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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             -----------------------

                                  FORM 10-K/A-2
                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(MARK ONE)
   |X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

            FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2001

                                       OR

   [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

            FOR THE TRANSITION PERIOD FROM           TO

                          COMMISSION FILE NUMBER 0-8623

                          ROBOTIC VISION SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

              DELAWARE                                   11-2400145
    (State or Other Jurisdiction                      (I.R.S. Employer
  of Incorporation or Organization)                  Identification No.)

                   5 SHAWMUT ROAD, CANTON, MASSACHUSETTS 02021
                    (Address of Principal Executive Offices)

        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (781) 302-2439

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

      TITLE OF EACH CLASS        NAME OF EACH EXCHANGE ON WHICH REGISTERED
      -------------------        -----------------------------------------
             None                                None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (TITLE OF CLASS)

    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No [ ]

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|

    The number of shares outstanding of the Registrant's common stock is
41,427,389 as of December 20, 2001.

    The aggregate market value of the voting stock held by non-affiliates of the
Registrant is $41,113,254 as of December 20, 2001.

                       DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
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             DOCUMENT                             LOCATION IN FORM 10-K IN WHICH INCORPORATED
             --------                             -------------------------------------------
<S>                                                               <C>
Registrant's Proxy Statement relating to the                      Part III
   2001 Annual Meeting of Stockholders
</TABLE>

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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

(a) GENERAL

    Robotic Vision Systems, Inc. designs, manufactures and markets machine
vision, automatic identification and related products for the semiconductor
capital equipment, electronics, automotive, aerospace, pharmaceutical and other
industries. Founded in 1976, we use advanced technology including vision-enabled
process equipment, high-performance optics, lighting and advanced hardware and
software to offer a full range of automation solutions. In 1991, we introduced
the first generation of our current principal product, the lead scanner, a
three-dimensional machine vision system, which inspects the physical
characteristics of packaged semiconductors. We believe we currently have the
dominant share of lead scanners used by the semiconductor industry. More
recently, we have become a leader in designing and manufacturing products that
utilize machine vision technology to read two-dimensional bar codes.

    We operate through two divisions -- the Semiconductor Equipment Group and
the Acuity CiMatrix division.

    -- The Semiconductor Equipment Group's primary business is the design,
manufacture and marketing of systems that inspect semiconductor wafer and
assembled chip packages, transfer integrated circuits from one medium to another
and attach solder balls to ball grid array semiconductors. This group serves the
semiconductor capital equipment market.

    -- The Acuity CiMatrix division designs, manufactures and markets two
primary product lines:

       -  machine vision systems, many of which are incorporated onto single
          circuit boards, which are used in the general purpose machine vision
          market for a variety of industrial applications; and

       -  two-dimensional bar code reading systems and related products used in
          the automatic identification and data collection market to provide
          manufacturers of products and components for the semiconductor,
          aerospace, automotive, printed circuit board, pharmaceutical, and
          consumer products businesses with the ability to uniquely identify and
          track single items within groups of thousands or hundreds of thousands
          of seemingly identical items.

    We were pioneers in the development of machine vision and have utilized our
technology to enter the emerging market for two-dimensional bar code readers. We
developed the technology and own the patents to Data Matrix, a two-dimensional
bar code symbology that can be marked directly onto parts and components. We
placed the Data Matrix symbology into the public domain to the extent necessary
to enable compliance with standards promulgated for various industries. We
retain patent rights for the use of Data Matrix in certain applications,
including biometrics.

    The Semiconductor Equipment Group, has facilities in Hauppauge, New York;
Quebec, Canada; New Berlin, Wisconsin and Tucson, Arizona. The Acuity CiMatrix
division is located in Canton, Massachusetts, with additional facilities in
Cherry Hill, New Jersey and Nashua and Weare, New Hampshire.

    On November 29, 2000, we acquired the outstanding shares of Abante
Automation, Inc. ("Abante") for approximately $1,850,000 in cash, a twelve-month
note of $1,500,000 at 8% interest and recorded the net present value of future
minimum payments of $500,000 per year for 5 years using a discount rate of 8%.
Abante designs, manufactures and markets machine vision systems for
three-dimensional inspection in the semiconductor and electronics industries.

    On January 3, 2001, we acquired the outstanding shares of Auto Image ID,
Inc. ("AIID") for approximately $1,200,000 in cash and three-year notes payable
at $1,855,000 per year at prime rate. AIID designs, manufactures and markets
products for reading direct part marks and two-dimensional bar codes.

    As of December 15, 2001, we sold our one-dimensional material handling
product line ("material handling business"), which had been part of our Acuity
CiMatrix division, to affiliates of SICK AG of Germany ("SICK"). The material
handling business designs, manufactures and markets one-dimensional bar code
reading and machine vision systems and related products used in the automatic
identification and data collection market to track packages for the parcel
delivery services and material handling industries. The sale price was $11.5
million which includes the right to receive $500,000 following the expiration of
a 16 month holdback to protect the purchaser against the possibility of
non-disclosed liabilities. The costs of the transaction are estimated to be
$500,000. We estimate that we will record a net gain of $7.0 million in the
first quarter of fiscal 2002. The net revenues and income from operations before
corporate charges of the material handling business for the year ended September
30, 2001 were approximately $16.1 million and breakeven, respectively.

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    On November 13, 2001, we signed a letter of intent to sell a second product
line. We expect this transaction to close no later than March 31, 2002. The
revenues and net operating results for this operation were not material to us in
fiscal 2001.

    We were incorporated in New York in 1976 and reincorporated in Delaware in
1977. Our executive offices are located at 5 Shawmut Road, Canton, Massachusetts
02021; our telephone number is (781) 302-2439.

(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

    For the purpose of segment reporting, our management considers us to operate
in two segments servicing the machine vision industry. See Note 11 to the
Consolidated Financial Statements.

(c) NARRATIVE DESCRIPTION OF THE BUSINESS

   INDUSTRY OVERVIEW

    Machine vision refers to the technology using optical sensors and digital
image processing hardware and software to identify, guide, inspect and measure
objects. Machine vision is important for applications in which human vision is
inadequate due to fatigue, visual acuity or speed. In addition, machine vision
is increasingly used to achieve substantial cost savings and improve product
quality. Many types of manufacturing equipment require machine vision because of
the increasing demands for speed and accuracy in manufacturing processes, as
well as the decreasing size and increasing complexity of items being
manufactured.

    The semiconductor capital equipment market represents the largest
application for machine vision products. Machine vision is also extensively used
in general industrial applications such as the manufacture of electronics,
automotive, aerospace, pharmaceutical and consumer products. Increasingly,
machine vision is being utilized in the automatic identification and data
collection market as a complementary or alternative technology to traditional
laser scanning devices for reading bar codes.

   Semiconductor Capital Equipment Market

    Semiconductor capital equipment is sold primarily to companies engaged in
the manufacture of semiconductor devices in order to expand the capacity of
existing facilities as well as to enable the production of more complex, higher
density and smaller designs. Semiconductors, which are also known as chips, ICs,
or integrated circuits, are critical components used to create an increasing
variety of electronic products and systems. The semiconductor manufacturing
process is divided into the front-end fabrication of semiconductor wafers and
the back-end packaging process that involves the assembly, test and inspection
of the integrated circuits. Our semiconductor capital equipment is used
primarily in the back-end of the semiconductor manufacturing process.

    According to the Semiconductor Industry Association (SIA), the semiconductor
market expanded from approximately $50.5 billion in 1990 to $204.4 billion in
2000, representing a compound annual growth rate of approximately 15% during
this period. We believe that this growth resulted primarily from two factors.
The first factor is the proliferation of semiconductor applications due to the
rapidly expanding end-user demand for faster, smaller and more efficient
electronic devices with greater functionality and reliability coupled with an
increasingly broad range of applications. The second factor is the increasing
importance of semiconductors in electronic systems. We believe that these trends
will continue to drive the long-term growth of semiconductors.

    However, the semiconductor market can be cyclical as a result of periodic
oversupply of integrated circuits, resulting in reduction in demand for the
capital equipment used to fabricate, assemble, and inspect chips. This was
evident in 2001, as a combination of lower-than-expected end-user demand and
over-production in 2000 combined to decrease semiconductor industry sales by an
estimated 31.2%, to $140.7 billion. Declines, even of this magnitude, are not
predictable. As late as the end of 2000, the SIA was predicting substantial
growth in 2001. The SIA has predicted a return to modest growth in 2002 ($149.5
billion, or 6.3%), with sales accelerating by more than 20% in 2003 and 2004.
Even with such growth, the SIA does not predict that the semiconductor industry
will surpass its 2000 revenues of $204.4 billion until 2004, when it predicts
industry revenues of $218.3 billion.

    During such downturns, semiconductor companies greatly reduce their levels
of capital spending. Semiconductor production ultimately drives demand for the
capital equipment that supplies chip manufacturers. Like the semiconductor
industry forecasts, predictions for future growth of the semiconductor capital
equipment market have proven to be unreliable. In December 2000, the
Semiconductor Equipment Materials Institute, the trade association for suppliers
of capital equipment to the semiconductor industry, predicted growth of 22% in
2001 on top of the record 83% growth reported in 2000. When final statistics for
2001 are made available (in the first quarter of 2002), the semiconductor
capital equipment industry is likely to have reported sales that were at least
60% lower than those of 2000, with industry orders declining by an even greater
percentage. For 2002, analyst predictions vary widely, with some estimates of a
further decline in semiconductor industry capital spending leading to lower
sales for capital equipment suppliers. In December 2001, the Semiconductor
Equipment Materials Institute predicted flat revenues in 2002 for equipment
manufacturers. The

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most optimistic securities analyst forecast is for a 40% improvement in industry
shipments; the most pessimistic forecast is for a further 20% decline. Analysts
are generally in agreement that the second half of 2002 will show an improvement
over the first half.

    The demand for semiconductor capital equipment is generally driven by two
forces. The first is the need for additional capacity. As more chips are
produced, there is a commensurate need for more equipment to fabricate, test,
package, and inspect those devices. Purchases related to capacity are triggered
when utilization rates exceed approximately 80%. Analyst reports issued in late
November 2001 indicate most back-end facilities are operating with utilization
rates of 50-70% (up from 30-50% in the April -- June 2001 time frame). The
second force influencing demand for semiconductor capital equipment is
technology change. As new generations of chips are designed, they call for ever
smaller, lighter, and lower-profile packages. Thus, there is a need for
equipment to produce advanced chips that is independent of overall rises and
declines in the semiconductor industry.

    The factors that drive the sale of inspection equipment of the kind
manufactured by RVSI include the following:

    -   the general proliferation of advanced package types, such as ball grid
        array and chip-scale packages, and the trend towards miniaturization of
        semiconductor devices;

    -   the desire of semiconductor manufacturers to replace slower, older
        inspection technology with newer, faster generations of equipment;

    -   the desire to maximize capacity and improve efficiencies by minimizing
        floor space requirements and reducing the total number of systems
        employed;

    -   the emerging need to inspect previously uninspected classes of
        semiconductor devices, such as memory chips, due to their increasing
        package complexity; and

    -   the requirement to inspect semiconductors at additional steps within the
        manufacturing process, most notably wafer-scale inspection during the
        application of solder balls for flip-chip packages and package visual
        inspection during the transfer of assembled chips from trays to tubes or
        tape prior to shipment.

    Semiconductor manufacturers are increasingly outsourcing their packaging
requirements to subcontractors. Subcontractors account for an increasing
percentage of semiconductor capital equipment orders as they establish new and
expand existing packaging facilities.

   General Purpose Machine Vision Market

    The electronics industry, including board-level manufacturing, is the second
largest user of machine vision behind the semiconductor industry.
General-purpose machine vision is also actively employed in the automotive,
aerospace, pharmaceutical and consumer products markets. A general-purpose
machine vision system usually consists of a personal computer equipped with
special vision processing software and a vision board connected to a solid-state
video camera. The camera is used to acquire a digital image of the subject in
computer memory. The vision processing hardware and software is used to extract
features from the image, verify the identity of the subject, detect its location
or orientation, inspect for surface defects and perform non-contact
measurements.

    Growth in the general-purpose machine vision market is driven by the need to
guide high-speed automated assembly equipment and inspect manufactured products.
For example, in pharmaceutical manufacturing, machine vision is employed to
inspect and verify packaging, labeling and quantities. In the automotive
industry, machine vision is used in parts identification, component inspection,
assembly verification and robot guidance. We believe that the utilization of
general-purpose machine vision products will continue to increase as products
become smaller and more complex, requiring more accurate measurements.

   Automatic Identification and Data Collection Market

    For RVSI, the automatic identification and data collection market
encompasses products that mark, read and interpret two-dimensional bar codes.
Camera based readers are becoming an integral part of the automatic
identification and data collection market which, according to the Venture
Development Corporation, was an approximate $14.7 billion annual market in 1999
which is estimated to grow to approximately $23.8 billion by 2002, representing
a projected compound annual growth rate of approximately 17.3% over this period.
We believe that the scanning portion of the automated identification and data
collection market will be increasingly penetrated by machine vision
manufacturers, especially in high-density applications such as printed circuit
board manufacturing and parts marking and tracking.

    We believe that increasingly, the bar code scanning industry is converging
with the machine vision industry. Bar codes, most notably in the form of
Universal Product Codes, have been in use since the early 1970s. Traditionally,
bar codes are read with lasers, which measure the width of the lines that make
up a bar code. One-dimensional bar codes are typically limited to storing
sixteen

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alphanumeric characters, can be read in a limited range of orientations and
require high-contrast labels. The advent of two-dimensional bar codes in the
mid-1980s significantly altered the application of bar codes. Two-dimensional
bar codes can store hundreds of alphanumeric characters, can be read in any
orientation and can be marked directly on manufactured parts. These advantages
are critical in providing a high degree of traceability, making two- dimensional
bar codes more flexible than traditional one-dimensional alternatives.
Two-dimensional bar codes are not limited to storing alphanumerics. Any
information, which can be captured digitally, and especially biometric
information, can be converted to a two-dimensional code.

    There are three principal two-dimension symbologies including our Data
Matrix, Symbol Technologies Inc.'s PDF417 format and United Parcel Services'
MaxiCode. We believe that the Data Matrix symbology is well suited for the
component marking market due to its ability to be inscribed on virtually any
surface, including curved, low-reflectivity and matte surfaces, and can be
produced in a fraction of the space of an alternative bar code.

    According to Venture Development Corporation, in 2000, the most recent year
for which statistics are available, the market for two-dimensional bar code
readers was $74.4 million, including $39.4 million for hand-held readers and $35
million for fixed-mount readers. A fundamental growth factor of two-dimensional
symbology is the trend among manufacturers to mark discrete components,
especially in industries such as semiconductor, aerospace and automotive
manufacturing.

    While basic camera-based scanners are capable of reading high contrast and
high quality Data Matrix images, we believe that the broad application of Data
Matrix symbology on parts and components requires the imaging and processing
technology typically associated with machine vision.

   STRATEGY

    Our goal is to grow by continuing to work with leaders in each of our served
markets, anticipating their needs and offering them the most advanced products
and technology. To accomplish this objective, we intend to:

    -   Leverage our leading position in selected semiconductor capital
        equipment market niches. We believe we have the largest installed base
        of products in several segments of the semiconductor capital equipment
        market, such as lead scanners, tape and reel packaging equipment and
        ball grid array assembly machinery. Through our commitment to research
        and product development, we intend to continue to set the industry
        standard for the portions of the semiconductor capital equipment
        markets in which we engage. We intend to capitalize upon our large
        installed base of products and reputation for quality to provide new
        applications within the semiconductor capital equipment market for our
        machine vision technology. As an example, we have already begun to
        leverage our strong relationships with semiconductor manufacturers by
        introducing them to new products from our Acuity CiMatrix division.

    -   Further develop the two-dimensional bar code market for Data Matrix
        symbology. Anticipating that manufacturers will increasingly identify
        and track individual components in order to comply with standards,
        improve product traceability and manage inventories, we placed Data
        Matrix into the public domain to the extent necessary to facilitate its
        adoption as an international standard. We believe markets such as the
        semiconductor, electronics, aerospace and automotive industries will be
        among the earliest users of Data Matrix. We intend to capitalize upon
        our knowledge of both Data Matrix and machine vision by working with the
        leaders in our targeted markets to encourage the use of our family of
        imagers.

    -   Capitalize upon the convergence of the machine vision and bar code
        industries. As two-dimensional bar code systems are adopted for new
        applications, we believe machine vision will increasingly play a key
        role in reading such codes, whether for manufacturing management, unit
        level traceability, or for emerging security applications involving the
        encoding of biometric data. As the industry's supplier of the broadest
        line of machine vision equipment and two-dimensional bar code imagers,
        we believe we are uniquely positioned to offer fully integrated
        automatic identification and data collection systems.

   PRINCIPAL PRODUCTS

    Our products range from state-of-the-art machine vision systems on a circuit
board which can be priced as low as $5,000 to inspection systems with selling
prices greater than $800,000 for bumped-wafers used in advanced semiconductor
packages. Our own sales force sells some of our products; other products are
sold either through manufacturers' representatives or to original equipment
manufacturers for incorporation into customized systems.

   Semiconductor Equipment Group

    Our Semiconductor Equipment Group is comprised of our RVSI Electronics, RVSI
Systemation and RVSI Vanguard subdivisions.

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    The Electronics subdivision, including Abante Automation, supplies
inspection equipment to the semiconductor industry. Our lead scanning systems,
which can be found in most back-end semiconductor manufacturing lines, generally
perform the final inspection of semiconductor packages prior to their
preparation for shipment to the end-user. Our lead scanning systems offer
automated, high-speed, three-dimensional semiconductor package lead inspection
with the added feature of non-contact scanning of the packages in their shipping
trays, which is known as in-tray scanning. The systems use a laser-based, non-
contact, three-dimensional measurement technique to inspect and sort a wide
variety of semiconductor package types, such as quad flat packs, thin quad flat
packs, chip scale packages, wafer scaled products, ball grid arrays and thin
small outline packs in their carrying trays. The system measurements captured by
our systems include coplanarity, total package height, true position spread and
span, as well as lead angle, width, pitch and gap.

    The development of a new kind of integrated circuit, used primarily in high
performance and small form factor applications, has created a new requirement
for high-speed wafer inspection equipment. These ICs, called flip chips,
necessitate ball grid arrays to be applied and inspected at the end of the
front-end fabrication process, as well as the back-end packaging process.
Recognizing this need, in 2000 we introduced the WS-series, a two and
three-dimensional machine vision-based inspection system. We believe that our
WS-1000, WS-2000, and WS-2500 are the most widely used bumped wafer inspection
equipment in use today, and provide the semiconductor industry with the broadest
range of products for bumped wafer inspection.

    Systemation offers semiconductor handling systems, including tape and reel
component processing systems, designed to transfer and inspect a variety of
integrated circuit packages. Systemation's tape and reel packaging product can
be integrated into our lead scanners to collect acceptable products and place
them into packaging media as required by different customers. We believe that
Systemation's expertise in designing and manufacturing systems that transfer
semiconductors between media while providing camera-based machine vision
inspection enables us to further expand the breadth of our product offerings to
the semiconductor market.

    Vanguard is a supplier of ball attach equipment used in ball grid array and
chip scale package assembly for the semiconductor and connection industries.
These devices attach solder balls to the integrated circuit in order to generate
a medium which, when heated, will connect the package to the printed circuit
board. Vanguard's products are deployed on the back-end manufacturing line prior
to our lead scanner testing device. In September 2001, we announced plans to
consolidate the manufacturing of this product into our New York facility from
our Arizona location.

   Acuity CiMatrix division

    The Acuity CiMatrix division designs, manufactures and markets
two-dimensional machine vision systems and lighting products as well as
two-dimensional data collection products and bar code reading systems. These
products are used by a broad range of businesses, including customers in the
semiconductor, electronics, automotive, pharmaceutical and consumer products
industries. The Acuity CiMatrix division also supplies certain machine vision
products to our Semiconductor Equipment Group.

    Our Acuity CiMatrix machine vision systems use processor chips optimized for
vision, software and solid-state video cameras to perform functions such as
measurement, flaw detection and inspection of manufactured products. These
products examine an image of a manufactured product in order to ascertain
physical characteristics, identify deviations and check for identification. For
the general-purpose machine vision market, our Acuity CiMatrix division offers
single-board machine vision systems, which can be tailored to the needs of
specific industries via software modules. Vertical industries currently served
include semiconductor, electronics, automotive and packaging/pharmaceutical.
Acuity CiMatrix's principal machine vision product, Visionscape, was first
introduced in 1998 and today encompasses a family of board-level machine vision
systems. Visionscape is a machine vision product platform on a single printed
circuit board for the Windows PC. This product family is designed to meet the
needs of original equipment manufacturers, which incorporate vision products
into their systems, as well as for direct use by manufacturers on their factory
floor.

    Our Acuity CiMatrix data collection and bar code reading systems use machine
vision to read and collect data from one- and two-dimensional bar codes for
purposes such as process control, traceability and security. Our product
offerings also include both fixed and hand-held two-dimensional camera-based
readers.

    In two-dimensional applications, we have concentrated our efforts on
scanning systems compatible with Data Matrix, a symbology that we believe, has a
number of advantages over other two-dimensional bar codes in the public domain.
We believe that the smaller size of the Data Matrix symbology enables it to be
used in miniaturized applications. Data Matrix is read using machine vision as
compared to traditional laser scanning systems. The machine vision scanning
process enables Data Matrix to exhibit a wider span of character integrity and,
hence, enables Data Matrix to be applied to a variety of surfaces. We believe
that these characteristics make Data Matrix the preferred symbology for
applications in which components need to be marked directly, such as in parts
identification. For example, as part of a move to a paperless manufacturing
process, one of our customers, Pratt & Whitney, an aircraft engine manufacturer,
is now applying two-dimensional bar codes to critical engine components. We
believe that these systems will become increasingly common due to the trend
toward reducing electronic component sizes and the desire to improve the
traceability of each component.

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    By incorporating our expertise in machine vision with our innovations in bar
code technologies, we are uniquely positioned to offer integrated solutions for
a variety of automation needs. We can combine our semiconductor inspection
capabilities with our Data Matrix symbology to serialize semiconductor wafer
chips. Collectively, these capabilities give computers the power of sight.

   MANUFACTURING

    Our manufacturing strategy is to produce internally only those components
that possess a critical technology and subcontract all other components. Our
production facilities are capable of fabricating and assembling total electronic
and electromechanical systems and subsystems. Facilities include assembly and
wiring operations that have the ability to produce intricate electronic
subassemblies, as well as complex wiring harnesses.

    We manufacture products for the Semiconductor Equipment Group in Hauppauge,
New York, Tucson, Arizona and New Berlin, Wisconsin. We announced plans to
consolidate the manufacturing of the Vanguard products from Tucson, Arizona into
Hauppauge, New York. We manufacture products for the Acuity CiMatrix division in
Canton, Massachusetts, Cherry Hill, New Jersey and Weare, New Hampshire. We
maintain comprehensive test and inspection programs to ensure that all systems
meet exacting customer requirements for performance and quality workmanship
prior to delivery.

   MARKETING AND SALES

    Our Semiconductor Equipment Group's marketing strategy focuses on
cultivating long-term relationships with the leading manufacturers of electronic
and semiconductor inspection and quality control equipment. Its marketing
efforts rely heavily on direct sales. The selling cycle for products, generally,
is between six to nine months from initial customer contact to closure. A
lengthier process is often the case in the purchase of an initial unit.
Subsequent purchases require less time and often result in multiple orders.
Group sales activities in the domestic market are handled by direct sales
personnel. The Semiconductor Equipment Group also maintains sales capabilities
in both Europe and the Far East through independent sales representatives and
distributors, providing access to all major markets for electronic and
semiconductor test equipment. Sales and technical support offices are maintained
in the Philippines and Singapore.

    The Acuity CiMatrix division markets its products through a combination of
direct sales personnel, distributors and system integrators. For sales made
through distributors, the Acuity CiMatrix division supports these activities
with direct sales management and technical support personnel. The Acuity
CiMatrix division maintains sales and technical support offices in various
locations in the United States, as well as in the United Kingdom and France.

   ENGINEERING, PRODUCT DEVELOPMENT AND RESEARCH

    We believe that our engineering, product development and research functions
are critical to our ability to maintain our leadership position in our current
markets and to develop new products. As of September 30, 2001 we employed over
160 people who are dedicated to engineering, product development and research
functions.

    Our research and development efforts over recent years have been largely
devoted to continued development of advanced two-dimensional and
three-dimensional vision technology and applications software for use in various
inspection and process control automation. Research and development
expenditures, net of capitalized software development costs, were $28.4 million,
$27.0 million, and $20.5 million for the years ended September 30, 2001, 2000,
and 1999, respectively. In the fiscal years ended September 30, 2001, 2000, and
1999, we capitalized $3.4 million, $4.2 million, and $4.9 million, respectively,
of our software development costs in accordance with the provisions of Statement
of Financial Accounting Standards No. 86.

   SOURCES OF SUPPLY

    To support our internal operations and to extend our overall capacity, we
purchase a wide variety of components, assemblies and services from proven
outside manufacturers, distributors and service organizations. We have not
experienced any significant difficulty in obtaining adequate supplies to perform
under our contracts.

    A number of our components and sub-systems are purchased from single
sources. We believe that alternative sources of supply could be obtained, if
necessary, without major interruption in production. In addition, certain
products or sub-systems developed and marketed by the Acuity CiMatrix division
are incorporated into the Semiconductor Equipment Group's product offerings.


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   PROPRIETARY PROTECTION

    At September 30, 2001, we owned over 100 issued U.S. patents, with
expiration dates ranging from April 2002 to June 2020 and we owned more than 50
foreign patents. We also have various U.S. and foreign registered trademarks.

    We do not believe that our present operations are materially dependent upon
the proprietary protection that may be available to us by reason of any one or
more of such patents. Moreover, as our patent position has not been tested, with
the exception of the litigation referred to elsewhere in this report, we can
give no assurance as to the effectiveness of the protection afforded by our
patent rights.

   CUSTOMERS

    Intel Corporation accounted for 10% of our revenues during the fiscal year
ended September 30, 2001. No customers accounted for more than 10% of sales
during the fiscal years ended September 30, 2000 and 1999.

   BOOKINGS AND BACKLOG

    We define our bookings during a fiscal period as incoming orders deliverable
to customers in the next eighteen months less cancellations. For the twelve
months ended September 30, 2001, bookings were $71.4 million. This compares to
bookings of $229.4 million for the twelve months ended September 30, 2000. The
decline in our bookings in fiscal 2001 is a reflection of reduced demand by
semiconductor industry customers, coupled with a generally uncertain climate for
capital equipment expenditures for all industries. As a general rule, we ship
most products in the quarter in which orders are received. We may report as
bookings orders for future quarters where discounts are tied to quantity
purchases.

    At September 30, 2001 our backlog was $15.3 million, as compared to $36.7
million at September 30, 2000. We believe that most of our backlog at September
30, 2001 will be delivered in the next 12 months. The change in our backlog in
these periods is a reflection of short-term business levels and customer lead
times. Because orders in backlog are subject to cancellation or indefinite
delay, we do not believe that our backlog at any particular time is necessarily
indicative of our long-term future business.

   COMPETITION

    We believe that machine vision has evolved into a new industry over the past
several years, in which a number of machine vision-based firms have developed
successful industrial applications for the technology. We are aware that a large
number of companies, estimated to be upward of 100 firms, entered the industry
in the 1980's and that most of these were small private concerns. Over the last
several years the number of competitors has narrowed to fewer than 25. We
believe this is attributable, to a large extent, to consolidation within the
industry. Our principal competitors are ICOS Vision Systems NV in semiconductor
inspection, August Technology, Inc. in bumped wafer inspection, Ismeca Europe
S.A. in tape and reel handlers and Cognex in machine vision. We believe that we
are a significant competitor in the machine vision industry based upon the
breadth of our product lines and our customer base. The pricing of our
semiconductor inspection systems is somewhat higher, generally, than that of our
competitors, but we do not regard this factor as a significant competitive
disadvantage as customers have historically demonstrated their willingness to
pay our asking prices to obtain features that are unavailable in our
competitors' product offerings or result in lower cost of ownership over the
life of the product.

   EMPLOYEES

    At September 30, 2001 we employed 539 persons, of whom 231 were engineering
and other technical personnel. None of our employees is a member of a labor
union. In connection with the sale of our material handling business as of
December 15, 2001, approximately 70 of our employees became employees of SICK.

(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

    Revenues from unaffiliated customers generated by our European subsidiaries
were $4.5 million, $8.2 million and $10.3 million for the years ended September
30, 2001, 2000 and 1999, respectively.

    Total revenues to customers outside the U.S. were $65.6 million, $158.2
million and $71.4 million for the years ended September 30, 2001, 2000 and 1999,
respectively.


                                       8
<PAGE>
ITEM 3.  LEGAL PROCEEDINGS

          A number of purported securities class actions were filed beginning on
     or about June 11, 2001 against us, Pat V. Costa, Chief Executive Officer,
     and Frank Edwards, our former Chief Financial Officer, in the Federal
     District Court for the District of Massachusetts. All such actions have
     been consolidated by the court and are currently pending as In Re Robotic
     Vision Systems, Inc. Securities Litigation, Master File No. 01-CV-10876
     (RGS). The lead plaintiffs in these actions are Andre K. Tse and Franklin
     G. Griffin. The plaintiffs seek damages for alleged false and misleading
     statements made prior to our announcement that we would restate our
     financial results for fiscal year 2000 and the first quarter of fiscal year
     2001. The defendants have moved to dismiss the complaint in its entirety,
     and that motion has been fully briefed and was argued in July 2002. This
     case remains at a preliminary stage and no discovery proceedings have taken
     place. We believe that these claims are without merit and intend to defend
     vigorously against them.

          On or about August 2, 2001, a vendor of ours, Triphase Automation,
     LLC, filed an action against RVSI Systemation Engineered Products in the
     Federal District Court for the Eastern District of Wisconsin, Case No.
     01-C-0777, seeking damages for our alleged breach of contract based on our
     alleged failure to accept delivery of and pay for products. The action was
     settled effective November 2001. We agreed to pay an outstanding balance of
     approximately $90,000 and to accept delivery of and pay an aggregate of
     approximately $1,100,000 for additional products, over a period to extend
     not later than March 2003.

          On or about July 23, 2001, a vendor of ours, Granite Microsystems,
     Inc., filed an action against us in the Ozaukee County Circuit Court in
     Wisconsin, Case No. 01CV279 B1, seeking damages for our alleged breach of
     contract based on our alleged failure to accept delivery of and pay for
     products. This action was settled in January 2002. We agreed to accept
     delivery of and pay an aggregate of approximately $480,000 for products,
     over a period to extend not later than September 2003.

                                       9
<PAGE>
                                     PART II


                                       10
<PAGE>



ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

    The following selected consolidated financial data below should be read in
conjunction with our consolidated financial statements including the
accompanying notes and Management's Discussion and Analysis of Financial
Condition and Results of Operations, both elsewhere in this report. The data as
of September 30, 2001 and 2000 and for each of the three years in the period
ended September 30, 2001 have been derived from, and should be read in
conjunction with, our audited consolidated financial statements and accompanying
notes, which are contained elsewhere in this report. The Balance Sheet Data as
of September 30, 1999, 1998 and 1997 and the Statement of Operations Data for
each of the two years in the period ended September 30, 1998 have been derived
from our audited financial statements, which are not contained in this Report.

<TABLE>
<CAPTION>

                                                                                      FISCAL YEAR ENDED SEPTEMBER 30,
                                                                        --------------------------------------------------------
                                                                           2001        2000       1999        1998       1997
                                                                        ----------   --------  ----------  ---------   ---------
                                                                                (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA:
<S>                                                                     <C>          <C>       <C>         <C>         <C>
Revenues...........................................................     $  107,845   $223,193  $ 128,230   $ 169,007   $ 169,342
Income (loss) before income taxes..................................     $  (84,406)  $ 10,725  $  (9,258)  $ (40,505)  $   1,393
Provision for income taxes.........................................     $    9,220   $      3  $      --   $      --   $     745
Income (loss) before cumulative effect of accounting change........     $  (93,626)  $ 10,722  $  (9,258)  $ (40,505)  $     648
Cumulative effect of accounting change.............................     $  (10,747)  $     --  $      --   $      --   $      --
Net income (loss)..................................................     $ (104,373)  $ 10,722  $  (9,258)  $ (40,505)  $     648
Basic net income (loss) per share..................................     $    (2.94)  $   0.32  $   (0.38)  $   (1.65)  $    0.03
Diluted net income (loss) per share................................     $    (2.94)  $   0.27  $   (0.38)  $   (1.65)  $    0.03

Net Income (loss) per share:
   Basic...........................................................     $    (2.64)  $   0.32  $   (0.38)  $   (1.65)  $    0.03
   Diluted.........................................................     $    (2.64)  $   0.27  $   (0.38)  $   (1.65)  $    0.03
Cumulative effect of accounting change (1)
   Basic...........................................................     $    (0.30)  $     --  $      --   $      --   $      --
   Diluted.........................................................     $    (0.30)  $     --  $      --   $      --   $      --
Net Income (loss)
   Basic...........................................................     $    (2.94)  $   0.32  $   (0.38)  $   (1.65)  $    0.03
   Diluted.........................................................     $    (2.94)  $   0.27  $   (0.38)  $   (1.65)  $    0.03
Weighted average shares
   Basic...........................................................         35,683     31,431     25,669      24,613      23,718
   Diluted.........................................................         35,683     39,804     25,669      24,613      23,967
</TABLE>


(1) The effect of adopting SAB 101 was to increase fiscal 2001 revenues by
$15,197 and to reduce the loss before cumulative effect of the accounting change
by $8,107 (or $0.23 per share).

<TABLE>
<CAPTION>

                                                                                            AT SEPTEMBER 30,
                                                                        --------------------------------------------------------
                                                                           2001        2000       1999       1998        1997
                                                                        ----------   ---------  ---------  ---------   ---------
SELECTED BALANCE SHEET DATA:
<S>                                                                     <C>          <C>        <C>        <C>         <C>
Current assets......................................................    $   55,353   $ 143,564  $  77,636  $  72,227   $ 110,541
     Total assets...................................................    $   87,947   $ 195,484  $ 123,201  $ 121,571   $ 139,923
Long term debt and other............................................    $    7,240   $   2,499  $   2,855  $   3,059   $   6,414
     Total liabilities..............................................    $   47,448   $  49,924  $  76,106  $  84,774   $  64,346
Prepaid warrants....................................................    $    7,067   $   8,644  $   9,105         --          --
Stockholders' equity................................................    $   33,432   $ 136,916  $  37,990  $  36,797   $  75,577
Working capital (deficit)...........................................    $   15,145   $  96,139  $   4,385  $  (9,488)  $  55,159
</TABLE>

                                       11
<PAGE>


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

OVERVIEW

    We are involved in the development, manufacture, marketing and servicing of
machine vision equipment for a variety of industries, including the global
semiconductor industry. Demand for products can change significantly from period
to period as a result of numerous factors including, but not limited to, changes
in global economic conditions, supply and demand for semiconductors, changes in
semiconductor manufacturing capacity and processes and competitive product
offerings. Due to these and other factors, our historical results of operations
including the periods described herein may not be indicative of future operating
results.

    During fiscal 2001, we made two acquisitions. On November 29, 2000, we
acquired the outstanding shares of Abante Automation, Inc. ("Abante") for
approximately $1.85 million in cash, a twelve-month note for $1.5 million at 8%
interest and recorded the net present value of future minimum payments of $0.5
million per year for five years using a discount rate of 8%. Abante designs,
manufactures and markets machine vision systems for three-dimensional inspection
in the semiconductor and electronics industries. Also, on January 3, 2001, we
acquired the outstanding shares of Auto Image ID, Inc. ("AIID") for
approximately $1.2 million in cash and three-year notes payable at $1.86 million
per year at prime rate. AIID designs, manufactures and markets products for
reading direct part marks and two-dimensional bar codes. The operations of
Abante and AIID prior to their acquisitions by us were not material to our
statements of operations.

    During the fiscal year, we changed our method of accounting for revenue to
comply with SEC Staff Accounting Bulletin No. 101 ("SAB 101"). Previously, we
generally recognized revenue upon shipment to the customer, and accrued the cost
of providing any undelivered services associated with the equipment at the time
of revenue recognition. Under the new accounting method, adopted retroactive to
October 1, 2000, we now recognize revenues based on the type of equipment that
is sold and the terms and conditions of the underlying sales contracts.

    Revenue for established products that have previously satisfied customer
acceptance requirements and that provide for full payment tied to shipment is
generally recognized upon shipment and passage of title. In those cases,
installation is not deemed to be essential to the functionality of the equipment
since installation does not involve significant changes to the features or
capabilities of the equipment or building complex interfaces and connections. In
addition, the customer or other vendors could install the equipment and
generally the cost of installation approximates only 1% to 2% of the sales value
of the related equipment. Revenue for products that have not previously
satisfied customer acceptance requirements is recognized upon customer
acceptance. In certain instances, customer payment terms may provide that a
minority portion of the equipment purchase price be paid only upon customer
acceptance. In those situations, the portion of the purchase price related to
customer acceptance is generally recognized upon customer acceptance with the
majority portion of revenue and the entire product cost recognized upon shipment
and passage of title. We provide for warranty costs at the time the related
revenue is recognized. Equipment installation is typically provided by us and is
generally not billed separately to the customer. Service revenue is recognized
ratably over the period of the related contract. The gross profit on sales that
are not recognized is recorded as deferred gross profit on the consolidated
balance sheets.

    In accordance with SAB 101, the new method of accounting has not been
applied retroactively to transactions that occurred prior to fiscal 2001. The
cumulative effect adjustment of the change in accounting as of October 1, 2000
was a charge to operations of $10.7 million, which is included in operations for
the year ended September 30, 2001. For the year ended September 30, 2001,
revenues were $107.8 million. Revenue amounting to $15.2 million that was
previously recognized and included in the cumulative effect adjustment at
October 1, 2000 was recognized in fiscal 2001. The discussion below compares
2001 results of operations adjusted for the impact of SAB 101 to 2000 results
that do not reflect the application of SAB 101.

   FISCAL YEARS ENDED SEPTEMBER 30, 2001 AND 2000

    For the three month period ended September 30, 2001, bookings were $15.0
million and revenues were $16.5 million. This compares to bookings of $13.5
million and revenues of $21.1 million for the three month period ended June 30,
2001 and to bookings of $47.2 million and revenues of $59.2 million for the
three month period ended September 30, 2000. The decline in our bookings in the
last year is a reflection of a sharp semiconductor industry slowdown, as a
result of which our customers have decreased demand for our products.

    Our revenues were $107.8 million for the fiscal year ended September 30,
2001, compared to $223.2 million for the fiscal year ended September 30, 2000, a
decrease of 51.7%. The lower revenues were associated with decreased shipments
of semiconductor inspection and handling equipment, as well as vision reading
systems sold primarily to the semiconductor industry.

    In fiscal 2001, revenues for our Semiconductor Equipment Group were $71.8
million, which represented 66.6% of total revenues, compared to $175.4 million
or 78.6% of revenues in fiscal 2000. In the Semiconductor Equipment Group,
revenues fell to $8.7 million

                                       12
<PAGE>

for the three month period ended September 30, 2001, which compares to revenues
of $11.9 million in the three month period ended June 30, 2001, $22.0 million in
the three month period ended March 31, 2001, $29.2 million in the three month
period ended December 31, 2000, $46.4 million in the three month period ended
September 30, 2000 and $47.9 million for the three month period ended June 30,
2000. The decrease in our revenues in the fourth quarter of fiscal 2001 reflects
a continued dramatic slowdown in demand from the semiconductor capital equipment
industry.

    In fiscal 2001, revenues for our Acuity CiMatrix division were $36.0
million, which is 33.4% of total revenue, compared to $47.8 million or 21.4% of
revenues in fiscal 2000. In the Acuity CiMatrix division revenues declined to
$7.8 million for the three months ended September 30, 2001, which compares to
revenues of $9.2 million in the three months ended June 30, 2001, $9.3 million
in the three months ended March 31, 2001, $9.7 million in the three months ended
December 31, 2000, $12.8 million in the three months ended September 30, 2000
and $13.2 million for the three months ended June 30, 2000. The continued lower
level of revenues in the fourth quarter of fiscal 2001 reflects a reduction in
demand for our machine vision products sold to the semiconductor industry,
delays in the implementation of direct part mark reading programs and a general
reluctance to commit to capital programs on the part of the industries we
largely serve, including the electronics industry.

    Our gross profit margin at both divisions declined during fiscal 2001. Our
gross profit percentage declined to 16.5% in fiscal 2001 as compared with 44.3%
for fiscal 2000. The gross profit margin, as a percentage of revenues, for the
Semiconductor Equipment Group decreased to 14.4% for fiscal 2001 as compared to
41.6% of revenues for fiscal 2000. Gross profit margin, as a percentage of
revenues, decreased for the Acuity CiMatrix division to 17.7% in fiscal 2001, as
compared to 50.1% for fiscal 2000. The two major reasons for the decrease
include an inventory provision of $16.5 million or 15.3%, primarily charged for
inventory in excess of current requirements, and a delay in reducing
manufacturing infrastructure as sales volume declined. We could not foresee the
severity of the downturn and we were reluctant to let go skilled people in what
was then a tight labor market, so we did not severely cut staffing levels early
in the fiscal year.

    In fiscal 2001, we recorded inventory provisions of $17.3 million as
compared to $1.4 in fiscal 2000. Because of the significance of the losses
incurred in fiscal 2001, we have reported a charge of $16.5 million as a special
component of cost of revenues, representing the losses incurred primarily for
excess and obsolete inventories related principally to semiconductor inspection
and handling equipment and some Acuity CiMatrix products. The $16.5 million
provision reflects reduced demand for products as a result of the sharp
semiconductor industry downturn and the general reduction in capital spending in
the industry that we serve. The remaining provision in fiscal 2001 and the
inventory provision in fiscal 2000 reflect normal recurring losses resulting
from excess and obsolescence. We review and evaluate the excess, obsolescence
and net realizable value of inventories on a quarterly basis. The carrying value
of the inventory is compared to the future realizable value of such products
given sales prices and revenue projections. As a result of these quarterly
analyses, we recorded a $10.3 million inventory provision during the three month
period ended March 31, 2001, a $0.7 million inventory provision during the three
month period ended June 30, 2001 and an additional $5.5 million inventory
provision during the three month period ended September 30, 2001. Substantially
all inventory provisions related to excess inventories. We believe that these
provisions have reduced the inventories to their appropriate net realizable
value. However, there can be no assurance that we will not have to take
additional inventory provisions in the future, based upon a number of factors
including: changing business conditions; shortened product life cycles; the
introduction of new products and the effect of new technology.

    Excluding the $16.5 million inventory provision, our gross profit percentage
declined to 32.0% in fiscal 2001 as compared with 44.3% for fiscal 2000. In
addition, the Semiconductor Equipment Group gross profit percentage decreased to
29.4% for fiscal 2001 as compared to 41.6% of revenues for fiscal 2000. Also,
the Acuity CiMatrix division gross profit percentage decreased to 31.3% for
fiscal 2001 as compared to 50.1% of revenues for fiscal 2000. The reason for the
decline in gross margins, excluding the inventory provisions, was the same as
for the fiscal year.

    Our research and development expenses were $28.4 million, or 26.3% of
revenues, in fiscal 2001, compared to $27.0 million, or 12.1% of revenues, in
fiscal 2000. The higher level of expense reflects spending associated with our
continued efforts to maintain our market position and ensure we have the
appropriate products for our customers when demand returns.

    In our Semiconductor Equipment Group, the research and development projects
included work on the new wafer scanning inspection systems and enhanced
capabilities for our lead scanning systems, as well as a new line of
ball-placement equipment. At Acuity CiMatrix, we continued to invest in
enhancing our two-dimensional barcode reading products and expanding our machine
vision platform, Visionscape. During fiscal 2001, we capitalized $3.4 million of
software development costs, in accordance with SFAS No. 86, compared to $4.2
million in fiscal 2000.

    Our selling, general and administrative expenses were $54.3 million, or
50.4% of revenues, in fiscal 2001, compared to $59.7 million, or 26.8% of
revenues, in fiscal 2000. The current year's level of expenses reflects a
combination of the higher level of fixed costs on a lower revenue base, which
was partially offset by a lower level of variable selling expenses associated
with the decrease in revenues and a portion of the cost reductions taken
throughout fiscal year 2001 which are discussed below.

                                       13
<PAGE>

    We recorded a provision for doubtful accounts during fiscal 2001 of $1.1
million as a result of collection problems arising from the downturn in the
economy. The provision for doubtful accounts was determined based upon quarterly
analyses of account collectibility. These analyses included reviewing payment
history, known bankruptcies and customer responses to calls on delayed payments.
In the prior year, the amount added to the allowance for doubtful accounts was
$0.7 million. Management has increased collection efforts through increased
monitoring of accounts receivable and weekly collection calls by credit
managers.

    In response to the lower level of revenues in fiscal 2001, we took steps to
reduce our operating costs. In addition, we reviewed our long-lived assets for
impairment. A summary of these restructuring costs and impairment charges are as
follows:

<TABLE>
<CAPTION>


                                                                     CHARGES IN               CASH    NON-CASH   LIABILITY AT
                                                                       FISCAL     AMOUNTS   AMOUNTS   AMOUNTS    SEPTEMBER 30,
(IN THOUSANDS)                                                          2001      REVERSED  INCURRED  INCURRED      2001
                                                                     ----------   --------  --------  ---------  ------------
<S>                                                                    <C>          <C>      <C>      <C>           <C>
RESTRUCTURING
Severance payments to employees..................................      $ 3,661      $ 124    $ 2,620  $     --      $  917
Exit costs from facilities.......................................        1,572        853        359        --         360
Write-off of other tangible and intangible assets................          905         --         --       905          --
                                                                       -------      -----    -------   -------      ------
Subtotal restructuring...........................................        6,138        977      2,979       905       1,277
                                                                       -------      -----    -------   -------      ------
IMPAIRMENTS
Capitalized software.............................................        3,243         --         --     3,243          --
Purchased technologies...........................................        4,160         --         --     4,160          --
Goodwill.........................................................        3,915         --         --     3,915          --
                                                                       -------      -----    -------   -------      ------
Write-off of other tangible assets...............................          857         --         --       857          --
                                                                       -------      -----    -------   -------      ------
Subtotal impairments.............................................       12,175         --         --    12,175          --
                                                                       -------      -----    -------   -------      ------
Total............................................................      $18,313      $ 977    $ 2,979   $13,080      $1,277
                                                                       =======      =====    =======   =======      ======
</TABLE>

Restructuring -- We experienced a significant decline in orders and revenues
commencing with the first quarter of fiscal 2001. Our response was to develop
and implement headcount reduction plans designed to reduce costs and expenses.
As the downturn in the economy worsened, we reviewed our operational plan and
made further headcount reductions. During all quarters of fiscal 2001, we made
decisions to terminate employees in response to lower revenues. In addition to
headcount reductions, we exited certain facilities, including substantially all
European locations. The remaining lease obligations were accrued when an exit
plan was determined. Certain tangible and intangible assets were also abandoned
in connection with the restructuring efforts. Restructuring charges, totaling
approximately $5.2 million after reversals, were recorded during fiscal 2001.
The charges can be summarized as follows:

-        During the quarter ended December 31, 2000, approximately $1.5 million
         of employee severance was recorded. Headcount reductions were made in
         the Semiconductor Equipment Group ,the Acuity CiMatrix division , as
         well as within the Corporate staff. Approximately 110 employees were
         terminated throughout all functions of these operations. In addition, a
         restructuring of the European operations led to lease termination
         costs, a write-off of facility leasehold improvement costs and
         write-off of intangible assets considered impaired with the closure of
         the European businesses, all of which totaled approximately $1.2
         million.

-        In the quarter ended March 31, 2001, approximately $0.8 million of
         severance was recorded. Approximately 90 employees were terminated
         throughout all functions of the Semiconductor Equipment Group and the
         Acuity CiMatrix division. Approximately $0.1 million of severance was
         reversed as a result of lower termination costs than anticipated.
         Continued efforts to downsize the European operations led to lease
         termination costs and write-off of facility leasehold improvements,
         totaling approximately $0.4 million.

-        In the quarter ended June 30, 2001, approximately $0.5 million of
         severance was recorded. Approximately 100 employees were terminated
         throughout all functions of the Semiconductor Equipment Group and the
         Acuity CiMatrix division.

-        In the quarter ended September 30, 2001, approximately $0.9 million of
         severance was recorded, representing 100 employees throughout all
         functions of the Semiconductor Equipment Group and the Acuity CiMatrix
         division. Finalization of the European facilities' closures and other
         restructuring activities resulted in a $0.9 million write-off of
         abandoned property and equipment and certain intangibles, totaling $0.2
         million. As a result of favorable negotiations, the estimated lease
         obligations on a facility in the U.K. were reduced by $0.9 million.

                                       14
<PAGE>

    Impairments -- Because of the significant decline in revenues in 2001, we
reviewed our long-lived assets, including capitalized software, purchased
technologies and goodwill for impairment. To evaluate and measure the impairment
of capitalized software we considered the estimated future gross revenues
reduced by estimated future costs, including costs of performing maintenance and
customer support. To evaluate the impairment of purchased technologies and
goodwill, we compared the carrying amount to estimated undiscounted net future
cash flows. If an impairment was indicated, the amount was measured as the
excess of the carrying amount over the fair market value of the asset, which we
estimated using a discounted cash flow model.

    Net interest expense was $1.2 million for fiscal 2001, compared to net
interest expense of $1.4 million for fiscal 2000. The reason for the decline in
interest expense relates to the levels of invested cash balances in fiscal 2001
compared to fiscal 2000, partially offset by interest expense on new acquisition
debt. We had $2.3 million of borrowings on our line of credit at the end of
fiscal 2001.

    Based on the current year's losses and the inability to project a return to
profitability until there is a sustained upturn in the semiconductor capital
equipment sector, we have recorded $9.2 million of additional valuation
allowance and a corresponding tax expense in fiscal 2001. The tax provision in
fiscal 2000 reflected minimum federal income taxes, offset by a change in our
deferred tax asset.

    In fiscal 2001, we had a net loss of $104.4 million, or a loss of $2.94 per
share. For fiscal 2000, we had net income of $10.7 million, or $0.27 per diluted
share

   FISCAL YEARS ENDED SEPTEMBER 30, 2000 AND 1999

    Our revenues were $223.2 million for the fiscal year ended September 30,
2000, compared to $128.2 million for the fiscal year ended September 30, 1999,
an increase of 74.1%. The higher revenues year-to-year were associated with
increased shipments of semiconductor inspection and handling equipment, as well
as vision and one and two-dimensional bar code reading systems. Revenues for our
Semiconductor Equipment Group and Acuity CiMatrix division increased 111.8% and
5.2%, respectively, from the prior year.

    Our gross profit margin at both divisions improved during fiscal 2000.
However, the higher amount of Semiconductor Equipment Group revenues, as a
percentage of total revenues, caused our gross profit percentage to remain
consistent at 44.3% as compared with 44.2% for the fiscal years ended September
30, 2000 and 1999, respectively. The gross profit margin, as a percentage of
revenues, for our Semiconductor Equipment Group increased to 41.6% of revenues
in the year ended September 30, 2000 compared to 39.3% of revenues for the year
ended 1999. Also, gross profit margin, as a percentage of revenues, increased
for our Acuity CiMatrix division to 50.1% in fiscal 2000, as compared to 47.1%
for the year ended September 30, 1999.

    Our research and development expenses were $27.0 million, or 12.1% of
revenues, in fiscal 2000, compared to $20.5 million, or 16.0% of revenues, in
fiscal 1999. The higher level of expense dollars reflects spending associated
with our continued efforts to invest in new product development. In our
Semiconductor Equipment Group, the projects included work on the new wafer
scanning inspection systems and enhanced capabilities for our lead scanning
systems, as well as a new line of ball-placement equipment. At Acuity CiMatrix,
we continued to invest in enhancing our 1-D and 2-D barcode reading products and
expanding our new machine vision platform, Visionscape. During fiscal 2000, we
capitalized $4.2 million of software development costs, in accordance with SFAS
No. 86, compared to $4.9 million in fiscal 1999.

    Our selling, general and administrative expenses were $59.7 million, or
26.8% of revenues, in fiscal 2000, compared to $44.6 million, or 34.8% of
revenues, in fiscal 1999. The higher level of expense reflects a combination of
higher variable selling expenses associated with the increase in revenues,
including commissions, as well as increased marketing, salaries and related
expenses.

    In fiscal 1999, severance and other charges was $0.3 million, primarily
related to reductions in personnel, particularly in Europe.

    In fiscal 1999, we sold our Aircraft Safety division to a subsidiary of B.F.
Goodrich for $4.05 million in cash. We no longer considered this technology a
key component of our product portfolio or future strategic direction. We sold
certain inventory, equipment and intellectual property in the transaction,
resulting in a gain of $3.0 million. Proceeds from the sale were used for
working capital requirements and to repay $2.0 million of outstanding bank debt.

    Net interest expense was $1.4 million in fiscal 2000 compared to net
interest expense of $3.6 million in fiscal 1999. In the second quarter of fiscal
2000, proceeds from our secondary offering were used to repay $35.3 million of
bank debt, resulting in net interest income of $0.3 million for the second half
offset by net interest expense of $1.7 million for the first half of fiscal
2000.

    The tax provision for fiscal 2000 reflected minimal income taxes from
utilizing our net operating loss carryforwards. There was no tax provision in
fiscal 1999, due to the loss in the period.

                                       15
<PAGE>

    For fiscal 2000, we had net income of $10.7 million, or $0.27 per diluted
share. In fiscal 1999, we had a net loss of $9.3 million, or a loss of $0.38 per
share.

LIQUIDITY AND CAPITAL RESOURCES

    Our cash balance decreased $19.4 million, to $3.6 million, in fiscal 2001,
as a result of $12.6 million of net cash used in operating activities, $8.8
million of net cash used in investing activities and $2.0 million of net cash
provided by financing activities.

    The $12.6 million of net cash used in operating activities was primarily a
result of the $104.4 million loss in fiscal 2001, which represented a loss of
$39.1 million before deferred taxes, depreciation and amortization, the
inventory provisions, the cumulative effect of accounting changes, the
impairment charges and the in-process research and development charge. This
$39.1 million loss was partially offset by net reductions in operating assets
and liabilities of $26.5 million, due to the receivable reduction of $49.8
million, offset primarily by the reductions in accounts payable, accrued
expenses and deferred gross profit of $26.1 million.

    Additions to plant and equipment were $2.3 million in fiscal 2001, as
compared to $9.6 million in fiscal 2000. The capitalized software development
costs for fiscal 2001 were $3.4 million as compared with $4.2 million in fiscal
2000. We also completed the purchase of Abante Automation, Inc. and Auto Image
ID, Inc. in the year ended September 30, 2001 and paid an aggregate of $3.1
million in cash at the closings.

    Decreased capital outlays in fiscal 2001 along with depreciation charges
totaling $6.9 million and a write-off related to our restructuring efforts
totaling $1.1 million during fiscal 2001, partially offset by capital
expenditures totaling $2.3 million, which resulted in a $5.7 million decline in
property and equipment at September 30, 2001 as compared to September 30, 2000.

    In fiscal 2000, we entered into a three year $35 million revolving credit
agreement with a domestic bank. This agreement allowed for borrowings of up to
85% of eligible domestic receivables plus up to $10 million of availability
provided under the Export-Import Bank of the United States guarantee of certain
foreign receivables and inventories. At June 30, 2001, we were in technical
non-compliance with certain covenants of the credit agreement, but we had no
outstanding borrowings under the agreement. An amendment to this agreement in
the fourth quarter of fiscal 2001 reduced the line of credit to $10 million,
allowing for borrowings based on levels of eligible receivables and inventory
and formally waived the technical non-compliance and established revised
covenants to better reflect current circumstances.

    At September 30, 2001, we were not in compliance with the covenants
associated with the amended credit facility. On December 19, 2001, we amended
the terms of this credit facility, obtained a waiver of the noncompliance that
existed at September 30, 2001 and modified the financial covenants.

    On November 21, 2001, a $1.5 million note issued to the former shareholders
of Abante Automation came due together with 8% interest thereon from November
29, 2000. On the same date, the first of five annual earn-out payments also
became due, in the amount of $500,000. On the due date, we paid the interest,
$250,000 of note principal, and $112,247 of the earn-out payment. We are
currently engaged in negotiations with Abante's former principals with a view to
paying the balance of the sums originally due on November 21, 2001 in
installments from February 2002 through the first quarter of fiscal 2003.

    As of December 15, 2001, we sold our material handling business to SICK for
approximately $11.5 million which includes the right to receive $500,000
following the expiration of a 16 month holdback to protect the purchaser against
the possibility of non-disclosed liabilities. In addition to these cash
proceeds, management continues to implement plans intended to control operating
expenses, inventory levels, and capital expenditures as well as plans to manage
accounts payable and accounts receivable to enhance cash flows. Additionally, we
have entered into a letter of intent under which we would dispose of a second
product line. We expect to close this transaction no later than March 31, 2002.
The revenues and net operating results for this operation were not material to
us in fiscal 2001. We are also considering a number of new debt or equity
financing alternatives.

    Management believes that through a combination of proceeds from the material
handling sale, the credit facility, the proceeds from the disposition of a
second product line, additional debt/equity financing and cash flows from
operations, we will have sufficient liquidity through at least September 30,
2002 to fund our cash requirements.

RECENT ACCOUNTING PRONOUNCEMENTS

    Business Combinations -- In July 2001, the FASB issued SFAS No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 requires business combinations initiated after June 30,
2001 to be accounted for using the purchase method of accounting, and broadens
the criteria for recording intangible assets separate from goodwill. Recorded
goodwill and intangibles will be evaluated against these new criteria and may
result in certain intangibles being reclassified

                                       16
<PAGE>

into goodwill, or alternatively, amounts initially recorded as goodwill may be
separately identified and recognized apart from goodwill. SFAS No. 142 requires,
among other things, the discontinuance of goodwill amortization. Under this
approach, goodwill and certain intangibles will not be amortized into results of
operations, but instead would be reviewed for impairment and written down and
charged to operations only in the periods in which the recorded value of
goodwill and certain intangibles is more than its fair value. SFAS No. 142 also
requires that we complete a transitional goodwill impairment test six months
from the date of adoption of SFAS No. 142. We are required to adopt SFAS No. 142
on October 1, 2002. We are currently assessing, but we have not yet determined,
the impact of SFAS No. 142 on our financial position and results of operations.

    Impairments -- In August 2001, the FASB issued SFAS No. 144, "Accounting for
Impairment or Disposal of Long-Lived Assets," which replaces SFAS No. 121. The
new statement establishes a single accounting model for long-lived assets to be
disposed of by sale. Under its provisions, which apply to both continuing and
discontinued operations, companies must measure long-lived assets at the lower
of fair value, less cost to sell, or the carrying amount. As a result, amounts
reported as discontinued operations should no longer be reported at net
realizable value or include any losses that have not yet occurred. We are
required to adopt SFAS No. 144 on October 1, 2002. We are currently assessing,
but we have not yet determined, the impact of SFAS No. 144 on our financial
position and results of operations.

EFFECT OF INFLATION

    We believe that the effect of inflation has not been material during the
years ended September 30, 2001, 2000 and 1999.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

    This report contains forward-looking statements including statements
regarding, among other items, business strategy, growth strategy and anticipated
trends in our business, which are made pursuant to the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995. The words "believe,"
"expect" and "anticipate" and similar expressions identify forward-looking
statements, which speak only as of the date the statement is made. These
forward-looking statements are based largely on our expectations and are subject
to a number of risks and uncertainties, some of which cannot be predicted or
quantified and are beyond our control. Future events and actual results could
differ materially from those set forth in, contemplated by, or underlying the
forward-looking statements. Statements in this report, including those set forth
in "Risk Factors" below, describe factors, among others, that could contribute
to or cause such differences. In light of these risks and uncertainties, there
can be no assurance that the forward-looking information contained in this
Report will in fact transpire or prove to be accurate.

RISK FACTORS

   ANY SIGNIFICANT DOWNTURN IN THE HIGHLY CYCLICAL SEMICONDUCTOR INDUSTRY OR IN
   GENERAL ECONOMIC CONDITIONS WOULD LIKELY RESULT IN A REDUCTION IN DEMAND FOR
   OUR PRODUCTS AND WOULD HURT OUR BUSINESS

    We sell capital equipment to companies that design, manufacture, assemble
and test semiconductor devices. The semiconductor industry is highly cyclical,
causing in turn a cyclical impact on our financial results. Any significant
downturn in the markets for our customers' semiconductor devices or in general
economic conditions would likely result in a reduction in demand for our
products and would hurt our business.

    We define bookings during a fiscal period as incoming orders deliverable to
customers in the next eighteen months, less cancellations. Our bookings levels
decreased each quarter from the third quarter of fiscal 2000 when they were
$61.5 million through the third quarter of fiscal 2001 when they were $13.5
million. Our decline in this one year period was greater than 75%. This decline
mirrors the steep decline in the industry, where reports are that bookings rates
are down 91% for manufacturers of test, assembly, and packaging. At December
2001, there was no consensus among industry analysts or research organizations
as to how long the current downturn will continue before a period of renewed
growth.

    Consistent between the current downturn and the fiscal years 1998 and 1999
downturn, our revenue and operating results declined as a result of a sudden and
severe downturn in the semiconductor industry. Downturns in the semiconductor
capital equipment industry have been characterized by diminished product demand,
excess production capacity and accelerated erosion of selling prices. In the
past, we have experienced delays in commitments, delays in collecting accounts
receivable and significant declines in demand for our product during these
downturns, and we have experienced similar delays and declines in this downturn.
Additionally, as a capital equipment provider, our revenues are driven by the
spending patterns of our customers who often delay expenditures or cancel orders
in reaction to variations in their businesses. Because a high proportion of our
costs are fixed, we are limited in our ability to reduce expenses quickly in
response to severe revenue shortfalls. In a contraction, we may not be able to
reduce our significant fixed costs, such as our infrastructure and our continued
investment in research and development.

                                       17
<PAGE>

    During a downturn, we may experience delays in collecting receivables, which
may impose constraints on our working capital. In addition, a downturn in
industry demand for our products may place us in a position of excessive
inventories, which would further constrain cash flow. By way of illustration, we
were compelled to reduce our inventory carrying value by approximately $16.5
million and $16.6 million during fiscal 2001 and 1998, respectively, as a
consequence of an unexpected industry downturn.

   WE WILL BE UNABLE TO ACHIEVE PROFITABLE OPERATIONS UNLESS WE INCREASE
   QUARTERLY REVENUE OR MAKE FURTHER REDUCTIONS IN OUR COSTS

    We incurred net losses of $104.4 million, $9.3 million and $40.5 million for
the fiscal years 2001, 1999 and 1998, respectively, primarily attributable to
the worldwide downturn in demand for semiconductor capital equipment. Our
ability to achieve profitable operations will depend upon our ability to
increase quarterly revenue levels or make further reductions in our costs. There
can be no assurance that we will reduce our costs sufficiently in anticipation
of declines in demand to return to profitability.

   A LOSS OF OR DECREASE IN PURCHASES BY ONE OF OUR SIGNIFICANT CUSTOMERS COULD
   MATERIALLY AND ADVERSELY AFFECT OUR REVENUES AND PROFITABILITY

    The semiconductor industry is highly concentrated, and a small number of
semiconductor device manufacturers and contract assemblers account for a
substantial portion of purchases of semiconductor capital equipment. Sales to
our ten largest customers accounted for 30.0%, 40.6% and 33.3% of total revenues
in fiscal years ended September 30, 2001, 2000 and 1999, respectively. Intel
Corporation accounted for 10% of our revenues in fiscal year 2001. No single
customer accounted for more than 10% of revenues in fiscal years ended September
30, 2000 and 1999. A loss of or decrease in purchases by one of these customers
could materially and adversely affect our sales and operating results.

   ECONOMIC DIFFICULTIES ENCOUNTERED BY CERTAIN OF OUR FOREIGN CUSTOMERS MAY
   RESULT IN ORDER CANCELLATIONS AND REDUCE COLLECTIONS OF OUTSTANDING
   RECEIVABLES

    International sales, primarily to Asia and Western Europe, accounted for
approximately 61%, 71% and 56% of our revenues for the fiscal years ended
September 30, 2001, 2000 and 1999, respectively. In particular, sales to Taiwan,
Korea and other Asian countries accounted for approximately 51%, 61% and 41% of
our revenues for the fiscal years ended September 30, 2001, 2000 and 1999,
respectively. While our sales in Asia are generally denominated in U.S. dollars,
our international business may be affected by changes in demand resulting from
fluctuations in currency exchange rates, trade restrictions, duties and other
political and economic factors. By way of illustration, the Asian economic
crisis in 1998 led to significant order cancellations from customers in Taiwan,
Korea, Malaysia and the Philippines as currency devaluations prevented these
customers from acquiring U.S. dollars at favorable exchange rates, thereby
adversely affecting both our revenue and profitability.

   DEVELOPMENT OF OUR PRODUCTS REQUIRES SIGNIFICANT LEAD TIME AND WE MAY FAIL TO
   CORRECTLY ANTICIPATE THE TECHNICAL NEEDS OF OUR MARKETS

    We must anticipate industry trends and develop products in advance of the
commercialization of semiconductor capital equipment. We are required to make
capital investments to develop new products before our customers commercially
accept them. In addition, if we are not successful in developing enhancements or
new generations of products, we may not be able to recover the costs of these
investments or may incur significant losses. If we are not able to develop new
products, which meet the needs of our markets, our competitive position in our
industries may be diminished and our relationships with our customers may be
impaired.

                                       18
<PAGE>

INADEQUATE CASH FLOW AND RESTRICTIONS IN OUR BANKING ARRANGEMENTS MAY IMPEDE OUR
PRODUCTION AND PREVENT US FROM INVESTING SUFFICIENT FUNDS IN RESEARCH AND
DEVELOPMENT

    The markets for our products are extremely competitive. Our near-term
competitive position is dependent upon our ability to satisfy orders received in
a timely manner. To do so, we need access to capital to rapidly increase our
production capabilities. Maintaining our long-term competitive position will
require our continued investment in research and product development. Our
ability to satisfy orders received in a timely manner and to invest in research
and product development may be limited by our cash flow availability and by our
need to comply with covenants in our banking arrangements that may limit our
production, research and product development expenditures.

   THE LOSS OF KEY PERSONNEL COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS

    Our success depends in large part upon our ability to hire and retain
qualified personnel in technical and managerial positions. We have a limited
number of employment agreements with our technical and managerial personnel. The
market for employees with the combination of skills and attributes required to
carry out our needs is extremely competitive. Our inability to hire and retain
such personnel could adversely affect our growth and profitability.

   THE LARGE NUMBER OF SHARES AVAILABLE FOR FUTURE SALE COULD ADVERSELY AFFECT
THE PRICE OF OUR COMMON STOCK

    As of September 30, 2001, we had outstanding 4.6 million shares of common
stock issuable upon exercise of stock options with a weighted average exercise
price of $4.61 per share; and a total of 14.7 million warrants outstanding, with
substantially all of these warrants having an exercise price of $0.86 to $4.04
per share.

    The shares underlying these options and substantially all of the shares
underlying the warrants have been registered for resale and none of them is
subject to any contractual restrictions on resale.

    Future sales of any of these shares, or the anticipation of such sales,
could adversely affect the market price of our common stock and could materially
impair our future ability to raise capital through an offering of equity
securities. Further, any issuance of a substantial number of these shares could
result in increased volatility in the price of our common stock.

   THE VOLATILITY OF OUR STOCK PRICE COULD ADVERSELY AFFECT THE VALUE OF AN
INVESTMENT IN OUR COMMON STOCK

    During the twelve month period ended September 30, 2001 the closing price of
our common stock has ranged from a low of $0.92 to a high of $6.06. The price of
our common stock has been and likely will continue to be subject to wide
fluctuations in response to a number of events and factors, such as:

    -   quarterly variations in operating results;

    -   differences between our quarterly results of operations and securities
        analysts' estimates;

    -   announcements of technological innovations, new products or strategic
        alliances;

    -   the announcement of the results of existing or new litigation; and

    -   news reports relating to companies or trends in our markets.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    Financial instruments that potentially subject us to concentrations of
credit-risk consist principally of cash equivalents and trade receivables. We
place our cash equivalents with high-quality financial institutions, limit the
amount of credit exposure to any one institution and have established investment
guidelines relative to diversification and maturities designed to maintain
safety and liquidity. Our trade receivables result primarily from sales to
semiconductors manufacturers located in North America, Japan, the Pacific Rim
and Europe. Receivables are denominated in U.S. dollars, mostly from major
corporations or distributors or are supported by letters of credit. We maintain
reserves for potential credit losses and such losses have been immaterial.

    We are exposed to the impact of fluctuation in interest rates, primarily
through our borrowing activities. Our policy has been to use U.S. dollar
denominated borrowings to fund our working capital requirements. The interest
rates on our current borrowings fluctuate with current market rates. The extent
of risk associated with an increase in the interest rate on our borrowings is
not quantifiable or predictable because of the variability of future interest
rates and our future financing requirements.

                                       19
<PAGE>

    We believe that our exposure to currency exchange fluctuation risk is
insignificant because the operations of our international subsidiaries are
immaterial. Sales of our U.S. divisions to foreign customers are primarily U.S.
dollar denominated. During fiscal 2001, we did not engage in foreign currency
hedging activities. Based on a hypothetical ten percent adverse movement in
foreign currency exchange rates, the potential losses in future earnings, fair
value of foreign currency sensitive instruments, and cash flows are immaterial,
although the actual effects may differ materially from the hypothetical
analysis.

    We estimate the fair value of our notes payable and long-term liabilities
based on quoted market prices for the same or similar issues or on current rates
offered to us for debt of the same remaining maturities. For all other balance
sheet financial instruments, the carrying amount approximates fair value. The
fair value of the shares into which the prepaid warrants was exercisable at
September 30, 2001 was approximately $10.7 million.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    Reference is made to Item 14(a)(i) herein.


                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

    (a) Documents filed as part of this report:

       (i) Financial Statements.

           Independent Auditors' Report

           Consolidated Balance Sheets at September 30, 2001 and September 30,
           2000

           Consolidated Statements of Operations for the Years Ended September
           30, 2001, 2000 and 1999

           Consolidated Statements of Stockholders' Equity for the Years Ended
           September 30, 2001, 2000 and 1999

           Consolidated Statements of Comprehensive Income (Loss) for the Years
           Ended September 30, 2001, 2000 and 1999

                                       20
<PAGE>

           Consolidated Statements of Cash Flows for the Years Ended September
           30, 2001, 2000 and 1999

           Notes to Consolidated Financial Statements

     (ii)  Financial Statement Schedule.

           Schedule II -- Valuation and Qualifying Accounts

    (iii)  Exhibits.


  EXHIBIT
    NO.                                 DESCRIPTION
  -------                               -----------
    2.1*        Purchase and Sales Agreement By and Among Robotic Vision
                Systems, Inc. and RVSI Europe Ltd. Sellers and Sick, Inc.
                and Erwin Sick Ltd. Buyers Dated as of December 18, 2001

    3.1*        Registrant's Restated Certificate of Incorporation(1)

    3.2*        Amendments to Registrant's Restated Certificate of
                Incorporation(2)

    3.3*        Registrant's Bylaws, as amended(3)

    4.1*        Rights Agreement, dated as of May 14, 1998, between Registrant
                and American Stock Transfer & Trust Company(3)

    4.2*        Form of Prepaid Warrant(4)

   10.1*        Securities Purchase Agreement dated as of February 18, 1999
                among Registrant and the purchasers parties thereto(4)

   10.2*        Securities Purchase Agreement dated as of July 19, 1999 among
                Registrant and the purchasers parties thereto(5)

   10.3*        Asset Purchase Agreement, dated November 16, 1998 between
                Registrant and Rosemount Aerospace, Inc.(6)

   10.4*        License Agreement, dated December 4, 1999, between Registrant
                and Rosemount Aerospace, Inc.(6)

   10.5*        License Agreement, dated December 4, 1999, between Registrant
                and Rosemount Aerospace, Inc.(6)

   10.6*        Asset Purchase Agreement dated as of November 10, 1999 between
                Registrant and Polaroid Corporation(7)

   10.7*        Revolving Credit and Security Agreement, dated April 28, 2000
                between PNC Bank, National Association (as lender and agent),
                Registrant and certain of Registrant's subsidiaries (as
                borrower) and other lenders identified therein.(8)

   10.8*        First Amendment to the Revolving Credit and Security Agreement,
                dated September 10, 2001 between PNC Bank, National Association
                (as lender and agent), Registrant and certain of Registrant's
                subsidiaries (as borrower).

   10.9*        Second Amendment and Restated Revolving Credit Note, dated
                September 10, 2001 between PNC Bank, National Association (as
                lender and agent), Registrant and certain of Registrant's
                subsidiaries (as borrower).

   10.10*       Second Amendment to the Revolving Credit and Security Agreement,
                dated December 19, 2001 between PNC Bank, National Association
                (as lender and agent), Registrant (as borrower).

   21*          Subsidiaries of Registrant

   23           Independent Auditors' Consent of Deloitte & Touche LLP

----------
(1) Filed as an exhibit to Registrant's Registration Statement on Form S-4,
    File No. 333-08633.

(2) Filed as an exhibit to Registrant's Registration Statement on Form S-1,
    File No. 333-76927.

(3) Filed as an exhibit to Registrant's Current Report on Form 8-K dated
    May 20, 1998.

(4) Filed as an exhibit to Registrant's Current Report on Form 8-K dated
    February 24, 1999.

(5) Filed as an exhibit to Registrant's Current Report on Form 8-K dated July
    23, 1999.

(6) Filed as an exhibit to Registrant's Annual Report on Form 10-K for its
    fiscal year ended September 30, 1998.

(7) Filed as an exhibit to Registrant's Annual Report on Form 10-K for its
    fiscal year ended September 30, 1999.

(8) Filed as an exhibit to Registrant's Current Report on Form 10-Q dated May
    11, 2000.

     *  Previously filed with this annual report on Form 10-K.

    (b) Reports on Form 8-K:

    None.

                                       21
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Robotic Vision Systems, Inc.
Canton, Massachusetts

    We have audited the accompanying consolidated balance sheets of Robotic
Vision Systems, Inc. and subsidiaries (the "Company") as of September 30, 2001
and 2000, and the related consolidated statements of operations, stockholders'
equity, comprehensive income (loss), and cash flows for each of the three years
in the period ended September 30, 2001. Our audits also included the financial
statement schedule listed in the Index at Item 14. These financial statements
and the financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements and the financial statement schedule based on our audits.

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

    In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Robotic Vision Systems, Inc.
and subsidiaries at September 30, 2001 and 2000, and the results of their
operations, and their cash flows for each of the three years in the period ended
September 30, 2001 in conformity with accounting principles generally accepted
in the United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

    As discussed in Note 1 to the consolidated financial statements, effective
October 1, 2000, the Company changed its method of revenue recognition to
conform to Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements."


DELOITTE & TOUCHE LLP

Boston, Massachusetts
November 30, 2001
(December 19, 2001 as to the fourth paragraph of Note 1)

                                       22
<PAGE>


                  ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           SEPTEMBER 30, 2001 AND 2000
<TABLE>
<CAPTION>

                                                                                                  2001       2000
                                                                                              ----------  ----------
                                                                                              (IN THOUSANDS, EXCEPT
                                                                                                    PER SHARE)
<S>                                                                                           <C>         <C>
                                                   ASSETS
Current Assets:
  Cash and cash equivalents...............................................................    $    3,554  $   22,947
  Accounts receivable, net................................................................        14,866      64,520
  Inventories, net........................................................................        34,765      52,801
  Prepaid expenses and other current assets...............................................         2,168       3,296
                                                                                              ----------  ----------
     Total current assets.................................................................        55,353     143,564
  Plant and equipment, net................................................................        10,393      16,095
  Deferred income taxes...................................................................            --       9,220
  Goodwill, net of accumulated amortization of $2,799 and $2,023..........................         4,265       4,992
  Software development costs, net.........................................................         9,944      14,188
Intangibles and other long-term assets....................................................         7,992       7,425
                                                                                              ----------  ----------
                                                                                              $   87,947  $  195,484
                                                                                              ==========  ==========
                                    LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Revolving credit facility...............................................................    $    2,385  $       --
  Notes payable and current portion of long-term debt.....................................         4,259         236
  Accounts payable........................................................................        13,694      30,546
  Accrued expenses and other current liabilities..........................................        17,401      16,643
  Deferred gross profit...................................................................         2,469          --
                                                                                              ----------  ----------
     Total current liabilities............................................................        40,208      47,425
  Long-term debt..........................................................................         7,240       2,499
                                                                                              ----------  ----------
     Total liabilities....................................................................        47,448      49,924
  Commitments and contingencies (Note 9)
  Prepaid warrants........................................................................         7,067       8,644
  Stockholders' Equity:
  Common stock, $0.01 par value; shares authorized, 75,000 shares; issued and
    outstanding, 2001-- 35,960 and 2000-- 35,270..........................................           360         353
  Additional paid-in capital..............................................................       270,564     268,967
  Accumulated deficit.....................................................................      (236,810)   (131,733)
  Accumulated other comprehensive loss....................................................          (682)       (671)
                                                                                              ----------  ----------
     Total stockholders' equity...........................................................        33,432     136,916
                                                                                              ----------  ----------
                                                                                              $   87,947  $  195,484
                                                                                              ==========  ==========
</TABLE>

                 See notes to consolidated financial statements.

                                       23


<PAGE>


                  ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
<TABLE>
<CAPTION>

                                                                                  2001         2000       1999
                                                                               ----------   ---------- -------
                                                                                      (IN THOUSANDS, EXCEPT
                                                                                       PER SHARE AMOUNTS)

<S>                                                                            <C>          <C>        <C>
Revenues...................................................................    $  107,845   $ 223,193  $ 128,230
Cost of revenues...........................................................        73,513     124,354     71,526
Inventory provisions.......................................................        16,500          --         --
                                                                               ----------   ---------  ---------
Gross profit...............................................................        17,832      98,839     56,704
                                                                               ----------   ---------  ---------
Operating costs and expenses:
Research and development expenses..........................................        28,352      26,965     20,533
Selling, general and administrative expenses...............................        54,320      59,716     44,599
Severance and other charges................................................        17,336          --        255
In-process research and development........................................         1,050          --         --
                                                                               ----------   ---------  ---------
Income (loss) from operations..............................................       (83,226)     12,158     (8,683)
Gain on sale of assets.....................................................            --          --      2,985
Interest expense...........................................................        (1,622)     (2,443)    (3,959)
Interest income............................................................           442       1,010        399
                                                                               ----------   ---------  ---------
Income (loss) before income taxes..........................................       (84,406)     10,725     (9,258)
Provision for income taxes.................................................         9,220           3         --
                                                                               ----------   ---------  ---------
Income (loss) before cumulative effect of accounting change................       (93,626)     10,722     (9,258)
Cumulative effect of accounting change.....................................       (10,747)         --         --
                                                                               ----------   ---------  ---------
Net income (loss)..........................................................    $ (104,373)  $  10,722  $  (9,258)
                                                                               ==========   =========  =========
Net income (loss) per share:
Income (loss) before cumulative effect of accounting change
  Basic....................................................................    $    (2.64)  $    0.32  $   (0.38)
  Diluted..................................................................    $    (2.64)  $    0.27  $   (0.38)
Cumulative effect of accounting change:
  Basic....................................................................    $    (0.30)         --         --
  Diluted..................................................................    $    (0.30)         --         --
Net income (loss)
  Basic....................................................................    $    (2.94)  $    0.32  $   (0.38)
  Diluted..................................................................    $    (2.94)  $    0.27  $   (0.38)
Weighted average shares:
  Basic....................................................................        35,683      31,431     25,669
  Diluted..................................................................        35,683      39,804     25,669

</TABLE>


                 See notes to consolidated financial statements.


                                       24
<PAGE>

                  ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<TABLE>
<CAPTION>


                                                                                                        ACCUMULATED
                                                         COMMON STOCK                                     OTHER
                                                    ---------------------    ADDITIONAL               COMPREHENSIVE      TOTAL
                                                     NUMBER                    PAID-IN   ACCUMULATED     INCOME      STOCKHOLDERS'
                                                    OF SHARES      AMOUNT      CAPITAL      DEFICIT      (LOSS)         EQUITY
                                                    ---------      ------    ----------  -----------  -------------  -------------
                                                                                   (IN THOUSANDS)
<S>                                                  <C>            <C>       <C>         <C>            <C>           <C>
BALANCE, OCTOBER 1,  1998.......................     24,870         $ 249     $168,493    $(131,962)     $   17        $  36,797
Shares issued in connection with the exercise of
  stock options and warrants....................        111             1          168           --          --              169
Shares issued in connection with private
placement, net of                                     2,373            24        5,807           --          --            5,831
   offering costs...............................
Warrants issued in connection with private
placement, net of                                        --            --        4,898           --          --            4,898
   offering costs...............................
Warrants issued for professional services.......         --            --          100           --          --              100
Amortization of warrant premium.................         --            --           --         (463)         --             (463)
Translation adjustment..........................         --            --           --           --         (84)             (84)
Net loss........................................         --            --           --       (9,258)         --           (9,258)
                                                     ------         -----     --------    ---------      ------        ---------
BALANCE, SEPTEMBER 30,  1999....................     27,354           274      179,466     (141,683)        (67)          37,990
Shares issued in connection with public offering,
  net of offering costs.........................      5,750            57       79,068           --          --           79,125
Shares issued in connection with  the conversion
  of subordinated note payable..................        258             3        2,064           --          --            2,067
Shares issued in connection with the exercise of
  stock options and warrants....................      1,908            19        8,269           --          --            8,288
Warrants issued for professional services.......         --            --          100           --          --              100
Amortization of warrant premium.................         --            --           --         (772)         --             (772)
Translation adjustment..........................         --            --           --           --        (604)            (604)
Net income......................................         --            --           --       10,722          --           10,722
                                                     ------         -----     --------    ---------      ------        ---------
BALANCE, SEPTEMBER 30,  2000 ...................     35,270           353      268,967     (131,733)       (671)         136,916
Shares issued in connection with the exercise of
  stock options and warrants....................        690             7        1,597           --          --            1,604
Amortization of warrant premium.................         --            --           --         (704)         --             (704)
Translation adjustment..........................         --            --           --           --         (11)             (11)
Net loss........................................         --            --           --     (104,373)         --         (104,373)
                                                     ------         -----     --------    ---------      ------        ---------
BALANCE, SEPTEMBER 30,  2001....................     35,960         $ 360     $270,564    $(236,810)     $ (682)       $  33,432
                                                     ======         =====     ========    =========      ======        =========
</TABLE>



                 See notes to consolidated financial statements.


                                       25

<PAGE>


                  ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES

             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
              FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<TABLE>
<CAPTION>

                                                                       2001         2000         1999
                                                                    ----------    ---------    --------
                                                                               (IN THOUSANDS)
<S>                                                                 <C>           <C>          <C>
Net income (loss)..............................................     $ (104,373)   $ 10,722     $(9,258)
Foreign currency translation adjustment........................            (11)       (604)        (84)
                                                                    ----------    --------     -------
Comprehensive income (loss)....................................     $ (104,384)   $ 10,118     $(9,342)
                                                                    ==========    ========     =======
</TABLE>



                 See notes to consolidated financial statements.


                                       26
<PAGE>


                  ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
<TABLE>
<CAPTION>


                                                                                                  2001         2000       1999
                                                                                               ----------   ---------  ---------
                                                                                                        (IN THOUSANDS)
<S>                                                                                            <C>          <C>        <C>
OPERATING ACTIVITIES:
Net income (loss)...........................................................................   $(104,373)   $ 10,722   $ (9,258)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
   Deferred income taxes....................................................................       9,220        (400)        --
   Depreciation and amortization............................................................      14,883      11,038     10,771
   Inventory provisions.....................................................................      16,500          --         --
   Cumulative effect of accounting change...................................................      10,747          --         --
   Impairment charges (non-cash restructuring)..............................................      12,885          --         --
   Bad debt provision.......................................................................       1,122         662        202
   Warranty provision.......................................................................       1,990       5,024      3,059
   In-process research and development......................................................       1,050          --         --
   Gain on sale of assets...................................................................          --          --     (2,985)
   Changes in operating assets and liabilities:
     Accounts receivable....................................................................      48,650     (27,680)    (5,337)
     Inventories............................................................................       1,947     (20,248)     3,660
     Prepaid expense and other current assets...............................................       1,528      (2,008)       (62)
     Other assets...........................................................................        (692)     (1,179)       (57)
     Accounts payable.......................................................................     (17,317)      9,453       (295)
     Deferred gross profit..................................................................      (8,278)         --         --
     Accrued expenses and other current liabilities.........................................      (2,446)     (6,606)    (9,280)
                                                                                               ----------   ---------  ---------
        Net cash used in operating activities...............................................     (12,584)    (21,222)    (9,582)
                                                                                               ----------   ---------  ---------
INVESTING ACTIVITIES:
Additions to plant and equipment, net.......................................................      (2,285)     (9,602)    (2,885)
Cash paid for acquisitions, net of cash acquired............................................      (3,125)         --         --
Additions to software development costs.....................................................      (3,409)     (4,211)    (4,927)
Proceeds from sale of assets................................................................          --          --      4,229
                                                                                               ---------    --------   --------
        Net cash used in investing activities...............................................      (8,819)    (13,813)    (3,583)
                                                                                               ----------   ---------  ---------
FINANCING ACTIVITIES:
Proceeds from the issuance of common stock and warrants (less offering costs)...............          --      79,192     19,372
Proceeds from exercise of stock options and warrants........................................          26       8,288        168
Net proceeds from (payments of) revolving credit facility...................................       2,385     (35,325)    (2,175)
Repayment of long-term borrowings...........................................................        (420)       (422)      (440)
                                                                                               ----------   ---------  ---------
        Net cash provided by financing activities...........................................       1,991      51,733     16,925
                                                                                               ---------    --------   --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS................................          19         (44)       112
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................................     (19,393)     16,654      3,872
CASH AND CASH EQUIVALENTS:
   Beginning of year........................................................................      22,947       6,293      2,421
                                                                                               ---------    --------   --------
   End of year..............................................................................   $   3,554    $ 22,947   $  6,293
                                                                                               ---------    --------   --------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid...............................................................................   $     446    $  3,353   $  2,937
                                                                                               ---------    --------   --------
Income taxes paid...........................................................................   $      --    $    408   $     --
                                                                                               ---------    --------   --------
NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of subordinated notes payable in connection with acquisitions......................   $   9,185    $  2,000         --
                                                                                               =========    ========   ========
Conversion of subordinated note payable and accrued interest into common stock..............   $      --    $ (2,067)        --
                                                                                               =========    ========   ========
Cashless exercise of prepared warrants for 682 shares of common stock.......................   $   1,577    $     --   $     --
                                                                                               =========    ========   ========
</TABLE>

                 See notes to consolidated financial statements.


                                       27
<PAGE>


                  ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1.  BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

    a. Description of Business -- Robotic Vision Systems, Inc. ("RVSI") and
subsidiaries (the "Company") designs, manufactures, markets and sells automated
two dimensional ("2-D") and three dimensional ("3-D") machine vision based
products and systems for inspection, measurement and identification, and is a
leader in advanced electro-optical sensor technology.

    b. Operations -- As shown in the consolidated financial statements, the
Company incurred a net loss of $104,373 for the fiscal year ended September 30,
2001 and used $12,584 of cash in operations during that same period. At
September 30, 2001, the Company was not in compliance with the covenants
associated with the revolving credit facility (see Note 7). These results are
primarily attributable to the worldwide downturn in demand for semiconductor
capital equipment.

    Throughout fiscal 2001, management took a series of steps to reduce
operating expenses and to restructure operations, which consisted primarily of
reductions in headcount and exit costs from facilities, in response to this
downturn (see Note 14).

    Management continues to implement plans to control operating expenses,
inventory levels, and capital expenditures as well as plans to manage accounts
payable and accounts receivable to enhance cash flows. The Company is also
considering a number of new debt or equity financing alternatives as well as the
disposition of certain lines of business that are no longer considered to be
consistent with the Company's long-term strategies. As discussed in Note 16, the
Company sold the one-dimensional material handling business ("material handling
business") as of December 15, 2001; the net proceeds from the disposition of the
business were approximately $10,500. The Company has a letter of intent to sell
a second product line, and expects the transaction to close no later than March
31, 2002. The revenues and net operating results for the second product line
were not material to the Company in fiscal 2001. On December 19, 2001, the
Company amended the terms of its revolving credit facility and obtained a waiver
of the noncompliance that existed at September 30, 2001.

    Management believes that through a combination of proceeds from the sale of
the material handling business, the credit facility, the disposition of the
second product line, additional debt/equity financing and cash flows from
operations, the Company will have sufficient liquidity through at least
September 30, 2002 to fund its cash requirements.

    c. Principles of Consolidation -- The consolidated financial statements
include the financial statements of RVSI and its subsidiaries, all of which are
wholly-owned. All significant intercompany transactions and balances have been
eliminated in consolidation.

    d. Revenues, Cost of Revenues and Cumulative Effect of Accounting Change --
In fiscal year 2001, the Company changed its method of accounting for revenue on
certain semiconductor equipment sales to comply with SEC Staff Accounting
Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements."
Previously, the Company generally recognized revenue upon shipment to the
customer, and accrued the cost of providing any undelivered services associated
with the equipment at the time of revenue recognition. Under the new accounting
method, adopted retroactive as of October 1, 2000, the Company now recognizes
revenue based on the type of equipment that is sold and the terms and conditions
of the underlying sales contracts.

    Revenue for established products that have previously satisfied customer
acceptance requirements and that provide for full payment tied to shipment is
generally recognized upon shipment and passage of title. In those cases,
installation is not deemed to be essential to the functionality of the equipment
since installation does not involve significant changes to the features or
capabilities of the equipment or building complex interfaces and connections. In
addition, the equipment could be installed by the customer or other vendors and
generally the cost of installation approximates only 1% to 2% of the sales value
of the related equipment. When customer payment terms provide that a minor
portion of the equipment purchase price be paid only upon customer acceptance,
the portion of the purchase price related to customer acceptance is generally
recognized upon customer acceptance with the majority portion of revenue and the
entire product cost recognized upon shipment and passage of title. When customer
payment terms require that a significant portion of the equipment price be paid
upon customer acceptance, the entire purchase price and cost are deferred until
customer acceptance is received. Revenue for new products that have not
previously satisfied customer acceptance requirements, generally semiconductor
capital equipment, is recognized upon customer acceptance. The gross profit on
sales that are not yet recognized is recorded as deferred gross profit in the
consolidated balance sheet. The Company provides for warranty costs at the time
the related revenue is recognized. Equipment installation is typically provided
by the Company and is generally not billed separately to the customer. Service
revenue, related to maintenance and training programs, is recognized ratably
over the period that services are provided. The Company does not grant any
rights of return or price protection privileges to distributors.

                                       28

<PAGE>

    The cumulative effect of the change as of October 1, 2000 resulted in a
charge to operations of $10,747, which is included in the Consolidated Statement
of Operations for the year ended September 30, 2001. The effect of the change on
year ended September 30, 2001 was to increase revenues by $15,197 and to reduce
the loss before the cumulative effect of the accounting change by $8,107. Pro
forma amounts for the periods prior to October 1, 2000 have not been presented,
as the effect of the change in accounting principle could not be reasonably
determined.

    e. Cash and Cash Equivalents -- Cash and cash equivalents includes money
market accounts and certain debt securities issued by the United States
government purchased with an original maturity of three months or less.

    f. Inventories-- Inventories are stated at the lower of cost (using the
first-in, first-out cost flow assumption) or market.

    g. Plant and Equipment -- Plant and equipment is recorded at cost less
accumulated depreciation and amortization. Depreciation is computed by the
straight-line method over estimated lives ranging from two to eight years.
Leasehold improvements are amortized over the lesser of their respective
estimated useful lives or lease terms.

    h. Intangible Assets -- Goodwill is being amortized over the expected useful
life of the related investment, ranging from 7 to 15 years; a technology
license, other purchased technology and non-competition agreement are being
amortized over the term of the agreements or expected life of the technology,
ranging from 5 years to 10 years. The Company reviews its long-lived assets,
including goodwill and other identifiable intangibles for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
assets may not be fully recoverable. A review for impairment includes comparing
the carrying value of an asset to an estimate of the undiscounted net future
cash inflows over the life of the asset. An asset is considered to be impaired
when the carrying value exceeds the calculation of the undiscounted net future
cash inflows. An impairment loss is measured as the amount of the excess of the
carrying value over the fair market value of the asset. See discussion of
impairments recorded in fiscal 2001 in Note 14.

    i. Software Development Costs -- Software development costs are capitalized
in accordance with Statement of Financial Accounting Standards ("SFAS") No. 86.
Such costs are capitalized only to the extent of costs of producing product
masters subsequent to the establishment of their technological feasibility and
capitalization ends when the product is available for general release to
customers. Capitalized software development costs are amortized over the
estimated useful lives (generally five years) on a straight-line basis or the
ratio of current revenues to total expected revenues in a product's expected
life, if greater. Amortization begins in the period in which the related product
is available for general release to customers. The Company reviews the
unamortized capitalized costs of its underlying products compared to the net
realizable value of these products. An impairment loss is recorded in an amount
by which the unamortized capitalized costs of a computer software product
exceeds the net realizable value of that asset. Certain software development
costs totaling $3,409, $4,211 and $4,927 have been capitalized during the fiscal
years ended September 30, 2001, 2000 and 1999, respectively. Amortization
expense relating to software development costs for the fiscal years ended
September 30, 2001, 2000, and 1999 was $4,409, $3,987 and $2,775, respectively.
See discussion of impairments recorded in fiscal 2001 in Note 14.

    j. Research and Development Costs -- The Company charges research and
development costs for Company-funded projects to operations as incurred.

    k. Income Taxes -- The Company accounts for income taxes under the
provisions of SFAS No. 109, "Accounting for Income Taxes," which requires
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the Company's consolidated
financial statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the differences between the financial
accounting and tax bases of assets and liabilities using enacted tax rates
expected to be in effect for the year in which the differences are expected to
reverse. Valuation allowances are provided against assets that are not likely to
be recognized.

    l. Foreign Currency Translation -- Assets and liabilities of RVSI's European
subsidiaries are translated at the exchange rate in effect at the balance sheet
date. Income statement accounts are translated at the average exchange rate for
the year. The resulting translation adjustments are excluded from operations and
accumulated as a separate component of stockholders' equity.

    m. Net Income (Loss) Per Share -- Basic income (loss) per share is computed
using the weighted average number of common shares outstanding during each year.
Diluted net income per common share reflects the effect of the Company's
outstanding options and warrants (using the treasury stock method), except where
such options would be anti-dilutive.

    n. Fair Value of Financial Instruments -- The following methods and
assumptions were used to estimate the fair value of each class of financial
instruments:

        a) Receivables -- The carrying amount approximates fair value because of
the short maturity of these instruments.

                                       29
<PAGE>

        b) Debt -- The carrying amounts approximate fair value based on
    borrowing rates currently available to the Company for loans with similar
    terms.

        c) Prepaid warrant -- At September 30, 2001 and 2000, the value of the
    common shares which would result from full exercise of the prepaid warrants
    was approximately $10,682 and $16,583, respectively.

    o. Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted 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. Actual results could differ
from those estimates.

    p. Concentrations of credit risk -- Financial instruments that potentially
subject the Company to concentrations of credit-risk consist principally of cash
equivalents and trade receivables. Cash equivalents are placed with high-quality
financial institutions, which limits the amount of credit exposure to any one
institution, and the Company has established investment guidelines relative to
diversification and maturities designed to maintain safety and liquidity. Trade
receivables result primarily from sales to semiconductors manufacturers located
in North America, Japan, the Pacific Rim and Europe. Receivables are mostly from
major corporations or distributors or are supported by letters of credit.

    q. Equity-based compensation -- SFAS No. 123, "Accounting for Stock-Based
Compensation," encourages but does not require companies to record compensation
cost for stock-based employee compensation plans at fair value. As permitted by
SFAS No. 123, the Company has elected to account for stock-based compensation
using the intrinsic value method prescribed in Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations including Financial Accounting Standards Board ("FASB")
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation -- an Interpretation of APB Opinion No. 25," and has adopted the
disclosure-only provisions of SFAS No. 123. Accordingly, for financial reporting
purposes, compensation cost for stock options granted to employees is measured
as the excess, if any, of the estimated fair market value of the Company's stock
at the date of the grant over the amount an employee must pay to acquire the
stock. Equity instruments issued to nonemployees are accounted for in accordance
with SFAS No. 123 and Emerging Issues Task Force ("EITF") Abstract No. 96-18,
"Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling Goods or Services."

    r. Reclassifications -- Certain amounts in the prior year's financial
statements have been reclassified to conform with the current year's
presentation.

    s. Recent Accounting Pronouncements --

    Derivative Financial Instruments -- The Company adopted SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," effective
October 1, 2000 and there was no material impact on the Company's consolidated
financial position, results of operations or cash flows.

        Business Combinations -- In July 2001, the FASB issued SFAS No. 141,
    "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
    Assets." SFAS No. 141 requires business combinations initiated after June
    30, 2001 to be accounted for using the purchase method of accounting, and
    broadens the criteria for recording intangible assets separate from
    goodwill. Recorded goodwill and intangibles will be evaluated against these
    new criteria and may result in certain intangibles being reclassified into
    goodwill, or alternatively, amounts initially recorded as goodwill may be
    separately identified and recognized apart from goodwill. SFAS No. 142
    requires, among other things, the discontinuance of goodwill amortization.
    Under this approach, goodwill and certain intangibles will not be amortized
    into results of operations, but instead would be reviewed for impairment and
    written down and charged to operations only in the periods in which the
    recorded value of goodwill and certain intangibles is more than its fair
    value. SFAS No. 142 also requires the Company to complete a transitional
    goodwill impairment test six months from the date of adoption of SFAS No.
    142. The Company is required to adopt SFAS No. 142 on October 1, 2002. The
    Company is currently assessing, but has not yet determined, the impact of
    SFAS No. 142 on its financial position and results of operations.

        Impairments -- In August 2001, the FASB issued SFAS No. 144, "Accounting
    for Impairment or Disposal of Long-Lived Assets," which replaces SFAS No.
    121. The new statement establishes a single accounting model for long-lived
    assets to be disposed of by sale. Under its provisions, which apply to both
    continuing and discontinued operations, companies must measure long-lived
    assets at the lower of fair value, less cost to sell, or the carrying
    amount. As a result, amounts reported as discontinued operations should no
    longer be reported at net realizable value or include any losses that have
    not yet occurred. The Company is required to adopt SFAS 144 on October 1,
    2002. The Company is currently assessing, but has not yet determined, the
    impact of SFAS No. 144 on its financial position and results of operations.

                                       30
<PAGE>

2.  ACCOUNTS RECEIVABLE

    Accounts receivable at September 30, 2001 and 2000 consisted of the
following:

                                                             2001      2000
                                                          --------  --------
Total accounts receivable.............................    $ 16,793  $ 65,954
Less allowance for doubtful accounts receivable.......      (1,927)   (1,434)
                                                          --------  --------
Accounts receivables, net.............................    $ 14,866  $ 64,520
                                                          --------  --------

3.  INVENTORIES

    Inventories at September 30, 2001 and 2000 consisted of the following:

                                                            2001      2000
                                                          --------  --------
Raw materials.........................................    $ 18,640  $ 28,573
Work in process.......................................       4,968    11,943
Finished goods........................................      11,157    12,285
                                                          --------  --------
     Total............................................    $ 34,765  $ 52,801
                                                          ========  ========

    Finished goods inventory includes $1,701 and $2,772 on consignment at
September 30, 2001, and September 30, 2000, respectively.

    During the fiscal years ended September 30, 2001, 2000 and 1999, the Company
recorded inventory provisions totaling $17,326, $1,425 and $622, respectively.
Because of the significance of the provisions recorded in fiscal 2001, the
Company has reported a charge of $16,500 as a special component of cost of
revenues, representing the inventory losses incurred as a result of the sharp
decline in demand in the semiconductor industry and the general reduction in
capital spending in the industries the Company serves. The remaining inventory
provision in fiscal 2001 and the inventory provisions in fiscal 2000 and 1999
reflect normal recurring losses resulting from excess and obsolescence.
Management believes that these provisions have reduced inventories to their
appropriate net realizable value.

4.  INCOME TAXES

    The components of income (loss) before income tax provision (benefit), for
the fiscal years ended September 30, 2001, 2000 and 1999 are as follows:

                                                  2001        2000     1999
                                               ---------   ---------  ------
Domestic...................................    $ (74,930)  $ 13,080  $ (7,496)
Foreign....................................       (9,476)    (2,355)   (1,762)
                                               ---------   --------  --------
     Total.................................    $ (84,406)  $ 10,725  $ (9,258)
                                               =========   ========  ========

    The income tax provision (benefit) for the fiscal years ended September 30,
2001, 2000 and 1999 consisted of the following:

                                                  2001      2000      1999
                                               ---------  --------  --------
Current:
  Federal..................................    $      --  $    303  $     --
  State....................................           --       100        --
  Foreign..................................           --        --        --
                                               ---------  --------  --------
                                               $      --  $    403  $     --
                                               ---------  --------  --------
Deferred:
  Federal..................................      (31,107)    4,792    (4,042
  State....................................       (2,367)      562      (476)
  Change in valuation allowance............       42,694    (5,754)    4,518
                                               ---------  --------  --------
                                                   9,220      (400)       --
                                               ---------  --------  --------
     Total.................................    $   9,220  $      3  $     --
                                               =========  ========  ========

    The income tax benefits related to the exercise of stock options reduces
taxes currently payable or increases net deferred tax assets, and is credited to
additional paid-in capital.

    A reconciliation between the statutory U.S. Federal income tax rate and the
Company's effective tax rate for the fiscal years ended September 30, 2001, 2000
and 1999 is as follows:

                                                      2001     2000    1999
                                                    -------   ------  ------
U.S. Federal statutory rate......................    (34.0)%   34.0%  (34.0)%
Increases (reductions) due to:
State taxes-- net of Federal tax benefit.........     (4.0)     4.0    (4.0)
Change in valuation allowance....................     47.8       --    34.0
Utilization of net operating loss carryforwards..       --    (40.7)     --
Other-- net......................................      1.1      2.7     4.0
                                                     -----    -----   -----
     Total.......................................     10.9%     0.0%    0.0%
                                                     =====    =====   =====

                                       31
<PAGE>

    The net deferred tax asset at September 30, 2001 and 2000 is comprised of
the following:

                                                          2001       2000
                                                       ---------  ---------
DEFERRED TAX ASSETS (LIABILITIES):
Net operating loss carryforwards...................    $  55,708  $  30,547
Tax credit carryforwards...........................        1,925      2,200
Accrued liabilities................................        2,125      1,527
Deferred revenue...................................        1,223         --
Inventories........................................        8,972      4,332
Receivables........................................          795        530
Property and equipment.............................          548        656
Software development costs.........................       (3,631)    (3,836)
Intangible assets..................................        1,735         --
Other..............................................           37          7
                                                       ---------  ---------
                                                          69,437     35,963
Less valuation allowance...........................      (69,437)   (26,743)
                                                       ---------  ---------
     Total.........................................    $      --  $   9,220
                                                       =========  =========

    As of September 30, 2001, the Company had U.S. Federal net operating loss
carryforwards of approximately $149,000 of which $14,300 are subject to annual
limitations because of changes in ownership, as defined in the Internal Revenue
Code. Such loss carryforwards expire in the fiscal years 2002 through 2014. The
utilization of the carryforwards to offset future tax liabilities is dependent
upon the Company's ability to generate sufficient taxable income during the
carryforward periods. The Company has recorded a valuation allowance to reduce
the net deferred tax asset to an amount that management believes is more likely
than not to be realized. The change in the valuation allowance in fiscal 2000
relates primarily to the utilization of net operating losses against fiscal 2000
taxable income. The change in the valuation allowance in 2001 is attributable to
the significant operating loss incurred in 2001 and the provision of a valuation
allowance against the Company's net deferred tax asset of $9,220.

5. PLANT AND EQUIPMENT

    Plant and equipment at September 30, 2001 and 2000 consisted of the
following:

                                                          2001       2000
                                                       ---------  ---------
Machinery and equipment............................    $  11,156  $  15,008
Furniture, fixtures and other equipment............       12,828     14,748
Demonstration equipment............................        7,324      8,535
Leasehold improvements.............................        3,811      3,676
                                                       ---------  ---------
     Total.........................................       35,119     41,967
Less accumulated depreciation and amortization.....      (24,726)   (25,872)
                                                       ---------  ---------
  Plant and equipment-- net........................    $  10,393  $  16,095
                                                       =========  =========

6.  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

    Accrued expenses and other current liabilities at September 30, 2001 and
2000 consisted of the following:

                                                         2001       2000
                                                       --------   --------
Accrued wages and related employee benefits........    $  5,279   $  5,721
Accrued sales commissions..........................       2,083      4,836
Advance contract payments received.................         975      1,558
Accrued warranty and other product related costs...       2,156      1,411
Accrued warrant premium............................       1,712      1,263
Accrued interest...................................         533         --
Accrued severance and other restructuring charges..       1,277         --
Accrued other......................................       3,386      1,854
                                                       --------   --------
     Total.........................................    $ 17,401   $ 16,643
                                                       ========   ========

7.  REVOLVING CREDIT FACILITY, NOTES PAYABLE AND LONG-TERM DEBT

   REVOLVING CREDIT FACILITY

    In fiscal 2000, the Company entered into a three year $35,000 revolving
credit agreement with a domestic bank. This agreement allowed for borrowings of
up to 85% of eligible domestic receivables plus up to $10,000 of availability
provided under the Export-Import Bank of the United States guarantee of certain
foreign receivables and inventories. At June 30, 2001, the Company was not in
compliance with certain covenants of the credit agreement, but the Company had
no outstanding borrowings under the agreement. On September 10, 2001 the
agreement was amended to reduce the line to $10,000 allowing for borrowings
based on levels of eligible receivables and inventory, and all instances of
non-compliance were waived. At September 30, 2001, the Company was not in
compliance with the covenants associated with the amended agreement. On December
19, 2001, the agreement was amended, a waiver of the noncompliance that existed
at September 30, 2001 was received and financial covenants were modified. The
available credit under the facility remains at $10,000 and the facility
expiration remains at April 2003. At September 30, 2001, the outstanding

                                       32
<PAGE>

principal on the revolving credit facility totaled $2,385. Outstanding principal
balances bear interest at a variable rate as determined periodically by the bank
(7.0% at September 30, 2001).

   NOTES PAYABLE AND LONG-TERM DEBT:

    Notes payable and long-term debt at September 30, 2001 and 2000 consisted of
the following:

<TABLE>
<CAPTION>

                                                                                                               2001       2000
                                                                                                            --------    -------
<S>                                                                                                         <C>         <C>
Subordinated note payable-- 8.25%, payable in equal quarterly installments of $281 through June 2003....    $  1,969    $ 2,250
Abante note payable-- 8%, payable in one installment in November 2002...................................       1,500         --
Abante payable-- non-interest bearing, discounted at 8%, payable in annual installments of $500 through        2,129         --
November 2006...........................................................................................
AIID notes payable-- prime rate (7.1% at September 30,  2001), payable in annual installments of $1,855        5,556         --
through January 2004....................................................................................
Other borrowings........................................................................................         345        485
                                                                                                            --------    -------
Total notes payable and long-term debt..................................................................      11,499      2,735
Less notes payable and current portion of long-term debt................................................      (4,259)      (236)
                                                                                                            --------    -------
Long-term debt..........................................................................................    $  7,240    $ 2,499
                                                                                                            ========    =======
</TABLE>

    On November 21, 2001, a $1.5 million note issued to the former shareholders
of Abante Automation came due together with 8% interest thereon from November
29, 2000. On the same date, the first of five annual earn-out payments also
became due, in the amount of $500,000. On the due date, we paid the interest,
$250,000 of note principal, and $112,247 of the earn-out payment. We are
currently engaged in negotiations with Abante's former principals with a view to
paying the balance of the sums originally due on November 21, 2001 in
installments from February 2002 through the first quarter of fiscal 2003.

    If the average closing price of the Company's common stock for fifteen
consecutive trading days equals or exceeds $10.00 per share, the Company may
elect to pay the Abante note in the form of common stock. The holders of the
AIID notes may elect to receive payment in shares of the Company's common stock
valued at $10.80 per share.

    Principal maturities of long-term debt as of September 30, 2001 are as
follows:

2002.........................................................    $  4,259
2003.........................................................       4,256
2004.........................................................       2,354
2005.........................................................         501
2006.........................................................         129
                                                                 --------
     Total...................................................    $ 11,499
                                                                 ========

8.  EMPLOYEE BENEFIT PLANS

    Defined Benefit Plan -- The Company has a noncontributory pension plan for
certain employees hired prior to September 1996 that meet certain minimum
eligibility requirements. The level of retirement benefit is based on a formula,
which considers both employee compensation and length of credited service.

    Plan assets are invested in pooled bank investment accounts and mutual
funds, and the fair value of such assets is based on the quoted market prices of
underlying securities in such accounts. The Company funds pension plan costs
based on minimum and maximum funding criteria as determined by independent
actuarial consultants.

    The components of net pension cost for the fiscal years ended September 30,
2001, 2000 and 1999 are summarized as follows:

<TABLE>
<CAPTION>

                                                                     2001     2000    1999
                                                                   -------  -------  ------
<S>                                                                <C>      <C>      <C>
Service cost-- benefits earned during the period...............    $  253   $  244   $  257
Interest on projected benefit obligations......................       200      161      164
Estimated return on plan assets................................      (173)    (113)    (128)
Other-- amortization of actuarial gains, net transition
  asset, curtailment and settlement gains......................       187       24       23
                                                                   ------   ------   ------
Net pension cost...............................................    $  467   $  316   $  316
                                                                   ======   ======   ======
</TABLE>

                                       33
<PAGE>

    The funded status of the plan compared with the accrued expense included in
the Company's consolidated balance sheet at September 30, 2001 and 2000 is as
follows:

                                                                2001     2000
                                                              -------  -------
Reconciliation of benefit obligation
  Obligation at October 1.................................    $ 2,327  $ 2,166
  Service cost............................................        253      244
  Interest cost...........................................        200      161
  Plan amendment..........................................         --       --
  Actuarial (gain) loss...................................        543      (71)
  Benefit payments and settlements........................       (633)    (173)
  Curtailment.............................................       (122)      --
                                                              -------  -------
  Obligation at September 30..............................    $ 2,568  $ 2,327
Reconciliation of fair value of plan assets
  Fair value of plan assets at October 1..................    $ 1,808  $ 1,254
  Actual return on plan assets............................       (136)     224
  Employer contributions..................................        539      503
  Benefit payments and settlements........................       (633)    (173)
                                                              -------  -------
  Fair value of plan assets at September 30...............    $ 1,578  $ 1,808
Funded status
  Funded status at September 30...........................       (990)    (519)
  Unrecognized prior service cost.........................         40       63
  Unrecognized (gain) loss................................        648       82
                                                              -------  -------
Net accrued pension costs.................................    $  (302) $  (374)
                                                              =======  =======

    The curtailment and settlements were a result of the partial termination of
the plan as well as a result of the employee terminations resulting from the
Company's restructuring efforts.

    Significant assumptions used in determining net periodic pension cost and
related pension obligations are as follows:

                                                               2001    2000
                                                               -----   -----
Discount rate..............................................    7.50%   7.75%
Rate of compensation increase..............................    4.00%   4.00%
Expected long-term rate of return on assets................    8.25%   8.25%

    Defined Contribution Plans -- The Company has four defined contribution
plans (the "Plans") for all eligible employees, as defined by the Plans. The
Company makes matching employer contributions at various percentages in
accordance with the respective plan documents. The Company incurred $546, $751
and $645 for matching employer contributions to the Plans in 2001, 2000 and
1999, respectively.

    During fiscal year 2001, the RVSI Vanguard Savings Plan and the RVSI
Retirement Investment Plan experienced partial plan terminations due to the
number of participants separated from employment. Consequently, all participants
who were involuntarily separated from the company due to a reduction in
workforce received 100% of the company matching funds in their accounts.

9.  COMMITMENTS AND CONTINGENCIES

    Operating Leases -- The Company has entered into operating lease agreements
for equipment, and manufacturing and office facilities. The minimum
noncancelable scheduled rentals under these agreements are as follows:

FISCAL YEAR ENDING SEPTEMBER 30:               FACILITIES  EQUIPMENT   TOTAL
--------------------------------               ----------  ---------  -------

2002.......................................      $ 3,121     $ 182    $ 3,303
2003.......................................        2,886       103      2,989
2004.......................................        2,262        68      2,330
2005.......................................        2,411        30      2,441
2006.......................................        1,839        --      1,839
Thereafter.................................        8.750        --      8,750
                                                 --------    -----    -------
     Total.................................      $21,269     $ 383    $21,652
                                                 =======     =====    =======

    Rent expense for the fiscal years ended September 30, 2001, 2000 and 1999
was $3,563, $3,447 and $3,400, respectively.

   LITIGATION

    A number of purported securities class actions were filed against us, Pat V.
Costa, the Chief Executive Officer and Frank Edwards the former Chief Financial
Officer, in Federal District Court for the District of Massachusetts in the
summer of 2001. The Court consolidated these actions and appointed two lead
plaintiffs. Thereafter, the lead plaintiffs filed a consolidated amended
complaint, to which a response is due in early February 2002. This case remains
at a preliminary stage and no discovery proceedings have taken place. We believe
that these claims are without merit and intend to defend vigorously against
them.

                                       34
<PAGE>

    The Company has recently settled one lawsuit filed by a vendor in federal
court in Wisconsin. The resolution requires the Company to make certain payments
to the vendor and the vendor to make certain product deliveries to the Company.
The resolution also results in dismissal of the lawsuit. A second vendor lawsuit
remains pending in state court in Wisconsin. The amount sought is less than
$500, and the full amount in dispute would constitute payment for additional
product. This case remains at a preliminary stage and no discovery proceedings
have occurred.

    The Company is presently involved in other litigation matters in the normal
course of business. Based upon discussion with Company's legal counsel,
management does not expect that these matters will have a material adverse
impact on the Company's consolidated financial statements.

10.  STOCKHOLDERS' EQUITY

    Warrants Outstanding -- As of September 30, 2001, there were outstanding
warrants to purchase the Company's common stock as described below:

                                        NUMBER     PROCEEDS ON
DATE ISSUED                            OF SHARES    EXERCISE    EXPIRATION DATE
-----------                            ---------   -----------  ---------------
COMMON STOCK PURCHASE WARRANTS
a.  September 1996-- September 1998...      61      $    601    September 2002
b.  February 1999.....................     522         2,068    February 2004
c.  April 1999........................     327         1,297    April 2004
d.  July 1999.........................   2,909        11,695    July 2004
e.  July 1999.........................      69           347    July 2004
PREPAID WARRANTS
b.  February 1999.....................   10,900           --    February 2004
                                         ------     --------
                                         14,788     $ 16,008
                                         ======     ========
----------
a. Warrants issued in various transactions having exercise prices between
   $2.57 and $13.13.

b. In connection with a private placement of its equity, the Company issued
   prepaid common stock purchase warrants and common stock purchase warrants.
   See "Prepaid and Incentive Warrants" for more details.

c. In conjunction with the sale of common stock, the Company issued 5-year
   incentive warrants at an exercise price of $3.96 per share, subject to
   anti-dilution adjustments. The incentive warrants are exercisable, beginning
   in October 2000.

d. The Company sold warrants to purchase 3,091 shares of the Company's common
   stock at an exercise price of $4.02 per share for proceeds of $4,250, in a
   private placement.

e. Warrants issued to placement agent in connection with the sale of warrants
   and common stock with an exercise price of $5.00 per share.

    Prepaid and Incentive Warrants -- On February 23, 1999, the Company
completed a private placement of its equity securities consisting of 5-year
prepaid common stock purchase warrants ("prepaid warrants") with a stated value
of $11,000 and 5-year incentive common stock purchase warrants ("incentive
warrants") to purchase 592 shares of the Company's common stock upon payment of
an exercise price of $3.96 per share. These securities were sold to four
institutional investors. At the closing, the Company received gross proceeds of
$11,000 from the issuance of the prepaid warrants and incentive warrants, and
net proceeds of $9,763 after placement agent fees and other expenses of the
transaction. The Company also issued to the placement agent 5-year incentive
warrants to purchase 630 shares of common stock at an exercise price of $3.96
per share. The market price of the Company's common stock on the placement
closing date was $3.03 per share. As of September 30, 2000, there were issued
and outstanding $11,000 in stated value of prepaid warrants, plus accrued
premium of $1,263, and incentive warrants to purchase a total of 522 shares of
common stock. As of September 30, 2001, there were issued and outstanding $9,423
in stated value of prepaid warrants, plus accrued warrant premium of $1,712, and
incentive warrants to purchase a total of 522 shares of common stock.

    Each prepaid warrant is exercisable at the lower of $3.96 per share or 95%
of the average of the three lowest closing bid prices of the Company's common
stock during the 20-day trading period ending on the date of notice of exercise.
One hundred eighty days after the issuance of warrants the trading period will
increase by one day for each thirty day period thereafter. As of September 30,
2001, the trading period was forty-five days. On September 30, 2001, 2000 and
1999, the exercise prices would have been $0.86, $3.96 and $3.55 per share,
respectively. The prepaid warrants bear an annual premium of 7% per annum,
payable in cash or, at the Company's option, in shares of the Company's common
stock, and were initially exercisable, to the extent of 25% of the total number
of shares issuable, commencing on the 180th day (August 19, 1999) following
their issuance, increasing by increments of 25% every 90 days thereafter so that
after the passage of 450 days following the date of original issuance, the
prepaid warrants are now fully exercisable. The incentive warrants are
exercisable at any time during their 5-year term.

                                       35
<PAGE>

    The holders of the prepaid warrants can require that the Company redeem the
prepaid warrants in cash in the event of default by the Company under the
warrant agreement. An event of default as defined under the warrant agreement
includes failure to keep the Company's stock listed on a major exchange, failure
to file registration statements and to have such registration statements
declared effective, failure to make the shares underlying the warrants available
for exercise, merger into another entity where the Company is not the surviving
entity, bankruptcy proceedings, and failure to follow other material provisions
of the agreement.

    In the event of a default the Company may be required to pay the greater of
105% of the stated value of the prepaid warrants inclusive of accrued but unpaid
premium or an amount based on the highest closing bid price of the Company's
common stock during the default period.

    The prepaid warrants are subject to call at the Company's option if both,
during the 20-day trading period immediately preceding the date of the Company's
notice of redemption the average closing bid price, and on the date of the
Company's notice of redemption the closing bid price, of the Company's common
stock is less than $3.96 per share, subject to an anti-dilution adjustment, at a
cash price equal to 120% of the exercise amount of the prepaid warrants,
inclusive of earned premium, called for redemption. Such call right may be
exercised by the Company up to four times during the term of the prepaid
warrants. The prepaid warrants are also subject to redemption by the Company, at
the Company's option, if the exercise price falls below $2.50 per share. The
prepaid warrants have been recorded outside of stockholder's equity because the
warrant holders can require the Company to redeem the prepaid warrants under
certain circumstances outside the Company's control.

    The incentive warrants have been included in stockholders' equity in the
amount of $1,120, which reflects their estimated fair value. The prepaid
warrants have been recorded at $8,644, which reflects the amount of the net
proceeds received for the issuance of the prepaid warrants and incentive
warrants, less the value assigned to the incentive warrants. Under accounting
literature in effect at the date of issue of the prepaid warrants, the exercise
terms of the prepaid warrants were not considered to be a beneficial conversion
feature.

    Had the accounting requirements of EITF 98-5, "Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios" ("EITF 98-5"), which is effective for instruments issued
after May 20, 1999, been in effect at the time of issuance of the prepaid
warrants, the exercise terms of the prepaid warrants would have been considered
a beneficial conversion feature and valued at approximately $1,120. This amount
would have been recorded as a discount to the amount recorded as prepaid
warrants and amortized over the period to initial exercisability of the prepaid
warrants resulting in an increase of the warrant premium of approximately $0,
$313 and $807 for the years ended September 30, 2001, 2000 and 1999,
respectively.

    Stock Option Plans -- The Company has several stock option plans, which
provide for the granting of options to employees or directors at prices and
terms as determined by the Board of Directors' Stock Option Committee. Such
options vest over a period of one to five years. All options issued by the
Company to date have exercise prices equal to the fair market value of the
Company's common stock at the date of grant.

    The following table sets forth summarized information concerning the
Company's stock options:

<TABLE>
<CAPTION>

                                                                                                NUMBER    EXERCISE PRICE
                                                                                              OF SHARES       RANGE
                                                                                              ---------   --------------
<S>                                                                                             <C>        <C>
Options outstanding for shares of common stock at October 1,  1998.........................     3,571      $1.00-$19.38
  Granted..................................................................................     1,424       2.00-  4.38
  Canceled or expired......................................................................    (1,038)      1.53- 18.25
  Exercised................................................................................       (48)      1.00-  3.75
                                                                                                -----
Options outstanding for shares of common stock at September 30, 1999.......................     3,909       1.00- 19.38
  Granted..................................................................................       852       3.97- 18.00
  Canceled or expired......................................................................      (517)      2.00- 18.00
  Exercised................................................................................      (512)      1.00- 14.52
                                                                                                -----
Options outstanding for shares of common stock at September 30, 2000.......................     3,732       1.00- 19.38
  Granted..................................................................................     1,712       1.07-  5.63
  Canceled or expired......................................................................      (854)      1.81- 18.25
  Exercised................................................................................        (8)      2.00-  4.13
                                                                                                -----
Options outstanding for shares of common stock at September 30, 2001.......................     4,582       1.00- 19.38
                                                                                                =====
Options exercisable at September 30, 2001..................................................     2,120
                                                                                                =====
  September 30, 2000.......................................................................     1,600
                                                                                                =====
  September 30, 1999.......................................................................     1,211
                                                                                                =====
Shares available for future grant at September 30, 2001....................................     1,773
                                                                                                =====
</TABLE>

                                       36

<PAGE>

    Weighted average option exercise price information for the fiscal years
ended September 30, 2001, 2000 and 1999 was as follows:

                                                        2001    2000    1999
                                                      -------  ------  ------
Outstanding at beginning of year..................    $  5.48  $ 5.08  $ 6.94
Granted during the year...........................       3.00    7.96    2.61
Exercised during the year.........................       2.98    4.19    2.19
Canceled, terminated and expired..................       5.49    7.71    8.64
Outstanding at end of year........................       4.61    5.48    5.08
Exercisable at year end...........................       5.06    4.88    4.74

                            AS OF SEPTEMBER 30, 2001

<TABLE>
<CAPTION>

                                        OUTSTANDING OPTIONS                                   EXERCISABLE OPTIONS
                              -----------------------------------------------            -----------------------------
  RANGE OF                                 REMAINING LIFE         WEIGHTED                                 WEIGHTED
EXERCISE PRICES               SHARES          IN YEARS          AVERAGE PRICE             SHARES         AVERAGE PRICE
---------------               ------       --------------      --------------            -------         -------------
<S>                            <C>               <C>               <C>                   <C>                <C>
$ 1.00-$ 2.00                    684             3.51              $  1.69                  295             $  1.53
$ 2.04-$ 2.75                    520             4.49              $  2.58                   76             $  2.29
$ 2.77-$ 3.02                     92             3.19              $  2.94                   37             $  2.95
$ 3.09-$ 3.09                    687             5.06              $  3.09                   20             $  3.09
$ 3.16-$ 3.97                    482             3.33              $  3.43                  262             $  3.37
$ 4.00-$ 4.00                    200             3.69              $  4.00                   80             $  4.00
$ 4.13-$ 4.13                  1,010             3.75              $  4.13                  865             $  4.13
$ 4.25-$11.94                    538             3.54              $  7.56                  283             $  7.36
$12.81-$18.25                    324             4.46              $ 14.38                  163             $ 14.28
$19.38-$19.38                     45             4.66              $ 19.38                   39             $ 19.38
                               -----             ----              -------                -----             -------
$ 1.00-$19.38                  4,582             3.97              $  4.61                2,120             $  5.06
                               =====             ====              =======                =====             =======
</TABLE>

    The Company applies Accounting Principles Board Opinion No. 25, "Accounting
For Stock Issued To Employees", and related interpretations in accounting for
its option plans. Accordingly, as all options have been granted at exercise
prices greater than or equal to fair market value on the date of grant, no
compensation expense has been recognized by the Company in connection with its
stock-based compensation plans. Had compensation cost for the Company's stock
option plans been determined based upon the fair value at the grant date for
awards under these plans consistent with the methodology prescribed under
Statement of Financial Accounting Standards No. 123, "Accounting For Stock-Based
Compensation", the Company's earnings (loss) available to common stockholders
and earnings (loss) per share would have been as follows:

<TABLE>
<CAPTION>

                                                                                    2001       2000       1999
                                                                                 ----------   -------   ---------
<S>                                                                              <C>          <C>        <C>
Earnings (loss) available to common stockholders:
  As reported................................................................    $ (105,077)  $ 9,950   $  (9,721)
  Pro forma..................................................................      (109,077)    6,069     (14,206)
Basic earnings (loss) per share:
  As reported................................................................    $    (2.94)  $  0.32   $   (0.38)
  Pro forma..................................................................         (3.06)     0.19       (0.55)
Diluted earnings (loss) per share:
  As reported................................................................    $    (2.94)  $  0.27   $   (0.38)
  Pro forma..................................................................         (3.06)     0.15       (0.55)
</TABLE>

    The weighted average fair value of the options granted during fiscal 2001,
2000 and 1999 is estimated at $2.27, $7.96 and $2.01 on the date of grant (using
Black-Scholes option pricing model) with the following weighted average
assumptions for fiscal 2001, 2000 and 1999, respectively: volatility of 107%,
95% and 95%, risk-free interest rate of 3.90%, 5.94% and 6.02%, and an expected
life of five years in fiscal 2001, 2000 and 1999, respectively.

11.  CUSTOMERS, GEOGRAPHIC AND SEGMENT INFORMATION

   MAJOR CUSTOMERS AND CREDIT CONCENTRATIONS

    In fiscal 2001, revenues from one customer represented 10% of total revenues
and more than 10% of recorded accounts receivables at September 30, 2001. During
fiscal 2000 and 1999, no customer accounted for more than 10% of total revenues.

                                       37
<PAGE>

GEOGRAPHIC OPERATIONS

    Operations by geographic area are summarized as follows:

<TABLE>
<CAPTION>

                                                                                UNITED
FISCAL YEAR ENDED SEPTEMBER 30, 2001                                            STATES     EUROPE   ELIMINATIONS  CONSOLIDATED
------------------------------------                                          ----------  --------  ------------  ------------
<S>                                                                           <C>         <C>         <C>           <C>
Revenues from unaffiliated customers......................................    $ 103,322   $  4,523    $     --      $107,845
Transfers between geographic areas........................................        2,424         --      (2,424)           --
                                                                              ---------   --------    --------      --------
     Total revenues.......................................................      105,746      4,523      (2,424)      107,845
                                                                              =========   ========    ========      ========
Income (loss) before income tax provision.................................      (80,253)    (4,153)         --       (84,406)
                                                                              =========   ========    ========      ========
Identifiable assets.......................................................       86,056      2,246        (355)       87,947
                                                                              =========   ========    ========      ========
</TABLE>

<TABLE>
<CAPTION>

                                                                                UNITED
FISCAL YEAR ENDED SEPTEMBER 30, 2000                                            STATES      EUROPE   ELIMINATIONS  CONSOLIDATED
------------------------------------                                          ---------    --------  ------------  ------------
<S>                                                                           <C>          <C>         <C>          <C>
Revenues from unaffiliated customers......................................    $ 214,976    $  8,217    $     --     $223,193
Transfers between geographic areas........................................        3,946          --      (3,946)          --
                                                                              ---------    --------    --------     --------
     Total revenues.......................................................      218,922       8,217      (3,946)     223,193
                                                                              =========    ========    ========     ========
Income (loss) before income tax provision.................................       13,080      (2,355)         --       10,725
                                                                              =========    ========    ========     ========
Identifiable assets.......................................................      195,681       4,952      (5,149)     195,484
                                                                              =========    ========    ========     ========
</TABLE>

<TABLE>
<CAPTION>

                                                                                 UNITED
FISCAL YEAR ENDED SEPTEMBER 30, 1999                                             STATES     EUROPE   ELIMINATIONS  CONSOLIDATED
------------------------------------                                           ----------  --------  ------------  -------------
<S>                                                                            <C>         <C>          <C>          <C>
Revenues from unaffiliated customers......................................     $ 117,924   $ 10,306     $     --     $128,230
Transfers between geographic areas........................................         4,405         --       (4,405)          --
                                                                               ---------   --------     --------     --------
     Total revenues.......................................................       122,329     10,306       (4,405)     128,230
                                                                               =========   ========     ========     ========
Income (loss) before income tax provision  (benefit)......................        (7,511)    (1,747)          --       (9,258)
                                                                               =========   ========     ========     ========
Identifiable assets.......................................................       125,911      6,821       (9,531)     123,201
                                                                               =========   ========     ========     ========
</TABLE>

    Total revenues from customers outside the U.S. were $65,640, $158,152 and
$71,352 for the fiscal years ended September 30, 2001, 2000 and 1999,
respectively.

    Export sales from the Company's U.S. divisions to unaffiliated customers,
which are generally denominated in U.S. dollars, for the fiscal years ended
September 30, 2001, 2000 and 1999 were as follows:

                                                2001      2000        1999
                                              --------  ---------   --------
Europe...................................     $ 3,080   $   9,670   $  6,686
Asia/Pacific Rim.........................      55,351     137,033     52,724
Other....................................       2,686       3,232      1,636
                                              -------   ---------   --------
     Total...............................     $61,117   $ 149,935   $ 61,046
                                              =======   =========   ========

SEGMENT INFORMATION

    The Company operates in two reportable segments serving the machine vision
industry. The Company has determined segments primarily based on the nature of
the products offered by the Semiconductor Equipment Group and the Acuity
CiMatrix division. The Semiconductor Equipment Group is comprised of the
Electronics, Systemation and Vanguard subdivisions. The Electronics subdivision,
including Abante Automation, supplies inspection equipment to the semiconductor
industry; the Systemation subdivision offers tape and reel component processing
systems designed to handle and inspect chip scale packages ("CSP") and ball grid
array ("BGA") packages; and the Vanguard subdivision is a supplier of BGA and
CSP equipment for the semiconductor and connection industries. The Acuity
CiMatrix division designs, manufactures and markets 2-D data collection products
and barcode reading systems, as well as 2-D machine vision systems and lighting
products for use in industrial automation.

    The accounting policies of each segment are the same as those described in
Note 1. Sales between segments are determined based on an intercompany price
that is consistent with external customers. Intersegment sales by the Acuity
CiMatrix division were approximately $965, $3,800 and $1,300 for fiscal 2001,
2000 and 1999, respectively. Other income (loss) is comprised of unallocated
corporate general and administrative expenses. Other assets are comprised
primarily of unallocated deferred taxes and corporate accounts. Although certain
research activities are conducted by the Acuity CiMatrix division for the
Semiconductor Equipment Group, research and development expenses are reported in
the segment where the costs are incurred. The following table presents
information about the Company's reportable segments.

                                       38
<PAGE>

                                                 2001        2000       1999
                                               --------    --------   --------
REVENUES:
Semiconductor Equipment.....................   $ 71,840    $175,382   $ 82,793
Acuity CiMatrix.............................     36,005      47,811     45,437
                                               --------    --------   --------
   Total Revenues...........................   $107,845    $223,193   $128,230
                                               ========    ========   ========

INCOME (LOSS) FROM OPERATIONS
Semiconductor Equipment.....................   $(44,302)   $ 21,722   $     41
Acuity CiMatrix.............................    (30,055)     (2,058)    (1,464)
Other.......................................     (8,869)     (7,506)    (7,260)
                                               --------    --------   --------
   Total income (loss) from operations......   $(83,226)   $ 12,158   $ (8,683)
                                               ========    ========   ========

DEPRECIATION AND AMORTIZATION
Semiconductor Equipment.....................   $  9,317    $  7,691   $  7,375
Acuity CiMatrix.............................      5,008       3,232      3,396
Other.......................................        558         115         --
                                               --------    --------   --------
   Total depreciation and amortization......   $ 14,883    $ 11,038   $ 10,771
                                               ========    ========   ========

INVENTORY PROVISIONS
Semiconductor Equipment.....................   $ 10,817    $     --   $     --
Acuity CiMatrix.............................      6,483          --         --
                                               --------    --------   --------
Total inventory provisions..................   $ 17,300    $     --   $     --
                                               ========    ========   ========

SEVERANCE AND OTHER CHARGES
Semiconductor Equipment.....................   $  8,415    $     --   $     67
Acuity CiMatrix.............................      8,852          --        188
Other.......................................         69          --         --
                                               --------    --------   --------
         Total severance and other..........   $ 17,336    $     --   $    255
                                               ========    ========   ========

TOTAL ASSETS
Semiconductor Equipment.....................   $ 54,947    $119,293   $ 79,800
Acuity CiMatrix.............................     29,100      47,185     32,286
Other.......................................      3,901      29,006     11,115
                                               --------    --------   --------
   Total Assets.............................   $ 87,947    $195,484   $123,201
                                               ========    ========   ========

EXPENDITURES FOR PLANT AND EQUIPMENT, NET
Semiconductor Equipment.....................   $  1,431    $  6,021   $  2,252
Acuity CiMatrix.............................        636       3,181        633
Other.......................................        218         400         --
                                               --------    --------   --------
   Total expenditures for plant and
     equipment, net.........................   $  2,285    $  9,602   $  2,885
                                               ========    ========   ========

EXPENDITURES FOR SOFTWARE DEVELOPMENT COSTS
Semiconductor Equipment.....................   $  2,370    $  3,420   $  2,562
Acuity CiMatrix.............................      1,039       1,649      1,507
                                               --------    --------   --------
   Total expenditures for software
    development costs ......................   $  3,409    $  4,211   $  4,927
                                               ========    ========   ========

    Loss from operations for fiscal 2001 included a charge for in-process
research and development costs associated with the Semiconductor Equipment Group
totaling $1,050.

12.  ACQUISITIONS

    In November 1999, the Company acquired Polaroid's interest in the MXi,
including all relevant intellectual property rights, for $2,000. The Company
will pay Polaroid a royalty based on net sales of the MXi.

    On November 29, 2000, the Company acquired the outstanding shares of Abante
Automation, Inc. ("Abante") for approximately $1,850 in cash, a twelve-month
note of $1,500 at 8% interest and recorded the net present value of future
minimum payments of $500 per year for 5 years using a discount rate of 8% (see
Note 7). Abante designs, manufactures and markets machine vision systems for
three-dimensional inspection in the semiconductor and electronics industries.

    On January 3, 2001, the Company acquired the outstanding shares of Auto
Image ID, Inc. ("AIID") for approximately $1,200 in cash and three-year notes
payable at $1,855 per year at prime rate (see Note 7). AIID designs,
manufactures and markets products for reading direct part marks and
two-dimensional bar codes.

    The acquisitions have been accounted for as purchases and, accordingly, the
results of Abante and AIID are included in the consolidated statements of
operations of the Company since the respective dates of acquisition. Under the
purchase method of accounting, the acquired assets and assumed liabilities have
been recorded at their estimated fair values at the dates of acquisition.

                                       39
<PAGE>

    The valuation of the existing technology and in-process research and
development was determined using the income method. Revenue and expense
projections as well as technology assumptions were prepared through 2006. The
projected cash flows were discounted using a 25% rate. The value assigned to
in-process technology relates primarily to one research project, as yet to reach
technological feasibility and which had no alternative use at the date of
purchase. The in-process research and development related to a single project
for the development of 3-D inspection technology. Management is primarily
responsible for estimating the fair value of the acquired in-process research
and development, and the valuation was determined separately from all other
acquired assets using the percentage of completion method. The significant
assumptions underlying the valuation of this technology included revenues
commencing in 2001, a completion ratio of 64% which was calculated by dividing
the total expenditures to date for the project by the total estimated
expenditures, and a discount rate of 30%. The efforts required to develop the
in-process technologies into commercially viable products principally relate to
the completion of all planning, designing, prototyping, verification and testing
activities that are necessary to establish that the products can be designed to
meet their design specifications, including function, features and technical
performance requirements. At September 30, 2001, this project was substantially
concluded.

    The allocation of the total cost of the acquisitions in 2001 of
approximately $12,550 was as follows: approximately $5,300 was allocated to
existing technologies; $1,050 to in-process research and development;
approximately $1,800 to other identified intangible assets and $4,400 to
goodwill. The intangible lives range from 4 to 5 years and the goodwill was
being amortized over 7 years. Future minimum payments under non-cancelable
commitments are discounted using applicable rates. The operations of Abante and
AIID prior to their acquisitions by the Company, are not material to the
Company's statement of operations.

                                       40
<PAGE>

13.  EARNINGS PER SHARE

    Basic net income (loss) per share is computed using the weighted average
number of shares outstanding during each period. Diluted net income per share
reflects the effect of the Company's outstanding stock options and warrants
(using the treasury stock method), except where such options and warrants would
be anti-dilutive. The calculations for earnings per share for the three years
ended September 30, 2001, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>

                                                                                               2001         2000      1999
                                                                                            ----------   --------  --------
<S>                                                                                         <C>          <C>       <C>
BASIC EPS
Income (loss) before cumulative effect of accounting change.............................    $  (93,626)  $ 10,722  $ (9,258)
Premium on prepaid warrants.............................................................          (704)      (772)     (463)
                                                                                            ----------   --------  --------
Income (loss) before cumulative effect-- basic numerator................................       (94,330)     9,950    (9,721)
Cumulative effect of accounting change-- basic numerator................................       (10,747)        --        --
                                                                                            ----------   --------  --------
Net income (loss)-- basic numerator.....................................................    $ (105,077)  $  9,950  $ (9,721)
                                                                                            ----------   --------  --------
Weighted average number of common shares-- basic denominator............................        35,683     31,431    25,669
                                                                                            ----------   --------  --------
Per Share:
Income (loss) before cumulative effect of accounting change-- basic.....................    $    (2.64)  $   0.32  $  (0.38)
                                                                                            ----------   --------- --------
Cumulative effect of accounting change-- basic..........................................    $    (0.30)  $     --  $     --
                                                                                            ----------   --------  --------
Net income (loss)-- basic...............................................................    $    (2.94)  $   0.32  $  (0.38)
                                                                                            ----------   --------- ---------
DILUTED EPS
Income (loss) before cumulative effect of accounting change-- basic numerator...........    $  (94,330)  $  9,950  $ (9,721)
Effect of conversion of prepaid warrants................................................            --        772        --
                                                                                            ----------   --------  --------
Income (loss) before cumulative effect-- diluted numerator..............................       (94,330)    10,722  $ (9,721)
Cumulative effect of accounting change-- diluted numerator..............................       (10,747)        --        --
                                                                                            ----------   --------  --------
Net income (loss)-- diluted numerator...................................................    $ (105,077)  $ 10,722  $ (9,721)
                                                                                            ----------   --------  --------
Weighted average number of common shares-- basic denominator............................        35,683     31,431    25,669
Effect of conversion of prepaid warrants................................................            --      2,778        --
Effect of other dilutive common stock options and warrants..............................            --      5,595        --
                                                                                            ----------   --------  --------
Weighted average number of common and common equivalent shares-- diluted denominator....        35,683     39,804    25,669
                                                                                            ----------   --------  --------
Per Share:
Income (loss) before cumulative effect-- diluted........................................    $    (2.64)  $   0.27  $  (0.38)
                                                                                            ----------   --------  --------
Cumulative effect of accounting change-- diluted........................................    $    (0.30)  $     --  $     --
                                                                                            ----------   --------  --------
Net income (loss)-- diluted.............................................................    $    (2.94)  $   0.27  $  (0.38)
                                                                                            ----------   --------  --------
</TABLE>

    For the years ended September 30, 2001, 2000 and 1999, the Company had
potential common shares, representing outstanding stock options and warrants,
excluded from the earnings per shares calculation of 11,945, 514, and 2,500
respectively, as they were considered anti-dilutive.

14.  RESTRUCTURING AND IMPAIRMENTS

    In response to the lower level of revenues in fiscal 2001, the Company took
steps to reduce its operating costs. In addition, the Company reviewed its
long-lived assets for impairment. A summary of these restructuring costs and
impairment charges are as follows:

<TABLE>
<CAPTION>


                                                                                       CASH     NON-CASH
                                                              CHARGES IN   AMOUNTS    AMOUNTS   AMOUNTS      LIABILITY AT
                                                              FISCAL 2001  REVERSED  INCURRED   INCURRED   SEPTEMBER 30, 2001
                                                              -----------  --------  --------   --------   ------------------
<S>                                                              <C>         <C>      <C>       <C>             <C>
RESTRUCTURING
  Severance payments to employees............................   $ 3,661     $ 124     $ 2,620    $    --        $   917
  Exit costs from facilities.................................     1,572       853         359         --            360
  Write-off of other tangible and intangible assets..........       905        --          --        905             --
                                                                -------     -----     -------    -------        -------
  Subtotal restructuring.....................................     6,138       977       2,979        905          1,277
                                                                -------     -----     -------    -------        -------
IMPAIRMENTS
  Capitalized software.......................................     3,243        --          --      3,243             --
  Purchased technologies.....................................     4,160        --          --      4,160             --
  Goodwill...................................................     3,915        --          --      3,915             --
  Write-off of other tangible assets.........................       857        --          --        857             --
                                                                -------     -----     -------    -------        -------
  Subtotal impairments.......................................    12,175        --          --     12,175             --
                                                                -------     -----     -------    -------        -------
Total........................................................   $18,313     $ 977     $ 2,979    $13,080        $ 1,277
                                                                =======     =====     =======    =======        =======
</TABLE>

Restructuring -- The Company experienced a significant decline in orders and
revenues commencing with the first quarter of fiscal 2001. Management's response
was to develop and implement headcount reduction plans designed to reduce costs
and expenses. As the downturn in the economy worsened, management reviewed its
operational plan and made further headcount reductions. During all quarters of
fiscal 2001, management made decisions to terminate employees in response to
lower revenues. In addition to headcount reductions, the Company exited certain
facilities, including substantially all European locations. The remaining lease
obligations were accrued when an exit plan was determined. Certain tangible and
intangible assets were also abandoned in connection with the restructuring
efforts. Restructuring charges, totaling approximately $5,200 after reversals,
were recorded during fiscal 2001. The charges can be summarized as follows:

                                       41
<PAGE>
-    During the quarter ended December 31, 2000, approximately $1,475 of
     employee severance was recorded. Headcount reductions were made in the
     Semiconductor Equipment Group, the Acuity CiMatrix division, as well as
     within the Corporate staff. Approximately 110 employees were terminated
     throughout all functions of these operations. In addition, a restructuring
     of the European operations led to lease termination costs, a write-off of
     facility leasehold improvement costs and write-off of intangible assets
     considered impaired with the closure of the European businesses, all of
     which totaled approximately $1,200.

-    In the quarter ended March 31, 2001, approximately $797 of severance was
     recorded. Approximately 90 employees were terminated throughout all
     functions of the Semiconductor Equipment Group and the Acuity CiMatrix
     division. Approximately $124 of severance was reversed as a result of lower
     termination costs than anticipated. Continued efforts to downsize the
     European operations led to lease termination costs and write-off of
     facility leasehold improvements, totaling approximately $364.

-    In the quarter ended June 30, 2001, approximately $497 of severance was
     recorded. Approximately 100 employees were terminated throughout all
     functions of the Semiconductor Equipment Group and the Acuity CiMatrix
     division.

-    In the quarter ended September 30, 2001, approximately $900 of severance
     was recorded, representing 100 employees throughout all functions of the
     Semiconductor Equipment Group and the Acuity CiMatrix division.
     Finalization of the European facilities' closures and other restructuring
     activities resulted in a $900 write-off of abandoned property and equipment
     and certain intangibles, totaling $200. As a result of favorable
     negotiations, the estimated lease obligations on a facility in the U.K.
     were reduced by $900.

                                       42
<PAGE>

     All charges should be paid within the Company's fiscal year ended September
30, 2002, with the exception of exit costs from lease facilities. These exit
costs include the Company's estimated costs on non-cancelable leases, expected
to be incurred over the remaining lease terms, which range from 1 to 3 years.

    Impairments -- Because of the significant decline in revenues in 2001, the
Company reviewed its long-lived assets, including capitalized software,
purchased technologies and goodwill for impairment. To evaluate and measure the
impairment of capitalized software the Company considered the estimated future
gross revenues reduced by estimated future costs, including costs of performing
maintenance and customer support. To evaluate the impairment of purchased
technologies and goodwill, the Company compared the carrying amount to estimated
undiscounted net future cash flows. If an impairment was indicated, the amount
was measured as the excess of the carrying amount over the fair market value of
the asset, which the Company estimated using a discounted cash flow model.

15.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

   FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2001 AND 2000:

<TABLE>
<CAPTION>

                                                                                   2001
                                                               --------------------------------------------
                                                                 FIRST      SECOND     THIRD       FOURTH
                                                                QUARTER     QUARTER   QUARTER      QUARTER
                                                               ---------   ---------  ---------   ---------
<S>                                                            <C>         <C>        <C>         <C>
Revenues...................................................    $  38,964   $  31,307  $  21,061   $  16,513
Inventory provision                                                   --      10,299        650       5,551
Gross profit...............................................       14,376       1,511      5,294      (3,349)
Severance and other charges                                        2,663       1,037        914      12,722
In-process research and development                                   --       1,050         --          --
Net loss...................................................      (22,327)    (22,458)   (14,623)    (44,965)
Net loss per share-- diluted...............................        (0.64)      (0.63)     (0.41)      (1.25)
</TABLE>

<TABLE>
<CAPTION>

                                                                                  2000
                                                               -------------------------------------------
                                                                 FIRST     SECOND      THIRD      FOURTH
                                                                QUARTER    QUARTER    QUARTER     QUARTER
                                                               --------    --------   --------    --------
<S>                                                            <C>         <C>        <C>         <C>
Revenues...................................................    $ 46,697    $ 56,153   $ 61,181    $ 59,162
Gross profit...............................................      20,659      24,477     27,723      25,980
Net income.................................................       1,186       3,262      5,319         955
Net income per share-- diluted.............................        0.03        0.08       0.12        0.02
</TABLE>

16.  SUBSEQUENT EVENTS (UNAUDITED)

    As of December 15, 2001 the Company sold its one-dimensional material
handling product line ("material handling business"), which had been part of the
Company's Acuity CiMatrix division to affiliates of SICK AG of Germany. The
material handling business designs, manufactures and markets one-dimensional bar
code reading and machine vision systems and related products used in the
automatic identification and data collection market to track packages for the
parcel delivery services and material handling industries. The sales price was
$11,500, which includes the right to receive $500 following the expiration of a
16 month holdback to protect the purchaser against the possibility of
non-disclosed liabilities. The costs of the transaction are estimated to be
$500. The Company has estimated that it will record a net gain of $7.0 million
in the first quarter of fiscal 2002.

    The following unaudited pro forma financial information reflects adjustments
to the historical consolidated balance sheet and statements of operations of the
Company to give effect to the sale of the material handling business. The
unaudited pro-forma consolidated balance sheet as of September 30, 2001 gives
pro forma effect to the sale and related pro forma accounting adjustments as if
the sale had occurred on September 30, 2001. The unaudited pro forma
consolidated statements of operations for the year ended September 30, 2001 give
pro forma effect to the sale and related pro forma accounting adjustments as if
the sale had occurred on October 1, 2000, the beginning of the Company's fiscal
year 2001. The pro-forma adjustments relating to the sale are described in the
notes included below.

    The following unaudited pro forma financial information is presented for
illustrative purposes only and is not necessarily indicative of the financial
position or results of operations that would have been obtained had the sale
actually occurred on the dates assumed, nor is it necessarily indicative of the
future financial position or future operating results of the Company.

                                       43
<PAGE>

         UNAUDITED CONSOLIDATED BALANCE SHEET WITH PRO FORMA ADJUSTMENTS
                               SEPTEMBER 30, 2001

<TABLE>
<CAPTION>
                                                                      HISTORICAL       A,B       PRO FORMA
                                                                         RVSI      ADJUSTMENTS  AS ADJUSTED
                                                                      ----------   -----------  -----------
<S>                                                                    <C>         <C>             <C>
ASSETS
Current Assets:
  Cash and cash equivalents.......................................     $  3,554    $ 10,500(a)     $14,054
  Accounts receivable, net........................................       14,866          --         14,866
  Inventories, net................................................       34,765      (2,962)(b)     31,803
Prepaid expenses and other current assets.........................        2,168          --          2,168
                                                                       --------    --------        -------
     Total current assets.........................................       55,353       7,538         62,891
Plant and equipment, net..........................................       10,393        (432)(b)      9,961
Deferred income taxes.............................................           --          --             --
Goodwill..........................................................        4,265          --          4,265
Software development costs, net...................................        9,944        (826)(b)      9,118
Intangibles and other long-term assets............................        7,992         (38)(b)      7,954
                                                                       --------    --------        -------
                                                                       $ 87,947       6,242        $94,189
                                                                       ========    ========        =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Revolving credit facility.......................................     $  2,385          --        $ 2,385
  Notes payable and current portion of long-term debt.............        4,259          --          4,259
  Accounts payable................................................       13,694          --         13,694
  Accrued expenses and other current liabilities..................       17,401        (769)(b)     16,632
  Deferred gross profit...........................................        2,469          --          2,469
                                                                       --------    --------        -------
     Total current liabilities....................................       40,208        (769)        39,439
Long-term debt....................................................        7,240          --          7,240
                                                                       --------    --------        -------
     Total liabilities............................................       47,448        (769)        46,679
Commitments and contingencies (Note 9)
Prepaid warrants..................................................        7,067          --          7,067
Total stockholders' equity........................................       33,432       7,011(c)(e)   40,443
                                                                       --------    --------        -------
                                                                       $ 87,947       6,242        $94,189
                                                                       ========    ========        =======
</TABLE>



       See Notes to Unaudited Pro Forma Consolidated Financial Statements.



                                       44
<PAGE>



    UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS WITH PRO FORMA ADJUSTMENTS
                               SEPTEMBER 30, 2001

<TABLE>
<CAPTION>


                                                                       HISTORICAL         C,D        PRO FORMA
                                                                          RVSI        ADJUSTMENTS   AS ADJUSTED
                                                                       ----------     -----------   -----------
<S>                                                                    <C>            <C>           <C>
Revenues..........................................................     $  107,845      (16,104)(d)   $  91,741
Cost of revenues..................................................         73,513      (11,002)(d)      62,511
Inventory provisions..............................................         16,500           --          16,500
                                                                       ----------    ---------       ---------
Gross profit......................................................         17,832       (5,102)         12,730
                                                                       ----------    ---------       ---------
Operating costs and expenses:
Research and development expenses.................................         28,352       (1,964)(d)      26,388
Selling, general and administrative expenses......................         54,320       (2,940)(d)      51,380
Severance and other charges.......................................         17,336           --          17,336
In-process research and development...............................          1,050           --           1,050
                                                                       ----------    ---------       ---------
Income (loss) from operations.....................................        (83,226)        (198)        (83,424)
Interest expense..................................................         (1,622)          --          (1,622)
Interest income...................................................            442           --             442
                                                                       ----------    ---------       ---------
Income (loss) before income taxes.................................        (84,406)        (198)        (84,604)
Provision for income taxes........................................          9,220           --(e)        9,220
                                                                       ----------    ---------       ---------
Income (loss) before cumulative effect of accounting
  change..........................................................        (93,626)        (198)        (93,824)
Cumulative effect of accounting change............................        (10,747)          --         (10,747)
                                                                       ----------    ---------       ---------
Net income (loss).................................................     $ (104,373)   $    (198)      $(104,571)
                                                                       ==========    =========       =========
Net income (loss) per share:
Income (loss) before cumulative effect
  Basic...........................................................     $    (2.64)                   $   (2.65)
  Diluted.........................................................     $    (2.64)                   $   (2.65)
Cumulative effect of accounting change:
  Basic...........................................................     $    (0.30)                   $   (0.30)
  Diluted.........................................................     $    (0.30)                   $   (0.30)
Net income (loss)
  Basic...........................................................     $    (2.94)                   $   (2.95)
  Diluted.........................................................     $    (2.94)                   $   (2.95)
Weighted average shares:
  Basic...........................................................         35,683                       35,683
  Diluted.........................................................         35,683                       35,683
</TABLE>



       See Notes to Unaudited Pro Forma Consolidated Financial Statements.


                                       45
<PAGE>

         NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

BALANCE SHEET --

    (a) To record proceeds from the disposition

    (b) To record the assets acquired and liabilities assumed by SICK, which is
subject to final audit and settlement

    (c) To record the estimated gain on disposition, which is subject to a
final audit and post-closing adjustments

STATEMENT OF OPERATIONS --

    (d) To eliminate $16,104 of revenue, $11,002 of related costs of revenues
and $4,904 of operating expense due to the disposition of the 1-D business

    (e) Due to significant net operating loss carryforwards, the Company has not
incurred Federal or State income taxes on these operations and does not expect
to incur a tax expense associated with the gain on the transaction.


                                       46
<PAGE>



          SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


<TABLE>
<CAPTION>

                                                               COLUMN A    COLUMN B     COLUMN C      COLUMN D      COLUMN E
                                                              ---------- -----------  -----------   ------------   ----------
                                                                                        ADDITION
                                                                                       CHARGED TO
                                                              BALANCE AT  CHARGED TO      OTHER                     BALANCE
                                                               BEGINNING   COST AND     ACCOUNTS    DEDUCTION --   AT END OF
DESCRIPTION                                                    OF PERIOD   EXPENSES     DESCRIBED    DESCRIBED      PERIOD
-----------                                                   ----------  ----------  -----------   ------------   ---------
                                                                                    (IN THOUSANDS)
<S>                                                              <C>       <C>           <C>          <C>           <C>
Year Ended September 30, 2001:

  Allowance for doubtful accounts.........................      $ 1,434    $ 1,122       $  --        $ 629(1)      $ 1,927
                                                                -------    -------       -----        -----         -------
  Reserve for excess and obsolete inventory...............      $ 7,670    $17,300       $  --        $3,682(1)     $21,288
                                                                -------    -------       -----        ------        -------
  Reserve for sales warranties............................      $ 1,411    $ 1,990       $  --        $1,245(1)     $ 2,156
                                                                -------    -------       -----        ------        -------
Year Ended September 30, 2000:                                                           $  --
                                                                                         -----
  Allowance for doubtful accounts.........................      $   892    $   662       $  --        $ 120(1)      $ 1,434
                                                                -------    -------       -----        -----         -------
  Reserve for excess and obsolete inventory...............      $ 7,538    $ 1,425       $  --        $1,293(1)     $ 7,670
                                                                -------    -------       -----        ------        -------
  Reserve for sales warranties............................      $ 1,448    $ 5,024       $  --        $5,061(1)     $ 1,411
                                                                -------    -------       -----        ------        -------
Year Ended September 30, 1999:

  Allowance for doubtful accounts.........................      $ 1,000    $   202       $  --        $ 310(1)      $   892
                                                                -------    -------       -----        -----         -------
  Reserve for excess and obsolete inventory...............      $15,448    $   622       $  --        $8,532(1)     $ 7,538
                                                                -------    -------       -----        ------        -------
  Reserve for sales warranties............................      $ 3,051    $ 3,059       $  --        $4,437(1)     $ 1,448
                                                                -------    -------       -----        ------        -------
</TABLE>

----------

(1) Amounts written off.

                                       47
<PAGE>

                                   SIGNATURES

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


                                         ROBOTIC VISION SYSTEMS, INC.


Dated July 16, 2002                      By:   /s/ PAT V. COSTA
                                              ----------------------------------
                                              PAT V. COSTA
                                              Chairman, President and Chief
                                              Executive Officer



                                       48