##### 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 31,
    2003                                                
|          
|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 whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the
Act).     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

There were 37,857,109 shares of common
stock, no par value, outstanding as of September 30, 2002.
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, 2002 was
approximately $228,656,938.

There were 38,490,414 shares of common
stock, no par value, outstanding as of May 30, 2003.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are
incorporated by reference in this report:

Portions of the Registrants notice of
annual meeting of shareholders and proxy statement to be filed
pursuant to Regulation 14A within 120 days after
Registrants fiscal year ended March 31, 2003 are
incorporated by reference into Part II, Item 5 and
Part III of this Report.



---






---

TABLE OF CONTENTS



|                                                                   |                                                                                                        |  |  |  |  |  |  | 
|------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------ |  |  |  |  |  |  | 
|PART I                                                            
|                                                                   | Item 1 Business                                                                                       
|                                                                   | Item 2 Properties                                                                                     
|                                                                   | Item 3 Legal Proceedings                                                                              
|                                                                   | Item 4 Submission of Matters to a Vote for Security Holders                                           
|PART II                                                           
|                                                                   | Item 5 Market for the Registrants Common Equity and Related Shareholder Matters                      
|                                                                   | Item 6 Selected Consolidated Financial Data                                                           
|                                                                   | Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations          
|                                                                   | Item 7A Quantitative and Qualitative Disclosures Regarding Market Risk                                
|                                                                   | Item 8 Financial Statements and Supplementary Data                                                    
|                                                                   | Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           
|PART III                                                          
|                                                                   | Item 10 Directors and Executive Officers of the Registrant                                            
|                                                                   | Item 11 Executive Compensation                                                                        
|                                                                   | Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
|                                                                   | Item 13 Certain Relationships and Related Transactions                                                
|                                                                   | Item 14 Controls and Procedures                                                                       
|PART IV                                                           
|                                                                   | Item 15 Exhibits, Financial Statement Schedule and Reports on Form 8-K                                
|SIGNATURES                                                        
|CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER            
|CERTIFICATION OF SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
|EXHIBIT INDEX                                                     
|EXHIBIT 2.10                                                      
|EXHIBIT 10.44                                                     
|EXHIBIT 21.1                                                      
|EXHIBIT 23.1                                                      
|EXHIBIT 99.1                                                      



---



##### Table of Contents



ASYST TECHNOLOGIES, INC.

TABLE OF CONTENTS

|         |  |                                                                                                    |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                                    |  | Page
|         |  |                                                                                                    |  |     
|PART I  
|Item 1.  |  | Business                                                                                           |  |      | 1  | 
|Item 2.  |  | Properties                                                                                         |  |      | 10 | 
|Item 3.  |  | Legal Proceedings                                                                                  |  |      | 11 | 
|Item 4.  |  | Submission of Matters to a Vote of Security
    Holders                                            |  |      | 12 | 
|PART II 
|Item 5.  |  | Market for the Registrants Common Equity
    and Related Shareholder Matters                      |  |      | 12 | 
|Item 6.  |  | Selected Consolidated Financial Data                                                               |  |      | 13 | 
|Item 7.  |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations          |  |      | 14 | 
|Item 7A  |  | Quantitative and Qualitative Disclosures About
    Market Risk                                     |  |      | 36 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                                        |  |      | 38 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure           |  |      | 39 | 
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                                 |  |      | 40 | 
|Item 11. |  | Executive Compensation                                                                             |  |      | 40 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters |  |      | 40 | 
|Item 13. |  | Certain Relationships and Related Transactions                                                     |  |      | 40 | 
|Item 14. |  | Controls and Procedures                                                                            |  |      | 40 | 
|PART IV 
|Item 15. |  | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K                                |  |      | 41 | 
|         |  | Signatures                                                                                         |  |      | 80 | 
|         |  | Certifications                                                                                     |  |      | 81 | 



---



##### 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 our
Annual Report on Form 10-K. 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
document and in our Annual Report on Form 10-K 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 automation systems for the semiconductor, or chip,
and 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.                                                                          

1



---



##### 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, and integrate our systems with
their equipment.

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. Currently,
most semiconductor manufacturing facilities, or fabs, process
wafers with diameters of 200mm. However, several fabs are
currently operating production lines utilizing 300mm wafers and
a significant number of new fabs are expected to be built for
300mm wafers. Concurrently, line widths in chip manufacturing
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 (approximately
$2 to $3 billion), the value of work-in-process inventory,
and the ergonomic issues introduced by the significantly
increased weight and bulk of loaded 300mm semiconductor carriers
(pods).

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
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
to protect the wafers from accidental damage due to mishandling.

Semiconductor manufacturers also increasingly are
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. In addition,
    our connectivity software provides semiconductor manufacturers
    with fab-ready automation capabilities, resulting in faster
    implementation times and more efficient operational
    productivity. With our automated transportation and loading
    solutions, tool idle time

2



---



##### Table of Contents



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | is reduced and timely wafer delivery is improved,
    thereby increasing equipment utilization and productivity. Our
    systems offer semiconductor manufacturers the flexibility to add
    capacity while minimizing disruption of ongoing production in
    the fab.                                                                                                                                                                                                                                                                                     
|
| | 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 will 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 is a leader in AMHS. We have captured a total of
    16 interbay and intrabay AMHS installations to date as of
    March 31, 2003 in 300mm fabs, compared to nine
    installations for our nearest competitor. We have begun to
    penetrate the market for FPD AMHS, having largely completed the
    AMHS installation for a large Gen 5 FPD fab in South Korea.
    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 FasTrackTM.
    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 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

3



---



##### Table of Contents



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | portals. In its April 2003 report, Dataquest
    estimated this merchant market for atmospheric tool front-end
    products at $260 million for calendar year 2002. 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 $400 million in 2002. We
    believe that our product offerings provide price/performance
    advantages over most captively manufactured equipment front-ends
    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. Because of the severity of the chip
    industrys cyclical downturn during the period from 2000 to
    present, and the resulting harm to the balance sheets of many
    chip manufacturers, 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
    copperinterconnects, we believe that fabs will make concurrent
    purchases of isolation products as they seek to maximize the
    yields and productivity of this 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 two fiscal years we have received
    large SMIF orders from a total of four fab operators
    representing six 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.Although the Japanese economic
    environment has been challenging, we believe that Japanese
    semiconductor manufacturers will upgrade existing 200mm
    facilities in response to market pressures and longer-term
    increases in demand. We believe that construction of new and
    expansion 300mm fab projects also will begin to accelerate
    during the next year as many Japanese chip manufacturers are
    running out of production capacity. 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 transition all of our North American
    manufacturing operations  which produced
    approximately 75 percent of our fiscal 2002 net
    sales  to Solectron Corporation, a leading contract
    manufacturer of electronics products. 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 ultraclean 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

4



---



##### Table of Contents



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. In calendar year 2002, we introduced
the IsoPortTM, our latest generation loadport for the
300mm market. 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
PlusTM Portal Front-End Solutions, LCD 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 chip 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, code
named Spartan, 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. 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 such as rocket lots, 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. Sorters utilize our
input/output systems, auto identification systems, robots,
prealigners and minienvironment technology.



| |     
| | ----
| | AMHS

Automated Material Handling Systems,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

5



---



##### Table of Contents



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

Through our whollyowned subsidiary,
GW Associates, Inc., or GW, 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. Through our acquisition of domainLogix Corporation
(DLC), Asyst now offers next-generation tool communications
software products adhering to the OBEM industry standard.

Customers

Semiconductor manufacturers drive our sales by
building new fabs or, in existing fabs, expanding capacity,
adding isolation technology, or upgrading process technology.
Through our early years and well into the last industry upcycle
that ended in the fourth calendar quarter of 2000, the majority
or our sales were direct to semiconductor manufacturers.
However, as the industry migrates to 300mm wafer fabs, OEMs are
purchasing an increasing proportion of our equipment solutions
and are making automation systems part of the tool. OEMS
represented 40 percent, 59 percent, and
45 percent of our sales for the fiscal years ended
March 31, 2003, 2002 and 2001, respectively. If we are
successful in further penetrating the market for AMHS, which
along with our other fab solutions products is sold directly to
fabs, we anticipate that our sales to semiconductor
manufacturers and to OEMs will essentially be split evenly.

Our net sales to any particular semiconductor
manufacturer customer are dependent on the number of fabs a
semiconductor manufacturer is constructing and the number of fab
upgrades a semiconductor manufacturer undertakes. As 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
2003, one customer accounted for more than 10 percent of
sales.

Our ten largest customers based on cumulative
sales during fiscal year 2003, arranged alphabetically, were:

|                                        |  |                                                
|--------------------------------------- |  | -----------------------------------------------
|Applied Materials                       |  | Nikon                                          
|Grace Semiconductor Manufacturing Corp. |  | Novellus                                       
|Intel                                   |  | Semiconductor Manufacturing International Corp.
|KLA Tencor                              |  | Taiwan Semiconductor Manufacturing Corp.       
|L.G. Philips                            |  | United Microelectronics Corp.                  

6



---



##### Table of Contents



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 domestic field sales personnel are stationed in
Massachusetts, New York and Texas. Japan is supported by sales
and service offices in Tokyo, Nagoya and Yokohama, Japan and a
software distributor. The European market is supported through
offices in Crawley, the 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
65 percent, 55 percent, and 61 percent of total
sales for fiscal years 2003, 2002 and 2001, respectively. In
fiscal 2003, approximately 31 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 a
few weeks to several 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.

Systems Integration and Customer
Support

Our systems integration and OEM applications
organizations focus on understanding our customers
manufacturing methodologies and anticipated production
applications to develop customer-specific solutions. For
retrofitting and upgrading existing facilities with Asyst
solutions, our systems integration organization works with our
customers facilities and manufacturing personnel to
develop programs, schedules and solutions to minimize disruption
during the installation of our products into our customers
fabs. In the case of a new fab or tool design, our OEM
applications and systems integration organizations work with our
customers facility planners and operations personnel, as
well as with cleanroom designers, architects and engineers.

In the case of OEM integration, our OEM
applications organization designs and integrates the Asyst
solutions directly into the tool. Our OEM applications
organization works very closely with the OEM to understand the
process equipment and the processing requirements to provide our
customer with an optimized solution.

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 $40.1 million,
$39.0 million, and $44.3 million during fiscal years
2003, 2002, and 2001, 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. 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.

7



---



##### Table of Contents



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 mechanical 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 all our
U.S-based manufacturing operations to Solectron Corporation, a
provider of outsourced manufacturing services. As of June 2003,
all of our U.S-based products were being manufactured by
Solectron and shipped out of Solectrons facilities in
Singapore. We currently manufacture certain robotics products
representing approximately 10 percent of our revenue in
AJIs facilities in Nagoya, Japan. 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 change.

Brooks Automation, Inc., 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 Automation (through its acquisition of
Hermos) and Omron. We also compete with several companies in the
robotics area, including, but not limited to, Brooks Automation,
Newport Corp., Rorze Corporation and Yasukawa  Super
Mectronics 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 91 United
States patents and 61 foreign patents, have 27 pending patent
applications in the United States, 157 pending foreign patent
applications, and intend to file additional patent applications
as appropriate. Our patents expire between 2003 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

8



---



##### Table of Contents



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 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 $81.8 million,
$61.5 million, and $119.6 million as of the fiscal
years ended March 31, 2003, 2002, and 2001, 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, 2003, we employed 872
persons on a full-time basis, including 138 in research and
development, 34 in manufacturing operations (including quality
assurance), 128 in sales and marketing (including customer
service), 58 in finance and administration, 244 in international
operations and 270 at ASI. Additionally, we employed 8 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 month of fiscal 2004, we
restructured certain domestic and international operations in
response to continued difficult market conditions. As a result
of these restructuring activities, we terminated the employment
of approximately 683 full-time employees from our operations in
the United States and approximately 56 employees from our
international operations during fiscal 2003 and the first month
of fiscal 2004.

Financial Information by Business Segment and
Geographic Data

As a result of the acquisition of 51 percent
ASI in October 2002, we now operate and track our results in two
segments: Fab Automation Solutions and Automated Material
Handling Systems (AMHS). Fab Automation Solutions
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. The Chief Operating Decision Maker is our Chief
Executive Officer. The information included in Note 12 of Notes
to the Consolidated Financial Statements, 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
environmen-

9



---



##### Table of Contents



tal 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.


Additional Information

The Company was incorporated in California on
May 31, 1984. We file the following reports with the SEC:
our annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and amendments
to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act. We maintain a
site on the world wide web at www.asyst.com, however,
information found on our web site is not incorporated by
reference into this report. The public may read and copy any
materials we file with the SEC at the SECs Public
Reference Room at 450 Fifth Street, NW,
Washington, DC 20549. The public may obtain information on
the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. We are an electronic filer with the SEC. The SEC
maintains a web site at www.sec.gov that contains
reports, proxy and information statements, and other information
regarding issuers that file electronically.

In fiscal 2004, we intend to adopt a code of
ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer or
controller, or persons performing similar functions. We intend
to post the text of our code of ethics on our website at
www.asyst.com in connection with Investor materials.
In addition, we intend to promptly disclose (1) the nature
of any amendment to our code of ethics that applies to our
principal executive officer, principal financial officer,
principal accounting officer or controller, or persons
performing similar functions and (2) the nature of any
waiver, including an implicit waiver, from a provision of our
code of ethics that is granted to one of these specified
officers, the name of such person who is granted the waiver and
the date of the waiver on our website in the future.




Item
2     Properties

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

|                       |  |                                    |  |               |         |            |  |  |                | 
|---------------------- |  | ---------------------------------- |  | ------------- | ------- | ---------- |  |  | -------------- | 
|                       |  |                                    |  | Square        |         |           
|                       |  |                                    |  | Footage       |         | Lease     
|Location               |  | Functions                          |  | (approximate) |         | Expiration
|                       |  |                                    |  |               |         |           
|Fremont, California    |  | Corporate headquarters, R&D        |  |               | 91,275  |            |  |  | October 2005   | 
|Fremont, California    |  | Administration, R&D                |  |               | 35,360  |            |  |  | January 2005   | 
|Fremont, California    |  | Administration, R&D                |  |               | 35,360  |            |  |  | February 2008  | 
|Fremont, California    |  | Administration, R&D                |  |               | 56,400  |            |  |  | May 2005       | 
|Andover, Massachusetts |  | Sales and support                  |  |               | 5,308   |            |  |  | September 2006 | 
|Vancouver, Washington  |  | Sales and support                  |  |               | 3,716   |            |  |  | June 2003      | 
|Williston, Vermont     |  | Sales and support                  |  |               | 11,400  |            |  |  | August 2004    | 
|Nagoya, Japan          |  | Administration, manufacturing, R&D |  |               | 66,500  |            |  |  | Owned          | 
|Tokyo, Japan           |  | Administration, sales and support  |  |               | 3,023   |            |  |  | January 2005   | 
|Yokohama, Japan        |  | Administration, sales and support  |  |               | 14,466  |            |  |  | March 2004     | 
|Hsin-Chu City, Taiwan  |  | Administration, sales and support  |  |               | 5,821   |            |  |  | May 2005       | 
|Shanghai, China        |  | Sales and support                  |  |               | 3,414   |            |  |  | September 2003 | 
|Crawley, UK            |  | Sales and support                  |  |               | 5,500   |            |  |  | November 2011  | 
|Evry Cedex, France     |  | Sales and support                  |  |               | 356     |            |  |  | August 2003    | 
|Dresden, Germany       |  | Sales and support                  |  |               | 2,377   |            |  |  | March 2004     | 
|Bangalore, India       |  | R&D, sales and support             |  |               | 2,720   |            |  |  | May 2004       | 
|Ise, Japan             |  | Administration, manufacturing, R&D |  |               | 176,120 |            |  |  | September 2007 | 
|Tokyo, Japan           |  | Sales and support                  |  |               | 3,540   |            |  |  | April 2004     | 

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 116,659 square feet of leased

10



---



##### Table of Contents



office space. Some of these properties are
presently either fully or partially 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 own undeveloped land in Fremont, California.
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 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 during the quarter
ended June 30, 2001. We recorded an additional
$7.1 million write-down in fiscal 2003 based on our revised
estimate of market value. We continue to hold the land for sale.




Item 3     Legal
Proceedings

On October 28, 1996 we filed suit 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. We have since narrowed our
case to the 421 patent, and we continue to seek
monetary damages for defendants infringement, equitable
relief, and an award of attorneys fees. Defendants
related declaratory judgment claims are also pending. The court
held a claims construction hearing on September 30, 2002,
and issued its claims construction ruling on February 28,
2003. The Court has since set a trial date of November 3,
2003. We believe the remaining claims are meritorious and intend
to vigorously pursue this matter.

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
the Companys 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
seeks compensatory damages in excess of $2 million plus
punitive damages and attorneys fees. We deny
Dr. Parikhs allegations and intend to defend the
action vigorously. The arbitration hearing is scheduled for
early 2004.

In July 2002, three former shareholders of
SemiFab, Inc., a corporation that merged with a subsidiary of
ours in February 2001, filed a complaint in San Benito County
Superior Court against us claiming breach of contract,
declaratory relief, conversion, constructive trust, and
injunctive relief. The plaintiffs alleged that we failed to
provide sufficient funding to SemiFab to make specified capital
expenditures, as required by the merger agreement under which
SemiFab was acquired. They further alleged that they were
entitled to receive approximately 450,000 shares of our stock
pursuant to the achievement of milestones on specified dates.
The plaintiffs sought the shares of common stock, plus interest,
attorney fees and other relief. We denied that we failed to
fulfill our obligations under the merger agreement. Following
mediation, we and the plaintiffs entered into a settlement
agreement that disposed of the matter.

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

11



---



##### Table of Contents



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. No estimate can be made of the possible
loss or possible range of loss associated with the resolution of
these contingencies. As a result, no losses have been accrued in
our financial statements as of March 31, 2003.





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.




PART II




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

Price Range of Common Stock

Since September 22, 1993, our common stock,
no par value, 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, 2001       |  | $    | 22.62 |     |  | $ | 10.69 | 
|July 1 - September 30, 2001   |  | $    | 17.10 |     |  | $ | 9.05  | 
|October 1 - December 31, 2001 |  | $    | 13.05 |     |  | $ | 8.02  | 
|January 1 - March 31, 2002    |  | $    | 19.33 |     |  | $ | 12.90 | 
|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  | 

Approximate Number of Equity Security
Holders

There were approximately 399 record holders of
our common stock as of March 31, 2003.

Dividends

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

Equity Compensation Plan Information

Information regarding the equity compensation
plans will be contained in the Definitive Proxy Statement with
respect to the Annual Meeting of Shareholders under the caption
Compensation  Equity Compensation Plan
Information, and is incorporated by reference into this
report. All of the equity compensation plans have been approved
by the shareholders.

Refer to Part III, Item 12 of this
Annual Report on Form 10-K for certain information required
to be disclosed by Item 201(d) of Regulation S-K
incorporated by reference.

12



---



##### Table of Contents






Item 6     Selected
Consolidated Financial Data

We acquired companies in fiscal 2003, 2002, 2001,
2000 and 1999, 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.
The following table reflects selected consolidated financial
data (in thousands, except per share amounts):

|                                                                                                                                          |                                                                                                                                           |                              |          |         |   |      |          |         |   |      |         |         |   |   |         |         |  |   |         |         |  
|----------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | -------- | ------- | - | ---- | -------- | ------- | - | ---- | ------- | ------- | - | - | ------- | ------- |  | - | ------- | ------- | -
|                                                                                                                                          |                                                                                                                                           |                             
|                                                                                                                                          |                                                                                                                                           | Fiscal Years Ended March, 31
|                                                                                                                                          |                                                                                                                                           |                             
|                                                                                                                                          |                                                                                                                                           | 2003                         |          | 2002    |   | 2001 |          | 2000    |   | 1999
|                                                                                                                                          |                                                                                                                                           |                              |          |         |   |      |          |         |   |     
|Consolidated Statements of Operations
    Data:                                                                                           |                                                                                                                                           |                              |          |         |   |      |          |         |   |      |         |         |   |   |         |         |  |   |         |        
|Net sales                                                                                                                                 |                                                                                                                                           | $                            | 259,495  |         |   | $    | 183,234  |         |   | $    | 491,542 |         |   | $ | 225,554 |         |  | $ | 92,948  |        
|Gross profit                                                                                                                              |                                                                                                                                           |                              | 75,052   |         |   |      | 40,928   |         |   |      | 185,746 |         |   |   | 103,055 |         |  |   | 33,053  |        
|In-process research and development of acquired
    businesses                                                                            |                                                                                                                                           |                              | 7,832    |         |   |      | 2,000    |         |   |      |        |         |   |   | 4,884   |         |  |   | 7,100   |        
|Operating income (loss)                                                                                                                   |                                                                                                                                           |                              | (83,603  | )       |   |      | (132,084 | )       |   |      | 43,106  |         |   |   | 15,456  |         |  |   | (39,475 | )      
|Gain on sale of wafer and reticle carrier products                                                                                        |                                                                                                                                           |                              | 28,420   |         |   |      |         |         |   |      |        |         |   |   |        |         |  |   |        |        
|Income (loss) from continuing operations
    before discontinued operations and cumulative effect of a change
    in accounting principle |                                                                                                                                           |                              | (114,773 | )       |   |      | (97,514  | )       |   |      | 29,532  |         |   |   | 10,019  |         |  |   | (26,931 | )      
|Discontinued operations, net of income tax                                                                                                |                                                                                                                                           |                              | (21,096  | )       |   |      | (51,403  | )       |   |      |        |         |   |   |        |         |  |   |        |        
|Cumulative effect of change in accounting
    principle, net of tax                                                                       |                                                                                                                                           |                              |         |         |   |      |         |         |   |      | (2,506  | )       |   |   |        |         |  |   |        |        
|Net income (loss)                                                                                                                         |                                                                                                                                           |                              | (135,869 | )       |   |      | (148,917 | )       |   |      | 27,026  |         |   |   | 10,019  |         |  |   | (26,931 | )      
|Basic Earnings (Loss) Per Share:                                                                                                          |                                                                                                                                           |                              |          |         |   |      |          |         |   |      |         |         |   |   |         |         |  |   |         |        
|                                                                                                                                          | Income (loss) from continuing operations
    before discontinued operations and cumulative effect of a change
    in accounting principle |                              | $        | (3.06   | ) |      | $        | (2.76   | ) |      |         | 0.90    |   |   |         | 0.36    |  |   |         | (1.15   | )
|                                                                                                                                          | Cumulative effect of a change in accounting
    principle, net of income tax                                                              |                              | $        |        |   |      | $        |        |   |      | $       | (0.08   | ) |   | $       |        |  |   | $       |        |  
|                                                                                                                                          | Shares used in basic earnings per share
    calculation                                                                                   |                              |          | 37,489  |   |      |          | 35,373  |   |      |         | 32,697  |   |   |         | 27,639  |  |   |         | 23,460  |  
|Diluted Earnings (Loss) Per Share:                                                                                                        |                                                                                                                                           |                              |          |         |   |      |          |         |   |      |         |         |   |   |         |         |  |   |         |        
|                                                                                                                                          | Income (loss) from continuing operations
    before discontinued operations and cumulative effect of a change
    in accounting principle |                              | $        | (3.06   | ) |      | $        | (2.76   | ) |      | $       | 0.85    |   |   | $       | 0.32    |  |   | $       | (1.15   | )
|                                                                                                                                          | Cumulative effect of a change in accounting
    principle                                                                                 |                              | $        |        |   |      | $        |        |   |      | $       | (0.07   | ) |   | $       |        |  |   | $       |        |  
|                                                                                                                                          | Shares used in diluted earnings per share
    calculation                                                                                 |                              |          | 37,489  |   |      |          | 35,373  |   |      |         | 34,928  |   |   |         | 30,986  |  |   |         | 23,460  |  
|Consolidated Balance Sheet Data:                                                                                                          |                                                                                                                                           |                              |          |         |   |      |          |         |   |      |         |         |   |   |         |         |  |   |         |        
|                                                                                                                                          | Cash and cash equivalents, restricted cash and
    cash equivalent, and short-term investments                                            |                              | $        | 99,302  |   |      | $        | 84,629  |   |      | $       | 90,249  |   |   | $       | 106,088 |  |   | $       | 35,762  |  
|                                                                                                                                          | Working capital                                                                                                                           |                              |          | 89,723  |   |      |          | 122,594 |   |      |         | 179,154 |   |   |         | 171,550 |  |   |         | 72,484  |  
|                                                                                                                                          | Total assets                                                                                                                              |                              |          | 395,225 |   |      |          | 344,415 |   |      |         | 408,432 |   |   |         | 329,200 |  |   |         | 124,288 |  
|                                                                                                                                          | Long-term debt and finance leases, net of current
    portion                                                                             |                              |          | 114,812 |   |      |          | 90,331  |   |      |         | 3,683   |   |   |         | 910     |  |   |         | 2,876   |  
|                                                                                                                                          | Shareholders equity                                                                                                                      |                              |          | 68,034  |   |      |          | 164,937 |   |      |         | 302,463 |   |   |         | 233,106 |  |   |         | 96,634  |  

13



---



##### Table of Contents






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 for the semiconductor, or chip,
and 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. In October 2002, we began
transitioning substantially all of our manufacturing to
Solectron Corporation, which we believe will reduce our fixed
manufacturing costs and improve our ability to respond to sales
fluctuations. Over the past two years, we have also reduced our
workforce from a peak of approximately 1,800 employees to
approximately 872 employees.

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 loss in our
Consolidated Balance Sheets.



| |             
| | ------------
| | Acquisitions

In October 2002, we purchased a 51 percent
interest in Asyst Shinko, Inc. (ASI or Asyst
Shinko), a Japanese corporation.

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 percent of the
common stock of GW Associates, Inc., or GW, a California
corporation.

In February 2001, we acquired 100 percent of
the common stock of Advanced Machine Programming, Inc., or AMP,
a Delaware corporation and manufacturer of precision parts. We
sold this subsidiary in March 2003.

In February 2001, we acquired 100 percent of
the common stock of SemiFab, Inc., or SemiFab, a Delaware
corporation and manufacturer of environmental control equipment
and a contract manufacturer. We sold this subsidiary in March
2003.

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, a wholly-owned subsidiary of Asyst.

All of the above transactions 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, 2003
include the results of these acquired entities for the periods
subsequent to their respective acquisitions, as applicable. We
consolidate fully the financial position and results of
operations of ASI and account for the minority interest in the
Consolidated Financial Statements.

14



---



##### Table of Contents



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. 101, or SAB 101, Revenue
Recognition in Financial Statements. 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. 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
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

15



---



##### Table of Contents



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

Effective April 1, 2002, we adopted
Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets
(SFAS No. 142). SFAS No. 142
requires that goodwill and identifiable intangible assets with
indefinite useful lives no longer be amortized, but instead be
tested for impairment at least annually. SFAS No. 142
also requires that intangible assets with estimable useful lives
be amortized over their respective estimated useful lives to
their estimated residual values and reviewed for impairment in
accordance with SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. Furthermore,
SFAS No. 142 includes provisions on the identification
of intangible assets, reclassification of certain intangible
assets from previously reported goodwill, and reassessment of
the useful lives of existing intangible assets. At
March 31, 2003, we had $142.4 million of goodwill and
intangible assets, net of accumulated amortization, recorded on
our balance sheet.

We completed an annual goodwill impairment test
in the third quarter of fiscal 2003. The first step of the test
identifies if an impairment may have occurred, while the second
step of the test measures the amount of the impairment, if any.
As a result of the test, a goodwill impairment expense of
$2.1 million was recognized. 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 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 fiscal
2003, 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 ACT.



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

Our warranty policy generally states that we will
provide warranty coverage for a predetermined amount of time,
generally 12 or 24 months, for material and labor to repair
and service our equipment. In fiscal 2003 we outsourced all of
our product manufactured in the United States to Solectron
Corporation. Solectron assumes the warranty liability for the
first 12 months on product it manufacturers, with Asyst
liable for warranty obligations thereafter. We record the
estimated warranty cost upon shipment of our product. 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 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,

16



---



##### Table of Contents



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.


Results of Operations



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

Net sales for the fiscal year ended
March 31, 2003 were $259.5 million, an increase of
$76.3 million or 42 percent from the prior year. The
increase in fiscal 2003 sales was due primarily to the
establishment of ASI. Excluding the impact of ASI, net sales for
fiscal 2003 were $213.0 million, an increase of
$29.8 million or 16 percent from the prior year. The
increase was primarily attributable to increased sales to
customers in China and Taiwan, partially offset by decreased
sales to customers in North America. Net sales for the fiscal
year ended March 31, 2002 were $183.2 million, a
decrease of $308.3 million or 63 percent from fiscal
2001. The reduction in fiscal 2002 sales was directly
attributable to the reduced capital spending of semiconductor
manufacturers due to the general decline in demand for chips.



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

Because the semiconductor capital equipment
industry is subject to rapid increases and decreases 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 2002 we reduced our manufacturing headcount and
consolidated manufacturing into two facilities versus four. In
fiscal 2003 we began transitioning all of our
U.S. manufacturing operations to Solectron, a contract
manufacturer. We expect this outsourced manufacturing model will
significantly improve our gross profits on outsourced products
in fiscal 2004 and beyond.

Our gross profit was $75.1 million for the
fiscal year ended March 31, 2003, $40.9 million for
the fiscal year ended March 31, 2002 and
$185.7 million for the fiscal year ended March 31,
2001. This represents 28.9 percent of net sales for the
fiscal year ended March 31, 2003, 22.3 percent of net
sales for the fiscal year ended March 31, 2002 and
37.8 percent of net sales for the fiscal year ended
March 31, 2001. The improvement as a percent of sales in
fiscal 2003 was primarily attributable to increased sales
volumes, which better absorbed manufacturing overhead, facility
and headcount reduction actions taken in the prior fiscal year,
and higher mix of 200mm products, offset by lower gross margins
on our Asyst Shinko AMHS products. The decrease in fiscal 2002
versus the prior year was primarily attributable to
significantly reduced sales, as well as a $12.8 million
inventory reserve recorded in fiscal 2002.



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

We believe that research and development, or
R&D, of new automation solutions and the enhancement of
current products are critical to our competitiveness. We believe
it is important to maintain our commitment to these development
programs during industry downturns so that we will be positioned
with competitive products during upturns. Our ongoing commitment
to R&D is evidenced by our consistent level of spending over
the past three fiscal years despite the dramatic up and down
changes in sales. R&D expenses were $40.1 million for
the fiscal year ended March 31, 2003, $39.0 million
for the fiscal year ended March 31, 2002 and
$44.3 million for the fiscal year ended March 31,
2001. This represents 15.4 percent of net sales for the
fiscal year ended March 31, 2003, 21.3 percent of net
sales for the fiscal year ended March 31, 2002 and
9.0 percent of net sales for the fiscal year ended
March 31, 2001. We increased R&D spending in fiscal
2003 as we continued strategic product development programs and
added the R&D spending of ASI and ACT, although R&D as a
percentage of sales decreased due to higher sales. The decrease
in fiscal 2002 spending from fiscal 2001 resulted from the
reduction or elimination of certain 200mm engineering programs,
although R&D as a percentage of sales increased
significantly due to the drop in sales.

17



---



##### Table of Contents





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

Over the past two years we have reduced selling,
general and administrative, or SG&A, expenses to better
align our spending with lower sales levels. Our efforts were
evident in fiscal 2003 as SG&A expenses declined to
$74.2 million, or 28.6 percent of net sales, compared
with $76.3 million, or 41.6 percent of net sales in
fiscal 2002. SG&A expense was $90.4 million for the
fiscal year ended March 31, 2001, representing
18.4 percent of net sales for the period. The decreases in
fiscal 2003 and fiscal 2002 resulted primarily from workforce
reductions, facility closures, and reduced discretionary
spending offset in fiscal 2003 by increases due to acquisitions
of ASI and DLC. In the first month of fiscal 2004 we made
additional reductions in SG&A expenses, primarily through
workforce reductions, in response to continued market weakness.



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

Amortization expenses relating to acquired
intangible assets were $14.1 million for the fiscal year
ended March 31, 2003, $7.1 million for the fiscal year
ended March 31, 2002 and $7.0 million for the fiscal
year ended March 31, 2001. This represents 5.4 percent
of net sales for the fiscal year ended March 31, 2003,
3.9 percent of net sales for the fiscal year ended
March 31, 2002 and 1.4 percent of net sales for the
fiscal year ended March 31, 2001. We amortize acquired
intangible assets over periods ranging from three to ten years.
The increase in amortization expenses in fiscal 2003 is
primarily due to the acquisition of the ASI joint venture
interest.



| |                      
| | ---------------------
| | Restructuring Charges

Restructuring charges and related utilization for
fiscal years 2003, 2002 and 2001 were as follows:

|                        |                              |           |     |          |   |             |       |        |   |   |     |        |   |   |       |        |  
|----------------------- | ---------------------------- | --------- | --- | -------- | - | ----------- | ----- | ------ | - | - | --- | ------ | - | - | ----- | ------ | -
|                        |                              | Severance |     |          |   |             |       |       
|                        |                              | and       |     | Excess   |   | Fixed Asset |       |       
|                        |                              | Benefits  |     | Facility |   | Impairment  |       | Total 
|                        |                              |           |     |          |   |             |       |       
|Balance, March 31, 2000 |                              |           |    |          |   |             |      |        |   |   |    |        |   |   |      |       
|                        | Additional accruals          |           | $   | 540      |   |             | $     | 439    |   |   |     |       |   |   | $     | 979    |  
|                        | Non-cash related utilization |           |     | (540     | ) |             |       | (439   | ) |   |     |       |   |   |       | (979   | )
|                        |                              |           |     |          |   |             |       |        |   |   |     |        |   |   |       |       
|Balance, March 31, 2001 |                              |           |    |          |   |             |      |        |   |   |    |        |   |   |      |       
|                        | Additional accruals          |           |     | 4,278    |   |             |       | 3,685  |   |   | $   | 200    |   |   |       | 8,163  |  
|                        | Non-cash related utilization |           |     |         |   |             |       | (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 utilization |           |     | (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 |       
|                        |                              |           |     |          |   |             |       |        |   |   |     |        |   |   |       |       

In the quarter ended September 30, 2002, we
recorded severance charges of $0.8 million and contractual
obligations of $0.6 million as a result of workforce
reduction measures affecting approximately 24 employees and a
manufacturing outsourcing agreement whereby approximately 191
employees joined Solectron. The workforce reduction affected
employees in manufacturing, sales, research and development and
administration. An additional charge of $1.6 million
relates to excess facilities that we have under lease but have
abandoned as a result of the manufacturing outsourcing
agreement. We also recorded a fixed asset impairment charge of
$1.5 million for assets that will not be used as we
consolidate facilities and integrate certain programs into a
joint venture.

In the quarter ended December 31, 2002, we
recorded an excess facility charge of $1.1 million
reflecting revised estimates of future sublease income based on
continued weakness in the Austin commercial real estate market.
We also recorded severance charges of $0.7 million are the
result of headcount reductions of 52

18



---



##### Table of Contents



employees, including manufacturing, sales,
research and development and administrative staff. We also
recorded a fixed asset impairment charge of $0.7 million
for assets disposed of due to our headcount reductions and
vacating facilities.


In fiscal 2002, we recorded restructuring charges
in connection with our plan to shut down some of our
manufacturing and service locations, outsource some of our
manufacturing activities and consolidate the remainder of our
domestic manufacturing in Fremont, California, as well as to
reduce our workforce due to economic conditions. These charges
included 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 approximately 29 percent of
our workforce.

We expect to utilize approximately
$2.5 million of the remaining balance of $4.1 million
during 2004, and the remaining balance, primarily unused leased
facilities, over the following three fiscal years.



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

Asset impairment charges for fiscal years 2003,
2002 and 2001 were as follows:

|                                   |        |                              |       |        |  |      |        |        |  |   |   |   | 
|---------------------------------- | ------ | ---------------------------- | ----- | ------ |  | ---- | ------ | ------ |  | - | - | - | 
|                                   |        |                             
|                                   |        | Fiscal Years Ended March 31,
|                                   |        |                             
|                                   |        | 2003                         |       | 2002   |  | 2001
|                                   |        |                              |       |        |  |     
|Goodwill and intangible impairment |        | $                            | 8,398 |        |  | $    | 22,574 |        |  | $ |  |  
|Land impairment                    |        |                              | 7,121 |        |  |      | 17,925 |        |  |   |  |  
|                                   |        |                              |       |        |  |      |        |        |  |   |   |  
|                                   | Totals |                              | $     | 15,519 |  |      | $      | 40,499 |  |   | $ |  | 
|                                   |        |                              |       |        |  |      |        |        |  |   |   |  

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.

In fiscal 2002, we completed an annual goodwill
impairment test 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 believe approximates fair
value, with their corresponding book values. The charges relate
to goodwill and intangible assets recorded in connection with
previously acquired businesses.

We own undeveloped land in Fremont, California.
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 noncancelable 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. We recorded an additional
$7.1 million write-down in fiscal 2003 based on our revised
estimate of market value. We continue to hold the land for sale.



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

In October 2002, we acquired 51 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. In May 2001, we acquired GW
Associates. In connection with the purchase price allocation
$2.0 million was assigned to IPR&D. The amount
allocated to IPR&D was determined through established
valuation techniques in the high-technology

19



---



##### Table of Contents



industry and was expensed upon acquisition, as it
was determined that the projects had not reached technological
feasibility at the time of our acquisition.




| |                                                       
| | ------------------------------------------------------
| | Gain on Sale of Wafer and Reticle Carrier
    Products

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,
$28.9 million and $38.8 million in fiscal years 2003,
2002 and 2001, respectively.



| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | Other Income (Expense), net excluding gain
    on sale of wafer and recticle carrier products

Other income (expense), net excluding gain on
sale of WRC was $(6.9) million for the fiscal year ended
March 31, 2003, $(3.5) million for the fiscal year
ended March 31, 2002 and $3.7 million for the fiscal
year ended March 31, 2001. The increased net 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, lower interest rates on invested cash and greater
interest expense related to the sale of $86.3 million of
5 3/4 percent convertible subordinated notes on
July 3, 2001. The increased net expense in fiscal 2002
compared with fiscal 2001 is primarily due to interest expense
related to the sale of $86.3 million of 5 3/4 percent
convertible subordinated notes on July 3, 2001.



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

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. We expect to continue this
practice until we can sustain a level of profitability that
demonstrates the ability to utilize our deferred tax assets.
Provision for (benefit from) income taxes was
($38.0) million for the fiscal year ended March 31,
2002 and $17.2 million for the fiscal year ended
March 31, 2001. This represents an effective tax rate
(28.1) percent for the fiscal year ended March 31,
2002 and 36.8 percent for the fiscal year ended
March 31, 2001.



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

Minority interest for fiscal 2003 was
$4.7 million. No minority interest was recorded in fiscal
2002 and 2001. This amount represents the 49 percent of our
joint venture partner, Shinko Electric Co. Ltd. (Shinko), in the
operations of ASI.



| |                                               
| | ----------------------------------------------
| | Discontinued Operations, net of income
    tax

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.



| |                                                                             
| | ----------------------------------------------------------------------------
| | Cumulative Effect of Change in Accounting
    Principles, Net of Tax Benefit

We recorded a non-cash charge of
$2.5 million, net of an income tax benefit of
$1.3 million, or a loss of $0.07 per diluted share, to
reflect the cumulative effect of the accounting change to comply
with SAB 101 as of the beginning of fiscal 2001. The
deferred revenue recorded as a result of this accounting change
was fully recognized in fiscal 2001.

20



---



##### Table of Contents





| |                                     
| | ------------------------------------
| | Segment and Geographic
    Reporting

We have two reportable segments: Fab Automation
and Automated Material Handling Systems (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).

Segment information is summarized as follows
(dollars in millions):

|                         |                         |                             |   |       |   |      |   |        |   |  |   |       | 
|------------------------ | ----------------------- | --------------------------- | - | ----- | - | ---- | - | ------ | - |  | - | ----- | 
|                         |                         |                            
|                         |                         | Fiscal Year Ended March 31,
|                         |                         |                            
|                         |                         | 2003                        |   | 2002  |   | 2001
|                         |                         |                             |   |       |   |     
|Fab Automation Products: |                         |                             |   |       |   |      |   |        |   |  |   |      
|                         | Revenues                |                             | $ | 213.1 |   |      | $ | 183.2  |   |  | $ | 491.5 | 
|                         |                         |                             |   |       |   |      |   |        |   |  |   |      
|                         | Operating (loss)/income |                             | $ | (66.9 | ) |      | $ | (132.1 | ) |  | $ | 43.1  | 
|                         |                         |                             |   |       |   |      |   |        |   |  |   |      
|AMHS:                    |                         |                             |   |       |   |      |   |        |   |  |   |      
|                         | Revenues                |                             | $ | 46.4  |   |      | $ |       |   |  | $ |      | 
|                         |                         |                             |   |       |   |      |   |        |   |  |   |      
|                         | Operating (loss)/income |                             | $ | (16.7 | ) |      | $ |       |   |  | $ |      | 
|                         |                         |                             |   |       |   |      |   |        |   |  |   |      
|Total:                   |                         |                             |   |       |   |      |   |        |   |  |   |      
|                         | Revenues                |                             | $ | 259.5 |   |      | $ | 183.2  |   |  | $ | 491.5 | 
|                         |                         |                             |   |       |   |      |   |        |   |  |   |      
|                         | Operating (loss)/income |                             | $ | (83.6 | ) |      | $ | (132.1 | ) |  | $ | 43.1  | 
|                         |                         |                             |   |       |   |      |   |        |   |  |   |      

We acquired 51 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 (dollars
in millions):

|                                                 |  |                      |       |      |  |      |       |  |  |   |       | 
|------------------------------------------------ |  | -------------------- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                                 |  |                     
|                                                 |  | Year Ended March 31,
|                                                 |  |                     
|                                                 |  | 2003                 |       | 2002 |  | 2001
|                                                 |  |                      |       |      |  |     
|United States                                    |  | $                    | 90.5  |      |  | $    | 82.4  |  |  | $ | 192.3 | 
|Japan                                            |  |                      | 48.0  |      |  |      | 45.6  |  |  |   | 102.8 | 
|Taiwan                                           |  |                      | 47.0  |      |  |      | 20.3  |  |  |   | 98.3  | 
|Other Asia/ Pacific (excluding Japan and Taiwan) |  |                      | 51.1  |      |  |      | 16.6  |  |  |   | 58.3  | 
|Europe                                           |  |                      | 22.9  |      |  |      | 18.3  |  |  |   | 39.8  | 
|                                                 |  |                      |       |      |  |      |       |  |  |   |       | 
|Total                                            |  | $                    | 259.5 |      |  | $    | 183.2 |  |  | $ | 491.5 | 
|                                                 |  |                      |       |      |  |      |       |  |  |   |       | 



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

At March 31, 2003, we held notes from two
former employees and two current employees totaling
$0.7 million. At March 31, 2002, we held notes from
two former employees totaling $0.2 million and notes from
four current employees totaling $0.9 million. Also at
March 31, 2002, we held two notes receivable from a former
executive officer totaling $0.8 million. These two notes
were paid off in fiscal 2003. One other note was transferred in
connection with the sale of a business. Approximately
$0.3 million and $0.6 million of the notes receivable
are secured by deeds of trust on certain real property and/or
pledged securities of Asyst owned by the employees and are
included in other assets at March 31, 2003 and
March 31, 2002, respectively.

21



---



##### Table of Contents



In April 2003 Asyst Shinko acquired the AMHS
portion of Shinko Technologies, Inc. from Shinko, our 49% joint
venture partner. Shinko Technologies provided service and
support to Shinko customers in the United States of America. The
acquired subsidiary was named Asyst Shinko America. The purchase
price of approximately $2.3 million was based on the
estimated fair value of assets less liabilities acquired.

The Companys majority owned subsidiary,
ASI, has certain transactions with the minority shareholder,
Shinko. At March 31, 2003, significant balances due from
and owed to Shinko were (dollars in thousands):

|                                          |  |   |        |  
|----------------------------------------- |  | - | ------ | -
|Accounts and notes receivable from Shinko |  | $ | 391    |  
|Accounts payable due to Shinko            |  |   | (8,500 | )
|Accrued liabilities due to Shinko         |  |   | (755   | )

In addition, ASI purchased various administrative
and IT services from Shinko in order to provide for an orderly
transition. During the year ended March 31, 2003, sales to
and purchases from Shinko were (dollars in thousands):

|                   |  |   |       | 
|------------------ |  | - | ----- | 
|Sales              |  | $ | 203   | 
|Material purchases |  |   | 3,285 | 
|Services purchased |  |   | 4,421 | 

Recent Accounting Pronouncements

In July 2001 the Financial Accounting
Standards Board (FASB) issued Statement of Financial
Accounting Standard (SFAS) No. 142,
Goodwill and Other Intangible Assets (SFAS
No. 142). SFAS No. 142 discontinues amortization
of goodwill and intangible assets deemed to have indefinite
lives. In addition, SFAS No. 142 includes provisions
regarding: (1) the reclassification between goodwill and
identifiable intangible assets in accordance with the new
definition of intangible assets as set forth in SFAS
No. 141, Business Combinations; (2) the
reassessment of the useful lives of existing intangibles; and
(3) the testing for impairment of goodwill and other
intangibles. We adopted SFAS No. 142 during the quarter
ended June 30, 2002.

In July 2001 the FASB issued SFAS
No. 143, Accounting for Asset Retirement
Obligations (SFAS No. 143), which
addresses accounting and reporting for obligations associated
with the retirement of tangible long-lived assets and the
associated asset retirement costs. We adopted SFAS No. 143
in fiscal 2003. The adoption of SFAS No. 143 did not have a
significant impact on our consolidated financial statements.

In October 2001 the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS No. 144). SFAS
No. 144 supersedes SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of, and provides a single accounting model for
impairment of long-lived assets. SFAS No. 144 applies to
all long-lived assets, including discontinued operations, and
consequently amends the accounting and reporting provisions of
Accounting Principles Board Opinion No. 30, Reporting
the Results of Operations  Reporting the Effects of
Disposal of a Division of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions. SFAS
No. 144 develops one accounting model for long-lived assets
that are to be disposed of by sale and requires the measurement
to be at the lower of book value or fair value less cost to
sell. Additionally, SFAS No. 144 expands the scope of
discontinued operations to include all components of an entity
with operations that (1) can be distinguished from the rest
of the entity and (2) will be eliminated from the ongoing
operations of the entity in a disposal transaction. We adopted
SFAS No. 144 in the first quarter of fiscal 2003.

In June 2002 the FASB issued SFAS
No. 146, Accounting for Exit or Disposal
Activities (SFAS No. 146). SFAS
No. 146 addresses significant issues regarding the
recognition, measurement, and reporting of costs that are
associated with exit and disposal activities, including
restructuring activities that are currently accounted for under
Emerging Issues Task Force (EITF) Issue
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)
(EITF Issue No. 94-3). The scope of SFAS
No. 146 also includes costs related to terminating a
contract that is not a capital lease and termination benefits
that employees who are

22



---



##### Table of Contents



involuntarily terminated receive under the terms
of a one-time benefit arrangement that is not an ongoing benefit
arrangement or an individual deferred-compensation contract. The
provisions of EITF Issue No. 94-3 continue to apply for an
exit activity initiated under an exit plan that met the criteria
of EITF Issue No. 94-3 prior to the adoption of SFAS
No. 146. The effect on adoption of SFAS No. 146 will
change on a prospective basis the timing of when restructuring
charges are recorded from a commitment date approach to when the
liability is incurred. We adopted SFAS No. 146 during the
quarter ending March 31, 2003. The adoption of SFAS
No. 146 to date has not had a significant impact on our
consolidated financial statements.


In November 2002, the FASB issued Interpretation
No. 45 (FIN 45), Guarantors
Accounting and Disclosure requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. The
Interpretation elaborates on the existing disclosure
requirements for most guarantees, including loan guarantees such
as standby letters of credit. It also clarifies that at the time
a company issues a guarantee, the company must recognize an
initial liability for the fair value, or market value, of the
obligations it assumes under the guarantee and must disclose
that information in its interim and annual financial statements.
The provisions related to recognizing a liability at inception
of the guarantee for the fair value of the guarantors
obligations does not apply to product warranties or to
guarantees accounted for as derivatives. The initial recognition
and initial measurement provisions apply on a prospective basis
to guarantees issued or modified after December 31, 2002.

We, as permitted under California law and in
accordance with our Bylaws, have indemnification obligations to
our officers and directors for certain events or occurrences,
subject to certain limits, while they were serving at our
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.

Prior to December 31, 2002, we guaranteed
certain lease payments with respect to equipment and real estate
of our Japanese subsidiary as disclosed in Note 9. We have
not recorded a liability for the amount of our guarantee.

As more fully described in Note 11, we are
contingently liable to provide funding for plan benefits under a
pension plan of Asyst Shinko. Our consolidated financial
statements include an accrued benefit liability of
$12.1 million at March 31, 2003.

These pension obligations are included in the
Shinko pension plan. Under certain remote circumstances
including bankruptcy and inability to pay by Shinko, we may have
to assume up to $200 million of pension obligations. We
have not recorded a liability for this as it is considered
remote.

In November 2002 the EITF reached a
consensus on EITF Issue No. 00-21, Accounting for
Revenue Arrangements with Multiple Deliverables
(EITF Issue No. 00-21). EITF Issue No. 00-21
provides guidance on how to account for arrangements that
involve the delivery or performance of multiple products,
services and/or rights to use assets. The provisions of EITF
Issue No. 00-21 will apply to revenue arrangements entered
into in fiscal periods beginning after June 15, 2003. The
adoption of EITF Issue No. 00-21 to date has not had a
significant impact on our consolidated financial statements.

In December 2002 the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure 
an amendment of FASB Statement No. 123 (SFAS
No. 148). SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee
compensation. SFAS No. 148 also requires that disclosures
of the pro forma effect of using the fair value method of
accounting for stock-based employee compensation be displayed
more prominently and in a tabular format. Additionally, SFAS
No. 148 requires disclosure of the pro forma

23



---



##### Table of Contents



effect in interim financial statements. The
transition and annual disclosure requirements of SFAS
No. 148 are effective for fiscal years ended after
December 15, 2002. The interim disclosure requirements are
effective for interim periods beginning after December 15,
2002. We have chosen to continue to account for stock-based
compensation using the intrinsic value method prescribed in APB
Opinion No. 25 and related interpretations. Accordingly,
compensation expense for stock options is measured as the
excess, if any, of the estimate of the market value of our stock
at the date of the grant over the amount an employee must pay to
acquire our stock. We have adopted the annual disclosure
provisions of SFAS No. 148 in our financial reports for the
year ended March 31, 2003 and will adopt the interim
disclosure provisions for our financial reports for the quarter
ending June 30, 2003. As the adoption of this standard
involves disclosures only, we do not expect a material impact on
our consolidated financial statements.


In January 2003 the FASB issued FIN No. 46,
Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51 (FIN
No. 46). FIN No. 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 No. 46 is effective immediately for
all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or
acquired prior to February 1, 2003, the provisions of FIN
No. 46 must be applied for the first interim or annual
period beginning after June 15, 2003. The adoption of FIN
No. 46 to date has not had a significant impact on our
consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity (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 classifies 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. We believe that the adoption of this standard will
have no material impact on our consolidated financial statements.

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, 2003,
we had approximately $96.2 million in cash and cash
equivalents, $3.1 million in restricted cash and cash
equivalents, $89.7 million in working capital and
$114.8 million in long- term debt and finance lease
obligations.

Cash Flows from Operating
Activities.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 non-cash charges of $59.2 million
related to the deferred tax asset impairment 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, and partially offset by our net loss
of $135.9 million. Other significant sources of cash
included increases in payables and accrued liabilities and
deferred revenue totaling $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.

Net cash used in operating activities in fiscal
2002 was $25.3 million. The net cash used in operating
activities in fiscal 2002 was primarily attributable to our net
loss of $148.9 million, reductions in payables, accrued
liabilities and deferred revenue totaling $32.9 million
primarily due to less purchasing activity with lower revenues,
and a non-cash benefit for deferred taxes of $37.0 million.
These uses of cash were partially offset by non-cash charges to
net loss including asset impairment charges $40.5 million,
restructuring charges

24



---



##### Table of Contents



of $6.6 million, depreciation and
amortization of $17.3 million and inventory reserve
adjustments of $12.8 million. Additionally, accounts
receivable and inventory declined by a combined
$60.5 million, primarily due to lower revenues.


Cash Flows from Investing
Activities.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 carrier 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.

Net cash provided by investing activities in
fiscal 2002 was $31.5 million. We sold short-term
investments of $45.4 million, net. This source of cash was
offset by purchases of property and equipment of approximately
$10.3 million and cash used in connection with our
acquisition of GW of $3.6 million.

Cash Flows from Financing
Activities.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 finance leases of
$1.2 million.

Net cash provided by financing activities in
fiscal 2002 was $39.3 million. During fiscal 2002, we
received net proceeds of $83.8 million primarily from the
issuance of convertible debt securities and $2.6 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 finance leases of
$47.0 million.

In October 2002, we entered into and fully drew
down a $25.0 million two-year revolving credit agreement
with a commercial bank. Borrowings under the credit agreement
bear interest at a rate indexed to LIBOR. We are required by the
lender to maintain compliance with certain financial covenants.
These covenants include a total liabilities to tangible net
worth ratio, tangible net worth and minimum liquidity covenants.
We were in compliance with the covenants at March 31, 2003.
The amount of the credit line available to us may change based
on the amount of receivables we have and reductions in the
non-formulary piece of the credit line which is subject to
periodic review and amendment. 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 stockholders
and affiliates; create liens; sell or otherwise dispose of
assets; make payments on our subordinated debt; and engage in
mergers and acquisitions.

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 $18.0 million and $16.7 million
at March 31, 2003 and 2002, respectively, of short-term
debt from banks in Japan. As of March 31, 2003, the
interest rate ranged from 1.4 percent to 2.4 percent
(interest rates ranged from 1.4 percent to 1.9 percent
at March 31, 2002). We had secured straight bonds from a
bank in Japan of $4.1 million at March 31, 2003. The
bonds bore interest at rates ranging from 1.4 percent 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 these secured straight bonds as well as for
short-term debt. As of March 31, 2003, pledged assets
consist of land and other property and equipment, net of
accumulated depreciation, time deposits and accounts receivable
totaling $14.0 million. Additionally we have provided
letters of guarantee to financial institutions in Japan covering
substantially all of AJIs debts.

We lease facilities under non-cancelable finance
and operating leases, with expiration dates ranging from August
2003 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

25



---



##### Table of Contents



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 twelve months.


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.

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.

The
semiconductor manufacturing industry is highly cyclical, and the
current substantial downturn is harming our operating
results.

Our business is entirely dependent upon the
capital expenditures of semiconductor manufacturers, which at
any point in time are dependent on the then-current and
anticipated market demand for chips, as well as products
utilizing ICs. The semiconductor industry is cyclical and has
historically experienced periodic downturns. These periodic
downturns, whether the result of general economic changes or
capacity growth temporarily exceeding growth in demand for
chips, are difficult to predict and often have a severe adverse
effect on the semiconductor industrys demand for tools.
Sales of tools to semiconductor manufacturers may be
significantly more cyclical than sales of chips, as the large
capital expenditures required for building new fabs or
facilitizing existing fabs is often delayed until chip
manufacturers are confident about future demand growth. If
demand for semiconductor equipment remains depressed for an
extended period, it will seriously harm our business.

The industry is currently experiencing a
significant downturn due to decreased worldwide demand for
semiconductors from peak levels reached in 2000. During this
downturn, most of our customers have reduced capital
expenditures, which has adversely impacted our business. Our net
sales declined 70.8 percent from their peak in the third
quarter of fiscal 2001 to the third quarter of fiscal 2002.
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. We currently expect
sales to decline further in the first quarter of fiscal 2004. 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 curtail
our long-term business prospects.

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

We have
existing debts, and may not be able to secure additional
financing to meet our future capital needs.

We currently anticipate that our available cash
resources, which include existing cash and cash equivalents,
short-term investments, cash generated from operations and other
existing sources of working capital will be sufficient to meet
our anticipated needs for working capital and capital
expenditures through at least the next twelve months. In October
2002, we entered into and fully drew down a $25 million
2-year revolving credit agreement with Comerica Bank 
California. We are required under this agreement to

26



---



##### Table of Contents



maintain compliance with financial covenants,
including a total liabilities to tangible net worth ratio,
tangible net worth and minimum liquidity covenants. The amount
of the credit line available to us may change based on the
amount of receivables we have and reductions in the
non-formulary piece of the credit line which is subject to
periodic review and amendment. Additionally, our Japanese
subsidiary, AJI, has loans outstanding with Japanese banks
totaling approximately $22.1 million, substantially all of
which is guaranteed by the U.S. parent company.


We may be unable to meet the financial covenants
contained in our credit agreement with Comerica. If we are
unable to meet the covenants, Comerica may require us to repay
the outstanding balance. If the amount of credit available to us
changes, we may also be required to repay some or all of the
outstanding balance. The Japanese banks may call our outstanding
loans, requiring repayment, some of which would be paid by the
U.S. parent under existing loan guarantees. This could
leave us with inadequate cash resources to effectively manage
the business and require us to obtain additional financing.

In July 2001, we completed the sale of
$86.3 million of 5 3/4 percent convertible
subordinated notes 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, 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 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. We may pursue additional funds
to support our working capital and operating expense
requirements or for other purposes. We may pursue these
additional funds through public or private debt, equity
financings or the sale of assets. 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.

Our new
credit facility contains restrictive covenants that may limit
our ability to expand or pursue our business
strategy.

The $25 million credit facility we entered
into in October 2002 restricts, without agreement from our
lender, Comerica Bank  California, 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 stockholders and
    affiliates;             
|
| |  | create liens;                                                            
|
| |  | sell or otherwise dispose of assets;                                     
|
| |  | make payments on our subordinated debt; and                              
|
| |  | engage in mergers and acquisitions.                                      

We are also required under the credit facility to
maintain compliance with financial tests, including a total
leverage ratio and net worth and liquidity covenants. We may not
be able to maintain these ratios. Covenants in the credit
facility may also impair our ability to expand or pursue our
business strategies. Our operating and

27



---



##### Table of Contents



financial performance, changes in business
conditions or results of operations, adverse regulatory
developments or other events beyond our control may impair our
ability to comply with these covenants and other provisions of
the credit facility. In addition, if we do not comply with these
covenants, we may be required to negotiate new terms and
conditions with our lender, or the lender may accelerate our
debt under the credit facility. New terms and conditions could
be more restrictive than under the current credit facility. If
the indebtedness under the credit facility is accelerated, we
may be required to repay all outstanding indebtedness in full.
Forced repayment of our indebtedness would reduce our available
cash balances. Any of these scenarios could have an adverse
impact on our operating or financial performance or could impair
our ability to expand or pursue our business strategies.


Upon the occurrence of a change of control as
defined in the indenture for our subordinated convertible notes
due in 2008, we will be required to offer to repurchase those
notes at 100 percent of the principal amount of the notes,
together with accrued and unpaid interest, if any, to the date
of purchase. However, we are prohibited under our new credit
facility, and may be prohibited under indebtedness we may incur
in the future, from purchasing any notes prior to their stated
maturity. In such circumstances, we will be required to repay
all or a portion of the outstanding principal and any accrued
interest under the credit facility and any such other future
indebtedness, or obtain the requisite consent from the lender
under the credit facility and the holders of any other future
indebtedness to permit the repurchase of the notes. If we are
unable to repay all of this indebtedness or are unable to obtain
the necessary consents, we will be unable to offer to repurchase
the notes, which would constitute an event of default under the
indenture for the notes, which in turn would constitute a
default under our new credit facility and could constitute a
default under the terms of any future indebtedness that we may
incur.

We may not
effectively compete in a highly competitive semiconductor
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. In addition, the facility automation market has
periods of rapid consolidation. Some of our competitors,
especially following consolidation, may have greater name
recognition, more extensive engineering, manufacturing and
marketing capabilities and substantially greater financial,
technical and personnel resources than those available to us.

Brooks Automation, Inc. and TDK are our primary
competitors in the area of isolation systems. Our SMART-Traveler
System products face competition from bar code technology as
well as Brooks and a number of smaller competitors. We also
compete with several companies in the robotics area, including,
but not limited to, Brooks Automation, 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 Automation. Our wafer and reticle
sorters compete primarily with products from Recif, Inc. and
Brooks Automation.

In addition, the transition to 300mm wafers is
likely to draw new competitors to the facility automation market
and may result in additional consolidation. In the 300mm wafer
market, we expect to face intense competition from a number of
companies such as Brooks Automation, as well as potential
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.

New products developed by our competitors or more
efficient production of their products could increase pricing
pressure on our products. In addition, companies in the
semiconductor capital equipment industry have been facing
pressure to reduce costs. Either of these factors may require us
to make significant price reductions to avoid losing orders.
Further, our current and prospective customers continuously
exert pressure

28



---



##### Table of Contents



on us to lower prices, shorten delivery times and
improve the capabilities of our products. Failure to respond
adequately to such pressures could result in a loss of customers
or orders.


Our gross
margins on 300mm products may be lower than on 200mm products,
which could result in decreased profitability.

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 directly to OEMs
rather than chip manufacturers.

The 300mm market is still relatively new.
Manufacturing costs are generally higher in the early stages of
new product introduction and 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. We face increased competition
for our 300mm products because of the development of SEMI
standards for 300mm products. While chip manufacturers purchased
a majority of 200mm automation products, OEM manufacturers are
purchasing most of the tool automation products for 300mm.

These and other factors may prevent us from
achieving or maintaining the same relative pricing and gross
margin performance on 300mm products as we have achieved on
200mm products.

Because the
semiconductor manufacturing industry is subject to rapid demand
shifts which are difficult to predict, our inability to
efficiently manage our manufacturing capacity and inventory
levels in response to these rapid shifts may cause a reduction
in our gross margins, profitability and market
share.

The semiconductor manufacturing industry
experiences rapid demand shifts. Our ability to respond to these
demand shifts is limited because we incur manufacturing
overhead, inventory expense and other costs, many of which are
fixed in the short-term, based on projections of anticipated
customer demand.

During a downturn, our ability to quickly reduce
our production costs may be hampered by manufacturing
commitments and accrued inventory based on earlier and more
optimistic projections of demand. If market demand does not
match our projections, we will have to carry or write off excess
and obsolete inventory and our gross margins will decline which,
in turn, could prevent us from operating profitably. For
example, we incurred an inventory charge in the fiscal fourth
quarter of 2003 of $4.6 million which was associated with
additional inventory reserves for obsolete and excess inventory.
This inventory accumulated largely due to the steep decline in
demand for our products. Furthermore, if we do not accurately
predict the demand for our 200mm and 300mm automation products,
we could encounter additional problems with excess and obsolete
inventory.

During periods of increasing demand, our ability
to satisfy increased customer demand may be constrained by our
projections. If our projections underestimate demand, we may
have inadequate inventory and may not be able to easily expand
our manufacturing capacity, which could result in delays in
shipments and loss of customers. Even if we are able to
sufficiently expand our capacity, we may not be able to do so
efficiently, which would adversely affect our gross margin and
profitability.

While our outsourcing agreement with Solectron
includes commitments from Solectron as to how quickly they can
increase or decrease manufacturing based on updates to our
forecast demand. Solectron may be unable to meet these
commitments and, even if it can, we may be unable to react
efficiently to rapid fluctuations in demand.

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 are
comprised of 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
makes our relationship with each customer critical to our
business. This

29



---



##### Table of Contents



concentrated customer base is even more
pronounced at ASI . We may not be able to retain our largest
customers or attract additional customers, and our OEM customers
may not be successful in selling their equipment with our
embedded systems. 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, some of our customers may in the future shift
their purchases of products from us to our competitors.
Additionally, the inability to successfully develop
relationships with additional customers or the need to provide
future price concessions 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. As we complete projects for a customer,
business from that customer will decline substantially unless it
undertakes additional projects incorporating our products.

We may
experience lost sales due to outsourcing of most of our product
manufacturing, which could negatively impact our
business.

In an effort to focus on core competencies and
reduce the impact of cyclical peaks and troughs on our operating
results, we have outsourced the manufacturing of our U.S.
products to Solectron Corporation. 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. These
problems 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
to the outsourced vendor, improper product specifications, and
the learning curve to commence manufacturing at a new outsourced
site. If products are delayed because of problems in outsourcing
we may lose sales and profits.

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 external manufacturer.

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

If we are
unsuccessful in fully commercializing our FasTrack Automated
Materials Handling System, and/or we cannot generate new
business from our Asyst Shinko joint venture, our growth
prospects could be negatively impacted.

AMHS is an important component of our growth
strategy. We have completed only one successful commercial
installation of our FasTrack system in a 200mm fab. Our FasTrack
system currently is not a complete AMHS solution, and we may not
be successful in some or all of our current efforts to develop
or otherwise obtain the additional components that comprise a
complete solution. If we are able to offer a complete solution,
we still could find it difficult to compete against companies
with greater experience and resources in the AMHS market. In
addition, our joint venture company, Asyst Shinko, may not
continue to succeed in the 300mm AMHS market, and may not be
able to help us gain market acceptance for FasTrack. Any failure
to win market acceptance of our products, either FasTrack or
joint venture products, would negatively impact our growth
prospects.

30



---



##### Table of Contents



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.

We do not have long-term contracts with our
customers. As a result, our agreements with our customers do not
provide any assurance of future sales. 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.                   

Sales are typically made pursuant to individual
purchase orders and product delivery often occurs with extremely
short lead times. If we are unable to fulfill these orders in a
timely manner, we could lose sales and customers.

The timing of
the transition to 300mm technology is uncertain and competition
may be intense.

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 implementing factory automation in
300mm pilot projects may initially seek to purchase systems from
multiple vendors. Competition, including price competition, for
these early 300mm orders could be vigorous. A vendor whose
system is selected for an early 300mm pilot project may have, or
be perceived to have, an advantage in competing for future
orders, and thus the award to a competitor of one or more early
300mm orders could cause our stock price to fall.

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

Our portal solutions offers our OEM customers a
complete, automated interface between the OEMs tool and
the fab, an alternative to designing and manufacturing automated
equipment front-ends for their tools utilizing purchased
components and in-house engineering and manufacturing resources.
The decision by OEMs to adopt our system 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. To date, we have penetrated only a small
percentage of OEM tools. We believe that our growth prospects in
the OEM market depend in large part upon our ability to gain
acceptance of the portal solutions and follow-on products by a
broader group of OEM customers. If we fail to satisfy these
expectations, whether based on limited or expanded sales levels,
OEMs will not adopt the portal solutions. We cannot assure you
that these tools will be widely accepted in the marketplace or
that additional OEMs will adopt the system. Notwithstanding our
solution, OEMs may purchase components to assemble interfaces or
invest in the development of their own complete interfaces. If
our products are not adopted by OEMs, our prospects will be
negatively impacted and our profits substantially harmed.

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 incur material development costs and other
expenses. During

31



---



##### Table of Contents



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.


We may not be
able to efficiently integrate 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. Our recent acquisitions include our 51 percent ownership
in ASI, as well as DLC, GW, SemiFab, AMP and MECS Corporation.
We subsequently merged MECS into AJI. During fiscal 2003 we sold
SemiFab, AMP and our wafer and reticle carrier product lines.

In the future we may make additional acquisitions
of, or significant investments in, businesses that offer
complementary products, services, technologies or market access.
For example, in May 2002, we completed the asset purchase from
DLC, and in October 2002 we completed the acquisition of a 51
percent ownership of ASI. 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
those of Asyst. 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 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. We may not succeed with the integration process and we
may not fully realize the anticipated benefits of the business
combinations. For example, in fiscal 2003, we decided to
discontinue operations of our SemiFab and AMP subsidiaries, as
these subsidiaries were not considered critical to our long-term
strategy. These subsidiaries were sold at the end of fiscal
2003. We may be required to record significant future impairment
costs, such as the $8.4 million and $22.6 million
charge recorded in fiscal 2003 and 2002, respectively in the
event that the carrying value exceeds the fair value of acquired
intangible assets. 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 successfully rationalize our
acquisitions or divestitures. The difficulties of integration
may increase because of the necessity of combining personnel
with disparate 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. 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.

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 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 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 or could detract from the value of
our product.

32



---



##### Table of Contents



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 Asyst 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.

Because our
quarterly operating results are subject to variability, quarter
to quarter comparisons may not be meaningful.

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



| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | the timing of significant customer orders;                                                               
|
| |  | the timing of product shipment and acceptance;                                                           
|
| |  | variations in the mix of products sold;                                                                  
|
| |  | the introduction of new products;                                                                        
|
| |  | changes in customer buying patterns;                                                                     
|
| |  | fluctuations in the semiconductor equipment
    market;                                                  
|
| |  | the availability of key components;                                                                      
|
| |  | lost sales due to outsourcing of manufacturing;                                                          
|
| |  | pressure from competitors; and                                                                           
|
| |  | general trends in the semiconductor manufacturing
    industry, electronics industry and overall economy.

The sales cycle to new customers ranges from 6 to
12 months from initial inquiry to placement of an order,
depending on the complexity of the project. This extended sales
cycle makes 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. These factors increase the risk of
unplanned fluctuations in net sales. Moreover, a shortfall in
net sales in a quarter as a result of these factors could
negatively impact our operating results for the quarter. Given
these factors, we expect quarter to quarter performance to
fluctuate for the foreseeable future. In one or more future
quarters, our operating results are likely to be below the
expectations of public market analysts and investors, which may
cause our stock price to decline.

Shortages of
components necessary for our product assembly can delay our
shipments and can lead to increased costs which may negatively
impact our financial results.

When demand for semiconductor manufacturing
equipment is strong, our suppliers, both domestic and
international, strain to provide components on a timely basis
and, in some cases, on an expedited basis at our request.
Disruption or termination of these sources could have a serious
adverse effect on our operations. Many of the components and
subassemblies used in our products are obtained from a single
supplier or a limited group of suppliers. 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.

33



---



##### Table of Contents



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 are
attributable to sales outside the United States, primarily in
Taiwan, Japan, China, Singapore and Europe. 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;                                                                                                            
|
| |  | trade restrictions;                                                                                                                            
|
| |  | changes in tariffs and taxes;                                                                                                                  
|
| |  | longer payment cycles typically associated with
    foreign sales;                                                                             
|
| |  | the greater difficulty of administering business
    overseas; and                                                                             
|
| |  | general economic conditions.                                                                                                                   

In addition, in Taiwan, our business could be
impacted by the political, economic and military conditions in
that country. China does not recognize Taiwans
independence and the two countries are continuously engaged in
political disputes. Both countries have continued to conduct
military exercises in or near the others territorial waters and
airspace. These disputes may continue or escalate, resulting in
an economic embargo, a disruption in shipping or even military
hostilities. The political instability in Taiwan could result in
the creation of political or other non-economic barriers to our
being able to sell our products or create local economic
conditions that reduce demand for our products among our target
market.

In both Taiwan and Japan, our customers are
subject to risk of natural disasters, which, if they were to
occur, could harm our revenue. Semiconductor fabrication
facilities have in the past experienced major reductions in
foundry capacity due to earthquakes in Taiwan and Japan. For
example, in 1999, Taiwan experienced several earthquakes which
impacted foundries due to power outages, physical damage and
employee dislocation. Our business could suffer if a major
customers manufacturing capacity was adversely affected by
a natural disaster such as an earthquake, fire, tornado or flood.

The recent outbreak of severe acute respiratory
syndrome, or SARS, which has had particular impact in China,
Hong Kong, Taiwan and Singapore, could have a negative effect on
our operations. A significant portion of our net sales are made
in Asia. Also, our outsourced manufacturing is conducted in
Singapore. Our operations may be impacted by a number of
SARS-related factors, including, among other things, disrupting
operations at our customers, supplier or our operations.

Any kind of economic instability in Taiwan and
Japan or other 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 countries,
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. During this period, the lack of capital
in the financial sectors of these countries made it difficult
for our customers to open letters of credit or other financial
instruments that are guaranteed by foreign banks. 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

34



---



##### Table of Contents



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.


European and Asian courts might not enforce
judgments rendered in the United States. There is doubt as to
the enforceability in Europe and Asia 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 European and Asian 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 based on civil liability would not
automatically be enforceable in many European and Asian
countries.

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 or useful
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,
we may face direct competition, which could materially adversely
affect our future business, operating results and financial
condition.

Anti-takeover
provisions in our articles of incorporation, bylaws and our
shareholder rights plan may prevent or delay an acquisition of
Asyst that might be beneficial to our
shareholders.

Our articles of incorporation and bylaws include
provisions that may have the effect of deterring hostile
takeovers or delaying changes in control or management of Asyst.
These provisions include certain advance notice procedures for
nominating candidates for election to our Board of Directors, a
provision eliminating shareholder actions by written consent and
a provision under which only our Board of Directors, our
Chairman of the Board, our President or shareholders holding at
least 10 percent of the outstanding common stock may call
special meetings of the shareholders. We have entered into
agreements with our officers and directors indemnifying them
against losses they may incur in legal proceedings arising from
their service to Asyst, including losses associated with actions
related to third-party attempts to acquire Asyst.

We have adopted a share purchase rights plan,
pursuant to which we have granted to our shareholders rights to
purchase shares of junior participating preferred stock. Upon
the earlier of (1) the date of a public announcement that a
person, entity, or group of associated persons has acquired
15 percent of our common stock or (2) 10 business
days following the commencement of, or announcement of, a tender
offer or exchange offer, the rights granted to our shareholders
will become exercisable to purchase our common stock at a price
substantially discounted from the then applicable market price
of our common stock. These rights could generally discourage a
merger or tender offer involving the securities of Asyst that is
not approved by our Board of Directors by increasing the cost of
effecting any such transaction and, accordingly, could have an
adverse impact on shareholders who might want to vote in favor
of such merger or participate in such tender offer.

In addition, our Board of Directors has authority
to issue up to 4,000,000 shares of preferred stock and to
fix the rights, preferences, privileges and restrictions,
including voting rights, of those shares without any future vote
or action by the shareholders. The issuance of preferred stock,
while providing desirable flexibility in connection with
possible acquisition and other corporate purposes, could have
the effect of making it more difficult for a third party to
acquire a majority of our outstanding voting stock, thereby
delaying, deferring or preventing a change in control of Asyst.
Furthermore, such preferred stock may have other rights,
including economic rights senior to the common stock, and as a
result, the issuance thereof could have a material adverse
effect on the market value of the common stock. We have no
present plans to issue shares of preferred stock.

Our stock
price may fluctuate significantly which could be detrimental to
our shareholders.

Our stock price has in the past fluctuated and
will fluctuate in the future in response to a variety of
factors, including the following:



| |   |                                                 
| | - | ------------------------------------------------
| |  | quarterly fluctuations in results of operations;

35



---



##### Table of Contents





| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | announcements of new products by Asyst or our
    competitors;                                          
|
| |  | changes in either our earnings estimates or
    investment recommendations by stock market analysts;    
|
| |  | announcements of technological innovations;                                                             
|
| |  | conditions or trends in the semiconductor
    manufacturing industry;                                   
|
| |  | announcements by Asyst or our competitors of
    acquisitions, strategic partnerships or joint ventures;
|
| |  | additions or departures of senior management; and                                                       
|
| |  | other events or factors many of which are beyond
    our control.                                       

In addition, in recent years, the stock market in
general and shares of technology companies in particular have
experienced extreme price fluctuations, and such extreme price
fluctuations may continue. These broad market and industry
fluctuations may adversely affect the market price of our common
stock.

Representatives
of Arthur Andersen LLP are not available to consent to the
inclusion of Arthur Andersen LLPs reports on our financial
statements and incorporated in our Form 10-K, and we will
not be able to recover against Arthur Andersen LLP under
Section 11 of the Securities Act of 1933.

Arthur Andersen LLP was previously our
independent accountant. On March 14, 2002, Andersen was
indicted on federal obstruction of justice charges arising from
the governments investigation of Enron Corporation and on
June 15, 2002, Andersen was found guilty. Arthur Andersen
has ceased practicing before the SEC. SEC rules require us to
present historical audited financial statements in various SEC
filings, such as registration statements into which this Annual
Report on Form 10-K may be incorporated by reference, along
with Arthur Andersens consent to our inclusion of its
audit report in those filings. In light of the cessation of
Arthur Andersens SEC practice, we will not be able to
obtain the consent of Arthur Andersen to the inclusion of its
audit report in our relevant current and future filings. The SEC
has provided regulatory relief designed to allow companies that
file reports with the SEC to dispense with the requirement to
file a consent of Arthur Andersen in certain circumstances.
Because representatives for Arthur Andersen LLP are not
available to provide the consents required for the inclusion of
their report on our consolidated financial statements for the
year ended March 31, 2001, you will not be able to recover
against Arthur Andersen LLP under Section 11 of the
Securities Act of 1933 for any untrue statements of a material
fact contained in these financial statements audited by Arthur
Andersen LLP.




Item 7AQuantitative
and Qualitative Disclosures Regarding Market Risk

Interest Rate Risk.Our exposure to market risk for changes in interest rates relate
primarily to the 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 is limited by 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 constantly 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 due to rise in
interest rates. If market interest rates were to increase
immediately and uniformly by 10 percent from levels at
March 31, 2003 and at March 31, 2002, 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 securities portfolio.

36



---



##### Table of Contents



The table below presents principal amounts and
related weighted average interest rates for the investment
portfolio at March 31, 2003. Our intent is not to hold
investments longer than twelve 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 9 to our
financial statements (dollars in thousands):

|                                     |  |            |               |                  |  |      |        |  |  |  |      |  
|------------------------------------ |  | ---------- | ------------- | ---------------- |  | ---- | ------ |  |  |  | ---- | -
|                                     |  |            |               |                 
|                                     |  |            |               | Average Carrying
|                                     |  |            |               | Interest        
|                                     |  | Remaining  |               |                 
|                                     |  | Maturities |               | Amount           |  | Rate
|                                     |  |            |               |                  |  |     
|CASH EQUIVALENTS:                    |  |            |               |                  |  |      |        |  |  |  |      |  
|Institutional money market funds     |  |            | within 1 year |                  |  | $    | 47,493 |  |  |  | 1.61 | %
|                                     |  |            |               |                  |  |      |        |  |  |  |      |  
|U.S. corporate debt securities       |  |            | within 1 year |                  |  |      | 11,500 |  |  |  | 1.30 | %
|                                     |  |            |               |                  |  |      |        |  |  |  |      |  
|Total cash equivalents               |  |            |               |                  |  | $    | 58,993 |  |  |  | 1.50 | %
|                                     |  |            |               |                  |  |      |        |  |  |  |      |  
|RESTRICTED CASH and CASH EQUIVALENTS |  |            |               |                  |  |      |        |  |  |  |      |  
|U.S. corporate debt securities       |  |            | within 1 year |                  |  | $    | 3,088  |  |  |  | 1.40 | %
|                                     |  |            |               |                  |  |      |        |  |  |  |      |  

Foreign Currency Exchange
Risk.We engage in international
operations and transact business in various foreign countries.
The primary foreign currency cash flows are located in Japan,
China, Taiwan, Singapore and Europe. Although we operate and
sell products in various global markets, substantially all sales
are denominated in the U.S. dollar, except in Japan,
therefore reducing the foreign currency risk factor. In March
2001, we began to employ a foreign currency hedge program
utilizing foreign currency forward exchange contracts in Japan.
To date, the foreign currency transactions and exposure to
exchange rate volatility have not been significant. There can be
no assurance that foreign currency risk will not be a material
impact on our financial position, results of operations or cash
flow in the future.

37



---



##### Table of Contents








|       |                                                
|------ | -----------------------------------------------
|Item 8 | Financial Statements and Supplementary
    Data

Our Financial Statements and notes thereto and
Financial Statement Schedules appear on pages 46-79 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, 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 income (loss) from continuing operations  |                         | $                         | (12,098 | )       |   | $       | (75,960 | )       |   | $ | (32,621 | )     |   | $ | 5,906  |      
|Discontinued operations, net of income tax    |                         | $                         | (1,360  | )       |   | $       | (2,093  | )       |   | $ | (8,300  | )     |   | $ | (9,343 | )    
|Net loss                                      |                         | $                         | (13,458 | )       |   | $       | (78,053 | )       |   | $ | (40,921 | )     |   | $ | (3,437 | )    
|Basic earnings (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 earnings (loss) per share         |                         | $                         | (0.37   | )       |   | $       | (2.08   | )       |   | $ | (1.08   | )     |   | $ | (0.09  | )    
|                                              |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |        |      
|Diluted earnings (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 earnings (loss) per share       |                         | $                         | (0.37   | )       |   | $       | (2.08   | )       |   | $ | (1.08   | )     |   | $ | (0.08  | )    
|                                              |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |        |      
|Shares used in basic per share calculations   |                         |                           | 36,565  |         |   |         | 37,452  |         |   |   | 37,932  |       |   |   | 38,005 |      
|Shares used in diluted per share calculations |                         |                           | 36,565  |         |   |         | 37,452  |         |   |   | 37,932  |       |   |   | 40,586 |      

|                                              |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |         |       |  
|--------------------------------------------- | ----------------------- | ------------------------- | ------- | ------- | - | ------- | ------- | ------- | - | - | ------- | ----- | - | - | ------- | ----- | -
|                                              |                         |                          
|                                              |                         | Year Ended March 31, 2002
|                                              |                         |                          
|                                              |                         | First                     |         | Second  |   | Third   |         | Fourth 
|                                              |                         | Quarter                   |         | Quarter |   | Quarter |         | Quarter
|                                              |                         |                           |         |         |   |         |         |        
|Net sales                                     |                         | $                         | 63,336  |         |   | $       | 48,494  |         |   | $ | 35,631  |       |   | $ | 35,773  |      
|Gross profit                                  |                         | $                         | 17,379  |         |   | $       | 14,100  |         |   | $ | (3,780  | )     |   | $ | 13,229  |      
|Net loss from continuing operations           |                         | $                         | (24,597 | )       |   | $       | (14,215 | )       |   | $ | (48,469 | )     |   | $ | (10,233 | )    
|Discontinued operations, net of income tax    |                         | $                         | (2,956  | )       |   | $       | (4,126  | )       |   | $ | (41,379 | )     |   | $ | (2,942  | )    
|Net loss                                      |                         | $                         | (27,553 | )       |   | $       | (18,341 | )       |   | $ | (89,848 | )     |   | $ | (13,175 | )    
|Basic loss per share:                         |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|                                              | Continuing operations   |                           | $       | (0.70   | ) |         | $       | (0.40   | ) |   | $       | (1.37 | ) |   | $       | (0.29 | )
|                                              | Discontinued operations |                           |         | (0.08   | ) |         |         | (0.12   | ) |   |         | (1.17 | ) |   |         | (0.08 | )
|                                              |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|Total basic loss per share                    |                         | $                         | (0.78   | )       |   | $       | (0.52   | )       |   | $ | (2.54   | )     |   | $ | (0.37   | )    
|                                              |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|Diluted loss per share:                       |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|                                              | Continuing operations   |                           | $       | (0.70   | ) |         | $       | (0.40   | ) |   | $       | (1.37 | ) |   | $       | (0.29 | )
|                                              | Discontinued operations |                           |         | (0.08   | ) |         |         | (0.12   | ) |   |         | (1.17 | ) |   |         | (0.08 | )
|                                              |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|Total diluted loss per share                  |                         | $                         | (0.78   | )       |   | $       | (0.52   | )       |   | $ | (2.54   | )     |   | $ | (0.37   | )    
|                                              |                         |                           |         |         |   |         |         |         |   |   |         |       |   |   |         |      
|Shares used in basic per share calculations   |                         |                           | 35,007  |         |   |         | 35,286  |         |   |   | 35,419  |       |   |   | 35,779  |      
|Shares used in diluted per share calculations |                         |                           | 35,007  |         |   |         | 35,286  |         |   |   | 35,419  |       |   |   | 35,779  |      

38



---



##### Table of Contents



Comparability of quarterly data from continuing
operations is affected by the following activity during fiscal
2003 and 2002:



| |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) Asset impairment charges of
    $7.1 million, $8.4 million, $17.9 million and
    $22.6 million in the second and third quarters of fiscal
    2003 and first and third quarters of fiscal 2002, respectively.
    These charges relate to writedowns in value of goodwill,
    intangibles and land held for sale.                                                                                          
|
| | (2) Reserve for net deferred tax assets of
    $62.7 million in the second quarter of fiscal 2003.                                                                                                                                                                                                                                                                                                               
|
| | (3) Net gain on sale of the WRC products in
    the fourth quarter of fiscal 2003 of $28.4 million.                                                                                                                                                                                                                                                                                                              
|
| | (4) Restructuring charges in the second and
    third quarters of fiscal 2003 and the first, second and third
    quarters of fiscal 2002 of $4.5 million, $2.5 million,
    $0.8 million, $1.5 million and $5.9 million,
    respectively. These charges were primarily for severance, excess
    facility and asset impairment charges related to workforce
    reductions and consolidation of our facilities.
|
| | (5) Inventory reserves of $4.5 million
    and $12.8 million in the fourth quarter of fiscal 2003 and
    third quarter of fiscal 2002, respectively.                                                                                                                                                                                                                                                            
|
| | (6) Adoption of SFAS 144 in the first
    quarter of fiscal 2003.                                                                                                                                                                                                                                                                                                                                                

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






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

On April 2, 2002, Asyst Technologies, Inc.
(Asyst or the Registrant) terminated the
engagement of its current independent public accountant, Arthur
Andersen LLP. This termination followed Asysts
decision to seek proposals from other independent auditors to
audit Asysts consolidated financial statements for its
fiscal year ended March 31, 2002.

On April 2, 2002, the Board of Directors,
based on the recommendation of the Audit Committee, engaged
PricewaterhouseCoopers LLP as its independent auditors with
respect to the audit of Asysts consolidated financial
statements for its fiscal year ended March 31, 2002.

During Asysts fiscal year ended
March 31, 2001, and during the subsequent interim period
preceding the replacement of Arthur Andersen LLP, there was
no disagreement between Asyst and Arthur Andersen LLP on any
matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if
not resolved to Arthur Andersen LLPs satisfaction,
would have caused Arthur Andersen LLP to make reference to
the subject matter of the disagreement in connection with its
reports. The audit reports of Arthur Andersen LLP on the
consolidated financial statements of Asyst as of and for the
fiscal year ended March 31, 2001 did not contain any
adverse opinion or disclaimer of opinion, nor was this opinion
qualified or modified as to uncertainty, audit scope or
accounting principles. A letter from Arthur Andersen LLP is
attached hereto as Exhibit 16.1.

During Asysts fiscal year ended
March 31, 2001, and during the subsequent interim period
preceding the replacement of Arthur Andersen LLP, Asyst did
not consult with PricewaterhouseCoopers LLP regarding the
application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that
might be rendered on Asysts financial statements.

39



---



##### Table of Contents






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
(the Definitive Proxy Statement). Such information
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 Shareholder
    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 | Controls and Procedures

Introduction.Rules
promulgated under the Securities Exchange Act of 1934, as
amended, (the Act) define disclosure controls
and procedures to mean 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). New rules promulgated under
the Act define internal control over financial
reporting to mean 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
(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
(CEO) and our Chief Financial Officer
(CFO) are responsible for establishing and
maintaining our Disclosure Controls. Our CEO and CFO, after
evaluating the effectiveness of our Disclosure Controls as of a
date within 90 days before the filing date of this Annual
Report on Form 10-K, 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 period covered by this
Annual Report on Form 10-K, we did not make any significant
changes in our Internal Controls or in other factors that could
significantly affect these controls, including any corrective
actions with regard to significant deficiencies and material
weaknesses.

40



---



##### Table of Contents






PART IV




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

(a)(1) Index to Financial
Statements



| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | The Financial Statements required by this item
    are submitted in a separate section beginning on page 46 of
    this report.

|                                                    |  |      |    | 
|--------------------------------------------------- |  | ---- | -- | 
|                                                    |  | Page
|                                                    |  |     
|Report of Independent Auditors                      |  |      | 46 | 
|Report of Independent Public Accountants            |  |      | 47 | 
|Consolidated Balance Sheets                         |  |      | 49 | 
|Consolidated Statements of Operations               |  |      | 50 | 
|Consolidated Statements of Shareholders
    Equity |  |      | 52 | 
|Consolidated Statements of Cash Flows               |  |      | 53 | 
|Notes to Consolidated Financial Statements          |  |      | 54 | 

(2) Schedule II
Valuation and Qualifying Accounts



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

(b) Exhibits

|        |  |                                                                                                                                                                                                                                                                             
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                             
|Number  |  | Description of Document                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                             
|2.2(1)  |  | Agreement and Plan of Merger and Reorganization
    among the Company, PSTI Merger SubAcquisition Corp., Progressive
    System Technologies, Inc., Advent International
    Investor 11, Envirotech Fund I and Global Private
    Equity Fund 11, dated as of June 2, 1999.
|2.3(2)  |  | Stock Purchase Agreement among the Company, Palo
    Alto Technologies, Inc., or PAT, the Shareholders of PAT and the
    option holders of PAT, dated August 27, 1999.                                                                                                     
|2.4(3)  |  | Agreement for Sale and Purchase of Common Stock
    between the Company and MECS Corporation, dated
    September 27, 1999.                                                                                                                                                 
|2.5(4)  |  | Amended Agreement between the Company and MECS
    Corporation, dated March 23, 2000.                                                                                                                                                                                       
|2.6(5)  |  | Agreement and Plan of Merger and Reorganization,
    dated as of December 7, 2000, among Asyst Technologies,
    Inc., Ramp Acquisition Corp., Advanced Machine Programming,
    Inc., New AMP LLC, Matlock Charles Rowe & Company and
    the Selling Shareholders.        
|2.7(6)  |  | Agreement and Plan of Merger and Reorganization,
    dated as of December 7, 2000, among Asyst Technologies,
    Inc., Tin Man Acquisition Corp., SemiFab, Inc. and certain
    principal shareholders of SemiFab.                                                          
|2.8(7)  |  | Agreement and Plan of Merger and Reorganization,
    dated as of May 22, 2001, among Asyst Technologies, Inc.,
    Gem Acquisition Corp., GW Associates, Inc. and John S. Ghiselli.                                                                                         
|2.9(22) |  | Asset Purchase Agreement among Asyst
    Technologies, Inc., Asyst Connectivity Technologies, Inc. and
    Domain Logix Corporation, dated as of April 9, 2002.                                                                                                             
|2.10**  |  | 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.                                                                                                                                                       

41



---



##### Table of Contents



|           |  |                                                                                                                                                                                                                    
|---------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit    |  |                                                                                                                                                                                                                    
|Number     |  | Description of Document                                                                                                                                                                                            
|           |  |                                                                                                                                                                                                                    
|4.1(10)    |  | Rights Agreement among the Company and Bank of
    Boston, N.A., as Right Agent, dated June 25, 1998.                                                                                                              
|4.2(1)     |  | Common Stock Purchase Agreement, 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 State Street Bank and
    Trust Company of California, N.A.                                                                     
|4.5(19)    |  | Amendment to Rights Agreement among the Company
    and Bank of Boston, N.A. as rights agent, dated
    November 31, 2001.                                                                                         
|10.1(8)    |  | Form of Indemnity Agreement entered into between
    the Company and its directors and officers.                                                                                                                   
|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.                                                                                                                        
|10.10(14)  |  | Secured Promissory Note between the Company and
    Dennis Riccio, dated November 16, 1998.                                                                                                                        
|10.11(14)  |  | Secured Promissory Note between the Company and
    Dennis Riccio, dated February 1, 1999.                                                                                                                         
|10.12(13)  |  | Employment and Compensation Agreement between the
    Company and Mihir Parikh, dated April 1, 1999.                                                                                                               
|10.13(2)   |  | Lease Agreement between Aetna Life Insurance
    Company and Hine Design, Incorporated, dated August 4, 1995.                                                                                                      
|10.14(2)   |  | Industrial Space Lease Agreement between the
    Company and PEN Associates, dated November 13, 1995.                                                                                                              
|10.15(2)   |  | Lease Agreement between SL-6 Partners, Ltd. and
    Progressive System Technologies, Inc. dated November 20,
    1995.                                                                                             
|10.16(2)   |  | Sublease Agreement between Progressive System
    Technologies, Inc. and Group, Inc., dated December 3, 1996.                                                                                                      
|10.17(2)   |  | Industrial Space Lease Agreement between the
    Company and PEN Associates, dated December 14, 1997.                                                                                                              
|10.19(2)   |  | Amendment to Lease Agreement between the Company
    and the Kato Road Partners, dated July 30, 1999.                                                                                                              
|10.20(2)   |  | Cooperation Agreement between the Company and
    MECS Corporation, dated August 5, 1999.                                                                                                                          
|10.21(15)  |  | Lease agreement between the Company and Exar
    Corporation, dated October 18, 1999.                                                                                                                              
|10.22(16)  |  | Employment Agreement between the Company and
    James C. Mitchener, Ph.D., dated March 28, 2000.                                                                                                                  
|10.23(17)  |  | Employment Agreement between the Company and Pat
    Boudreau, dated May 25, 2000.                                                                                                                                 
|10.24(17)  |  | Master Lease between the Company and Lease Plan
    North America, Inc., dated June 30, 2000.                                                                                                                      
|10.25(7)   |  | Second Amended and Restated Participation
    Agreement among the Company, Lease Plan North America, Inc., ABN
    Amro Bank N.V., and Certain Other Banks and Financial
    Institutions, dated February 21, 2001.
|10.26(7)   |  | First Amendment to Second Amended and Restated
    Participation Agreement and Other Operative Documents and
    Termination of Certain Operative Documents, dated May 25,
    2001.                               
|10.27(7)   |  | Employment Agreement between the Company and
    Stephen S. Schwartz, Ph.D., dated January 11, 2001.                                                                                                               
|10.28(11)* |  | Agreement on Bank Transactions between Asyst
    Japan, Inc., or AJI, and Tokyo Mitsubishi Bank dated
    March 13, 2001.                                                                                          

42



---



##### Table of Contents



|           |  |                                                                                                                                                                                                                                                                                                                 
|---------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit    |  |                                                                                                                                                                                                                                                                                                                 
|Number     |  | Description of Document                                                                                                                                                                                                                                                                                         
|           |  |                                                                                                                                                                                                                                                                                                                 
|10.29(11)* |  | Cash Consumer Debtor and Creditor Agreements
    between AJI and The Tokai Bank, Ltd. dated December 6, 1999
    and March 23, 2001.                                                                                                                                                                            
|10.30(11)* |  | Banking Consent & Agreement between
    MECS, K.K. and Tokai Bank, K.K. dated November 30, 1998,
    December, 6, 1999.                                                                                                                                                                                         
|10.31(11)* |  | Banking Consent & Agreement between
    MECS, K.K. and Ogaki Kyoritsu Bank dated November, 14, 1994.                                                                                                                                                                                                            
|10.32(11)* |  | Agreement on Bank Transactions between AJI and
    The Sumitomo Bank dated November 13, 2001.                                                                                                                                                                                                                   
|10.33(18)  |  | Palo Alto Technologies, Inc. 1997 Stock Plan and
    related stock option agreement.                                                                                                                                                                                                                            
|10.34(18)  |  | Progressive System Technologies, Inc. 1995 Stock
    Option/ Stock Issuance Plan and related notice document.                                                                                                                                                                                                   
|10.35(19)  |  | Employment Separation Agreement between the
    Company and Dennis Riccio dated February 28, 2002.                                                                                                                                                                                                              
|10.36(19)  |  | Second Amended and Restated Secured Promissory
    Note between the Company and Dennis Riccio dated April 12,
    2002.                                                                                                                                                                                         
|10.37(19)  |  | Amended and Restated Secured Promissory Note
    between the Company and Dennis Riccio dated April 12, 2002.                                                                                                                                                                                                    
|10.38(20)* |  | Share Purchase Agreement between Shinko Electric
    Co., Ltd. and Asyst Japan Inc., dated as of May 24, 2002.                                                                                                                                                                                                  
|10.39(20)* |  | Shareholders Agreement between Shinko Electric
    Co., Ltd. and Asyst Japan Inc., dated as of May 24, 2002.                                                                                                                                                                                                    
|10.40(20)  |  | Manufacturing Services and Supply Agreement among
    the Company and Solectron Corporation and its subsidiaries and
    affiliates, dated as of September 5, 2002.                                                                                                                                             
|10.41(20)  |  | Loan and Security Agreement between the Company
    and Comerica Bank  California, dated as of
    October 1, 2002.                                                                                                                                                                                            
|10.42(20)  |  | Amendment No. 1 to Loan and Security
    Agreement between the Company and Comerica Bank 
    California, dated as of November 8, 2002.                                                                                                                                                                        
|10.43(21)* |  | Amendment No. 1 to Shareholders Agreement
    between Shinko Electric Co., Ltd. and Asyst Japan Inc., dated as
    of October 16, 2002.                                                                                                                                                                         
|10.44**    |  | Patent Assignment and Cross-License and Trademark
    License Agreement among the Company, Entegris Cayman Ltd. and
    Entegris, Inc., dated as of February 11, 2003.                                                                                                                                          
|16.1(23)   |  | Letter from Arthur Andersen LLP to the Securities
    and Exchange Commission dated April 2, 2002.                                                                                                                                                                                                              
|21.1       |  | Subsidiaries of the Company.                                                                                                                                                                                                                                                                                    
|23.1       |  | Consent of Independent Accountants,
    PricewaterhouseCoopers LLP.                                                                                                                                                                                                                                             
|99.1***    |  | Certificate by the Chief Executive Officer and
    the Chief Financial Officer of the Company as required by
    Section 906 of the Public Company Accounting Reform and
    Investor Protection Act of 2002 (18 U.S.C.
    Section 1350, as adopted) (the Sarbanes-Oxley Act of 2002),
    dated June 30, 2003.



---



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



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



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | *** | This certification accompanies the
    Form 10-K to which it relates, is not deemed filed with the
    SEC and is not to be incorporated by reference into any filing
    of the Company under the Securities Act of 1933, as amended, or
    the Securities Exchange Act of 1934, as amended (whether made
    before or after the date of the Form 10-K), irrespective of
    any general incorporation language contained in such filing.
|
| | (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.                                                                                                                                                                                                                                                           

43



---



##### Table of Contents





| |     |                                                                                                                                                                                                                                       
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (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 Quarterly
    Report on Form 10-Q for the quarter ended June 30,
    1999, filed with the Securities Exchange Commission on
    August 16, 1999, and incorporated herein by reference.      
|    
|(15) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended December 31,
    1999, filed with the Securities Exchange Commission on
    February 14, 2000, and incorporated herein by reference.
|    
|(16) | Previously filed as an Exhibit to our Annual
    Report on Form 10-K for the fiscal year ended
    March 31, 2000, filed with the Securities Exchange
    Commission on June 29, 2000, and incorporated herein by
    reference.  
|    
|(17) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended June 30,
    2000, filed with the Securities Exchange Commission on
    August 14, 2000, and incorporated herein by reference.      
|    
|(18) | 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.            
|    
|(19) | 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.  

44



---



##### Table of Contents





|     |                                                                                                                                                                                                                                        
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(20) | 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.
|    
|(21) | 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.     
|    
|(22) | 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.                    
|    
|(23) | Previously filed as an Exhibit to our Current
    Report on Form 8-K, filed with the Securities Exchange
    Commission on April 4, 2002, and incorporated herein by
    reference.                                                    

(c) Reports on Form 8-K.



| |                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Registrant filed a report on Form 8-K on
    February 13, 2003 regarding the sale of its wafer and
    reticle carrier product lines to Entegris, Inc. that was amended
    on February 26, 2003 to include unaudited pro forma
    financial information in connection with such sale.

45



---



##### Table of Contents



REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders

of Asyst Technologies, Inc.


In our opinion, the consolidated financial
statements as of March 31, 2003 and 2002 and for the years
then ended listed in the index appearing under
Item 15(a)(1) on page 41 present fairly, in all
material respects, the financial position of Asyst Technologies,
Inc. and its subsidiaries at March 31, 2003 and
March 31, 2002, and the results of their operations and
their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of
America. In addition, in our opinion, the March 31, 2003
and March 31, 2002 information in the financial statement
schedule listed in the index appearing under Item 15(a)(2)
on page 41 presents fairly, in all material respects, the
information set forth therein for the years ended March 31,
2003 and March 31, 2002 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.
We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of
America, which 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. The consolidated statements of
operations, of shareholders equity and of cash flows of
Asyst Technologies, Inc. for the year ended March 31, 2001,
prior to the revisions described in Notes 2 and 12, and the
March 31, 2001 financial statement schedule information
were audited by other independent accountants who have ceased
operations. Those independent accountants expressed an
unqualified opinion on those financial statements in their
report dated April 27, 2001.

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 and Statement of Financial
Accounting Standards No. 144 Accounting for the
Impairment or Disposal of Long-Lived Assets on
April 1, 2002.

As discussed above, the consolidated statements
of operations, of shareholders equity and of cash flows of
Asyst Technologies, Inc. for the year ended March 31, 2001
were audited by other independent accountants who have ceased
operations. As described in Note 2, these financial
statements have been revised to include the transitional
disclosures required by Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible
Assets, which was adopted by the Company as of
April 1, 2002. We audited the transitional disclosures
described in Note 2. In our opinion, the transitional
disclosures for the year ended March 31, 2001 in
Note 2 are appropriate. As described in Note 12, these
financial statements have been revised to include certain
segment disclosures required by Statement of Financial
Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information. We
audited the disclosures described in Note 12. In our
opinion, the disclosures for the year ended March 31, 2001
in Note 12 are appropriate. However, we were not engaged to
audit, review, or apply any procedures to the year ended
March 31, 2001 financial statements of the Company other
than with respect to such disclosures and, accordingly, we do
not express an opinion or any other form of assurance on the
financial statements for the year ended March 31, 2001
taken as a whole.

/s/ PricewaterhouseCoopers LLP

San Jose, California

April 29, 2003


46



---



##### Table of Contents



THE FOLLOWING REPORT IS A COPY OF A REPORT
PREVIOUSLY ISSUED BY ARTHUR ANDERSEN LLP. THIS REPORT HAS NOT
BEEN REISSUED BY ARTHUR ANDERSEN LLP AND ARTHUR ANDERSEN LLP DID
NOT CONSENT TO THE USE OF THIS REPORT IN THE CONSOLIDATED
FINANCIAL STATEMENTS INCLUDED IN THE FISCAL 2003 FORM 10-K
OR ANY PREVIOUSLY FILED REGISTRATION STATEMENTS.

THE FOLLOWING REPORT DOES NOT EXTEND TO THE
REVISIONS DESCRIBED IN NOTES 2 AND 12 OF THE FISCAL 2003
FORM 10-K. PRICEWATERHOUSECOOPERS LLP HAVE AUDITED THE
DISCLOSURES DESCRIBED IN NOTES 2 AND 12 OF THE CONSOLIDATED
FINANCIAL STATEMENTS OF THE FISCAL 2003 FORM 10-K.

DISCLOSURES IN NOTES 15 AND 13 REFERENCED IN THE
FIRST PARAGRAPH ARE NOT PRESENTED IN THE CONSOLIDATED FINANCIAL
STATEMENTS OF THE FISCAL 2003 FORM 10-K BECAUSE THE PERIODS
COVERED BY THESE NOTES ARE NOT PRESENTED IN THE CONSOLIDATED
FINANCIAL STATEMENTS INCLUDED IN THE FISCAL 2003 FORM 10-K.
IN ADDITION, THE REPORTS OF THE OTHER AUDITORS REFERENCED IN THE
FIRST PARAGRAPH ARE NOT INCLUDED BECAUSE THE PERIODS COVERED BY
THESE REPORTS ARE NOT PRESENTED IN THE CONSOLIDATED FINANCIAL
STATEMENTS INCLUDED IN THE FISCAL 2003 FORM 10-K.

REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS

To Asyst Technologies, Inc.:

We have audited the accompanying consolidated
balance sheets of Asyst Technologies, Inc. (a California
corporation) and subsidiaries (the Company) as of March 31,
2001 and 2000, and the related consolidated statements of
operations, shareholders equity and cash flows for each of the
three years in the period ended March 31, 2001. These
financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits. We
did not audit the consolidated balance sheet of MECS Corporation
(a Japanese corporation) and subsidiaries (MECS), a company
acquired on March 23, 2000 in a transaction accounted for
using the purchase method of accounting, as discussed in
Note 15. Such balance sheet is included in the consolidated
balance sheet of the Company as of March 31, 2000 and
reflects total assets of 12 percent (before giving effect
to purchase accounting). We also did not audit the consolidated
statement of operations, shareholders equity and cash
flows of Progressive System Technologies, Inc. (a Texas
corporation) and subsidiary (PST) for the year ended
December 31, 1998. PST was acquired on June 2, 1999 in
a transaction accounted for as a pooling of interests, as
discussed in Note 13. Such statements are included in the
consolidated financial statements of the Company and reflect
total revenues of 10 percent of the consolidated statement
of operations for the year ended March 31, 1999. These
statements were audited by other auditors whose report has been
furnished to us, and our opinion, insofar as it relates to
amounts included for PST and MECS, is based solely upon the
report of the other auditors.

We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and
the reports of other auditors provide a reasonable basis for our
opinion.

In our opinion, based on our audits and the
reports of other auditors, the financial statements referred to
above present fairly, in all material respects, the financial
position of Asyst Technologies, Inc. as of March 31,

47



---



##### Table of Contents



2001 and 2000, and the results of their
operations and their cash flows for each of the three years in
the period ended March 31, 2001, in conformity with the
accounting principles generally accepted in the United States.


As discussed in Note 2 to the consolidated
financial statements, effective April 1, 2000, the Company
changed its method of accounting for revenue recognition in
accordance with guidance provided in SEC Accounting Bulletin
No. 101 (SAB 101) Revenue Recognition in Financial
Statements .

Our audits were made for the purpose of forming
an opinion on the basic financial statements taken as a whole.
The schedule listed under Item 14(a) is presented for the
purposes of complying with the Securities and Exchange
Commissions rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing
procedures applied to our audits of the basic financial
statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.



| |                    
| | -------------------
| | ARTHUR ANDERSEN LLP

San Jose, California

April 27, 2001


48



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share
data)


|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |          |         | 
|----------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ------- | -------- | ------- | - | ------- | -------- | ------- | 
|                                                            |                                                                                                                                    |                                                                  
|                                                            |                                                                                                                                    | March 31,                                                        
|                                                            |                                                                                                                                    |                                                                  
|                                                            |                                                                                                                                    | 2003                                                              |         | 2002    
|                                                            |                                                                                                                                    |                                                                   |         |         
|ASSETS                                                     
|CURRENT ASSETS:                                             |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            | Cash and cash equivalents                                                                                                          |                                                                   | $       | 96,214   |         |   | $       | 74,577   |        
|                                                            | Restricted cash and cash equivalents                                                                                               |                                                                   |         | 3,088    |         |   |         | 5,052    |        
|                                                            | Short-term investments                                                                                                             |                                                                   |         |         |         |   |         | 5,000    |        
|                                                            | Accounts receivable, net of allowances for
    doubtful accounts of $4,880 and $4,198 at March 31, 2003
    and 2002, respectively |                                                                   |         | 74,878   |         |   |         | 28,307   |        
|                                                            | Inventories                                                                                                                        |                                                                   |         | 22,204   |         |   |         | 39,296   |        
|                                                            | Deferred tax asset                                                                                                                 |                                                                   |         |         |         |   |         | 33,906   |        
|                                                            | Prepaid expenses and other                                                                                                         |                                                                   |         | 10,317   |         |   |         | 14,618   |        
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            |                                                                                                                                    | Total current assets                                              |         |          | 206,701 |   |         |          | 200,756 | 
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|Property and equipment, net                                 |                                                                                                                                    |                                                                   | 24,295  |          |         |   | 34,399  |         
|Deferred tax asset                                          |                                                                                                                                    |                                                                   | 200     |          |         |   | 30,294  |         
|Goodwill                                                    |                                                                                                                                    |                                                                   | 65,505  |          |         |   |        |         
|Intangible assets, net                                      |                                                                                                                                    |                                                                   | 76,862  |          |         |   | 29,901  |         
|Other assets                                                |                                                                                                                                    |                                                                   | 21,662  |          |         |   | 32,180  |         
|Assets of discontinued operations                           |                                                                                                                                    |                                                                   |        |          |         |   | 16,885  |         
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            |                                                                                                                                    | $                                                                 | 395,225 |          |         | $ | 344,415 |         
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|LIABILITIES, MINORITY INTEREST AND
    SHAREHOLDERS EQUITY
|CURRENT LIABILITIES:                                        |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            | Short-term loans and notes payable                                                                                                 |                                                                   | $       | 17,976   |         |   | $       | 16,707   |        
|                                                            | Current portion of long-term debt and finance
    leases                                                                           |                                                                   |         | 1,273    |         |   |         | 1,076    |        
|                                                            | Accounts payable                                                                                                                   |                                                                   |         | 36,527   |         |   |         | 9,193    |        
|                                                            | Accounts payable-related party                                                                                                     |                                                                   |         | 8,500    |         |   |         |         |        
|                                                            | Accrued liabilities and other                                                                                                      |                                                                   |         | 50,572   |         |   |         | 46,819   |        
|                                                            | Deferred revenue                                                                                                                   |                                                                   |         | 2,130    |         |   |         | 4,367    |        
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            |                                                                                                                                    | Total current liabilities                                         |         |          | 116,978 |   |         |          | 78,162  | 
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|LONG-TERM LIABILITIES:                                      |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            | Long-term debt and finance leases, net of current
    portion                                                                      |                                                                   |         | 114,812  |         |   |         | 90,331   |        
|                                                            | Deferred tax liability                                                                                                             |                                                                   |         | 23,754   |         |   |         | 6,478    |        
|                                                            | Other long-term liabilities                                                                                                        |                                                                   |         | 12,754   |         |   |         | 317      |        
|                                                            | Liabilities of discontinued operations                                                                                             |                                                                   |         |         |         |   |         | 4,190    |        
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            |                                                                                                                                    | Total long-term liabilities                                       |         |          | 151,320 |   |         |          | 101,316 | 
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|COMMITMENTS AND CONTINGENCIES (see Note 13):                |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|MINORITY INTEREST                                           |                                                                                                                                    |                                                                   | 58,893  |          |         |   |        |         
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|SHAREHOLDERS EQUITY                                        |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            | Common stock, no par value Authorized
    shares300,000,000                                                                       |                                                                   |         |          |         |   |         |          |        
|                                                            | Outstanding shares38,412,031 and 35,864,658
    shares at March 31, 2003 and 2002, respectively                                   |                                                                   |         | 332,569  |         |   |         | 297,197  |        
|                                                            | Deferred stock-based compensation                                                                                                  |                                                                   |         | (3,992   | )       |   |         | (2,846   | )      
|                                                            | Accumulated deficit                                                                                                                |                                                                   |         | (265,248 | )       |   |         | (129,379 | )      
|                                                            | Accumulated other comprehensive income (loss)                                                                                      |                                                                   |         | 4,705    |         |   |         | (35      | )      
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            |                                                                                                                                    | Total shareholders equity                                        |         |          | 68,034  |   |         |          | 164,937 | 
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         
|                                                            |                                                                                                                                    | Total liabilities, minority interest and
    shareholders equity |         | $        | 395,225 |   |         | $        | 344,415 | 
|                                                            |                                                                                                                                    |                                                                   |         |          |         |   |         |         

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

49



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |         |         | 
|--------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------- | ------ | ------- | ---- | -------- | ------ | -------- | - | ------- | ------- | ------- | 
|                                                                                                                                        |                                                              |                                                                                                                                                                         
|                                                                                                                                        |                                                              | Fiscal Year Ended March 31,                                                                                                                                             
|                                                                                                                                        |                                                              |                                                                                                                                                                         
|                                                                                                                                        |                                                              | 2003                                                                                                                                                                     |          | 2002   |         | 2001
|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |     
|                                                                                                                                        |                                                              |                                                                                                                                                                         
|                                                                                                                                        |                                                              | (In thousands, except per share data)                                                                                                                                   
|NET SALES                                                                                                                               |                                                              | $                                                                                                                                                                        | 259,495  |        |         | $    | 183,234  |        |          | $ | 491,542 |        
|COST OF SALES                                                                                                                           |                                                              |                                                                                                                                                                          | 184,443  |        |         |      | 142,306  |        |          |   | 305,796 |        
|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        
|                                                                                                                                        | Gross profit                                                 |                                                                                                                                                                          |          | 75,052 |         |      |          | 40,928 |          |   |         | 185,746 |        
|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        
|OPERATING EXPENSES:                                                                                                                     |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        
|                                                                                                                                        | Research and development                                     |                                                                                                                                                                          |          | 40,059 |         |      |          | 39,010 |          |   |         | 44,263  |        
|                                                                                                                                        | Selling, general and administrative                          |                                                                                                                                                                          |          | 74,175 |         |      |          | 76,262 |          |   |         | 90,435  |        
|                                                                                                                                        | Amortization of acquired intangible assets                   |                                                                                                                                                                          |          | 14,051 |         |      |          | 7,078  |          |   |         | 6,963   |        
|                                                                                                                                        | Restructuring charges                                        |                                                                                                                                                                          |          | 7,019  |         |      |          | 8,163  |          |   |         | 979     |        
|                                                                                                                                        | Asset impairment charges                                     |                                                                                                                                                                          |          | 15,519 |         |      |          | 40,499 |          |   |         |        |        
|                                                                                                                                        | In-process research & development of acquired
    businesses |                                                                                                                                                                          |          | 7,832  |         |      |          | 2,000  |          |   |         |        |        
|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        
|                                                                                                                                        |                                                              | Total operating expenses                                                                                                                                                 |          |        | 158,655 |      |          |        | 173,012  |   |         |         | 142,640 | 
|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        
|                                                                                                                                        |                                                              | Operating income (loss)                                                                                                                                                  |          |        | (83,603 | )    |          |        | (132,084 | ) |         |         | 43,106  | 
|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        
|OTHER INCOME (EXPENSE):                                                                                                                 |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        
|                                                                                                                                        | Gain on sale of wafer & reticle carrier
    products         |                                                                                                                                                                          |          | 28,420 |         |      |          |       |          |   |         |        |        
|                                                                                                                                        | Interest income                                              |                                                                                                                                                                          |          | 1,058  |         |      |          | 3,586  |          |   |         | 4,924   |        
|                                                                                                                                        | Interest expense                                             |                                                                                                                                                                          |          | (6,100 | )       |      |          | (5,088 | )        |   |         | (497    | )      
|                                                                                                                                        | Other income (expense)                                       |                                                                                                                                                                          |          | (1,876 | )       |      |          | (1,954 | )        |   |         | (772    | )      
|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        
|                                                                                                                                        |                                                              | Other income (expense), net                                                                                                                                              |          |        | 21,502  |      |          |        | (3,456   | ) |         |         | 3,655   | 
|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        
|                                                                                                                                        |                                                              | Income (loss) before provision for (benefit
    from) income taxes, minority interest, discontinued operations
    & cumulative effect of change in accounting principle |          |        | (62,101 | )    |          |        | (135,540 | ) |         |         | 46,761  | 
|PROVISION FOR (BENEFIT FROM) INCOME TAXES                                                                                               |                                                              |                                                                                                                                                                          | 57,335   |        |         |      | (38,026  | )      |          |   | 17,229  |        
|MINORITY INTEREST                                                                                                                       |                                                              |                                                                                                                                                                          | (4,663   | )      |         |      |         |        |          |   |        |        
|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        
|INCOME (LOSS) FROM CONTINUING OPERATIONS
    BEFORE DISCONTINUED OPERATIONS AND CUMULATIVE EFFECT OF CHANGE
    IN ACCOUNTING PRINCIPLE |                                                              |                                                                                                                                                                          | (114,773 | )      |         |      | (97,514  | )      |          |   | 29,532  |        
|DISCONTINUED OPERATIONS, net of income tax                                                                                              |                                                              |                                                                                                                                                                          | (21,096  | )      |         |      | (51,403  | )      |          |   |        |        
|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        
|INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF
    CHANGE IN ACCOUNTING PRINCIPLE                                                            |                                                              |                                                                                                                                                                          | (135,869 | )      |         |      | (148,917 | )      |          |   | 29,532  |        
|Cumulative effect of change in accounting
    principle, net of tax benefit of $1,326.                                                  |                                                              |                                                                                                                                                                          |         |        |         |      |         |        |          |   | (2,506  | )      
|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        
|NET INCOME (LOSS)                                                                                                                       |                                                              | $                                                                                                                                                                        | (135,869 | )      |         | $    | (148,917 | )      |          | $ | 27,026  |        
|                                                                                                                                        |                                                              |                                                                                                                                                                          |          |        |         |      |          |        |          |   |         |        

50



---



##### Table of Contents



|                                          |                                                                                                                                         |                                       |   |        |   |      |   |        |   |  |   |        |  
|----------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | - | ------ | - | ---- | - | ------ | - |  | - | ------ | -
|                                          |                                                                                                                                         |                                      
|                                          |                                                                                                                                         | Fiscal Year Ended March 31,          
|                                          |                                                                                                                                         |                                      
|                                          |                                                                                                                                         | 2003                                  |   | 2002   |   | 2001
|                                          |                                                                                                                                         |                                       |   |        |   |     
|                                          |                                                                                                                                         |                                      
|                                          |                                                                                                                                         | (In thousands, except per share data)
|BASIC EARNINGS (LOSS) PER SHARE:          |                                                                                                                                         |                                       |   |        |   |      |   |        |   |  |   |       
|                                          | Income (loss) from continuing operations
    before discontinued operations and cumulative effect of change
    in accounting principle |                                       | $ | (3.06  | ) |      | $ | (2.76  | ) |  | $ | 0.90   |  
|                                          | Discontinued operations, net of income tax                                                                                              |                                       |   | (0.56  | ) |      |   | (1.45  | ) |  |   |       |  
|                                          | Cumulative effect of change in accounting
    principle, net of income tax benefit                                                      |                                       |   |       |   |      |   |       |   |  |   | (0.08  | )
|                                          |                                                                                                                                         |                                       |   |        |   |      |   |        |   |  |   |       
|                                          | Basic net income (loss) per share                                                                                                       |                                       | $ | (3.62  | ) |      | $ | (4.21  | ) |  | $ | 0.82   |  
|                                          |                                                                                                                                         |                                       |   |        |   |      |   |        |   |  |   |       
|DILUTED EARNINGS (LOSS) PER SHARE:        |                                                                                                                                         |                                       |   |        |   |      |   |        |   |  |   |       
|                                          | Income (loss) from continuing operations
    before discontinued operations and cumulative effect of change
    in accounting principle |                                       | $ | (3.06  | ) |      | $ | (2.76  | ) |  | $ | 0.85   |  
|                                          | Discontinued operations, net of income tax                                                                                              |                                       |   | (0.56  | ) |      |   | (1.45  | ) |  |   |       |  
|                                          | Cumulative effect of change in accounting
    principle, net of income tax benefit                                                      |                                       |   |       |   |      |   |       |   |  |   | (0.07  | )
|                                          |                                                                                                                                         |                                       |   |        |   |      |   |        |   |  |   |       
|                                          | Diluted net income (loss) per share                                                                                                     |                                       | $ | (3.62  | ) |      | $ | (4.21  | ) |  | $ | 0.78   |  
|                                          |                                                                                                                                         |                                       |   |        |   |      |   |        |   |  |   |       
|SHARES USED IN THE PER SHARE CALCULATION: |                                                                                                                                         |                                       |   |        |   |      |   |        |   |  |   |       
|                                          | Basic                                                                                                                                   |                                       |   | 37,489 |   |      |   | 35,373 |   |  |   | 32,697 |  
|                                          |                                                                                                                                         |                                       |   |        |   |      |   |        |   |  |   |       
|                                          | Diluted                                                                                                                                 |                                       |   | 37,489 |   |      |   | 35,373 |   |  |   | 34,928 |  
|                                          |                                                                                                                                         |                                       |   |        |   |      |   |        |   |  |   |       

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

51



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY

|                                                                                           |  |                                   |            |             |  |              |         |               |  |               |        |        |  |   |          |   |  |   |       |   |  |   |          |  
|------------------------------------------------------------------------------------------ |  | --------------------------------- | ---------- | ----------- |  | ------------ | ------- | ------------- |  | ------------- | ------ | ------ |  | - | -------- | - |  | - | ----- | - |  | - | -------- | -
|                                                                                           |  |                                   |            |             |  | Retained     |         | Accumulated   |  |              
|                                                                                           |  | Common Stock                      |            | Deferred    |  | Earnings     |         | Other         |  | Total        
|                                                                                           |  |                                   |            | Stock-Based |  | (Accumulated |         | Comprehensive |  | Shareholders
|                                                                                           |  | Shares                            |            | Amount      |  | Compensation |         | Deficit)      |  | Income (Loss) |        | Equity
|                                                                                           |  |                                   |            |             |  |              |         |               |  |               |        |       
|                                                                                           |  |                                  
|                                                                                           |  | (In thousands, except share data)
|BALANCE, MARCH 31, 2000.                                                                   |  |                                   | 31,957,090 |             |  |              | 240,594 |               |  | $             |       |        |  | $ | (7,488   | ) |  | $ |      |   |  | $ | 233,106  |  
|Issuance of common stock under employee stock
    option and employee stock purchase plans |  |                                   | 568,380    |             |  |              | 4,631   |               |  |               |       |        |  |   |         |   |  |   |      |   |  |   | 4,631    |  
|Tax benefit realized from activity in employee
    stock option plans                      |  |                                   |           |             |  |              | 4,970   |               |  |               |       |        |  |   |         |   |  |   |      |   |  |   | 4,970    |  
|Shares awarded to Board of Directors and employees                                         |  |                                   | 4,720      |             |  |              | 326     |               |  |               |       |        |  |   |         |   |  |   |      |   |  |   | 326      |  
|Stock issued in acquisition of AMP                                                         |  |                                   | 1,081,261  |             |  |              | 19,000  |               |  |               |       |        |  |   |         |   |  |   |      |   |  |   | 19,000   |  
|Stock issued in acquisition of SemiFab                                                     |  |                                   | 990,892    |             |  |              | 13,404  |               |  |               |       |        |  |   |         |   |  |   |      |   |  |   | 13,404   |  
|Net income                                                                                 |  |                                   |           |             |  |              |        |               |  |               |       |        |  |   | 27,026   |   |  |   |      |   |  |   |          |  
|Comprehensive income                                                                       |  |                                   |           |             |  |              |        |               |  |               |       |        |  |   |         |   |  |   |      |   |  |   | 27,026   |  
|                                                                                           |  |                                   |            |             |  |              |         |               |  |               |        |        |  |   |          |   |  |   |       |   |  |   |          |  
|BALANCE, MARCH 31, 2001.                                                                   |  |                                   | 34,602,343 |             |  |              | 282,925 |               |  |               |       |        |  |   | 19,538   |   |  |   |      |   |  |   | 302,463  |  
|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      |  
|Net loss                                                                                   |  |                                   |           |             |  |              |        |               |  |               |       |        |  |   | (148,917 | ) |  |   |      |   |  |   |          |  
|Foreign currency translation                                                               |  |                                   |           |             |  |              |        |               |  |               |       |        |  |   |         |   |  |   | (35   | ) |  |   |          |  
|Comprehensive loss                                                                         |  |                                   |           |             |  |              |        |               |  |               |        |        |  |   |          |   |  |   |      |   |  |   | (148,952 | )
|                                                                                           |  |                                   |            |             |  |              |         |               |  |               |        |        |  |   |          |   |  |   |       |   |  |   |          |  
|BALANCE, MARCH 31, 2002.                                                                   |  |                                   | 35,864,658 |             |  |              | 297,197 |               |  |               | (2,846 | )      |  |   | (129,379 | ) |  |   | (35   | ) |  |   | 164,937  |  
|Issuance of common stock under employee stock
    option and employee stock purchase plans |  |                                   | 767,955    |             |  |              | 6,068   |               |  |               |       |        |  |   |         |   |  |   |      |   |  |   | 6,068    |  
|Stock issued in acquisition of GW                                                          |  |                                   | 841,308    |             |  |              | 16,000  |               |  |               |       |        |  |   |         |   |  |   |      |   |  |   | 16,000   |  
|Stock issued in acquisition of DLC                                                         |  |                                   | 434,398    |             |  |              | 7,955   |               |  |               |       |        |  |   |         |   |  |   |      |   |  |   | 7,955    |  
|Stock issued in SemiFab settlement                                                         |  |                                   | 249,880    |             |  |              | 1,618   |               |  |               |       |        |  |   |         |   |  |   |      |   |  |   | 1,618    |  
|Deferred stock-based compensation related to
    acquisition of DLC and others             |  |                                   | 304,327    |             |  |              | 5,919   |               |  |               | (5,919 | )      |  |   |         |   |  |   |      |   |  |   |         |  
|Non-employee stock-based compensation                                                      |  |                                   |           |             |  |              | 680     |               |  |               |       |        |  |   |         |   |  |   |      |   |  |   | 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  |        |  |   |         |   |  |   |      |   |  |   |         |  
|Net loss                                                                                   |  |                                   |           |             |  |              |        |               |  |               |       |        |  |   | (135,869 | ) |  |   |      |   |  |   |          |  
|Foreign currency translation                                                               |  |                                   |           |             |  |              |        |               |  |               |       |        |  |   |         |   |  |   | 4,740 |   |  |   |          |  
|Comprehensive loss                                                                         |  |                                   |           |             |  |              |        |               |  |               |       |        |  |   |         |   |  |   |      |   |  |   | (131,129 | )
|                                                                                           |  |                                   |            |             |  |              |         |               |  |               |        |        |  |   |          |   |  |   |       |   |  |   |          |  
|BALANCE, MARCH 31, 2003.                                                                   |  |                                   | 38,412,031 |             |  | $            | 332,569 |               |  | $             | (3,992 | )      |  | $ | (265,248 | ) |  | $ | 4,705 |   |  | $ | 68,034   |  
|                                                                                           |  |                                   |            |             |  |              |         |               |  |               |        |        |  |   |          |   |  |   |       |   |  |   |          |  

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

52



---



##### Table of Contents



ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |         |        |  
|---------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | ------------------------------------------------------- | -------- | ------- | ------- | ---- | -------- | ------- | ------- | - | ------ | ------- | ------ | -
|                                                                                                           |                                                                                        |                                                        
|                                                                                                           |                                                                                        | Fiscal Year Ended March 31,                            
|                                                                                                           |                                                                                        |                                                        
|                                                                                                           |                                                                                        | 2003                                                    |          | 2002    |         | 2001
|                                                                                                           |                                                                                        |                                                         |          |         |         |     
|                                                                                                           |                                                                                        |                                                        
|                                                                                                           |                                                                                        | (Dollars in thousands)                                 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                      |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|Net income (loss)                                                                                          |                                                                                        | $                                                       | (135,869 | )       |         | $    | (148,917 | )       |         | $ | 27,026 |        
|                                                                                                           | Less: Loss from discontinued operations                                                |                                                         |          | 21,096  |         |      |          | 51,403  |         |   |        |        |       
|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|Net income (loss) from continuing operations                                                               |                                                                                        |                                                         | (114,773 | )       |         |      | (97,514  | )       |         |   | 27,026 |        
|Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating
    activities: |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|                                                                                                           | Cumulative effect of change in accounting
    principle, net of tax benefit of $1,326. |                                                         |          |        |         |      |          |        |         |   |        | 2,506   |       
|                                                                                                           | Depreciation and amortization                                                          |                                                         |          | 30,833  |         |      |          | 17,311  |         |   |        | 16,424  |       
|                                                                                                           | Restructuring charges                                                                  |                                                         |          | 2,161   |         |      |          | 6,638   |         |   |        |        |       
|                                                                                                           | Asset impairment charges                                                               |                                                         |          | 15,519  |         |      |          | 40,499  |         |   |        |        |       
|                                                                                                           | Gain on sale of wafer and reticle carrier products                                     |                                                         |          | (28,420 | )       |      |          |        |         |   |        |        |       
|                                                                                                           | Minority interest in net loss in consolidated
    subsidiary                           |                                                         |          | (4,663  | )       |      |          |        |         |   |        |        |       
|                                                                                                           | Stock-based compensation                                                               |                                                         |          | 2,585   |         |      |          | 553     |         |   |        | 326     |       
|                                                                                                           | Provision for doubtful accounts                                                        |                                                         |          | 488     |         |      |          | 1,155   |         |   |        | 2,279   |       
|                                                                                                           | Provision for excess inventories                                                       |                                                         |          | 4,536   |         |      |          | 12,810  |         |   |        | 16,457  |       
|                                                                                                           | In-process research and development costs                                              |                                                         |          | 7,832   |         |      |          | 2,000   |         |   |        |        |       
|                                                                                                           | Deferred tax asset, net                                                                |                                                         |          | 59,247  |         |      |          | (37,026 | )       |   |        | 433     |       
|                                                                                                           | Tax benefit realized from activity in employee
    stock option plans                  |                                                         |          |        |         |      |          |        |         |   |        | 4,970   |       
|Changes in assets and liabilities, net of
    acquisitions:                                                |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|                                                                                                           | Accounts receivable                                                                    |                                                         |          | (3,534  | )       |      |          | 45,042  |         |   |        | (1,975  | )     
|                                                                                                           | Inventories                                                                            |                                                         |          | 23,518  |         |      |          | 15,421  |         |   |        | (34,635 | )     
|                                                                                                           | Prepaid expenses and other assets                                                      |                                                         |          | 5,387   |         |      |          | 715     |         |   |        | (1,911  | )     
|                                                                                                           | Accounts payable, accrued liabilities and
    deferred revenue                         |                                                         |          | 15,803  |         |      |          | (32,926 | )       |   |        | (950    | )     
|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|                                                                                                           |                                                                                        | Net cash provided by (used in) operating
    activities |          |         | 16,519  |      |          |         | (25,322 | ) |        |         | 30,950 |  
|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                      |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|                                                                                                           | Purchase of short-term investments                                                     |                                                         |          |        |         |      |          | (37,077 | )       |   |        | (49,350 | )     
|                                                                                                           | Sale or maturity of short-term investments                                             |                                                         |          | 5,000   |         |      |          | 35,077  |         |   |        | 139,800 |       
|                                                                                                           | Purchase of restricted cash equivalents and
    short-term investments                 |                                                         |          | (35,500 | )       |      |          | (57,652 | )       |   |        | (52,500 | )     
|                                                                                                           | Sale or maturity of restricted cash equivalents
    and short-term investments         |                                                         |          | 37,464  |         |      |          | 105,100 |         |   |        |        |       
|                                                                                                           | Purchase of property and equipment                                                     |                                                         |          | (9,064  | )       |      |          | (10,339 | )       |   |        | (17,918 | )     
|                                                                                                           | Proceeds from sale of wafer and reticle carrier
    products                           |                                                         |          | 34,186  |         |      |          |        |         |   |        |        |       
|                                                                                                           | Net cash used in acquisitions                                                          |                                                         |          | (51,131 | )       |      |          | (3,613  | )       |   |        | (28,995 | )     
|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|                                                                                                           |                                                                                        | Net cash provided by (used in) investing
    activities |          |         | (19,045 | )    |          |         | 31,496  |   |        |         | (8,963 | )
|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                      |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|                                                                                                           | Proceeds from line of credit                                                           |                                                         |          | 25,000  |         |      |          |        |         |   |        |        |       
|                                                                                                           | Payments on short-term loans                                                           |                                                         |          | (629    | )       |      |          | (47,048 | )       |   |        |        |       
|                                                                                                           | Proceeds (principal payments) on long-term debt
    and finance leases                 |                                                         |          | (620    | )       |      |          | 83,765  |         |   |        | (4,507  | )     
|                                                                                                           | Issuance of common stock                                                               |                                                         |          | 6,068   |         |      |          | 2,568   |         |   |        | 4,631   |       
|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|                                                                                                           |                                                                                        | Net cash provided by financing activities               |          |         | 29,819  |      |          |         | 39,285  |   |        |         | 124    |  
|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|Effect of exchange rate changes on cash and cash
    equivalents                                           |                                                                                        |                                                         | 2,744    |         |         |      | (625     | )       |         |   |       |        
|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|Net cash provided by continuing operations                                                                 |                                                                                        |                                                         | 30,037   |         |         |      | 44,834   |         |         |   | 22,111 |        
|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|Net cash used in discontinued operations                                                                   |                                                                                        |                                                         | (8,400   | )       |         |      | (5,006   | )       |         |   |       |        
|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|INCREASE IN CASH AND CASH EQUIVALENTS                                                                      |                                                                                        |                                                         | 21,637   |         |         |      | 39,828   |         |         |   | 22,111 |        
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                                               |                                                                                        |                                                         | 74,577   |         |         |      | 34,749   |         |         |   | 12,638 |        
|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|CASH AND CASH EQUIVALENTS, END OF YEAR                                                                     |                                                                                        | $                                                       | 96,214   |         |         | $    | 74,577   |         |         | $ | 34,749 |        
|                                                                                                           |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|Supplemental disclosures:                                                                                  |                                                                                        |                                                         |          |         |         |      |          |         |         |   |        |        
|Cash paid during the year for interest                                                                     |                                                                                        | $                                                       | 5,961    |         |         | $    | 4,125    |         |         | $ | 636    |        
|Cash paid (received) during the year for
    income taxes, net of refunds                                  |                                                                                        |                                                         | (7,535   | )       |         |      | (1,590   | )       |         |   | 11,064 |        
|Stock issued to acquire DLC                                                                                |                                                                                        |                                                         | 13,511   |         |         |      |         |         |         |   |       |        
|Stock issued to acquire GW                                                                                 |                                                                                        |                                                         | 16,000   |         |         |      | 8,000    |         |         |   |       |        
|Stock issued in SemiFab settlement                                                                         |                                                                                        |                                                         | 1,618    |         |         |      |         |         |         |   |       |        

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

53



---



##### 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.
(Asyst or the Company), 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 for
the semiconductor (chip) and flat panel display (FPD)
manufacturing industries. Our systems are designed to enable
semiconductor and FPD manufacturers to increase their
manufacturing productivity and protect their investment in
fragile materials and work-in-process.

In October 2002, we purchased a 51 percent
interest in Asyst Shinko, Inc. (ASI or Asyst
Shinko), a Japanese corporation.

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

In May 2001, we acquired 100 percent of the
common stock of GW Associates, Inc. (GW), a
California corporation.

In February 2001, we acquired 100 percent of
the common stock of Advanced Machine Programming, Inc.
(AMP), a Delaware corporation and manufacturer of
precision parts.

In February 2001, we acquired 100 percent of
the common stock of SemiFab, Inc. (SemiFab), a
Delaware corporation and manufacturer of environmental control
equipment and a contract manufacturer.

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.

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, 2003 include the results of these acquired
entities for the periods subsequent to their respective
acquisitions, as applicable. 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 intercompany 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. The
AMP and SemiFab businesses are accounted for as discontinued
operations and therefore, the results of operations and cash
flows have been removed from our results of continuing
operations for all periods presented. Certain prior year amounts
in the consolidated financial statements and the notes thereto
have been reclassified where necessary to conform to the year
ended March 31, 2003.

We have an accumulated deficit of
$265.2 million at March 31, 2003 and we have generated
losses in fiscal 2003 and 2002. We may incur additional
operating losses in the future. Failure to generate sufficient
revenue or reduce certain discretionary spending could have a
material adverse affect on our ability to achieve our intended
business objectives. However, we believe that our available cash
and cash equivalents will be sufficient to meet our working
capital and operating expense requirements for the next twelve
months.

54



---



##### Table of Contents





| |                 
| | ----------------
| | 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 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.

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.

Restricted cash and cash equivalents by security
type are as follows (dollars in thousands):

|                  |                                                  |           |       |      |  |   |       |     | 
|----------------- | ------------------------------------------------ | --------- | ----- | ---- |  | - | ----- | --- | 
|                  |                                                  |          
|                  |                                                  | March 31,
|                  |                                                  |          
|                  |                                                  | 2003      |       | 2002
|                  |                                                  |           |       |     
|CASH              |                                                  | $         | 3,088 |      |  | $ | 4,552 |    
|CASH EQUIVALENTS: |                                                  |           |       |      |  |   |       |    
|                  | Institutional money market funds debt securities |           |       |     |  |   |       | 500 | 
|                  |                                                  |           |       |      |  |   |       |    
|Total             |                                                  | $         | 3,088 |      |  | $ | 5,052 |    
|                  |                                                  |           |       |      |  |   |       |    



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

As of March 31, 2002, our short-term
investments consisted of liquid debt investments with
maturities, at the time of purchase, greater than three months
and less than one year. 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, have not been material to date. 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

55



---



##### Table of Contents



considered to be other than temporary for any of
the three years in the period ended March 31, 2003. The
cost of investments sold is based on specific identification. We
do not intend to hold individual securities for greater than one
year.


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

|                               |  |           |   |      |  |   |       | 
|------------------------------ |  | --------- | - | ---- |  | - | ----- | 
|                               |  |          
|                               |  | March 31,
|                               |  |          
|                               |  | 2003      |   | 2002
|                               |  |           |   |     
|U.S. corporate debt securities |  | $         |  |      |  | $ | 5,000 | 
|                               |  |           |   |      |  |   |       | 
|Total                          |  | $         |  |      |  | $ | 5,000 | 
|                               |  |           |   |      |  |   |       | 



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

The carrying amounts of our financial
instruments, including cash and cash equivalents, accounts
receivable, notes payable, and accounts payable and accrued
expenses, approximate fair value due to the short maturities of
these financial instruments. At March 31, 2003, the
carrying amount of long-term debt, including current portion,
was $116 million, and the estimated fair value was
$70.0 million. At March 31, 2002, the carrying amount
was $91.4 million and the estimated fair value was
$115.9 million. The 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 temporary 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 creditworthiness of our customers and
believe that we have adequately provided for exposure to
potential credit losses.

We had one, zero and zero customers that
accounted for more than 10 percent of sales for the fiscal
years ended March 31, 2003, 2002 and 2001, respectively.



| |            
| | -----------
| | 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. Inventories consisted of the
following (dollars in thousands):

|                                   |  |           |        |      |  |   |        | 
|---------------------------------- |  | --------- | ------ | ---- |  | - | ------ | 
|                                   |  |          
|                                   |  | March 31,
|                                   |  |          
|                                   |  | 2003      |        | 2002
|                                   |  |           |        |     
|Raw materials                      |  | $         | 8,448  |      |  | $ | 22,492 | 
|Work-in-process and finished goods |  |           | 13,756 |      |  |   | 16,804 | 
|                                   |  |           |        |      |  |   |        | 
|Total                              |  | $         | 22,204 |      |  | $ | 39,296 | 
|                                   |  |           |        |      |  |   |        | 

During the year ended March 31, 2003, we
outsourced the majority of our remaining manufacturing to
Solectron Corporation (Solectron). As part of the
arrangement, Solectron purchased $20 million of inventory
from us. No revenue was recorded for the sale of this inventory
to Solectron. In October 2003, we may be obligated to repurchase
any of this inventory that is not used by Solectron in
manufacturing our products. On an ongoing basis we may be
obligated to acquire inventory purchased by Solectron based on
our forecasts and not used timely under terms of the outsourcing
agreement.

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

56



---



##### Table of Contents





| |                                         
| | ----------------------------------------
| | 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 $3.0 million of assets 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 ten years; and licenses and patents,
ten 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. In connection
with the ASI acquisition in October 2002, we recorded goodwill
of $62.6 million.

We completed an annual goodwill impairment test
in the third quarter of fiscal 2003. The first step of the test
identifies if an impairment may have occurred, while the second
step of the test measures the amount of the impairment, if any.
As a result of the test, a goodwill impairment expense of
$2.1 million was recognized. 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 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 fiscal
2003, 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 ACT.

Goodwill and other intangible impairment charges
are included in Asset Impairment Charges on
Consolidated Statements of Operations.

Goodwill and intangible assets were as follows
(dollars in thousands):

|                               |                                           |                |   |                |        |       |   |          |        |              |   |        |        |  |   |        |        |  |   |       |        |  |   |        |        | 
|------------------------------ | ----------------------------------------- | -------------- | - | -------------- | ------ | ----- | - | -------- | ------ | ------------ | - | ------ | ------ |  | - | ------ | ------ |  | - | ----- | ------ |  | - | ------ | ------ | 
|                               |                                           |                |   |               
|                               |                                           | March 31, 2003 |   | March 31, 2002
|                               |                                           |                |   |               
|                               |                                           | Gross          |   |                |        | Gross |   |         
|                               |                                           | Carrying       |   | Accumulated    |        |       |   | Carrying |        | Accumulated  |   |       
|                               |                                           | Amount         |   | Amortization   |        | Net   |   | Amount   |        | Amortization |   | Net   
|                               |                                           |                |   |                |        |       |   |          |        |              |   |       
|Amortizable intangible assets: |                                           |                |   |                |        |       |   |          |        |              |   |        |        |  |   |        |        |  |   |       |        |  |   |       
|                               | Developed technology                      |                | $ | 57,294         |        |       | $ | 9,963    |        |              | $ | 47,331 |        |  | $ | 18,752 |        |  | $ | 7,673 |        |  | $ | 11,079 |       
|                               | Customer base and other intangible assets |                |   | 32,691         |        |       |   | 8,920    |        |              |   | 23,771 |        |  |   | 17,112 |        |  |   | 5,135 |        |  |   | 11,977 |       
|                               | Licenses and patents                      |                |   | 7,770          |        |       |   | 2,010    |        |              |   | 5,760  |        |  |   | 8,390  |        |  |   | 1,545 |        |  |   | 6,845  |       
|                               |                                           |                |   |                |        |       |   |          |        |              |   |        |        |  |   |        |        |  |   |       |        |  |   |       
|                               |                                           | Total          |   | $              | 97,755 |       |   | $        | 20,893 |              |   | $      | 76,862 |  |   | $      | 44,254 |  |   | $     | 14,353 |  |   | $      | 29,901 | 
|                               |                                           |                |   |                |        |       |   |          |        |              |   |        |        |  |   |        |        |  |   |       |        |  |   |       
|Unamortized intangible assets: |                                           |                |   |                |        |       |   |          |        |              |   |        |        |  |   |        |        |  |   |       |        |  |   |       
|                               | Goodwill                                  |                | $ | 65,505         |        |       | $ |         |        |              | $ | 65,505 |        |  | $ |       |        |  | $ |      |        |  | $ |       |       
|                               |                                           |                |   |                |        |       |   |          |        |              |   |        |        |  |   |        |        |  |   |       |        |  |   |       

Amortization expense was $14.1 million,
$7.1 million and $7.0 million for the years ended
March 31, 2003, 2002 and 2001, respectively.

57



---



##### Table of Contents



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

|              |                 |  |   |        | 
|------------- | --------------- |  | - | ------ | 
|Fiscal Years: |                 |  |   |       
|              | 2004            |  | $ | 19,746 | 
|              | 2005            |  |   | 19,746 | 
|              | 2006            |  |   | 18,746 | 
|              | 2007            |  |   | 14,325 | 
|              | 2008 and beyond |  |   | 4,299  | 

The changes in the carrying amount of goodwill
for the year ended March 31, 2003 are as follows (dollars
in thousands):

|                                           |  |            |        |      |  |       |        |  |  |   |        |  
|------------------------------------------ |  | ---------- | ------ | ---- |  | ----- | ------ |  |  | - | ------ | -
|                                           |  | Fab        |        |      |  |      
|                                           |  | Automation |        | AMHS |  | Total
|                                           |  |            |        |      |  |      
|Balance 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 | )
|                                           |  |            |        |      |  |       |        |  |  |   |        |  
|Balance at March 31, 2003                  |  | $          | 2,954  |      |  | $     | 62,551 |  |  | $ | 65,505 |  
|                                           |  |            |        |      |  |       |        |  |  |   |        |  

To facilitate comparison with prior periods, the
following table shows net income (loss) before cumulative effect
of change in accounting principle, if goodwill was not amortized
for those periods (dollars in thousands):

|                                                                                           |  |                    |          |      |  |   |        | 
|------------------------------------------------------------------------------------------ |  | ------------------ | -------- | ---- |  | - | ------ | 
|                                                                                           |  |                   
|                                                                                           |  | Fiscal Years Ended
|                                                                                           |  | March 31,         
|                                                                                           |  |                   
|                                                                                           |  | 2002               |          | 2001
|                                                                                           |  |                    |          |     
|Income (loss) before cumulative effect of change
    in accounting principle  as reported |  | $                  | (148,917 | )    |  | $ | 29,532 | 
|Add: Goodwill amortization                                                                 |  |                    | 1,806    |      |  |   | 3,457  | 
|                                                                                           |  |                    |          |      |  |   |        | 
|Income (loss) before cumulative effect of change
    in accounting principle  pro forma   |  | $                  | (147,111 | )    |  | $ | 32,989 | 
|                                                                                           |  |                    |          |      |  |   |        | 
|Basic earnings (loss) per share                                                            |  |                    |          |      |  |   |        | 
|Income (loss) before cumulative effect of change
    in accounting principle  as reported |  | $                  | (4.21    | )    |  | $ | 0.90   | 
|Add: Goodwill amortization per share                                                       |  |                    | 0.05     |      |  |   | 0.11   | 
|                                                                                           |  |                    |          |      |  |   |        | 
|Income (loss) before cumulative effect of change
    in accounting principle  pro forma   |  | $                  | (4.16    | )    |  | $ | 1.01   | 
|                                                                                           |  |                    |          |      |  |   |        | 
|Diluted earnings (loss) per
    share                                                      |  |                    |          |      |  |   |        | 
|Income (loss) before cumulative effect of change
    in accounting principle  as reported |  | $                  | (4.21    | )    |  | $ | 0.85   | 
|Add: Goodwill amortization per share                                                       |  |                    | 0.05     |      |  |   | 0.09   | 
|                                                                                           |  |                    |          |      |  |   |        | 
|Income (loss) before cumulative effect of change
    in accounting principle  pro forma   |  | $                  | (4.16    | )    |  | $ | 0.94   | 
|                                                                                           |  |                    |          |      |  |   |        | 



| |                       
| | ----------------------
| | 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

58



---



##### Table of Contents



the assets (or over the lease term if it is
shorter for leasehold improvements) which range from two to five
years. Depreciation expense was $16.7 million,
$10.2 million and $9.0 million for the years ended
March 31, 2003, 2002 and 2001, respectively. Property and
equipment consist of the following (dollars in thousands):


|                                         |           |                    |         |        |  |  |         |        | 
|---------------------------------------- | --------- | ------------------ | ------- | ------ |  |  | ------- | ------ | 
|                                         |           |                   
|                                         |           | Fiscal Years Ended
|                                         |           | March 31,         
|                                         |           |                   
|                                         |           | 2003               |         | 2002  
|                                         |           |                    |         |       
|Land                                     |           |                    | 1,875   |        |  |  | 1,875   |       
|Buildings                                |           |                    | 6,724   |        |  |  | 6,699   |       
|Leasehold Improvements                   |           |                    | 11,697  |        |  |  | 12,418  |       
|Machinery and equipment                  |           |                    | 25,660  |        |  |  | 26,324  |       
|Office equipment, furniture and fixtures |           |                    | 32,371  |        |  |  | 30,222  |       
|                                         |           |                    |         |        |  |  |         |       
|                                         | Sub-total |                    |         | 78,327 |  |  |         | 77,538 | 
|Less accumulated depreciation            |           |                    | (54,032 | )      |  |  | (43,139 | )     
|                                         |           |                    |         |        |  |  |         |       
|Total                                    |           |                    | 24,295  |        |  |  | 34,399  |       
|                                         |           |                    |         |        |  |  |         |       



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

We evaluate the recoverability of our long-lived
tangible assets in accordance with Financial Accounting
Standards Board (FASB) Statement of Financial
Accounting Standards (SFAS) No. 144,
Accounting for the Impairment of Long-Lived Assets to be
Disposed of (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 are 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 valueless costs to sell.



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

We provide for the estimated cost of product
warranties at the time revenue is recognized. The following
table presents the activity in our warranty accrual (dollars in
millions):

|                                                |  |        |        |  
|----------------------------------------------- |  | ------ | ------ | -
|                                                |  | Amount
|                                                |  |       
|Balance at March 31, 2002                       |  | $      | 4,689  |  
|Reserve assumed in acquisition of ASI           |  |        | 2,552  |  
|Reserve for warranties issued during the period |  |        | 4,147  |  
|Settlements made (in cash or in kind)           |  |        | (3,827 | )
|                                                |  |        |        |  
|Balance, March 31, 2003                         |  | $      | 7,561  |  
|                                                |  |        |        |  



| |                    
| | -------------------
| | 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 products until formal acceptance by
the customer. Revenue for spare parts sales is recognized on
shipment. Deferred revenue

59



---



##### Table of Contents



consists primarily of product shipments creating
legally enforceable receivables that did not meet Asysts
revenue recognition policy in compliance with SAB 101.
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.


During the year ended, March 31, 2001, we
recorded a non-cash charge of $2.5 million, net of an
income tax benefit of $1.3 million or a loss of $0.07 per
diluted share, to reflect the cumulative effect of the change in
accounting principle, as of the beginning of the year, in
accordance with the guidance provided in SAB 101. Revenue
of $5.0 million resulting in this charge was fully
recognized during the year ended March 31, 2001.

Prior to the year ended March 31, 2001, our
revenue policy was to recognize revenue at the time the customer
takes title to the product, generally at the time of shipment.
Revenue related to maintenance and service contracts was
recognized ratably over the duration of the contracts.

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
intend to disclose material changes in our financial results
that result from changes in estimates. Unbilled receivables
relating to long-term contracts were $17.4M at March 31,
2003 and are included in accounts receivable.

We account for software revenue 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 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 recorded loss
reserves from ASI totaling approximately $2.0 million for
contracts entered into prior to the acquisition date. These loss
reserves are included in the purchase accounting for ASI. At
March 31, 2002, we had a loss reserve of approximately
$2.0 million.



| |                            
| | ---------------------------
| | 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 income (loss) and reflected
instead in equity. The following table presents our
comprehensive income (loss) items (in thousands):

|                                         |  |                      |          |      |  |      |          |   |  |   |        | 
|---------------------------------------- |  | -------------------- | -------- | ---- |  | ---- | -------- | - |  | - | ------ | 
|                                         |  |                     
|                                         |  | Year Ended March 31,
|                                         |  |                     
|                                         |  | 2003                 |          | 2002 |  | 2001
|                                         |  |                      |          |      |  |     
|Net income (loss), as reported           |  | $                    | (135,869 | )    |  | $    | (148,917 | ) |  | $ | 27,026 | 
|Foreign currency translation adjustments |  |                      | 4,740    |      |  |      | (35      | ) |  |   |       | 
|                                         |  |                      |          |      |  |      |          |   |  |   |        | 
|Comprehensive income (loss)              |  | $                    | (131,129 | )    |  | $    | (148,952 | ) |  | $ | 27,026 | 
|                                         |  |                      |          |      |  |      |          |   |  |   |        | 

60



---



##### Table of Contents





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

Basic earnings per share has been computed using
the weighted average number of actual common shares outstanding,
while diluted earnings per share has been computed using 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 and
the conversion of the redeemable convertible preferred stock.
For periods for which there is a net loss, the number of shares
used in the computation of diluted earnings (loss) per share are
the same as those used for the computation of basic earnings
(loss) per share as the inclusion of dilutive securities would
be anti-dilutive.

Below is a reconciliation of earnings (loss) per
share and weighted average common shares outstanding for
purposes of calculating basic and diluted earnings (loss) per
share (in thousands, except per share data):

|                              |                            |                                                                                     |  |               |        |           |  |  |        |  |  |   |      | 
|----------------------------- | -------------------------- | ----------------------------------------------------------------------------------- |  | ------------- | ------ | --------- |  |  | ------ |  |  | - | ---- | 
|                              |                            | Income (Loss)                                                                       |  | Shares        |        | Per Share
|                              |                            | Numerator                                                                           |  | (Denominator) |        | Amount   
|                              |                            |                                                                                     |  |               |        |          
|For Year Ended March 31, 2001 |                            |                                                                                     |  |               |        |           |  |  |        |  |  |  
|                              | Basic earnings per share   |                                                                                     |  |               |        |           |  |  |        |  |  |   |     
|                              |                            | Net income                                                                          |  |               | 27,026 |           |  |  | 32,697 |  |  | $ | 0.82 | 
|                              |                            |                                                                                     |  |               |        |           |  |  |        |  |  |  
|                              |                            | Common shares issuable upon exercise of stock
    options using the treasury method |  |               |       |           |  |  | 2,231  |  |  |   |      | 
|                             
|                              | Diluted earnings per share |                                                                                     |  |               |        |           |  |  |        |  |  |   |     
|                              |                            |                                                                                     |  |               |        |           |  |  |        |  |  |  
|                              |                            | Net income                                                                          |  |               | 27,026 |           |  |  | 34,928 |  |  | $ | 0.78 | 
|                              |                            |                                                                                     |  |               |        |           |  |  |        |  |  |  

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
|                  |       |         
|                  |       | 2003     |       | 2002  |  | 2001
|                  |       |          |       |       |  |     
|Restricted stock  |       |          | 53    |       |  |      | 43    |       |  |  |  |  
|Stock options     |       |          | 2,347 |       |  |      | 2,387 |       |  |  |  |  
|Convertible notes |       |          | 5,682 |       |  |      | 4,262 |       |  |  |  |  
|                  |       |          |       |       |  |      |       |       |  |  |   |  
|                  | Total |          |       | 8,082 |  |      |       | 6,692 |  |  |   |  | 
|                  |       |          |       |       |  |      |       |       |  |  |   |  



| |                         
| | ------------------------
| | 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 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

61



---



##### Table of Contents



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 at the grant date for
awards in fiscal years 2003, 2002 and 2001 consistent with the
provision of SFAS No. 123, and SFAS No. 148, our net
loss for 2003 and 2002 would have increased and our net income
for 2001 decreased to the pro forma amounts indicated below (in
thousands, except per share amounts):

|                                                                                 |  |                      |          |      |  |      |          |   |  |   |         |  
|-------------------------------------------------------------------------------- |  | -------------------- | -------- | ---- |  | ---- | -------- | - |  | - | ------- | -
|                                                                                 |  |                     
|                                                                                 |  | Year Ended March 31,
|                                                                                 |  |                     
|                                                                                 |  | 2003                 |          | 2002 |  | 2001
|                                                                                 |  |                      |          |      |  |     
|Net income (loss)  as reported                                                  |  | $                    | (135,869 | )    |  | $    | (148,917 | ) |  | $ | 27,026  |  
|Add: stock-based compensation expense included in
    reported net income (loss) |  |                      | 2,585    |      |  |      | 858      |   |  |   | 326     |  
|Less: Pro forma stock-based compensation expense
    if we adopted FAS No. 123   |  |                      | (20,566  | )    |  |      | (13,861  | ) |  |   | (13,509 | )
|                                                                                 |  |                      |          |      |  |      |          |   |  |   |         |  
|Net income (loss)  pro forma                                                    |  | $                    | (153,850 | )    |  | $    | (161,920 | ) |  | $ | 13,843  |  
|                                                                                 |  |                      |          |      |  |      |          |   |  |   |         |  
|Basic earnings (loss) per share 
    as reported                                |  | $                    | (3.62    | )    |  | $    | (4.21    | ) |  | $ | 0.82    |  
|                                                                                 |  |                      |          |      |  |      |          |   |  |   |         |  
|Basic earnings (loss) per share 
    pro forma                                  |  | $                    | (4.10    | )    |  | $    | (4.52    | ) |  | $ | 0.42    |  
|                                                                                 |  |                      |          |      |  |      |          |   |  |   |         |  
|Diluted earnings (loss) per
    share  as reported                              |  | $                    | (3.62    | )    |  | $    | (4.21    | ) |  | $ | 0.78    |  
|                                                                                 |  |                      |          |      |  |      |          |   |  |   |         |  
|Diluted earnings (loss) per
    share  pro forma                                |  | $                    | (4.10    | )    |  | $    | (4.52    | ) |  | $ | 0.40    |  
|                                                                                 |  |                      |          |      |  |      |          |   |  |   |         |  



| |                         
| | ------------------------
| | New Accounting Standards

In July 2001 the Financial Accounting
Standards Board (FASB) issued Statement of Financial
Accounting Standard (SFAS) No. 142,
Goodwill and Other Intangible Assets (SFAS
No. 142). SFAS No. 142 discontinues amortization
of goodwill and intangible assets deemed to have indefinite
lives. In addition, SFAS No. 142 includes provisions
regarding: (1) the reclassification between goodwill and
identifiable intangible assets in accordance with the new
definition of intangible assets as set forth in SFAS
No. 141, Business Combinations; (2) the
reassessment of the useful lives of existing intangibles; and
(3) the testing for impairment of goodwill and other
intangibles. We adopted SFAS No. 142 during the quarter
ended June 30, 2002.

In July 2001 the FASB issued SFAS
No. 143, Accounting for Asset Retirement
Obligations (SFAS No. 143), which
addresses accounting and reporting for obligations associated
with the retirement of tangible long-lived assets and the
associated asset retirement costs. We adopted SFAS No. 143
in fiscal 2003. The adoption of SFAS No. 143 did not have a
significant impact on our consolidated financial statements.

In October 2001 the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS No. 144). SFAS
No. 144 supersedes SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of, and provides a single accounting model for
impairment of long-lived assets. SFAS No. 144 applies to
all long-lived assets, including discontinued operations, and
consequently amends the accounting and reporting provisions of
Accounting Principles Board Opinion No. 30, Reporting
the Results of Operations  Reporting the Effects of
Disposal of a Division of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions. SFAS
No. 144 develops one accounting model for long-lived assets
that are to be disposed of by sale and requires the measurement
to be at the lower of book value or fair value less cost to
sell. Additionally, SFAS No. 144 expands the scope of
discontinued operations to include all components of an entity
with operations that (1) can be distinguished from the rest
of the entity and (2) will be eliminated from the ongoing
operations of the entity in a disposal transaction. We adopted
SFAS No. 144 in the first quarter of fiscal 2003.

62



---



##### Table of Contents



In June 2002 the FASB issued SFAS
No. 146, Accounting for Exit or Disposal
Activities (SFAS No. 146). SFAS
No. 146 addresses significant issues regarding the
recognition, measurement, and reporting of costs that are
associated with exit and disposal activities, including
restructuring activities that are currently accounted for under
Emerging Issues Task Force (EITF) Issue
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)
(EITF Issue No. 94-3). The scope of SFAS
No. 146 also includes costs related to terminating a
contract that is not a capital lease and termination benefits
that employees who are involuntarily terminated receive under
the terms of a one-time benefit arrangement that is not an
ongoing benefit arrangement or an individual
deferred-compensation contract. The provisions of EITF Issue
No. 94-3 continue to apply for an exit activity initiated
under an exit plan that met the criteria of EITF Issue
No. 94-3 prior to the adoption of SFAS No. 146. The
effect on adoption of SFAS No. 146 will change on a
prospective basis the timing of when restructuring charges are
recorded from a commitment date approach to when the liability
is incurred. We adopted SFAS No. 146 during the quarter
ended March 31, 2003. The adoption of SFAS No. 146 to
date has not had a significant impact on our consolidated
financial statements.

In November 2002, the FASB issued Interpretation
No. 45 (FIN 45), Guarantors
Accounting and Disclosure requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. The
Interpretation elaborates on the existing disclosure
requirements for most guarantees, including loan guarantees such
as standby letters of credit. It also clarifies that at the time
a company issues a guarantee, the company must recognize an
initial liability for the fair value, or market value, of the
obligations it assumes under the guarantee and must disclose
that information in its interim and annual financial statements.
The provisions related to recognizing a liability at inception
of the guarantee for the fair value of the guarantors
obligations does not apply to product warranties or to
guarantees accounted for as derivatives. The initial recognition
and initial measurement provisions apply on a prospective basis
to guarantees issued or modified after December 31, 2002.

We, as permitted under California law and in
accordance with our Bylaws, have indemnification obligations to
our officers and directors for certain events or occurrences,
subject to certain limits, while they were serving at our
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.

Prior to December 31, 2002, we guaranteed
certain lease payments with respect to equipment and real estate
of our Japanese subsidiary as disclosed in Note 9. We have
not recorded a liability for the amount of our guarantee.

As more fully described in Note 11, we are
contingently liable to provide funding for plan benefits under a
pension plan of Asyst Shinko. Our consolidated financial
statements include an accrued benefit liability of
$12.1 million at March 31, 2003.

These pension obligations are included in the
Shinko Electric Co., Ltd., (Shinko), pension plan.
Under certain remote circumstances including bankruptcy and
inability to pay by Shinko, we may have to assume up to
$200 million of pension obligations. We have not recorded a
liability for this as it is considered remote.

In November 2002 the EITF reached a
consensus on EITF Issue No. 00-21, Accounting for
Revenue Arrangements with Multiple Deliverables
(EITF Issue No. 00-21). EITF Issue
No. 00-21 provides guidance on how to account for
arrangements that involve the delivery or performance of
multiple products, services and/or rights to use assets. The
provisions of EITF Issue No. 00-21 will apply to revenue

63



---



##### Table of Contents



arrangements entered into in fiscal periods
beginning after June 15, 2003. The adoption of EITF Issue
No. 00-21 to date has not had a significant impact on our
consolidated financial statements.


In December 2002 the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure 
an amendment of FASB Statement No. 123 (SFAS
No. 148). SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee
compensation. SFAS No. 148 also requires that disclosures
of the pro forma effect of using the fair value method of
accounting for stock-based employee compensation be displayed
more prominently and in a tabular format. Additionally, SFAS
No. 148 requires disclosure of the pro forma effect in
interim financial statements. The transition and annual
disclosure requirements of SFAS No. 148 are effective for
fiscal years ended after December 15, 2002. The interim
disclosure requirements are effective for interim periods
beginning after December 15, 2002. We have chosen to
continue to account for stock-based compensation using the
intrinsic value method prescribed in APB Opinion No. 25 and
related interpretations. Accordingly, compensation expense for
stock options is measured as the excess, if any, of the estimate
of the market value of our stock at the date of the grant over
the amount an employee must pay to acquire our stock. We have
adopted the annual disclosure provisions of SFAS No. 148 in
our financial reports for the year ended March 31, 2003 and
will adopt the interim disclosure provisions for our financial
reports for the quarter ending June 30, 2003. As the
adoption of this standard involves disclosures only, we do not
expect a material impact on our consolidated financial
statements.

In January 2003 the FASB issued FIN No. 46,
Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51 (FIN
No. 46). FIN No. 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 No. 46 is effective immediately for
all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or
acquired prior to February 1, 2003, the provisions of FIN
No. 46 must be applied for the first interim or annual
period beginning after June 15, 2003. The adoption of FIN
No. 46 to date has not had a significant impact on our
consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity (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 classifies 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. We believe that the adoption of this standard will
have no material impact on our consolidated financial statements.

3.     Acquisitions



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

On October 16, 2002, we established a joint
venture with Shinko, called Asyst Shinko, Inc.
(ASI). The joint venture develops, manufactures and
markets Shinkos market-leading Automated Materials
Handling Systems (AMHS) with principal operations in
Tokyo and Ise, Japan. Under terms of the agreement, Asyst
acquired 51 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. The consolidated financial
statements for the year ended March 31, 2003 include the
results of ASI from the date of acquisition. We believe ASI has
a strong presence in the 300mm AMHS and flat panel display
markets. We believe that ASI, in addition to Asysts
FasTrack AMHS solution, provides us an opportunity to benefit
from growth opportunities in the

64



---



##### Table of Contents



300mm generation of the AMHS business. The
acquisition has been accounted for as a purchase transaction in
accordance with SFAS No. 141.


A portion of the excess of purchase price over
fair value of net assets acquired was allocated to identifiable
intangible assets. We are amortizing 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 of 4.4 years. The balance of the
excess purchase price was recorded as goodwill. A summary of the
transaction is as follows (in thousands):

|                                                                                       |                                                                    |  |   |         | 
|-------------------------------------------------------------------------------------- | ------------------------------------------------------------------ |  | - | ------- | 
|Consideration:                                                                         |                                                                    |  |   |        
|                                                                                       | Cash paid                                                          |  | $ | 65,700  | 
|                                                                                       | Transaction costs                                                  |  |   | 1,796   | 
|                                                                                       |                                                                    |  |   |        
|                                                                                       | Total consideration                                                |  |   | 67,496  | 
|                                                                                       | Total Enterprise Value                                             |  |   | 132,345 | 
|                                                                                       |                                                                    |  |   |        
|                                                                                       | Fair value of net assets acquired                                  |  |   | 744     | 
|                                                                                       |                                                                    |  |   |        
|                                                                                       | Excess of consideration over fair value of net
    assets acquired |  | $ | 131,601 | 
|                                                                                       |                                                                    |  |   |        
|Allocation of excess consideration to
    identifiable intangible assets and goodwill: |                                                                    |  |   |        
|                                                                                       | Developed technology                                               |  |   | 44,500  | 
|                                                                                       | Customer base and other intangible assets                          |  |   | 18,800  | 
|                                                                                       | In-process research and development                                |  |   | 5,750   | 
|                                                                                       | Goodwill                                                           |  |   | 62,551  | 
|                                                                                       |                                                                    |  |   |        
|                                                                                       | Total intangible assets and goodwill                               |  | $ | 131,601 | 
|                                                                                       |                                                                    |  |   |        

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. The $62.6 million of goodwill arising
from the acquisition is not deductible for tax purposes. We
acquired $5.8 million of in-process research and
development as part of the acquisition. The in-process research
and development costs were expensed in fiscal 2003.

Minority interest of $58.9 million was
recorded at March 31, 2003 representing the minority
interest of 49 percent of the fair value of ASI at the time
of acquisition and the proportionate share of net income (loss)
and cumulative translation adjustment for the year ended
March 31, 2003.

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 cash equivalents               |  | $ | 15,200  |  
|Other current assets                    |  |   | 54,537  |  
|Property and equipment                  |  |   | 3,332   |  
|Other assets                            |  |   | 782     |  
|Current liabilities                     |  |   | (32,797 | )
|Deferred tax liabilities                |  |   | (26,586 | )
|Pension and other long-term liabilities |  |   | (13,724 | )
|                                        |  |   |         |  
|Net assets acquired                     |  | $ | 744     |  
|                                        |  |   |         |  

The following pro-forma consolidated results of
operations are presented as if the acquisition of ASI had been
made at April 1, 2001 (unaudited; dollars 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
Japan Generally Accepted Accounting Principles (GAAP) to US

65



---



##### Table of Contents



GAAP, the Shinko results were prepared in
accordance with Japan GAAP which differs from US GAAP. The
principle difference between US and Japan 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 income                        |  | $              | (133,547 | )              |  | $ | (144,886 | )
|                                  |  |                |          |                |  |   |          |  
|Basic earnings (loss) per share   |  | $              | (3.57    | )              |  | $ | (4.10    | )
|                                  |  |                |          |                |  |   |          |  
|Diluted earnings (loss) per share |  | $              | (3.57    | )              |  | $ | (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 ASIs pension plan,
under certain remote circumstances including bankruptcy and
inability to pay by Shinko, we may have to assume up to
$200 million of 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 recorded as goodwill and
intangible assets, including in-process research and
development. We recorded the value of intangible assets as
follows (dollars in thousands):

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

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.



| |                        
| | -----------------------
| | 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. The note
was paid in May 2002 in 841,308 shares of common stock. The
note payable was paid in shares of common stock in fiscal 2003.
The acquisition was accounted for using the purchase method of
accounting. Accordingly the results of GW have been combined
with ours since the date of acquisition. 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-

66



---



##### Table of Contents



process research and development was charged as
an expense during fiscal 2002. The remaining intangible assets
are being amortized over three to six years.


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.

4.     Restructuring
Charges

Restructuring charges and related utilization for
the fiscal years ended March 31, 2003, 2002 and 2001 were
(dollars in thousands):

|                             |  |           |        |          |  |             |        |       |  |   |        |   |  |   |        |  
|---------------------------- |  | --------- | ------ | -------- |  | ----------- | ------ | ----- |  | - | ------ | - |  | - | ------ | -
|                             |  | Severance |        |          |  |             |        |      
|                             |  | and       |        | Excess   |  | Fixed Asset |        |      
|                             |  | Benefits  |        | Facility |  | Impairment  |        | Total
|                             |  |           |        |          |  |             |        |      
|Balance, March 31, 2000      |  |           |       |          |  |             |       |       |  |   |       |   |  |   |       |  
|Additional accruals          |  | $         | 540    |          |  | $           | 439    |       |  |   |       |   |  | $ | 979    |  
|Non-cash related utilization |  |           | (540   | )        |  |             | (439   | )     |  |   |       |   |  |   | (979   | )
|                             |  |           |        |          |  |             |        |       |  |   |        |   |  |   |        |  
|Balance, March 31, 2001      |  |           |       |          |  |             |       |       |  |   |       |   |  |   |       |  
|Additional accruals          |  |           | 4,278  |          |  |             | 3,685  |       |  | $ | 200    |   |  |   | 8,163  |  
|Non-cash related utilization |  |           |       |          |  |             | (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 utilization |  |           | (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  |  
|                             |  |           |        |          |  |             |        |       |  |   |        |   |  |   |        |  

In the quarter ended December 31, 2002, we
recorded an excess facility charge of $1.1 million
reflecting revised estimates of future sublease income. We also
recorded severance charges of $0.7 million resulting from
headcount reductions of 52 employees, including manufacturing,
sales, research and development and administrative staff. We
also recorded a fixed asset impairment charge of
$0.7 million for assets to be disposed of due to headcount
reductions and vacating facilities. In the quarter ended
September 30, 2002, we recorded severance charges of
$0.8 million and contractual obligations of
$0.6 million as a result of workforce reduction measures
affecting approximately 24 employees and a manufacturing
outsourcing agreement whereby approximately 191 employees joined
Solectron. The workforce reduction affected employees in
manufacturing, sales, research and development and
administration. An additional charge of $1.6 million
relates to excess facilities that we have under lease but have
abandoned as a result of the manufacturing outsourcing
agreement. We also recorded a fixed asset impairment charge of
$1.5 million for assets that will not be used as we
consolidate facilities and integrate certain programs into a
joint venture.

In fiscal 2002, non-recurring 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 domestic 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 percent of our workforce.

In the fourth quarter of fiscal 2001, in response
to a decrease in net sales and new orders, we incurred
$0.5 million charge relating to the reduction in workforce
by 149 regular full-time employees and approximately 150
temporary employees primarily in Fremont, California. In
addition, we recorded $0.5 million relating to closing a
small manufacturing facility in Japan.

67



---



##### Table of Contents



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



|   |                         
|-- | ------------------------
|5. | Asset Impairment Charges

During fiscal 2003, we completed a periodic
goodwill impairment analysis. As a result, 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 relate to goodwill and
intangible assets recorded in connection with our acquisition of
DLC. Based on similar analyses, goodwill impairment charges were
also recorded in fiscal 2002 for $22.6 million. The charges
were measured on the basis of comparison of estimated fair
values with corresponding book values and relate to goodwill and
intangible assets recorded in connection with previously
acquired businesses.

We own land in Fremont, California. 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 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 during the quarter ended June 30, 2001. In total,
$17.9 million were recorded in fiscal 2002 for land
impairment charges. In fiscal 2003, we recorded an additional
$7.1 million write-down based on our revised estimate of
market value. We continue to classify the land as held for sale.



|   |             
|-- | ------------
|6. | 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 (dollars in thousands):

|         |  |                             |         |      |  |      |          |   |  |   |        | 
|-------- |  | --------------------------- | ------- | ---- |  | ---- | -------- | - |  | - | ------ | 
|         |  |                            
|         |  | Fiscal Year Ended March 31,
|         |  |                            
|         |  | 2003                        |         | 2002 |  | 2001
|         |  |                             |         |      |  |     
|Domestic |  | $                           | (57,557 | )    |  | $    | (138,359 | ) |  | $ | 39,679 | 
|Foreign  |  |                             | (4,544  | )    |  |      | 2,819    |   |  |   | 7,082  | 
|         |  |                             |         |      |  |      |          |   |  |   |        | 
|         |  | $                           | (62,101 | )    |  | $    | (135,540 | ) |  | $ | 46,761 | 
|         |  |                             |         |      |  |      |          |   |  |   |        | 

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

|         |                                                 |                             |   |        |        |      |   |         |         |   |   |        |        |  
|-------- | ----------------------------------------------- | --------------------------- | - | ------ | ------ | ---- | - | ------- | ------- | - | - | ------ | ------ | -
|         |                                                 |                            
|         |                                                 | Fiscal Year Ended March 31,
|         |                                                 |                            
|         |                                                 | 2003                        |   | 2002   |        | 2001
|         |                                                 |                             |   |        |        |     
|Current: |                                                 |                             |   |        |        |      |   |         |         |   |   |       
|         | Federal                                         |                             | $ |       |        |      | $ | (2,443  | )       |   | $ | 16,674 |       
|         | State                                           |                             |   | 80     |        |      |   | 80      |         |   |   | 861    |       
|         | Foreign                                         |                             |   | 2,394  |        |      |   | 747     |         |   |   | 123    |       
|         |                                                 |                             |   |        |        |      |   |         |         |   |   |       
|         |                                                 | Total Current               |   |        | 2,474  |      |   |         | (1,616  | ) |   |        | 17,658 |  
|Deferred |                                                 |                             |   |        |        |      |   |         |         |   |   |       
|         | Federal                                         |                             |   | 51,557 |        |      |   | (32,330 | )       |   |   | (12    | )     
|         | State                                           |                             |   | 6,378  |        |      |   | (4,080  | )       |   |   | (417   | )     
|         | Foreign                                         |                             |   | (3,074 | )      |      |   |        |         |   |   |       |       
|         |                                                 |                             |   |        |        |      |   |         |         |   |   |       
|         |                                                 | Total Deferred              |   |        | 54,861 |      |   |         | (36,410 | ) |   |        | (429   | )
|         | Total provision for (benefit from) income taxes |                             | $ | 57,335 |        |      | $ | (38,026 | )       |   | $ | 17,229 |       
|         |                                                 |                             |   |        |        |      |   |         |         |   |   |       

68



---



##### Table of Contents



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

|                                                                     |                                           |                             |         |        |  |      |         |         |   |   |        |        | 
|-------------------------------------------------------------------- | ----------------------------------------- | --------------------------- | ------- | ------ |  | ---- | ------- | ------- | - | - | ------ | ------ | 
|                                                                     |                                           |                            
|                                                                     |                                           | Fiscal Year Ended March 31,
|                                                                     |                                           |                            
|                                                                     |                                           | 2003                        |         | 2002   |  | 2001
|                                                                     |                                           |                             |         |        |  |     
|Provision computed at Federal statutory rate                         |                                           | $                           | (21,735 | )      |  | $    | (47,439 | )       |   | $ | 16,366 |       
|State taxes, net of Federal benefit                                  |                                           |                             | (3,092  | )      |  |      | (3,342  | )       |   |   | 2,287  |       
|Foreign income and withholding taxes in excess of
    statutory rate |                                           |                             | 718     |        |  |      | (118    | )       |   |   | 569    |       
|In-process research and development                                  |                                           |                             | 2,415   |        |  |      | 185     |         |   |   |       |       
|Non-deductible expenses and other                                    |                                           |                             | 469     |        |  |      | 264     |         |   |   | 665    |       
|Foreign sales corporation benefit                                    |                                           |                             |        |        |  |      |        |         |   |   | (1,714 | )     
|Change in valuation allowance                                        |                                           |                             | 78,560  |        |  |      |        |         |   |   | (1,500 | )     
|Goodwill amortization                                                |                                           |                             |        |        |  |      | 12,637  |         |   |   | 1,777  |       
|Tax exempt income                                                    |                                           |                             |        |        |  |      | (213    | )       |   |   | (1,221 | )     
|                                                                     |                                           |                             |         |        |  |      |         |         |   |   |        |       
|                                                                     | Provision for (benefit from) income taxes |                             | $       | 57,335 |  |      | $       | (38,026 | ) |   | $      | 17,229 | 
|                                                                     |                                           |                             |         |        |  |      |         |         |   |   |        |       
|Effective income tax rate                                            |                                           |                             | 92.3    | %      |  |      | (28.1   | )%      |   |   | 37.0   | %     
|                                                                     |                                           |                             |         |        |  |      |         |         |   |   |        |       

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

|                                            |                        |                   |         |         |   |   |         |        |  
|------------------------------------------- | ---------------------- | ----------------- | ------- | ------- | - | - | ------- | ------ | -
|                                            |                        |                  
|                                            |                        | Fiscal Year Ended
|                                            |                        | March 31,        
|                                            |                        |                  
|                                            |                        | 2003              |         | 2002   
|                                            |                        |                   |         |        
|Net operating loss and credit carryforwards |                        | $                 | 64,685  |         |   | $ | 36,151  |       
|Reserves and accruals                       |                        |                   | 24,712  |         |   |   | 26,264  |       
|Foreign deferred tax asset (MECS)           |                        |                   | 7,898   |         |   |   | 10,791  |       
|Depreciation and amortization               |                        |                   | 2,551   |         |   |   | 2,918   |       
|                                            |                        |                   |         |         |   |   |         |       
|                                            | Deferred tax asset     |                   |         | 99,846  |   |   |         | 76,124 |  
|Intangibles                                 |                        |                   | (27,933 | )       |   |   | (6,478  | )     
|                                            |                        |                   |         |         |   |   |         |       
|                                            | Deferred tax liability |                   |         | (27,933 | ) |   |         | (6,478 | )
|                                            |                        |                   |         |         |   |   |         |       
|Gross deferred tax asset                    |                        |                   | 71,913  |         |   |   | 69,646  |       
|Valuation allowance for deferred tax assets |                        |                   | (95,670 | )       |   |   | (11,924 | )     
|                                            |                        |                   |         |         |   |   |         |       
|Net deferred tax asset (liability)          |                        | $                 | (23,757 | )       |   | $ | 57,722  |       
|                                            |                        |                   |         |         |   |   |         |       

We have a gross deferred tax asset of
approximately $99.8 million, of which approximately
$64.7 million related to net operating loss carryforwards
and tax credits generated by us and our domestic subsidiaries,
which expire at various dates through March 2023. In addition,
as of March 31, 2003, $7.9 million of the deferred tax
asset relates to pre-merger foreign net operating loss
carryforwards of MECS which expire in 2005.

Based on the available objective evidence,
management believes that it is more likely than not that the
deferred tax assets including the net operating losses, will not
be fully realizable. Accordingly, we have provided a full
valuation allowance against its deferred tax assets at
March 31, 2003.

A deferred tax liability was recorded as part of
purchase accounting for the identifiable intangible assets
acquired as part of the joint venture, ASI. Therefore, we have
recorded a net deferred tax liability of approximately $23.8
million as of March 31, 2003.

69



---



##### Table of Contents



7.     Sale of Wafer
and Reticle Carrier Products

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.

A summary of the transaction is as follows
(dollars in thousands):

|                             |  |   |      |  
|---------------------------- |  | - | ---- | -
|Gross proceeds               |  | $ | 38.8 |  
|Less: Transaction expenses   |  |   | (4.6 | )
|Net Book value of
    assets |  |   | (5.8 | )
|                             |  |   |      |  
|Gain on sale                 |  | $ | 28.4 |  
|                             |  |   |      |  

The wafer and reticle carrier products
contributed revenues of $31.1 million, $28.9 million
and $38.8 million in fiscal years 2003, 2002 and 2001,
respectively.

8.     Discontinued
Operations

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 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 and recorded a loss on sale of
$5.9 million, which has been classified as part of the loss
from discontinued operations on the Consolidated Statements of
Operations.

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

|                         |  |                      |         |      |  |   |         |  
|------------------------ |  | -------------------- | ------- | ---- |  | - | ------- | -
|                         |  |                     
|                         |  | Year Ended March 31,
|                         |  |                     
|                         |  | 2003                 |         | 2002
|                         |  |                      |         |     
|Net sales                |  | $                    | 12,227  |      |  | $ | 10,718  |  
|                         |  |                      |         |      |  |   |         |  
|Loss before income taxes |  |                      | (21,096 | )    |  |   | (58,095 | )
|Income taxes (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 paid in shares of
our common stock in the fourth quarter of fiscal 2003.

The assets and liabilities of discontinued
operations are stated separately as of March 31, 2002 on
the statement of financial position and consist of (unaudited,
in thousands):

|                                       |  |            |   |      |  |   |        | 
|-------------------------------------- |  | ---------- | - | ---- |  | - | ------ | 
|                                       |  |           
|                                       |  | Year Ended
|                                       |  | March 31, 
|                                       |  |           
|                                       |  | 2003       |   | 2002
|                                       |  |            |   |     
|Inventories                            |  | $          |  |      |  | $ | 5,814  | 
|Property and equipment, net            |  |            |  |      |  |   | 3,967  | 
|Other assets                           |  |            |  |      |  |   | 7,104  | 
|Accrued losses                         |  |            |  |      |  |   |       | 
|                                       |  |            |   |      |  |   |        | 
|Assets of discontinued operations      |  | $          |  |      |  | $ | 16,885 | 
|                                       |  |            |   |      |  |   |        | 
|Liabilities of discontinued operations |  | $          |  |      |  | $ | 4,190  | 
|                                       |  |            |   |      |  |   |        | 

70



---



##### Table of Contents



9.     Debt

We had $18.0 million and $16.7 million
at March 31, 2003 and 2002, respectively, of short-term
debt from banks in Japan. As of March 31, 2003, the
interest rate ranged from 1.4 percent to 2.4 percent
(interest rates ranged from 1.4 percent to 1.9 percent
at March 31, 2002). Substantially all of this debt is
guaranteed by collateralized assets and letters of guarantee.

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

|                                                               |  |                      |         |      |  |   |        |  
|-------------------------------------------------------------- |  | -------------------- | ------- | ---- |  | - | ------ | -
|                                                               |  |                     
|                                                               |  | Year Ended March 31,
|                                                               |  |                     
|                                                               |  | 2003                 |         | 2002
|                                                               |  |                      |         |     
|Convertible subordinated notes                                 |  | $                    | 86,250  |      |  | $ | 86,250 |  
|Line of credit                                                 |  |                      | 25,000  |      |  |   |       |  
|Secured straight bonds                                         |  |                      | 4,075   |      |  |   | 4,508  |  
|Finance leases                                                 |  |                      | 760     |      |  |   | 649    |  
|                                                               |  |                      |         |      |  |   |        |  
|Total long-term debt and finance leases                        |  |                      | 116,085 |      |  |   | 91,407 |  
|Less: Current portion of long-term debt and
    finance leases |  |                      | (1,273  | )    |  |   | (1,076 | )
|                                                               |  |                      |         |      |  |   |        |  
|Long-term debt and finance leases, net of current
    portion  |  | $                    | 114,812 |      |  | $ | 90,331 |  
|                                                               |  |                      |         |      |  |   |        |  

At March 31, 2003, maturities of all debt
and finance leases, including current portion are as follows
(dollars in thousands):

|                             |  |        |         | 
|---------------------------- |  | ------ | ------- | 
|Fiscal Year Ending March 31, |  | Amount
|                             |  |       
|2004                         |  | $      | 1,273   | 
|2005                         |  |        | 25,299  | 
|2006                         |  |        | 116     | 
|2007                         |  |        | 1,145   | 
|2008 and thereafter          |  |        | 88,252  | 
|                             |  |        |         | 
|                             |  | $      | 116,085 | 
|                             |  |        |         | 



| |                                   
| | ----------------------------------
| | 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 and $0.4 million
during the year ended March 31, 2003 and March 31,
2002, respectively.



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

We had $4.1 million and $4.5 million of
secured straight bonds from a bank in Japan at March 31,
2003 and 2002, respectively. The bonds bore interest at rates
ranging from 1.4 percent to 2.4 percent as of
March 31, 2003 and 1.4 to 1.9 percent as of
March 31, 2002 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 a $25 million 2-year revolving
credit agreement with a commercial bank and are required under
the agreement to maintain compliance with financial covenants,
including total liabilities to tangible net worth

71



---



##### Table of Contents



ratio, tangible net worth and minimum liquidity
covenants. We were in compliance with the covenants at
March 31, 2003. 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.


10.     Common
Stock

As of March 31, 2003, the following shares
of our common stock were available for issuance:

|                             |  |  |           | 
|---------------------------- |  |  | --------- | 
|Employee Stock Option Plans  |  |  | 1,848,634 | 
|Employee Stock Purchase Plan |  |  | 229,570   | 
|                             |  |  |           | 
|                             |  |  | 2,078,204 | 
|                             |  |  |           | 



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

We have five 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) 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.

Under the 93 Plan, as amended, 13,837,269
shares of common stock are reserved for issuance. The 93 Plan
provides for the grant of both incentive and non-qualified stock
options to our key employees and consultants. In fiscal 2001, we
began granting non-employee directors stock options pursuant to
the 93 Plan. Under the 93 Plan, options may be granted at
prices not less than the fair market value of our common stock
at grant date (85.0 percent for non-qualified options).

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.

The SemiFab Plan was acquired with the
acquisition of SemiFab in February 2001. In connection with our
acquisition of SemiFab, options are no longer granted from the
SemiFab plan and any options outstanding that were initially
granted under the SemiFab Plan are exercisable into Asyst common
stock.

Activity in our stock option plans is summarized
as follows (prices are weighted average prices):

|                                       |  |                             |            |       |  |        |       |       |  |        |            |       |  |   |       |  |  |  |            |   |  |   |       | 
|-------------------------------------- |  | --------------------------- | ---------- | ----- |  | ------ | ----- | ----- |  | ------ | ---------- | ----- |  | - | ----- |  |  |  | ---------- | - |  | - | ----- | 
|                                       |  |                            
|                                       |  | Fiscal Year Ended March 31,
|                                       |  |                            
|                                       |  |                             |            |       |  |       
|                                       |  | 2003                        |            | 2002  |  | 2001  
|                                       |  |                             |            |       |  |       
|                                       |  | Shares                      |            | Price |  | Shares |       | Price |  | Shares |            | Price
|                                       |  |                             |            |       |  |        |       |       |  |        |            |      
|Options outstanding, beginning of year |  |                             | 9,971,917  |       |  | $      | 12.76 |       |  |        | 8,194,290  |       |  | $ | 13.47 |  |  |  | 6,193,219  |   |  | $ | 11.13 | 
|Granted                                |  |                             | 2,144,023  |       |  |        | 10.62 |       |  |        | 3,716,432  |       |  |   | 11.83 |  |  |  | 3,536,097  |   |  |   | 22.30 | 
|Exercised                              |  |                             | (525,269   | )     |  |        | 7.92  |       |  |        | (560,954   | )     |  |   | 6.63  |  |  |  | (435,576   | ) |  |   | 5.93  | 
|Cancelled                              |  |                             | (2,380,610 | )     |  |        | 14.00 |       |  |        | (1,377,851 | )     |  |   | 17.13 |  |  |  | (1,099,450 | ) |  |   | 32.75 | 
|                                       |  |                             |            |       |  |        |       |       |  |        |            |       |  |   |       |  |  |  |            |   |  |   |       | 
|Options outstanding, end of year       |  |                             | 9,210,061  |       |  | $      | 12.20 |       |  |        | 9,971,917  |       |  | $ | 12.76 |  |  |  | 8,194,290  |   |  | $ | 13.47 | 
|                                       |  |                             |            |       |  |        |       |       |  |        |            |       |  |   |       |  |  |  |            |   |  |   |       | 
|Exercisable, end of year               |  |                             | 5,276,209  |       |  | $      | 11.59 |       |  |        | 4,498,458  |       |  | $ | 10.77 |  |  |  | 3,373,002  |   |  | $ | 8.89  | 
|                                       |  |                             |            |       |  |        |       |       |  |        |            |       |  |   |       |  |  |  |            |   |  |   |       | 

72



---



##### Table of Contents



The following table summarizes the stock options
as of March 31, 2003 (prices and contractual life are
weighted averages):

|                    |                   |                     |           |                     |           |       |      |             |      |          |       |       |       |  |           |         |           |   |       |       |       | 
|------------------- | ----------------- | ------------------- | --------- | ------------------- | --------- | ----- | ---- | ----------- | ---- | -------- | ----- | ----- | ----- |  | --------- | ------- | --------- | - | ----- | ----- | ----- | 
|                    |                   |                     |           |                     |           |      
|                    |                   | Options Outstanding |           |                    
|                    |                   |                     |           | Exercisable Options
|                    |                   |                     |           | Remaining           |           |       |      |            
|Actual Range of     |                   | Number              |           | Contractual         |           |       |      | Number      |      | Exercise
|Exercise Prices     |                   | Outstanding         |           | Life                |           | Price |      | Exercisable |      | Price   
|                    |                   |                     |           |                     |           |       |      |             |      |         
|$ 0.0000  $ 6.1900 |                   |                     | 1,469,053 |                     |           |       | 6.52 |             |      | $        | 4.47  |       |       |  | 763,735   |         |           | $ | 3.96  |      
|                    |                   | 6.5000  8.4800     |           |                     | 1,630,505 |       |      |             | 5.75 |          |       |       | 7.07  |  |           |         | 1,417,812 |   |       |       | 6.94  | 
|                    |                   | 9.1563  12.8125    |           |                     | 1,472,608 |       |      |             | 6.50 |          |       |       | 10.56 |  |           |         | 1,091,119 |   |       |       | 10.65 | 
|                    | 12.9000  13.3125 |                     |           | 1,509,005           |           |       |      | 8.51        |      |          |       | 12.95 |       |  |           | 524,250 |           |   |       | 12.99 |      
|                    | 13.4000  17.6800 |                     |           | 1,566,963           |           |       |      | 8.14        |      |          |       | 14.87 |       |  |           | 644,055 |           |   |       | 14.76 |      
|                    | 17.8800  73.0647 |                     |           | 1,561,927           |           |       |      | 7.16        |      |          |       | 22.84 |       |  |           | 835,238 |           |   |       | 24.07 |      
|                    |                   |                     |           |                     |           |       |      |             |      |          |       |       |       |  |           |         |           |   |       |      
|                    |                   |                     | 9,210,061 |                     |           |       | 7.09 |             |      | $        | 12.20 |       |       |  | 5,276,209 |         |           | $ | 11.59 |      
|                    |                   |                     |           |                     |           |       |      |             |      |          |       |       |       |  |           |         |           |   |       |      

The weighted-average grant date fair value of
options during 2003, 2002 and 2001 was $10.25, $7.27 and $13.47,
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 2003, 2002, and 2001:

|                        |  |                   |      |      |  |      |      |   |  |  |      |  
|----------------------- |  | ----------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                        |  |                  
|                        |  | Fiscal Year Ended
|                        |  | March 31,        
|                        |  |                  
|                        |  | 2003              |      | 2002 |  | 2001
|                        |  |                   |      |      |  |     
|Risk-free interest rate |  |                   | 2.62 |      |  |      | 4.97 |   |  |  | 4.89 |  
|Expected term of option |  |                   | 4.30 |      |  |      | 4.73 |   |  |  | 4.80 |  
|Expected volatility     |  |                   | 107  | %    |  |      | 76   | % |  |  | 81   | %
|Expected dividend yield |  |                   | 0    | %    |  |      | 0    | % |  |  | 0    | %



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

Under the 1993 Employee Stock Purchase Plan (the
Plan), as amended, 1,900,000 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 percent of an
employees compensation, at a price not less than
85 percent of the market value of the stock on specified
dates. During the years ended March 31, 2003, 2002 and
2001, 242,686, 239,702 and 132,804 shares, respectively,
were issued under the plan. As of March 31, 2003,
1,670,430 shares had been purchased by employees under the
Plan.

The weighted-average stock purchases during 2003,
2002 and 2001 was $8.40, $11.14 and $15.42, respectively. The
fair value of each stock purchase is on the date of purchase
using the Black-Scholes model with the following weighted
average assumptions used:

|                        |  |                   |      |      |  |      |      |   |  |  |      |  
|----------------------- |  | ----------------- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                        |  |                  
|                        |  | Fiscal Year Ended
|                        |  | March 31,        
|                        |  |                  
|                        |  | 2003              |      | 2002 |  | 2001
|                        |  |                   |      |      |  |     
|Risk-free interest rate |  |                   | 1.83 |      |  |      | 2.41 |   |  |  | 4.89 |  
|Expected term of option |  |                   | 0.50 |      |  |      | 0.50 |   |  |  | 0.50 |  
|Expected volatility     |  |                   | 107  | %    |  |      | 76   | % |  |  | 81   | %
|Expected dividend yield |  |                   | 0    | %    |  |      | 0    | % |  |  | 0    | %

11.     Pension
Plans



| |                     
| | --------------------
| | Defined Benefit Plan

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

73



---



##### Table of Contents



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 plans described above were as follows (dollars in
thousands):

|                                                                                  |  |                   |         |  
|--------------------------------------------------------------------------------- |  | ----------------- | ------- | -
|                                                                                  |  | Fiscal Year Ended
|                                                                                  |  | March 31, 2003   
|                                                                                  |  |                  
|Change in benefit obligation:                                                     |  |                   |         |  
|Beginning benefit obligation                                                      |  | $                 |        |  
|Acquisitions                                                                      |  |                   | 15,707  |  
|Service cost                                                                      |  |                   | 308     |  
|Interest cost                                                                     |  |                   | 154     |  
|Participant contributions                                                         |  |                   |        |  
|Actuarial (gain)/loss                                                             |  |                   |        |  
|Currency exchange rate changes                                                    |  |                   | 678     |  
|Benefits paid to plan participants                                                |  |                   | (321    | )
|                                                                                  |  |                   |         |  
|Ending benefit obligation                                                         |  | $                 | 16,526  |  
|                                                                                  |  |                   |         |  
|Change in Plan Assets:                                                            |  |                   |         |  
|Beginning fair value of plan assets                                               |  | $                 |        |  
|Acquisitions                                                                      |  |                   | 3,387   |  
|Actual return on plan assets                                                      |  |                   | (244    | )
|Employer contributions                                                            |  |                   | 988     |  
|Currency exchange rate changes                                                    |  |                   | 167     |  
|Benefits paid to participants                                                     |  |                   | (227    | )
|                                                                                  |  |                   |         |  
|Ending fair value of plan assets                                                  |  | $                 | 4,071   |  
|                                                                                  |  |                   |         |  
|Funded Status:                                                                    |  |                   |         |  
|Ending funded status                                                              |  |                   | (12,455 | )
|Unrecognized net transition obligation
    Unrecognized net actuarial (gain)/loss |  |                   | 313     |  
|                                                                                  |  |                   |         |  
|Net amount recognized                                                             |  |                   | (12,142 | )
|                                                                                  |  |                   |         |  
|Amounts Recognized in the Balance
    Sheet:                                      |  |                   |         |  
|Prepaid pension cost                                                              |  | $                 |        |  
|Accrued benefit liability                                                         |  |                   | (12,142 | )
|Accumulated other comprehensive income                                            |  |                   |        |  
|                                                                                  |  |                   |         |  
|Net amount recognized                                                             |  | $                 | (12,142 | )
|                                                                                  |  |                   |         |  

Economic assumptions used to determine the costs
and benefit obligations for the pension plan at March 31,
2003 were as follows:

|                               |  |  |      |  
|------------------------------ |  |  | ---- | -
|Discount rate                  |  |  | 2.00 | %
|Expected return on plan assets |  |  | 3.00 | %
|Rate of compensation increase  |  |  | 2.25 | %

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.

74



---



##### Table of Contents



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

|                                                |  |                   |     |  
|----------------------------------------------- |  | ----------------- | --- | -
|                                                |  | Fiscal Year Ended
|                                                |  | March 31, 2003   
|                                                |  |                  
|Company service cost                            |  | $                 | 308 |  
|Interest cost                                   |  |                   | 154 |  
|Expected return on plan assets                  |  |                   | (57 | )
|Amortization of net transition obligatio        |  |                   |    |  
|Amortization of unrecognized prior service cost |  |                   |    |  
|Amortization of unrecognized net (gain)/loss    |  |                   |    |  
|                                                |  |                   |     |  
|Net periodic pension cost                       |  | $                 | 405 |  
|                                                |  |                   |     |  

At March 31, 2003, the plans
accumulated benefit obligation of $14.2 million and the
plans projected benefit obligation of $16.5 million
exceed the plan assets of $4.1 million.

Employee
Savings and Retirement Plan

We maintain a 401(k) retirement savings plan for
our U.S. full-time employees. Participants in the 401(k)
plan may contribute up to 15% of their annual salary, limited by
the maximum dollar amount allowed by the Internal Revenue Code.
No contributions were made in fiscal years ended March 31,
2003 and 2002. Contributions and expenses in connection with
this plan accounted for $0.1 million for the fiscal year
ended March 31, 2001.

12.     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).

Segment information is summarized as follows
(dollars in millions):

|                        |  |                             |       |      |  |      |        |   |  |   |       | 
|----------------------- |  | --------------------------- | ----- | ---- |  | ---- | ------ | - |  | - | ----- | 
|                        |  |                            
|                        |  | Fiscal Year Ended March 31,
|                        |  |                            
|                        |  | 2003                        |       | 2002 |  | 2001
|                        |  |                             |       |      |  |     
|Fab Automation:         |  |                             |       |      |  |      |        |   |  |   |       | 
|Net sales               |  | $                           | 213.1 |      |  | $    | 183.2  |   |  | $ | 491.5 | 
|                        |  |                             |       |      |  |      |        |   |  |   |       | 
|Operating (loss)/income |  | $                           | (66.9 | )    |  | $    | (132.1 | ) |  | $ | 43.1  | 
|                        |  |                             |       |      |  |      |        |   |  |   |       | 
|AMHS:                   |  |                             |       |      |  |      |        |   |  |   |       | 
|Net sales               |  | $                           | 46.4  |      |  | $    |       |   |  | $ |      | 
|                        |  |                             |       |      |  |      |        |   |  |   |       | 
|Operating (loss)/income |  | $                           | (16.7 | )    |  | $    |       |   |  | $ |      | 
|                        |  |                             |       |      |  |      |        |   |  |   |       | 
|Total:                  |  |                             |       |      |  |      |        |   |  |   |       | 
|Net sales               |  | $                           | 259.5 |      |  | $    | 183.2  |   |  | $ | 491.5 | 
|                        |  |                             |       |      |  |      |        |   |  |   |       | 
|Operating (loss)/income |  | $                           | (83.6 | )    |  | $    | (132.1 | ) |  | $ | 43.1  | 
|                        |  |                             |       |      |  |      |        |   |  |   |       | 

75



---



##### Table of Contents



We acquired 51 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 (dollars
in millions):

|                                                 |       |                      |      |       |  |      |      |       |  |   |       |       | 
|------------------------------------------------ | ----- | -------------------- | ---- | ----- |  | ---- | ---- | ----- |  | - | ----- | ----- | 
|                                                 |       |                     
|                                                 |       | Year Ended March 31,
|                                                 |       |                     
|                                                 |       | 2003                 |      | 2002  |  | 2001
|                                                 |       |                      |      |       |  |     
|United States                                    |       | $                    | 90.5 |       |  | $    | 82.4 |       |  | $ | 192.3 |      
|Japan                                            |       |                      | 48.0 |       |  |      | 45.6 |       |  |   | 102.8 |      
|Taiwan                                           |       |                      | 47.0 |       |  |      | 20.3 |       |  |   | 98.3  |      
|Other Asia/ Pacific (excluding Japan and Taiwan) |       |                      | 51.1 |       |  |      | 16.6 |       |  |   | 58.3  |      
|Europe                                           |       |                      | 22.9 |       |  |      | 18.3 |       |  |   | 39.8  |      
|                                                 |       |                      |      |       |  |      |      |       |  |   |       |      
|                                                 | Total |                      | $    | 259.5 |  |      | $    | 183.2 |  |   | $     | 491.5 | 
|                                                 |       |                      |      |       |  |      |      |       |  |   |       |      

Property and equipment, net, by geographical
location were as follows (dollars in thousands):

|              |  |                   |        |      |  |   |        | 
|------------- |  | ----------------- | ------ | ---- |  | - | ------ | 
|              |  |                  
|              |  | Fiscal Year Ended
|              |  | March 31,        
|              |  |                  
|              |  | 2003              |        | 2002
|              |  |                   |        |     
|United States |  | $                 | 12,133 |      |  | $ | 25,554 | 
|Japan         |  |                   | 11,393 |      |  |   | 7,928  | 
|Other         |  |                   | 769    |      |  |   | 917    | 
|              |  |                   |        |      |  |   |        | 
|Total         |  | $                 | 24,295 |      |  | $ | 34,399 | 
|              |  |                   |        |      |  |   |        | 

13.     Commitments

We lease various facilities under non-cancelable
finance and operating leases. At March 31, 2003, the future
minimum commitments under these leases are as follows (dollars
in thousands):

|                                        |  |         |     |           |  |   |        | 
|--------------------------------------- |  | ------- | --- | --------- |  | - | ------ | 
|                                        |  | Finance |     | Operating
|Fiscal Year Ending March 31,            |  | Lease   |     | Lease    
|                                        |  |         |     |          
|2004                                    |  | $       | 310 |           |  | $ | 6,024  | 
|2005                                    |  |         | 243 |           |  |   | 5,775  | 
|2006                                    |  |         | 123 |           |  |   | 3,518  | 
|2207                                    |  |         | 64  |           |  |   | 1,842  | 
|2008 and thereafter                     |  |         | 53  |           |  |   | 1,885  | 
|                                        |  |         |     |           |  |   |        | 
|Total                                   |  | $       | 793 |           |  | $ | 19,044 | 
|                                        |  |         |     |           |  |   |        | 
|Less interest                           |  |         | 33  |           |  |   |        | 
|                                        |  |         |     |           |  |   |        | 
|Present value of minimum lease payments |  |         | 760 |           |  |   |        | 
|Less: current portion of finance leases |  |         | 304 |           |  |   |        | 
|                                        |  |         |     |           |  |   |        | 
|Finance leases, net of current portion  |  | $       | 456 |           |  |   |        | 
|                                        |  |         |     |           |  |   |        | 

Rent expense under our operating leases was
approximately $5.5 million, $8.0 million and
$7.5 million for the years ended March 31, 2003, 2002
and 2001, respectively.

14.     Contingencies

On October 28, 1996 we filed suit 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

76



---



##### Table of Contents



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. We have since narrowed our case to the
421 patent, and continue to seek monetary damages for
defendants infringement, equitable relief, and an award of
attorneys fees. Defendants related declaratory
judgment claims are also pending. The court held a claims
construction hearing on September 30, 2002, and issued its
claims construction ruling on February 28, 2003. The Court
has since set a trial date of November 3, 2003. We believe
our remaining claims are meritorious, and we intend to
vigorously pursue this matter.


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
the Companys 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
seeks compensatory damages in excess of $2 million plus
punitive damages and attorneys fees. We deny
Dr. Parikhs allegations and intend to defend the
action vigorously. The arbitration hearing is scheduled for
early 2004.

In July 2002, three former shareholders of
SemiFab, Inc., a corporation that merged with a subsidiary of
ours in February 2001, filed a complaint in San Benito County
Superior Court against us claiming breach of contract,
declaratory relief, conversion, constructive trust, and
injunctive relief. The plaintiffs alleged that we failed to
provide sufficient funding to SemiFab to make specified capital
expenditures, as required by the merger agreement under which
SemiFab was acquired. They further alleged that they were
entitled to receive approximately 450,000 shares of our
stock pursuant to the achievement of milestones on specified
dates. The plaintiffs sought the shares of common stock, plus
interest, attorney fees and other relief. We denied that we
failed to fulfill our obligations under the merger agreement.
Following mediation, we and the plaintiffs entered into a
settlement agreement that disposed of the matter.

15.     Related Party
Transactions

At March 31, 2003, we held notes from two
former employees and two current employees totaling
$0.7 million. At March 31, 2002, we held notes from
two former employees totaling $0.2 million and notes from
four current employees totaling $0.9 million. Also at
March 31, 2002, we held two notes receivable from a former
executive officer totaling $0.8 million. These two notes
were paid off in fiscal 2003. One other note was transferred in
connection with the sale of a business. Approximately
$0.3 million and $0.6 million of the notes receivable
are secured by deeds of trust on certain real property and/or
pledged securities of Asyst owned by the employees and are
included in other assets at March 31, 2003 and
March 31, 2002, respectively.

In April 2003 Asyst Shinko acquired the AMHS
portion of Shinko Technologies, Inc. from Shinko, our 49% joint
venture partner. Shinko Technologies provided service and
support to Shinko customers in the United States of America. The
acquired subsidiary was named Asyst Shinko America. The purchase
price of approximately $2.3 million was based on the
estimated fair value of assets less liabilities acquired.

Our majority owned subsidiary, ASI, has certain
transactions with the minority shareholder, Shinko. At
March 31, 2003, significant balances due from and owed to
Shinko were (dollars in thousands):

|                                          |  |   |        |  
|----------------------------------------- |  | - | ------ | -
|Accounts and notes receivable from Shinko |  | $ | 391    |  
|Accounts payable due to Shinko            |  | $ | (8,500 | )
|Accrued liabilities due to Shinko         |  | $ | (755   | )

77



---



##### Table of Contents



In addition, ASI purchased various administrative
and IT services from Shinko in order to provide for an orderly
transition. During the year ended March 31, 2003, sales to
and purchases from Shinko were (dollars in thousands):

|                   |  |   |       | 
|------------------ |  | - | ----- | 
|Sales              |  | $ | 203   | 
|Material purchases |  | $ | 3,285 | 
|Services purchased |  | $ | 4,421 | 

78



---



##### Table of Contents



SCHEDULE II

ASYST TECHNOLOGIES, INC. AND
SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

|                     |                                                               |                |   |             |  |            |   |          |  |         |    |        |   |  |   |       |  |  |   |        | 
|-------------------- | ------------------------------------------------------------- | -------------- | - | ----------- |  | ---------- | - | -------- |  | ------- | -- | ------ | - |  | - | ----- |  |  | - | ------ | 
|                     |                                                               |                |   | Charged     |  |            |   |          |  |        
|                     |                                                               | Balance        |   | to/         |  |            |   |          |  | Balance
|                     |                                                               | Beginning      |   | Recovery    |  |            |   |          |  | End    
|                     |                                                               | of Year        |   | of Expenses |  | Deductions |   | Acquired |  | of Year
|                     |                                                               |                |   |             |  |            |   |          |  |        
|                     |                                                               |               
|                     |                                                               | (In thousands)
|Accounts Receivable: |                                                               |                |   |             |  |            |   |          |  |         |    |        |   |  |   |       |  |  |   |       
|                     | Reserve for doubtful accounts, March 31, 2001                 |                | $ | 2,809       |  |            | $ | 2,279    |  |         | ($ | 1,533  | ) |  | $ | 240   |  |  | $ | 3,795  | 
|                     | Reserve for doubtful accounts, March 31, 2002                 |                | $ | 3,795       |  |            | $ | 1,155    |  |         | ($ | 787    | ) |  | $ | 35    |  |  | $ | 4,198  | 
|                     | Reserve for doubtful accounts, March 31, 2003                 |                | $ | 4,198       |  |            | $ | 488      |  |         | ($ | 1,160  | ) |  | $ | 1,354 |  |  | $ | 4,880  | 
|Inventory:           |                                                               |                |   |             |  |            |   |          |  |         |    |        |   |  |   |       |  |  |   |       
|                     | Reserve for excess and obsolete inventory,
    March 31, 2001 |                | $ | 11,763      |  |            | $ | 16,457   |  |         | ($ | 101    | ) |  |   |      |  |  | $ | 28,119 | 
|                     | Reserve for excess and obsolete inventory,
    March 31, 2002 |                | $ | 28,119      |  |            | $ | 12,810   |  |         | ($ | 8,225  | ) |  |   |      |  |  | $ | 32,704 | 
|                     | Reserve for excess and obsolete inventory,
    March 31, 2003 |                | $ | 32,704      |  |            | $ | 4,536    |  |         | ($ | 31,342 | ) |  |   |      |  |  | $ | 5,898  | 

79



---



##### Table of Contents






SIGNATURES

Pursuant to the requirements 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.



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



| |     |                      
| | --- | ---------------------
| | By: | /s/ GEOFFREY G. RIBAR

| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| |                                                                                              
| | Geoffrey G. Ribar                                                                            
| | Senior Vice President                                                                        
| | Chief Financial Officer                                                                      
|
| | Signing on behalf of the registrant and as the
    principal accounting and financial officer

Date: June 30, 2003

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 30, 2003
|                                          
|/s/ GEOFFREY G. RIBARGeoffrey G. Ribar     |  | Senior Vice President and Chief Financial
    Officer (Principal Financial and Accounting Officer) |  | June 30, 2003
|                                          
|/s/ P. JACKSON BELLP. Jackson Bell         |  | Director                                                                                           |  | June 30, 2003
|                                          
|/s/ STANLEY GRUBELStanley Grubel           |  | Director                                                                                           |  | June 30, 2003
|                                          
|/s/ ROBERT A. MCNAMARARobert A. McNamara   |  | Director                                                                                           |  | June 30, 2003
|                                          
|/s/ ANTHONY E. SANTELLIAnthony E. Santelli |  | Director                                                                                           |  | June 30, 2003
|                                          
|/s/ WALTER W. WILSONWalter W. Wilson       |  | Director                                                                                           |  | June 30, 2003
|                                          
|/s/ TSUYOSHI KAWANISHITsuyoshi Kawanishi   |  | Director                                                                                           |  | June 30, 2003

80



---



##### Table of Contents






CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE
OFFICER

I, Stephen S. Schwartz, certify that:

1.     I have reviewed
this annual report on Form 10-K of Asyst Technologies, Inc.;

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

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

4.     The
registrants other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | (b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | (c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

5.     The
registrants other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrants
auditors and the audit committee of registrants board of
directors (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

6.     The
registrants other certifying officer and I have indicated
in this annual report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.



| |                                          
| | -----------------------------------------
| | Date: June 30, 2003                      
|
| | /s/ STEPHEN S. SCHWARTZ                  
| |                                          
| | Stephen S. Schwartz,                     
| | President and Chief Executive
    Officer

81



---



##### Table of Contents






CERTIFICATION OF SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER

I, Geoffrey G. Ribar, certify that:

1.     I have reviewed
this annual report on Form 10-K of Asyst Technologies, Inc.;

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

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

4.     The
registrants other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | (b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | (c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

5.     The
registrants other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrants
auditors and the audit committee of registrants board of
directors (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

6.     The
registrants other certifying officer and I have indicated
in this annual report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.



| |                          
| | -------------------------
| | Date: June 30, 2003      
|
| | /s/ GEOFFREY G. RIBAR    
| |                          
| | Geoffrey G. Ribar,       
| | Senior Vice President and
| | Chief Financial Officer  

82



---



##### Table of Contents






EXHIBIT INDEX

|        |    |                         |  |                                                                                                                                                                                                                                                                             
|------- | -- | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 2  | .2(1)                   |  | Agreement and Plan of Merger and Reorganization
    among the Company, PSTI Merger SubAcquisition Corp., Progressive
    System Technologies, Inc., Advent International
    Investor 11, Envirotech Fund I and Global Private
    Equity Fund 11, dated as of June 2, 1999.
|        | 2  | .3(2)                   |  | Stock Purchase Agreement among the Company, Palo
    Alto Technologies, Inc., or PAT, the Shareholders of PAT and the
    option holders of PAT, dated August 27, 1999.                                                                                                     
|        | 2  | .4(3)                   |  | Agreement for Sale and Purchase of Common Stock
    between the Company and MECS Corporation, dated
    September 27, 1999.                                                                                                                                                 
|        | 2  | .5(4)                   |  | Amended Agreement between the Company and MECS
    Corporation, dated March 23, 2000.                                                                                                                                                                                       
|        | 2  | .6(5)                   |  | Agreement and Plan of Merger and Reorganization,
    dated as of December 7, 2000, among Asyst Technologies,
    Inc., Ramp Acquisition Corp., Advanced Machine Programming,
    Inc., New AMP LLC, Matlock Charles Rowe & Company and
    the Selling Shareholders.        
|        | 2  | .7(6)                   |  | Agreement and Plan of Merger and Reorganization,
    dated as of December 7, 2000, among Asyst Technologies,
    Inc., Tin Man Acquisition Corp., SemiFab, Inc. and certain
    principal shareholders of SemiFab.                                                          
|        | 2  | .8(7)                   |  | Agreement and Plan of Merger and Reorganization,
    dated as of May 22, 2001, among Asyst Technologies, Inc.,
    Gem Acquisition Corp., GW Associates, Inc. and John S. Ghiselli.                                                                                         
|        | 2  | .9(22)                  |  | Asset Purchase Agreement among Asyst
    Technologies, Inc., Asyst Connectivity Technologies, Inc. and
    Domain Logix Corporation, dated as of April 9, 2002.                                                                                                             
|        | 2  | .10**                   |  | 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 Right Agent, dated June 25, 1998.                                                                                                                                                                       
|        | 4  | .2(1)                   |  | Common Stock Purchase Agreement, 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 State Street Bank and
    Trust Company of California, N.A.                                                                                                                              
|        | 4  | .5(19)                  |  | Amendment to Rights Agreement among the Company
    and Bank of Boston, N.A. as rights agent, dated
    November 31, 2001.                                                                                                                                                  
|        | 10 | .1(8)                   |  | Form of Indemnity Agreement entered into between
    the Company and its directors and officers.                                                                                                                                                                            
|        | 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 | .10(14)                 |  | Secured Promissory Note between the Company and
    Dennis Riccio, dated November 16, 1998.                                                                                                                                                                                 
|        | 10 | .11(14)                 |  | Secured Promissory Note between the Company and
    Dennis Riccio, dated February 1, 1999.                                                                                                                                                                                  
|        | 10 | .12(13)                 |  | Employment and Compensation Agreement between the
    Company and Mihir Parikh, dated April 1, 1999.                                                                                                                                                                        
|        | 10 | .13(2)                  |  | Lease Agreement between Aetna Life Insurance
    Company and Hine Design, Incorporated, dated August 4, 1995.                                                                                                                                                               



---



##### Table of Contents



|        |    |                         |  |                                                                                                                                                                                                                    
|------- | -- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .14(2)                  |  | Industrial Space Lease Agreement between the
    Company and PEN Associates, dated November 13, 1995.                                                                                                              
|        | 10 | .15(2)                  |  | Lease Agreement between SL-6 Partners, Ltd. and
    Progressive System Technologies, Inc. dated November 20,
    1995.                                                                                             
|        | 10 | .16(2)                  |  | Sublease Agreement between Progressive System
    Technologies, Inc. and Group, Inc., dated December 3, 1996.                                                                                                      
|        | 10 | .17(2)                  |  | Industrial Space Lease Agreement between the
    Company and PEN Associates, dated December 14, 1997.                                                                                                              
|        | 10 | .19(2)                  |  | Amendment to Lease Agreement between the Company
    and the Kato Road Partners, dated July 30, 1999.                                                                                                              
|        | 10 | .20(2)                  |  | Cooperation Agreement between the Company and
    MECS Corporation, dated August 5, 1999.                                                                                                                          
|        | 10 | .21(15)                 |  | Lease agreement between the Company and Exar
    Corporation, dated October 18, 1999.                                                                                                                              
|        | 10 | .22(16)                 |  | Employment Agreement between the Company and
    James C. Mitchener, Ph.D., dated March 28, 2000.                                                                                                                  
|        | 10 | .23(17)                 |  | Employment Agreement between the Company and Pat
    Boudreau, dated May 25, 2000.                                                                                                                                 
|        | 10 | .24(17)                 |  | Master Lease between the Company and Lease Plan
    North America, Inc., dated June 30, 2000.                                                                                                                      
|        | 10 | .25(7)                  |  | Second Amended and Restated Participation
    Agreement among the Company, Lease Plan North America, Inc., ABN
    Amro Bank N.V., and Certain Other Banks and Financial
    Institutions, dated February 21, 2001.
|        | 10 | .26(7)                  |  | First Amendment to Second Amended and Restated
    Participation Agreement and Other Operative Documents and
    Termination of Certain Operative Documents, dated May 25,
    2001.                               
|        | 10 | .27(7)                  |  | Employment Agreement between the Company and
    Stephen S. Schwartz, Ph.D., dated January 11, 2001.                                                                                                               
|        | 10 | .28(11)*                |  | Agreement on Bank Transactions between Asyst
    Japan, Inc., or AJI, and Tokyo Mitsubishi Bank dated
    March 13, 2001.                                                                                          
|        | 10 | .29(11)*                |  | Cash Consumer Debtor and Creditor Agreements
    between AJI and The Tokai Bank, Ltd. dated December 6, 1999
    and March 23, 2001.                                                                               
|        | 10 | .30(11)*                |  | Banking Consent & Agreement between
    MECS, K.K. and Tokai Bank, K.K. dated November 30, 1998,
    December, 6, 1999.                                                                                            
|        | 10 | .31(11)*                |  | Banking Consent & Agreement between
    MECS, K.K. and Ogaki Kyoritsu Bank dated November, 14, 1994.                                                                                                               
|        | 10 | .32(11)*                |  | Agreement on Bank Transactions between AJI and
    The Sumitomo Bank dated November 13, 2001.                                                                                                                      
|        | 10 | .33(18)                 |  | Palo Alto Technologies, Inc. 1997 Stock Plan and
    related stock option agreement.                                                                                                                               
|        | 10 | .34(18)                 |  | Progressive System Technologies, Inc. 1995 Stock
    Option/ Stock Issuance Plan and related notice document.                                                                                                      
|        | 10 | .35(19)                 |  | Employment Separation Agreement between the
    Company and Dennis Riccio dated February 28, 2002.                                                                                                                 
|        | 10 | .36(19)                 |  | Second Amended and Restated Secured Promissory
    Note between the Company and Dennis Riccio dated April 12,
    2002.                                                                                            
|        | 10 | .37(19)                 |  | Amended and Restated Secured Promissory Note
    between the Company and Dennis Riccio dated April 12, 2002.                                                                                                       
|        | 10 | .38(20)*                |  | Share Purchase Agreement between Shinko Electric
    Co., Ltd. and Asyst Japan Inc., dated as of May 24, 2002.                                                                                                     
|        | 10 | .39(20)*                |  | Shareholders Agreement between Shinko Electric
    Co., Ltd. and Asyst Japan Inc., dated as of May 24, 2002.                                                                                                       
|        | 10 | .40(20)                 |  | Manufacturing Services and Supply Agreement among
    the Company and Solectron Corporation and its subsidiaries and
    affiliates, dated as of September 5, 2002.                                                
|        | 10 | .41(20)                 |  | Loan and Security Agreement between the Company
    and Comerica Bank  California, dated as of
    October 1, 2002.                                                                                               



---



##### Table of Contents



|        |    |                         |  |                                                                                                                                                                                                                                                                                                                 
|------- | -- | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .42(20)                 |  | Amendment No. 1 to Loan and Security
    Agreement between the Company and Comerica Bank 
    California, dated as of November 8, 2002.                                                                                                                                                                        
|        | 10 | .43(21)*                |  | Amendment No. 1 to Shareholders Agreement
    between Shinko Electric Co., Ltd. and Asyst Japan Inc., dated as
    of October 16, 2002.                                                                                                                                                                         
|        | 10 | .44**                   |  | Patent Assignment and Cross-License and Trademark
    License Agreement among the Company, Entegris Cayman Ltd. and
    Entegris, Inc., dated as of February 11, 2003.                                                                                                                                          
|        | 16 | .1(23)                  |  | Letter from Arthur Andersen LLP to the Securities
    and Exchange Commission dated April 2, 2002.                                                                                                                                                                                                              
|        | 21 | .1                      |  | Subsidiaries of the Company.                                                                                                                                                                                                                                                                                    
|        | 23 | .1                      |  | Consent of Independent Accountants,
    PricewaterhouseCoopers LLP.                                                                                                                                                                                                                                             
|        | 99 | .1***                   |  | Certificate by the Chief Executive Officer and
    the Chief Financial Officer of the Company as required by
    Section 906 of the Public Company Accounting Reform and
    Investor Protection Act of 2002 (18 U.S.C.
    Section 1350, as adopted) (the Sarbanes-Oxley Act of 2002),
    dated June 30, 2003.



---



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



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



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | *** | This certification accompanies the
    Form 10-K to which it relates, is not deemed filed with the
    SEC and is not to be incorporated by reference into any filing
    of the Company under the Securities Act of 1933, as amended, or
    the Securities Exchange Act of 1934, as amended (whether made
    before or after the date of the Form 10-K), irrespective of
    any general incorporation language contained in such filing.
|
| | (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.     



---



##### Table of Contents





|     |                                                                                                                                                                                                                                        
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 Quarterly
    Report on Form 10-Q for the quarter ended June 30,
    1999, filed with the Securities Exchange Commission on
    August 16, 1999, and incorporated herein by reference.           
|    
|(15) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended December 31,
    1999, filed with the Securities Exchange Commission on
    February 14, 2000, and incorporated herein by reference.     
|    
|(16) | Previously filed as an Exhibit to our Annual
    Report on Form 10-K for the fiscal year ended
    March 31, 2000, filed with the Securities Exchange
    Commission on June 29, 2000, and incorporated herein by
    reference.       
|    
|(17) | Previously filed as an Exhibit to our Quarterly
    Report on Form 10-Q for the quarter ended June 30,
    2000, filed with the Securities Exchange Commission on
    August 14, 2000, and incorporated herein by reference.           
|    
|(18) | 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.                 
|    
|(19) | 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.       
|    
|(20) | 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.
|    
|(21) | 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.     
|    
|(22) | 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.                    
|    
|(23) | Previously filed as an Exhibit to our Current
    Report on Form 8-K, filed with the Securities Exchange
    Commission on April 4, 2002, and incorporated herein by
    reference.