyst
liable for warranty obligations beyond 12 months. We record
the estimated warranty cost upon shipment of our products. The
estimated warranty cost is determined based on the warranty term
and historical warranty costs for a specific product. If actual
product failure rates or material usage differs from our
estimates, we may need to revise our estimated warranty reserve.



| |                            
| | ---------------------------
| | Accounting for Income Taxes

We have recorded a valuation allowance to reduce
our deferred tax assets to the amount that is more likely than
not to be realized. We have considered our future taxable income
and tax planning strategies in assessing our valuation
allowance. Future taxable income is based upon our estimates,
and actual results may significantly differ from these estimates
due to the volatility of our industry. If in the future we
determine that

18



---



##### Table of Contents



we would be able to realize our deferred tax in
excess of the net amount recorded, we would record an adjustment
to the deferred tax asset, increasing income in the period such
determination was made. Likewise, should we determine that we
would not be able to realize all or part of our net deferred tax
asset in the future, we would record an adjustment to the
deferred tax asset, charging income in the period such
determination was made.




| |                                    
| | -----------------------------------
| | Impairment of Long-Lived
    Assets

We evaluate the recoverability of our long-lived
tangible assets in accordance with Financial Accounting
Standards Board Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment of Long-Lived
Assets to be Disposed of, or SFAS No. 144. Long-lived
assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. Determination of
recoverability is based on an estimate of undiscounted future
cash flows from the use of the assets and its eventual
disposition. Measurement of an impairment loss for long-lived
assets is based on the fair value of the assets. Long-lived
assets to be disposed of are reported at the lower of carrying
amount or fair value less costs to sell.

Results of Operations



| |          
| | ---------
| | Net Sales

Net sales for the fiscal year ended
March 31, 2004 were $301.6 million, an increase of
$42.1 million or 16.2 percent from the prior year. The
increase in fiscal 2004 sales was in AMHS and 200mm SMIF
products sold to semiconductor manufacturers. Excluding the
impact of ASI, net sales for fiscal 2004 were
$133.1 million, a decrease of $80.0 million or
37.5 percent from the prior year. This decrease was mainly
due to the general decline in the semiconductor equipment sector
and the sale of our wafer and reticle carrier product lines
during fiscal 2003. These product lines generated
$31.1 million of revenue in fiscal 2003. Net sales for the
fiscal year ended March 31, 2003 were $259.5 million, an
increase of $76.3 million or 41.6 percent from fiscal
2002. The increase in fiscal 2003 sales was primarily due to
revenue associated with the acquisition of ASI and increased
sales to customers in China and Taiwan.



| |             
| | ------------
| | Gross Profit

Because the semiconductor capital equipment
industry is subject to rapid fluctuations in demand, we have
made significant reductions and changes in our manufacturing
operations to decrease the fixed component of our manufacturing
costs and improve our margins during downturns. In fiscal 2004,
we had reductions of workforce, in both U.S. and international
operations. In fiscal 2003, we began transitioning all of our
U.S. manufacturing operations to Solectron, a contract
manufacturer, and completed this transition in fiscal 2004.

Our gross profit was $53.2 million for the
fiscal year ended March 31, 2004, $75.1 million for
the fiscal year ended March 31, 2003 and $40.9 million
for the fiscal year ended March 31, 2002. This represented
17.6 percent of net sales for the fiscal year ended
March 31, 2004, 28.9 percent of net sales for the
fiscal year ended March 31, 2003 and 22.3 percent of
net sales for the fiscal year ended March 31, 2002. The
decrease in gross profit as a percent of sales in fiscal 2004
was primarily due to product mix change resulting from higher
AMHS revenue with lower gross margins. In addition, ASI recorded
a $7.3 million charge in fiscal 2004 for estimated losses that
are anticipated on certain customer contracts and recorded a
$0.9 million provision relating to excess and obsolete
inventory. Although our traditional business was helped by our
continuing transition to outsourced manufacturing and a lower
cost supply chain, the gross profit deteriorated from the prior
year due to an increased mix of legacy portal and sorter
products with lower gross margins.

The improvement in gross profit in fiscal 2003
from the prior year was primarily attributable to increased
sales volumes, which better absorbed manufacturing overhead,
facility and headcount reduction actions taken in fiscal 2002,
and higher mix of 200mm products.

19



---



##### Table of Contents





| |                         
| | ------------------------
| | Research and Development

R&D expenses were $36.4 million for the
fiscal year ended March 31, 2004, $40.1 million for
the fiscal year ended March 31, 2003 and $39.0 million
for the fiscal year ended March 31, 2002. This represented
12.1 percent of net sales for the fiscal year ended
March 31, 2004, 15.4 percent of net sales for the
fiscal year ended March 31, 2003 and 21.3 percent of
net sales for the fiscal year ended March 31, 2002. The
decrease in R&D spending in fiscal 2004 was mainly due to
headcount reductions and other spending cuts in early fiscal
2004 in response to our sales declines. Our higher R&D
spending in fiscal 2003 resulted from our decision to continue
strategic product development programs and the inclusion of
R&D spending in ASI and ACT.



| |                                        
| | ---------------------------------------
| | Selling, General and
    Administrative

Over the past three years we have reduced
selling, general and administrative, or SG&A, expenses to
better align our spending with lower sales levels. SG&A
expenses declined to $70.5 million, or 23.4 percent of
net sales, compared with $74.2 million, or
28.6 percent of net sales in fiscal 2003. SG&A expense
was $76.3 million for the fiscal year ended March 31,
2002, representing 41.6 percent of net sales. The decreases
in fiscal 2004 and fiscal 2003 resulted primarily from workforce
reductions, facility closures, and reduced discretionary
spending offset by increases due to acquisitions of ASI and DLC.



| |                                               
| | ----------------------------------------------
| | Amortization of Acquired Intangible
    Assets

Amortization expenses relating to acquired
intangible assets were $20.2 million for the fiscal year ended
March 31, 2004, $14.1 million for the fiscal year
ended March 31, 2003 and $7.1 million for the fiscal
year ended March 31, 2002. This represented
6.7 percent of net sales for the fiscal year ended
March 31, 2004, 5.4 percent of net sales for the
fiscal year ended March 31, 2003 and 3.9 percent of
net sales for the fiscal year ended March 31, 2002. We
amortize acquired intangible assets over periods ranging from
three to ten years. The increases in amortization expenses in
fiscal 2004 and 2003 are primarily due to the acquisition of the
ASI joint venture interest.



| |                                    
| | -----------------------------------
| | Restructuring and Other
    Charges

Restructuring and other charges for the fiscal
years ended March 31, 2004, 2003 and 2002 were (in
thousands):

|                        |                              |              |     |          |   |             |       |        |   |   |     |        |   |   |       |        |  
|----------------------- | ---------------------------- | ------------ | --- | -------- | - | ----------- | ----- | ------ | - | - | --- | ------ | - | - | ----- | ------ | -
|                        |                              | Severance    |     | Excess   |   | Fixed Asset |       |       
|                        |                              | and Benefits |     | Facility |   | Impairment  |       | Total 
|                        |                              |              |     |          |   |             |       |       
|Balance, March 31, 2001 |                              | $            |    |          |   | $           |      |        |   | $ |    |        |   | $ |      |       
|                        | Additional accruals          |              |     | 4,278    |   |             |       | 3,685  |   |   |     | 200    |   |   |       | 8,163  |  
|                        | Non-cash related adjustments |              |     |         |   |             |       | (781   | ) |   |     |       |   |   |       | (781   | )
|                        | Amounts paid in cash         |              |     | (3,537   | ) |             |       | (472   | ) |   |     |       |   |   |       | (4,009 | )
|                        |                              |              |     |          |   |             |       |        |   |   |     |        |   |   |       |       
|Balance, March 31, 2002 |                              |              | 741 |          |   |             | 2,432 |        |   |   | 200 |        |   |   | 3,373 |       
|                        | Additional accruals          |              |     | 2,125    |   |             |       | 2,733  |   |   |     | 2,161  |   |   |       | 7,019  |  
|                        | Non-cash related adjustments |              |     | (331     | ) |             |       | (214   | ) |   |     | (2,077 | ) |   |       | (2,622 | )
|                        | Amounts paid in cash         |              |     | (2,244   | ) |             |       | (1,334 | ) |   |     | (92    | ) |   |       | (3,670 | )
|                        |                              |              |     |          |   |             |       |        |   |   |     |        |   |   |       |       
|Balance, March 31, 2003 |                              |              | 291 |          |   |             | 3,617 |        |   |   | 192 |        |   |   | 4,100 |       
|                        | Additional accruals          |              |     | 5,460    |   |             |       | 1,075  |   |   |     | 46     |   |   |       | 6,581  |  
|                        | Non-cash related adjustments |              |     | 70       |   |             |       | (335   | ) |   |     | (205   | ) |   |       | (470   | )
|                        | Amounts paid in cash         |              |     | (5,757   | ) |             |       | (2,058 | ) |   |     | (33    | ) |   |       | (7,848 | )
|                        |                              |              |     |          |   |             |       |        |   |   |     |        |   |   |       |       
|Balance, March 31, 2004 |                              | $            | 64  |          |   | $           | 2,299 |        |   | $ |    |        |   | $ | 2,363 |       
|                        |                              |              |     |          |   |             |       |        |   |   |     |        |   |   |       |       

In fiscal 2004, we recorded net severance and
other charges of $5.5 million, primarily related to
$3.4 million in severance costs from a reduction in
workforce in April 2003 and a $1.0 million charge
related to the settlement and release of claims arising from the
termination of a former officer. Included were also

20



---



##### Table of Contents



$1.1 million of severance expenses primarily
from headcount reductions in our Japanese operations. In
addition to the severance charges, we recorded $1.1 million
for exiting a facility in connection with our restructuring
activities and for future lease obligations on a vacated
facility in excess of estimated future sublease proceeds. As a
result of these restructuring activities, we terminated the
employment of approximately 245 employees, including 129 in
manufacturing, 34 in research and development and 82 in selling,
general and administration, from our U.S. operations as well as
international operations. We anticipate potential restructuring
charges of $3.0 million to $5.0 million over the next
several quarters as we continue our previously announced cost
reduction initiatives.


In fiscal 2003, we recorded a charge of
$1.6 million related to excess facilities that we had under
lease but had abandoned as a result of our decision to outsource
our manufacturing activities and an excess facility charge of
$1.1 million reflecting revised estimates of future
sublease income based on continued weakness in the Austin, Texas
commercial real estate market. We also recorded severance
charges of $1.5 million resulting from headcount reductions
and contractual obligations of $0.6 million as a result of
workforce reduction measures. The restructuring activities
affected approximately 291 employees in manufacturing, sales,
research and development and administrative staff, including
approximately 191 employees who joined Solectron. We also
recorded a fixed asset impairment charge of $2.2 million
for assets abandoned due to facility consolidation and the
integration of certain programs into ASI.

In fiscal 2002, restructuring charges were
recorded resulting from our plan to shut down some of our
manufacturing and service locations, outsource some of our
manufacturing activities and consolidate the remainder of our
U.S. manufacturing in Fremont, California, as well as to reduce
our workforce due to economic conditions. These charges include
approximately $3.9 million in write-downs of assets and
reserves for lease commitments, net of estimated sublease income
that we expect to generate from the vacated facilities, and
severance costs of approximately $4.3 million related to
reductions in force of approximately 450 employees, or
29.0 percent of our workforce.

We expect to utilize the remaining accrual
balance, primarily unused leased facilities, over the next two
fiscal years. All remaining accrual balances are expected to be
settled in cash.



| |                         
| | ------------------------
| | Asset Impairment Charges

Asset impairment charges for fiscal years 2004,
2003 and 2002 were as follows:

|                                   |        |                              |       |       |  |      |       |        |  |   |        |        | 
|---------------------------------- | ------ | ---------------------------- | ----- | ----- |  | ---- | ----- | ------ |  | - | ------ | ------ | 
|                                   |        |                             
|                                   |        | Fiscal Years Ended March 31,
|                                   |        |                             
|                                   |        | 2004                         |       | 2003  |  | 2002
|                                   |        |                              |       |       |  |     
|Goodwill and intangible impairment |        | $                            |      |       |  | $    | 8,398 |        |  | $ | 22,574 |       
|Land impairment                    |        |                              | 6,853 |       |  |      | 7,121 |        |  |   | 17,925 |       
|                                   |        |                              |       |       |  |      |       |        |  |   |        |       
|                                   | Totals |                              | $     | 6,853 |  |      | $     | 15,519 |  |   | $      | 40,499 | 
|                                   |        |                              |       |       |  |      |       |        |  |   |        |       

We completed the sale of land in Fremont,
California, in the fiscal year ended March 31, 2004. The
net proceeds from the sale were $12.1 million. We had
intended to construct corporate headquarters facilities on the
land and subsequently decided not to build these facilities. In
fiscal 2004, we recorded a $6.9 million write-down based on
our latest estimate of market value as supported by the pending
sale agreement at the time. We previously entered into a
purchase agreement in September 2002 to sell the land for
$19.0 million, net of selling expenses, which was expected
to close in the quarter ended December 31, 2002. This
transaction did not close. As a result, a $7.1 million
write-down was recorded in the second quarter in fiscal 2003.
Initially, we leased the land from a syndicate of financial
institutions pursuant to an original lease agreement dated
June 30, 2000, which was subsequently amended on
February 21, 2001 and May 30, 2001. We purchased the
land on October 22, 2001 for $41.1 million, and we
paid the syndicate of financial institutions approximately
$2.9 million for engineering costs incurred in preparation
for making leasehold improvements to the land. Based upon market
data at June 30, 2001 and our non-cancelable commitment to
purchase the land, we estimated that the then market value of
the land had been impaired and recorded a $15.0 million
write-down to its estimated market value in fiscal 2002.

21



---



##### Table of Contents



In fiscal 2003, we completed an annual goodwill
impairment test and determined that impairment charges of
$8.4 million were required because the estimated fair value
of certain businesses were less than their book values. The
charges were measured by comparing the forecasted undiscounted
cash flows, which we believe approximates fair value, with their
corresponding book values. The charges relate to goodwill and
intangible assets recorded in connection with our May 2002
acquisition of DLC.

We also performed a goodwill impairment test in
fiscal 2002 and determined that impairment charges of
$22.6 million were required because the estimated fair
value of certain businesses were less than their book values.
The charges were measured by comparing the forecasted
undiscounted cash flows, which we believed approximates fair
value, with their corresponding book values. The charges related
to goodwill and intangible assets recorded in connection with
previously acquired businesses.



| |                                                                                       
| | --------------------------------------------------------------------------------------
| | In-Process Research and Development Costs
    of Acquired Businesses and Product Lines

In October 2002, we acquired
51.0 percent of the common stock of ASI, our Japanese AMHS
joint venture company. In connection with the purchase price
allocation, in the quarter ended December 31, 2002, we
assigned $5.8 million to in-process research and
development, or IPR&D. In June 2002, we acquired DLC.
In connection with the purchase price allocation
$2.0 million was assigned to IPR&D. We identified
research projects in areas for which technological feasibility
had not been established and no alternative future uses existed.
The value was determined by estimating the expected cash flows
from the products once commercially viable, discounting the net
cash flows to their present value, and then applying a
percentage of completion to the calculated value.



| |                                                           
| | ----------------------------------------------------------
| | Gain on Sale of Wafer and Reticle Carrier
    Product Line

In fiscal 2003, we sold our wafer and reticle
carrier (WRC) products to Entegris for net proceeds of
$34.2 million. As a result of this transaction, we recorded
a gain on sale of $28.4 million. The wafer and reticle
carrier products contributed revenues of $31.1 million and
$28.9 million in fiscal years 2003 and 2002, respectively.



| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | Other Expense, Net Excluding Gain on Sale
    of Wafer and Recticle Carrier Product Line

Other expense, net was $6.6 million for the
fiscal year ended March 31, 2004, $6.9 million
excluding gain on sale of WRC for the fiscal year ended
March 31, 2003 and $3.5 million for the fiscal year
ended March 31, 2002. The other expenses for the fiscal
year ended March 31, 2004 were relatively flat from the
prior year. The increased expense in fiscal 2003 compared with
fiscal 2002 is primarily attributable to financing costs and
fees related to funding the ASI joint venture transaction,
increased interest expense related to the $25 million
credit facility which was established and drawn down to
partially fund the transaction, lower interest-bearing cash
balances, and lower interest rates on invested cash.



| |                                              
| | ---------------------------------------------
| | Provision for (Benefit from) Income
    Taxes

We recorded a benefit from income taxes of
$6.2 million for the fiscal year ended March 31, 2004,
or 6.5 percent of our loss before income taxes. The benefit
is primarily due to amortization of deferred tax liabilities
recorded in connection with the ASI acquisition of
$6.7 million, offset by tax provisions in our international
subsidiaries. As a result of the review undertaken at
September 30, 2002, we concluded that it was appropriate to
establish a full valuation allowance for our net deferred tax
assets. We therefore recorded a tax provision of
$57.3 million in fiscal 2003. Benefit from income taxes was
$38.0 million for the fiscal year ended March 31,
2002. This represented an effective tax rate of (6.5) percent
for the fiscal year ended March 31, 2004 and
92.3 percent for the fiscal year ended March 31, 2003
and 28.1 percent for the fiscal year ended March 31,
2002.

22



---



##### Table of Contents





| |                  
| | -----------------
| | Minority Interest

Minority interest in the loss from continuing
operations was $4.4 million and $4.7 million for the
fiscal years ended March 31, 2004 and 2003, respectively.
No minority interest was recorded in fiscal 2002. This amount
represents the 49.0 percent of our joint venture partner,
Shinko, in the operations of ASI.



| |                                               
| | ----------------------------------------------
| | Discontinued Operations, Net of Income
    Tax

There were no discontinued operations in fiscal
2004. Loss from discontinued operations was $21.1 million
for the fiscal year ended March 31, 2003 and
$51.4 million for the fiscal year ended March 31,
2002. The loss in fiscal 2002 included goodwill and impairment
charges of $37.8 million. In August 2002, we announced
our intention to divest two subsidiaries, AMP and SemiFab, in
order to allow us to better focus on our core business. Both
subsidiaries were divested in March 2003.



| |                           
| | --------------------------
| | Related Party Transactions

At March 31, 2004, we held notes from two
current non-officer employees totaling $0.4 million. At
March 31, 2003, we held notes from two former employees and
two current employees totaling $0.7 million. One of the
notes receivable is secured by a deed of trust on certain real
property. The fair market value of the property exceeds the loan
amount. These notes receivable are included in other assets at
March 31, 2004 and March 31, 2003, respectively.

Our majority owned subsidiary, ASI, has certain
transactions with the minority shareholder, Shinko. At
March 31, 2004, significant balances owed to Shinko were
(in thousands):

|                                  |  |   |        | 
|--------------------------------- |  | - | ------ | 
|Accounts payable due to Shinko    |  | $ | 17,194 | 
|Accrued liabilities due to Shinko |  |   | 248    | 

In addition, the consolidated condensed financial
statements reflect that ASI purchased various administrative and
IT services from Shinko. During the year ended March 31,
2004, sales to and purchases from Shinko were (in thousands):

|                   |  |   |        | 
|------------------ |  | - | ------ | 
|Sales              |  | $ | 743    | 
|Material purchases |  |   | 18,887 | 
|Services purchased |  |   | 12,375 | 

Guarantees & Commitments

We have guaranteed certain lease payments with
respect to equipment and real estate of our Japanese subsidiary
as disclosed in Note 10 to the Consolidated Financial Statements.

As more fully described in Note 12 to the
Consolidated Financial Statements, we are contingently liable as
part of the ASI acquisition to provide funding for plan benefits
under a pension plan of Asyst Shinko. As part of the acquisition
of ASI in October 2002, we recorded $12.1 million of
pension-related obligations. As of March 31, 2004, the
remaining liability was $11.8 million. Under certain remote
circumstances, including bankruptcy and inability to pay by
Shinko, we may have to assume approximately up to $200 million
of Shinkos pension obligations. No recognition of this
amount has been recorded to date as it is considered remote.

Recent Accounting Pronouncements

In January 2003, the FASB issued FASB
Interpretation No. 46, Consolidation of Variable Interest
Entities, an Interpretation of ARB No. 51, or FIN 46. FIN
46 requires certain variable interest entities to be
consolidated by the primary beneficiary of the entity if the
equity investors in the entity do not have the characteristics
of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties.
FIN 46 was effective for all new variable interest entities
created or acquired after January 31, 2003. In
December 2003, the FASB issued

23



---



##### Table of Contents



FIN 46R, which supercedes FIN 46. FIN 46R is
applicable in financial statements of public entities that have
interests in variable interest entities or potential variable
interest entities commonly referred to as special-purpose
entities for periods ending after December 15, 2003.
Application by public entities (other than small business
issuers) for all other types of entities is required in
financial statements for periods ending after March 15,
2004. The adoption of this standard did not have a material
impact on our results of operation or financial position.


In May 2003, the FASB issued SFAS
No. 150, Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity, or
SFAS No. 150. This Statement establishes standards for how
an issuer classifies and measures certain financial instruments
with characteristics of both liabilities and equity. It requires
that an issuer classify a financial instrument that is within
its scope as a liability (or an asset in some circumstances).
Many of those instruments were previously classified as equity.
The Statement is effective for financial instruments entered
into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first fiscal period beginning
after June 15, 2003. It is to be implemented by reporting
the cumulative effect of a change in an accounting principle for
financial instruments created before the issuance date of the
Statement and still existing at the beginning of the interim
period of adoption. Restatement is not permitted. The adoption
of SFAS No. 150 did not have a material impact on our
financial position or results of operations.

In August 2003, the EITF reached a consensus
on Issue No. 03-5, Applicability of AICPA Statement
of Position 97-2, Software Revenue Recognition, to Non-Software
Deliverables. This issue focuses solely on whether
non-software deliverables included in arrangements that contain
more-than-incidental software should be accounted for in
accordance with SOP 97-2. The Task Force confirmed that in an
arrangement that contains software that is more-than-incidental
to the products or services as a whole, only the software and
software-related elements are included within the scope of SOP
97-2. Software-related elements include software-related
products and services such as those listed in paragraph 9 of SOP
97-2, as well as other deliverables for which the software is
essential to their functionality. EITF Issue No. 03-5 is
effective for revenue arrangements entered into in fiscal
periods beginning after August 13, 2003. The adoption of
EITF Issue No. 03-5 did not have a significant impact on
our financial position or results of operations.

On December 17, 2003, the Staff of the
Securities and Exchange Commission, SEC or the Staff, issued
Staff Accounting Bulletin No. 104, Revenue Recognition, or
SAB 104, which supercedes Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial Statements, or
SAB 101. SAB 104 rescinds accounting guidance contained in SAB
101 related to multiple element revenue arrangements, superceded
as a result of the issuance of Emerging Issues Task Force Issue
No. 00-21, or EITF 00-21, Accounting for Revenue
Arrangements with Multiple Deliverables. Additionally, SAB 104
rescinds the SECs Revenue Recognition in Financial
Statements Frequently Asked Questions and Answers, or the FAQ,
issued with SAB 101 that had been codified in SEC topic 13,
Revenue Recognition. While the wording of SAB 104 has changed to
reflect the issuance of EITF 00-21, the revenue recognition
principles of SAB 101 remain largely unchanged by the issuance
of SAB 104. The adoption of SAB 104 did not have a material
effect on our financial position or results of operations.

In April 2004, the Emerging Issues Task
Force reached a consensus on Issue No. 03-06, Participating
Securities and the Two-Class Method Under FASB Statement
No. 128, Earnings Per Share, or EITF 03-16. EITF 03-06
addresses a number of questions regarding the computation of
earnings per share by companies that have issued securities
other than common stock that contractually entitle the holder to
participate in dividends and earnings of the company when, and
if, it declares dividends on its common stock. The issue also
provides further guidance in applying the two-class method of
calculating earnings per share, clarifying what constitutes a
participating security and how to apply the two-class method of
computing earning per share once it is determined that a
security is participating, including how to allocate
undistributed earnings to such a security. EITF 03-06 is
effective for fiscal periods beginning after March 31,
2004. The adoption of EITF 03-06 is not expected to have a
material effect on our financial position or results of
operations.

24



---



##### Table of Contents



Liquidity and Capital Resources

Since inception, we have funded our operations
primarily through the private sale of equity securities and
public stock offerings, customer pre-payments, bank borrowings
and cash generated from operations. As of March 31, 2004, we had
approximately $112.9 million in cash and cash equivalents,
$1.9 million in restricted cash and cash equivalents,
$127.6 million in working capital and $93.8 million in
long- term debt and capital lease obligations.

Cash flows from operating
activities.Net cash used in operating
activities in fiscal 2004 was $74.0 million. The net cash
used in operating activities in fiscal 2004 was primarily
attributable to our net loss of $83.5 million, and
increases in receivables and inventory totaling
$81.3 million primarily due to significantly higher
revenue. These uses of cash were partially offset by non-cash
charges to net income including depreciation and amortization of
$29.3 million, asset impairment charges of
$6.9 million, deferred taxes of $6.4 million, and
inventory reserve adjustments of $13.0 million. Additionally
accounts payable, accrued liabilities and deferred revenue
increased by a combined $48.5 million, primarily due to
increased purchasing activities from higher revenue.

Net cash provided by operating activities in
fiscal 2003 was $16.5 million. The net cash provided by
operating activities in fiscal 2003 was primarily attributable
to our net loss of $135.9 million, partially offset by
non-cash charges of $59.2 million related to the deferred
tax asset and $17.7 million of restructuring, goodwill and
intangibles impairment and asset write-downs; $30.8 million
of depreciation and amortization; $7.8 million of
in-process R&D; and other items. Other significant sources
of cash included increases in accounts payable accrued
liabilities and deferred revenue by a combined
$15.8 million; and an inventory decrease of
$23.5 million primarily due to the sale of inventory to
Solectron related to our outsourcing of manufacturing.

Cash flows from investing
activities.Net cash provided by
investing activities in fiscal 2004 was $1.2 million. We
received net proceeds of $12.1 million from the sale of land and
purchased short-term investments of $3.6 million, net. This
source of cash was offset by purchases of property and equipment
of approximately $6.1 million and cash used in connection
with our acquisition of ASAM of $1.2 million.

Net cash used in investing activities in fiscal
2003 was $19.0 million. We used $51.1 million of net
cash in the acquisitions of the ASI JV interest and DLC, and
received $34.2 million from the sale of our wafer and
reticle product lines (WRC). In addition, we sold short-term
investments of $7.0 million, net, and used $9.1 million for
purchases of property and equipment.

Cash flows from financing
activities.Net cash provided by
financing activities in fiscal 2004 was $93.0 million,
primarily from a total of $112.1 million from issuance of common
stock through our secondary stock offering and under our
employee stock programs. Proceeds from this issuance were used
in the repayment of $25.0 million against our commercial
banking line of credit. We also received proceeds from the sale
of receivables in the amount of $5.8 million.

In November 2003, we sold 6,900,000 shares
of our common stock, including exercise of the
underwriters over-allotment option, at an offering price
to the public of $15.17 per share. We received total proceeds of
$99.0 million, net of the related issuance fees and costs.

Net cash provided by financing activities in
fiscal 2003 was $29.8 million. During fiscal 2003, we received
net proceeds of $25.0 million from our line of credit and
$6.1 million from the issuance of common stock under our
employee stock programs. These sources of cash were offset by
net principal payments on short-term and long-term debt and
capital leases of $1.2 million.

In October 2002, we entered into a
$25.0 million two-year revolving credit agreement with a
commercial bank. The specific amount of the credit line
available, however, may change based on the amount of
receivables held. Borrowings under the credit agreement bear
interest at a rate indexed to LIBOR. The credit line was fully
paid down during the quarter ended December 31, 2003.
During fiscal year 2004, we amended the financial covenants. As
amended, we were required under the agreement to maintain
compliance with financial covenants, including a quarterly net
income/loss target, calculated on an after-tax basis excluding
depreciation, amortization and other non-cash items and a
requirement that we maintain with the bank during

25



---



##### Table of Contents



the term of the credit agreement a minimum
balance of $5 million of cash and cash-equivalents. As of
the quarter ended December 31, 2003, we were not in
compliance with certain of these financial covenants. However,
we obtained a waiver of compliance from the bank for these
certain covenants. We entered into an agreement with the bank,
effective as of May 15, 2004, to amend and restate the
terms of our existing credit agreement which extended its term
through May 15, 2006, changed and expanded the base of
assets under which we qualify for borrowings under the credit
facility and reduced certain fees and interest charges
applicable to borrowings under the credit line. The credit
agreement also restricts our ability to incur additional
indebtedness; pay dividends and make distributions in respect of
our capital stock; redeem capital stock; make investments or
other restricted payments; engage in transactions with
shareholders and affiliates; create liens; sell or otherwise
dispose of assets; make payments on our subordinated debt; and
engage in mergers and acquisitions.


As of March 31, 2004, we were in compliance
with these financial covenants. We cannot assure that we will
meet the quarterly net income/loss covenant or other covenants
in subsequent quarters. Non-compliance with the financial
covenants in the future may preclude our ability to borrow under
the credit agreement or require us to repay any borrowings
outstanding. These covenants may otherwise adversely affect our
company if our company fails to comply with them.

On July 3, 2001, we completed the sale of
$86.3 million of 5 3/4 percent convertible
subordinated notes which provided us with aggregate proceeds of
$82.9 million net of issuance costs. The notes are
convertible, at the option of the holder, at any time on or
prior to maturity into shares of our common stock at a
conversion price of $15.18 per share, which is equal to a
conversion rate of 65.8718 shares per $1,000 principal amount of
notes. The notes mature July 3, 2008, pay interest on
January 3 and July 3 of each year and are redeemable at our
option after July 3, 2004.

We had $18.2 million and $18.0 million
at March 31, 2004 and 2003, respectively, of short-term
debt from banks in Japan. As of March 31, 2004, the
interest rate ranged from 1.4 percent to 3.0 percent
(interest rates ranged from 1.4 percent to 2.4 percent
at March 31, 2003). We had secured straight bonds from a
bank in Japan of $7.1 million at March 31, 2004. The
bonds bore interest at rates ranging from 1.4 percent to
3.0 percent as of March 31, 2004 and mature in fiscal
year 2008. Certain of our assets in Japan have been pledged as
security for these secured straight bonds as well as for
short-term debt. As of March 31, 2004, pledged assets
consist of land and other property and equipment, net of
accumulated depreciation, time deposits and accounts receivable
totaling $15.9 million. Additionally Asyst U.S. has
provided letters of guarantee to financial institutions in Japan
covering substantially all of AJIs debts. In
September 2003, ASI entered into a short-term bank facility
with a Japanese bank under which it may borrow up to
approximately $28.3 million at the exchange rate as of
March 31, 2004. The current interest rate is
1.4 percent. This facility primarily supports ASIs
working capital requirements during the construction of its AMHS
projects, particularly located in Japan where customers
generally pay four to six months after acceptance of a completed
project. ASI had outstanding borrowings of $4.7 million
under this facility that is recorded in short-term debt at
March 31, 2004. Under terms of the bank facility, ASI must
generate annual operating profits on a statutory basis. We were
in compliance with the loan covenants at March 31, 2004.

We have an agreement with a Japanese banking
institution to sell certain of our trade receivables without
recourse. During fiscal 2004, approximately $5.8 million of
receivables were sold under this agreement. The total amount
available under the facility is $14 million at
March 31, 2004.

We lease facilities under non-cancelable capital
and operating leases, with expiration dates up to
November 2011.

We anticipate that operating expenses will
constitute a material use of our cash resources. The cyclical
nature of the semiconductor industry makes it very difficult for
us to predict future liquidity requirements with certainty. Any
upturn in the semiconductor industry may result in short-term
uses of cash in operations as cash may be used to finance
additional working capital requirements such as accounts
receivable. However, we believe that our available cash and cash
equivalents will be sufficient to meet our working capital and
operating expense requirements for at least the next
12 months.

26



---



##### Table of Contents



At some point in the future we may require
additional funds to support our working capital and operating
expense requirements or for other purposes and we may seek to
raise these additional funds through public or private debt or
equity financings or the sale of assets. These financings may
not be available to us on a timely basis if at all or, if
available, on terms acceptable to us and not dilutive to our
shareholders. If we fail to obtain acceptable additional
financing, we may be required to reduce planned expenditures or
forego investments, which could reduce our revenues, increase
our losses, and harm our business.



| |                                   
| | ----------------------------------
| | Off-Balance Sheet
    Arrangements

We do not have any financial partnerships with
unconsolidated entities established for the purpose of
facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes, such as entities
referred to as structured finance or special purpose entities.
Accordingly, we are not exposed to any financing or other risks
that could arise if we had such relationships.



| |                        
| | -----------------------
| | Contractual Obligations

The following table (in thousands) summarizes our
significant contractual obligations at March 31, 2004, and
the effect such obligations are expected to have on our
liquidity and cash flows in future periods.

|                                             |       |                        |         |           |  |           |        |           |  |         |        |        |  |   |        |        |  |   |     |     | 
|-------------------------------------------- | ----- | ---------------------- | ------- | --------- |  | --------- | ------ | --------- |  | ------- | ------ | ------ |  | - | ------ | ------ |  | - | --- | --- | 
|                                             |       |                       
|                                             |       | Payments Due by Period
|                                             |       |                       
|                                             |       |                        |         | Less than |  |           |        | More than
|                                             |       | Total                  |         | 1 year    |  | 1-3 years |        | 3-5 years |  | 5 years
|                                             |       |                        |         |           |  |           |        |           |  |        
|Short-term loans and notes payable           |       |                        | 18,161  |           |  |           | 18,161 |           |  |         |       |        |  |   |       |        |  |   |    |    
|Operating lease obligations                  |       | $                      | 13,842  |           |  | $         | 6,282  |           |  | $       | 6,288  |        |  | $ | 1,141  |        |  | $ | 131 |    
|Long-term debt and capital lease obligations |       |                        | 113,741 |           |  |           | 8,533  |           |  |         | 13,818 |        |  |   | 91,390 |        |  |   |    |    
|                                             |       |                        |         |           |  |           |        |           |  |         |        |        |  |   |        |        |  |   |     |    
|                                             | Total |                        | $       | 145,744   |  |           | $      | 32,976    |  |         | $      | 20,106 |  |   | $      | 92,531 |  |   | $   | 131 | 
|                                             |       |                        |         |           |  |           |        |           |  |         |        |        |  |   |        |        |  |   |     |    

Purchase orders or contracts for the purchase of
raw materials and other goods and services are not included in
the table above. We are not able to determine the aggregate
amount of such purchase orders that represent contractual
obligations, as purchase orders may represent authorizations to
purchase rather than binding agreements.

RISK FACTORS

This Annual Report on Form 10-K contains
forward-looking statements that involve risks and uncertainties,
including statements about our future plans, objectives,
intentions and expectations. Many factors, including those
described below, could cause actual results to differ materially
from those discussed in any forward-looking
statements.

Risk Related to Our Business



| |                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we fail to effectively manage our ASI
    joint venture, our sales of Automated Material Handling Systems
    could be adversely affected and the mix of sales between AMHS
    and our other products could affect our overall financial
    performance.

Sales of Automated Material Handling Systems, or
AMHS, accounted for approximately 56.0 percent of our sales
for the fiscal year ended March 31, 2004, and are expected
to be an important component of our future revenues.
Substantially all of our AMHS sales are through our
majority-owned joint venture subsidiary, Asyst Shinko, Inc., or
ASI, of which we acquired 51.0 percent in the third quarter of
fiscal year 2003. While we have effective operating control of
ASI, certain major decisions require the approval of our joint
venture partner, Shinko Electric Co., Ltd., or Shinko, and the
future success of ASI depends in part on the strength of our
relationship with Shinko. Other than a right of first refusal if
Shinko is considering selling its stake in ASI, we have no
mechanism to acquire the 49.0 percent of ASI that is
currently owned by Shinko. Even if Shinko were to offer to sell
its stake in ASI to us, we may not have sufficient funds
available to facilitate such

27



---



##### Table of Contents



acquisition. In addition, we have limited
experience managing operations in Japan, and our failure to
manage effectively ASI in Japan could harm our business.


Orders for AMHS are relatively large, often
exceeding $20 million for a given project. Because of the
size of these orders, our revenues are often concentrated among
a small number of customers in any fiscal period. Additionally,
the manufacture and installation of these systems at our
customers manufacturing facilities can take up to six
months. We recognize revenue and costs for AMHS based on
percentage of completion because the contracts are long-term in
nature. Payments under these contracts often occur well after we
incur our manufacturing costs. For example, terms for our
Japanese AMHS customers require payment to be made six months
after customer acceptance of the installation. The consequence
of the AMHS payment cycle is that significant demands can be
placed on our working capital. Further, gross margins on our
AMHS sales are lower than those for our other products. If we
fail to effectively estimate costs and manage these long-term
projects, we could have loss contract exposure and additional
gross margin pressure. Our overall financial performance will
therefore be impacted by the mix of sales between AMHS and other
products in a given period.



| |                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to increase our sales of
    AMHS to FPD manufacturers, or if the FPD industry enters a
    cyclical downturn, our growth prospects could be negatively
    impacted.

In recent quarters, ASI has begun to sell AMHS to
flat panel display, or FPD, manufacturers. While we believe that
sales to the FPD industry present a significant opportunity for
growth, the size of this market opportunity depends in large
part on capital expenditures by FPD manufacturers. The market
for FPD products is highly cyclical and has experienced periods
of oversupply, resulting in significantly reduced demand for
manufacturing and automation equipment. If the FPD market enters
into a cyclical downturn, demand for AMHS by the FPD market may
be significantly reduced, impacting our growth prospects.

As a relatively new entrant to the FPD equipment
market, we do not have the customer relationships that our
competitors have. Similarly, our relative inexperience in the
FPD industry may cause us to misjudge important trends and
dynamics in this market. If we are unable to anticipate future
customer needs in the FPD market, our growth prospects may be
severely reduced.



| |                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The timing of the industrys
    transition to 300mm technology is uncertain and competition may
    be intense, and could adversely affect our
    revenues.

The 300mm market is still relatively new. We have
invested, and are continuing to invest, substantial resources to
develop new systems and technologies to automate the processing
of 300mm wafers. However, the timing of the industrys
transition from the current, widely-used 200mm manufacturing
technology to 300mm manufacturing technology is uncertain,
partly as a result of the recent period of reduced wafer
fabrication capacity utilization. Delay in the adoption of 300mm
manufacturing technology could adversely affect our potential
revenue. Manufacturers who are implementing factory automation
in 300mm fabs may seek to purchase systems from multiple
vendors. Competition, including price competition, for these
300mm orders is intense. We face increased competition for our
300mm products from a number of new entrants because of the
development of Semiconductor Equipment and Materials
International, or SEMI, standards for 300mm products.



| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our gross margins on 300mm products may be
    lower than on 200mm products, which could adversely affect our
    ability to become and remain profitable.

The gross margins on our 300mm products currently
are not as favorable as on our 200mm products. This is primarily
because our 300mm products are early in their production life,
we face increased competition in this production line, and we
sell a greater percentage of our 300mm products to OEMs rather
than directly to semiconductor manufacturers. Manufacturing
costs are generally higher in the early stages of new product
introduction and typically decrease as demand increases, due to
better economies of scale and efficiencies developed in the
manufacturing processes. However, we cannot assure you that we
will see such economies of scale and efficiencies in our future
manufacturing of 300mm products, which will be supplied
primarily by

28



---



##### Table of Contents



contract manufacturers. SEMI standards for 300mm
products have enabled more suppliers to enter our markets,
thereby increasing competition and creating pricing pressure.
While semiconductor manufacturers purchased a majority of 200mm
tool automation products, OEMs are purchasing most of the tool
automation products for 300mm. Sales to OEMs typically have
lower gross margins.


These factors may prevent us from achieving or
maintaining similar relative pricing and gross margin
performance on 300mm products as we have achieved on 200mm
products, and could adversely affect our ability to become and
remain profitable.



| |                                                                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Most of our manufacturing is outsourced and
    we rely on a single contract manufacturer for much of our
    product manufacturing, which could disrupt the availability of
    our products or adversely affect our gross
    margins.

We have outsourced the manufacturing of most of
our products. Solectron currently manufactures, under a
long-term contract, our products, other than AMHS and our
Japanese robotics products. ASI also has outsourced a large
portion of its AMHS manufacturing to third parties. In the
future we may increase our dependence on contract manufacturers.
Outsourcing may not yield the benefits we expect, and instead
could result in increased product costs and product delivery
delays.

Outsourced manufacturing could create disruptions
in the availability of our products if the timeliness or quality
of products delivered does not meet our requirements or our
customers expectations. From time to time, we have
experienced delays in receiving products from Solectron.
Problems with quality or timeliness could be caused by a number
of factors including, but not limited to: manufacturing process
flow issues, financial viability of an outsourced vendor,
availability of raw materials or components to the outsourced
vendor, improper product specifications, and the learning curve
to commence manufacturing at a new outsourced site. Our contract
with Solectron contains minimum purchase commitments which, if
not met, could result in increased costs, which would adversely
affect our gross margins. We must also provide Solectron with
forecasts and targets based on actual and anticipated demand,
which we may not be able to do effectively or efficiently. If
Solectron purchases inventory based on our forecasts, and that
inventory is not used, we must repurchase the unused inventory,
which would adversely affect both our cash flows and gross
margins. If product supply is adversely affected because of
problems in outsourcing we may lose sales and profits.

Our outsourcing agreement with Solectron includes
commitments from Solectron to adjust, up and down, manufacturing
volume based on updates to our forecast demand. However,
Solectron may be unable to meet these commitments and, even if
it can, may be unable to react efficiently to rapid fluctuations
in demand. If our agreement with Solectron terminates or if
Solectron does not perform its obligations under our agreement,
it could take several months to establish alternative
manufacturing for these products and we may not be able to
fulfill our customers orders for most of our products in a
timely manner. If our agreement with Solectron terminates, we
may be unable to find another suitable outsource manufacturer.

Any delays in meeting customer demand or quality
problems resulting from product manufactured at an outsourced
location could result in lost or reduced future sales to key
customers and could have a material negative impact on our net
sales, gross profits and results of operations.



| |                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Shortages of components necessary for
    product assembly by Solectron or us can delay shipments to our
    customers and can lead to increased costs, which may negatively
    impact our financial results.

When demand for semiconductor manufacturing
equipment is strong, suppliers, both U.S. and international,
strain to provide components on a timely basis. We have
outsourced the manufacturing of many of our products, and
disruption or termination of supply sources to our contract
manufacturers or us could have a serious adverse effect on our
operations. Many of the components and subassemblies used in our
products are obtained from a limited group of suppliers, or in
some cases may come from a single supplier. A prolonged
inability to obtain some components could have an adverse effect
on our operating results and could result in damage to our
customer relationships. Shortages of components may also result
in price increases for components and, as a result, could
decrease our margins and negatively impact our financial results.

29



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have significant existing debts; the
    restrictive covenants under some of our debt agreements may
    limit our ability to expand or pursue our business strategy; if
    we are forced to prepay some or all of this indebtedness our
    financial position would be severely and adversely
    affected.

We have a significant amount of outstanding
indebtedness. At March 31, 2004, our long-term debt was
$91.1 million, and our short-term debt was $20.9 million,
for an aggregate of $112.0 million. We have
$86.3 million of 5 3/4 percent convertible
subordinated notes outstanding which are convertible, at the
option of the holder, at any time on or prior to maturity into
shares of our common stock at a conversion price of $15.18 per
share. We are required to pay interest on these convertible
notes on January 3 and July 3 of each year. These convertible
notes mature July 3, 2008, and are redeemable at our option
after July 3, 2004. Our joint venture with Shinko, ASI,
entered into a short-term facility with a Japanese bank under
which it may borrow up to approximately $28.3 million, of
which $4.7 million is currently outstanding. We have also
guaranteed the loans of our Japanese subsidiary, Asyst Japan,
Inc., or AJI, which loans currently total approximately
$20.6 million as of March 31, 2004.

Our two-year revolving credit agreement with a
commercial bank requires us to maintain compliance with certain
financial covenants, including a quarterly net income/ loss
target, calculated on an after-tax basis (excluding
depreciation, amortization and other non-cash items) and a
requirement that we maintain with the bank during the term of
the credit agreement a minimum balance of $5.0 million of
cash and cash equivalents. The specific amount of the credit
line available at any time, however, may change based on the
amount of current receivables we have outstanding. The covenants
contained in our credit agreement with the bank also restrict
our ability to take certain actions, including our ability to:



| |   |                                                                          
| | - | -------------------------------------------------------------------------
| |  | incur additional indebtedness;                                           
|
| |  | pay dividends and make distributions in respect
    of our capital stock;
|
| |  | redeem capital stock;                                                    
|
| |  | make investments or other restricted payments;                           
|
| |  | engage in transactions with shareholders and
    affiliates;             
|
| |  | create liens;                                                            
|
| |  | sell or otherwise dispose of assets;                                     
|
| |  | make payments on our debt, other than in the
    ordinary course; and    
|
| |  | engage in mergers and acquisitions.                                      

The credit line has been fully paid down since
the quarter ended December 31, 2003. As of the quarter ended
December 31, 2003, we were not in compliance with certain
of these financial covenants. However, we obtained a waiver of
compliance from the bank for these certain covenants. As of the
quarter ended March 31, 2004, we were in compliance with
the financial covenants. We entered into an agreement with the
bank, effective as of May 15, 2004, to amend and restate
the terms of our existing credit agreement which extended its
term through May 15, 2006, changed and expanded the base of
assets under which we qualify for borrowings under the credit
facility and reduced certain fees and interest charges
applicable to borrowings under the credit line. While we have
substantial improvements in our financial results in the quarter
ended March 31, 2004, we cannot assure you that we will
meet the financial covenants contained in our credit agreement
with Comerica in subsequent quarters. Specifically, we may be
unable to meet the maximum loss covenant or the minimum
liquidity covenant in future quarters. If we are unable to meet
any covenants, we cannot assure you that the bank will grant
waivers and amend the covenants, and Comerica may terminate the
agreement, preclude further borrowings and require us to repay
the outstanding borrowings.

Under terms of the ASI bank facility, ASI must
generate operating profits on a statutory basis. Additionally,
upon an event of default, the Japanese banks may call the loans
outstanding at AJI, requiring repayment, which we have
guaranteed.

30



---



##### Table of Contents



As long as our indebtedness remains outstanding,
the restrictive covenants could impair our ability to expand or
pursue our business strategies. Forced prepayment of some or all
of our indebtedness would reduce our available cash balances and
have an adverse impact on our operating and financial
performance.



| |                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | We may need additional financing in the
    future to meet our capital needs; if we do need to secure
    financing, it may be on unfavorable terms.

We recently raised capital by issuing
6.9 million shares of our common stock in a public offering
in November 2003; however, our operations are currently
consuming cash and are expected to continue to do so for the
next few quarters. As a consequence, in the future we may be
required to seek additional financing to meet our working
capital needs and to finance capital expenditures, as well as to
fund operations. We may be unable to obtain any required
additional financing on terms favorable to us, if at all. If
adequate funds are not available on acceptable terms, we may be
unable to fund our expansion, successfully develop or enhance
products, respond to competitive pressures or take advantage of
acquisition opportunities, any of which could have a material
adverse effect on our business. If we raise additional funds
through the issuance of equity securities, our shareholders may
experience dilution of their ownership interest, and the
newly-issued securities may have rights superior to those of the
common stock. If we raise additional funds by issuing debt, we
may be subject to limitations on our operations. This strain on
our capital resources could adversely affect our business.



| |                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------
| | If our fully integrated tool front-end
    solutions are not widely accepted, our growth prospects could be
    negatively impacted.

The decision by OEMs to adopt our tool front-end,
or portal, solutions for a large product line involves
significant organizational, technological and financial
commitments by the OEMs. OEMs expect the portal solutions to
meet stringent design, reliability and delivery specifications.
If we fail to satisfy these expectations, whether based on
limited or expanded sales levels, OEMs will not adopt our portal
solutions. We cannot ensure that these tools will be widely
accepted in the marketplace or that additional OEMs will adopt
them. We have invested significant time and expense in the
development of Spartan, our next generation portal offering
specifically designed for the 300mm market. While we believe
Spartan may improve our competitive position and gross margins
in the 300mm industry, if the market acceptance of Spartan is
less than we have forecast or if the timing of this acceptance
is delayed, our financial performance could be impacted.
Further, because Spartan is early in its production life, its
manufacturing costs may be higher (and resulting margins may be
lower) in the early stage of new product introduction.
Notwithstanding our solutions, OEMs may purchase components to
assemble or invest in the development of their own comparable
portals. If our solutions are not adopted by OEMs, our prospects
will be negatively impacted and we may not be able to achieve
profitability.



| |                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Because we do not have long-term contracts
    with our customers, our customers may cease purchasing our
    products at any time if we fail to meet their needs on a timely
    basis.

We do not have long-term contracts with our
customers, and our sales are typically made pursuant to
individual purchase orders. Accordingly:



| |   |                                                                                  
| | - | ---------------------------------------------------------------------------------
| |  | our customers can cease purchasing our products
    at any time, without penalty;
|
| |  | our customers are free to purchase products from
    our competitors;            
|
| |  | we are exposed to competitive price pressure on
    each order; and              
|
| |  | our customers are not required to make minimum
    purchases.                    

Customer orders are often received with extremely
short lead times. If we are unable to fulfill these orders in a
timely manner, we could lose sales and customers.

31



---



##### Table of Contents





| |                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We depend on large purchases from a few
    significant customers, and any loss, cancellation, reduction or
    delay in purchases by, or failure to collect receivables from,
    these customers could harm our business.

The markets in which we sell our products
comprise a relatively small number of OEMs and semiconductor
manufacturers. Large orders from a relatively small number of
customers account for a significant portion of our revenue and
make our relationship with each customer critical to our
business. The sales cycles to new customers range from six to
12 months from initial inquiry to placement of an order,
depending on the complexity of the project. These extended sales
cycles make the timing of customer orders uneven and difficult
to predict. A significant portion of the net sales in any
quarter is typically derived from a small number of long-term,
multi-million dollar customer projects involving upgrades of
existing facilities or the construction of new facilities.
Generally, our customers may cancel or reschedule shipments with
limited or no penalty.

Our customers demand for our products is
largely driven by the timing of new fab construction and the
upgrading of existing fabs initiated by those customers. As
such, when we complete projects for a customer, business from
that customer will decline substantially unless it undertakes
additional projects incorporating our products. The high cost of
building a fab is causing increasing numbers of semiconductor
manufacturers to outsource the manufacturing of their
semiconductors to foundries. This trend toward foundry
outsourcing, combined with increasing consolidation within the
semiconductor industry, could continue to decrease the number of
our potential customers and increase our dependency on our
remaining customers. We may not be able to retain our largest
customers or attract additional customers, and our OEM customers
may not be successful in selling the OEM equipment in which our
systems are embedded. Our success will depend on our continued
ability to develop and manage relationships with significant
customers. In addition, our customers have in the past sought
price concessions from us and may continue to do so in the
future, particularly during downturns in the semiconductor
market. Further, our current and prospective customers have
exerted pressure on us to shorten delivery times and to
customize and improve the capabilities of our products, thus
increasing our manufacturing costs. In addition, some of our
customers may in the future shift their purchases of products
from us to our competitors. Failure to respond adequately to
such pressures could result in a loss of customers or orders and
the inability to develop successful relationships with new
customers, which would have a negative impact on our business.

If we are unable to collect a receivable from a
large customer, our financial results will be negatively
impacted. In addition, since each customer represents a
significant percentage of net sales, the timing of the
completion of an order can lead to a fluctuation in our
quarterly results.



| |                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to develop and introduce
    new products and technologies in a timely manner, our business
    could be negatively impacted.

Semiconductor equipment and processes are subject
to rapid technological changes. The development of more complex
semiconductors has driven the need for new facilities, equipment
and processes to produce these devices at an acceptable cost. We
believe that our future success will depend in part upon our
ability to continue to enhance our existing products to meet
customer needs and to develop and introduce new products in a
timely manner. We often require long lead times for development
of our products, which requires us to expend significant
management effort and to incur material development costs and
other expenses. During development periods we may not realize
corresponding revenue in the same period, or at all. We may not
succeed with our product development efforts and we may not
respond effectively to technological change, which could have a
negative impact on our financial condition and results of
operations.



| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may be unable to protect our
    intellectual property rights and we may become involved in
    litigation concerning the intellectual property rights of
    others.

We rely on a combination of patent, trade secret
and copyright protection to establish and protect our
intellectual property. While we intend to take reasonable steps
to protect our patent rights, we cannot assure you that our
patents and other intellectual property rights will not be
challenged, invalidated or avoided, or that the rights granted
thereunder will provide us with competitive advantages. We also
rely on trade secrets

32



---



##### Table of Contents



that we seek to protect, in part, through
confidentiality agreements with employees, consultants and other
parties. These agreements may be breached, we may not have
adequate remedies for any breach, or our trade secrets may
otherwise become known to, or independently developed by, others.


Intellectual property rights are uncertain and
involve complex legal and factual questions. We may unknowingly
infringe on the intellectual property rights of others and may
be liable for that infringement, which could result in
significant liability for us. If we do infringe the intellectual
property rights of others, we could be forced to either seek a
license to intellectual property rights of others or alter our
products so that they no longer infringe the intellectual
property rights of others. A license could be very expensive to
obtain or may not be available at all. Similarly, changing our
products or processes to avoid infringing the rights of others
may be costly or impractical, could detract from the value of
our product, or could delay our ability to meet customer demands
or opportunities.

There has been substantial litigation regarding
patent and other intellectual property rights in
semiconductor-related industries. Litigation may be necessary to
enforce our patents, to protect our trade secrets or know how,
to defend us against claimed infringement of the rights of
others, or to determine the scope and validity of the patents or
intellectual property rights of others. Any litigation could
result in substantial cost to us and divert the attention of our
management, which by itself could have an adverse material
effect on our financial condition and operating results.
Further, adverse determinations in any litigation could result
in our loss of intellectual property rights, subject us to
significant liabilities to third parties, require us to seek
licenses from third parties, or prevent us from manufacturing or
selling our products. Any of these effects could have a negative
impact on our financial condition and results of operations.

The intellectual property laws in Asia do not
protect our intellectual property rights to the same extent as
do the laws of the United States. It may be necessary for us to
participate in proceedings to determine the validity of our, or
our competitors, intellectual property rights in Asia,
which could result in substantial cost and divert our efforts
and attention from other aspects of our business. If we are
unable to defend our intellectual property rights in Asia, our
future business, operating results and financial condition could
be adversely affected.



| |                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may not be able to integrate efficiently
    the operations of our acquisitions, and may incur substantial
    losses in the divestiture of assets or operations.

We have made and may continue to make additional
acquisitions of, or significant investments in, businesses that
offer complementary products, services, technologies or market
access. If we are to realize the anticipated benefits of past
and future acquisitions, the operations of these companies must
be integrated and combined efficiently with our own. The process
of integrating supply and distribution channels, computer and
accounting systems and other aspects of operations, while
managing a larger entity, has in the past presented and will
continue to present a significant challenge to our management.
In addition, it is not certain that we will be able to
incorporate different technologies into our integrated solution.
The difficulties of integration may increase because of the
necessity of combining personnel with varied business
backgrounds and combining different corporate cultures. We may
incur substantial costs associated with these activities and we
may suffer other material adverse effects from these integration
efforts which could materially reduce our short-term earnings.
We may not succeed with the integration process and we may not
fully realize the anticipated benefits of the business
combinations, or we could decide to divest or discontinue
existing or recently acquired assets or operations. For example,
in fiscal 2003, we decided to discontinue operations of our
SemiFab and AMP subsidiaries, both of which we had acquired in
February 2001, as these subsidiaries were generating
significant operating losses and not considered critical to our
long-term strategy. These subsidiaries were sold at the end of
fiscal 2003 at a substantial loss. The dedication of management
resources to such integration or divestitures may detract
attention from the day-to-day business, and we may need to hire
additional management personnel to mange our acquisitions or
divestitures successfully.

33



---



##### Table of Contents





| |                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As our quarterly and yearly operating
    results are subject to variability, comparisons between periods
    may not be meaningful; this variability in our results could
    cause our stock price to decline.

Our revenues and operating results can fluctuate
substantially from quarter to quarter and year to year,
depending on factors such as:



| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | general trends in the overall economy,
    electronics industry and semiconductor manufacturing industry;         
|
| |  | fluctuations in the semiconductor equipment
    market;                                                           
|
| |  | changes in customer buying patterns;                                                                              
|
| |  | the degree of competition we face;                                                                                
|
| |  | the size, timing and product mix of customer
    orders;                                                          
|
| |  | lost sales due to any failure in the outsourcing
    of our manufacturing;                                        
|
| |  | the availability of key components;                                                                               
|
| |  | the timing of product shipment and acceptance,
    which are factors in determining when we recognize revenue; and
|
| |  | the timely introduction and acceptance of new
    products.                                                       

These and other factors increase the risk of
unplanned fluctuations in our net sales. A shortfall in net
sales in a quarter or a fiscal year as a result of these factors
could negatively impact our operating results for that period.
Given these factors, we expect quarter-to-quarter and
year-to-year performance to fluctuate for the foreseeable
future. As a result, period-to-period comparisons of our
performance may not be meaningful, and you should not rely on
them as an indication of our future performance. In one or more
future periods, our operating results may be below the
expectations of public market analysts and investors, which may
cause our stock price to decline.



| |                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------
| | We face significant economic and regulatory
    risks because a majority of our net sales are from outside the
    United States.

A significant portion of our net sales is
attributable to sales outside the United States, primarily in
Taiwan, Japan, China, Korea, Singapore and Europe. International
sales were 79.0 percent of our total net sales for fiscal
2004, 65.0 percent in fiscal 2003 and 55.0 percent in
fiscal 2002. We expect that international sales will continue to
represent a significant portion of our total revenue in the
future. This concentration increases our exposure to any risks
in this area. Sales to customers outside the United States are
subject to various risks, including:



| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | exposure to currency fluctuations;                                                                                                             
|
| |  | the imposition of governmental controls;                                                                                                       
|
| |  | the laws of certain foreign countries may not
    protect our intellectual property to the same extent as do the
    laws of the United States;
|
| |  | the need to comply with a wide variety of foreign
    and U.S. export laws;                                                                    
|
| |  | political and economic instability;                                                                                                            
|
| |  | terrorism and anti-American sentiment;                                                                                                         
|
| |  | trade restrictions;                                                                                                                            
|
| |  | changes in tariffs and taxes;                                                                                                                  
|
| |  | longer product acceptance and payment cycles; and                                                                                              
|
| |  | the greater difficulty of administering business
    overseas.                                                                                 

34



---



##### Table of Contents



Any kind of economic instability in parts of Asia
where we do business can have a severe negative impact on our
operating results due to the large concentration of our sales
activities in this region. For example, during 1997 and 1998,
several Asian regions, including Taiwan and Japan, experienced
severe currency fluctuation and economic deflation, which
negatively impacted our revenues and also negatively impacted
our ability to collect payments from customers. The economic
situation during this period exacerbated a decline in selling
prices for our products as our competitors reduced product
prices to generate needed cash.

Although we invoice a majority of our
international sales in United States dollars, for sales in
Japan, we invoice our sales in Japanese yen. Future changes in
the exchange rate of the U.S. dollar to the Japanese yen may
adversely affect our future results of operations. We do not
currently engage in active currency hedging transactions.
Nonetheless, as we expand our international operations, we may
allow payment in additional foreign currencies and our exposure
to losses in foreign currency transactions may increase.
Moreover, the costs of doing business abroad may increase as a
result of adverse exchange rate fluctuations. For example, if
the United States dollar declined in value relative to a local
currency, we could be required to pay more for our expenditures
in that market, including salaries, commissions, local
operations and marketing expenses, each of which is paid in
local currency. In addition, we may lose customers if exchange
rate fluctuations, currency devaluations or economic crises
increase the local currency price of our products or reduce our
customers ability to purchase our products.

Asian and European courts might not enforce
judgments rendered in the United States. There is doubt as to
the enforceability in Asia and Europe of judgments obtained in
any federal or state court in the United States in civil and
commercial matters. The United States does not currently have a
treaty with many Asian and European countries providing for the
reciprocal recognition and enforcement of judgments in civil and
commercial matters. Therefore, a final judgment for the payment
of a fixed debt or sum of money rendered by any federal or state
court in the United States would not automatically be
enforceable in many European and Asian countries.



| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | Our current and planned operations may
    strain our resources and increase our operating
    expenses.

We may expand our operations through both
internal growth and acquisitions. We expect that this expansion
will strain our systems and operational and financial controls.
In addition, we may incur higher operating costs and be required
to expend substantial working capital to fund operations during
such an expansion. In addition, during an expansion, we may
incur significantly increased up-front costs of sale and product
manufacture well in advance of receiving revenue for such
product sales. To manage our growth effectively, we must
continue to improve and expand our systems and controls. If we
fail to do so, our growth will be limited and our liquidity and
ability to fund our operations could be significantly strained.
Our officers have limited experience in managing large or
rapidly growing businesses.

Further, consideration for future acquisitions
could be in the form of cash, common stock, rights to purchase
stock, or a combination thereof. Dilution to existing
shareholders, and to earnings per share, may result if shares of
common stock or other rights to purchase common stock are issued
in connection with any future acquisitions.



| |                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------
| | If we lose any of our key personnel or are
    unable to attract, train or retain qualified personnel, our
    business would be harmed.

Our success depends, in large part, on the
continued contributions of our key management and other key
personnel, many of whom are highly skilled and would be
difficult to replace. In particular, the services of
Dr. Stephen Schwartz, Chairman of our Board of Directors,
Chief Executive Officer and President, who has led our company
since August 2002 (and Chairman since January 2003),
are very important to our business. None of our senior
management, key technical personnel or key sales personnel is
bound by written employment contracts to remain with us for a
specified period. In addition, we do not currently maintain key
person life insurance covering our key personnel. The loss of
any of our senior management or key personnel could harm our
business.

35



---



##### Table of Contents



Our success also depends on our ability to
attract, train and retain highly skilled managerial,
engineering, sales, marketing, legal and finance personnel and
on the abilities of new personnel to function effectively, both
individually and as a group. Competition for qualified senior
employees can be intense. If we fail to do this, business would
be harmed.

Moreover, some of the individuals on our
management team have been in their current positions for a
relatively short period of time. For example, our Chief
Financial Officer joined us in October 2003 and our Senior
Vice President of Worldwide Manufacturing Operations joined us
in May 2004. Our future success will depend to a
significant extent on the ability of our management team to work
effectively together. There can be no assurance that our
management team will be able to integrate and work together
effectively.



| |                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------
| | If we account for employee stock options
    using the fair value method, it could significantly impact our
    results from operations.

There has been ongoing public debate whether
stock options granted to employees should be treated as a
compensation expense and, if so, how to properly value such
charges. On March 31, 2004, the Financial Accounting
Standard Board, or FASB, issued an Exposure Draft, Share-Based
Payment: an amendment of FASB statements No. 123 and 95,
which would require a company to recognize, as an expense, the
fair value of stock options and other stock-based compensation
to employees beginning in 2005 and subsequent reporting periods.
If we elect or are required to record an expense for our
stock-based compensation plans using the fair value method as
described in the Exposure Draft, we could have significant and
ongoing accounting charges, which could adversely impact our
results from operations.

Risks Related to our Industry



| |                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The semiconductor manufacturing equipment
    industry is highly cyclical and is impacted by recurring
    downturns in the semiconductor industry, and these cycles can
    harm our operating results.

Our business is largely dependent upon the
capital expenditures of semiconductor manufacturers.
Semiconductor manufacturers are dependent on the then-current
and anticipated market demand for semiconductors. The
semiconductor industry is cyclical and has historically
experienced periodic downturns. These periodic downturns,
whether the result of general economic changes or decreases in
demand for semiconductors, are difficult to predict and often
have a severe adverse effect on the semiconductor
industrys demand for semiconductor manufacturing
equipment. Sales of equipment to semiconductor manufacturers may
be significantly more cyclical than sales of semiconductors, as
the large capital expenditures required for building new fabs or
facilitizing existing fabs is often delayed until semiconductor
manufacturers are confident about increases in future demand. If
demand for semiconductor equipment remains depressed for an
extended period, it will seriously harm our business.

Our industry began experiencing a significant
downturn in 2000 due to decreased worldwide demand for
semiconductors. During this downturn, most of our customers
reduced capital expenditures, which adversely impacted our
business. Excluding sales of ASI, which was acquired during the
third quarter of fiscal 2003, our net sales declined
sequentially in the third and fourth quarter of fiscal 2003 and
again in the first quarter of fiscal 2004. Although our net
sales increased $55.3 million in the fourth quarter ended
March 27, 2004, or 73.8 percent sequentially, and
increased $23.5 million in our third quarter ended
December 31, 2003, or 45.8 percent, from the prior
quarter, we cannot assure you that our sales will recover
sufficiently for us to return to profitability in the near
future. As a result of substantial cost reductions in response
to the decrease in net sales and uncertainty over the timing and
extent of any industry recovery, we may be unable to make the
investments in marketing, research and development and
engineering that are necessary to maintain our competitive
position, which could seriously harm our long-term business
prospects.

We believe that the cyclical nature of the
semiconductor and semiconductor manufacturing equipment
industries will continue, leading to periodic industry
downturns, which may seriously harm our business and financial
position.

36



---



##### Table of Contents





| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | We may not effectively compete in a highly
    competitive semiconductor manufacturing equipment
    industry.

The markets for our products are highly
competitive and subject to rapid technological change. We
currently face direct competition with respect to all of our
products. A number of competitors may have greater name
recognition, more extensive engineering, research &
development, manufacturing, and marketing capabilities, and
substantially greater financial, technical and personnel
resources than those available to us.

Brooks Automation, Inc., or Brooks, and TDK
Corporation of Japan are our primary competitors in the area of
isolation systems. Our SMART-Traveler System products face
competition from bar code technology as well as from Brooks, and
a number of smaller competitors. We also compete with several
companies in the robotics area, including, but not limited to,
Brooks, Newport Corp., Rorze Corporation and Yasukawa Super
Mectronics Division. In the area of AMHS, our products face
competition from Daifuku Co., Ltd., Murata Co., Ltd., and
Brooks. In our FPD business, we compete with Daifuku and Murata.
Our wafer sorters compete primarily with products from Recif,
Inc. and Brooks. In addition, the industry transition to 300mm
wafers is likely to draw new competitors to the facility
automation market. In the 300mm wafer market, we expect to face
intense competition from a number of established automation
companies such as Brooks, as well as new competition from
semiconductor equipment and cleanroom construction companies.

We expect that our competitors will continue to
develop new products in direct competition with our systems,
improve the design and performance of their products and
introduce new products with enhanced performance
characteristics. In order to remain competitive, we need to
continue to improve and expand our product line, which will
require us to maintain a high level of investment in research
and development. Ultimately, we may not be able to make the
technological advances and investments necessary to remain
competitive.

Companies in the semiconductor capital equipment
industry face continued pressure to reduce costs. Pricing
actions by our competitors may require us to make significant
price reductions to avoid losing orders.




Item 7A  Quantitative and
Qualitative Disclosures Regarding Market Risk

Interest Rate Risk.Our exposure to market risk for changes in interest rates
relates primarily to our investment portfolio. We do not use
derivative financial instruments in our investment portfolio.
Our investment portfolio consists of short-term fixed income
securities and by policy we limit the amount of credit exposure
to any one issuer. As stated in our investment policy, we ensure
the safety and preservation of our invested principal funds by
limiting default risk, market risk and reinvestment risk. We
mitigate default risk by investing in safe and high-credit
quality securities and by periodically positioning our portfolio
to respond appropriately to a significant reduction in a credit
rating of any investment issuer, guarantor or depository. The
portfolio includes only marketable securities with active
secondary or resale markets to ensure portfolio liquidity. These
securities, like all fixed income instruments, carry a degree of
interest rate risk. Fixed-rate securities have their fair market
value adversely affected by rising interest rates. If market
interest rates were to increase immediately and uniformly by
10.0 percent from levels at March 31, 2004, the fair
market value of these investments would decline by an immaterial
amount. We also have the ability to keep our fixed income
investments fairly liquid. Therefore, we would not expect our
operating results or cash flows to be affected to any
significant degree by a sudden change in market interest rates
on our investment portfolio.

37



---



##### Table of Contents



The table below presents principal amounts and
related weighted average interest rates for the investment
portfolio at March 31, 2004. As a general matter, our
intent is not to hold investments longer than 12 months.
Restricted cash, cash equivalents and short-term investments
represent amounts that are restricted as to their use primarily
in accordance with a debt agreements more fully described in
Note 10 to our financial statements (in thousands):

|                                     |  |            |               |                   |  |      |        |  |  |          
|------------------------------------ |  | ---------- | ------------- | ----------------- |  | ---- | ------ |  |  | ---------
|                                     |  |            |               |                  
|                                     |  |            |               | Average          
|                                     |  |            |               | Carrying Interest
|                                     |  | Remaining  |               |                  
|                                     |  | Maturities |               | Amount            |  | Rate
|                                     |  |            |               |                   |  |     
|CASH EQUIVALENTS:                    |  |            |               |                   |  |      |        |  |  |          
|Institutional money market funds     |  |            | within 1 year |                   |  | $    | 37,415 |  |  | 0.4%1.1%
|                                     |  |            |               |                   |  |      |        |  |  |          
|U.S. corporate debt securities       |  |            | within 1 year |                   |  |      | 39,450 |  |  | 1.0%1.5%
|                                     |  |            |               |                   |  |      |        |  |  |          
|Total cash equivalents               |  |            |               |                   |  | $    | 76,865 |  |  | 0.4%1.5%
|                                     |  |            |               |                   |  |      |        |  |  |          
|RESTRICTED CASH and CASH EQUIVALENTS |  |            |               |                   |  |      |        |  |  |          
|U.S. corporate debt securities       |  |            | within 1 year |                   |  | $    | 1,904  |  |  | 1.4%     
|                                     |  |            |               |                   |  |      |        |  |  |          

We have short-term debt, long-term debt, capital
leases and convertible notes totaling approximately
$112.0 million. Most of these borrowings have fixed
interest rates. Convertible notes of $86.3 million are the
most significant debt subject to interest rate risk. A
hypothetical 100 basis point increase in interest rate would
have a $3.4 million impact on income before taxes on our
consolidated statements of operations for fiscal 2004. The
following table presents the hypothetical changes in fair value
in our outstanding convertible notes at March 31, 2004 that
are sensitive to the changes in interest rates. The modeling
technique used measures the change in fair values arising from
hypothetical parallel shifts in the yield curve of plus or minus
50 basis points (0.5%), or BPS, 100 BPS (1.0%) and 150 BPS
(1.5%) over a 12-month time horizon. The base value represents
the fair market value of the notes (in thousands):

|                  |  |                                     |        |                |  |                                     |        |               |  |        |        |         |  |         |        |  |  |   |        |  |  |   |        |  |  |   |        | 
|----------------- |  | ----------------------------------- | ------ | -------------- |  | ----------------------------------- | ------ | ------------- |  | ------ | ------ | ------- |  | ------- | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------ | 
|                  |  |                                     |        |                |  |                                    
|                  |  | Valuation of borrowing given an     |        |                |  | Valuation of borrowing given an    
|                  |  | interest decrease of X basis points |        | Valuation with |  | interest increase of X basis points
|                  |  |                                     |        | no change in   |  |                                    
|                  |  | 150 BPS                             |        | 100 BPS        |  | 50 BPS                              |        | interest rate |  | 50 BPS |        | 100 BPS |  | 150 BPS
|                  |  |                                     |        |                |  |                                     |        |               |  |        |        |         |  |        
|Convertible notes |  | $                                   | 87,272 |                |  | $                                   | 86,848 |               |  | $      | 86,427 |         |  | $       | 86,008 |  |  | $ | 85,591 |  |  | $ | 85,177 |  |  | $ | 84,764 | 

Foreign Currency Exchange
Risk. We engage in international
operations and transact business in various foreign countries.
The primary source of foreign currency cash flows is Japan and
to a lesser extent China, Taiwan, Singapore and Europe. Although
we operate and sell products in various global markets,
substantially all sales are denominated in U.S. dollars, except
in Japan, thereby reducing our foreign currency risk. To date,
the foreign currency transactions and exposure to exchange rate
volatility have not been significant. If the Japanese Yen were
to fluctuate by 10.0 percent from the level at
March 31, 2004, our results of operations may improve or
deteriorate in the range of $5.0 to $6.0 million. Although
we do not anticipate any significant fluctuations, there can be
no assurance that foreign currency exchange risk will not have a
material impact on our financial position, results of operations
or cash flow in the future.

38



---



##### Table of Contents






Item 8  Financial
Statements and Supplementary Data

Our Financial Statements and notes thereto and
Financial Statement Schedules appear on pages 44-70 of this
Form 10-K. The quarterly financial data
(unaudited) were as follows:

QUARTERLY FINANCIAL DATA

(In thousands, except per share
data):


|                                                                     |  |                           |         |         |  |         |         |         |  |   |         |   |  |   |         |  
|-------------------------------------------------------------------- |  | ------------------------- | ------- | ------- |  | ------- | ------- | ------- |  | - | ------- | - |  | - | ------- | -
|                                                                     |  |                          
|                                                                     |  | Year ended March 31, 2004
|                                                                     |  |                          
|                                                                     |  | First                     |         | Second  |  | Third   |         | Fourth 
|                                                                     |  | Quarter                   |         | Quarter |  | Quarter |         | Quarter
|                                                                     |  |                           |         |         |  |         |         |        
|Net sales                                                            |  | $                         | 45,268  |         |  | $       | 51,349  |         |  | $ | 74,888  |   |  | $ | 130,137 |  
|Gross profit                                                         |  | $                         | 4,444   |         |  | $       | 11,999  |         |  | $ | 10,587  |   |  | $ | 26,159  |  
|Net loss                                                             |  | $                         | (37,376 | )       |  | $       | (16,315 | )       |  | $ | (22,057 | ) |  | $ | (7,701  | )
|Basic and diluted net loss per share                                 |  | $                         | (0.97   | )       |  | $       | (0.41   | )       |  | $ | (0.52   | ) |  | $ | (0.16   | )
|                                                                     |  |                           |         |         |  |         |         |         |  |   |         |   |  |   |         |  
|Shares used in basic and diluted net loss per
    share calculations |  |                           | 38,475  |         |  |         | 39,517  |         |  |   | 42,206  |   |  |   | 47,020  |  

|                                                                    |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |        |       |  
|------------------------------------------------------------------- | ----------------------- | ------------------------- | ------- | ------- | - | ------- | ------- | ------- | - | - | ------- | ----- | - | - | ------ | ----- | -
|                                                                    |                         |                          
|                                                                    |                         | Year ended March 31, 2003
|                                                                    |                         |                          
|                                                                    |                         | First                     |         | Second  |   | Third   |         | Fourth 
|                                                                    |                         | Quarter                   |         | Quarter |   | Quarter |         | Quarter
|                                                                    |                         |                           |         |         |   |         |         |        
|Net sales                                                           |                         | $                         | 51,865  |         |   | $       | 72,319  |         |   | $ | 75,624  |       |   | $ | 59,687 |      
|Gross profit                                                        |                         | $                         | 16,555  |         |   | $       | 28,169  |         |   | $ | 19,129  |       |   | $ | 11,199 |      
|Net loss                                                            |                         | $                         | (13,458 | )       |   | $       | (78,053 | )       |   | $ | (40,921 | )     |   | $ | (3,437 | )    
|Basic net income (loss) per share:                                  |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |        |      
|                                                                    | Continuing operations   |                           | $       | (0.33   | ) |         | $       | (2.03   | ) |   | $       | (0.86 | ) |   | $      | 0.16  |  
|                                                                    | Discontinued operations |                           |         | (0.04   | ) |         |         | (0.05   | ) |   |         | (0.22 | ) |   |        | (0.25 | )
|                                                                    |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |        |      
|Total basic net loss per share                                      |                         | $                         | (0.37   | )       |   | $       | (2.08   | )       |   | $ | (1.08   | )     |   | $ | (0.09  | )    
|                                                                    |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |        |      
|Diluted net income (loss) per share:                                |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |        |      
|                                                                    | Continuing operations   |                           | $       | (0.33   | ) |         | $       | (2.03   | ) |   | $       | (0.86 | ) |   | $      | 0.15  |  
|                                                                    | Discontinued operations |                           |         | (0.04   | ) |         |         | (0.05   | ) |   |         | (0.22 | ) |   |        | (0.23 | )
|                                                                    |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |        |      
|Total diluted net loss per share                                    |                         | $                         | (0.37   | )       |   | $       | (2.08   | )       |   | $ | (1.08   | )     |   | $ | (0.08  | )    
|                                                                    |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |        |      
|Shares used in basic net income (loss) per
    share calculations   |                         |                           | 36,565  |         |   |         | 37,452  |         |   |   | 37,932  |       |   |   | 38,005 |      
|Shares used in diluted net income (loss) per
    share calculations |                         |                           | 36,565  |         |   |         | 37,452  |         |   |   | 37,932  |       |   |   | 40,586 |      

Comparability of quarterly data is affected by
the following items which occurred during fiscal 2004 and 2003:



| |                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Asset impairment charges of $6.9 million,
    $7.1 million and $8.4 million in the first quarter of
    fiscal 2004, and second and third quarter of fiscal 2003,
    respectively. These charges relate to write-downs in value of
    goodwill, intangibles and land held for sale.                               
|
| | Reserve for net deferred tax assets of
    $62.7 million in the second quarter of fiscal 2003.                                                                                                                                                                                                                      
|
| | Loss contract accruals of $5.4 million and
    $1.9 million at ASI in the third and fourth quarters of
    fiscal 2004, respectively. Loss reserves and loss on sale of the
    AMP and SemiFab subsidiaries of $6.6 million and
    $5.9 million in the third and fourth quarters of fiscal
    2003, respectively.
|
| | Net gain on sale of the WRC products in the
    fourth quarter of fiscal 2003 of $28.4 million.                                                                                                                                                                                                                     

39



---



##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Restructuring charges in the first, second and
    third quarters of fiscal 2004 and the second and third quarters
    of fiscal 2003 of $4.4 million, $0.5 million,
    $1.7 million, $4.5 million, $2.5 million,
    respectively. These charges were primarily for severance, excess
    facility and asset impairment charges related to workforce
    reductions and consolidation of our facilities.
|
| | Inventory reserves of $4.5 million in the
    fourth quarter of fiscal 2003.                                                                                                                                                                                                                                                                                                                              

Refer to the consolidated financial statements
contained in this 10-K for further disclosure of the above items.




Item 9  Changes in and
Disagreements with Accountants on Accounting and Financial
Disclosure

Not applicable.




Item 9A  Controls and
Procedures

Introduction

SEC rules define disclosure controls and
procedures as controls and procedures that are designed to
ensure that information required to be disclosed by public
companies in the reports filed or submitted under the Act is
recorded, processed, summarized and reported, within the time
periods specified in the SECs rules and forms
(Disclosure Controls).

SEC rules define internal control over
financial reporting as a process designed by, or under the
supervision of, a public companys principal executive and
principal financial officers, or persons performing similar
functions, and effected by the companys board of
directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles, or
GAAP, including those policies and procedures that:
(i) pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the company, (ii) provide
reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
GAAP, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management
and directors of the company and (iii) provide reasonable
assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the
companys assets that could have a material effect on the
financial statements (Internal Controls).

We have designed our Disclosure Controls and
Internal Controls to provide reasonable assurances that their
objectives will be met. A control system, no matter how well
designed and operated, can provide only reasonable, but not
absolute, assurance that its objectives will be met. All control
systems are subject to inherent limitations, such as resource
constraints, the possibility of human error and the possibility
of intentional circumvention of these controls. Furthermore, the
design of any control system is based in part upon assumptions
about the likelihood of future events, which assumptions may
ultimately prove to be incorrect. As a result, we cannot assure
you that our control system will detect every error or instance
of fraudulent conduct.

Evaluation of Disclosure Controls

Our Chief Executive Officer, or CEO, and our
Chief Financial Officer, or CFO, are responsible for
establishing and maintaining our Disclosure Controls as defined
in Securities Exchange Act Rules 13a-15(e) and 15d-15(e).
Our CEO and CFO, after evaluating the effectiveness of our
Disclosure Controls as of March 31, 2004, have concluded
that our Disclosure Controls are effective to provide reasonable
assurances that our Disclosure Controls will meet their defined
objectives.

Changes in Internal Controls

During the fourth quarter of fiscal 2004, we
instituted procedural changes in our Internal Controls intended
to improve the timing and accuracy of reconciliations of certain
accounts. Other than as described

40



---



##### Table of Contents



above, there were no other procedural changes
that occurred during the fourth quarter of fiscal 2004 that have
materially affected, or are reasonably likely to materially
affect, the Internal Controls.


PART III




Item 10  Directors and
Executive Officers of the Registrant

Information with respect to Directors and
Executive Officers may be found in the Definitive Proxy
Statement to be delivered to shareholders in connection with the
solicitation of proxies for our Annual Meeting of Shareholders
in 2004 (the Definitive Proxy Statement). Such
information is incorporated herein by reference.

Information relating to the Code of Ethics
defined in SEC rules is set forth above in Part I,
Item 1 Business  Additional Information
and Governance Matters, and is incorporated herein by
reference.




Item 11  Executive
Compensation

The information required under this item is
hereby incorporated by reference from our Definitive Proxy
Statement.






|          |                                                                                                       
|--------- | ------------------------------------------------------------------------------------------------------
|Item 12  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder
    Matters

The information required under this item is
hereby incorporated by reference from our Definitive Proxy
Statement.




Item 13  Certain
Relationships and Related Transactions

The information required under this item is
hereby incorporated by reference from our Definitive Proxy
Statement.




Item 14  Principal
Accountant Fees and Services

The information required under this item is
hereby incorporated by reference from our Definitive Proxy
Statement.

41



---



##### Table of Contents



PART IV




Item 15  Exhibits,
Financial Statement Schedule and Reports on
Form 8-K

(a) Index to Financial
Statements

The Financial Statements required by this item
are submitted in a separate section beginning on page 48 of
this report.

|                                                            |  |      |    | 
|----------------------------------------------------------- |  | ---- | -- | 
|                                                            |  | Page
|                                                            |  |     
|Report of Independent Registered Public
    Accounting Firm |  |      | 47 | 
|Consolidated Balance Sheets                                 |  |      | 48 | 
|Consolidated Statements of Operations                       |  |      | 49 | 
|Consolidated Statements of
    Shareholders Equity         |  |      | 50 | 
|Consolidated Statements of Cash Flows                       |  |      | 51 | 
|Notes to Consolidated Financial Statements                  |  |      | 52 | 

(b) Schedule II Valuation and
Qualifying Accounts

Schedule II Valuation and Qualifying
Accounts for the years ended March 31, 2004, 2003 and 2002
appears on page 71 of this Annual Report and should be read
in conjunction with the consolidated financial statements and
related notes thereto and the report of independent registered
public accounting firm filed herewith.

All other schedules are omitted because they are
not applicable or the required information is shown in the
Financial Statements or the notes thereto.

(c) Reports on Form 8-K

We furnished a Current Report on Form 8-K to
the Securities and Exchange Commission on February 10,
2004, to report information under Item 12 concerning
results of operations and financial condition for the fiscal
quarter ended December 31, 2003.

(d) Exhibits

|        |   |                         |  |                                                                                                                                                                                                                                                        
|------- | - | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |                        
|Number  |   | Description of Document
|        |   |                        
|        | 2 | .1(3)                   |  | Agreement for Sale and Purchase of Common Stock
    between the Company and MECS Corporation, dated
    September 27, 1999.                                                                                                                            
|        | 2 | .2(4)                   |  | Amendment Agreement between the Company and MECS
    Corporation, dated March 23, 2000.                                                                                                                                                                
|        | 2 | .3(5)                   |  | Agreement and Plan of Merger and Reorganization,
    dated as of December 7, 2000, among the Company, Ramp
    Acquisition Corp., Advanced Machine Programming, Inc., New AMP
    LLC, Matlock Charles Rowe & Company and the Selling
    Shareholders.
|        | 2 | .4(6)                   |  | Agreement and Plan of Merger and Reorganization,
    dated as of December 7, 2000, among the Company, Tin Man
    Acquisition Corp., SemiFab, Inc. and certain principal
    shareholders of SemiFab.                                                  
|        | 2 | .5(7)                   |  | Agreement and Plan of Merger and Reorganization,
    dated as of May 22, 2001, among the Company, Gem
    Acquisition Corp., GW Associates, Inc. and John S. Ghiselli.                                                                                 
|        | 2 | .6(18)                  |  | Asset Purchase Agreement among the Company, Aruba
    Solutions Consulting, Inc., and Domain Logix Corporation, dated
    as of April 9, 2002.                                                                                                         
|        | 2 | .7(19)                  |  | Asset Purchase Agreement among the Company,
    Entegris Cayman Ltd. and Entegris, Inc., dated as of
    February 11, 2003.                                                                                                                            
|        | 3 | .1(8)                   |  | Amended and Restated Articles of Incorporation of
    the Company.                                                                                                                                                                                     
|        | 3 | .2(8)                   |  | Bylaws of the Company.                                                                                                                                                                                                                                 

42



---



##### Table of Contents



|        |    |                         |  |                                                                                                                                                                                                  
|------- | -- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 3  | .3(2)                   |  | Certificate of Amendment of the Amended and
    Restated Articles of Incorporation, filed September 24,
    1999.                                                                                
|        | 3  | .4(9)                   |  | Second Certificate of Amendment of the Amended
    and Restated Articles of Incorporation, filed October 5,
    2000.                                                                            
|        | 4  | .1(10)                  |  | Rights Agreement among the Company and Bank of
    Boston, N.A., as Rights Agent, dated June 25, 1998.                                                                                           
|        | 4  | .2(1)                   |  | Common Stock Purchase Agreement between the
    Company and various purchasers, dated as of May 26, 1999.                                                                                        
|        | 4  | .3(11)                  |  | Indenture dated as of July 3, 2001 between the
    Company, State Street Bank and Trust Company of California,
    N.A., as trustee, including therein the forms of the notes.                   
|        | 4  | .4(11)                  |  | Registration Rights Agreement dated as of
    July 3, 2001 between the Company and Merrill
    Lynch & Co., Merrill Lynch, Pierce, Fenner &
    Smith, Incorporated, and ABN Amro Rothschild LLC.
|        | 4  | .5(15)                  |  | Amendment to Rights Agreement among the Company
    and Bank of Boston, N.A. as Rights Agent, dated
    November 30, 2001.                                                                       
|        | 10 | .1(8)***                |  | Form of Indemnity Agreement entered into between
    the Company and certain directors.                                                                                                          
|        | 10 | .2(12)***               |  | Companys 1993 Stock Option Plan and related
    form of stock option agreement.                                                                                                                 
|        | 10 | .3(8)***                |  | Companys 1993 Employee Stock Purchase Plan
    and related offering document.                                                                                                                   
|        | 10 | .4(8)***                |  | Companys 1993 Non-Employee Directors
    Stock Option Plan and related offering document.                                                                                                      
|        | 10 | .5(8)                   |  | Hewlett-Packard SMIF License Agreement dated
    June 6, 1984.                                                                                                                                   
|        | 10 | .6(13)                  |  | Lease Agreement between the Company and the Kato
    Road Partners dated February 16, 1995.                                                                                                      
|        | 10 | .7(2)                   |  | Lease Agreement between SL-6 Partners, Ltd. and
    Progressive System Technologies, Inc. dated November 20,
    1995.                                                                           
|        | 10 | .8(2)                   |  | Sublease Agreement between Progressive System
    Technologies, Inc. and Group, Inc., dated December 3, 1996.                                                                                    
|        | 10 | .9(2)                   |  | Amendment to Lease Agreement between the Company
    and the Kato Road Partners, dated July 30, 1999.                                                                                            
|        | 10 | .10(2)                  |  | Cooperation Agreement between the Company and
    MECS Corporation, dated August 5, 1999.                                                                                                        
|        | 10 | .11(7)***               |  | Employment Agreement between the Company and
    Stephen S. Schwartz, Ph.D., dated January 11, 2001.                                                                                             
|        | 10 | .12(11)*                |  | Agreement on Bank Transactions between Asyst
    Japan, Inc., or AJI, and Tokyo Mitsubishi Bank dated
    March 13, 2001.                                                                        
|        | 10 | .13(11)*                |  | Cash Consumer Debtor and Creditor Agreements
    between AJI and The Tokai Bank, Ltd. dated December 6, 1999
    and March 23, 2001.                                                             
|        | 10 | .14(11)*                |  | Banking Consents & Agreements between
    MECS, K.K. and Tokai Bank, K.K. dated November 30, 1998 and
    December 6, 1999.                                                                      
|        | 10 | .15(11)*                |  | Banking Consent & Agreement between
    MECS, K.K. and Ogaki Kyoritsu Bank dated November 14, 1994.                                                                                              
|        | 10 | .16(11)*                |  | Agreement on Bank Transactions between AJI and
    The Sumitomo Bank dated November 13, 2001.                                                                                                    
|        | 10 | .17(14)***              |  | Palo Alto Technologies, Inc. 1997 Stock Plan and
    related stock option agreement.                                                                                                             
|        | 10 | .18(14)***              |  | Progressive System Technologies, Inc. 1995 Stock
    Option/Stock Issuance Plan and related notice document.                                                                                     
|        | 10 | .19(16)*                |  | Share Purchase Agreement between Shinko Electric
    Co., Ltd. and Asyst Japan Inc., dated as of May 24, 2002.                                                                                   

43



---



##### Table of Contents



|        |    |                         |  |                                                                                                                                                                                                                     
|------- | -- | ----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .20(16)*                |  | Shareholders Agreement between Shinko Electric
    Co., Ltd. and Asyst Japan Inc., dated as of May 24, 2002.                                                                                                        
|        | 10 | .21(16)**               |  | Manufacturing Services and Supply Agreement among
    the Company and Solectron Corporation and its subsidiaries and
    affiliates, dated as of September 5, 2002.                                                 
|        | 10 | .22(16)                 |  | Loan and Security Agreement between the Company
    and Comerica Bank  California, dated as of
    October 1, 2002.                                                                                                
|        | 10 | .23(16)                 |  | Amendment No. 1 to Loan and Security
    Agreement between the Company and Comerica Bank 
    California, dated as of November 8, 2002.                                                                            
|        | 10 | .24(17)*                |  | Amendment No. 1 to Shareholders Agreement
    between Shinko Electric Co., Ltd. and Asyst Japan Inc., dated as
    of October 16, 2002.                                                                             
|        | 10 | .25(19)**               |  | Patent Assignment and Cross-License and Trademark
    License Agreement among the Company, Entegris Cayman Ltd. and
    Entegris, Inc., dated as of February 11, 2003.                                              
|        | 10 | .26(20)                 |  | Amendment No. 2 to Loan and Security
    Agreement between the Company and Comerica Bank 
    California, dated as of March 17, 2003.                                                                              
|        | 10 | .27(20)                 |  | Amendment No. 3 to Loan and Security
    Agreement between the Company and Comerica Bank 
    California, dated as of September 26, 2003.                                                                          
|        | 10 | .28(20)***              |  | Change-In-Control Agreement between the Company
    and Stephen S. Schwartz, dated as of October 20, 2003.                                                                                                          
|        | 10 | .29(20)***              |  | Change-In-Control Agreement between the Company
    and David L. White, dated as of November 7, 2003.                                                                                                               
|        | 10 | .30(20)                 |  | Agreement for Purchase and Sale of 44960 Warm
    Springs Boulevard, Fremont, California, between the Company and
    Milpitas Square 880 @ 237, LLC, dated as of June 13,
    2003.                                
|        | 10 | .31(21)**               |  | Amendment and Modification Agreement to
    Manufacturing Services and Supply Agreement among the Company
    and Solectron Corporation and its subsidiaries and affiliates,
    effective as of September 22, 2003.
|        | 10 | .32(22)***              |  | Companys 2003 Equity Incentive Plan.                                                                                                                                                                               
|        | 10 | .33***                  |  | Form of Indemnity Agreement entered into between
    the Company and certain executive officers.                                                                                                                    
|        | 10 | .34***                  |  | Separation Agreement between the Company and
    Geoffrey Ribar dated September 11, 2003.                                                                                                                           
|        | 10 | .35                     |  | Amendment No. 4 to Loan and Security
    Agreement between the Company and Comerica Bank dated
    February 3, 2004.                                                                                                
|        | 10 | .36                     |  | Letter agreement between the Company and Comerica
    Bank dated December 24, 2003.                                                                                                                                 
|        | 10 | .37***                  |  | Form of Agreement to Arbitrate Disputes and
    Claims entered into between the Company and its executive
    officers.                                                                                             
|        | 10 | .38***                  |  | Companys Compensation Program for
    Nonemployee Directors.                                                                                                                                                       
|        | 10 | .39***                  |  | Companys Executive Deferred Compensation
    Plan.                                                                                                                                                                 
|        | 10 | .40***                  |  | Employment Agreement between the Company and
    Stephen Debenham dated August 21, 2003.                                                                                                                            
|        | 10 | .41***                  |  | Employment Agreement between the Company and
    David L. White dated September 29, 2003.                                                                                                                           
|        | 10 | .42***                  |  | Summary of the Companys Executive Bonus
    Plan.                                                                                                                                                                  
|        | 10 | .43***                  |  | Addendum dated September 23, 2003 to Separation
    Agreement between the Company and Geoffrey Ribar dated
    September 11, 2003.                                                                                  
|        | 21 | .1                      |  | Subsidiaries of Asyst Technologies, Inc.                                                                                                                                                                            
|        | 23 | .1                      |  | Consent of PricewaterhouseCoopers LLP,
    Independent Registered Public Accounting Firm.                                                                                                                           

44



---



##### Table of Contents



|        |    |                         |  |                                                                                                                                                                                                                
|------- | -- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 31 | .1                      |  | Certification of the Chief Executive Officer of
    the Registrant required by SEC Rule 13a-14(a) (pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002).                                             
|        | 31 | .2                      |  | Certification of the Chief Financial Officer of
    the Registrant required by SEC Rule 13a-14(a) (pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002).                                             
|        | 32 |                         |  | Combined Certification of the Chief Executive
    Officer and the Chief Financial Officer of the Registrant
    required by SEC Rule 13a-14(b) (pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002).



---



| |     |                                                                                                                                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | *   | English translation of original document.                                                                                                                                                                                             
|
| | **  | Confidential treatment has been requested for
    portions of this document.                                                                                                                                                          
|
| | *** | Indicates management contract or compensatory
    plan or arrangement.                                                                                                                                                                
|
| | (1) | Previously filed as an Exhibit to our Current
    Report on Form 8-K, filed with the Securities Exchange
    Commission on June 18, 1999, and incorporated herein by
    reference.                                                   
|
| | (2) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 1999, filed with the Securities Exchange
    Commission on October 21, 1999, and incorporated herein by
    reference.
|
| | (3) | Previously filed as an Exhibit to our
    Registration Statement on Form S-3/ A, File No. 333-89489,
    filed with the Securities Exchange Commission on
    October 29, 1999, and incorporated herein by reference.                 
|
| | (4) | Previously filed as an Exhibit to our Current
    Report on Form 8-K/ A, filed with the Securities Exchange
    Commission on June 6, 2000, and incorporated herein by
    reference.                                                 
|
| | (5) | Previously filed as an Exhibit to our
    Registration Statement on Form S-3, File
    No. 333-54924, filed with the Securities Exchange
    Commission on February 2, 2001, and incorporated herein by
    reference.                
|
| | (6) | Previously filed as an Exhibit to our
    Registration Statement on Form S-3, File
    No. 333-56068, filed with the Securities Exchange
    Commission on February 23, 2001, and incorporated herein by
    reference.               
|
| | (7) | Previously filed as an Exhibit to our Annual
    Report on Form 10-K for the fiscal year ended
    March 31, 2001, filed with the Securities Exchange
    Commission on June 19, 2001, and incorporated herein by
    reference.      
|
| | (8) | Previously filed as an Exhibit to our
    Registration Statement on Form S-1, as amended, File
    No. 333-66184, filed with the Securities Exchange
    Commission on July 19, 1993, and incorporated herein by
    reference.       
|
| | (9) | Previously filed with our Definitive Proxy
    Statement for the 2000 Annual Meeting of Shareholders, filed
    with the Securities Exchange Commission on July 31, 2000,
    and incorporated herein by reference.                   



|     |                                                                                                                                                                                                                                 
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Previously filed as an Exhibit to our Current
    Report on Form 8-K, filed with the Securities Exchange
    Commission on June 29, 1998, and incorporated herein by
    reference.                                             
|    
|(11) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended June 30,
    2001, filed with the Securities Exchange Commission on
    August 14, 2001, and incorporated herein by reference.    
|    
|(12) | Previously filed as an Exhibit to our
    Registration Statement on Form S-1, File
    No. 333-88246, filed with the Securities Exchange
    Commission on February 13, 1995, and incorporated herein by
    reference.         
|    
|(13) | Previously filed as an Exhibit to our Annual
    Report on Form 10-K for the fiscal year ended
    March 31, 1995, filed with the Securities Exchange
    Commission on July 19, 1995, and incorporated herein by
    reference.
|    
|(14) | Previously filed as an Exhibit to our
    Registration Statement on Form S-8, File
    No. 333-94619, filed with the Securities Exchange
    Commission on January 13, 2000, and incorporated herein by
    reference.          
|    
|(15) | Previously filed as an Exhibit to our Annual
    Report on Form 10-K for the fiscal year ended
    March 31, 2002, filed with the Securities Exchange
    Commission on June 28, 2002, and incorporated herein by
    reference.

45



---



##### Table of Contents





|     |                                                                                                                                                                                                                                           
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(16) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 2002, filed with the Securities Exchange
    Commission on November 12, 2002, and incorporated herein by
    reference.   
|    
|(17) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended December 31,
    2002, filed with the Securities Exchange Commission on
    February 11, 2003, and incorporated herein by reference.        
|    
|(18) | Previously filed as an Exhibit to our
    Registration Statement on Form S-3, File
    No. 333-97227, filed with the Securities Exchange
    Commission on July 29, 2002, and incorporated herein by
    reference.                       
|    
|(19) | Previously filed as an Exhibit to our Annual
    Report on Form 10-K/ A (Amendment No. 1) for the
    fiscal year ended March 31, 2003, filed with the Securities
    and Exchange Commission on October 29, 2003.                        
|    
|(20) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 2003, filed with the Securities and Exchange
    Commission on November 12, 2003 and incorporated herein by
    reference.
|    
|(21) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended December 31,
    2003, filed with the Securities and Exchange Commission on
    February 10, 2004 and incorporated herein by reference.     
|    
|(22) | Previously filed as an Exhibit to our
    Form S-8 filed with the Securities and Exchange Commissions
    on October 3, 2003 and incorporated herein by reference.                                                                        

46



---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Board of Directors and Shareholders

of Asyst Technologies, Inc.:


In our opinion, the consolidated financial
statements listed in the index appearing under Item 15(a)
present fairly, in all material respects, the financial position
of Asyst Technologies, Inc. and its subsidiaries at March 31,
2004 and 2003, and the results of their operations and their
cash flows for each of the three years in the period ended
March 31, 2004 in conformity with accounting principles
generally accepted in the United States of America. In addition,
in our opinion, the financial statement schedule listed in the
index appearing under Item 15(b) presents fairly, in all
material respects, the information set forth therein when read
in conjunction with the related consolidated financial
statements. These financial statements and financial statement
schedule are the responsibility of the Company s management. Our
responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits
of these statements in accordance with the standards of the
Public Company Accounting Oversight Board (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, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.

As discussed in Note 2 to the consolidated
financial statements, the Company adopted Statement of Financial
Accounting Standards No. 142 Goodwill and other
Intangible Assets on April 1, 2002.

/s/ PricewaterhouseCoopers LLP

San Jose, California

June 4, 2004


47



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |          |         | 
|----------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ------- | -------- | ------- | - | ------- | -------- | ------- | 
|                                                            |                                                                                                                                    |                                                                  
|                                                            |                                                                                                                                    | March 31,                                                        
|                                                            |                                                                                                                                    |                                                                  
|                                                            |                                                                                                                                    | 2004                                                              |         | 2003    
|                                                            |                                                                                                                                    |                                                                   |         |         
|                                                            |                                                                                                                                    |                                                                  
|                                                            |                                                                                                                                    | (In thousands, except share                                      
|                                                            |                                                                                                                                    | and per share data)                                              
|ASSETS                                                     
|CURRENT ASSETS:                                             |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            | Cash and cash equivalents                                                                                                          |                                                                   | $       | 112,907  |         |   | $       | 96,214   |        
|                                                            | Restricted cash and cash equivalents                                                                                               |                                                                   |         | 1,904    |         |   |         | 3,088    |        
|                                                            | Short-term investments                                                                                                             |                                                                   |         | 4,953    |         |   |         |         |        
|                                                            | Accounts receivable, net of allowances for
    doubtful accounts of $4,608 and $4,880 at March 31, 2004
    and 2003, respectively |                                                                   |         | 74,139   |         |   |         | 57,478   |        
|                                                            | Unbilled receivables                                                                                                               |                                                                   |         | 73,800   |         |   |         | 17,400   |        
|                                                            | Inventories                                                                                                                        |                                                                   |         | 27,694   |         |   |         | 22,204   |        
|                                                            | Prepaid expenses and other                                                                                                         |                                                                   |         | 14,276   |         |   |         | 10,317   |        
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            |                                                                                                                                    | Total current assets                                              |         |          | 309,673 |   |         |          | 206,701 | 
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|Property and equipment, net                                 |                                                                                                                                    |                                                                   | 22,868  |          |         |   | 24,295  |         
|Goodwill                                                    |                                                                                                                                    |                                                                   | 71,973  |          |         |   | 65,505  |         
|Intangible assets, net                                      |                                                                                                                                    |                                                                   | 65,778  |          |         |   | 76,862  |         
|Other assets                                                |                                                                                                                                    |                                                                   | 3,317   |          |         |   | 21,862  |         
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            |                                                                                                                                    | $                                                                 | 473,609 |          |         | $ | 395,225 |         
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|LIABILITIES, MINORITY INTEREST AND
    SHAREHOLDERS EQUITY
|CURRENT LIABILITIES:                                        |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            | Short-term loans and notes payable                                                                                                 |                                                                   | $       | 18,161   |         |   | $       | 17,976   |        
|                                                            | Current portion of long-term debt and
    capital leases                                                                           |                                                                   |         | 2,775    |         |   |         | 1,273    |        
|                                                            | Accounts payable                                                                                                                   |                                                                   |         | 92,716   |         |   |         | 36,527   |        
|                                                            | Accounts payable-related party                                                                                                     |                                                                   |         | 17,194   |         |   |         | 8,500    |        
|                                                            | Accrued liabilities and other                                                                                                      |                                                                   |         | 48,571   |         |   |         | 50,572   |        
|                                                            | Deferred revenue                                                                                                                   |                                                                   |         | 2,683    |         |   |         | 2,130    |        
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            |                                                                                                                                    | Total current liabilities                                         |         |          | 182,100 |   |         |          | 116,978 | 
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|LONG-TERM LIABILITIES                                       |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            | Long-term debt and capital leases, net of
    current portion                                                                      |                                                                   |         | 91,074   |         |   |         | 114,812  |        
|                                                            | Deferred tax liability                                                                                                             |                                                                   |         | 20,704   |         |   |         | 23,754   |        
|                                                            | Other long-term liabilities                                                                                                        |                                                                   |         | 12,826   |         |   |         | 12,754   |        
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            |                                                                                                                                    | Total long-term liabilities                                       |         |          | 124,604 |   |         |          | 151,320 | 
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|COMMITMENTS AND CONTINGENCIES (see Note 14)                 |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|MINORITY INTEREST                                           |                                                                                                                                    |                                                                   | 63,796  |          |         |   | 58,893  |         
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|SHAREHOLDERS EQUITY                                        |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            | Common stock, no par value                                                                                                         |                                                                   |         |          |         |   |         |          |        
|                                                            | Authorized shares  300,000,000                                                                                                    |                                                                   |         |          |         |   |         |          |        
|                                                            | Outstanding shares  47,053,748 and
    38,412,031 shares at March 31, 2004 and 2003, respectively                                 |                                                                   |         | 445,981  |         |   |         | 332,569  |        
|                                                            | Deferred stock-based compensation                                                                                                  |                                                                   |         | (2,619   | )       |   |         | (3,992   | )      
|                                                            | Accumulated deficit                                                                                                                |                                                                   |         | (348,697 | )       |   |         | (265,248 | )      
|                                                            | Accumulated other comprehensive income                                                                                             |                                                                   |         | 8,444    |         |   |         | 4,705    |        
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            |                                                                                                                                    | Total shareholders equity                                        |         |          | 103,109 |   |         |          | 68,034  | 
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            |                                                                                                                                    | Total liabilities, minority interest and
    shareholders equity |         | $        | 473,609 |   |         | $        | 395,225 | 
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         

The accompanying notes are an integral part of
these consolidated financial statements.

48



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |        |          |  
|---------------------------------------------------------------------- | ------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------- | ------- | ------ | ------- | ---- | -------- | ------ | ------- | - | -------- | ------ | -------- | -
|                                                                       |                                                              |                                                                                                         
|                                                                       |                                                              | Fiscal Year Ended March 31,                                                                             
|                                                                       |                                                              |                                                                                                         
|                                                                       |                                                              | 2004                                                                                                     |         | 2003   |         | 2002
|                                                                       |                                                              |                                                                                                          |         |        |         |     
|                                                                       |                                                              |                                                                                                         
|                                                                       |                                                              | (In thousands, except per share data)                                                                   
|NET SALES                                                              |                                                              | $                                                                                                        | 301,642 |        |         | $    | 259,495  |        |         | $ | 183,234  |       
|COST OF SALES                                                          |                                                              |                                                                                                          | 248,453 |        |         |      | 184,443  |        |         |   | 142,306  |       
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       | Gross profit                                                 |                                                                                                          |         | 53,189 |         |      |          | 75,052 |         |   |          | 40,928 |         
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|OPERATING EXPENSES:                                                    |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       | Research and development                                     |                                                                                                          |         | 36,376 |         |      |          | 40,059 |         |   |          | 39,010 |         
|                                                                       | Selling, general and administrative                          |                                                                                                          |         | 70,541 |         |      |          | 74,175 |         |   |          | 76,262 |         
|                                                                       | Amortization of acquired intangible assets                   |                                                                                                          |         | 20,160 |         |      |          | 14,051 |         |   |          | 7,078  |         
|                                                                       | Restructuring and other charges                              |                                                                                                          |         | 6,581  |         |      |          | 7,019  |         |   |          | 8,163  |         
|                                                                       | Asset impairment charges                                     |                                                                                                          |         | 6,853  |         |      |          | 15,519 |         |   |          | 40,499 |         
|                                                                       | In-process research & development of
    acquired businesses |                                                                                                          |         |       |         |      |          | 7,832  |         |   |          | 2,000  |         
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       |                                                              | Total operating expenses                                                                                 |         |        | 140,511 |      |          |        | 158,655 |   |          |        | 173,012  |  
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       |                                                              | Loss from operations                                                                                     |         |        | (87,322 | )    |          |        | (83,603 | ) |          |        | (132,084 | )
|OTHER INCOME (EXPENSE):                                                |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       | Gain on sale of wafer & reticle
    carrier products         |                                                                                                          |         |       |         |      |          | 28,420 |         |   |          |       |         
|                                                                       | Interest income                                              |                                                                                                          |         | 815    |         |      |          | 1,058  |         |   |          | 3,586  |         
|                                                                       | Interest expense                                             |                                                                                                          |         | (7,213 | )       |      |          | (6,100 | )       |   |          | (5,088 | )       
|                                                                       | Other expense                                                |                                                                                                          |         | (237   | )       |      |          | (1,876 | )       |   |          | (1,954 | )       
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       |                                                              | Other income (expense), net                                                                              |         |        | (6,635  | )    |          |        | 21,502  |   |          |        | (3,456   | )
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       |                                                              | Loss before (provision for) benefit from income
    taxes, minority interest and discontinued operations |         |        | (93,957 | )    |          |        | (62,101 | ) |          |        | (135,540 | )
|(PROVISION FOR) BENEFIT FROM INCOME TAXES                              |                                                              |                                                                                                          | 6,150   |        |         |      | (57,335  | )      |         |   | 38,026   |       
|MINORITY INTEREST                                                      |                                                              |                                                                                                          | 4,358   |        |         |      | 4,663    |        |         |   |         |       
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|NET LOSS FROM CONTINUING OPERATIONS BEFORE
    DISCONTINUED OPERATIONS |                                                              |                                                                                                          | (83,449 | )      |         |      | (114,773 | )      |         |   | (97,514  | )     
|LOSS FROM DISCONTINUED OPERATIONS, net of
    income taxes             |                                                              |                                                                                                          |        |        |         |      | (21,096  | )      |         |   | (51,403  | )     
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|NET LOSS                                                               |                                                              | $                                                                                                        | (83,449 | )      |         | $    | (135,869 | )      |         | $ | (148,917 | )     
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|BASIC NET LOSS PER SHARE:                                              |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       | Continuing operations                                        |                                                                                                          | $       | (2.00  | )       |      | $        | (3.06  | )       |   | $        | (2.76  | )       
|                                                                       | Discontinued operations, net of income taxes                 |                                                                                                          |         |       |         |      |          | (0.56  | )       |   |          | (1.45  | )       
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       |                                                              | Basic net loss per share                                                                                 |         | $      | (2.00   | )    |          | $      | (3.62   | ) |          | $      | (4.21    | )
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|DILUTED NET LOSS PER SHARE:                                            |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       | Continuing operations                                        |                                                                                                          | $       | (2.00  | )       |      | $        | (3.06  | )       |   | $        | (2.76  | )       
|                                                                       | Discontinued operations, net of income taxes                 |                                                                                                          |         |       |         |      |          | (0.56  | )       |   |          | (1.45  | )       
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       |                                                              | Diluted net loss per share                                                                               |         | $      | (2.00   | )    |          | $      | (3.62   | ) |          | $      | (4.21    | )
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|SHARES USED IN THE PER SHARE CALCULATION:                              |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       | Basic                                                        |                                                                                                          |         | 41,805 |         |      |          | 37,489 |         |   |          | 35,373 |         
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                       | Diluted                                                      |                                                                                                          |         | 41,805 |         |      |          | 37,489 |         |   |          | 35,373 |         
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|                                                                      
|Non-cash stock-based compensation included in the
    above expenses:  |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       
|Selling, general and administrative                                    |                                                              | $                                                                                                        | 2,646   |        |         | $    | 2,585    |        |         | $ | 858      |       
|                                                                       |                                                              |                                                                                                          |         |        |         |      |          |        |         |   |          |       

The accompanying notes are an integral part of
these consolidated financial statements.

49



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY

|                                                                                                  |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |          |          |  
|------------------------------------------------------------------------------------------------- | ----------------------------- | --------------------------------- | ---------- | ----------- |  | ------------ | ------- | ------------- |  | ------------- | ------ | ----- |  | - | -------- | -------- | - | - | ----- | ----- | - | - | ------- | -------- | -------- | -
|                                                                                                  |                               |                                   |            |             |  | Retained     |         | Accumulated   |  |              
|                                                                                                  |                               | Common Stock                      |            | Deferred    |  | Earnings     |         | Other         |  |              
|                                                                                                  |                               |                                   |            | Stock-Based |  | (Accumulated |         | Comprehensive |  |              
|                                                                                                  |                               | Shares                            |            | Amount      |  | Compensation |         | (Deficit)     |  | Income (Loss) |        | Total
|                                                                                                  |                               |                                   |            |             |  |              |         |               |  |               |        |      
|                                                                                                  |                               |                                  
|                                                                                                  |                               | (In thousands, except share data)
|BALANCES, MARCH 31, 2001                                                                          |                               |                                   | 34,602,343 |             |  | $            | 282,925 |               |  | $             |       |       |  | $ | 19,538   |          |   | $ |      |       |   | $ | 302,463 |         
|Components of comprehensive loss:                                                                 |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         
|                                                                                                  | Net loss                      |                                   |            |            |  |              |         |              |  |               |        |      |  |   |          | (148,917 | ) |   |       |      |   |   |         | (148,917 | )       
|                                                                                                  | Foreign currency translation  |                                   |            |            |  |              |         |              |  |               |        |      |  |   |          |         |   |   |       | (35   | ) |   |         | (35      | )       
|                                                                                                  |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         
|                                                                                                  |                               | Total comprehensive loss          |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |          | (148,952 | )
|                                                                                                  |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         
|Issuance of common stock under employee stock
    option and employee stock purchase plans        |                               |                                   | 800,656    |             |  |              | 2,568   |               |  |               |       |       |  |   |         |          |   |   |      |       |   |   | 2,568   |         
|Employee and non-employee stock-based compensation                                                |                               |                                   | 10,396     |             |  |              | 553     |               |  |               |       |       |  |   |         |          |   |   |      |       |   |   | 553     |         
|Stock issued in acquisition of GW                                                                 |                               |                                   | 451,263    |             |  |              | 8,000   |               |  |               |       |       |  |   |         |          |   |   |      |       |   |   | 8,000   |         
|Deferred stock-based compensation related to the
    acquisition of GW                            |                               |                                   |           |             |  |              | 3,151   |               |  |               | (3,151 | )     |  |   |          |          |   |   |      |       |   |   |        |         
|Amortization of deferred stock-based compensation
    related to the acquisition of GW            |                               |                                   |           |             |  |              |        |               |  |               | 305    |       |  |   |         |          |   |   |      |       |   |   | 305     |         
|                                                                                                  |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         
|BALANCES, MARCH 31, 2002                                                                          |                               |                                   | 35,864,658 |             |  |              | 297,197 |               |  |               | (2,846 | )     |  |   | (129,379 | )        |   |   | (35   | )     |   |   | 164,937 |         
|Components of comprehensive loss:                                                                 |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         
|                                                                                                  | Net loss                      |                                   |            |            |  |              |         |              |  |               |        |      |  |   |          | (135,869 | ) |   |       |      |   |   |         | (135,869 | )       
|                                                                                                  | Foreign currency translation  |                                   |            |            |  |              |         |              |  |               |        |      |  |   |          |         |   |   |       | 4,740 |   |   |         | 4,740    |         
|                                                                                                  |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         
|                                                                                                  |                               | Total comprehensive loss          |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |          | (131,129 | )
|                                                                                                  |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         
|Issuance of common stock under employee stock
    option and employee stock purchase plans        |                               |                                   | 767,955    |             |  |              | 6,068   |               |  |               |       |       |  |   |         |          |   |   |      |       |   |   | 6,068   |         
|Common stock issued in acquisition of GW                                                          |                               |                                   | 841,308    |             |  |              | 16,000  |               |  |               |       |       |  |   |         |          |   |   |      |       |   |   | 16,000  |         
|Common stock issued in acquisition of domainLogix
    (DLC)                                       |                               |                                   | 434,398    |             |  |              | 7,955   |               |  |               |       |       |  |   |         |          |   |   |      |       |   |   | 7,955   |         
|Common stock issued in SemiFab settlement                                                         |                               |                                   | 249,880    |             |  |              | 1,618   |               |  |               |       |       |  |   |         |          |   |   |      |       |   |   | 1,618   |         
|Deferred stock-based compensation                                                                 |                               |                                   | 304,327    |             |  |              | 6,599   |               |  |               | (5,919 | )     |  |   |         |          |   |   |      |       |   |   | 680     |         
|Amortization of deferred stock-based compensation                                                 |                               |                                   |           |             |  |              |        |               |  |               | 1,905  |       |  |   |         |          |   |   |      |       |   |   | 1,905   |         
|Reversal of deferred stock-based compensation due
    to cancellations                            |                               |                                   | (50,495    | )           |  |              | (2,868  | )             |  |               | 2,868  |       |  |   |         |          |   |   |      |       |   |   |        |         
|                                                                                                  |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         
|BALANCES, MARCH 31, 2003                                                                          |                               |                                   | 38,412,031 |             |  |              | 332,569 |               |  |               | (3,992 | )     |  |   | (265,248 | )        |   |   | 4,705 |       |   |   | 68,034  |         
|Components of comprehensive loss:                                                                 |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         
|                                                                                                  | Net loss                      |                                   |            |            |  |              |         |              |  |               |        |      |  |   |          | (83,449  | ) |   |       |      |   |   |         | (83,449  | )       
|                                                                                                  | Foreign currency translation  |                                   |            |            |  |              |         |              |  |               |        |      |  |   |          |         |   |   |       | 3,748 |   |   |         | 3,748    |         
|                                                                                                  | Unrealized loss on investment |                                   |            |            |  |              |         |              |  |               |        |      |  |   |          |         |   |   |       | (9    | ) |   |         | (9       | )       
|                                                                                                  |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         
|                                                                                                  |                               | Total comprehensive loss          |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |          | (79,710  | )
|                                                                                                  |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         
|Issuance of common stock from secondary stock
    offering, net of issuance costs of $5.7 million |                               |                                   | 6,900,000  |             |  |              | 98,945  |               |  |               |       |       |  |   |         |          |   |   |      |       |   |   | 98,945  |         
|Issuance of common stock under employee stock
    option and employee stock purchase plans        |                               |                                   | 1,859,717  |             |  |              | 13,194  |               |  |               |       |       |  |   |         |          |   |   |      |       |   |   | 13,194  |         
|Deferred stock-based compensation related to
    employee stock grant                             |                               |                                   |           |             |  |              | 1,864   |               |  |               | (1,864 | )     |  |   |         |          |   |   |      |       |   |   |        |         
|Amortization of deferred stock-based compensation                                                 |                               |                                   |           |             |  |              |        |               |  |               | 1,580  |       |  |   |         |          |   |   |      |       |   |   | 1,580   |         
|Non-employee stock-based compensation                                                             |                               |                                   |           |             |  |              | 1,066   |               |  |               |       |       |  |   |         |          |   |   |      |       |   |   | 1,066   |         
|Reversal of deferred stock-based compensation due
    to cancellations                            |                               |                                   | (118,000   | )           |  |              | (1,657  | )             |  |               | 1,657  |       |  |   |         |          |   |   |      |       |   |   |        |         
|                                                                                                  |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         
|BALANCES, MARCH 31, 2004                                                                          |                               |                                   | 47,053,748 |             |  | $            | 445,981 |               |  | $             | (2,619 | )     |  | $ | (348,697 | )        |   |   | 8,444 |       |   | $ | 103,109 |         
|                                                                                                  |                               |                                   |            |             |  |              |         |               |  |               |        |       |  |   |          |          |   |   |       |       |   |   |         |         

The accompanying notes are an integral part of
these consolidated financial statements.

50



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                                              |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |         |         |  
|--------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | ------------------------------------------------------- | ------- | ------- | ------- | ---- | -------- | ------- | ------- | - | -------- | ------- | ------- | -
|                                                                                              |                                                                                |                                                        
|                                                                                              |                                                                                | Fiscal Year Ended March 31,                            
|                                                                                              |                                                                                |                                                        
|                                                                                              |                                                                                | 2004                                                    |         | 2003    |         | 2002
|                                                                                              |                                                                                |                                                         |         |         |         |     
|                                                                                              |                                                                                |                                                        
|                                                                                              |                                                                                | (In thousands)                                         
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                         |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|Net loss                                                                                      |                                                                                | $                                                       | (83,449 | )       |         | $    | (135,869 | )       |         | $ | (148,917 | )      
|                                                                                              | Less: Loss from discontinued operations                                        |                                                         |         |        |         |      |          | 21,096  |         |   |          | 51,403  |        
|Net loss from continuing operations                                                           |                                                                                |                                                         | (83,449 | )       |         |      | (114,773 | )       |         |   | (97,514  | )      
|Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities: |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|                                                                                              | Depreciation and amortization                                                  |                                                         |         | 29,274  |         |      |          | 30,833  |         |   |          | 17,311  |        
|                                                                                              | Restructuring charges                                                          |                                                         |         | 190     |         |      |          | 2,161   |         |   |          | 6,638   |        
|                                                                                              | Asset impairment charges                                                       |                                                         |         | 6,853   |         |      |          | 15,519  |         |   |          | 40,499  |        
|                                                                                              | Gain on sale of wafer and reticle
    carrier products                         |                                                         |         |        |         |      |          | (28,420 | )       |   |          |        |        
|                                                                                              | Minority interest in net loss in
    consolidated subsidiary                   |                                                         |         | (4,358  | )       |      |          | (4,663  | )       |   |          |        |        
|                                                                                              | Stock-based compensation                                                       |                                                         |         | 2,646   |         |      |          | 2,585   |         |   |          | 553     |        
|                                                                                              | Provision for doubtful accounts                                                |                                                         |         | 222     |         |      |          | 488     |         |   |          | 1,155   |        
|                                                                                              | Provision for excess inventories                                               |                                                         |         | 12,981  |         |      |          | 4,536   |         |   |          | 12,810  |        
|                                                                                              | In-process research and development costs                                      |                                                         |         |        |         |      |          | 7,832   |         |   |          | 2,000   |        
|                                                                                              | Deferred taxes, net                                                            |                                                         |         | (6,394  | )       |      |          | 59,247  |         |   |          | (37,026 | )      
|Changes in assets and liabilities, net of
    acquisitions:                                   |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|                                                                                              | Accounts receivable and unbilled receivables                                   |                                                         |         | (65,170 | )       |      |          | (3,534  | )       |   |          | 45,042  |        
|                                                                                              | Inventories                                                                    |                                                         |         | (16,118 | )       |      |          | 23,518  |         |   |          | 15,421  |        
|                                                                                              | Prepaid expenses and other assets                                              |                                                         |         | 1,222   |         |      |          | 5,387   |         |   |          | 715     |        
|                                                                                              | Accounts payable, accrued liabilities and
    deferred revenue                 |                                                         |         | 48,488  |         |      |          | 15,803  |         |   |          | (32,926 | )      
|                                                                                              |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|                                                                                              |                                                                                | Net cash provided by (used in)
    operating activities |         |         | (73,613 | )    |          |         | 16,519  |   |          |         | (25,322 | )
|                                                                                              |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                         |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|                                                                                              | Purchase of short-term investments                                             |                                                         |         | (4,962  | )       |      |          |        |         |   |          | (37,077 | )      
|                                                                                              | Sale or maturity of short-term investments                                     |                                                         |         |        |         |      |          | 5,000   |         |   |          | 35,077  |        
|                                                                                              | Purchase of restricted cash equivalents and
    short-term investments         |                                                         |         |        |         |      |          | (35,500 | )       |   |          | (57,652 | )      
|                                                                                              | Sale or maturity of restricted cash equivalents
    and short-term investments |                                                         |         | 1,403   |         |      |          | 37,464  |         |   |          | 105,100 |        
|                                                                                              | Purchase of property and equipment                                             |                                                         |         | (6,119  | )       |      |          | (9,064  | )       |   |          | (10,339 | )      
|                                                                                              | Proceeds from sale of wafer and reticle carrier
    product line               |                                                         |         |        |         |      |          | 34,186  |         |   |          |        |        
|                                                                                              | Net proceeds from sale of land                                                 |                                                         |         | 12,106  |         |      |          |        |         |   |          |        |        
|                                                                                              | Net cash used in acquisitions                                                  |                                                         |         | (1,179  | )       |      |          | (51,131 | )       |   |          | (3,613  | )      
|                                                                                              |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|                                                                                              |                                                                                | Net cash provided by (used in)
    investing activities |         |         | 1,249   |      |          |         | (19,045 | ) |          |         | 31,496  |  
|                                                                                              |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                         |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|                                                                                              | Proceeds (payment) from line of credit                                         |                                                         |         | (25,000 | )       |      |          | 25,000  |         |   |          |        |        
|                                                                                              | Proceeds (payments) on short-term loans                                        |                                                         |         | (1,923  | )       |      |          | (629    | )       |   |          | (47,048 | )      
|                                                                                              | Proceeds (principal payments) on long-term debt
    and capital leases         |                                                         |         | 1,939   |         |      |          | (620    | )       |   |          | 83,765  |        
|                                                                                              | Proceeds from the sale of receivables                                          |                                                         |         | 5,800   |         |      |          |        |         |   |          |        |        
|                                                                                              | Issuance of common stock                                                       |                                                         |         | 112,139 |         |      |          | 6,068   |         |   |          | 2,568   |        
|                                                                                              |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|                                                                                              |                                                                                | Net cash provided by financing activities               |         |         | 92,955  |      |          |         | 29,819  |   |          |         | 39,285  |  
|                                                                                              |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|Effect of exchange rate changes on cash and
    cash equivalents                              |                                                                                |                                                         | (3,898  | )       |         |      | 2,744    |         |         |   | (625     | )      
|                                                                                              |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|Net cash provided by continuing operations                                                    |                                                                                |                                                         | 16,693  |         |         |      | 30,037   |         |         |   | 44,834   |        
|                                                                                              |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|Net cash used in discontinued operations                                                      |                                                                                |                                                         |        |         |         |      | (8,400   | )       |         |   | (5,006   | )      
|                                                                                              |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|INCREASE IN CASH AND CASH EQUIVALENTS                                                         |                                                                                |                                                         | 16,693  |         |         |      | 21,637   |         |         |   | 39,828   |        
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                                  |                                                                                |                                                         | 96,214  |         |         |      | 74,577   |         |         |   | 34,749   |        
|                                                                                              |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|CASH AND CASH EQUIVALENTS, END OF YEAR                                                        |                                                                                | $                                                       | 112,907 |         |         | $    | 96,214   |         |         | $ | 74,577   |        
|                                                                                              |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|Supplemental disclosures:                                                                     |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|Cash paid during the year for interest                                                        |                                                                                | $                                                       | 6,751   |         |         | $    | 5,961    |         |         | $ | 4,125    |        
|Cash paid during the year for income taxes, net
    of refunds                                |                                                                                |                                                         | (573    | )       |         |      | (7,535   | )       |         |   | (1,590   | )      
|Supplemental disclosures of non-cash financing
    activities:                                |                                                                                |                                                         |         |         |         |      |          |         |         |   |          |        
|Stock issued to acquire DLC                                                                   |                                                                                |                                                         |        |         |         | $    | 13,511   |         |         |   |         |        
|Stock issued to acquire GW                                                                    |                                                                                |                                                         |        |         |         | $    | 16,000   |         |         | $ | 8,000    |        
|Stock issued for SemiFab settlement                                                           |                                                                                |                                                         |        |         |         | $    | 1,618    |         |         |   |         |        

The accompanying notes are an integral part of
these consolidated financial statements.

51



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS



|   |                             
|-- | ----------------------------
|1. | Organization of the Company:

The accompanying consolidated financial
statements include the accounts of Asyst Technologies, Inc., or
Asyst, which was incorporated in California on May 31, 1984, our
subsidiaries and our majority-owned joint venture. We develop,
manufacture, sell and support integrated automation systems,
primarily for the semiconductor and secondarily for the flat
panel display, or FPD, manufacturing industries.

In April 2003, our majority-owned joint
venture, Asyst Shinko, Inc., or ASI, acquired the portion of
Shinko Technologies, Inc. that provides ongoing support to
ASIs North American Automated Material Handling Systems,
or AMHS, customers from Shinko Electric, Co., Ltd., or Shinko.
ASI renamed this subsidiary Asyst Shinko America, or ASAM.

In October 2002, we purchased a
51.0 percent interest in ASI, a Japanese corporation.

In May 2002, Asyst Connectivity
Technologies, Inc., or ACT, our wholly-owned subsidiary,
purchased substantially all of the assets of domainLogix
Corporation, or DLC, a Delaware corporation.

In May 2001, we acquired 100.0 percent
of the common stock of GW Associates, Inc., or GW, a California
corporation.

In fiscal 2000, we acquired a majority ownership
percentage of MECS, a Japanese engineering and robotics
manufacturing company, and in fiscal 2003 our ownership
percentage increased 2.1 percent to 98.9 percent. MECS
is now merged into AJI, our majority-owned subsidiary.

The above transactions, which were unrelated,
were accounted for using the purchase method of accounting.
Accordingly, our Consolidated Statements of Operations and of
Cash Flows for each of the years in the three year period ended
March 31, 2004 include the results of these acquired
entities for the periods subsequent to the date of the
respective acquisitions. We consolidate fully the financial
position and results of operations of ASI and account for the
minority interest in the consolidated financial statements.



|   |                                 
|-- | --------------------------------
|2. | Significant Accounting Policies:



| |                     
| | --------------------
| | Basis of Preparation

The accompanying consolidated financial
statements include the accounts of Asyst and its subsidiaries.
All significant inter-company accounts and transactions have
been eliminated. Minority shareholders interest represents
the minority shareholders proportionate share of the net assets
and results of operations of our majority-owned subsidiary, ASI,
and our majority-owned subsidiary, Asyst Japan, Inc., or AJI.
The Advanced Machine Programming, Inc., or AMP, and SemiFab,
Inc., or SemiFab, businesses were accounted for as discontinued
operations in fiscal 2003 and therefore, the results of
operations and cash flows have been removed from our results of
continuing operations for respective periods presented. Certain
prior year amounts in the consolidated financial statements and
the notes thereto have been reclassified where necessary to
conform to the presentation for the year ended March 31,
2004. The reclassifications did not have an effect on the prior
periods net loss. Also during the quarter ended
December 31, 2003, we recorded a $2.1 million charge
to selling, general and administrative expenses relating to
prior quarters of fiscal 2004 and 2003 and 2002. The effect of
this adjustment on any prior quarter or year was not material.
We close our books on the last Saturday of each quarter and thus
the actual date of the year-end, March 27, 2004, is
different from the year-end date used throughout this
Form 10-K report. This presentation is for convenience
purposes.



| |                 
| | ----------------
| | Use of Estimates

The preparation of financial statements in
conformity with generally accepted accounting principles in the
United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial

52



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

statements and the reported amounts of revenues
and expenses during the reporting period. Significant estimates
include revenues and costs under long-term contracts,
collectibility of accounts receivable, obsolescence of
inventory, cost of product warranties, recoverability of
depreciable assets, intangibles and deferred tax assets and the
adequacy of acquisition-related and restructuring reserves.
Although we regularly assess these estimates, actual results
could differ from those estimates. Changes in estimates are
recorded in the period in which they become known.



| |                             
| | ----------------------------
| | Foreign Currency Translation

Our subsidiaries located in Japan operate using
local functional currencies. Accordingly, all assets and
liabilities of these subsidiaries are translated using exchange
rates in effect at the end of the period, and revenues and costs
are translated using average exchange rates for the period. The
resulting translation adjustments are presented as a separate
component of accumulated other comprehensive income (loss).

All other foreign subsidiaries use the U.S.
dollar as their functional currency. Accordingly, assets and
liabilities of these subsidiaries are translated using exchange
rates in effect at the end of the period, except for
non-monetary assets, such as inventories and property, plant and
equipment, that are translated using historical exchange rates.
Revenues and costs are translated using average exchange rates
for the period, except for costs related to those balance sheet
items that are translated using historical exchange rates. The
resulting translation gains and losses are included in the
Consolidated Statements of Operations as incurred.



| |                          
| | -------------------------
| | Cash and Cash Equivalents

We consider all highly liquid investments with an
original maturity of three months or less from the date of
purchase to be cash equivalents. The carrying value of the cash
equivalents approximates their current fair market value.



| |                                         
| | ----------------------------------------
| | Restricted Cash and Cash
    Equivalents

Restricted cash and cash equivalents represent
amounts that are restricted as to their use in accordance with
Japanese debt agreements.



| |                       
| | ----------------------
| | Short-term Investments

As of March 31, 2004, our short-term
investments consisted of liquid debt investments with
maturities, at the time of purchase, greater than three months
and less than 18 months. All such investments have been
classified as available-for-sale and are carried at
fair value. Unrealized holding gains and losses, net of taxes
reported, are recorded as a component of other comprehensive
income (loss). The cost of debt security is adjusted for
amortization of premiums and accretion of discounts to maturity.
Such amortization, interest income, realized gains and losses
and declines in value that are considered to be other than
temporary, are included in other income (expense), net, on the
accompanying consolidated statements of operations. There have
been no declines in value that are considered to be other than
temporary for any of the three years in the period ended
March 31, 2004. The cost of investments sold is based on
specific identification. We do not intend to hold individual
securities for greater than one year.



| |                                        
| | ---------------------------------------
| | Fair Value of Financial
    Instruments

The carrying amounts of our financial
instruments, including cash and cash equivalents, accounts
receivable, short-term notes payable, and accounts payable and
accrued expenses, approximate fair value due to the short
maturities of these financial instruments. At March 31,
2004, the carrying amount of long-term debt, including current
portion, was $93.8 million, and the estimated fair value
was $93.5 million. At March 31, 2003, the carrying
amount was $116.0 million and the estimated fair value was
$70.0 million. The

53



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

estimated fair value of long-term debt is based
primarily on quoted market prices for the same or similar issues.



| |                             
| | ----------------------------
| | Concentration of Credit Risk

Financial instruments that potentially subject us
to concentration of credit risk consist primarily of trade
receivables and short-term and long-term cash investments in
treasury bills, certificates of deposit and commercial paper. We
restrict our investments to repurchase agreements with major
banks, U.S. government and corporate securities, and mutual
funds that invest in U.S. government securities, which are
subject to minimal credit and market risk. Our customers are
concentrated in the semiconductor industry, and relatively few
customers account for a significant portion of our revenues. We
regularly monitor the credit worthiness of our customers and
believe that we have adequately provided for exposure to
potential credit losses. During the year ended March 31,
2004, L.G. Philips and Taiwan Semiconductor Manufacturing Corp.
accounted for 17.8 percent and 9.5 percent of revenues,
respectively.



| |                                    
| | -----------------------------------
| | Allowance for Doubtful
    Accounts

We estimate our allowance for doubtful accounts
based on a combination of specifically identified amounts and a
general reserve calculated based on the aging of receivables. If
circumstances change (such as an unexpected material adverse
change in a major customers ability to meet its financial
obligations to us or its payment trends), we may adjust our
estimates of the recoverability of amounts due to us.



| |            
| | -----------
| | Inventories

Inventories are stated at the lower of cost
(first-in, first-out) or market and include materials, labor and
manufacturing overhead costs. Provisions, when required, are
made to reduce excess and obsolete inventories to their
estimated net realizable values.



| |                                         
| | ----------------------------------------
| | Goodwill and Other Intangible
    Assets

We adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible
Assets, or SFAS 142, in the first quarter of fiscal 2003.
Based on criteria set out in SFAS No. 142, we reclassified
approximately $3.0 million of assets related to assembled
workforce previously classified as intangible assets to
goodwill. Intangible assets subject to amortization are being
amortized over the following estimated useful lives using the
straight-line method: purchased technology, four to eight years;
customer lists and other intangible assets, five to
10 years; and licenses and patents, five to 10 years.
No changes were made to the useful lives of amortizable
intangible assets in connection with the adoption of SFAS
No. 142. In connection with the DLC acquisition in
May 2002, we recorded goodwill of $2.1 million. For the ASI
acquisition in October 2002, goodwill of $62.6 million
was originally recorded. Purchase accounting for the acquisition
of ASI was finalized in the quarter ended September 30,
2003, resulting in an adjustment to reduce goodwill by
approximately $2.0 million. In connection with the ASAM
acquisition in April 2003, ASI recorded goodwill of
$0.4 million.

We completed an annual impairment test in
accordance with SFAS No. 142 during the quarter ended
December 31, 2003 and concluded that there was no
impairment of goodwill and intangible assets. In connection with
the annual impairment test as at December 31, 2002, an
expense of $2.1 million was recognized related to the
impairment of goodwill recorded in connection with our
May 2002 acquisition of substantially all the assets of
domainLogix Corporation, or DLC. To determine the amount of the
impairment, we estimated the fair value of our reporting
segments that contained goodwill (based primarily on expected
future cash flows), reduced the amount by the fair value of
identifiable intangible assets other than goodwill (also based
primarily on expected future cash flows), and then compared the
unallocated fair value of the business to the carrying value of
goodwill. To the extent goodwill exceeded the unallocated fair
value of the

54



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

business, an impairment expense was recognized.
In connection with the annual impairment analysis for goodwill,
we assessed the recoverability of the intangible assets subject
to amortization in accordance with SFAS No. 144. During the
quarter ended December 31, 2002, an impairment expense of
$6.2 million was recognized for acquired technology and
$0.1 million was recognized for customer base, based upon
our projection of significantly reduced future cash flows of DLC.



| |                       
| | ----------------------
| | Property and Equipment

Property and equipment are recorded at cost or in
the case of property and equipment purchased through corporate
acquisitions at fair value based upon the allocated purchase
price on the acquisition date. Depreciation and amortization are
computed using the straight-line method over the estimated
useful lives of the assets (or over the lease term if it is
shorter for leasehold improvements) which range from two to five
years.



| |                                    
| | -----------------------------------
| | Impairment of Long-lived
    Assets

We evaluate the recoverability of our long-lived
tangible assets in accordance with Financial Accounting
Standards Board Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment of Long-Lived
Assets to be Disposed of, or SFAS No. 144. Long-lived
assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. Determination of
recoverability is based on an estimate of undiscounted future
cash flows from the use of the assets and its eventual
disposition. Measurement of an impairment loss for long-lived
assets is based on the fair value of the assets. Long-lived
assets to be disposed of are reported at the lower of carrying
amount or fair value less costs to sell.



| |                 
| | ----------------
| | Warranty Reserve

We provide for the estimated cost of product
warranties at the time revenue is recognized.

|                                                    |  |                    |        |      |  |   |        |  
|--------------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                                                    |  |                   
|                                                    |  | Fiscal Years Ended
|                                                    |  | March 31,         
|                                                    |  |                   
|                                                    |  | 2004               |        | 2003
|                                                    |  |                    |        |     
|Beginning Balance                                   |  | $                  | 7,561  |      |  | $ | 4,689  |  
|Reserve assumed in acquisition of ASI               |  |                    |       |      |  |   | 2,552  |  
|Reserve for warranties issued during
    the period |  |                    | 4,878  |      |  |   | 4,147  |  
|Settlements made (in cash or in kind)               |  |                    | (4,257 | )    |  |   | (3,827 | )
|                                                    |  |                    |        |      |  |   |        |  
|Ending Balance                                      |  | $                  | 8,182  |      |  | $ | 7,561  |  
|                                                    |  |                    |        |      |  |   |        |  



| |                    
| | -------------------
| | Revenue Recognition

We recognize revenue in accordance with SEC Staff
Accounting Bulletin No. 104, or SAB 104, Revenue
Recognition. We recognize revenue when persuasive evidence
of an arrangement exists, delivery has occurred or service has
been rendered, the sellers price is fixed or determinable
and collectibility is reasonably assured. Some of our products
are large volume consumables that are tested to industry and/or
customer acceptance criteria prior to shipment. Our primary
shipping terms are FOB shipping point. Therefore, revenue for
these types of products is recognized when title transfers.
Certain of our product sales are accounted for as
multiple-element arrangements. If we have met defined customer
acceptance experience levels with both the customer and the
specific type of equipment, we recognize the product revenue at
the time of shipment and transfer of title, with the remainder
when the other elements, primarily installation, have been
completed. Some of our other products are highly customized
systems and cannot be completed or adequately tested to customer
specifications prior to shipment from the factory. We do not
recognize revenue for these

55



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

products until formal acceptance by the customer.
Revenue for spare parts sales is recognized on shipment.
Deferred revenue consists primarily of product shipments
creating legally enforceable receivables that did not meet our
revenue recognition policy in compliance with SAB 104. Revenue
related to maintenance and service contracts is recognized
ratably over the duration of the contracts. Unearned maintenance
and service contract revenue is not significant and is included
in accrued liabilities and other.

We recognize revenue for long-term contracts at
ASI in accordance with the American Institute of Certified
Public Accountants Statement of Position 81-1,
Accounting for Performance of Construction-Type and
Certain Production-Type Contracts. We use the percentage
of completion method to calculate revenue and related costs of
these contracts because they are long-term in nature and
estimates of cost to complete and extent of progress toward
completion of long-term contracts are available and reasonably
dependable. We record revenue each period based on the
percentage of completion to date on each contract, measured by
costs incurred to date relative to the total estimated costs of
each contract. We treat contracts as substantially complete when
we receive technical acceptance of our work by the customer. We
disclose material changes in our financial results that result
from changes in estimates.

We account for software revenue in accordance
with the American Institute of Certified Public
Accountants Statement of Position 97-2, Software
Revenue Recognition. Revenue for integration software work
is recognized on a percentage-of-completion basis. Software
license revenue, which is not material to the consolidated
financial statements, is recognized when persuasive evidence of
an arrangement exists, delivery has occurred or services have
been rendered, the selling price is fixed or determinable and
collectibility is reasonably assured.



| |                      
| | ---------------------
| | Contract Loss Reserve

We routinely evaluate the contractual commitments
with our customers and suppliers to determine if it is probable
that a loss exists that can be estimated in fulfillment of the
contractual commitment. If so, a loss reserve is recorded and
included in accrued liabilities and other. We had a loss reserve
of approximately $5.4 million and $2.0 million at
March 31, 2004 and March 31, 2003, respectively. The
balance at March 31, 2004 mainly related to three Automated
Material Handling System, or AMHS, contracts entered into by ASI
during the fiscal year ended March 31, 2004.



| |                            
| | ---------------------------
| | Comprehensive Income (loss)

Comprehensive income (loss) is defined as
the change in equity of a company during a period from
transactions and other events and circumstances excluding
transactions resulting from investments by owners and
distributions to owners and is to include unrealized gains and
losses that have historically been excluded from net loss and
reflected instead in equity.



| |                   
| | ------------------
| | Earnings Per Share

Basic net income (loss) per share is
computed using the weighted average number of common shares
outstanding, while diluted net income (loss) per share is
computed using the sum of the weighted average number of common
and common equivalent shares outstanding. Common equivalent
shares used in the computation of diluted earnings per share
result from the assumed exercise of stock options and warrants,
using the treasury stock method. For periods for which there is
a net loss, the numbers of shares used in the computation of
diluted net income (loss) per share are the same as those
used for the computation of basic net income (loss) per
share as the inclusion of dilutive securities would be
anti-dilutive.

56



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                         
| | ------------------------
| | Stock-Based Compensation

We account for employee stock-based compensation
arrangements in accordance with the provisions of Accounting
Principles Board Opinion (APB) No. 25, Accounting for Stock
Issued to Employees, Financial Accounting Standards Board
Interpretation (FIN) No. 44, Accounting for Certain
Transactions Involving Stock Compensation, an Interpretation of
APB Opinion No. 25 and FIN No. 28, Accounting for
Stock Appreciation Rights and Other Variable Stock Option or
Award Plans, and comply with the disclosure provisions of
Statement of Financial Accounting Standards
(SFAS) No. 123, Accounting for Stock-Based
Compensation, and SFAS No. 148, Accounting for Stock Based
Compensation  Transition and Disclosure 
an amendment of FAS No. 123. Under APB No. 25,
compensation expense is based on the difference, if any, on the
date of grant, between the estimated fair value of our common
stock and the exercise price. SFAS No. 123 defines a fair
value based method of accounting for an employee stock option or
similar equity instrument. We amortize stock-based compensation
using the straight-line method over the remaining vesting
periods of the related options, which is generally four years.

We account for equity instruments issued to
non-employees in accordance with the provisions of SFAS
No. 123 and the Emerging Issues Task Force
(EITF) 96-18, Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction
with Selling, Goods or Services and value awards using the
Black-Scholes option pricing model as of the date at which the
non-employees performance is complete. We recognize the fair
value of the award as a compensation expense as the
non-employees interest in the instrument vests.

Had compensation expense for our stock options,
employee stock purchase plan and the restricted stock issuances
been determined based on the fair value of the grant date for
awards in fiscal years 2004, 2003 and 2002 consistent with the
provision of SFAS No. 123, and SFAS No. 148, our net
loss for 2004, 2003 and 2002 would have increased to the pro
forma amounts indicated below (in thousands, except per share
amounts):

|                                             |                                                                                                   |                      |         |         |   |      |          |          |   |   |          |          |  
|-------------------------------------------- | ------------------------------------------------------------------------------------------------- | -------------------- | ------- | ------- | - | ---- | -------- | -------- | - | - | -------- | -------- | -
|                                             |                                                                                                   |                     
|                                             |                                                                                                   | Year Ended March 31,
|                                             |                                                                                                   |                     
|                                             |                                                                                                   | 2004                 |         | 2003    |   | 2002
|                                             |                                                                                                   |                      |         |         |   |     
|Net loss  as reported                       |                                                                                                   | $                    | (83,449 | )       |   | $    | (135,869 | )        |   | $ | (148,917 | )       
|                                             | Add: employee stock-based compensation expense
    included in reported net loss, net of tax      |                      |         | 1,580   |   |      |          | 1,905    |   |   |          | 305      |  
|                                             | Less: total employee stock-based compensation
    expense determined under fair value, net of tax |                      |         | (15,215 | ) |      |          | (20,566  | ) |   |          | (13,861  | )
|                                             |                                                                                                   |                      |         |         |   |      |          |          |   |   |          |         
|                                             | Net loss  pro forma                                                                              |                      | $       | (97,084 | ) |      | $        | (154,530 | ) |   | $        | (162,473 | )
|                                             |                                                                                                   |                      |         |         |   |      |          |          |   |   |          |         
|                                             | Basic net loss per share 
    as reported                                                        |                      | $       | (2.00   | ) |      | $        | (3.62    | ) |   | $        | (4.21    | )
|                                             | Basic net loss per share 
    pro forma                                                          |                      | $       | (2.32   | ) |      | $        | (4.12    | ) |   | $        | (4.59    | )
|Diluted net loss per share 
    as reported |                                                                                                   | $                    | (2.00   | )       |   | $    | (3.62    | )        |   | $ | (4.21    | )       
|Diluted net loss per share 
    pro forma   |                                                                                                   | $                    | (2.32   | )       |   | $    | (4.12    | )        |   | $ | (4.59    | )       



| |                                     
| | ------------------------------------
| | Recent Accounting
    Pronouncements

In January 2003, the FASB issued FASB
Interpretation No. 46, Consolidation of Variable Interest
Entities, an Interpretation of ARB No. 51, or FIN 46. FIN
46 requires certain variable interest entities to be
consolidated by the primary beneficiary of the entity if the
equity investors in the entity do not have the characteristics
of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties.
FIN 46 was effective for all new variable interest entities
created or acquired after January 31, 2003. In
December 2003, the FASB issued FIN 46R, which supercedes
FIN 46. FIN 46R is applicable in financial statements of public
entities that have interests in variable interest entities or
potential variable interest entities commonly referred to as
special-

57



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

purpose entities for periods ending after
December 15, 2003. Application by public entities (other
than small business issuers) for all other types of entities is
required in financial statements for periods ending after
March 15, 2004. The adoption of this standard did not have
a material impact on our results of operation or financial
position.

In May 2003, the FASB issued SFAS
No. 150, Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity, or
SFAS No. 150. This Statement establishes standards for how
an issuer classifies and measures certain financial instruments
with characteristics of both liabilities and equity. It requires
that an issuer classify a financial instrument that is within
its scope as a liability (or an asset in some circumstances).
Many of those instruments were previously classified as equity.
The Statement is effective for financial instruments entered
into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first fiscal period beginning
after June 15, 2003. It is to be implemented by reporting
the cumulative effect of a change in an accounting principle for
financial instruments created before the issuance date of the
Statement and still existing at the beginning of the interim
period of adoption. Restatement is not permitted. The adoption
of SFAS No. 150 to date did not have a material impact on
our financial position or results of operations.

In August 2003, the EITF reached a consensus
on Issue No. 03-5, Applicability of AICPA Statement
of Position 97-2, Software Revenue Recognition, to Non-Software
Deliverables. This issue focuses solely on whether
non-software deliverables included in arrangements that contain
more-than-incidental software should be accounted for in
accordance with SOP 97-2. The Task Force confirmed that in an
arrangement that contains software that is more-than-incidental
to the products or services as a whole, only the software and
software-related elements are included within the scope of SOP
97-2. Software-related elements include software-related
products and services such as those listed in paragraph 9 of SOP
97-2, as well as other deliverables for which the software is
essential to their functionality. EITF Issue No. 03-5 is
effective for revenue arrangements entered into in fiscal
periods beginning after August 13, 2003. The adoption of
EITF Issue No. 03-5 did not have a significant impact on
our financial position or results of operations.

On December 17, 2003, the Staff of the
Securities and Exchange Commission, SEC or the Staff, issued
Staff Accounting Bulletin No. 104, Revenue Recognition, or
SAB 104, which supercedes Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial Statements, or
SAB 101. SAB 104 rescinds accounting guidance contained in SAB
101 related to multiple element revenue arrangements, superceded
as a result of the issuance of Emerging Issues Task Force Issue
No. 00-21, or EITF 00-21, Accounting for Revenue
Arrangements with Multiple Deliverables. Additionally, SAB 104
rescinds the SECs Revenue Recognition in Financial
Statements Frequently Asked Questions and Answers, or the FAQ,
issued with SAB 101 that had been codified in SEC topic 13,
Revenue Recognition. While the wording of SAB 104 has changed to
reflect the issuance of EITF 00-21, the revenue recognition
principles of SAB 101 remain largely unchanged by the issuance
of SAB 104. The adoption of SAB 104 did not have a material
effect on our financial position or results of operations.

In April 2004, the Emerging Issues Task
Force reached a consensus on Issue No. 03-06, Participating
Securities and the Two-Class Method Under FASB Statement
No. 128, Earnings Per Share, or EITF 03-16. EITF 03-06
addresses a number of questions regarding the computation of
earnings per share by companies that have issued securities
other than common stock that contractually entitle the holder to
participate in dividends and earnings of the company when, and
if, it declares dividends on its common stock. The issue also
provides further guidance in applying the two-class method of
calculating earnings per share, clarifying what constitutes a
participating security and how to apply the two-class method of
computing earning per share once it is determined that a
security is participating, including how to allocate
undistributed earnings to such a security. EITF 03-06 is
effective for fiscal periods beginning after March 31,
2004. The adoption of EITF 03-06 is not expected to have a
material effect on our financial position or results of
operations.

58



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|   |                          
|-- | -------------------------
|3. | Balance Sheet Components:



| |                       
| | ----------------------
| | Short-term Investments

Short-term investments by security type are as
follows (in thousands):

|                               |  |                |       |                 |  |            |    |   |  |   |       | 
|------------------------------ |  | -------------- | ----- | --------------- |  | ---------- | -- | - |  | - | ----- | 
|                               |  |               
|                               |  | March 31, 2004
|                               |  |               
|                               |  | Cost           |       | Unrealized Loss |  | Fair Value
|                               |  |                |       |                 |  |           
|U.S. corporate debt securities |  | $              | 4,962 |                 |  | $          | (9 | ) |  | $ | 4,953 | 
|                               |  |                |       |                 |  |            |    |   |  |   |       | 



| |            
| | -----------
| | Inventories

Inventories consisted of the following (in
thousands):

|                                   |  |           |        |      |  |   |        | 
|---------------------------------- |  | --------- | ------ | ---- |  | - | ------ | 
|                                   |  |          
|                                   |  | March 31,
|                                   |  |          
|                                   |  | 2004      |        | 2003
|                                   |  |           |        |     
|Raw materials                      |  | $         | 16,241 |      |  | $ | 8,448  | 
|Work-in-process and finished goods |  |           | 11,453 |      |  |   | 13,756 | 
|                                   |  |           |        |      |  |   |        | 
|Total                              |  | $         | 27,694 |      |  | $ | 22,204 | 
|                                   |  |           |        |      |  |   |        | 

During the fiscal year ended March 31, 2003,
we began to transition substantially all of our U.S.
manufacturing to Solectron Corporation, or Solectron. As part of
the arrangement, Solectron purchased $20.0 million of
inventory from us. No revenue was recorded for the sale of this
inventory to Solectron. During the fiscal year ended
March 31, 2004, we repurchased $4.3 million of this
inventory that was not used by Solectron in manufacturing our
products. This amount was fully reserved in prior periods. On an
on-going basis, we may be obligated to acquire inventory
purchased by Solectron if the inventory is not used over certain
specified period of time per the terms of our agreement.

In fiscal 2004 and 2003, we recorded a reserve of
$8.5 million and $4.5 million, respectively, for estimated
excess and obsolete inventory held by us or Solectron.

Intangible
assets

Intangible assets were as follows (in thousands):

|                              |                         |                   |        |                |         |       |        |          |        |              |        |       |        |   |        |       |        |   |       |       |        |   |        |       |        | 
|----------------------------- | ----------------------- | ----------------- | ------ | -------------- | ------- | ----- | ------ | -------- | ------ | ------------ | ------ | ----- | ------ | - | ------ | ----- | ------ | - | ----- | ----- | ------ | - | ------ | ----- | ------ | 
|                              |                         |                   |        |               
|                              |                         | March 31, 2004    |        | March 31, 2003
|                              |                         |                   |        |               
|                              |                         | Gross             |        |                |         | Gross |        |         
|                              |                         | Carrying          |        | Accumulated    |         |       |        | Carrying |        | Accumulated  |        |      
|                              |                         | Amount            |        | Amortization   |         | Net   |        | Amount   |        | Amortization |        | Net  
|                              |                         |                   |        |                |         |       |        |          |        |              |        |      
|Amorizable intangible assets: |                         |                   |        |                |         |       |        |          |        |              |        |       |        |   |        |       |        |   |       |       |        |   |        |      
|Developed technology          |                         | $                 | 64,317 |                |         | $     | 21,778 |          |        | $            | 42,539 |       |        | $ | 57,294 |       |        | $ | 9,963 |       |        | $ | 47,331 |      
|                              | Customer base and other |                   |        |                |         |       |        |          |        |              |        |       |        |   |        |       |        |   |       |       |        |   |        |       |       
|                              |                         | intangible assets |        |                | 35,676  |       |        |          | 17,394 |              |        |       | 18,282 |   |        |       | 32,691 |   |       |       | 8,920  |   |        |       | 23,771 | 
|                              | Licenses and patents    |                   |        | 7,440          |         |       |        | 2,483    |        |              |        | 4,957 |        |   |        | 7,770 |        |   |       | 2,010 |        |   |        | 5,760 |       
|                              |                         |                   |        |                |         |       |        |          |        |              |        |       |        |   |        |       |        |   |       |       |        |   |        |      
|                              |                         | Total             |        | $              | 107,433 |       |        | $        | 41,655 |              |        | $     | 65,778 |   |        | $     | 97,755 |   |       | $     | 20,893 |   |        | $     | 76,862 | 
|                              |                         |                   |        |                |         |       |        |          |        |              |        |       |        |   |        |       |        |   |       |       |        |   |        |      

Amortization expense was $20.2 million,
$14.1 million and $7.1 million for the years ended
March 31, 2004, 2003 and 2002, respectively.

59



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Expected future intangible amortization expense,
based on current balances for the following fiscal years is as
follows (in thousands):

|              |      |   |        |        | 
|------------- | ---- | - | ------ | ------ | 
|Fiscal Years: |      |   |        |       
|              | 2005 |   | $      | 21,075 | 
|              | 2006 |   |        | 20,499 | 
|              | 2007 |   |        | 15,096 | 
|              | 2008 |   |        | 9,108  | 
|              |      |   |        |       
|              |      | $ | 65,778 |       
|              |      |   |        |       



| |         
| | --------
| | Goodwill

Goodwill balances were as follows (in thousands):

|         |  |           |        |           |  |   |        | 
|-------- |  | --------- | ------ | --------- |  | - | ------ | 
|         |  | March 31, |        | March 31,
|         |  | 2004      |        | 2003     
|         |  |           |        |          
|         |  | Carrying  |        | Carrying 
|         |  | Amount    |        | Amount   
|         |  |           |        |          
|Goodwill |  | $         | 71,973 |           |  | $ | 65,505 | 
|         |  |           |        |           |  |   |        | 

The changes in the carrying amount of goodwill
for the years ended March 31, 2004 and 2003, respectively, are
as follows (in thousands):

|                                           |  |                |        |      |  |       |        |   |  |   |        |  
|------------------------------------------ |  | -------------- | ------ | ---- |  | ----- | ------ | - |  | - | ------ | -
|                                           |  | Fab Automation |        | AMHS |  | Total
|                                           |  |                |        |      |  |      
|Balances at March 31, 2002                 |  | $              |       |      |  | $     |       |   |  | $ |       |  
|Reclassification upon adoption of SFAS 142 |  |                | 2,954  |      |  |       |       |   |  |   | 2,954  |  
|Acquisitions                               |  |                | 2,100  |      |  |       | 62,551 |   |  |   | 64,651 |  
|Impairment charges                         |  |                | (2,100 | )    |  |       |       |   |  |   | (2,100 | )
|                                           |  |                |        |      |  |       |        |   |  |   |        |  
|Balances at March 31, 2003                 |  |                | 2,954  |      |  |       | 62,551 |   |  |   | 65,505 |  
|Acquisitions                               |  |                |       |      |  |       | 376    |   |  |   | 376    |  
|Purchase accounting adjustments            |  |                |       |      |  |       | (2,017 | ) |  |   | (2,017 | )
|Foreign currency translation               |  |                |       |      |  |       | 8,109  |   |  |   | 8,109  |  
|                                           |  |                |        |      |  |       |        |   |  |   |        |  
|Balances at March 31, 2004                 |  | $              | 2,954  |      |  | $     | 69,019 |   |  | $ | 71,973 |  
|                                           |  |                |        |      |  |       |        |   |  |   |        |  

60



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

To facilitate comparison with prior periods, the
following table shows our loss before cumulative effect of
change in accounting principle for the year ended March 31,
2002, if goodwill was not amortized for that period (in
thousands):

|                                                                                                    |  |                   |          |  
|--------------------------------------------------------------------------------------------------- |  | ----------------- | -------- | -
|                                                                                                    |  | Fiscal Year Ended
|                                                                                                    |  | March 31, 2002   
|                                                                                                    |  |                  
|Loss before cumulative effect of change in
    accounting principle  as reported                   |  | $                 | (148,917 | )
|Add: Goodwill amortization                                                                          |  |                   | 1,806    |  
|                                                                                                    |  |                   |          |  
|Loss before cumulative effect of change in
    accounting principle  pro forma                     |  | $                 | (147,111 | )
|                                                                                                    |  |                   |          |  
|Basic loss before cumulative effect of change in
    accounting principle per share  as reported   |  | $                 | (4.21    | )
|Add: Goodwill amortization per share                                                                |  |                   | 0.05     |  
|                                                                                                    |  |                   |          |  
|Basic loss before cumulative effect of change in
    accounting principle per share  pro forma     |  | $                 | (4.16    | )
|                                                                                                    |  |                   |          |  
|Diluted loss before cumulative effect of change
    in accounting principle per share  as reported |  | $                 | (4.21    | )
|Add: Goodwill amortization per share                                                                |  |                   | 0.05     |  
|                                                                                                    |  |                   |          |  
|Diluted loss before cumulative effect of change
    in accounting principle per share  pro forma   |  | $                 | (4.16    | )
|                                                                                                    |  |                   |          |  



| |                       
| | ----------------------
| | Property and Equipment

Depreciation expense was $9.1 million,
$16.7 million and $10.2 million for the years ended
March 31, 2004, 2003 and 2002, respectively. Property and
equipment consist of the following (in thousands):

|                                         |           |           |         |        |  |   |         |        | 
|---------------------------------------- | --------- | --------- | ------- | ------ |  | - | ------- | ------ | 
|                                         |           |          
|                                         |           | March 31,
|                                         |           |          
|                                         |           | 2004      |         | 2003  
|                                         |           |           |         |       
|Land                                     |           | $         | 2,347   |        |  | $ | 1,875   |       
|Buildings                                |           |           | 8,363   |        |  |   | 6,724   |       
|Leasehold improvements                   |           |           | 12,660  |        |  |   | 11,697  |       
|Machinery and equipment                  |           |           | 29,855  |        |  |   | 25,660  |       
|Office equipment, furniture and fixtures |           |           | 33,118  |        |  |   | 32,371  |       
|                                         |           |           |         |        |  |   |         |       
|                                         | Sub-total |           |         | 86,343 |  |   |         | 78,327 | 
|Less accumulated depreciation            |           |           | (63,475 | )      |  |   | (54,032 | )     
|                                         |           |           |         |        |  |   |         |       
|Total                                    |           | $         | 22,868  |        |  | $ | 24,295  |       
|                                         |           |           |         |        |  |   |         |       



| |                            
| | ---------------------------
| | Comprehensive Income (loss)

Comprehensive income (loss) is defined as
the change in equity of a company during a period from
transactions and other events and circumstances excluding
transactions resulting from investments by owners and
distributions to owners and is to include unrealized gains and
losses that have historically been excluded

61



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

from net loss and reflected instead in equity.
The following table presents our accumulated other comprehensive
income (loss) items (in thousands):

|                                              |  |           |       |      |  |      |       |  |  |   |     |  
|--------------------------------------------- |  | --------- | ----- | ---- |  | ---- | ----- |  |  | - | --- | -
|                                              |  |          
|                                              |  | March 31,
|                                              |  |          
|                                              |  | 2004      |       | 2003 |  | 2002
|                                              |  |           |       |      |  |     
|Unrealized loss on investments                |  | $         | (9    | )    |  | $    |      |  |  | $ |    |  
|Foreign currency translation adjustments      |  |           | 8,453 |      |  |      | 4,705 |  |  |   | (35 | )
|                                              |  |           |       |      |  |      |       |  |  |   |     |  
|Accumulated other comprehensive income (loss) |  | $         | 8,444 |      |  | $    | 4,705 |  |  | $ | (35 | )
|                                              |  |           |       |      |  |      |       |  |  |   |     |  



|   |              
|-- | -------------
|4. | Acquisitions:



| |                             
| | ----------------------------
| | Asyst Shinko America (ASAM):

In April 2003, ASI acquired the portion of
Shinko Technologies, Inc., a subsidiary of Shinko Electric, Co.,
Ltd., or Shinko, that provided ongoing support to ASIs
North American AMHS customers. Shinko owns 49.0 percent of
ASI. ASI renamed this subsidiary Asyst Shinko America (ASAM).
The total purchase price, net of cash acquired, was
approximately $1.2 million. A summary of assets acquired
and liabilities assumed is as follows (in thousands):

|                            |  |   |       |  
|--------------------------- |  | - | ----- | -
|Accounts receivable, net    |  | $ | 820   |  
|Inventories                 |  |   | 315   |  
|Property and equipment, net |  |   | 286   |  
|Other assets                |  |   | 30    |  
|Current liabilities         |  |   | (662  | )
|                            |  |   |       |  
|Net assets acquired         |  |   | 789   |  
|Goodwill                    |  |   | 390   |  
|                            |  |   |       |  
|Net cash paid               |  | $ | 1,179 |  
|                            |  |   |       |  

ASAM provides ongoing service to customers who
installed ASIs AMHS solution. As such, there is no
in-process research and development activity at ASAM. The
acquisition was made to provide better support to North American
AMHS customers. We believe the purchase price reasonably
reflects the fair value of the business based on estimates of
future revenues and earnings.

Comparative pro forma information reflecting the
acquisition of ASAM has not been presented because the
operations of ASAM were not material to our consolidated
financial statements.



| |                          
| | -------------------------
| | Asyst Shinko, Inc. (ASI):

On October 16, 2002, we established a joint
venture with Shinko called Asyst Shinko, Inc, or ASI. The joint
venture develops, manufactures and markets market-leading AMHS
with principal operations in Tokyo and Ise, Japan. Under terms
of the joint venture agreement, we acquired 51.0 percent of
the joint venture for approximately $67.5 million of cash
and transaction costs. Shinko contributed its entire AMHS
business, including intellectual property and other assets,
installed customer base and approximately 250 employees. We
acquired ASI to enhance our presence in the 300mm AMHS and flat
panel display markets. The acquisition has been accounted for as
a purchase transaction in accordance with SFAS No. 141 and
accordingly, the results of ASI are included in the consolidated
financial statements for the period subsequent to its
acquisition.

A portion of the excess of purchase price over
fair value of net assets acquired was allocated to identifiable
intangible assets. We amortize developed technology over a
period of five years and the customer base and trademarks over a
period of three years, using the straight-line method, with a
weighted-average life

62



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

of 4.4 years. The balance of the excess
purchase price was recorded as goodwill. We completed our final
analysis of the acquisition and recorded all remaining
adjustments in the second quarter of fiscal year 2004. A summary
of the transaction is as follows (in thousands):

|                                                                              |  |   |         | 
|----------------------------------------------------------------------------- |  | - | ------- | 
|Total Enterprise Value                                                        |  | $ | 128,824 | 
|Transaction costs                                                             |  |   | 1,796   | 
|                                                                              |  |   |         | 
|                                                                              |  | $ | 130,620 | 
|                                                                              |  |   |         | 
|Fair value of identifiable intangibles
    contributed by Shinko:             |  |   |         | 
|Net assets                                                                    |  |   | 1,036   | 
|Developed technology                                                          |  |   | 44,500  | 
|Customer lists                                                                |  |   | 18,800  | 
|In-process research and development                                           |  |   | 5,750   | 
|Excess of consideration over fair value of net
    assets acquired  Goodwill |  |   | 60,534  | 
|                                                                              |  |   |         | 
|                                                                              |  | $ | 130,620 | 
|                                                                              |  |   |         | 

The fair values of identifiable intangible assets
are based on estimates of future revenues and earnings to
determine a discounted cash flow valuation of identifiable
intangible assets that meet the separate recognition criteria of
SFAS No. 141. Goodwill of approximately $60.5 million
arising from the acquisition is not deductible for tax purposes.
We expensed approximately $5.8 million of in-process
research and development as part of the acquisition in the third
quarter of fiscal 2003. We identified research projects in areas
for which technological feasibility had not been established and
no alternative future uses existed. The value was determined by
estimating the expected cash flows from the products once
commercially viable, discounting the net cash flows to their
present value, and then applying a percentage of completion to
the calculated value. If the assumption and estimates used to
allocate the purchase price are not correct, future asset
impairment charges could be required.

Minority interest of approximately
$63.8 million was recorded at March 31, 2004,
representing the minority interest of 49.0 percent of the
fair value of ASI at the time of acquisition and the
proportionate share of net income (loss) including its own
interest in amortization of intangible assets and cumulative
translation adjustment for the periods since acquisition.

The following table summarizes the estimated fair
values of the tangible assets acquired and liabilities assumed
at the date of acquisition (in thousands):

|                                        |  |   |         |  
|--------------------------------------- |  | - | ------- | -
|Cash and short-term investments         |  | $ | 15,200  |  
|Other current assets                    |  |   | 52,955  |  
|Property plant and equipment            |  |   | 3,332   |  
|Other assets                            |  |   | 775     |  
|Current liabilities                     |  |   | (31,234 | )
|Deferred tax liabilities                |  |   | (26,586 | )
|Pension and other long-term liabilities |  |   | (13,406 | )
|                                        |  |   |         |  
|Net assets acquired                     |  | $ | 1,036   |  
|                                        |  |   |         |  

The following pro-forma consolidated results of
operations are presented as if the acquisition of ASI had been
made at April 1, 2001 (unaudited; in thousands, except per
share amounts). The ASI results included in the pro forma
consolidated results of operations are based on the estimated
carve-out of ASI from the consolidated results of Shinko for the
periods prior to the acquisition. Due to the difficulty and
costs to restate the historic information from Japanese GAAP to
US GAAP, the Shinko results were prepared in accordance

63



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

with Generally Accepted Accounting Principles in
Japan which differs from US GAAP. The principle difference
between US and Japanese GAAP relates to the application of
percentage of completion revenue recognition. While such
differences may be significant in any one period, the pro forma
information below is deemed to be directionally correct and
therefore useful. Additionally, Shinko allocated certain costs
to ASI and these allocations may not be reflective of the costs
to ASI to provide such activities on a stand-alone basis.

|                                                          |  |                |          |                |  |   |          |  
|--------------------------------------------------------- |  | -------------- | -------- | -------------- |  | - | -------- | -
|                                                          |  | Year Ended     |          | Year Ended    
|                                                          |  | March 31, 2003 |          | March 31, 2002
|                                                          |  |                |          |               
|Net sales                                                 |  | $              | 309,002  |                |  | $ | 280,163  |  
|Net loss from continuing operations                       |  | $              | (133,547 | )              |  | $ | (144,886 | )
|Basic net loss from continuing operations
    per share   |  | $              | (3.56    | )              |  | $ | (4.10    | )
|Diluted net loss from continuing operations
    per share |  | $              | (3.56    | )              |  | $ | (4.10    | )

As part of the acquisition, we assumed
pension-related obligations. In addition, as certain pension
obligations are included in the former owner of Shinkos
pension plan, under certain remote circumstances, including
bankruptcy and inability to pay by Shinko, we may have to assume
approximately up to $200 million of Shinkos pension
obligations. No recognition of this amount has been recorded to
date as it is considered remote.



| |                         
| | ------------------------
| | domainLogix
    (DLC):

In May 2002, ACT, a wholly-owned subsidiary
of Asyst, purchased substantially all of the assets of DLC, a
developer of next-generation software for tool communication and
a provider of a variety of consulting, development and
integration services to customers. Prior to this acquisition, we
owned approximately seven percent of the outstanding shares of
DLC. The results of ACT reflect the acquisition of DLCs
assets from the purchase date. The DLC assets were acquired for
$2.2 million of cash, $1.0 million of liabilities
assumed, and 468,796 shares of Asyst common stock valued at
$8.0 million. In addition, there were acquisition costs of
$0.4 million and certain former employees of DLC, upon
acceptance of employment with ACT received grants totaling
304,327 shares of Asyst common stock, to vest over four years
based on continued employment with ACT. The stock grants are
valued at approximately $5.7 million, based on their
intrinsic value at the date of grant. Assets acquired include
$768,000 of receivables and $40,000 of fixed assets. The
majority of the purchase price was allocated to intangible
assets, including in-process research and development, with the
remainder recorded as goodwill. We expensed approximately
$2.1 million of in-process research and development as part
of the acquisition in fiscal 2003. The value of the acquired
in-process research and development was determined by estimating
the expected cash flows from the products once commercially
viable, discounting the net cash flows to their present value,
and then applying a percentage of completion to the calculated
value. If the assumption and estimates used to allocate the
purchase price are not correct, future asset impairment charges
could be required. We recorded the value of intangible assets as
follows (in thousands):

|                                    |  |   |        | 
|----------------------------------- |  | - | ------ | 
|Amortizable intangible assets       |  | $ | 7,615  | 
|Goodwill                            |  |   | 2,100  | 
|In-process research and development |  |   | 2,082  | 
|                                    |  |   |        | 
|                                    |  | $ | 11,797 | 
|                                    |  |   |        | 

Comparative pro forma information reflecting the
acquisition of DLCs assets has not been presented because
the operations of DLC were not material to our financial
statements.

64



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                          
| | -------------------------
| | GW Associates, Inc. (GW):

On May 22, 2001 we acquired GW, a developer
of factory integration software used by electronics
manufacturers, for $3.6 million of cash, 451,263 shares of
our common stock valued at $8.0 million and a note for
$16.0 million, which was converted to 841,308 shares of our
common stock in May 2002. The note payable was paid in
shares of common stock in fiscal 2003. The acquisition was
accounted for using the purchase method of accounting.
Approximately $26.5 million of the purchase price, in
excess of the net assets of $4.5 million acquired, was
allocated to intangible assets. These intangible assets consist
of in-process research and development, developed technology,
installed customer base, assembled workforce, trade name, and
the excess purchase price of the net assets acquired. Because
there can be no assurance that we will be able to successfully
complete the associated products or that the technology has any
alternative future use, $2.0 million of such in-process
research and development was charged as an expense during fiscal
2002. The remaining intangible assets are being amortized over
three to six years. We identified research projects in areas for
which technological feasibility had not been established and no
alternative future uses existed. The value was determined by
estimating the expected cash flows from the products once
commercially viable, discounting the net cash flows to their
present value, and then applying a percentage of completion to
the calculated value. If the assumption and estimates used to
allocate the purchase price are not correct, future asset
impairment charges could be required.

Comparative pro forma information reflecting the
acquisition of GW has not been presented because the operations
of GW are not material to our consolidated financial statements.

5.     Restructuring
and Other Charges:

Restructuring and other charges and related
utilization for the fiscal years ended March 31, 2004, 2003
and 2002 were (in thousands):

|                        |                              |              |     |          |   |             |       |        |   |   |     |        |   |   |       |        |  
|----------------------- | ---------------------------- | ------------ | --- | -------- | - | ----------- | ----- | ------ | - | - | --- | ------ | - | - | ----- | ------ | -
|                        |                              | Severance    |     | Excess   |   | Fixed Asset |       |       
|                        |                              | and Benefits |     | Facility |   | Impairment  |       | Total 
|                        |                              |              |     |          |   |             |       |       
|Balance, March 31, 2001 |                              | $            |    |          |   | $           |      |        |   | $ |    |        |   | $ |      |       
|                        | Additional accruals          |              |     | 4,278    |   |             |       | 3,685  |   |   |     | 200    |   |   |       | 8,163  |  
|                        | Non-cash related adjustments |              |     |         |   |             |       | (781   | ) |   |     |       |   |   |       | (781   | )
|                        | Amounts paid in cash         |              |     | (3,537   | ) |             |       | (472   | ) |   |     |       |   |   |       | (4,009 | )
|                        |                              |              |     |          |   |             |       |        |   |   |     |        |   |   |       |       
|Balance, March 31, 2002 |                              |              | 741 |          |   |             | 2,432 |        |   |   | 200 |        |   |   | 3,373 |       
|                        | Additional accruals          |              |     | 2,125    |   |             |       | 2,733  |   |   |     | 2,161  |   |   |       | 7,019  |  
|                        | Non-cash related adjustments |              |     | (331     | ) |             |       | (214   | ) |   |     | (2,077 | ) |   |       | (2,622 | )
|                        | Amounts paid in cash         |              |     | (2,244   | ) |             |       | (1,334 | ) |   |     | (92    | ) |   |       | (3,670 | )
|                        |                              |              |     |          |   |             |       |        |   |   |     |        |   |   |       |       
|Balance, March 31, 2003 |                              |              | 291 |          |   |             | 3,617 |        |   |   | 192 |        |   |   | 4,100 |       
|                        | Additional accruals          |              |     | 5,460    |   |             |       | 1,075  |   |   |     | 46     |   |   |       | 6,581  |  
|                        | Non-cash related adjustments |              |     | 70       |   |             |       | (335   | ) |   |     | (205   | ) |   |       | (470   | )
|                        | Amounts paid in cash         |              |     | (5,757   | ) |             |       | (2,058 | ) |   |     | (33    | ) |   |       | (7,848 | )
|                        |                              |              |     |          |   |             |       |        |   |   |     |        |   |   |       |       
|Balance, March 31, 2004 |                              | $            | 64  |          |   | $           | 2,299 |        |   | $ |    |        |   | $ | 2,363 |       
|                        |                              |              |     |          |   |             |       |        |   |   |     |        |   |   |       |       

In fiscal 2004, we recorded net severance and
other charges of $5.5 million, primarily related to
$3.4 million in severance costs from a reduction in
workforce in April 2003 and a $1.0 million charge
related to the settlement and release of claims arising from the
termination of a former officer. Included were also
$1.1 million of severance expenses primarily from headcount
reductions in our Japanese operations. In addition to the
severance charges, we recorded $1.1 million for exiting a
facility in connection with our restructuring activities and for
future lease obligations on a vacated facility in excess of
estimated future

65



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

sublease proceeds. As a result of these
restructuring activities, we terminated the employment of
approximately 245 employees, including 129 in manufacturing, 34
in research and development and 82 in selling, general and
administration, from our U.S. operations as well as
international operations.

In fiscal 2003, we recorded a charge of
$1.6 million related to excess facilities that we had under
lease but had abandoned as a result of our decision to outsource
our manufacturing activities and an excess facility charge of
$1.1 million reflecting revised estimates of future
sublease income based on continued weakness in the Austin, Texas
commercial real estate market. We also recorded severance
charges of $1.5 million resulting from headcount reductions
and contractual obligations of $0.6 million as a result of
workforce reduction measures. The restructuring activities
affected approximately 291 employees in manufacturing, sales,
research and development and administrative staff, including
approximately 191 employees who joined Solectron. We also
recorded a fixed asset impairment charge of $2.2 million
for assets abandoned due to facility consolidation and the
integration of certain programs into ASI.

In fiscal 2002, restructuring charges were
recorded resulting from our plan to shut down some of our
manufacturing and service locations, outsource some of our
manufacturing activities and consolidate the remainder of our
U.S. manufacturing in Fremont California, as well as to reduce
our workforce due to economic conditions. These charges include
approximately $3.9 million in write-downs of assets and
reserves for lease commitments, net of estimated sublease income
that we expect to generate from the vacated facilities, and
severance costs of approximately $4.3 million related to
reductions in force of approximately 435 employees, or
29.0 percent of our workforce.

We expect to utilize the remaining balance,
primarily unused leased facilities, over the following two
fiscal years. All remaining accrual balances are expected to be
settled in cash.

6.     Asset
Impairment Charges:

We completed the sale of land in Fremont,
California, in the quarter ended September 30, 2003. The
net proceeds from the sale were $12.1 million. We had
intended to construct corporate headquarters facilities on the
land and subsequently decided not to build these facilities.
Initially, we leased the land from a syndicate of financial
institutions pursuant to an original lease agreement and an
amended lease agreement. We purchased the land on
October 22, 2001 for $41.1 million, and paid the
syndicate of financial institutions approximately
$2.9 million for engineering costs incurred in preparation
for making leasehold improvements to the land. Based upon market
data at June 30, 2001 and our non-cancelable commitment to
purchase the land, we estimated that the then market value of
the land had been impaired and as such recorded a
$15.0 million write-down to its estimated market value
during the quarter ended June 30, 2001. We entered into a
purchase agreement in September 2002 to sell the land for
$19.0 million, net of selling expenses. This transaction
did not close. As a result, an additional $7.1 million
write-down was recorded in the second quarter in fiscal 2003. In
the quarter ended June 30, 2003, we recorded a
$6.9 million write-down based on our latest estimate of
market value as supported by the pending sale agreement at the
time.

In the quarter ended December 31, 2002, we
completed an annual goodwill impairment test. As a result of the
test, we determined that impairment charges of $8.4 million
were required because the forecasted undiscounted cash flows
were less than the book values of certain businesses. The
charges were measured on the basis of comparing estimated fair
values with corresponding book values related to the goodwill
and intangible assets recorded in connection with our
May 2002 acquisition of substantially all the assets of
domainLogix Corporation, or DLC.

66



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

7.     Income
Taxes:

The provision for (benefit from) income taxes is
based upon income (loss) before income taxes, minority interest,
discontinued operations and cumulative effect of change in
accounting principle as follows (in thousands):

|         |  |                             |         |      |  |      |         |   |  |   |          |  
|-------- |  | --------------------------- | ------- | ---- |  | ---- | ------- | - |  | - | -------- | -
|         |  |                            
|         |  | Fiscal Year Ended March 31,
|         |  |                            
|         |  | 2004                        |         | 2003 |  | 2002
|         |  |                             |         |      |  |     
|Domestic |  | $                           | (73,828 | )    |  | $    | (57,557 | ) |  | $ | (138,359 | )
|Foreign  |  |                             | (20,129 | )    |  |      | (4,544  | ) |  |   | 2,819    |  
|         |  |                             |         |      |  |      |         |   |  |   |          |  
|         |  | $                           | (93,957 | )    |  | $    | (62,101 | ) |  | $ | (135,540 | )
|         |  |                             |         |      |  |      |         |   |  |   |          |  

The provision for (benefit from) income taxes
consisted of (in thousands):

|                                                    |         |                             |        |        |        |      |        |        |        |   |         |         |         |  
|--------------------------------------------------- | ------- | --------------------------- | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------- | ------- | ------- | -
|                                                    |         |                            
|                                                    |         | Fiscal Year Ended March 31,
|                                                    |         |                            
|                                                    |         | 2004                        |        | 2003   |        | 2002
|                                                    |         |                             |        |        |        |     
|Current:                                            |         |                             |        |        |        |      |        |        |        |   |         |        
|                                                    | Federal |                             | $      |       |        |      | $      |       |        |   | $       | (2,443  | )      
|                                                    | State   |                             |        | 31     |        |      |        | 80     |        |   |         | 80      |        
|                                                    | Foreign |                             |        | 2,272  |        |      |        | 2,394  |        |   |         | 747     |        
|                                                    |         |                             |        |        |        |      |        |        |        |   |         |        
|                                                    |         | Total Current               |        |        | 2,303  |      |        |        | 2,474  |   |         |         | (1,616  | )
|                                                    |         |                             |        |        |        |      |        |        |        |   |         |        
|Deferred:                                           |         |                             |        |        |        |      |        |        |        |   |         |        
|                                                    | Federal |                             |        |       |        |      |        | 51,557 |        |   |         | (32,330 | )      
|                                                    | State   |                             |        |       |        |      |        | 6,378  |        |   |         | (4,080  | )      
|                                                    | Foreign |                             |        | (8,453 | )      |      |        | (3,074 | )      |   |         |        |        
|                                                    |         |                             |        |        |        |      |        |        |        |   |         |        
|                                                    |         | Total Deferred              |        |        | (8,453 | )    |        |        | 54,861 |   |         |         | (36,410 | )
|                                                    |         |                             |        |        |        |      |        |        |        |   |         |        
|Total provision for (benefit from)
    income taxes |         | $                           | (6,150 | )      |        | $    | 57,335 |        |        | $ | (38,026 | )      
|                                                    |         |                             |        |        |        |      |        |        |        |   |         |        

The provision for (benefit from) income taxes is
reconciled with the Federal statutory rate as follows (in
thousands):

|                                                                     |  |                             |       |      |  |      |       |    |  |  |       |   
|-------------------------------------------------------------------- |  | --------------------------- | ----- | ---- |  | ---- | ----- | -- |  |  | ----- | --
|                                                                     |  |                            
|                                                                     |  | Fiscal Year Ended March 31,
|                                                                     |  |                            
|                                                                     |  | 2004                        |       | 2003 |  | 2002
|                                                                     |  |                             |       |      |  |     
|Federal statutory rate                                               |  |                             | (35.0 | )%   |  |      | (35.0 | )% |  |  | (35.0 | )%
|State taxes, net of Federal benefit                                  |  |                             | (5.5  | )%   |  |      | (5.0  | )% |  |  | (2.5  | )%
|Foreign income and withholding taxes in excess of
    statutory rate |  |                             | 0.9   | %    |  |      | 1.1   | %  |  |  | (0.1  | )%
|In-process research and development                                  |  |                             | 0.0   | %    |  |      | 3.9   | %  |  |  | 0.2   | % 
|Non-deductible expenses and other                                    |  |                             | (0.8  | )%   |  |      | 0.8   | %  |  |  | 0.2   | % 
|Change in valuation allowance                                        |  |                             | 33.9  | %    |  |      | 126.5 | %  |  |  | 0.0   | % 
|Goodwill amortization                                                |  |                             | 0.0   | %    |  |      | 0.0   | %  |  |  | 9.3   | % 
|Tax exempt income                                                    |  |                             | 0.0   | %    |  |      | 0.0   | %  |  |  | (0.2  | )%
|                                                                     |  |                             |       |      |  |      |       |    |  |  |       |   
|Effective income tax rate                                            |  |                             | (6.5  | )%   |  |      | 92.3  | %  |  |  | (28.1 | )%
|                                                                     |  |                             |       |      |  |      |       |    |  |  |       |   

67



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The components of the net deferred tax assets and
liabilities are as follows (in thousands):

|                                            |                              |                             |          |         |   |   |         |         |  
|------------------------------------------- | ---------------------------- | --------------------------- | -------- | ------- | - | - | ------- | ------- | -
|                                            |                              |                            
|                                            |                              | Fiscal Year Ended March 31,
|                                            |                              |                            
|                                            |                              | 2004                        |          | 2003   
|                                            |                              |                             |          |        
|Net operating loss and credit carryforwards |                              | $                           | 97,740   |         |   | $ | 64,685  |        
|Reserves and accruals                       |                              |                             | 19,050   |         |   |   | 23,084  |        
|Foreign deferred tax assets                 |                              |                             | 9,035    |         |   |   | 7,898   |        
|Depreciation and Amortization               |                              |                             | (626     | )       |   |   | (1,625  | )      
|Capitalized R&D                             |                              |                             | 4,217    |         |   |   | 1,628   |        
|                                            |                              |                             |          |         |   |   |         |        
|                                            | Gross deferred tax assets    |                             |          | 129,416 |   |   |         | 95,670  |  
|Valuation allowance                         |                              |                             | (126,848 | )       |   |   | (95,670 | )      
|                                            |                              |                             |          |         |   |   |         |        
|                                            | Net deferred tax assets      |                             | $        | 2,568   |   |   | $       |        |  
|                                            |                              |                             |          |         |   |   |         |        
|Gross deferred tax liability:               |                              |                             |          |         |   |   |         |        
|Intangibles                                 |                              | $                           | (20,704  | )       |   | $ | (23,754 | )      
|                                            |                              |                             |          |         |   |   |         |        
|                                            | Net deferred tax liabilities |                             | $        | (20,704 | ) |   | $       | (23,754 | )
|                                            |                              |                             |          |         |   |   |         |        

At March 31, 2004, we had federal and state
net operating losses of $244.9 million and $63.3 million,
respectively. The federal net operating losses expire at various
dates through March 2024. Approximately $13.7 million
of net operating losses relates to stock options which when
realized will be credited to equity. In addition, as of
March 2004, $7.1 million of the federal tax asset
relates to pre-merger foreign net operating loss carry-forwards
of MECS, which expire in 2005.

At March 31, 2004, we had federal and state
research and development tax credits of $4.3 million and
$3.9 million, respectively. The federal research and
development tax credits will begin to expire in 2021, while the
state research and development tax credits may be carried
forward indefinitely.

Based on the available objective evidence, we
believe that it is more likely than not that the U.S. deferred
tax assets, including the net operating losses, will not be
fully realizable. Accordingly, we have provided a full valuation
allowance against the U.S. deferred tax assets at March 31,
2004. A partial valuation allowance has been provided against
the Japanese deferred tax assets based on an entity-by-entity
analysis based on the available objective evidence.

A deferred tax liability was recorded as part of
purchase accounting for the identifiable intangible assets
acquired as part of the joint venture, ASI. The joint venture
had no deferred tax assets at the date of acquisition.

8.     Sale of Wafer
and Reticle Carrier Product Line:

In fiscal 2003, we sold our wafer and reticle
carrier (WRC) product line to Entegris for net proceeds of
$34.2 million. As a result of this transaction, we recorded
a gain on sale of $28.4 million. The wafer and reticle
carrier product line contributed revenues of $31.1 million
and $28.9 million in fiscal years 2003 and 2002, respectively.

9.     Discontinued
Operations:

There were no discontinued operations in fiscal
2004. In fiscal 2003, our Board of Directors approved a plan to
discontinue operations of our AMP and SemiFab subsidiaries.
Accordingly, these businesses were classified as held for sale
and accounted for as discontinued operations and, therefore, the
results of operations and cash flows have been reclassified from
our results of continuing operations to discontinued operations
for

68



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

all periods presented. We based our decision on
an evaluation of, and decision to focus on our core business,
concluding AMP and SemiFab were not critical to our long-term
strategy. We completed the sale of each business at the end of
fiscal 2003. Proceeds from sale of AMP and SemiFab were
$0.5 million in cash and $0.4 million in secured
notes. The loss on sale of AMP and SemiFab was $6.0 million.

Summarized selected financial information for the
discontinued operations is as follows (in thousands):

|                         |  |                      |         |      |  |   |         |  
|------------------------ |  | -------------------- | ------- | ---- |  | - | ------- | -
|                         |  |                     
|                         |  | Year Ended March 31,
|                         |  |                     
|                         |  | 2003                 |         | 2002
|                         |  |                      |         |     
|Net sales                |  | $                    | 12,227  |      |  | $ | 10,718  |  
|                         |  |                      |         |      |  |   |         |  
|Loss before income taxes |  |                      | (21,096 | )    |  |   | (58,095 | )
|Income tax benefit       |  |                      |        |      |  |   | 6,692   |  
|                         |  |                      |         |      |  |   |         |  
|Net loss                 |  | $                    | (21,096 | )    |  | $ | (51,403 | )
|                         |  |                      |         |      |  |   |         |  

The loss before income taxes in fiscal 2003
includes a charge of approximately $1.6 million related to
settlement of a contingent purchase adjustment with the former
shareholders of SemiFab. The contingency was settled by the
issuance of 249,880 shares of our common stock in the fourth
quarter of fiscal 2003.

10.     Debt:

We had $18.2 million and $18.0 million
at March 31, 2004 and 2003, respectively, of short-term
debt from banks in Japan. As of March 31, 2004, the
interest rate ranged from 1.4 percent to 3.0 percent.
Interest rates ranged from 1.4 percent to 2.4 percent
at March 31, 2003. Substantially all of the debt is
guaranteed by Asyst in the United States.

Long-term debt and capital leases consisted of
the following (in thousands):

|                                                               |  |                      |        |      |  |   |         |  
|-------------------------------------------------------------- |  | -------------------- | ------ | ---- |  | - | ------- | -
|                                                               |  |                     
|                                                               |  | Year Ended March 31,
|                                                               |  |                     
|                                                               |  | 2004                 |        | 2003
|                                                               |  |                      |        |     
|Convertible subordinated notes                                 |  | $                    | 86,250 |      |  | $ | 86,250  |  
|Line of credit                                                 |  |                      |       |      |  |   | 25,000  |  
|Secured straight bonds                                         |  |                      | 7,110  |      |  |   | 4,075   |  
|Capital leases                                                 |  |                      | 489    |      |  |   | 760     |  
|                                                               |  |                      |        |      |  |   |         |  
|Total long-term debt                                           |  |                      | 93,849 |      |  |   | 116,085 |  
|Less: Current portion of long-term debt and
    capital leases |  |                      | (2,775 | )    |  |   | (1,273  | )
|                                                               |  |                      |        |      |  |   |         |  
|Long-term debt and capital leases of
    current portion       |  | $                    | 91,074 |      |  | $ | 114,812 |  
|                                                               |  |                      |        |      |  |   |         |  

At March 31, 2004, maturities of all
long-term debt and capital leases are as follows (in thousands):

|                             |  |        |        | 
|---------------------------- |  | ------ | ------ | 
|Fiscal Year Ending March 31, |  | Amount
|                             |  |       
|2005                         |  | $      | 3,546  | 
|2006                         |  |        | 2,988  | 
|2007                         |  |        | 891    | 
|2008                         |  |        | 86,424 | 
|2009 and thereafter          |  |        |       | 
|                             |  |        |        | 
|                             |  | $      | 93,849 | 
|                             |  |        |        | 

69



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                   
| | ----------------------------------
| | Convertible Subordinated
    Notes

On July 3, 2001, we completed the sale of
$86.3 million of 5 3/4 percent convertible
subordinated notes that resulted in aggregate proceeds of $82.9
million to us, net of issuance costs. The notes are convertible,
at the option of the holder, at any time on or prior to maturity
into shares of our common stock at a conversion price of $15.18
per share, which is equal to a conversion rate of 65.8718 shares
per $1,000 principal amount of notes. The notes mature
July 3, 2008, pay interest on January 3 and July 3 of each
year and are redeemable at our option after July 3, 2004.
Debt issuance costs of $2.9 million, net of amortization are
included in other assets. Issuance costs are being amortized
over 84 months and are being charged to other income
(expense). Debt amortization costs totaled $0.5,
$0.5 million and $0.4 million during the year ended
March 31, 2004, 2003 and 2002, respectively.



| |                       
| | ----------------------
| | Secured Straight Bonds

We had $7.1 million and $4.1 million of
secured straight bonds from a bank in Japan at March 31,
2004 and 2003, respectively. The bonds bore interest at rates
ranging from 1.4 percent to 3.0 percent as of
March 31, 2004 and 1.4 to 2.4 percent as of
March 31, 2003 and mature in fiscal year 2008. Certain of
our assets in Japan have been pledged as security for short-term
debt and secured straight bonds.



| |               
| | --------------
| | Line of Credit

We have available to us a $25 million 2-year
revolving credit agreement with a commercial bank and are
required under the agreement to maintain compliance with
financial covenants. The amount of the credit line available may
change based on the amount of receivables held and reductions in
the non-formulary piece of the credit line which is subject to
periodic review and amendment. During fiscal year 2004, we
amended the financial covenants. As amended, we were required
under the agreement to maintain compliance with financial
covenants, including a quarterly net income/loss target,
calculated on an after-tax basis excluding depreciation,
amortization and other non-cash items and a requirement that we
maintain with the bank during the term of the credit agreement a
minimum balance of $5.0 million of cash and
cash-equivalents. As of the quarter ended December 31,
2003, we were not in compliance with certain of these financial
covenants. However, we obtained a waiver of compliance from the
bank for these certain covenants. The credit line was fully paid
down during the quarter ended December 31, 2003. As of
March 31, 2004, we were in compliance with these financial
covenants.

In September 2003, ASI entered into a
short-term bank facility with a Japanese bank under which it may
borrow up to approximately $28.3 million at the exchange
rate as of March 31, 2004. ASI had outstanding borrowings
of $4.7 million that is recorded in short-term debt as of
March 31, 2004. Under terms of the ASI bank facility, ASI
must generate operating profits on a statutory basis. We were in
compliance with the loan covenants at March 31, 2004.

We have guaranteed certain lease payments with
respect to equipment and real estate of our Japanese
subsidiaries.

11.     Common
Stock:

As of March 31, 2004, the following shares
of our common stock were available for issuance:

|                             |  |  |           | 
|---------------------------- |  |  | --------- | 
|Employee Stock Option Plans  |  |  | 1,329,920 | 
|Employee Stock Purchase Plan |  |  | 615,899   | 
|                             |  |  |           | 
|                             |  |  | 1,945,819 | 
|                             |  |  |           | 

70



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                          
| | -------------------------
| | Sale of Equity Securities

In November 2003, we sold 6,900,000 shares
of our common stock, including exercise of the
underwriters over-allotment option, at an offering price
to the public of $15.17 per share. We received total proceeds of
$99.0 million, net of the related issuance fees and costs
of $5.7 million.



| |                   
| | ------------------
| | Stock Option Plans

We have six stock option plans; the 1986 Employee
Stock Option Plan (the 1986 Plan), the 1993 Employee
Stock Option Plan (the 93 Plan), the 1993
Non-Employee Directors Stock Plan, the 2001 Non-Officer
Equity Plan (the 2001 Plan), the 2003 Equity
Incentive Plan (the 2003 Plan) and the SemiFab Inc.
1993 Flexible Stock Incentive Plan ( the SemiFab
Plan). Under all of our stock option plans, options are
granted for ten year periods and become exercisable ratably over
a vesting period of four years or as determined by the Board of
Directors.

The 1986 Plan was terminated in 1994, and there
are no further stock options available for issuance.

The 1993 Plan was terminated in 2003, and there
are no further stock options available for issuance.

The 1993 Non-Employee Directors Stock Plan
was terminated in 1999, and there are no further stock options
available for issuance.

Under the 2001 Plan, adopted in
January 2001, 2,100,000 shares of common stock are reserved
for issuance. The 2001 Plan provides for the grant of only
non-qualified stock options to employees (other than officers or
directors) and consultants (not including directors). Under the
2001 Plan, options may be granted at prices not less than the
fair market value of our common stock at grant date.

Under the 2003 Plan, adopted in July 2003,
1,000,000 shares of common stock are reserved for issuance. The
2003 Plan provides for the grant of non-qualified stock options,
incentive stock options and restricted stocks to employees.
Under the 2003 Plan, options may be granted at prices not less
than the fair market value of our common stock at grant date.

The SemiFab Plan arose from the acquisition of
SemiFab in February 2001. The plan was terminated upon the
sale of SemiFab in fiscal 2003. There are no further stock
options available for issuance.

Activity in our stock option plans is summarized
as follows:

|                                       |  |                             |            |       |  |        |       |       |  |        |            |       |  |   |       |  |  |  |            |   |  |   |       | 
|-------------------------------------- |  | --------------------------- | ---------- | ----- |  | ------ | ----- | ----- |  | ------ | ---------- | ----- |  | - | ----- |  |  |  | ---------- | - |  | - | ----- | 
|                                       |  |                            
|                                       |  | Fiscal Year Ended March 31,
|                                       |  |                            
|                                       |  |                             |            |       |  |       
|                                       |  | 2004                        |            | 2003  |  | 2002  
|                                       |  |                             |            |       |  |       
|                                       |  | Shares                      |            | Price |  | Shares |       | Price |  | Shares |            | Price
|                                       |  |                             |            |       |  |        |       |       |  |        |            |      
|Options outstanding, beginning of year |  |                             | 9,210,061  |       |  | $      | 12.20 |       |  |        | 9,971,917  |       |  | $ | 12.76 |  |  |  | 8,194,290  |   |  | $ | 13.47 | 
|Granted                                |  |                             | 3,014,508  |       |  |        | 6.67  |       |  |        | 2,144,023  |       |  |   | 10.62 |  |  |  | 3,716,432  |   |  |   | 11.83 | 
|Exercised                              |  |                             | (1,695,160 | )     |  |        | 6.75  |       |  |        | (525,269   | )     |  |   | 7.92  |  |  |  | (560,954   | ) |  |   | 6.63  | 
|Cancelled                              |  |                             | (2,317,904 | )     |  |        | 12.80 |       |  |        | (2,380,610 | )     |  |   | 14.00 |  |  |  | (1,377,851 | ) |  |   | 17.13 | 
|                                       |  |                             |            |       |  |        |       |       |  |        |            |       |  |   |       |  |  |  |            |   |  |   |       | 
|Options outstanding, end of year       |  |                             | 8,211,505  |       |  | $      | 11.05 |       |  |        | 9,210,061  |       |  | $ | 12.20 |  |  |  | 9,971,917  |   |  | $ | 12.76 | 
|                                       |  |                             |            |       |  |        |       |       |  |        |            |       |  |   |       |  |  |  |            |   |  |   |       | 
|Exercisable, end of year               |  |                             | 4,417,856  |       |  | $      | 12.40 |       |  |        | 5,276,209  |       |  | $ | 11.59 |  |  |  | 4,498,458  |   |  | $ | 10.77 | 
|                                       |  |                             |            |       |  |        |       |       |  |        |            |       |  |   |       |  |  |  |            |   |  |   |       | 

71



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following table summarizes the stock options
as of March 31, 2004 (prices and contractual life are
weighted averages):

|                                |                    |                     |           |                     |           |       |      |             |      |          |       |       |       |  |           |         |         |   |       |       |       | 
|------------------------------- | ------------------ | ------------------- | --------- | ------------------- | --------- | ----- | ---- | ----------- | ---- | -------- | ----- | ----- | ----- |  | --------- | ------- | ------- | - | ----- | ----- | ----- | 
|                                |                    |                     |           |                     |           |      
|                                |                    | Options Outstanding |           |                    
|                                |                    |                     |           | Exercisable Options
|                                |                    |                     |           | Remaining           |           |       |      |            
|                                |                    | Number              |           | Contractual         |           |       |      | Number      |      | Exercise
|Actual Range of Exercise Prices |                    | Outstanding         |           | Life                |           | Price |      | Exercisable |      | Price   
|                                |                    |                     |           |                     |           |       |      |             |      |         
|$ 0.0000  $ 6.1900             |                    |                     | 2,881,459 |                     |           |       | 8.07 |             |      | $        | 4.51  |       |       |  | 1,009,278 |         |         | $ | 4.45  |      
|                                |                    | 6.5000    8.4800   |           |                     | 473,412   |       |      |             | 5.65 |          |       |       | 7.30  |  |           |         | 359,474 |   |       |       | 7.28  | 
|                                |                    | 9.1563   12.8125   |           |                     | 1,063,328 |       |      |             | 6.45 |          |       |       | 10.60 |  |           |         | 812,417 |   |       |       | 10.66 | 
|                                | 12.9000   13.3125 |                     |           | 1,085,026           |           |       |      | 7.55        |      |          |       | 12.94 |       |  |           | 637,157 |         |   |       | 12.96 |      
|                                | 13.4000   17.6800 |                     |           | 1,458,431           |           |       |      | 7.95        |      |          |       | 15.19 |       |  |           | 671,066 |         |   |       | 15.03 |      
|                                | 17.8800   73.0647 |                     |           | 1,249,849           |           |       |      | 6.34        |      |          |       | 21.29 |       |  |           | 928,464 |         |   |       | 22.02 |      
|                                |                    |                     |           |                     |           |       |      |             |      |          |       |       |       |  |           |         |         |   |       |      
|$ 0.0001  $73.0648             |                    |                     | 8,211,505 |                     |           |       | 7.37 |             |      | $        | 11.05 |       |       |  | 4,417,856 |         |         | $ | 12.40 |      
|                                |                    |                     |           |                     |           |       |      |             |      |          |       |       |       |  |           |         |         |   |       |      

The first line in the table includes 53,000
shares of restricted stock issued under the stock option plans.
Excluding these shares, the range of exercise prices in this
line is $2.22  $6.19.

The weighted-average grant date fair value of
options during 2004, 2003 and 2002 was $4.37, $10.25 and $7.27,
respectively. 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 used for
grants in 2004, 2003, and 2002:

|                        |  |                             |      |      |  |      |      |   |  |  |      |  
|----------------------- |  | --------------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                        |  |                            
|                        |  | Fiscal Year Ended March 31,
|                        |  |                            
|                        |  | 2004                        |      | 2003 |  | 2002
|                        |  |                             |      |      |  |     
|Risk-free interest rate |  |                             | 3.00 |      |  |      | 2.62 |   |  |  | 4.97 |  
|Expected term of option |  |                             | 4.65 |      |  |      | 4.30 |   |  |  | 4.73 |  
|Expected volatility     |  |                             | 81   | %    |  |      | 107  | % |  |  | 76   | %
|Expected dividend yield |  |                             | 0    | %    |  |      | 0    | % |  |  | 0    | %



| |                             
| | ----------------------------
| | Employee Stock Purchase Plan

Under the 1993 Employee Stock Purchase Plan (the
Plan), as amended, 2,450,000 shares of common stock
are reserved for issuance to eligible employees. The Plan
permits employees to purchase common stock through payroll
deductions, which may not exceed 10.0 percent of an
employees compensation, at a price not less than
85.0 percent of the market value of the stock on specified
dates. During the years ended March 31, 2004, 2003 and
2002, 163,671, 242,686 and 239,702 shares, respectively, were
issued under the plan. As of March 31, 2004, 1,834,101
shares had been purchased by employees under the Plan.

The weighted-average fair value of stock
purchases during 2004, 2003 and 2002 was $7.69, $8.40 and
$11.14, respectively. The fair value of each stock purchase is
calculated on the date of purchase using the Black-Scholes model
with the following weighted average assumptions used:

|                         |  |                             |      |      |  |      |      |   |  |  |      |  
|------------------------ |  | --------------------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                         |  |                            
|                         |  | Fiscal Year Ended March 31,
|                         |  |                            
|                         |  | 2004                        |      | 2003 |  | 2002
|                         |  |                             |      |      |  |     
|Risk-free interest rate  |  |                             | 1.15 |      |  |      | 1.83 |   |  |  | 2.41 |  
|Expected life (in years) |  |                             | 0.50 |      |  |      | 0.50 |   |  |  | 0.50 |  
|Expected volatility      |  |                             | 81   | %    |  |      | 107  | % |  |  | 76   | %
|Expected dividend yield  |  |                             | 0    | %    |  |      | 0    | % |  |  | 0    | %

72



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

12.     Defined
Benefit Plans:

Our joint venture, ASI, provides a defined
benefit pension plan for its employees. The joint venture
deposits funds for this plan with insurance companies,
third-party trustees, or into government-managed accounts,
and/or accrues for the unfunded portion of the obligation, in
each case consistent with the requirements of Japanese law.

The changes in the benefit obligations and plan
assets for the plan described above were as follows (in
thousands):

|                                             |  |           |         |      |  |   |         |  
|-------------------------------------------- |  | --------- | ------- | ---- |  | - | ------- | -
|                                             |  |          
|                                             |  | March 31,
|                                             |  |          
|                                             |  | 2004      |         | 2003
|                                             |  |           |         |     
|Change in benefit obligation:                |  |           |         |      |  |   |         |  
|Beginning benefit obligation                 |  | $         | 16,526  |      |  | $ |        |  
|Acquisitions                                 |  |           |        |      |  |   | 15,707  |  
|Service cost                                 |  |           | 688     |      |  |   | 308     |  
|Interest cost                                |  |           | 352     |      |  |   | 154     |  
|Actuarial loss                               |  |           | 334     |      |  |   |        |  
|Currency exchange rate changes               |  |           | 2,014   |      |  |   | 678     |  
|Benefits paid to plan participants           |  |           | (1,211  | )    |  |   | (321    | )
|                                             |  |           |         |      |  |   |         |  
|Ending benefit obligation                    |  | $         | 18,703  |      |  | $ | 16,526  |  
|                                             |  |           |         |      |  |   |         |  
|Change in Plan Assets:                       |  |           |         |      |  |   |         |  
|Beginning fair value of plan assets          |  | $         | 4,071   |      |  |   |        |  
|Acquisitions                                 |  |           |        |      |  |   | 3,387   |  
|Actual return on plan assets                 |  |           | 61      |      |  |   | (244    | )
|Employer contributions                       |  |           | 2,275   |      |  |   | 988     |  
|Currency exchange rate changes               |  |           | 543     |      |  |   | 167     |  
|Benefits paid to participants                |  |           | (797    | )    |  |   | (227    | )
|                                             |  |           |         |      |  |   |         |  
|Ending fair value of
    plan assets         |  | $         | 6,153   |      |  | $ | 4,071   |  
|                                             |  |           |         |      |  |   |         |  
|Funded Status:                               |  |           |         |      |  |   |         |  
|Ending funded status                         |  |           | (12,550 | )    |  |   | (12,455 | )
|Unrecognized net actuarial loss              |  |           | 774     |      |  |   | 313     |  
|                                             |  |           |         |      |  |   |         |  
|Net amount recognized                        |  |           | (11,776 | )    |  |   | (12,142 | )
|                                             |  |           |         |      |  |   |         |  
|Amounts Recognized in the Balance
    Sheet: |  |           |         |      |  |   |         |  
|Accrued benefit liability                    |  | $         | (11,776 | )    |  | $ | (12,142 | )
|                                             |  |           |         |      |  |   |         |  

Economic assumptions used to determine the costs
and benefit obligations for the pension plan were as follows:

|                               |  |           |       |      |  |  |       | 
|------------------------------ |  | --------- | ----- | ---- |  |  | ----- | 
|                               |  |          
|                               |  | March 31,
|                               |  |          
|                               |  | 2004      |       | 2003
|                               |  |           |       |     
|Discount rate                  |  |           | 2.00% |      |  |  | 2.00% | 
|Expected return on plan assets |  |           | 3.50% |      |  |  | 3.00% | 
|Rate of compensation increase  |  |           | 2.50% |      |  |  | 2.25% | 

73



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Asset return assumptions are required by
generally accepted accounting principles and are derived,
following actuarial and statistical methodologies, from the
analysis of long-term historical data relevant to Japan where
the plan is in effect, and the investment applicable to the
plan. Plans are subject to regulation under local law which may
directly or indirectly affect the types of investment that the
plan may hold.

The net periodic benefit cost for the plan
included the following components (in thousands):

|                               |  |                 |      |      |  |   |     |  
|------------------------------ |  | --------------- | ---- | ---- |  | - | --- | -
|                               |  |                
|                               |  | Fiscal Year    
|                               |  | Ended March 31,
|                               |  |                
|                               |  | 2004            |      | 2003
|                               |  |                 |      |     
|Company service cost           |  | $               | 688  |      |  | $ | 308 |  
|Interest cost                  |  |                 | 352  |      |  |   | 154 |  
|Expected return on plan assets |  |                 | (243 | )    |  |   | (57 | )
|                               |  |                 |      |      |  |   |     |  
|Net periodic pension cost      |  | $               | 797  |      |  | $ | 405 |  
|                               |  |                 |      |      |  |   |     |  

At March 31, 2004, the plans
accumulated benefit obligation of $15.6 million and the
plans projected benefit obligation of $18.7 million
exceed the plan assets of $6.2 million. We are contingently
liable to provide funding for plan benefits under a pension plan
of Asyst Shinko.



| |                                         
| | ----------------------------------------
| | Employee Savings and Retirement
    Plan

We maintain a 401(k) retirement savings plan for
our full-time employees. Participants in the 401(k) plan may
contribute up to 15.0 percent of their annual salary,
limited by the maximum dollar amount allowed by the Internal
Revenue Code. No employer matching contributions were made in
fiscal years ended March 31, 2004, 2003 and 2002.

13.     Reportable
Segments:

We have two reportable segments: Fab Automation
and AMHS. Fab Automation products include interface products,
substrate-handling robotics, wafer and reticle carriers, auto-ID
systems, sorters and connectivity software. AMHS products
include automated transport and loading systems for
semiconductor fabs and flat panel display manufacturers.

We evaluate performance and allocate resources
based on revenues and operating income (loss). Operating income
(loss) for each segment includes selling, general and
administrative expenses directly attributable to the segment.
Amortization of acquired intangible assets, including impairment
of these assets and of goodwill, and acquisition-related and
restructuring charges are excluded from the segments
operating income (loss). Our non-allocable overhead costs, which
include corporate general and administrative expenses, are
allocated between the segments based upon segment revenues.

74



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Segment information is summarized as follows (in
millions):

|                         |  |                             |       |      |  |      |       |   |  |   |        |  
|------------------------ |  | --------------------------- | ----- | ---- |  | ---- | ----- | - |  | - | ------ | -
|                         |  |                            
|                         |  | Fiscal Year Ended March 31,
|                         |  |                            
|                         |  | 2004                        |       | 2003 |  | 2002
|                         |  |                             |       |      |  |     
|Fab Automation Products: |  |                             |       |      |  |      |       |   |  |   |        |  
|                         |  |                             |       |      |  |      |       |   |  |   |        |  
|Net sales                |  | $                           | 133.1 |      |  | $    | 213.1 |   |  | $ | 183.2  |  
|                         |  |                             |       |      |  |      |       |   |  |   |        |  
|Operating loss           |  | $                           | (68.1 | )    |  | $    | (66.9 | ) |  | $ | (132.1 | )
|                         |  |                             |       |      |  |      |       |   |  |   |        |  
|AMHS:                    |  |                             |       |      |  |      |       |   |  |   |        |  
|                         |  |                             |       |      |  |      |       |   |  |   |        |  
|Net sales                |  | $                           | 168.5 |      |  | $    | 46.4  |   |  | $ |       |  
|                         |  |                             |       |      |  |      |       |   |  |   |        |  
|Operating loss           |  | $                           | (19.2 | )    |  | $    | (16.7 | ) |  | $ |       |  
|                         |  |                             |       |      |  |      |       |   |  |   |        |  
|Total:                   |  |                             |       |      |  |      |       |   |  |   |        |  
|                         |  |                             |       |      |  |      |       |   |  |   |        |  
|Net sales                |  | $                           | 301.6 |      |  | $    | 259.5 |   |  | $ | 183.2  |  
|                         |  |                             |       |      |  |      |       |   |  |   |        |  
|Operating loss           |  | $                           | (87.3 | )    |  | $    | (83.6 | ) |  | $ | (132.1 | )
|                         |  |                             |       |      |  |      |       |   |  |   |        |  

We acquired 51.0 percent of ASI on
October 16, 2002. Operating segment data includes results
from ASI for the period from the effective date of the
acquisition. Total operating loss is equal to consolidated loss
from operations for the periods presented. We do not allocate
other income (expense), net to individual segments.

Net sales by geography were as follows (in
millions):

|                    |       |                             |      |       |  |      |      |       |  |   |      |       | 
|------------------- | ----- | --------------------------- | ---- | ----- |  | ---- | ---- | ----- |  | - | ---- | ----- | 
|                    |       |                            
|                    |       | Fiscal Year Ended March 31,
|                    |       |                            
|                    |       | 2004                        |      | 2003  |  | 2002
|                    |       |                             |      |       |  |     
|United States       |       | $                           | 63.8 |       |  | $    | 90.5 |       |  | $ | 82.4 |      
|Japan               |       |                             | 83.8 |       |  |      | 48.0 |       |  |   | 45.6 |      
|Taiwan              |       |                             | 46.2 |       |  |      | 47.0 |       |  |   | 20.3 |      
|Korea               |       |                             | 45.8 |       |  |      |     |       |  |   |     |      
|Other Asia/ Pacific |       |                             | 41.3 |       |  |      | 51.1 |       |  |   | 16.6 |      
|Europe              |       |                             | 20.7 |       |  |      | 22.9 |       |  |   | 18.3 |      
|                    |       |                             |      |       |  |      |      |       |  |   |      |      
|                    | Total |                             | $    | 301.6 |  |      | $    | 259.5 |  |   | $    | 183.2 | 
|                    |       |                             |      |       |  |      |      |       |  |   |      |      

75



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

14.     Commitments
and Contingencies:



| |                  
| | -----------------
| | Lease Commitments

We lease various facilities under non-cancelable
capital and operating leases. At March 31, 2004, the future
minimum commitments under these leases are as follows (in
thousands):

|                                        |       |               |     |           |  |          |       |        |  |   |      |        |  
|--------------------------------------- | ----- | ------------- | --- | --------- |  | -------- | ----- | ------ |  | - | ---- | ------ | -
|                                        |       |               |     | Operating |  | Sublease
|Fiscal Year Ending March 31,            |       | Capital Lease |     | Lease     |  | Income  
|                                        |       |               |     |           |  |         
|2005                                    |       | $             | 270 |           |  | $        | 6,282 |        |  | $ | (523 | )     
|2006                                    |       |               | 136 |           |  |          | 4,474 |        |  |   | (523 | )     
|2007                                    |       |               | 71  |           |  |          | 1,814 |        |  |   | (44  | )     
|2008                                    |       |               | 67  |           |  |          | 1,062 |        |  |   |     |       
|2009 and thereafter                     |       |               |    |           |  |          | 210   |        |  |   |     |       
|                                        |       |               |     |           |  |          |       |        |  |   |      |       
|                                        | Total |               |     | 544       |  |          | $     | 13,842 |  |   | $    | (1,090 | )
|                                        |       |               |     |           |  |          |       |        |  |   |      |       
|Less: interest                          |       |               | 55  |           |  |          |       |        |  |   |      |       
|                                        |       |               |     |           |  |          |       |        |  |   |      |       
|Present value of minimum lease payments |       |               | 489 |           |  |          |       |        |  |   |      |       
|Less: current portion of capital leases |       |               | 268 |           |  |          |       |        |  |   |      |       
|                                        |       |               |     |           |  |          |       |        |  |   |      |       
|Capital leases, net of current portion  |       | $             | 221 |           |  |          |       |        |  |   |      |       
|                                        |       |               |     |           |  |          |       |        |  |   |      |       

Rent expense under our operating leases was
approximately $5.6 million, $5.5 million and
$8.5 million for the years ended March 31, 2004, 2003
and 2002, respectively.



| |                  
| | -----------------
| | Legal Commitments

On October 28, 1996, we filed suit in the
United States District Court for the Northern District of
California against Empak, Inc., Emtrak, Inc., Jenoptik AG, and
Jenoptik Infab, Inc., alleging, among other things, that certain
products of these defendants infringe our United States Patents
Nos. 5,097,421 (the 421 patent) and 4,974,166
(the 166 patent). Defendants filed answers and
counterclaims asserting various defenses, and the issues
subsequently were narrowed by the parties respective
dismissals of various claims, and the dismissal of defendant
Empak pursuant to a settlement agreement. The remaining patent
infringement claims against the remaining parties proceeded to
summary judgment, which was entered against us on June 8,
1999. We thereafter took an appeal to the United States Court of
Appeals for the Federal Circuit. On October 10, 2001, the
Federal Circuit issued a written opinion, Asyst Technologies,
Inc. v. Empak, 268 F.3d 1365 (Fed. Cir. 2001), reversing the
decision of the trial court, and remanding the matter to the
trial court for further proceedings. The case was subsequently
narrowed to the 421 patent, and we sought monetary damages
for defendants infringement, equitable relief, and an
award of attorneys fees. On October 9, 2003, the
court: (i) granted defendants motion for summary
judgment to the effect that the defendants had not infringed our
patent claims at issue and (ii) directed that judgment be
entered for defendants. We have filed a notice of appeal of both
the order and the entry of judgment against us. The court also
denied defendants motion for judgment as to the invalidity
of our asserted patents. Defendants have filed a notice of
appeal as to the courts denial of that motion.

On February 25, 2003, Mihir Parikh, our
former Chief Executive Officer and Chairman of the Board, filed
a demand for arbitration with the American Arbitration
Association against us, alleging breach of his employment
agreement, wrongful termination in violation of public policy,
discrimination based on age, race and national origin, fraud and
deceit, defamation and violation of the California Labor Code.
On March 4, 2003, Dr. Parikh resigned as a member of
our Board of Directors. On June 17, 2003, Dr. Parikh
filed an amended demand for arbitration adding as respondents
our Chief Executive Officer and Chairman of the

76



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Board, Stephen S. Schwartz, and three outside
directors, Walter W. Wilson, Stanley J. Grubel and Anthony E.
Santelli to all claims other than the breach of contract claim.
Dr. Parikh sought compensatory damages in excess of
$5.0 million plus punitive damages and attorneys
fees. The matter has since been resolved pursuant to a
settlement and release agreement entered into by the parties,
and the claims underlying the action have been dismissed with
prejudice. We recorded severance and associated costs of
$1.3 million related to the settlement in the quarter ended
December 31, 2003.



| |                 
| | ----------------
| | Indemnifications

We, as permitted under California law and in
accordance with our Bylaws, indemnify our officers, directors
and members of our senior management for certain events or
occurrences, subject to certain limits, while they were serving
at its request in such capacity. The maximum amount of potential
future indemnification is unlimited; however, we have a Director
and Officer Insurance Policy that enables us to recover a
portion of any future amounts paid. As a result of the insurance
policy coverage, we believe the fair value of these
indemnification agreements is minimal.

Our sales agreements indemnify our customers for
any expenses or liability resulting from claimed infringements
of patents, trademarks or copyrights of third parties. The terms
of these indemnification agreements are generally perpetual any
time after execution of the agreement. The maximum amount of
potential future indemnification is unlimited. However, to date,
we have not paid any claims or been required to defend any
lawsuits with respect to any claim.



| |                    
| | -------------------
| | Sale of Receivables

We have an agreement with a Japanese banking
institution to sell certain of our trade receivables without
recourse. During fiscal 2004, approximately $5.8 million of
receivables were sold under this agreement. The total amount
available under the facility is $14.0 million at
March 31, 2004.

15.     Earnings Per
Share:

The following table summarizes securities
outstanding which were not included in the calculation of
diluted net loss per share as to do so would be anti-dilutive
(in thousands):

|                  |       |           |       |        |  |      |       |        |  |  |       |        | 
|----------------- | ----- | --------- | ----- | ------ |  | ---- | ----- | ------ |  |  | ----- | ------ | 
|                  |       |          
|                  |       | March 31,
|                  |       |          
|                  |       | 2004      |       | 2003   |  | 2002
|                  |       |           |       |        |  |     
|Restricted stock  |       |           | 59    |        |  |      | 53    |        |  |  | 43    |       
|Stock options     |       |           | 8,212 |        |  |      | 9,210 |        |  |  | 9,972 |       
|Convertible notes |       |           | 5,682 |        |  |      | 5,682 |        |  |  | 4,262 |       
|                  |       |           |       |        |  |      |       |        |  |  |       |       
|                  | Total |           |       | 13,953 |  |      |       | 14,945 |  |  |       | 14,277 | 
|                  |       |           |       |        |  |      |       |        |  |  |       |       

16.     Related Party
Transactions:

At March 31, 2004, we held notes from two
current non-officer employees totaling $0.4 million. At
March 31, 2003, we held notes from two former employees and
two current employees totaling $0.7 million. One of the
notes receivable is secured by a deed of trust on certain real
property. The fair market value of the property exceeds the loan
amount. These notes receivable are included in other assets at
March 31, 2004 and March 31, 2003, respectively.

77



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Our majority owned subsidiary, ASI, has certain
transactions with the minority shareholder, Shinko. At March 31,
2004, significant balances owed to Shinko were (in thousands):

|                                  |  |   |        | 
|--------------------------------- |  | - | ------ | 
|Accounts payable due to Shinko    |  | $ | 17,194 | 
|Accrued liabilities due to Shinko |  |   | 248    | 

In addition, the consolidated financial
statements reflect that ASI purchased various administrative and
IT services from Shinko. During the year ended March 31,
2004, sales to and purchases from Shinko were (in thousands):

|                    |  |   |        | 
|------------------- |  | - | ------ | 
|Sales               |  | $ | 743    | 
|Materials purchased |  |   | 18,887 | 
|Services purchased  |  |   | 12,375 | 

78



---



##### Table of Contents



SCHEDULE II

ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

(In thousands)


|                                              |                      |           |  |          |        |            |  |          |        |         |  |   |         |   |  |   |       |  |  |   |        | 
|--------------------------------------------- | -------------------- | --------- |  | -------- | ------ | ---------- |  | -------- | ------ | ------- |  | - | ------- | - |  | - | ----- |  |  | - | ------ | 
|                                              |                      | Balance   |  | Charged  |        |            |  |          |        | Balance
|                                              |                      | Beginning |  | to       |        |            |  |          |        | End    
|                                              |                      | of Year   |  | Expenses |        | Deductions |  | Acquired |        | of Year
|                                              |                      |           |  |          |        |            |  |          |        |        
|Allowance for doubtful accounts               |                      |           |  |          |        |            |  |          |        |         |  |   |         |   |  |   |       |  |  |  
|                                              | Year Ended March 31, |           |  |          |        |            |  |          |        |         |  |   |         |   |  |   |       |  |  |   |       
|                                              |                      | 2002      |  | $        | 3,795  |            |  | $        | 1,155  |         |  | $ | (787    | ) |  | $ | 35    |  |  | $ | 4,198  | 
|                                              |                      | 2003      |  | $        | 4,198  |            |  | $        | 488    |         |  | $ | (1,160  | ) |  | $ | 1,354 |  |  | $ | 4,880  | 
|                                              |                      | 2004      |  | $        | 4,880  |            |  | $        | 222    |         |  | $ | (494    | ) |  | $ |      |  |  | $ | 4,608  | 
|Reserve for excess and obsolete
    inventory |                      |           |  |          |        |            |  |          |        |         |  |   |         |   |  |   |       |  |  |  
|                                              | Year Ended March 31, |           |  |          |        |            |  |          |        |         |  |   |         |   |  |   |       |  |  |   |       
|                                              |                      | 2002      |  | $        | 28,119 |            |  | $        | 12,810 |         |  | $ | (8,225  | ) |  | $ |      |  |  | $ | 32,704 | 
|                                              |                      | 2003      |  | $        | 32,704 |            |  | $        | 4,536  |         |  | $ | (31,342 | ) |  | $ |      |  |  | $ | 5,898  | 
|                                              |                      | 2004      |  | $        | 5,898  |            |  | $        | 12,981 |         |  | $ | (4,149  | ) |  | $ |      |  |  | $ | 14,730 | 

79



---



##### Table of Contents






SIGNATURES

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

Date: June 10, 2004

| |                         
| | ------------------------
| | ASYST TECHNOLOGIES, INC.



| |     |                   
| | --- | ------------------
| | By: | /s/ DAVID L. WHITE

| |                        
| | -----------------------
| |                        
| | David L. White         
| | Senior Vice President  
| | Chief Financial Officer

Pursuant to the requirements of the Securities
Exchange of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.

|                                           |  |                                                                                                        |  |               |  | 
|------------------------------------------ |  | ------------------------------------------------------------------------------------------------------ |  | ------------- |  | 
|                                           |  |                                                                                                        |  |              
|Signature                                  |  | Title                                                                                                  |  | Date         
|                                           |  |                                                                                                        |  |              
|                                          
|/s/ STEPHEN S. SCHWARTZStephen S. Schwartz |  | Chairman of the Board,
    Chief Executive Officer and Director
    (Principal Executive Officer)      |  | June 10, 2004
|                                          
|/s/ DAVID L. WHITEDavid L. White           |  | Senior Vice President and
    Chief Financial Officer
    (Principal Financial and Accounting Officer) |  | June 10, 2004
|                                          
|/s/ STANLEY GRUBELStanley Grubel           |  | Director                                                                                               |  | June 10, 2004
|                                          
|/s/ ROBERT A. MCNAMARARobert A. McNamara   |  | Director                                                                                               |  | June 10, 2004
|                                          
|/s/ ANTHONY E. SANTELLIAnthony E. Santelli |  | Director                                                                                               |  | June 10, 2004
|                                          
|/s/ WALTER W. WILSONWalter W. Wilson       |  | Director                                                                                               |  | June 10, 2004
|                                          
|/s/ TSUYOSHI KAWANISHITsuyoshi Kawanishi   |  | Director                                                                                               |  | June 10, 2004

80



---



##### Table of Contents



EXHIBIT INDEX

|        |    |                         |  |                                                                                                                                                                                                                                                        
|------- | -- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 2  | .1(3)                   |  | Agreement for Sale and Purchase of Common Stock
    between the Company and MECS Corporation, dated
    September 27, 1999.                                                                                                                            
|        | 2  | .2(4)                   |  | Amendment Agreement between the Company and MECS
    Corporation, dated March 23, 2000.                                                                                                                                                                
|        | 2  | .3(5)                   |  | Agreement and Plan of Merger and Reorganization,
    dated as of December 7, 2000, among the Company, Ramp
    Acquisition Corp., Advanced Machine Programming, Inc., New AMP
    LLC, Matlock Charles Rowe & Company and the Selling
    Shareholders.
|        | 2  | .4(6)                   |  | Agreement and Plan of Merger and Reorganization,
    dated as of December 7, 2000, among the Company, Tin Man
    Acquisition Corp., SemiFab, Inc. and certain principal
    shareholders of SemiFab.                                                  
|        | 2  | .5(7)                   |  | Agreement and Plan of Merger and Reorganization,
    dated as of May 22, 2001, among the Company, Gem Acquisition
    Corp., GW Associates, Inc. and John S. Ghiselli.                                                                                 
|        | 2  | .6(18)                  |  | Asset Purchase Agreement among the Company, Aruba
    Solutions Consulting, Inc., and Domain Logix Corporation, dated
    as of April 9, 2002.                                                                                                         
|        | 2  | .7(19)                  |  | Asset Purchase Agreement among the Company,
    Entegris Cayman Ltd. and Entegris, Inc., dated as of
    February 11, 2003.                                                                                                                            
|        | 3  | .1(8)                   |  | Amended and Restated Articles of Incorporation of
    the Company.                                                                                                                                                                                     
|        | 3  | .2(8)                   |  | Bylaws of the Company.                                                                                                                                                                                                                                 
|        | 3  | .3(2)                   |  | Certificate of Amendment of the Amended and
    Restated Articles of Incorporation, filed September 24,
    1999.                                                                                                                                      
|        | 3  | .4(9)                   |  | Second Certificate of Amendment of the Amended
    and Restated Articles of Incorporation, filed October 5,
    2000.                                                                                                                                  
|        | 4  | .1(10)                  |  | Rights Agreement among the Company and Bank of
    Boston, N.A., as Rights Agent, dated June 25, 1998.                                                                                                                                                 
|        | 4  | .2(1)                   |  | Common Stock Purchase Agreement between the
    Company and various purchasers, dated as of May 26, 1999.                                                                                                                                              
|        | 4  | .3(11)                  |  | Indenture dated as of July 3, 2001 between
    the Company, State Street Bank and Trust Company of California,
    N.A., as trustee, including therein the forms of the notes.                                                                         
|        | 4  | .4(11)                  |  | Registration Rights Agreement dated as of
    July 3, 2001 between the Company and Merrill
    Lynch & Co., Merrill Lynch, Pierce, Fenner &
    Smith, Incorporated, and ABN Amro Rothschild LLC.                                                      
|        | 4  | .5(15)                  |  | Amendment to Rights Agreement among the Company
    and Bank of Boston, N.A. as Rights Agent, dated
    November 30, 2001.                                                                                                                             
|        | 10 | .1(8)***                |  | Form of Indemnity Agreement entered into between
    the Company and certain directors.                                                                                                                                                                
|        | 10 | .2(12)***               |  | Companys 1993 Stock Option Plan and related
    form of stock option agreement.                                                                                                                                                                       
|        | 10 | .3(8)***                |  | Companys 1993 Employee Stock Purchase Plan
    and related offering document.                                                                                                                                                                         
|        | 10 | .4(8)***                |  | Companys 1993 Non-Employee Directors
    Stock Option Plan and related offering document.                                                                                                                                                            
|        | 10 | .5(8)                   |  | Hewlett-Packard SMIF License Agreement dated
    June 6, 1984.                                                                                                                                                                                         
|        | 10 | .6(13)                  |  | Lease Agreement between the Company and the Kato
    Road Partners dated February 16, 1995.                                                                                                                                                            
|        | 10 | .7(2)                   |  | Lease Agreement between SL-6 Partners, Ltd. and
    Progressive System Technologies, Inc. dated November 20,
    1995.                                                                                                                                 
|        | 10 | .8(2)                   |  | Sublease Agreement between Progressive System
    Technologies, Inc. and Group, Inc., dated December 3, 1996.                                                                                                                                          



---



##### Table of Contents



|        |    |                         |  |                                                                                                                                                                                                                     
|------- | -- | ----------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .9(2)                   |  | Amendment to Lease Agreement between the Company
    and the Kato Road Partners, dated                                                                                                                              
|        | 10 | .10(2)                  |  | Cooperation Agreement between the Company and
    MECS Corporation, dated August 5, 1999.                                                                                                                           
|        | 10 | .11(7)***               |  | Employment Agreement between the Company and
    Stephen S. Schwartz, Ph.D., dated January 11, 2001.                                                                                                                
|        | 10 | .12(11)*                |  | Agreement on Bank Transactions between Asyst
    Japan, Inc., or AJI, and Tokyo Mitsubishi Bank dated
    March 13, 2001.                                                                                           
|        | 10 | .13(11)*                |  | Cash Consumer Debtor and Creditor Agreements
    between AJI and The Tokai Bank, Ltd. dated December 6, 1999
    and March 23, 2001.                                                                                
|        | 10 | .14(11)*                |  | Banking Consents & Agreements between
    MECS, K.K. and Tokai Bank, K.K. dated November 30, 1998 and
    December 6, 1999.                                                                                         
|        | 10 | .15(11)*                |  | Banking Consent & Agreement between
    MECS, K.K. and Ogaki Kyoritsu Bank dated November 14, 1994.                                                                                                                 
|        | 10 | .16(11)*                |  | Agreement on Bank Transactions between AJI and
    The Sumitomo Bank dated November 13, 2001.                                                                                                                       
|        | 10 | .17(14)***              |  | Palo Alto Technologies, Inc. 1997 Stock Plan and
    related stock option agreement.                                                                                                                                
|        | 10 | .18(14)***              |  | Progressive System Technologies, Inc. 1995 Stock
    Option/Stock Issuance Plan and related notice document.                                                                                                        
|        | 10 | .19(16)*                |  | Share Purchase Agreement between Shinko Electric
    Co., Ltd. and Asyst Japan Inc., dated as of May 24, 2002.                                                                                                      
|        | 10 | .20(16)*                |  | Shareholders Agreement between Shinko Electric
    Co., Ltd. and Asyst Japan Inc., dated as of May 24, 2002.                                                                                                        
|        | 10 | .21(16)**               |  | Manufacturing Services and Supply Agreement among
    the Company and Solectron Corporation and its subsidiaries and
    affiliates, dated as of September 5, 2002.                                                 
|        | 10 | .22(16)                 |  | Loan and Security Agreement between the Company
    and Comerica Bank  California, dated as of
    October 1, 2002.                                                                                                
|        | 10 | .23(16)                 |  | Amendment No. 1 to Loan and Security
    Agreement between the Company and Comerica Bank 
    California, dated as of November 8, 2002.                                                                            
|        | 10 | .24(17)*                |  | Amendment No. 1 to Shareholders Agreement between
    Shinko Electric Co., Ltd. and Asyst Japan Inc., dated as of
    October 16, 2002.                                                                             
|        | 10 | .25(19)**               |  | Patent Assignment and Cross-License and Trademark
    License Agreement among the Company, Entegris Cayman Ltd. and
    Entegris, Inc., dated as of February 11, 2003.                                              
|        | 10 | .26(20)                 |  | Amendment No. 2 to Loan and Security
    Agreement between the Company and Comerica Bank 
    California, dated as of March 17, 2003.                                                                              
|        | 10 | .27(20)                 |  | Amendment No. 3 to Loan and Security
    Agreement between the Company and Comerica Bank 
    California, dated as of September 26, 2003.                                                                          
|        | 10 | .28(20)***              |  | Change-In-Control Agreement between the Company
    and Stephen S. Schwartz, dated as of October 20, 2003.                                                                                                          
|        | 10 | .29(20)***              |  | Change-In-Control Agreement between the Company
    and David L. White, dated as of November 7, 2003.                                                                                                               
|        | 10 | .30(20)                 |  | Agreement for Purchase and Sale of 44960 Warm
    Springs Boulevard, Fremont, California, between the Company and
    Milpitas Square 880 @ 237, LLC, dated as of June 13,
    2003.                                
|        | 10 | .31(21)**               |  | Amendment and Modification Agreement to
    Manufacturing Services and Supply Agreement among the Company
    and Solectron Corporation and its subsidiaries and affiliates,
    effective as of September 22, 2003.
|        | 10 | .32(22)***              |  | Companys 2003 Equity Incentive Plan.                                                                                                                                                                               
|        | 10 | .33***                  |  | Form of Indemnity Agreement entered into between
    the Company and certain executive officers.                                                                                                                    



---



##### Table of Contents



|        |    |                         |  |                                                                                                                                                                                                                
|------- | -- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .34***                  |  | Separation Agreement between the Company and
    Geoffrey Ribar dated September 11, 2003.                                                                                                                      
|        | 10 | .35                     |  | Amendment No. 4 to Loan and Security
    Agreement between the Company and Comerica Bank dated
    February 3, 2004.                                                                                           
|        | 10 | .36                     |  | Letter agreement between the Company and Comerica
    Bank dated December 24, 2003.                                                                                                                            
|        | 10 | .37***                  |  | Form of Agreement to Arbitrate Disputes and
    Claims entered into between the Company and its executive
    officers.                                                                                        
|        | 10 | .38***                  |  | Companys Compensation Program for
    Nonemployee Directors.                                                                                                                                                  
|        | 10 | .39***                  |  | Companys Executive Deferred Compensation
    Plan.                                                                                                                                                            
|        | 10 | .40***                  |  | Employment Agreement between the Company and
    Stephen Debenham dated August 21, 2003.                                                                                                                       
|        | 10 | .41***                  |  | Employment Agreement between the Company and
    David L. White dated September 29, 2003.                                                                                                                      
|        | 10 | .42***                  |  | Summary of the Companys Executive Bonus
    Plan.                                                                                                                                                             
|        | 10 | .43***                  |  | Addendum dated September 23, 2003 to Separation
    Agreement between the Company and Geoffrey Ribar dated
    September 11, 2003.                                                                             
|        | 21 | .1                      |  | Subsidiaries of Asyst Technologies, Inc.                                                                                                                                                                       
|        | 23 | .1                      |  | Consent of PricewaterhouseCoopers LLP,
    Independent Registered Public Accounting Firm.                                                                                                                      
|        | 31 | .1                      |  | Certification of the Chief Executive Officer of
    the Registrant required by SEC Rule 13a-14(a) (pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002).                                             
|        | 31 | .2                      |  | Certification of the Chief Financial Officer of
    the Registrant required by SEC Rule 13a-14(a) (pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002).                                             
|        | 32 |                         |  | Combined Certification of the Chief Executive
    Officer and the Chief Financial Officer of the Registrant
    required by SEC Rule 13a-14(b) (pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002).



---



| |   |                                          
| | - | -----------------------------------------
| | * | English translation of original document.



| |    |                                                                             
| | -- | ----------------------------------------------------------------------------
| | ** | Confidential treatment has been requested for
    portions of this document.



| |     |                                                                                                                                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | *** | Indicates management contract or compensatory
    plan or arrangement.                                                                                                                                                                
|
| | (1) | Previously filed as an Exhibit to our Current
    Report on Form 8-K, filed with the Securities Exchange
    Commission on June 18, 1999, and incorporated herein by
    reference.                                                   
|
| | (2) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 1999, filed with the Securities Exchange
    Commission on October 21, 1999, and incorporated herein by
    reference.
|
| | (3) | Previously filed as an Exhibit to our
    Registration Statement on Form S-3/ A, File No. 333-89489,
    filed with the Securities Exchange Commission on
    October 29, 1999, and incorporated herein by reference.                 
|
| | (4) | Previously filed as an Exhibit to our Current
    Report on Form 8-K/ A, filed with the Securities Exchange
    Commission on June 6, 2000, and incorporated herein by
    reference.                                                 
|
| | (5) | Previously filed as an Exhibit to our
    Registration Statement on Form S-3, File
    No. 333-54924, filed with the Securities Exchange
    Commission on February 2, 2001, and incorporated herein by
    reference.                
|
| | (6) | Previously filed as an Exhibit to our
    Registration Statement on Form S-3, File
    No. 333-56068, filed with the Securities Exchange
    Commission on February 23, 2001, and incorporated herein by
    reference.               
|
| | (7) | Previously filed as an Exhibit to our Annual
    Report on Form 10-K for the fiscal year ended
    March 31, 2001, filed with the Securities Exchange
    Commission on June 19, 2001, and incorporated herein by
    reference.      



---



##### Table of Contents





| |     |                                                                                                                                                                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (8) | Previously filed as an Exhibit to our
    Registration Statement on Form S-1, as amended, File
    No. 333-66184, filed with the Securities Exchange
    Commission on July 19,1993, and incorporated herein by
    reference.
|
| | (9) | Previously filed with our Definitive Proxy
    Statement for the 2000 Annual Meeting of Shareholders, filed
    with the Securities Exchange Commission on July 31, 2000,
    and incorporated herein by reference.           



|     |                                                                                                                                                                                                                                           
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Previously filed as an Exhibit to our Current
    Report on Form 8-K, filed with the Securities Exchange
    Commission on June 29, 1998, and incorporated herein by
    reference.                                                       
|    
|(11) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended June 30,
    2001, filed with the Securities Exchange Commission on
    August 14, 2001, and incorporated herein by reference.              
|    
|(12) | Previously filed as an Exhibit to our
    Registration Statement on Form S-1, File
    No. 333-88246, filed with the Securities Exchange
    Commission on February 13, 1995, and incorporated herein by
    reference.                   
|    
|(13) | Previously filed as an Exhibit to our Annual
    Report on Form 10-K for the fiscal year ended
    March 31, 1995, filed with the Securities Exchange
    Commission on July 19, 1995, and incorporated herein by
    reference.          
|    
|(14) | Previously filed as an Exhibit to our
    Registration Statement on Form S-8, File
    No. 333-94619, filed with the Securities Exchange
    Commission on January 13, 2000, and incorporated herein by
    reference.                    
|    
|(15) | Previously filed as an Exhibit to our Annual
    Report on Form 10-K for the fiscal year ended
    March 31, 2002, filed with the Securities Exchange
    Commission on June 28, 2002, and incorporated herein by
    reference.          
|    
|(16) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 2002, filed with the Securities Exchange
    Commission on November 12, 2002, and incorporated herein by
    reference.   
|    
|(17) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended December 31,
    2002, filed with the Securities Exchange Commission on
    February 11, 2003, and incorporated herein by reference.        
|    
|(18) | Previously filed as an Exhibit to our
    Registration Statement on Form S-3, File
    No. 333-97227, filed with the Securities Exchange
    Commission on July 29, 2002, and incorporated herein by
    reference.                       
|    
|(19) | Previously filed as an Exhibit to our Annual
    Report on Form 10-K/ A (Amendment No. 1) for the
    fiscal year ended March 31, 2003, filed with the Securities
    and Exchange Commission on October 29, 2003.                        
|    
|(20) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended
    September 30, 2003, filed with the Securities and Exchange
    Commission on November 12, 2003 and incorporated herein by
    reference.
|    
|(21) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended December 31,
    2003, filed with the Securities and Exchange Commission on
    February 10, 2004 and incorporated herein by reference.     
|    
|(22) | Previously filed as an Exhibit to our
    Form S-8 filed with the Securities and Exchange Commissions
    on October 3, 2003 and incorporated herein by reference.