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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


Form 10-Q

(Mark One)

|    |  |                                                        
|--- |  | -------------------------------------------------------
|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|    |  | SECURITIES EXCHANGE ACT OF 1934                        

For the quarterly period ended September 30, 2003

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 000-22430

ASYST TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)




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

48761 Kato Road, Fremont, California 94538
(Address of principal executive offices, including zip code)

(510) 661-5000
(Registrants telephone number, including area code)

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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes [X]   No [  ]


The number of shares of the registrants Common Stock, no par value,
outstanding as of October 31, 2003 was 39,847,286.



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TABLE OF CONTENTS



|                               |                                                                                                |                                                      |  |  |  |  |  | 
|------------------------------ | ---------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|Part I  FINANCIAL INFORMATION
|                               | Item 1  Financial Statements                                                                 
|                               |                                                                                                | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                               |                                                                                                | CONSOLIDATED STATEMENTS OF OPERATIONS               
|                               |                                                                                                | CONSOLIDATED STATEMENTS OF CASH FLOWS               
|                               |                                                                                                | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                               | Item 2  Managements Discussion and Analysis of Results of Operations and Financial Condition
|                               | Item 3  Quantitative and Qualitative Disclosures About Market Risk                           
|                               | Item 4  Controls and Procedures                                                              
|PART II  OTHER INFORMATION   
|                               | Item 1  Legal Proceedings                                                                    
|                               | Item 4. Submission of Matters to a Vote of Security Holders                                   
|                               | Item 6  Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                    
|EXHIBIT INDEX                 
|EXHIBIT 10.45                 
|EXHIBIT 10.46                 
|EXHIBIT 10.47                 
|EXHIBIT 10.48                 
|EXHIBIT 10.49                 
|EXHIBIT 31.1                  
|EXHIBIT 31.2                  
|EXHIBIT 32.1                  



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ASYST TECHNOLOGIES, INC.
TABLE OF CONTENTS

|                              |         |                                                                                                                               |    |          |    | 
|----------------------------- | ------- | ----------------------------------------------------------------------------------------------------------------------------- | -- | -------- | -- | 
|                              |         |                                                                                                                               |    | Page No.
|                              |         |                                                                                                                               |    |         
|Part I. Financial Information |         |                                                                                                                               |    |         
|                              | Item 1. | Condensed Consolidated Financial Statements                                                                                   |    |          |    | 
|                              |         | Condensed Consolidated Balance Sheets  September 30, 2003 and March 31, 2003                                                 |    |          | 3  | 
|                              |         | Condensed Consolidated Statements of Operations  Three Months and Six Months
Ended September 30, 2003 and September 30, 2002 |    |          | 4  | 
|                              |         | Condensed Consolidated Statements of Cash Flows  Six Months Ended September
30, 2003 and September 30, 2002                  |    |          | 5  | 
|                              |         | Notes to Condensed Consolidated Financial Statements                                                                          |    |          | 6  | 
|                              | Item 2. | Managements Discussion and Analysis of Financial Condition and Results of
Operations                                         |    |          | 16 | 
|                              | Item 3. | Quantitative and Qualitative Disclosures About Market Risk                                                                    |    |          | 32 | 
|                              | Item 4. | Controls and Procedures                                                                                                       |    |          | 33 | 
|Part II. Other Information    |         |                                                                                                                               |    |         
|                              | Item 1. | Legal Proceedings                                                                                                             |    |          | 33 | 
|                              | Item 4. | Submission of Matters to a Vote of Security Holders                                                                           |    |          | 34 | 
|                              | Item 6. | Exhibits and Reports on Form 8-K                                                                                              |    |          | 35 | 
|Signatures                    |         |                                                                                                                               | 37 |         
|Exhibit Index                 |         |                                                                                                                               | 38 |         
|Exhibit 10.45                 |         |                                                                                                                               |    |         
|Exhibit 10.46                 |         |                                                                                                                               |    |         
|Exhibit 10.47                 |         |                                                                                                                               |    |         
|Exhibit 10.48                 |         |                                                                                                                               |    |         
|Exhibit 10.49                 |         |                                                                                                                               |    |         
|Exhibit 31.1                  |         |                                                                                                                               |    |         
|Exhibit 31.2                  |         |                                                                                                                               |    |         
|Exhibit 32.1                  |         |                                                                                                                               |    |         

2



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##### Table of Contents






Part I  FINANCIAL INFORMATION




Item 1  Financial Statements




ASYST TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands)

|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |          |         |  | 
|---------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ------------------------------------------------------- | -------- | ------------- |  | --------- | -------- | ------- |  | 
|                       |                                                                                                                                         |                                                               |                                                         |          | September 30, |  | March 31,
|                       |                                                                                                                                         |                                                               |                                                         |          | 2003          |  | 2003     
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |          
|ASSETS                 |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|CURRENT ASSETS:        |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|                       | Cash and cash equivalents                                                                                                               |                                                               | $                                                       | 77,444   |               |  | $         | 96,214   |        
|                       | Restricted cash                                                                                                                         |                                                               |                                                         | 2,268    |               |  |           | 3,088    |        
|                       | Accounts receivable, net of allowance for doubtful accounts of $5,078
and $4,880 at September 30, 2003 and March 31, 2003, respectively |                                                               |                                                         | 81,848   |               |  |           | 74,878   |        
|                       | Inventories                                                                                                                             |                                                               |                                                         | 17,581   |               |  |           | 22,204   |        
|                       | Prepaid expenses and other                                                                                                              |                                                               |                                                         | 9,651    |               |  |           | 10,317   |        
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|                       |                                                                                                                                         | Total current assets                                          |                                                         |          | 188,792       |  |           |          | 206,701 | 
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|                       | Property and equipment, net                                                                                                             |                                                               |                                                         | 23,760   |               |  |           | 24,295   |        
|                       | Goodwill                                                                                                                                |                                                               |                                                         | 69,428   |               |  |           | 65,505   |        
|                       | Intangible assets, net                                                                                                                  |                                                               |                                                         | 73,520   |               |  |           | 76,862   |        
|                       | Other assets                                                                                                                            |                                                               |                                                         | 2,744    |               |  |           | 21,862   |        
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|                       |                                                                                                                                         | Total assets                                                  |                                                         | $        | 358,244       |  |           | $        | 395,225 | 
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|                       |                                                                                                                                         |                                                               | LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS EQUITY |          |               |  |           |          |         |  | 
|CURRENT LIABILITIES:   |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|                       | Short-term loans and notes payable                                                                                                      |                                                               | $                                                       | 18,009   |               |  | $         | 17,976   |        
|                       | Current portion of long-term debt and finance leases                                                                                    |                                                               |                                                         | 27,477   |               |  |           | 1,273    |        
|                       | Accounts payable                                                                                                                        |                                                               |                                                         | 40,478   |               |  |           | 36,527   |        
|                       | Accounts payable-related party                                                                                                          |                                                               |                                                         | 4,770    |               |  |           | 8,500    |        
|                       | Accrued liabilities and other                                                                                                           |                                                               |                                                         | 50,145   |               |  |           | 50,572   |        
|                       | Deferred revenue                                                                                                                        |                                                               |                                                         | 1,416    |               |  |           | 2,130    |        
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|                       |                                                                                                                                         | Total current liabilities                                     |                                                         |          | 142,295       |  |           |          | 116,978 | 
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|LONG-TERM LIABILITIES: |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|                       | Long-term debt and finance leases, net of current portion                                                                               |                                                               |                                                         | 92,523   |               |  |           | 114,812  |        
|                       | Deferred tax liability                                                                                                                  |                                                               |                                                         | 23,227   |               |  |           | 23,754   |        
|                       | Other long-term liabilities                                                                                                             |                                                               |                                                         | 12,434   |               |  |           | 12,754   |        
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|                       |                                                                                                                                         | Total long-term liabilities                                   |                                                         |          | 128,184       |  |           |          | 151,320 | 
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|MINORITY INTEREST      |                                                                                                                                         |                                                               | 62,714                                                  |          |               |  | 58,893    |         
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|SHAREHOLDERS EQUITY   |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|                       | Common stock                                                                                                                            |                                                               |                                                         | 343,176  |               |  |           | 332,569  |        
|                       | Deferred stock-based compensation                                                                                                       |                                                               |                                                         | (3,588   | )             |  |           | (3,992   | )      
|                       | Accumulated deficit                                                                                                                     |                                                               |                                                         | (318,939 | )             |  |           | (265,248 | )      
|                       | Accumulated other comprehensive income                                                                                                  |                                                               |                                                         | 4,402    |               |  |           | 4,705    |        
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|                       |                                                                                                                                         | Total shareholders equity                                    |                                                         |          | 25,051        |  |           |          | 68,034  | 
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         
|                       |                                                                                                                                         | Total liabilities, minority interest and shareholders equity |                                                         | $        | 358,244       |  |           | $        | 395,225 | 
|                       |                                                                                                                                         |                                                               |                                                         |          |               |  |           |         

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

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ASYST TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share amounts)

|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |         |         |        |        |  
|------------------------------------------------------------ | ------------------------------------------------------------------------------------------------ | -------------- | --------------------------- | ------------------------------------------ | ------- | ------------------ | ------- | ---------------- | ------- | ---- | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | ------ | -
|                                                             |                                                                                                  |                |                             |                                            |         | Three Months Ended |         | Six Months Ended
|                                                             |                                                                                                  |                |                             |                                            |         | September 30,      |         | September 30,   
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                 
|                                                             |                                                                                                  |                |                             |                                            |         | 2003               |         | 2002             |         | 2003 |         | 2002   
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |        
|NET SALES                                                    |                                                                                                  | $              | 51,349                      |                                            |         | $                  | 72,319  |                  |         | $    | 96,617  |         |         | $      | 124,183 |        
|COST OF SALES                                                |                                                                                                  |                | 39,350                      |                                            |         |                    | 44,150  |                  |         |      | 80,174  |         |         |        | 79,459  |        
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|                                                             | Gross profit                                                                                     |                |                             | 11,999                                     |         |                    |         | 28,169           |         |      |         | 16,443  |         |        |         | 44,724  |        
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|OPERATING EXPENSES:                                          |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|                                                             | Research and development                                                                         |                |                             | 8,391                                      |         |                    |         | 10,058           |         |      |         | 18,015  |         |        |         | 20,350  |        
|                                                             | Selling, general and administrative                                                              |                |                             | 14,914                                     |         |                    |         | 17,346           |         |      |         | 32,519  |         |        |         | 33,884  |        
|                                                             | Amortization of acquired intangible assets                                                       |                |                             | 4,778                                      |         |                    |         | 1,916            |         |      |         | 9,563   |         |        |         | 3,566   |        
|                                                             | Restructuring charges                                                                            |                |                             | 487                                        |         |                    |         | 3,027            |         |      |         | 4,850   |         |        |         | 3,027   |        
|                                                             | Asset impairment charges                                                                         |                |                             |                                           |         |                    |         | 8,594            |         |      |         | 6,853   |         |        |         | 8,594   |        
|                                                             | In-process research and development of acquired business                                         |                |                             |                                           |         |                    |         | (418             | )       |      |         |        |         |        |         | 2,082   |        
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|                                                             |                                                                                                  |                |                             | Total operating expenses                   |         |                    | 28,570  |                  |         |      | 40,523  |         |         |        | 71,800  |         |         |        | 71,503 |  
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|                                                             |                                                                                                  | Operating loss |                             |                                            | (16,571 | )                  |         |                  | (12,354 | )    |         |         | (55,357 | )      |         |         | (26,779 | )     
|OTHER INCOME (EXPENSE):                                      |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|                                                             | Interest income and other income (expense)                                                       |                |                             | 363                                        |         |                    |         | 552              |         |      |         | 1,112   |         |        |         | 255     |        
|                                                             | Interest expense                                                                                 |                |                             | (1,826                                     | )       |                    |         | (1,497           | )       |      |         | (3,500  | )       |        |         | (2,907  | )      
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|                                                             |                                                                                                  |                | Other income (expense), net |                                            |         | (1,463             | )       |                  |         | (945 | )       |         |         | (2,388 | )       |         |         | (2,652 | )     
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|                                                             | Loss before provision (benefit) from income taxes,
minority interest and discontinued operations |                |                             | (18,034                                    | )       |                    |         | (13,299          | )       |      |         | (57,745 | )       |        |         | (29,431 | )      
|PROVISION (BENEFIT) FROM INCOME TAXES                        |                                                                                                  |                | (1,005                      | )                                          |         |                    | 62,661  |                  |         |      | (2,385  | )       |         |        | 58,628  |        
|MINORITY INTEREST                                            |                                                                                                  |                | (714                        | )                                          |         |                    |        |                  |         |      | (1,669  | )       |         |        |        |        
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|LOSS FROM CONTINUING OPERATIONS                              |                                                                                                  |                | (16,315                     | )                                          |         |                    | (75,960 | )                |         |      | (53,691 | )       |         |        | (88,059 | )      
|DISCONTINUED OPERATIONS, net of income tax                   |                                                                                                  |                |                            |                                            |         |                    | (2,093  | )                |         |      |        |         |         |        | (3,453  | )      
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|NET LOSS                                                     |                                                                                                  | $              | (16,315                     | )                                          |         | $                  | (78,053 | )                |         | $    | (53,691 | )       |         | $      | (91,512 | )      
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|BASIC AND DILUTED LOSS PER SHARE:                            |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|                                                             |                                                                                                  |                |                             | Continuing operations                      |         | $                  | (0.41   | )                |         | $    | (2.03   | )       |         | $      | (1.38   | )       |         | $      | (2.38  | )
|                                                             |                                                                                                  |                |                             | Discontinued operations, net of income tax |         |                    |        |                  |         |      | (0.05   | )       |         |        |        |         |         |        | (0.09  | )
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|                                                             |                                                                                                  |                |                             | Net loss                                   |         | $                  | (0.41   | )                |         | $    | (2.08   | )       |         | $      | (1.38   | )       |         | $      | (2.47  | )
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        
|SHARES USED IN THE PER SHARE CALCULATION  basic and
diluted |                                                                                                  |                | 39,517                      |                                            |         |                    | 37,452  |                  |         |      | 38,996  |         |         |        | 37,009  |        
|                                                             |                                                                                                  |                |                             |                                            |         |                    |         |                  |         |      |         |         |         |        |         |        

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

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ASYST TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)

|                                                             |                                                                                           |                                                            |                                       |         |                  |         |               |         |         |        |  
|------------------------------------------------------------ | ----------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ------------------------------------- | ------- | ---------------- | ------- | ------------- | ------- | ------- | ------ | -
|                                                             |                                                                                           |                                                            |                                       |         | Six Months Ended
|                                                             |                                                                                           |                                                            |                                       |         | September 30,    |         | September 30,
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |              
|                                                             |                                                                                           |                                                            |                                       |         | 2003             |         | 2002         
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |              
|CASH FLOWS FROM OPERATING ACTIVITIES:                        |                                                                                           |                                                            |                                       |         |                  |         |               |        
|                                                             | Net loss                                                                                  |                                                            | $                                     | (53,691 | )                |         | $             | (91,512 | )      
|                                                             |                                                                                           | Less: Loss from discontinued operations                    |                                       |         |                 |         |               |         | 3,453   |       
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |               |        
|                                                             | Net loss from continuing operations                                                       |                                                            |                                       | (53,691 | )                |         |               | (88,059 | )      
|                                                             | Adjustments to reconcile net loss to net cash
provided by (used in) operating activities: |                                                            |                                       |         |                  |         |               |         |        
|                                                             |                                                                                           | Depreciation and amortization                              |                                       |         | 13,738           |         |               |         | 9,354   |       
|                                                             |                                                                                           | Minority interest in net loss in consolidated subsidiary   |                                       |         | 1,669            |         |               |         |        |       
|                                                             |                                                                                           | Stock-based compensation                                   |                                       |         | 1,184            |         |               |         | 1,608   |       
|                                                             |                                                                                           | Provision for doubtful accounts                            |                                       |         | 198              |         |               |         | (463    | )     
|                                                             |                                                                                           | Provision for excess inventories                           |                                       |         | 1,489            |         |               |         |        |       
|                                                             |                                                                                           | Non-cash charges for restructuring and write-down of land  |                                       |         | 6,853            |         |               |         | 9,840   |       
|                                                             |                                                                                           | In-process research and development of acquired business   |                                       |         |                 |         |               |         | 2,082   |       
|                                                             |                                                                                           | Deferred tax asset, net                                    |                                       |         |                 |         |               |         | 59,432  |       
|                                                             | Changes in assets and liabilities, net of acquisitions:                                   |                                                            |                                       |         |                  |         |               |         |        
|                                                             |                                                                                           | Accounts receivable                                        |                                       |         | (1,485           | )       |               |         | (18,754 | )     
|                                                             |                                                                                           | Inventories                                                |                                       |         | 4,433            |         |               |         | 10,582  |       
|                                                             |                                                                                           | Prepaid expenses and other assets                          |                                       |         | (8,008           | )       |               |         | 2,372   |       
|                                                             |                                                                                           | Accounts payable, accrued liabilities and deferred revenue |                                       |         | (4,751           | )       |               |         | 7,127   |       
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |               |        
|                                                             |                                                                                           |                                                            | Net cash used in operating activities |         |                  | (38,371 | )             |         |         | (4,879 | )
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |               |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                        |                                                                                           |                                                            |                                       |         |                  |         |               |        
|                                                             | Purchase of short-term investments                                                        |                                                            |                                       |        |                  |         |               | (9,000  | )      
|                                                             | Purchase of restricted cash and cash equivalents and short-term investments               |                                                            |                                       |        |                  |         |               | (22,500 | )      
|                                                             | Sale or maturity of restricted cash and cash equivalents and short-term
investments       |                                                            |                                       |        |                  |         |               | 23,324  |        
|                                                             | Net proceeds from sale of land                                                            |                                                            |                                       | 12,106  |                  |         |               |        |        
|                                                             | Net cash used in acquisitions                                                             |                                                            |                                       | (1,179  | )                |         |               |        |        
|                                                             | Purchase of property and equipment                                                        |                                                            |                                       | (1,922  | )                |         |               | (4,258  | )      
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |               |        
|                                                             |                                                                                           | Net cash used in investing activities                      |                                       |         | 9,005            |         |               |         | (12,434 | )     
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |               |        
|CASH FLOW FROM FINANCING ACTIVITIES:                         |                                                                                           |                                                            |                                       |         |                  |         |               |        
|                                                             | Net proceeds from short-term loans and long-term loans                                    |                                                            |                                       | 7,454   |                  |         |               | 1,259   |        
|                                                             | Repayment of short-term debt, long-term debt and finance leases                           |                                                            |                                       | (5,437  | )                |         |               | (400    | )      
|                                                             | Issuance of common stock                                                                  |                                                            |                                       | 9,825   |                  |         |               | 4,666   |        
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |               |        
|                                                             |                                                                                           | Net cash provided by financing activities                  |                                       |         | 11,843           |         |               |         | 5,525   |       
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |               |        
|Effect of exchange rate changes on cash and cash equivalents |                                                                                           |                                                            | (1,247                                | )       |                  |         | 617           |        
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |               |        
|Net cash used in continuing operations                       |                                                                                           |                                                            | (18,770                               | )       |                  |         | (11,171       | )      
|Net cash used in discontinued operations                     |                                                                                           |                                                            |                                      |         |                  |         | (1,802        | )      
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |               |        
|DECREASE IN CASH AND CASH EQUIVALENTS                        |                                                                                           |                                                            | (18,770                               | )       |                  |         | (12,973       | )      
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD               |                                                                                           |                                                            | 96,214                                |         |                  |         | 74,577        |        
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |               |        
|CASH AND CASH EQUIVALENTS, END OF PERIOD                     |                                                                                           | $                                                          | 77,444                                |         |                  | $       | 61,604        |        
|                                                             |                                                                                           |                                                            |                                       |         |                  |         |               |        

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

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ASYST TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. ORGANIZATION OF THE COMPANY:

The accompanying condensed consolidated financial statements include the
accounts of Asyst Technologies, Inc., or Asyst, which was incorporated in
California on May 31, 1984, our subsidiaries and our majority-owned joint
venture. We develop, manufacture, sell and support integrated automation
systems, primarily for the semiconductor and secondarily for the flat panel
display, or FPD, manufacturing industries. Our systems are designed to enable
semiconductor and FPD manufacturers to increase their manufacturing
productivity and protect their investment in fragile materials and
work-in-process.

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

In October 2002, we purchased a 51 percent interest in ASI, a Japanese
corporation.

The above transactions were accounted for using the purchase method of
accounting. Accordingly, our condensed consolidated statements of operations
and of cash flows for the periods ended September 30, 2003 and September 30,
2002 include the results of these acquired entities for the periods subsequent
to their respective acquisitions, as applicable. We consolidate fully the
financial position and results of operations of ASI and account for the
minority interest in the condensed consolidated financial statements.

2. SIGNIFICANT ACCOUNTING POLICIES:

Basis of Preparation

While the financial information furnished is unaudited, the condensed
consolidated financial statements included in this report reflect all
adjustments (consisting of normal recurring accruals) which we consider
necessary for the fair presentation of the results of operations for the
interim periods covered and of our financial condition at the date of the
interim balance sheet. Certain information and footnote disclosures included
in the financial statements prepared in accordance with generally accepted
accounting principles have been omitted in these interim statements as allowed
by such SEC rules and regulations. However, we believe that the disclosures
are adequate to make the information presented not misleading. All significant
inter-company accounts and transactions have been eliminated. Minority
shareholders interest represents the minority shareholders proportionate
share of the net assets and results of operations of our majority-owned joint
venture, ASI, and our majority-owned subsidiary, Asyst Japan, Inc., or AJI.
Certain prior year amounts in the condensed consolidated financial statements
and the notes thereto have been reclassified where necessary to conform to the
quarter ended September 30, 2003. We close our books on the last Saturday of
each quarter and thus the actual date of the quarter-end, September 27, 2003,
is different from the month-end dates used throughout this Form 10-Q report.
This presentation is for convenience purposes. The results for interim periods
are not necessarily indicative of the results for the entire year. The
condensed consolidated financial statements should be read in connection with
our consolidated financial statements for the year ended March 31, 2003
included in our Annual Report on Form 10-K as amended. The Advanced Machine
Programming, Inc., or AMP, and SemiFab, Inc., or SemiFab, businesses were sold
in March 2003 and were accounted for as discontinued operations and, therefore,
the results of operations and cash flows have been removed from our results of
continuing operations for all periods presented.

New Accounting Standards

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

In
August 2003, the EITF reached a consensus on Issue No. 03-5,
Applicability of AICPA Statement of Position 97-2,
Software Revenue Recognition, to Non-Software Deliverables. This
issue focuses solely on whether non-software deliverables included in
arrangement that contain more than incidental software should be
accounted for in accordance with SOP 97-2. The Task Force
confirmed that in an arrangement that contains software that is more
than
incidental to the products or services as a whole, only the software and
software related elements are included within the scope of
SOP 97-2. Software related elements include software related
products and services such as those listed in paragraph 9 of
SOP 97-2, as well as other deliverables for which the software
is essential to their functionality. EITF Issue No. 03-5 will be
effective for revenue arrangements entered into in fiscal periods
beginning after August 13, 2003. We are currently in the process
of determining the effect, if any, the adoption of
EIFF Issue No. 03-5 will have on our consolidated
financial statements.

In January 2003, the Financial Accounting Standards Board, or FASB, issued
FIN No. 46, Consolidation of Variable Interest Entities, an Interpretation of
ARB No. 51, or FIN No. 46. FIN No. 46 requires certain variable interest
entities to be consolidated by the primary beneficiary of the entity if the
equity investors in the entity do not have the characteristics of a controlling
financial

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interest or do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from
other parties. FIN No. 46 is effective immediately for all new variable
interest entities created or acquired after January 31, 2003. For variable
interest entities created or acquired prior to February 1, 2003, the provisions
of FIN No. 46 must be applied for the first interim or annual period beginning
after June 15, 2003. In October 2003, the Financial Accounting Standards Board
deferred the latest date by which all public entities must apply FIN No. 46, to
the first reporting period ending after December 15, 2003. We believe that the
adoption of this standard will have no material impact on our consolidated
financial statements.

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

Restricted Cash

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

Inventories

Inventories consist of the following (in thousands):

|                                   |       |   |               |        |           |   |        |        | 
|---------------------------------- | ----- | - | ------------- | ------ | --------- | - | ------ | ------ | 
|                                   |       |   | September 30, |        | March 31,
|                                   |       |   | 2003          |        | 2003     
|                                   |       |   |               |        |          
|Raw materials                      |       | $ | 9,040         |        |           | $ | 8,448  |       
|Work-in-process and finished goods |       |   | 8,541         |        |           |   | 13,756 |       
|                                   |       |   |               |        |           |   |        |       
|                                   | Total |   | $             | 17,581 |           |   | $      | 22,204 | 
|                                   |       |   |               |        |           |   |        |       

During the year ended March 31, 2003, we outsourced the majority of our
remaining manufacturing to Solectron Corporation, or Solectron. As part of the
arrangement, Solectron purchased $20.0 million of inventory from us. No
revenue was recorded for the sale of this inventory to Solectron. In the
quarter ending December 31, 2003, we may be obligated to repurchase any of this
inventory that is not used by Solectron in manufacturing our products. The
buy-back of Solectron inventory is estimated to be $6.0 million. On an
on-going basis, we may be obligated to acquire inventory purchased by Solectron
based on our forecasts and not used timely under terms of the outsourcing
agreement. At September 30, 2003, we recorded a receivable of
$2.3 million and the
corresponding decrease in cost of sales for product cost savings from
Solectron, primarily resulting from the localization of our material
purchasing in the Asia-Pacific region.

Goodwill and Intangible Assets, net

Intangible assets subject to amortization are being amortized over the
following estimated useful lives, using the straight-line method: purchased
technology, four to eight years; customer lists and other intangible assets,
five to ten
years; and licenses and patents, ten years. No changes were made to the
useful lives of amortizable intangible assets in connection with the adoption
of SFAS No. 142. For the ASI acquisition in October 2002,
goodwill of $60.5
million was recorded, as adjusted in the quarter ended September 30, 2003. In
connection with the ASAM acquisition in April 2003, ASI recorded goodwill of
$0.4 million.

Purchase accounting for the acquisition of ASI was finalized in the
quarter ended September 30, 2003, resulting in approximately a
$2.0 million adjustment to goodwill.

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

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test, a goodwill impairment expense of
$2.1 million was recognized. To determine the amount of the impairment, we
estimated the fair value of our reporting segments that contained goodwill
(based primarily on expected future cash flows), reduced the amount by the fair
value of identifiable intangible assets other than goodwill (also based
primarily on expected future cash flows), and then compared the unallocated
fair value of the business to the carrying value of goodwill. To the extent
goodwill exceeded the unallocated fair value of the business, an impairment
expense was recognized. In connection with the annual impairment analysis for
goodwill, we assessed the recoverability of the intangible assets subject to
amortization in accordance with SFAS No. 144. During fiscal 2003, an
impairment expense of $6.2 million was recognized for acquired technology and
$0.1 million was recognized for customer base, based upon our projection of
significantly reduced future cash flows of Asyst Connectivity Technologies,
Inc., or ACT.

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

|                               |                                            |       |   |                    |         |              |   |        |        |                |   |              |        |             |   |        |        |  |   |       |        |  |   |        |        | 
|------------------------------ | ------------------------------------------ | ----- | - | ------------------ | ------- | ------------ | - | ------ | ------ | -------------- | - | ------------ | ------ | ----------- | - | ------ | ------ |  | - | ----- | ------ |  | - | ------ | ------ | 
|                               |                                            |       |   | September 30, 2003 |         |              |   |        |        | March 31, 2003 |   |              |        |            
|                               |                                            |       |   |                    |         |              |   |        |        |                |   |              |        |            
|                               |                                            |       |   | Gross              |         |              |   |        |        |                |   |              |        | Gross       |   |        |        |  |   |       |        | 
|                               |                                            |       |   | Carrying           |         | Accumulated  |   |        |        |                |   | Carrying     |        | Accumulated |   |        |        | 
|                               |                                            |       |   | Amount             |         | Amortization |   | Net    |        | Amount         |   | Amortization |        | Net        
|                               |                                            |       |   |                    |         |              |   |        |        |                |   |              |        |            
|Amortizable intangible assets: |                                            |       |   |                    |         |              |   |        |        |                |   |              |        |             |   |        |        |  |   |       |        |  |   |       
|                               | Developed technology                       |       | $ | 61,966             |         |              | $ | 15,517 |        |                | $ | 46,449       |        |             | $ | 57,294 |        |  | $ | 9,963 |        |  | $ | 47,331 |       
|                               | Customer lists and other
intangible assets |       |   | 34,683             |         |              |   | 12,908 |        |                |   | 21,775       |        |             |   | 32,691 |        |  |   | 8,920 |        |  |   | 23,771 |       
|                               | Licenses and patents                       |       |   | 7,498              |         |              |   | 2,202  |        |                |   | 5,296        |        |             |   | 7,770  |        |  |   | 2,010 |        |  |   | 5,760  |       
|                               |                                            |       |   |                    |         |              |   |        |        |                |   |              |        |             |   |        |        |  |   |       |        |  |   |       
|                               |                                            | Total |   | $                  | 104,147 |              |   | $      | 30,627 |                |   | $            | 73,520 |             |   | $      | 97,755 |  |   | $     | 20,893 |  |   | $      | 76,862 | 
|Unamortized intangible assets: |                                            |       |   |                    |         |              |   |        |        |                |   |              |        |             |   |        |        |  |   |       |        |  |   |       
|                               | Goodwill                                   |       | $ | 69,428             |         |              | $ |       |        |                | $ | 69,428       |        |             | $ | 65,505 |        |  | $ |      |        |  | $ | 65,505 |       

Amortization expense was $9.6 million for the six months ended September
30, 2003 and $3.6 million for the six months ended September 30, 2002.

Expected future intangible amortization expense, based on current
balances, for the remainder of fiscal 2004 and for the following fiscal years
is as follows (in thousands):

|              |                   |  |   |        | 
|------------- | ----------------- |  | - | ------ | 
|Fiscal Years: |                   |  |   |       
|              | Remainder of 2004 |  | $ | 10,280 | 
|              | 2005              |  |   | 20,566 | 
|              | 2006              |  |   | 18,778 | 
|              | 2007              |  |   | 14,120 | 
|              | 2008 and beyond   |  |   | 9,776  | 

The changes in the carrying amount of goodwill for the six months ended
September 30, 2003 are as follows (in thousands):

|                                |  |                |       |      |  |       |        |   |  |   |        |  
|------------------------------- |  | -------------- | ----- | ---- |  | ----- | ------ | - |  | - | ------ | -
|                                |  | Fab Automation |       | AMHS |  | Total
|                                |  |                |       |      |  |      
|Balance at March 31, 2003       |  | $              | 2,954 |      |  | $     | 62,551 |   |  | $ | 65,505 |  
|Acquisitions                    |  |                |      |      |  |       | 376    |   |  |   | 376    |  
|Purchase accounting adjustments |  |                |      |      |  |       | (2,017 | ) |  |   | (2,017 | )
|Foreign currency translation    |  |                |      |      |  |       | 5,564  |   |  |   | 5,564  |  
|                                |  |                |       |      |  |       |        |   |  |   |        |  
|Balance at September 30, 2003   |  | $              | 2,954 |      |  | $     | 66,474 |   |  | $ | 69,428 |  
|                                |  |                |       |      |  |       |        |   |  |   |        |  

Warranty Reserve

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

|                                                 |  |        |        |  
|------------------------------------------------ |  | ------ | ------ | -
|                                                 |  | Amount
|                                                 |  |       
|Balance at March 31, 2003                        |  | $      | 7,561  |  
|Accruals for warranties issued during the period |  |        | 1,812  |  
|Settlements made (in cash or in kind)            |  |        | (2,072 | )
|Other additions                                  |  |        | 640    |  
|                                                 |  |        |        |  
|Balance, September 30, 2003                      |  | $      | 7,941  |  
|                                                 |  |        |        |  

Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement exists,
delivery has occurred or service has been rendered, the sellers price is fixed
or determinable and collectibility is reasonably assured. Some of our products
are large volume consumables that are tested to industry and/or customer
acceptance criteria prior to shipment. Our primary shipping terms are FOB
shipping point. Therefore, revenue for these types of products is recognized
when title transfers. Certain of our product sales are accounted for as
multiple-element arrangements. If we have met defined customer acceptance
experience levels with both the customer and the specific type of equipment, we
recognize the product revenue at the time of shipment and transfer of title,
with the remainder recognized when the other elements, primarily installation,
have been completed. Some of our other products are highly customized systems
and cannot be completed or adequately tested to customer specifications prior
to shipment from the factory. We do not recognize revenue for these products
until formal acceptance by the customer. Revenue for spare parts sales is
recognized on shipment. Deferred revenue consists primarily of product
shipments creating legally enforceable receivables that did not meet our
revenue recognition policy in compliance with SAB 101. Revenue related to
maintenance and service contracts is recognized ratably over the duration of
the contracts. Unearned maintenance and service contract revenue is not
significant and is included in accrued liabilities and other.

We recognize revenue for long-term AMHS contracts in accordance with the
American Institute of Certified Public Accountants Statement of Position 81-1,
Accounting for Performance of Construction-Type and Certain Production-Type
Contracts. We use the percentage of completion method to calculate revenue
and related costs of these contracts because they are long-term in nature and
estimates of cost to complete and extent of progress toward completion of
long-term contracts are available and reasonably dependable. We record revenue
each period based on the percentage of completion to date on each contract,
measured by costs incurred to date relative to the total estimated costs of
each contract. We treat contracts as substantially complete when we receive
technical acceptance of our work by the customer. We intend to disclose
material changes in our financial results that result from changes in
estimates. Under this accounting policy, we are obligated to recognize
revenues on work-in-process inventory prior to invoicing, and in some instances
prior to shipment to the customer. Receivable balances that have not yet been
invoiced to the customer, but where revenue has been recognized, were $35.0
million and $17.4 million at September 30, 2003 and March 31, 2003,
respectively, and are included in accounts receivable on the condensed
consolidated balance sheets.

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

Contract Loss Reserve

We routinely evaluate the contractual commitments with our customers and
suppliers to determine if it is probable that a loss exists that can be
estimated in fulfillment of the contractual commitment. If so, a loss reserve
is recorded and included in accrued liabilities and other. We had a loss reserve of approximately $1.2 million and $2.0
million at September 30, 2003 and March 31, 2003. The balance at September
2003 was for two contracts identified in the quarter ended September 30, 2003
as likely to incur losses.

Loss Per Share

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

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

|                  |       |  |                    |       |                  |  |       |       |      |  |       |       |  |  |       |       | 
|----------------- | ----- |  | ------------------ | ----- | ---------------- |  | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- | 
|                  |       |  | Three Months Ended |       | Six Months Ended
|                  |       |  | September 30,      |       | September 30,   
|                  |       |  |                    |       |                 
|                  |       |  | 2003               |       | 2002             |  | 2003  |       | 2002
|                  |       |  |                    |       |                  |  |       |       |     
|Restricted stock  |       |  | 44                 |       |                  |  | 304   |       |      |  | 44    |       |  |  | 304   |      
|Stock options     |       |  | 2,536              |       |                  |  | 1,913 |       |      |  | 1,887 |       |  |  | 2,524 |      
|Convertible notes |       |  | 5,682              |       |                  |  | 5,682 |       |      |  | 5,682 |       |  |  | 5,682 |      
|                  |       |  |                    |       |                  |  |       |       |      |  |       |       |  |  |       |      
|                  | Total |  |                    | 8,262 |                  |  |       | 7,899 |      |  |       | 7,613 |  |  |       | 8,510 | 
|                  |       |  |                    |       |                  |  |       |       |      |  |       |       |  |  |       |      

Comprehensive Loss

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

|                                         |       |   |                    |         |                  |   |         |         |      |   |         |         |   |   |           |         |  
|---------------------------------------- | ----- | - | ------------------ | ------- | ---------------- | - | ------- | ------- | ---- | - | ------- | ------- | - | - | --------- | ------- | -
|                                         |       |   | Three Months Ended |         | Six Months Ended
|                                         |       |   | September 30,      |         | September 30,   
|                                         |       |   |                    |         |                 
|                                         |       |   | 2003               |         | 2002             |   | 2003    |         | 2002
|                                         |       |   |                    |         |                  |   |         |         |     
|Net loss, as reported                    |       | $ | (16,315            | )       |                  | $ | (78,053 | )       |      | $ | (53,691 | )       |   | $ | (91,512   | )      
|Foreign currency translation adjustments |       |   | 738                |         |                  |   | (250    | )       |      |   | (303    | )       |   |   | (     977 | )      
|                                         |       |   |                    |         |                  |   |         |         |      |   |         |         |   |   |           |        
|                                         | Total |   | $                  | (15,577 | )                |   | $       | (78,303 | )    |   | $       | (53,994 | ) |   | $         | (92,489 | )
|                                         |       |   |                    |         |                  |   |         |         |      |   |         |         |   |   |           |        

Stock-Based Compensation

We account for employee stock-based compensation arrangements in
accordance with the provisions of Accounting Principles Board Opinion, or APB,
No. 25, Accounting for Stock Issued to Employees, and Financial Accounting
Standards Board Interpretation, or FIN, No. 44, Accounting for Certain
Transactions Involving Stock
Compensation, an Interpretation of APB Opinion No. 25, and comply with the
disclosure provisions of SFAS No. 123, Accounting for Stock-Based Compensation,
and SFAS No. 148, Accounting for Stock Based Compensation - Transition and
Disclosure  an amendment of FAS No. 123. Under APB No. 25, compensation
expense is based on the difference, if any, on the date of grant between the
estimated fair value of our common stock and the exercise price. SFAS No. 123
defines a fair value based method of accounting for an employee stock option or
similar equity instrument.

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

Had compensation expense for our stock options, employee stock purchase
plan and the restricted stock issuances to employees been determined based on
the fair value at the grant date for the awards, our net loss for the three
months and six months ended September 30, 2003 and 2002 would have increased as
indicated below (in thousands, except per share amounts):

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|                                                                                                |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ---------------- |  | ---- | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                                |  | Three Months Ended |         | Six Months Ended
|                                                                                                |  | September 30,      |         | September 30,   
|                                                                                                |  |                    |         |                 
|                                                                                                |  | 2003               |         | 2002             |  | 2003 |         | 2002
|                                                                                                |  |                    |         |                  |  |      |         |     
|Net loss - as reported                                                                          |  | $                  | (16,315 | )                |  | $    | (78,053 | )    |  | $ | (53,691 | ) |  | $ | (91,512 | )
|Add: stock-based compensation expense included in
reported net loss                             |  |                    | 589     |                  |  |      | 1,225   |      |  |   | 1,184   |   |  |   | 1,608   |  
|Less: stock-based compensation expenses determined under
fair value based method for all awards |  |                    | (3,618  | )                |  |      | (4,774  | )    |  |   | (7,323  | ) |  |   | (9,549  | )
|                                                                                                |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|Net loss - pro forma                                                                            |  | $                  | (19,344 | )                |  | $    | (81,602 | )    |  | $ | (59,830 | ) |  | $ | (99,453 | )
|                                                                                                |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|Basic and diluted net loss per share - as reported                                              |  | $                  | (0.41   | )                |  | $    | (2.08   | )    |  | $ | (1.38   | ) |  | $ | (2.47   | )
|                                                                                                |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  
|Basic and diluted net loss per share - pro forma                                                |  | $                  | (0.49   | )                |  | $    | (2.18   | )    |  | $ | (1.53   | ) |  | $ | (2.69   | )
|                                                                                                |  |                    |         |                  |  |      |         |      |  |   |         |   |  |   |         |  

3. RESTRUCTURING CHARGES:

Restructuring charges and related utilization for the six months ended
September 30, 2003 were (in thousands):

|                             |  |           |        |            |  |             |       |       |  |   |      |   |  |   |        |  
|---------------------------- |  | --------- | ------ | ---------- |  | ----------- | ----- | ----- |  | - | ---- | - |  | - | ------ | -
|                             |  | Severance |        |            |  |             |       |       |  |   |      |   |  |  
|                             |  | and       |        | Excess     |  | Fixed Asset |       |       |  |  
|                             |  | Benefits  |        | Facilities |  | Impairment  |       | Total
|                             |  |           |        |            |  |             |       |      
|Balance, March 31, 2003      |  | $         | 291    |            |  | $           | 3,617 |       |  | $ | 192  |   |  | $ | 4,100  |  
|Additional accruals          |  |           | 3,448  |            |  |             | 869   |       |  |   | 46   |   |  |   | 4,363  |  
|Non-cash related utilization |  |           |       |            |  |             | (29   | )     |  |   | (205 | ) |  |   | (234   | )
|Amounts paid in cash         |  |           | (3,269 | )          |  |             | (250  | )     |  |   | (33  | ) |  |   | (3,552 | )
|                             |  |           |        |            |  |             |       |       |  |   |      |   |  |   |        |  
|Balance,
June 30, 2003       |  | $         | 470    |            |  | $           | 4,207 |       |  | $ |     |   |  | $ | 4,677  |  
|                             |  |           |        |            |  |             |       |       |  |   |      |   |  |   |        |  
|Additional
accruals          |  |           | 160    |            |  |             | 327   |       |  |   |     |   |  |   | 487    |  
|Non-cash
related utilization |  |           |       |            |  |             |      |       |  |   |     |   |  |   |       |  
|Amounts paid in cash         |  |           | (305   | )          |  |             | (957  | )     |  |   |     |   |  |   | (1,262 | )
|                             |  |           |        |            |  |             |       |       |  |   |      |   |  |   |        |  
|Balance,
September 30, 2003  |  | $         | 325    |            |  | $           | 3,577 |       |  | $ |     |   |  | $ | 3,902  |  
|                             |  |           |        |            |  |             |       |       |  |   |      |   |  |   |        |  

We incurred restructuring charges of $0.5 million during the quarter ended
September 30, 2003, consisting primarily of severance costs of $0.2 million
from a reduction in our worldwide workforce and secondarily for exiting a
facility in connection with our restructuring activities. As a result of these
restructuring activities, we terminated the employment of approximately 49
employees, mainly in manufacturing, from our international operations. We
anticipate additional restructuring charges during the remainder of fiscal 2004
as we complete the workforce reductions and outsourcing of manufacturing in
Japan.

In the six months ended September 30, 2003, we incurred restructuring
charges of $4.9 million, consisting primarily of severance costs from a
reduction in workforce in April 2003. Additionally, we incurred a charge for
future lease obligations on a vacated facility in excess of estimated future
sublease proceeds.

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

4. ASSET IMPAIRMENT CHARGES:

We completed the sale of land in Fremont, California, in the quarter ended
September 30, 2003. The net proceeds from the sale were $12.1 million. We had
intended to construct corporate headquarters facilities on the land and
subsequently decided not to build these facilities. In the first quarter of
fiscal 2004 we recorded a $6.9 million write-down based on our latest estimate
of market value as supported by the pending sale agreement at the time.

5. INCOME TAXES:

Statement of Financial Accounting Standards No. 109 Accounting for Income
Taxes, or SFAS No. 109, requires that a valuation allowance be established
when it is more likely than not that all or a portion of deferred tax assets
will not be realized. A review of all available positive and negative evidence
needs to be considered, including the companys performance, the market
environment in which the company operates, the utilization of past tax credits,
length of carry-back and carry-forward periods, and existing contracts or sales
backlog that will result in future profits. It further states that forming a
conclusion that a valuation allowance is not needed is difficult when there is
negative evidence such as cumulative losses in recent years. Therefore,
cumulative losses weigh heavily in the overall assessment. As a result of
current losses, difficult industry conditions and revised downward future
projections a review was

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undertaken at September 30, 2002, and we concluded
that it was appropriate to establish a full valuation allowance for our
domestic net deferred tax assets. In addition, we expect to continue to
provide a full valuation allowance on future domestic tax benefits until we can
sustain a level of profitability that demonstrates our ability to utilize the
assets. Deferred tax assets are recognized to the extent realizable related to
our Japanese operations. A tax benefit has been recognized in the three months
and the six months ended September 30, 2003 as we expect to have net income in
Japan for the 12-month period ending March 31, 2004.

6. REPORTABLE SEGMENTS:

We have two reportable segments: Fab Automation and AMHS. Fab Automation
products include interface products, substrate-handling robotics, wafer and
reticle carriers, auto-ID systems, sorters and connectivity software. AMHS
products include automated transport and loading systems for semiconductor fabs
and flat panel display manufacturers. We began tracking AMHS as a reportable
segment with the acquisition of ASI in the third quarter of fiscal 2003.

Segment information is summarized as follows (in millions):

|               |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |  
|-------------- |  | ------------------ | ----- | ---------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|               |  | Three Months Ended |       | Six Months Ended
|               |  | September 30,      |       | September 30,   
|               |  |                    |       |                 
|               |  | 2003               |       | 2002             |  | 2003 |       | 2002
|               |  |                    |       |                  |  |      |       |     
|Fab Automation |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |  
|Net sales      |  | $                  | 26.0  |                  |  | $    | 72.3  |      |  | $ | 49.6  |   |  | $ | 124.2 |  
|Operating loss |  | $                  | (13.5 | )                |  | $    | (12.4 | )    |  | $ | (47.3 | ) |  | $ | (26.8 | )
|AMHS:          |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |  
|Net sales      |  | $                  | 25.3  |                  |  | $    |      |      |  | $ | 47.0  |   |  | $ |      |  
|Operating loss |  | $                  | (3.1  | )                |  | $    |      |      |  | $ | (8.0  | ) |  | $ |      |  
|Total:         |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   |       |  
|Net sales      |  | $                  | 51.3  |                  |  | $    | 72.3  |      |  | $ | 96.6  |   |  | $ | 124.2 |  
|Operating loss |  | $                  | (16.5 | )                |  | $    | (12.4 | )    |  | $ | (55.3 | ) |  | $ | (26.8 | )

Our net sales by geography, including local revenues recorded at our
foreign locations, were as follows (in millions):

|                   |  |                    |      |                  |  |      |      |      |  |   |      |  |  |   |       | 
|------------------ |  | ------------------ | ---- | ---------------- |  | ---- | ---- | ---- |  | - | ---- |  |  | - | ----- | 
|                   |  | Three Months Ended |      | Six Months Ended
|                   |  | September 30,      |      | September 30,   
|                   |  |                    |      |                 
|                   |  | 2003               |      | 2002             |  | 2003 |      | 2002
|                   |  |                    |      |                  |  |      |      |     
|North America      |  | $                  | 11.0 |                  |  | $    | 26.0 |      |  | $ | 21.4 |  |  | $ | 48.2  | 
|Japan              |  |                    | 20.0 |                  |  |      | 12.1 |      |  |   | 35.6 |  |  |   | 19.8  | 
|Taiwan             |  |                    | 7.4  |                  |  |      | 18.1 |      |  |   | 13.7 |  |  |   | 29.1  | 
|Other Asia/Pacific |  |                    | 9.3  |                  |  |      | 11.2 |      |  |   | 16.9 |  |  |   | 17.4  | 
|Europe             |  |                    | 3.6  |                  |  |      | 4.9  |      |  |   | 9.0  |  |  |   | 9.7   | 
|                   |  |                    |      |                  |  |      |      |      |  |   |      |  |  |   |       | 
|Total              |  | $                  | 51.3 |                  |  | $    | 72.3 |      |  | $ | 96.6 |  |  | $ | 124.2 | 
|                   |  |                    |      |                  |  |      |      |      |  |   |      |  |  |   |       | 

7. DISCONTINUED OPERATIONS:

In August 2002, our Board of Directors approved a plan to discontinue
operations of our AMP and SemiFab subsidiaries. Accordingly, these businesses
were accounted for as discontinued operations and, therefore, the results of
operations and cash flows were reclassified from our results of continuing
operations to discontinued operations for all periods presented. We based the
decision to discontinue these operations on an evaluation of, and decision to
focus on our core business, concluding that AMP and SemiFab were not critical
to our long-term strategy. We completed the sale of each business in March
2003.

Summarized selected financial information for discontinued operations in
the three and the six months ended September 30, 2002 is as follows (in
thousands):

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|                         |          |   |               |        |               |   |        |        |  
|------------------------ | -------- | - | ------------- | ------ | ------------- | - | ------ | ------ | -
|                         |          |   | Three Months  |        | Six Months   
|                         |          |   | Ended         |        | Ended        
|                         |          |   | September 30, |        | September 30,
|                         |          |   |               |        |              
|                         |          |   | 2002          |        | 2002         
|                         |          |   |               |        |              
|Net sales                |          | $ | 3,945         |        |               | $ | 7,983  |       
|Loss before income taxes |          |   | (2,093        | )      |               |   | (3,907 | )     
|Income taxes (benefit)   |          |   |              |        |               |   | (454   | )     
|                         |          |   |               |        |               |   |        |       
|                         | Net loss |   | $             | (2,093 | )             |   | $      | (3,453 | )
|                         |          |   |               |        |               |   |        |       

8. ACQUISITIONS:

ASYST SHINKO AMERICA (ASAM)

In April 2003, ASI acquired the portion of Shinko Technologies, Inc., a
subsidiary of Shinko Electric, Co., Ltd., or Shinko, that provided ongoing
support to ASIs North American AMHS customers. Shinko owns 49 percent of ASI.
ASI renamed this subsidiary Asyst Shinko America (ASAM). The total purchase
price, net of cash acquired, was approximately $1.2 million. A summary of
assets acquired and liabilities assumed follows (in thousands):

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

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

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

ASYST SHINKO INC. (ASI)

On October 16, 2002, we established a joint venture with Shinko called
ASI. The joint venture develops, manufactures and markets Shinkos
market-leading AMHS with principal operations in Tokyo and Ise, Japan. Under
terms of the joint venture agreement, Asyst acquired 51 percent of the joint
venture for approximately $67.5 million of cash and transaction costs. Shinko
contributed its entire AMHS business, including intellectual property and other
assets, installed customer base and approximately 250 employees. The
consolidated financial statements for the period ended September 30, 2003
include the results of ASI for the quarter and year-to-date. We
acquired ASI to enhance our presence in the 300mm AMHS and flat panel display markets.
The acquisition has been accounted for as a purchase
transaction in accordance with SFAS No. 141.

A portion of the excess of purchase price over fair value of net assets
acquired was allocated to identifiable intangible assets. We amortize
developed technology over a period of five years and the customer base and
trademarks over a period of three years, using the straight-line method, with a
weighted-average life of 4.4 years. The balance of the excess purchase price
was recorded as goodwill. We have completed our final analysis of the
acquisition and recorded all remaining adjustments in the second quarter of
fiscal year 2004. A summary of the transaction is as follows (in thousands):

|                       |  |   |         | 
|---------------------- |  | - | ------- | 
|Total Enterprise Value |  |   | 128,824 | 
|Transaction costs      |  |   | 1,796   | 
|                       |  |   |         | 
|                       |  | $ | 130,620 | 

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|                                                                          |  |   |        | 
|------------------------------------------------------------------------- |  | - | ------ | 
|
|Less
fair
value of identifiable intangibles contributed by Shinko:        |  |   |        | 
|Net
assets                                                                |  |   | 1,036  | 
|Developed technology                                                      |  |   | 44,500 | 
|Customer lists                                                            |  |   | 18,800 | 
|In-process research and development                                       |  |   | 5,750  | 
|                                                                          |  |   |        | 
|Excess
of consideration over fair value of net assets
acquired  Goodwill |  | $ | 60,534 | 
|                                                                          |  |   |        | 

The fair values of identifiable intangible assets are based on estimates
of future revenues and earnings to determine a discounted cash flow valuation
of identifiable intangible assets that meet the separate recognition criteria
of SFAS No. 141. The $60.5 million of goodwill arising from the acquisition is
not deductible for tax
purposes. We expensed $5.8 million of in-process research and development
as part of the acquisition in the third quarter of fiscal 2003.

Minority interest of $62.7 million was recorded at September 30, 2003,
representing the minority interest of 49 percent of the fair value of ASI at
the time of acquisition and the proportionate share of net income
(loss) including its own interest in amortization of
intangible assets and
cumulative translation adjustment for the periods since acquisition.

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

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

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

9. DEBT:

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

Asyst Japan Inc., or AJI, our Japanese subsidiary, had $21.6 million and
$22.1 million of debt from banks in Japan at September 30, 2003 and March 31,
2003, respectively. The interest rates ranged from 1.4 percent to 3.0 percent
as of September 30, 2003. Certain of AJIs assets have been pledged as
security for this debt. As of September 30, 2003, pledged assets consist of
land and other property and equipment, net of accumulated depreciation, time
deposits and accounts receivable totaling approximately $15.3 million.
Additionally, Asyst U.S. has provided letters of guarantee to financial
institutions in Japan covering substantially all of AJIs debts.

We have, and have fully drawn down, a $25.0 million 2-year revolving
credit agreement with a commercial bank. The debt is due for repayment in
October 2004. During the quarter ended September 30, 2003, we amended the
financial covenants. As amended, we are required under the agreement to
maintain compliance with financial covenants, including a quarterly net
income/loss target, calculated on an after-tax basis excluding depreciation,
amortization and other non-cash items and minimum liquidity covenants. We must
also meet a minimum liquidity covenant. We are in compliance with the
covenants for the quarter ended September 30, 2003. The maximum net
income/loss covenant requires that we substantially improve the financial
performance for the quarter ending

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December 31, 2003, compared to the quarter
ended September 30, 2003. Non-compliance with these financial covenants in the
future could result in this debt becoming immediately due and payable. Based
upon uncertainty whether we will remain in compliance with all financial
covenants in future periods, we have classified this debt as current at
September 30, 2003. The amount of the credit line available may change based
on the amount of receivables held.

In September 2003 ASI entered into a short-term bank facility with a
Japanese bank under which they may borrow up to approximately $27.0 million at
Septembers month-end exchange rate. The current interest rate is 1.395%.
This facility primarily supports ASIs working capital requirements during the
construction of two projects
currently in process in Japan where substantially all of the payment
is expected upon completion of the project. ASI had outstanding borrowings of
$4.5 million under this facility at September 30, 2003. Under terms of the
bank facility, ASI must generate operating profits on a statutory basis. We
are in compliance with the covenants for the quarter ended September 30, 2003.

10. RELATED PARTY TRANSACTIONS:

At September 30, 2003, we held notes from two current non-officer
employees totaling $0.4 million. These notes receivable are secured by deeds
of trust on certain real property and/or pledged securities of Asyst owned by
the employees and are included in other assets at September 30, 2003.

Our majority-owned subsidiary, ASI, has certain transactions with the
minority shareholder, Shinko. At September 30, 2003, significant balances owed
(to) from Shinko were (in thousands):

|                                          |  |   |        |  
|----------------------------------------- |  | - | ------ | -
|Accounts and notes receivable from Shinko |  | $ | 2,562  |  
|Accounts payable due to Shinko            |  | $ | (4,770 | )
|Accrued liabilities due to Shinko         |  | $ | (6,048 | )

In addition, ASI purchased various administrative and IT services from
Shinko. During the six months ended September 30, 2003, there were no sales to
Shinko and material and services purchased from Shinko were (in thousands):

|                   |  |               |        |               |  |   |        |  
|------------------ |  | ------------- | ------ | ------------- |  | - | ------ | -
|                   |  | Three Months  |        | Six Months   
|                   |  | Ended         |        | Ended        
|                   |  | September 30, |        | September 30,
|                   |  |               |        |              
|Material purchased |  | $             | (2,041 | )             |  | $ | (3,989 | )
|Services purchased |  | $             | (228   | )             |  | $ | (490   | )

11. LEGAL PROCEEDINGS:

On October 28, 1996, we filed suit in the United States District Court for
the Northern District of California against Empak, Inc., Emtrak, Inc., Jenoptik
AG, and Jenoptik Infab, Inc., alleging, among other things, that certain
products of these defendants infringe our United States Patents Nos. 5,097,421
(the 421 patent) and 4,974,166 (the 166 patent). Defendants filed
answers and counterclaims asserting various defenses, and the issues
subsequently were narrowed by the parties respective dismissals of various
claims, and the dismissal of defendant Empak pursuant to a settlement
agreement. The remaining patent infringement claims against the remaining
parties proceeded to summary judgment, which was entered against us on June 8,
1999. We thereafter took an appeal to the United States Court of Appeals for
the Federal Circuit. On October 10, 2001, the Federal Circuit issued a written
opinion, Asyst Technologies, Inc. v. Empak, 268 F.3d 1365 (Fed. Cir. 2001),
reversing the decision of the trial court, and remanding the matter to the
trial court for further proceedings. The case was subsequently narrowed to the
421 patent, and we sought monetary damages for defendants infringement,
equitable relief, and an award of attorneys fees. On October 9, 2003 the
court (i) granted defendants motion for summary judgment to the effect that
the defendants had not infringed those of our patent claims that were at issue
and (ii) directed that judgment be entered for the defendants. The Court also
denied defendants motion for judgment as to the invalidity of our asserted
patents. In conjunction with entry of judgement, defendants requested
that the Court direct us to pay defendants attorneys fees and
costs in the action, which potentially could be in excess of
$5 million. No action has been taken at defendants request. We have filed a notice of appeal of both the order and the entry of
judgment against us.

On February 25, 2003, Mihir Parikh, our former Chief Executive Officer and
Chairman of the Board, filed a demand for arbitration with the American
Arbitration Association against us, alleging breach of his employment
agreement, wrongful termination in violation of public policy, discrimination
based on age, race and national origin, fraud and deceit, defamation and
violation of the California Labor Code. On March 4, 2003, Dr. Parikh resigned
as a member of our Board of Directors. On June 17, 2003, Dr. Parikh filed an
amended demand for arbitration adding as respondents our Chief Executive
Officer and Chairman of the Board, Stephen S. Schwartz, and three outside
directors, Walter W. Wilson, Stanley J. Grubel and Anthony E. Santelli to all
claims other than the breach of

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contract claim. Dr. Parikh seeks compensatory
damages in excess of $5.0 million plus punitive damages and
attorneys fees. We deny Dr. Parikhs allegations and intend to defend the
action vigorously. The arbitration hearing has been scheduled tentatively for
April 2004.

From time to time, we are also involved in other legal actions arising in
the ordinary course of business. We have incurred certain costs while
defending these matters. There can be no assurance third party assertions will
be resolved without costly litigation, in a manner that is not adverse to our
financial position, results of operations or cash flows or without requiring
royalty payments in the future which may adversely impact gross margins. No
estimate can be made of the possible loss or possible range of loss,
if any, associated
with the resolution of these contingencies. As a result, no losses have been
accrued in our financial statements as of September 30, 2003.




Item 2 
Managements Discussion and Analysis of Results of Operations and
Financial Condition

Forward Looking Statements

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

Words such as expect, anticipate, intend, plan, believe,
estimate and variations of such words and similar expressions are intended to
identify such forward-looking statements. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this
document and in our Annual Report on Form 10-K might not occur. The following
discussion of our financial condition and results of operations should be read
in conjunction with our condensed consolidated financial statements and the
related notes included elsewhere in this report.

Overview

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

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

In response to the industry downturn, we have reduced costs in several
areas. We reduced approximately 35 percent of our headcount in April 2003, due
to ongoing weakness in our business, our outsourcing of manufacturing, and the
sale of two discontinued operations and the wafer carrier business. We also
announced plans to outsource our Japanese manufacturing operations. In October
2002, we began transitioning substantially all of our U.S. manufacturing to
Solectron Corporation, which we believe will reduce our fixed manufacturing
costs and improve our ability to respond to sales fluctuations. The transition
was substantially completed in June 2003. Over the past two years, we have
reduced our workforce from a peak of approximately 1,800 employees to
approximately 550 employees.

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

In
October 2002, we purchased a 51 percent interest in Asyst
Shinko, Inc., or ASI, a Japanese
corporation, for $67.5 million of cash and transaction costs.
The consolidated financial statements for the three- and six-month periods
ended September 30, 2003 include the results of ASI. The
acquisition has been accounted for as a purchase acquisition.

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

The above transactions were accounted for using the purchase method of
accounting. Accordingly, our condensed consolidated statements of operations
and of cash flows for the periods ended September 30, 2003 and September 30,
2002 include the results of these acquired entities for the periods subsequent
to their respective acquisitions, as applicable. We consolidate fully the
financial position and results of operations of ASI and account for the
minority interest in the condensed consolidated financial statements.

Critical Accounting Policies and Estimates

16



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Information with respect to our critical accounting policies and estimates
may be found in our Annual Report on Form 10-K filed for the fiscal year ended
March 31, 2003.

Three Months and Six Months Ended September 30, 2003 and 2002

The following table sets forth the percentage of net sales represented by
condensed consolidated statements of operations data for the periods indicated
(unaudited):

|                                                                                                     |                                                          |                          |       |                    |      |                  |        |      |      |      |       |      |      |  |       |      |      | 
|---------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | ------------------------ | ----- | ------------------ | ---- | ---------------- | ------ | ---- | ---- | ---- | ----- | ---- | ---- |  | ----- | ---- | ---- | 
|                                                                                                     |                                                          |                          |       | Three Months Ended |      | Six Months Ended
|                                                                                                     |                                                          |                          |       | September 30,      |      | September 30,   
|                                                                                                     |                                                          |                          |       |                    |      |                 
|                                                                                                     |                                                          |                          |       | 2003               |      | 2002             |        | 2003 |      | 2002
|                                                                                                     |                                                          |                          |       |                    |      |                  |        |      |      |     
|Net sales                                                                                            |                                                          |                          | 100.0 | %                  |      |                  | 100.0  | %    |      |      | 100.0 | %    |      |  | 100.0 | %   
|Cost of sales                                                                                        |                                                          |                          | 76.6  |                    |      |                  | 61.0   |      |      |      | 83.0  |      |      |  | 64.0  |     
|                                                                                                     |                                                          |                          |       |                    |      |                  |        |      |      |      |       |      |      |  |       |     
|Gross profit                                                                                         |                                                          |                          | 23.4  |                    |      |                  | 39.0   |      |      |      | 17.0  |      |      |  | 36.0  |     
|Operating expenses:                                                                                  |                                                          |                          |       |                    |      |                  |        |      |      |      |       |      |      |  |       |     
|                                                                                                     | Research and development                                 |                          |       | 16.4               |      |                  |        | 13.9 |      |      |       | 18.6 |      |  |       | 16.4 |     
|                                                                                                     | Selling, general and administration                      |                          |       | 29.0               |      |                  |        | 24.0 |      |      |       | 33.7 |      |  |       | 27.3 |     
|                                                                                                     | Amortization of acquired intangible assets               |                          |       | 9.3                |      |                  |        | 2.7  |      |      |       | 9.9  |      |  |       | 2.9  |     
|                                                                                                     | Restructuring charges                                    |                          |       | 1.0                |      |                  |        | 4.2  |      |      |       | 5.0  |      |  |       | 2.4  |     
|                                                                                                     | Asset impairment charges                                 |                          |       |                   |      |                  |        | 11.9 |      |      |       | 7.1  |      |  |       | 6.9  |     
|                                                                                                     | In-process research and development of acquired business |                          |       |                   |      |                  |        | (0.6 | )    |      |       |     |      |  |       | 1.7  |     
|                                                                                                     |                                                          |                          |       |                    |      |                  |        |      |      |      |       |      |      |  |       |     
|                                                                                                     |                                                          | Total operating expenses |       |                    | 55.7 |                  |        |      | 56.1 |      |       |      | 74.3 |  |       |      | 57.6 | 
|                                                                                                     |                                                          |                          |       |                    |      |                  |        |      |      |      |       |      |      |  |       |     
|Operating loss                                                                                       |                                                          |                          | (32.3 | )                  |      |                  | (17.1  | )    |      |      | (57.3 | )    |      |  | (21.6 | )   
|Other income (expense), net                                                                          |                                                          |                          | (2.8  | )                  |      |                  | (1.3   | )    |      |      | (2.5  | )    |      |  | (2.1  | )   
|                                                                                                     |                                                          |                          |       |                    |      |                  |        |      |      |      |       |      |      |  |       |     
|Loss before provision (benefit) for/from income taxes, minority interest and
discontinued operations |                                                          |                          | (35.1 | )                  |      |                  | (18.4  | )    |      |      | (59.8 | )    |      |  | (23.7 | )   
|Provision (benefit) for/from income taxes                                                            |                                                          |                          | (1.9  | )                  |      |                  | 86.6   |      |      |      | (2.5  | )    |      |  | 47.2  |     
|                                                                                                     |                                                          |                          |       |                    |      |                  |        |      |      |      |       |      |      |  |       |     
|Minority interest                                                                                    |                                                          |                          | (1.4  | )                  |      |                  |       |      |      |      | (1.7  | )    |      |  |      |     
|                                                                                                     |                                                          |                          |       |                    |      |                  |        |      |      |      |       |      |      |  |       |     
|Loss from continuing operations                                                                      |                                                          |                          | (31.8 | )                  |      |                  | (105.0 | )    |      |      | (55.6 | )    |      |  | (70.9 | )   
|                                                                                                     |                                                          |                          |       |                    |      |                  |        |      |      |      |       |      |      |  |       |     
|Discontinued operations, net of income tax                                                           |                                                          |                          |      |                    |      |                  | (2.9   | )    |      |      |      |      |      |  | (2.8  | )   
|                                                                                                     |                                                          |                          |       |                    |      |                  |        |      |      |      |       |      |      |  |       |     
|Net loss                                                                                             |                                                          |                          | (31.8 | )%                 |      |                  | (107.9 | )%   |      |      | (55.6 | )%   |      |  | (73.7 | )%  
|                                                                                                     |                                                          |                          |       |                    |      |                  |        |      |      |      |       |      |      |  |       |     

Results of Operations

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Net
Sales. We have two reportable segments: Fab Automation and AMHS. Fab Automation
products include interface products, substrate-handling robotics, wafer and
reticle carriers, auto-ID systems, sorters and connectivity software. AMHS
products include automated transport and loading systems for semiconductor fabs
and flat panel display manufacturers. We began tracking AMHS as a reportable
segment with the acquisition of ASI in the third quarter of fiscal 2003.

Segment information is summarized as follows (in millions):

|                         |  |                    |      |                  |  |      |      |      |  |   |      |  |  |   |       | 
|------------------------ |  | ------------------ | ---- | ---------------- |  | ---- | ---- | ---- |  | - | ---- |  |  | - | ----- | 
|                         |  | Three Months Ended |      | Six Months Ended
|                         |  | September 30,      |      | September 30,   
|                         |  |                    |      |                 
|                         |  | 2003               |      | 2002             |  | 2003 |      | 2002
|                         |  |                    |      |                  |  |      |      |     
|Fab Automation Products: |  |                    |      |                  |  |      |      |      |  |   |      |  |  |   |       | 
|Net sales                |  | $                  | 26.0 |                  |  |      | 72.3 |      |  | $ | 49.6 |  |  | $ | 124.2 | 
|AMHS:                    |  |                    |      |                  |  |      |      |      |  |   |      |  |  |   |       | 
|Net sales                |  |                    | 25.3 |                  |  |      |     |      |  |   | 47.0 |  |  |   |      | 
|                         |  |                    |      |                  |  |      |      |      |  |   |      |  |  |   |       | 
|Total:                   |  |                    |      |                  |  |      |      |      |  |   |      |  |  |   |       | 
|Net sales                |  | $                  | 51.3 |                  |  | $    | 72.3 |      |  | $ | 96.6 |  |  | $ | 124.2 | 
|                         |  |                    |      |                  |  |      |      |      |  |   |      |  |  |   |       | 

Total
net sales decreased by $21.0 million or 29 percent in the
three months ended September 30, 2003 and by $27.6 million
or 22.2 percent in the six months ended September 30, 2003.
Total net sales include net sales of $25.3 million and
$47.0 million by ASI during the three and six month periods. ASI
was acquired in October 2002.

Net
sales of Fab Automation Products decreased by $46.3 million or
64 percent in the three months ended September 30, 2003 and by
$74.6 million or 60 percent in the six months ended
September 30, 2003. The decrease is mainly due to the general
decline in the semiconductor equipment sector and sale of our wafer
and reticle carrier product line during fiscal 2003. The product
line generated $12.2 million  and $23.2 million of revenue in
the three months and the six months ended September 30, 2002,
respectively.

Our net sales by geography were as follows (in millions):

|                   |       |   |                    |      |                  |   |      |      |      |   |      |      |  |   |      |       | 
|------------------ | ----- | - | ------------------ | ---- | ---------------- | - | ---- | ---- | ---- | - | ---- | ---- |  | - | ---- | ----- | 
|                   |       |   | Three Months Ended |      | Six Months Ended
|                   |       |   | September 30,      |      | September 30,   
|                   |       |   |                    |      |                 
|                   |       |   | 2003               |      | 2002             |   | 2003 |      | 2002
|                   |       |   |                    |      |                  |   |      |      |     
|North America      |       | $ | 11.0               |      |                  | $ | 26.0 |      |      | $ | 21.4 |      |  | $ | 48.2 |      
|Japan              |       |   | 20.0               |      |                  |   | 12.1 |      |      |   | 35.6 |      |  |   | 19.8 |      
|Taiwan             |       |   | 7.4                |      |                  |   | 18.1 |      |      |   | 13.7 |      |  |   | 29.1 |      
|Other Asia/Pacific |       |   | 9.3                |      |                  |   | 11.2 |      |      |   | 16.9 |      |  |   | 17.4 |      
|Europe             |       |   | 3.6                |      |                  |   | 4.9  |      |      |   | 9.0  |      |  |   | 9.7  |      
|                   |       |   |                    |      |                  |   |      |      |      |   |      |      |  |   |      |      
|                   | Total |   | $                  | 51.3 |                  |   | $    | 72.3 |      |   | $    | 96.6 |  |   | $    | 124.2 | 
|                   |       |   |                    |      |                  |   |      |      |      |   |      |      |  |   |      |      

The increase in Japan in the three months and six months ended September
30, 2003 from the same periods in the prior year is primarily due to increase
in AMHS sales, offset by decreases in our traditional business. All other
regions were down due to lower sales activities in our traditional business in
line with the downturn of the industry.

Gross Profit. Gross profit decreased to $12.0 million, representing 23.4
percent of net sales, for the quarter ended September 30, 2003, compared to
$28.2 million, or 39.0 percent of net sales, for the quarter ended September
30, 2002. The decline was mainly due to lower sales volumes in our
Fab Automation Products business coupled with the acquisition of the ASI business that generates lower
profit margins. The gross profit decline was favorably impacted by
$2.3 million in product cost savings from the localization of
our material purchasing in the Asia-Pacific region.

Gross profit decreased $28.2 million to $16.4 million, or 17.0 percent of
net sales, for the six months ended September 30, 2003, compared to $44.7
million, or 36.0 percent of net sales, in the corresponding period of the prior
year. The decrease in gross margin was primarily due to lower sales volumes
and the lower gross margin at ASI. The changes in the product mix to the new
300mm products also negatively impacted the first two quarters of fiscal 2004
as our 300mm products are early in their product life cycle and currently have
low margins in comparison to our 200mm products. Swings in product mix may
impact our gross margins on a quarter-over-quarter basis. Through cost
reduction initiatives and our outsourcing strategy, we expect 300mm gross
margins to improve. However, because of the anticipated size of the emerging
300mm product market, we face strong competition on price and features for
these products from existing and new competitors.

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We believe that gross margin will increase several percentage points in
the quarter ending December 31, 2003 from the gross margin in the quarter ended
September 30, 2003. This anticipated increase is due to expected sales
increases of approximately 10 percent as well as continued progress in our
outsourcing strategy. Our gross margin will continue to be impacted by future
changes in product mix and net sales volumes, as well as market competition.

Research and Development.Research and development expenses decreased
$1.7 million to $8.4 million for the quarter ended September 30, 2003, compared
with $10.1 million for the quarter ended September 30, 2002. As a percentage
of sales, research and development increased to 16.4 percent of sales in the
quarter ended September 30, 2003, compared to 13.9 percent in the quarter ended
September 30, 2002. The decrease in spending is due to headcount reductions
and other spending cuts in the preceding quarters to reduce research and
development expenses in response to declines in our net sales. Our second
quarter fiscal 2004 results include approximately $1.4 million of research and
development spending at ASI. Excluding ASI, research and development expenses
were approximately $7.0 million, a decline of $3.1 million or 30.2 percent,
from the second quarter of fiscal 2002. Our research and development expenses
vary as a percentage of net sales because we do not manage these expenditures
strictly to variations in our level of net sales.

Research and development expenses for the six months ended September 30,
2003 were $18.0 million, or 18.6 percent of revenue, compared to $20.4 million,
or 16.4 percent of revenue, in the six months ended September 30, 2002. The
decrease of $2.4 million is due to headcount reductions and other spending cuts
during the past year to reduce expenses in response to declines in our sales,
offset by spending at ASI. The decrease in our research and development
expenses was achieved even as we accelerated efforts on key new products. Our
research and development expenses vary as a percentage of net sales because
these expenditures are based on long-term product development plans targeted
toward future revenue opportunities and we may or may not modify our
expenditures levels based on short-term changes in the actual or anticipated
level of net sales.

Selling, General and Administrative.Selling, general and administrative,
or SG&A, expenses decreased $2.4 million to $14.9 million in the quarter ended
September 30, 2003, compared to $17.3 million for the quarter ended September
30, 2002. However, due to lower sales, SG&A expenses increased, as a
percentage of sales, 4.9 percent to 29.0 percent for the quarter ended
September 30, 2003, compared to 24.0 percent for the quarter ended September
30, 2002. SG&A expenses for the six months ended September 30, 2003 were $32.5
million, or 33.7 percent of net sales, compared to $33.9 million, or 27.3
percent of net sales, for the corresponding period of the prior year. The
decrease was mainly due to substantial headcount reductions in the first half
of fiscal 2004 and other spending controls to reduce expenses in response to
declines in our sales, offset by $5.4 million of SG&A spending at ASI.
Excluding the impact of additional costs assumed from ASI, our SG&A costs
declined by $6.7 million, or approximately 19.9 percent, from the second
quarter of fiscal 2003. This decrease was a result of SG&A headcount
reductions in our traditional business throughout fiscal 2003 in response to
lower sales, and a further substantial headcount reduction in April 2003.

Amortization of Acquired Intangible Assets.Amortization expenses relating
to acquired intangible assets were $4.8 million, or 9.3 percent of net sales,
for the quarter ended September 30, 2003 and $1.9 million, or 2.7 percent of
net sales, for the quarter ended September 30, 2002. Amortization expenses for
acquired intangible assets were $9.6 million for the six months
ended
September 30, 2003 and $3.6 million for the six months ended September 30,
2002. The increases in amortization expense in the three months and the six
months ended September 30, 2003 are primarily due to the acquisition of the ASI
joint venture in the third quarter of fiscal 2003. We amortize acquired
intangible assets over periods ranging from three to ten years.

Restructuring Charges. The following table summarizes the activities in
our restructuring accrual during the six months ended September 30, 2003 (in
thousands):

|                             |  |           |        |            |  |             |       |       |  |   |      |   |  |   |        |  
|---------------------------- |  | --------- | ------ | ---------- |  | ----------- | ----- | ----- |  | - | ---- | - |  | - | ------ | -
|                             |  | Severance |        |            |  |             |       |       |  |   |      |   |  |  
|                             |  | and       |        | Excess     |  | Fixed Asset |       |       |  |  
|                             |  | Benefits  |        | Facilities |  | Impairment  |       | Total
|                             |  |           |        |            |  |             |       |      
|Balance, March 31, 2003      |  | $         | 291    |            |  | $           | 3,617 |       |  | $ | 192  |   |  | $ | 4,100  |  
|Additional accruals          |  |           | 3,448  |            |  |             | 869   |       |  |   | 46   |   |  |   | 4,363  |  
|Non-cash related utilization |  |           |       |            |  |             | (29   | )     |  |   | (205 | ) |  |   | (234   | )
|Amounts paid in cash         |  |           | (3,269 | )          |  |             | (250  | )     |  |   | (33  | ) |  |   | (3,552 | )
|                             |  |           |        |            |  |             |       |       |  |   |      |   |  |   |        |  
|Balance,
June 30, 2003       |  | $         | 470    |            |  | $           | 4,207 |       |  | $ |     |   |  | $ | 4,677  |  
|                             |  |           |        |            |  |             |       |       |  |   |      |   |  |   |        |  
|Additional
accruals          |  |           | 160    |            |  |             | 327   |       |  |   |     |   |  |   | 487    |  
|Non-cash
related utilization |  |           |       |            |  |             |      |       |  |   |     |   |  |   |       |  
|Amounts paid in cash         |  |           | (305   | )          |  |             | (957  | )     |  |   |     |   |  |   | (1,262 | )
|                             |  |           |        |            |  |             |       |       |  |   |      |   |  |   |        |  
|Balance,
September 30, 2003  |  | $         | 325    |            |  | $           | 3,577 |       |  | $ |     |   |  | $ | 3,902  |  
|                             |  |           |        |            |  |             |       |       |  |   |      |   |  |   |        |  

We incurred restructuring charges of $0.5 million during the quarter ended
September 30, 2003, consisting primarily of severance costs from a reduction in
our worldwide workforce and secondarily for exiting a facility in connection
with our restructuring activities.

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As a result of these restructuring
activities, we terminated the employment of approximately 49 employees, mainly
in manufacturing, from our international operations. We anticipate additional
restructuring charges during the remainder of fiscal 2004 as we complete the
workforce reductions and outsourcing of manufacturing in Japan.

In the six months ended September 30, 2003, we incurred restructuring
charges of $4.9 million, consisting primarily of severance costs from a
reduction in workforce in April 2003. Additionally, we incurred a charge for
future lease obligations on a vacated facility in excess of estimated future
sublease proceeds. We expect to utilize the remaining balance, primarily
unused leased facilities, over the following three fiscal years. All remaining
accrual balance are expected to be settled in cash.

We incurred restructuring charges of $3.0 million in the six months ended
September 30, 2002. The charges include severance charges of $0.8 million for
approximately 215 manufacturing and other employees as a result of workforce
reduction measures and contractual obligations of $0.6 million related to our
manufacturing outsourcing agreement. An additional charge of $1.6 million
relates to excess facilities that we had under lease but no longer intend to
use as a result of the manufacturing outsourcing agreement.

Asset Impairment Charges.We completed the sale of land in Fremont,
California, in the quarter ended September 30, 2003. The net proceeds from the
sale were $12.1 million. We had intended to construct corporate headquarters
facilities on the land and subsequently decided not to build these facilities.
In the first quarter of fiscal 2004 we recorded a $6.9 million write-down based
on our latest estimate of market value as supported by the pending sale
agreement at the time.

In the quarter and the six months ended September 30, 2002, we wrote down
the land held for sale by $7.1 million based on the estimated market value and
$1.5 million to write off fixed assets that will not be used as we consolidated
facilities and integrated our AMHS programs with ASI.

In-process Research and Development Costs of Acquired Business.On May 29,
2002, ACT purchased substantially all of the assets of domainLogix Corporation,
or DLC. In connection with the estimated purchase price allocation, $2.5
million was assigned to in-process research and development costs of acquired
business, or IPR&D. IPR&D was subsequently adjusted to approximately $2.1
million as we completed our analysis of the fair value of intangible assets in
the second quarter of fiscal 2003. The amount allocated to IPR&D was estimated
through established valuation techniques in the high-technology industry and
was expensed upon acquisition as it was determined that the projects had not
reached technological feasibility at the time of our acquisition.

Other
Income (Expense), Net.The net increase in other income (expense)
for the three months ended September 30, 2003 is due to higher
interest expense on larger debt balances, foreign exchange losses due
to the strengthening yen, offset by royalty income. The net
decrease in other income (expense) for the six months ended
September 30, 2003 is due to royalty income for the full six
months more than offsetting higher interest expense due to the higher
debt balances.

Provision/Benefit from Income Taxes. We recorded a benefit from income
taxes of $1.0 million for the quarter ended September 30, 2003, or 5.6 percent
of our loss before income taxes. The benefit is primarily due to $1.6 million
amortization of deferred tax liabilities recorded in connection with the ASI
acquisition, offset by tax
provisions in our international subsidiaries. We recorded a benefit from
income taxes of $2.4 million for the six months ended September 30, 2003. A
tax benefit has been recognized in the three months and six months ended
September 30, 2003 as we expect to have net income in Japan for the 12-month
period ending March 31, 2004.

We recorded an expense for income taxes of $62.7 million and $58.6 million
for the quarter and six months ended September 30, 2002, respectively. As a
result of the review undertaken at September 30, 2002, we concluded that it was
appropriate to establish a full valuation allowance for our U.S. net deferred
tax assets. The valuation allowance for deferred tax assets increased from
$11.9 million at March 31, 2002, to approximately $74.5 million at September
30, 2002. We expect to provide a full valuation allowance on future tax
benefits until we can sustain a level of profitability that demonstrates the
ability to utilize the assets.

Minority Interest. Minority interest for the second quarter and
year-to-date of fiscal 2003 were $0.7 million and $1.7 million, respectively.
No minority interest was recorded in the quarter ended September 30, 2002. The
amount for minority interest represents 49 percent interest of our joint
venture partner, Shinko, in the operations of ASI.

Discontinued Operations, net of income tax.There were no losses from
discontinued operations for the three or six months of fiscal 2004 and the loss
from discontinued operations was $2.1 million and $3.5 million for the three
months and six months ended

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September 30, 2002, respectively. We divested two
of our subsidiaries, AMP and SemiFab, in March 2003 to allow us to better focus
on our core business.

Liquidity and Capital Resources

Since inception, we have funded our operations primarily through the
private sale of equity securities and public stock offerings, customer
pre-payments, bank borrowings, long-term debt and cash generated from
operations. As of September 30, 2003, we had approximately $77.4 million in
cash and cash equivalents, $2.3 million in restricted cash, $46.5 million in
working capital and $92.5 million in long-term debt and finance leases.

Operating activities.Net cash used in operating activities was $38.4
million in the six months ended September 30, 2003, primarily consisting of our
$53.7 million net loss, increases in receivables of $1.5 million and reductions
in payables, accrued liabilities and deferred revenue of $4.8 million, as well
as increases of prepaid expenses and other assets of
$8.0 million. These uses of cash were
partially offset by non-cash charges of $13.7 million for depreciation and
amortization, $6.9 million for impairment in our land held for sale and $1.5
million for inventory reserves, as well as reductions in inventory of $4.4
million. The reductions in the current asset and liability accounts reflect
our lower sales volume compared with the prior quarters.

Net cash used in operating activities was $4.9 million in the six months
ended September 30, 2002, primarily consisting of an $88.1 million net loss
from continuing operations, and an $18.8 million increase in accounts
receivable. These uses of cash were largely offset by a decrease in the net
deferred tax asset of $59.4 million, a decrease in inventory of $10.6 million,
non-cash charges for write-down of land and other restructuring of $9.8
million, an increase in accounts payable, accrued liabilities and deferred
revenue of $7.1 million and non-cash charges of $9.4 million for depreciation
and amortization. The increases in receivables, accounts payable, accrued
liabilities and deferred revenue reflected substantial sales growth during the
period. The decrease in inventory resulted from ongoing efforts to improve
inventory turns as well as increased sales.

Investing activities.Net cash provided by investing activities was $9.0
million in the six months ended September 30, 2003, due to the net proceeds of
$12.1 million from the sale of land offset by the purchases of property and
equipment of $1.9 million and ASAM acquisition of $1.2 million.

Net cash used in investing activities during the six months ended
September 30, 2002 was $12.4 million due to net purchases of short-term
investments of $8.1 million and purchases of property and
equipment of $4.3
million.

Financing activities. Net cash provided by financing activities was $11.8
million for the six months ended September 30, 2003, including total loan
proceeds of $7.5 million from a short-term borrowing and additional long-term
debt in our Japanese subsidiaries, offset by $5.4 million of loan repayments in
the first half of the year. Additionally, a total of $9.8 million was provided
from issuance of common stock under our employee stock
programs in the six months ended September 30, 2003. Substantial stock
transactions resulted from exercises of stock options by terminated employees
prior to the expiration of their stock options.

Net cash provided by financing activities was $5.5 million for the six
months ended September 30, 2002, due to net proceeds from short- and long-term
borrowing of $1.3 million and $4.7 million from issuance of common stock under
our employee stock programs.

In September 2003 ASI entered into a short-term bank facility with a
Japanese bank under which it may borrow up to approximately $27.0 million at
Septembers month-end exchange rate. The current interest rate is 1.395%.
This facility primarily supports ASIs working capital requirements during the
current construction of two projects currently in process in Japan where
customers generally pay four to six months after acceptance of a completed
project. ASI had outstanding borrowings of $4.5 million under this facility at
September 30, 2003. Under terms of the bank facility, ASI must generate
operating profits on a statutory basis.

In October 2002, we entered into and fully drew down a $25.0 million
two-year revolving credit agreement with a commercial bank. The debt is due
for repayment in October 2004. Borrowings under the credit agreement bear
interest at a rate indexed to LIBOR. As amended, we are required under the
agreement to maintain compliance with financial covenants, including a
quarterly net income/loss target, calculated on an after-tax basis excluding
depreciation, amortization and other non-cash items and minimum liquidity
covenants. We must also meet a minimum liquidity covenant. We are in
compliance with the covenants for the quarter ended September 30, 2003. The
maximum net loss covenant requires that we substantially improve the financial
performance for the quarter ending December 31, 2003 compared to the quarter
ending September 30, 2003. The amount of the credit line available to us

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may
change based on the amount of receivables we have and changes in the
non-formulary piece of the credit line which is subject to periodic review and
amendment. The credit agreement also restricts our ability to incur additional
indebtedness; pay dividends and make distributions in respect of our capital
stock; redeem capital stock; make investments or other restricted payments;
engage in transactions with shareholders and affiliates; create liens; sell or
otherwise dispose of assets; make payments on our subordinated debt; and engage
in mergers and acquisitions. We cannot assure you that we will meet the
quarterly net income/loss covenant in the quarter ending December 31, 2003 or in
subsequent quarters. Based upon uncertainty whether we will remain in
compliance with all financial covenants in future periods, we have classified
this debt as current at September 30, 2003.

On July 3, 2001, we completed the sale of $86.3 million of 53/4 percent
convertible subordinated notes which provided us with aggregate proceeds of
$82.9 million net of issuance costs. The notes are convertible, at the option
of the holder, at any time on or prior to maturity into shares of our common
stock at a conversion price of $15.18 per share, which is equal to a conversion
rate of 65.8718 shares per $1,000 principal amount of notes. The notes mature
July 3, 2008, pay interest on January 3 and July 3 of each year and are
redeemable at our option after July 3, 2004.

AJI had $21.6 million and $22.1 million of debt from banks in Japan at
September 30, 2003 and March 31, 2003, respectively. The interest rates ranged
from 1.4 percent to 3.0 percent as of September 30, 2003. Certain of AJIs
assets have been pledged as security for this debt. As of September 30, 2003,
pledged assets consist of land and other property and equipment, net of
accumulated depreciation, time deposits and accounts receivable totaling
approximately $15.3 million. Additionally, Asyst U.S. has provided letters of
guarantee to financial institutions in Japan covering substantially all of
AJIs debts. Certain notes of AJI will mature in the second half of fiscal
2004. We intend to renew or roll over these notes but we cannot assure you
that we will be successful in renewing these notes.

During the year ended March 31, 2003, we outsourced the majority of our
remaining manufacturing to Solectron Corporation, or Solectron. As part of the
arrangement, Solectron purchased $20.0 million of inventory from us. No
revenue was recorded for the sale of this inventory to Solectron. In the
quarter ending December 31, 2003, we may be obligated to repurchase any of this
inventory that is not used by Solectron in manufacturing our products. The
buy-back of Solectron inventory is estimated to be $6.0 million. On an
on-going basis, we may be obligated to acquire inventory purchased by Solectron
based on our forecasts and not used timely under terms of the outsourcing
agreement.
At September 30, 2003, we recorded a receivable of
$2.3 million and the
corresponding decrease in cost of sales for product cost savings from
Solectron, primarily resulting from the localization of our material
purchasing in the Asia-Pacific region.

We anticipate that operating losses will constitute a material use of our
cash resources. The cyclical nature of the semiconductor industry makes it
very difficult for us to predict future liquidity requirements with certainty.
Any upturn in the semiconductor industry may result in short-term uses of cash
in operations as cash may be used to finance additional working capital
requirements such as accounts receivable. However, we believe that our
available cash and cash equivalents will be sufficient to meet our working
capital and operating expense requirements through September 30, 2004.

We expect to pursue additional funds to support our working capital and
operating expense requirements or for other purposes within the next several
quarters and we expect to raise these additional funds through an equity
financing. However, financing may not be available to us on a timely basis,
if at all, or, if available, on terms acceptable to us and not dilutive to our
shareholders.

New Accounting Pronouncements

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

In August 2003, the EITF reached a consensus on Issue No. 03-5,
Applicability of AICPA Statement of Position 97-2,
Software Revenue Recognition, to Non-Software Deliverables. This
issue focuses solely on whether non-software deliverables included in
arrangement that contain more than incidental software should be
accounted for in accordance with SOP 97-2. The Task Force
confirmed that in an arrangement that contains software that is more
than
incidental to the products or services as a whole, only the software and
software related elements are included within the scope of
SOP 97-2. Software related elements include software related
products and services such as those listed in paragraph 9 of
SOP 97-2, as well as other deliverables for which the software
is essential to their functionality. EITF Issue No. 03-5 will be
effective for revenue arrangements entered into in fiscal periods
beginning after August 13, 2003. We are currently in the process
of determining the effect, if any, the adoption of
EIFF Issue No. 03-5 will have on our consolidated
financial statements.

In January 2003, the Financial Accounting Standards Board, or FASB, issued
FIN No. 46, Consolidation of Variable Interest Entities, an Interpretation of
ARB No. 51, or FIN No. 46. FIN No. 46 requires certain variable interest
entities to be consolidated by the primary beneficiary of the entity if the
equity investors in the entity do not have the characteristics of a controlling
financial interest or do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from
other parties. FIN No. 46 is effective immediately for all new variable
interest entities created or acquired after January 31, 2003. For variable
interest entities created or acquired prior to February 1, 2003, the provisions
of FIN No. 46 must be applied for the first interim or annual period beginning
after June 15, 2003. In October 2003, the Financial Accounting Standards Board
deferred the latest date by which all public entities must apply FIN No. 46, to
the first reporting period ending after December 15, 2003. We believe that the
adoption of this standard will have no material impact on our consolidated
financial statements.

In May 2003, FASB issued Statement of Financial Accounting Standards No.
150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity, or SFAS No. 150. SFAS No. 150 establishes standards
for how an issuer

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classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an issuer
classify a financial instrument that is within its scope as a liability (or an
asset in some circumstances). Many of those instruments were previously
classified as equity. SFAS No. 150 is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first fiscal period beginning after June 15, 2003. SFAS No.
150 is to be implemented by reporting the cumulative effect of a change in an
accounting principle for financial instruments created before the issuance date
of SFAS No. 150 and still existing at the beginning of the interim period of
adoption. Restatement is not permitted. The adoption of SFAS No. 150 to date
has not had a significant impact on our consolidated financial statements.

Risk Factors

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

Risks Related to Our Business



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

We have a significant amount of outstanding
indebtedness. At September 30, 2003, our long-term debt was
$92.5 million, and our short-term debt was
$45.5 million, for an aggregate of $138.0 million. We
have entered into a $25.0 million revolving credit
agreement with Comerica Bank  California, which
facility has been fully drawn down and expires in October 2004.
We have $86.3 million of 5 3/4 percent convertible
subordinated notes outstanding which are convertible, at the
option of the holder, at any time on or prior to maturity into
shares of our common stock at a conversion price of $15.18 per
share. We are required to pay interest on these convertible
notes on January 3 and July 3 of each year. These
convertible notes mature July 3, 2008, and are redeemable
at our option after July 3, 2004. Our majority-owned joint
venture, Asyst Shinko, Inc., or ASI, entered into a short-term
facility with a Japanese bank under which it may borrow up to
approximately $27.0 million, of which $4.5 million is
currently outstanding. We have also guaranteed the loans of our
Japanese subsidiary, Asyst Japan, Inc., or AJI, which loans
total approximately $22.3 million.

Our revolving credit agreement with Comerica
requires us to maintain compliance with numerous financial
covenants. In the past, we have had to obtain waivers for
noncompliance with these covenants and amendments of these
covenants in order to remain in compliance. After giving effect
to recent amendments, we are in compliance with the covenants
for the quarter ended September 30, 2003. In order for us
to comply with our financial covenants, including in particular
the maximum net loss covenant for the quarter ended
December 31, 2003, we will need to substantially improve
our financial performance in that quarter compared to the
quarter ended September 30, 2003. The covenants contained
in our credit agreement with Comerica restrict our ability to
take certain actions, including our ability to:



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

We may be unable to meet the financial covenants
contained in our credit agreement with Comerica in the quarter
ended December 31, 2003 and in subsequent quarters.
Specifically, we may be unable to meet the maximum loss covenant
or the minimum liquidity covenant in future quarters. If we are
unable to meet any

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covenants, we cannot assure you that the bank
will again grant waivers and amend the covenants, and Comerica
may require us to repay the outstanding balance.


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

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



| |                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may not be able to secure additional
    financing to meet our future capital needs; if we do secure
    financing, it may be on unfavorable terms.

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



| |                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we fail to maintain our position in
    Automated Materials Handling Systems, through our ASI joint
    venture, our growth prospects could be negatively
    impacted.

Sales of Automated Material Handling Systems, or
AMHS, accounted for approximately 50 percent of our sales
in the quarter ended September 30, 2003 and will be an
important component of our future revenues. Substantially all of
our AMHS sales are through our majority-owned joint venture
subsidiary, ASI, of which we acquired 51 percent in the third
quarter of fiscal 2003. While we have effective operating
control of ASI, certain major decisions require the approval of
our joint venture partner, Shinko Electric Co., Ltd., and our
future success depends in part on the strength of our
relationship with our joint venture partner. Other than a right
of first refusal if our joint venture partner is considering
selling its stake, we have no mechanism to acquire the
49 percent of ASI that is currently owned by Shinko. Even
if Shinko were to offer to sell its stake in ASI to us, we may
not have sufficient funds available to facilitate such
acquisition. In addition, we have limited experience managing
operations in Japan, and our failure to manage effectively could
harm our business.

Orders for AMHS are relatively large, often
exceeding $20 million for a given project. Because of the
size of these orders, our revenues are often concentrated among
a small number of customers in any fiscal period. Additionally,
the manufacture and installation of these systems at our
customers manufacturing facilities can take up to
6 months. We recognize revenue and costs for AMHS based on
percentage of completion because the contracts are long-term in
nature. Payments under these contracts often occur well after we
incur our manufacturing costs. For example, terms for our
Japanese AMHS customers require payment to be made 6 months
after customer acceptance of the installation. The consequence
of the AMHS payment cycle is that significant demands can be
placed on our working capital. Further, gross margins on our
AMHS sales are lower than those for our other products. Our
overall financial performance will therefore be impacted by the
mix of sales between AMHS and other products in a given period.



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

In recent quarters, ASI has begun to sell AMHS to
FPD manufacturers. While we believe that FPD AMHS presents
a significant opportunity for growth, the size of this market
opportunity depends in large

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part on capital expenditures by FPD
manufacturers. The market for FPD products is highly cyclical
and has experienced periods of oversupply resulting in
significantly reduced demand for manufacturing and automation
equipment. If the FPD market enters into a cyclical downturn,
demand for our FPD AMHS may be significantly reduced,
impacting our growth prospects.


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



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

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



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

The gross margins on our 300mm products currently
are not as favorable as on our 200mm products. This is primarily
because our 300mm products are early in their production life,
we face increased competition in this product area and we sell a
greater percentage of our 300mm products to OEMs rather than
directly to semiconductor manufacturers. Manufacturing costs are
generally higher in the early stages of new product introduction
and decrease as demand increases, due to better economies of
scale and efficiencies developed in the manufacturing processes.
However, we cannot assure you that we will see such economies of
scale and efficiencies in our future manufacturing of 300mm
products, which will be supplied primarily by contract
manufacturers. SEMI standards for 300mm products have enabled
more suppliers to enter our markets, thereby increasing
competition and creating pricing pressure. While semiconductor
manufacturers purchased a majority of 200mm tool automation
products, OEMs are purchasing most of the tool automation
products for 300mm. Sales to OEMs typically have lower gross
margins.

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



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

The decision by OEMs to adopt our tool front-end,
or portal, solutions for a large product line involves
significant organizational, technological and financial
commitments by the OEMs. OEMs expect these portal solutions to
meet stringent design, reliability and delivery specifications.
If we fail to satisfy these expectations, whether based on
limited or expanded sales levels, OEMs will not adopt our portal
solutions. We cannot ensure that these tools will be widely
accepted in the marketplace or that additional OEMs will adopt
them. We have invested significant time and expense in the
development of Spartan, our next generation portal offering
specifically designed for the 300mm market. While we believe
Spartan may improve our competitive position and gross margins
in the 300mm industry, if the market acceptance of Spartan is
less than we have forecast or if the timing of this acceptance
is delayed, our financial performance could be impacted.
Notwithstanding our solutions, OEMs may purchase components to
assemble or invest in the development of

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their own comparable portals. If our solutions
are not adopted by OEMs, our prospects will be negatively
impacted and our profits substantially harmed.




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

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



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

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



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

The markets in which we sell our products
comprise a relatively small number of customers, primarily OEMs
and semiconductor manufacturers. Large orders from a relatively
small number of customers account for a significant portion of
our revenue and make our relationship with each customer
critical to our business. The sales cycle to new customers
ranges from 6 to 12 months from initial inquiry to
placement of an order, depending on the complexity of the
project. This extended sales cycle makes the timing of customer
orders uneven and difficult to predict. A significant portion of
the net sales in any quarter is typically derived from a small
number of long-term, multi-million dollar customer projects
involving upgrades of existing facilities or the construction of
new facilities. Generally, our customers may cancel or
reschedule shipments with limited or no penalty.

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

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



| |                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------
| | Most of our manufacturing is outsourced and
    we rely on a single contract manufacturer for much of our
    product manufacturing.

We have outsourced the manufacturing of most of
our products. Solectron currently manufactures, under a
long-term contract, our products, other than AMHS and our
Japanese robotics products. ASI outsources a large portion of
its AMHS manufacturing to third parties. In the future we may
increase our dependence on

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contract manufacturers. Outsourcing may not yield
the benefits we expect, and instead could result in increased
product costs, and product delivery delays.


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

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

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



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

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



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

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

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

We rely on a combination of patent, trade secret
and copyright protection to establish and protect our
intellectual property. While we intend to take reasonable steps
to protect our patent rights, we cannot assure you that our
patents and other intellectual property rights will not be
challenged, invalidated or avoided, or that the rights granted
thereunder will provide us with competitive advantages. We also
rely on trade secrets that we seek to protect, in part, through
confidentiality agreements with employees, consultants and other
parties. These agreements may be breached, we may not have
adequate remedies for any breach, or our trade secrets may
otherwise become known to, or independently developed by, others.

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

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

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



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

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

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adverse effects from these integration efforts
which could materially reduce our short-term earnings.
Consideration for future acquisitions could be in the form of
cash, common stock, rights to purchase stock or a combination
thereof. Dilution to existing shareholders and to earnings per
share may result if shares of common stock or other rights to
purchase common stock are issued in connection with any future
acquisitions.




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

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



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

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



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

A significant portion of our net sales is
attributable to sales outside the United States, primarily in
Taiwan, Japan, China, Singapore and Europe. International sales
were 61 percent of our net revenue for our 2001 fiscal
year, 55 percent in our 2002 fiscal year and
65 percent in our 2003 fiscal year and 78 percent for
the first six months of our 2004 fiscal year. We expect that
international sales will continue to represent a significant
portion of our total revenue in the future. This concentration
increases our exposure to any risks in this area. Sales to
customers outside the United States are subject to various
risks, including:



| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | exposure to currency fluctuations;                                                                                                             
|
| |  | the imposition of governmental controls;                                                                                                       
|
| |  | the laws of certain foreign countries may not
    protect our intellectual property to the same extent as do the
    laws of the United States;
|
| |  | the need to comply with a wide variety of foreign
    and U.S. export laws;                                                                    
|
| |  | political and economic instability;                                                                                                            
|
| |  | terrorism and anti-American sentiment;                                                                                                         
|
| |  | trade restrictions;                                                                                                                            

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| |   |                                                               
| | - | --------------------------------------------------------------
| |  | changes in tariffs and taxes;                                 
|
| |  | longer payment cycles; and                                    
|
| |  | the greater difficulty of administering business
    overseas.

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

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

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



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

We may expand our operations through both
internal growth and acquisitions. We expect that this expansion
will strain our systems and operational and financial controls.
In addition, we may incur higher operating costs. To manage our
growth effectively, we must continue to improve and expand our
systems and controls. If we fail to do so, our growth will be
limited. Our officers have limited experience in managing large
or rapidly growing businesses.



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

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

Our success also depends on our ability to
attract, train and retain highly skilled managerial,
engineering, sales, marketing, legal and finance personnel and
on the abilities of new personnel to function effectively, both

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individually and as a group. Competition for
qualified senior employees can be intense. If we fail to do
this, business would be harmed.


Moreover, some of the individuals on our
management team have been in their current positions for a
relatively short period of time. For example, our Chief
Financial Officer joined us during the current quarter. Our
future success will depend to a significant extent on the
ability of our management team to work effectively together.



| |                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Representatives of Arthur Andersen LLP are
    not available to consent to the inclusion of Arthur Andersen
    LLPs reports on our financial statements and incorporated
    in our SEC filings, and you will not be able to recover against
    Arthur Andersen LLP under Section 11 of the Securities Act
    of 1933.

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

Risks Related to Our Industry



| |                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------
| | The semiconductor manufacturing industry is
    highly cyclical, and these cycles can harm our operating
    results.

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

Since 2000, our industry has been experiencing a
significant downturn due to decreased worldwide demand for
semiconductors. During this downturn, most of our customers have
reduced capital expenditures, which has adversely impacted our
business. Excluding sales of ASI, which was acquired during the
third quarter of fiscal 2003, our net sales declined
sequentially in the third and fourth quarter of fiscal 2003 and
again in the first quarter of fiscal 2004. Although our net
sales in the second quarter ended September 30, 2003
increased $6.1 million, or 13.5 percent, from the
first quarter of fiscal 2004, we cannot assure you that our
sales will recover sufficiently for us to return to
profitability in the near future. As a result of substantial
cost reductions in response to the decrease in net sales and
uncertainty over the timing and extent of any industry recovery,
we may be unable to make the investments in marketing, research
and development and engineering that are necessary to maintain
our competitive position, which could seriously harm our
long-term business prospects.

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



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

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

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

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

Companies in the semiconductor capital equipment
industry face continued pressure to reduce costs. Pricing
actions by our competitors may require us to make significant
price reductions to avoid losing orders. Further, our current
and prospective customers continuously exert pressure on us to
lower prices, shorten delivery times and improve the
capabilities of our products. Failure to respond adequately to
such pressures could result in a loss of customers or orders.




Item 3  Quantitative and Qualitative Disclosures About Market Risk

There has not been a material change in our exposure to interest rate and
foreign currency exchange risks since March 31, 2003, the end of our preceding
fiscal year.

Interest Rate Risk. Our exposure to market risk for changes in interest
rates relates primarily to our investment portfolio. We do not use derivative
financial instruments in our investment portfolio. Our investment portfolio
consists of short-term fixed income securities and by policy we limit the
amount of credit exposure to any one issuer. As stated in our investment
policy, we ensure the safety and preservation of our invested principal funds
by limiting default risk, market risk and reinvestment risk. We mitigate
default risk by investing in safe and high-credit quality securities and by
periodically positioning our portfolio to respond appropriately to a
significant reduction in a credit rating of any investment issuer, guarantor or
depository. The portfolio includes only marketable securities with active
secondary or resale markets to ensure portfolio liquidity. These securities,
like all fixed income instruments, carry a degree of interest rate risk.
Fixed-rate securities have their fair market value adversely affected due to
rise in interest rates. If market interest rates were to increase immediately
and uniformly by 10 percent from levels at September 30, 2003, the fair market
value of these investments would decline by an immaterial amount. We also have
the ability to keep our fixed income investments

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fairly liquid. Therefore, we
would not expect our operating results or cash flows to be affected to any
significant degree by a sudden change in market interest rates on our
investment portfolio.

Foreign Currency Exchange Risk. We engage in international operations and
transact business in various foreign countries. The primary source of foreign
currency cash flows is Japan and to a lesser extent China, Taiwan, Singapore
and Europe. Although we operate and sell products in various global markets,
substantially all sales are denominated in the U.S. dollar, except in Japan,
therefore reducing the foreign currency risk factor. In March 2001, we began
to employ a foreign currency hedge program utilizing foreign currency forward
exchange contracts in Japan. To date, the foreign currency transactions and
exposure to exchange rate volatility have not been significant. If the
Japanese Yen were to fluctuate by 10 percent from the level at September 30,
2003, our quarterly results of operations may improve or deteriorate in the
range of $1.0 million. Although we do not anticipate any significant
fluctuations within a quarter, there can be no assurance that foreign currency
exchange risk will not have a material impact on our financial position,
results of operations or cash flow in the future.




Item 4  Controls and Procedures

Introduction. Rules promulgated under the Securities Exchange Act of
1934, as amended, or the Act, define disclosure controls and procedures to
mean controls and procedures that are designed to ensure that information
required to be disclosed by public companies in the reports filed or submitted
under the Act is recorded, processed, summarized and reported, within the time
periods specified in the SECs rules and forms (Disclosure Controls). New
rules promulgated under the Act define internal control over financial
reporting to mean a process designed by, or under the supervision of, a public
companys principal executive and principal financial officers, or persons
performing similar functions, and effected by the companys board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles, or GAAP, including those policies and procedures that:
(i) pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
company, (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
GAAP, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company and
(iii) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the companys assets that could
have a material effect on the financial statements (Internal Controls).

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

Evaluation of Disclosure Controls and Procedures.Our Chief Executive
Office, or CEO, and our Chief Financial Officer, or CFO, are responsible for
establishing and maintaining our Disclosure Controls and Procedures as defined
in Securities Exchange Act Rules 13a-15(e) and 15d-15(e). Our CEO and CFO,
after evaluating the effectiveness of our Disclosure Controls and Procedures as
of September 30, 2003, have concluded that our Disclosure Controls and
Procedures are effective to provide reasonable assurances that our Disclosure
Controls and Procedures will meet their defined objectives.

Changes in Internal Controls.During the period covered by this report,
we did not make any significant changes in our internal controls or in other
factors that could significantly affect these controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses.




PART II  OTHER INFORMATION




Item 1  Legal Proceedings

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

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claims, and the dismissal of defendant Empak pursuant to a settlement
agreement. The remaining patent infringement claims against the remaining
parties proceeded to summary judgment, which was entered against us on June 8,
1999. We thereafter took an appeal to the United States Court of Appeals for
the Federal Circuit. On October 10, 2001, the Federal Circuit issued a written
opinion, Asyst Technologies, Inc. v. Empak, 268 F.3d 1365 (Fed. Cir. 2001),
reversing the decision of the trial court, and remanding the matter to the
trial court for further proceedings. The case was subsequently narrowed to the
421 patent, and we sought monetary damages for defendants infringement,
equitable relief, and an award of attorneys fees. On October 9, 2003 the
court (i) granted defendants motion for summary judgment to the effect that
the defendants had not infringed those of our patent claims that were at issue
and (ii) directed that judgment be entered for the defendants. The Court also
denied defendants motion for judgment as to the invalidity of our asserted
patents. In conjunction with entry of judgement, defendants requested
that the Court direct us to pay defendants attorneys fees and
costs in the action, which potentially could be in excess of
$5 million. No action has been taken at defendants request. We have filed a notice of appeal of both the order and the entry of
judgment against us.

On February 25, 2003, Mihir Parikh, our former Chief Executive Officer and
Chairman of the Board, filed a demand for arbitration with the American
Arbitration Association against us, alleging breach of his employment
agreement, wrongful termination in violation of public policy, discrimination
based on age, race and national origin, fraud and deceit, defamation and
violation of the California Labor Code. On March 4, 2003, Dr. Parikh resigned
as a member of our Board of Directors. On June 17, 2003, Dr. Parikh filed an
amended demand for arbitration adding as respondents our Chief Executive
Officer and Chairman of the Board, Stephen S. Schwartz, and three outside
directors, Walter W. Wilson, Stanley J. Grubel and Anthony E. Santelli to all
claims other than the breach of contract claim. Dr. Parikh seeks compensatory
damages in excess of $5.0 million plus punitive damages and
attorneys fees. We deny Dr. Parikhs allegations and intend to defend the
action vigorously. The arbitration hearing has been scheduled tentatively for
April 2004.

From time to time, we are also involved in other legal actions arising in
the ordinary course of business. We have incurred certain costs while
defending these matters. There can be no assurance third party assertions will
be resolved without costly litigation, in a manner that is not adverse to our
financial position, results of operations or cash flows or without requiring
royalty payments in the future which may adversely impact gross margins. No
estimate can be made of the possible loss or possible range of loss associated
with the resolution of these contingencies. As a result, no losses have been
accrued in our financial statements as of September 30 2003.




Item 4. Submission of Matters to a Vote of Security Holders

Our annual meeting of shareholders was held on September 23, 2003 for the
purpose of: (1) electing directors to serve for the ensuing year and until
their successors are elected; (2) approving our 2003 Equity Incentive Plan; (3)
approving our 1993 Employee Stock Purchase Plan, as amended, to increase the
aggregate number of shares of common stock authorized for issuance under this
plan by 550,000 shares; and (4) ratifying the selection of
PricewaterhouseCoopers LLP as our independent auditors for the 2004 fiscal
year. Proxies for the meeting were solicited pursuant to Section 14(a) of the
Securities Exchange Act of 1934, as amended, and there was no solicitation in
opposition of managements solicitations. Shareholders passed all proposals.
The final vote on the proposals was recorded as follows:



| |  |  | Proposal 1:                                                                                                                                                                            
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Stephen S. Schwartz, Ph.D. was elected to the board of directors to serve
for the ensuing year and until a successor is elected with 31,186,761 votes
for and 1,780,629 votes withheld.
|
| |  |  | P. Jackson Bell was elected to the board of directors to serve for the
ensuing year and until a successor is elected with 31,968,671 votes for and
998,719 votes withheld.             
|
| |  |  | Stanley Grubel was elected to the board of directors to serve for the
ensuing year and until a successor is elected with 32,000,571 votes for and
966,819 votes withheld.              
|
| |  |  | Robert A. McNamara was elected to the board of directors to serve for the
ensuing year and until a successor is elected with 31,969,571 votes for and
997,819 votes withheld.          
|
| |  |  | Anthony E. Santelli was elected to the board of directors to serve for the
ensuing year and until a successor is elected with 31,997,531 votes for and
969,859 votes withheld.         
|
| |  |  | Walter W. Wilson was elected to the board of directors to serve for the ensuing year and until a successor is elected with 31,967,972 votes for and 999,418 votes withheld.            

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Tsuyoshi Kawanishi was elected to the board of directors to serve for the
ensuing year and until a successor is elected with 32,006,587 votes for and
960,803 votes withheld.

Proposal 2:

Our 2003 Equity Incentive Plan was approved by the following vote:

|           |  |           |            |           |  |  |         | 
|---------- |  | --------- | ---------- | --------- |  |  | ------- | 
|FOR      |  | AGAINST |            | ABSTAIN
|           |  |           |            |          
|20,283,211 |  |           | 12,578,559 |           |  |  | 105,620 | 

Proposal 3:

Our amendment to the 1993 Employee Stock Purchase Plan to increase the
aggregate number of shares of common stock authorized for issuance under
this plan by 550,000 shares was approved by the following vote:

|           |  |           |           |           |  |  |         | 
|---------- |  | --------- | --------- | --------- |  |  | ------- | 
|FOR      |  | AGAINST |           | ABSTAIN
|           |  |           |           |          
|31,357,746 |  |           | 1,475,453 |           |  |  | 134,191 | 

Proposal 4:

The selection of PricewaterhouseCoopers LLP as our independent auditors for
the 2004 fiscal year was ratified by the following vote:

|           |  |           |           |           |  |  |        | 
|---------- |  | --------- | --------- | --------- |  |  | ------ | 
|FOR      |  | AGAINST |           | ABSTAIN
|           |  |           |           |          
|31,713,591 |  |           | 1,209,853 |           |  |  | 43,946 | 




Item 6  Exhibits and Reports on Form 8-K

(a) Exhibits

|               |  |                                                                                                                                                                         
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description of Document                                                                                                                                                 
|               |  |                                                                                                                                                                         
|3.1(1)         |  | Amended and Restated Articles of Incorporation of the Company.                                                                                                          
|3.2(1)         |  | Bylaws of the Company.                                                                                                                                                  
|3.3(2)         |  | Certificate of Amendment of the Amended and Restated Articles
of Incorporation, filed September 24, 1999.                                                               
|3.4(3)         |  | Second Certificate of Amendment of the Amended and Restated
Articles of Incorporation, filed October 5, 2000.                                                           
|4.1(4)         |  | Rights Agreement among the Company and Bank of Boston, N.A.,
as Rights Agent, dated June 25, 1998.                                                                      
|4.2(5)         |  | Common Stock Purchase Agreement, dated as of May 26, 1999.                                                                                                              
|4.3(6)         |  | Indenture dated as of July 3, 2001 between the Company, State
Street Bank and Trust Company of California, N.A., as
trustee, including therein the forms of the notes.  
|4.4(6)         |  | Registration Rights Agreement dated as of July 3, 2001
between the Company and State Street Bank and Trust Company
of California, N.A.                                  
|4.5(7)         |  | Amendment to Rights Agreement among the Company and Bank of
Boston, N.A. as rights agent, dated November 30, 2001.                                                      
|10.45          |  | Amendment No. 2
to Loan and Security Agreement between the Company and Comerica
Bank California, dated as of March 17, 2003.                                           
|10.46          |  | Amendment No. 3
to Loan and Security Agreement between the Company and Comerica
Bank California, dated as of September 26, 2003.                                       
|10.47          |  | Change-In-Control
Agreement between the Company and Stephen S. Schwartz, dated as of
October 20, 2003.                                                                  
|10.48          |  | Change-In-Control
Agreement between the Company and David L. White, dated as of
November 7, 2003.                                                                       
|10.49          |  | Agreement for Purchase and Sale of 44960 Warm Springs Boulevard,
Fremont, California, between the Company and Milpitas Square
880 @ 237, LLC,
dated as of June 13, 2003.
|31.1           |  | Certification required by Rule 13a-14(a) or Rule 15d-14(a).                                                                                                             
|31.2           |  | Certification required by Rule 13a-14(a) or Rule 15d-14(a).                                                                                                             
|32.1*          |  | Certifications required by Rule 13a-14(b) or Rule 15d-14(b)
and Section 1350 of Chapter 63 of Title 18 of the United
States Code (18 U.S.C. 1350).                      

35



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(1)  Previously filed as an Exhibit to our Registration Statement on Form S-1,
as amended, File No. 333-66184, filed with the Securities and Exchange
Commission on July 19, 1993, and incorporated herein by reference.

(2)  Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, filed with the Securities and Exchange
Commission on October 21, 1999, and incorporated herein by reference.

(3)  Previously filed with our Definitive Proxy Statement for the 2000 Annual
Meeting of Shareholders, filed with the Securities and Exchange Commission on
July 31, 2000, and incorporated herein by reference.

(4)  Previously filed as an Exhibit to our Current Report on Form 8-K, filed
with the Securities and Exchange Commission on June 29, 1998, and incorporated
herein by reference.

(5)  Previously filed as an Exhibit to our Current Report on Form 8-K, filed
with the Securities and Exchange Commission on June 18, 1999, and incorporated
herein by reference.

(6)  Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001, filed with the Securities and Exchange Commission
on August 14, 2001, and incorporated herein by reference.

(7)  Previously filed as an Exhibit to our Annual Report on Form 10-K for the
fiscal year ended March 31, 2002, filed with the Securities and Exchange
Commission on June 28, 2002, and incorporated herein by reference.

*     The certification attached as Exhibit 32.1 accompanies the Quarterly Report
on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and
shall not be deemed filed by the Company for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended.

(b) Reports on Form 8-K.

1.     On August 5, 2003, we filed a Current Report on Form 8-K, dated July
22, 2003, to furnish our public announcement of Board approval of a change of
our fiscal year end from March 31 to the last Saturday in March beginning with
the 2004 fiscal year and preliminary results for our first fiscal quarter ended
June 30, 2003.

2.     On September 18, 2003, we filed a Current Report on Form 8-K, dated
September 16, 2003, to furnish our public announcement that Geoffrey Ribar, our
former Senior Vice President and Chief Financial Officer, was leaving Asyst.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                        |  |                          |  |                                               
|----------------------- |  | ------------------------ |  | ----------------------------------------------
|                        |  | ASYST TECHNOLOGIES, INC.
|                        |  |                          |  |                                               
|Date: November 12, 2003 |  | By:                      |  | /s/ David L. White                            
|                        |  |                          |  |                                               
|                        |  |                          |  | David L. White                                
|                        |  |                          |  | Senior Vice President                         
|                        |  |                          |  | Chief Financial Officer                       
|                        |  |                          |  |                                               
|                        |  |                          |  | Signing on behalf of the registrant and as the
|                        |  |                          |  | principal accounting and financial officer    

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EXHIBIT INDEX

|               |  |                                                                                                                                                                         
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description of Document                                                                                                                                                 
|               |  |                                                                                                                                                                         
|3.1(1)         |  | Amended and Restated Articles of Incorporation of the Company.                                                                                                          
|3.2(1)         |  | Bylaws of the Company.                                                                                                                                                  
|3.3(2)         |  | Certificate of Amendment of the Amended and Restated Articles
of Incorporation, filed September 24, 1999.                                                               
|3.4(3)         |  | Second Certificate of Amendment of the Amended and Restated
Articles of Incorporation, filed October 5, 2000.                                                           
|4.1(4)         |  | Rights Agreement among the Company and Bank of Boston, N.A.,
as Rights Agent, dated June 25, 1998.                                                                      
|4.2(5)         |  | Common Stock Purchase Agreement, dated as of May 26, 1999.                                                                                                              
|4.3(6)         |  | Indenture dated as of July 3, 2001 between the Company, State
Street Bank and Trust Company of California, N.A., as
trustee, including therein the forms of the notes.  
|4.4(6)         |  | Registration Rights Agreement dated as of July 3, 2001
between the Company and State Street Bank and Trust Company
of California, N.A.                                  
|4.5(7)         |  | Amendment to Rights Agreement among the Company and Bank of
Boston, N.A. as rights agent, dated November 30, 2001.                                                      
|10.45          |  | Amendment No. 2
to Loan and Security Agreement between the Company and Comerica
Bank California, dated as of March 17, 2003.                                           
|10.46          |  | Amendment No. 3
to Loan and Security Agreement between the Company and Comerica
Bank California, dated as of September 26, 2003.                                       
|10.47          |  | Change-In-Control
Agreement between the Company and Stephen S. Schwartz, dated as of
October 20, 2003.                                                                  
|10.48          |  | Change-In-Control
Agreement between the Company and David L. White, dated as of
November 7, 2003.                                                                       
|10.49          |  | Agreement for Purchase and Sale of 44960 Warm Springs Boulevard,
Fremont, California, between the Company and Milpitas Square
880 @ 237, LLC,
dated as of June 13, 2003.
|31.1           |  | Certification required by Rule 13a-14(a) or Rule 15d-14(a).                                                                                                             
|31.2           |  | Certification required by Rule 13a-14(a) or Rule 15d-14(a).                                                                                                             
|32.1*          |  | Certifications required by Rule 13a-14(b) or Rule 15d-14(b)
and Section 1350 of Chapter 63 of Title 18 of the United
States Code (18 U.S.C. 1350).                      

(1)  Previously filed as an Exhibit to our Registration Statement on Form S-1,
as amended, File No. 333-66184, filed with the Securities and Exchange
Commission on July 19, 1993, and incorporated herein by reference.

(2)  Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, filed with the Securities and Exchange
Commission on October 21, 1999, and incorporated herein by reference.

(3)  Previously filed with our Definitive Proxy Statement for the 2000 Annual
Meeting of Shareholders, filed with the Securities and Exchange Commission on
July 31, 2000, and incorporated herein by reference.

(4)  Previously filed as an Exhibit to our Current Report on Form 8-K, filed
with the Securities and Exchange Commission on June 29, 1998, and incorporated
herein by reference.

(5)  Previously filed as an Exhibit to our Current Report on Form 8-K, filed
with the Securities and Exchange Commission on June 18, 1999, and incorporated
herein by reference.

(6)  Previously filed as an Exhibit to our Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001, filed with the Securities and Exchange Commission
on August 14, 2001, and incorporated herein by reference.

(7)  Previously filed as an Exhibit to our Annual Report on Form 10-K for the
fiscal year ended March 31, 2002, filed with the Securities and Exchange
Commission on June 28, 2002, and incorporated herein by reference.

*     The certification attached as Exhibit 32.1 accompanies the Quarterly Report
on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and
shall not be deemed filed by the Company for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended.

38