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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 OR
 o
    
    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 Number)
 48761 Kato Road, Fremont, California 94538
 (510) 661-5000
  Yes þ No o
  Yes þ No o




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ASYST TECHNOLOGIES, INC.
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements:Condensed Consolidated Balance Sheets  June 30, 2005 and March 31, 2005
    
    
    3Condensed Consolidated Statements of Operations  Three-Month Periods Ended June 30, 2005 and 2004
    
    
    4Condensed Consolidated Statements of Cash Flows  Three-Month Periods Ended June 30, 2005 and 2004
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    37Item 4.Controls and Procedures
    
    
    37PART II. OTHER INFORMATIONItem 1.Legal Proceedings
    
    
    42ITEM 6.EXHIBITS
    
    
    43SIGNATURESEXHIBIT INDEXEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  2




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Part I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 ASYST TECHNOLOGIES, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    March 31,2005
    
    2005ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    66,932
    
    
    $
    55,094Short-term investments
    
    
    39,029
    
    
    
    46,086Accounts receivable, net of allowances for doubtful accounts of $8,827 and
$6,980 at June 30 and March 31, 2005, respectively
    
    
    189,748
    
    
    
    189,943Inventories
    
    
    36,703
    
    
    
    33,515Prepaid expenses and other current assets
    
    
    27,355
    
    
    
    33,971Total current assets
    
    
    359,767
    
    
    
    358,609Property and equipment, net
    
    
    14,492
    
    
    
    15,458Goodwill
    
    
    62,354
    
    
    
    64,014Intangible assets, net
    
    
    34,611
    
    
    
    40,898Other assets
    
    
    4,644
    
    
    
    4,795$
    475,868
    
    
    $
    483,774LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Short-term loans and notes payable
    
    $
    53,034
    
    
    $
    20,563Current portion of long-term debt and capital leases
    
    
    2,639
    
    
    
    2,757Accounts payable
    
    
    80,479
    
    
    
    83,913Accounts payable-related parties
    
    
    21,933
    
    
    
    39,242Accrued and other liabilities
    
    
    59,718
    
    
    
    70,439Deferred margin
    
    
    5,066
    
    
    
    6,013Total current liabilities
    
    
    222,869
    
    
    
    222,927LONG-TERM LIABILITIESLong-term debt and capital leases, net of current portion
    
    
    88,050
    
    
    
    88,750Deferred tax liability
    
    
    6,564
    
    
    
    8,548Other long-term liabilities
    
    
    9,037
    
    
    
    9,771Total long-term liabilities
    
    
    103,651
    
    
    
    107,069COMMITMENTS AND CONTINGENCIES (see Note 10)MINORITY INTEREST
    
    
    64,460
    
    
    
    63,855SHAREHOLDERS EQUITYCommon stock
    
    
    451,200
    
    
    
    450,005Deferred stock-based compensation
    
    
    (1,953
    )
    
    
    (1,312
    )Accumulated deficit
    
    
    (369,826
    )
    
    
    (366,239
    )Accumulated other comprehensive income
    
    
    5,467
    
    
    
    7,469Total shareholders equity
    
    
    84,888
    
    
    
    89,923Total liabilities, minority interest and shareholders equity
    
    $
    475,868
    
    
    $
    483,774
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ASYST TECHNOLOGIES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months EndedJune 30,2005
    
    2004NET SALES
    
    $
    117,451
    
    
    $
    139,425COST OF SALES
    
    
    83,717
    
    
    
    112,330GROSS PROFIT
    
    
    33,734
    
    
    
    27,095OPERATING EXPENSES:Research and development
    
    
    7,067
    
    
    
    9,679Selling, general and administrative
    
    
    19,179
    
    
    
    16,850Amortization of acquired intangible assets
    
    
    4,918
    
    
    
    5,052Restructuring charges
    
    
    93
    
    
    
    219Total operating expenses
    
    
    31,257
    
    
    
    31,800INCOME (LOSS) FROM OPERATIONS
    
    
    2,477
    
    
    
    (4,705
    )INTEREST AND OTHER INCOME (EXPENSE), NET:Interest income
    
    
    523
    
    
    
    337Interest expense
    
    
    (1,599
    )
    
    
    (1,627
    )Other income, net
    
    
    517
    
    
    
    734Interest and other income (expense), net
    
    
    (559
    )
    
    
    (556
    )INCOME (LOSS) BEFORE (PROVISION FOR) BENEFIT FROM INCOME TAXES AND
MINORITY INTEREST
    
    
    1,918
    
    
    
    (5,261
    )(PROVISION FOR) BENEFIT FROM INCOME TAXES
    
    
    (3,101
    )
    
    
    1,654MINORITY INTEREST
    
    
    (2,404
    )
    
    
    1,321NET LOSS
    
    $
    (3,587
    )
    
    $
    (2,286
    )BASIC AND DILUTED NET LOSS PER SHARE:Basic and diluted net loss per share
    
    
    (0.08
    )
    
    
    (0.05
    )SHARES USED IN THE PER SHARE CALCULATION:Basic and diluted
    
    
    47,812
    
    
    
    47,179
  4




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ASYST TECHNOLOGIES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months Ended June 30,2005
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (3,587
    )
    
    $
    (2,286
    )Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    6,679
    
    
    
    7,041Minority interest in net income (loss) in consolidated subsidiary
    
    
    2,404
    
    
    
    (1,321
    )Stock-based compensation expense
    
    
    534
    
    
    
    418Changes in assets and liabilities:Accounts receivable, net
    
    
    (3,797
    )
    
    
    (29,567
    )Inventories
    
    
    (4,069
    )
    
    
    (22,473
    )Prepaid expenses and other assets
    
    
    2,741
    
    
    
    (4,589
    )Accounts payable, accrued liabilities and deferred margin
    
    
    (28,106
    )
    
    
    56,655Net cash provided by (used in) operating activities
    
    
    (27,201
    )
    
    
    3,878CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of short-term investments
    
    
    (16,363
    )
    
    
    (50,764
    )Sale or maturity of short-term investments
    
    
    23,375
    
    
    
    11,624Release of restricted cash and cash equivalents
    
    
    
    
    
    
    1,904Purchase of property and equipment, net
    
    
    (789
    )
    
    
    (856
    )Net cash provided by (used in) investing activities
    
    
    6,223
    
    
    
    (38,092
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from (payments to) line of credit, net
    
    
    34,641
    
    
    
    (727
    )Payments on short-term loans
    
    
    
    
    
    
    (711
    )Principal payments on long-term debt and capital leases
    
    
    (1,133
    )
    
    
    Proceeds from issuance of common stock
    
    
    20
    
    
    
    1,757Net cash provided by financing activities
    
    
    33,528
    
    
    
    319Effect of exchange rate changes on cash and cash equivalents
    
    
    (712
    )
    
    
    (371
    )INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    11,838
    
    
    
    (34,266
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    55,094
    
    
    
    101,907CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    66,932
    
    
    $
    67,641
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ASYST TECHNOLOGIES, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. ORGANIZATION OF THE COMPANY
      2. LIQUIDITY
     6




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3. SIGNIFICANT ACCOUNTING POLICIES
 Basis of Preparation
   Recent Accounting Pronouncements
 The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments.
 Inventory Costs  an Amendment of ARB No. 43, Chapter 4
 Exchange of Nonmonetary Assets  an amendment
of APB Opinion No. 29
 Share Based Payment. Accounting for Stock-Based Compensation
 7




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Accounting Changes and Error Corrections: a
Replacement of Accounting
Principles Board Opinion No. 20 (APB 20) and FASB Statement No 3
 Reclassifications
   Short-term
Investments
  Cost
    
    
    Unrealized Loss
    
    
    Fair ValueJune 30, 2005Auction rate securities
    
    $
    15,200
    
    
    $
    
    
    
    $
    15,200Corporate debt securities
    
    
    9,932
    
    
    
    (27
    )
    
    
    9,905International debt securities
    
    
    1,016
    
    
    
    (2
    )
    
    
    1,014Federal agency notes
    
    
    12,929
    
    
    
    (19
    )
    
    
    12,910$
    39,077
    
    
    $
    (48
    )
    
    $
    39,029March 31, 2005Auction rate securities
    
    $
    19,803
    
    
    $
    
    
    
    $
    19,803Corporate debt securities
    
    
    9,915
    
    
    
    (47
    )
    
    
    9,868Municipal debt securities
    
    
    501
    
    
    
    (1
    )
    
    
    500International debt securities
    
    
    1,009
    
    
    
    (2
    )
    
    
    1,007Federal agency notes
    
    
    15,000
    
    
    
    (92
    )
    
    
    14,908$
    46,228
    
    
    $
    (142
    )
    
    $
    46,086
 Accounts Receivable, net of allowance for doubtful accounts
  June 30,
    
    March 31,2005
    
    2005Trade receivables
    
    $
    97,802
    
    
    $
    77,196Trade receivables-related party
    
    
    49
    
    
    
    100Unbilled receivables
    
    
    84,047
    
    
    
    110,778Other receivables
    
    
    16,677
    
    
    
    8,849Less: Allowance for doubtful accounts
    
    
    (8,827
    )
    
    
    (6,980
    )Total
    
    $
    189,748
    
    
    $
    189,943
     8




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Inventories
  June 30,
    
    March 31,2005
    
    2005Raw materials
    
    $
    14,969
    
    
    $
    14,040Work-in-process
    
    
    20,630
    
    
    
    17,905Finished goods
    
    
    1,104
    
    
    
    1,570Total
    
    $
    36,703
    
    
    $
    33,515
   Goodwill and Intangible Assets, net
 Goodwill
  Fab Automation
    
    AMHS
    
    TotalBalance at March 31, 2005
    
    $
    3,397
    
    
    $
    60,617
    
    
    $
    64,014Foreign currency translation
    
    
    
    
    
    
    (1,660
    )
    
    
    (1,660
    )Balance at June 30, 2005
    
    $
    3,397
    
    
    $
    58,957
    
    
    $
    62,354
 Intangible assets, net
  June 30, 2005
    
    
    
    
    
    
    
    
    
    March 31, 2005Gross
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    Accumulated
    
    
    
    
    
    Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Net
    
    Amount
    
    Amortization
    
    NetAmortizable intangible assets:Developed technology
    
    $
    61,234
    
    
    $
    36,575
    
    
    $
    24,659
    
    
    $
    62,626
    
    
    $
    34,069
    
    
    $
    28,557Customer base and other intangible assets
    
    
    33,179
    
    
    
    26,713
    
    
    
    6,466
    
    
    
    33,767
    
    
    
    25,167
    
    
    
    8,600Licenses and patents
    
    
    6,715
    
    
    
    3,229
    
    
    
    3,486
    
    
    
    6,989
    
    
    
    3,248
    
    
    
    3,741Total
    
    $
    101,128
    
    
    $
    66,517
    
    
    $
    34,611
    
    
    $
    103,382
    
    
    $
    62,484
    
    
    $
    40,898
  9




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Fiscal Year ending March 31,Remaining portion of 2006:
    
    $
    13,0682007
    
    
    12,8492008
    
    
    7,2752009
    
    
    6802010
    
    
    3682011 and thereafter
    
    
    371Total
    
    $
    34,611
 Warranty Accrual
  Three Months Ended June 30,2005
    
    2004Beginning Balance
    
    $
    13,509
    
    
    $
    8,185Accruals
    
    
    2,710
    
    
    
    2,569Settlements
    
    
    (3,440
    )
    
    
    (1,376
    )Foreign Currency Translation
    
    
    (352
    )
    
    
    (56
    )Ending Balance
    
    $
    12,427
    
    
    $
    9,322
  Contract Loss Reserve
  Comprehensive Loss
  Three Months Ended June 30,2005
    
    2004Net loss, as reported
    
    $
    (3,587
    )
    
    $
    (2,286
    )Foreign currency translation adjustments
    
    
    (2,049
    )
    
    
    (758
    )Unrealized losses on investments
    
    
    47
    
    
    
    (100
    )Comprehensive loss
    
    $
    (5,589
    )
    
    $
    (3,144
    )
 Net Income (Loss) Per Share
  10




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As of June 30,2005
    
    2004Restricted stock
    
    
    469
    
    
    
    67Restricted stock units
    
    
    37
    
    
    
    Stock options
    
    
    7,310
    
    
    
    8,643Convertible notes
    
    
    5,682
    
    
    
    5,682Total
    
    
    13,498
    
    
    
    14,392
 Stock-Based Compensation
  Three Months Ended June 30,2005
    
    2004Net loss  as reported
    
    $
    (3,587
    )
    
    $
    (2,286
    )Add: employee stock-based compensation
expense included in reported net loss, net
of tax
    
    
    534
    
    
    
    325Less: total employee stock-based
compensation expense determined under fair
value, net of tax
    
    
    (1,708
    )
    
    
    (2,753
    )Net loss  pro forma
    
    $
    (4,761
    )
    
    $
    (4,714
    )Basic and diluted net loss per share  as reported
    
    $
    (0.08
    )
    
    $
    (0.05
    )Basic and diluted net loss per share  pro forma
    
    $
    (0.10
    )
    
    $
    (0.10
    )Shares used in EPS calculation  basic & diluted
    
    
    47,812
    
    
    
    47,179
 Defined Benefit Pension Plans
  11




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4. RESTRUCTURING CHARGES
  Severance
    
    Excessand Benefits
    

Facilities
    
    TotalBalance, March 31, 2005
    
    $
    67
    
    
    $
    816
    
    
    $
    883Additional accruals
    
    
    
    
    
    
    93
    
    
    
    93Non-cash related adjustments
    
    
    27
    
    
    
    (16
    )
    
    
    11Amounts paid in cash
    
    
    
    
    
    
    (370
    )
    
    
    (370
    )Foreign currency translation adjustment
    
    
    (1
    )
    
    
    (1
    )
    
    
    (2
    )Balance, June 30, 2005
    
    $
    93
    
    
    $
    522
    
    
    $
    615
    Severance
    
    Excessand Benefits
    

Facilities
    
    TotalBalance, March 31, 2004
    
    $
    64
    
    
    $
    2,190
    
    
    $
    2,254Additional accruals
    
    
    6
    
    
    
    213
    
    
    
    219Amounts paid in cash
    
    
    (37
    )
    
    
    (385
    )
    
    
    (422
    )Foreign currency translation adjustment
    
    
    
    
    
    
    4
    
    
    
    4Balance, June 30, 2004
    
    $
    33
    
    
    $
    2,022
    
    
    $
    2,055
  5. INCOME TAXES
  6. REPORTABLE SEGMENTS
   12




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Three Months Ended June 30,2005
    
    2004Fab Automation Products:Net sales
    
    $
    40,074
    
    
    $
    71,755Income (loss) from operations
    
    $
    (5,351
    )
    
    $
    2,153AMHS:Net sales
    
    $
    77,377
    
    
    $
    67,670Income (loss) from operations
    
    $
    7,828
    
    
    $
    (6,858
    )Total:Net sales
    
    $
    117,451
    
    
    $
    139,425Income (loss) from operations
    
    $
    2,477
    
    
    $
    (4,705
    )
   June 30,
    
    March 31,2005
    
    2005United States
    
    $
    5,753
    
    
    $
    6,243Japan
    
    
    11,485
    
    
    
    11,915Other
    
    
    294
    
    
    
    324Total
    
    $
    17,532
    
    
    $
    18,482
 7. DEBT
   June 30,
    
    March 31,2005
    
    2005Convertible subordinated notes
    
    $
    86,250
    
    
    $
    86,250Secured straight bonds
    
    
    3,675
    
    
    
    4,397Capital leases
    
    
    764
    
    
    
    860Total long-term debt
    
    
    90,689
    
    
    
    91,507Less: Current portion of long-term debt and capital leases
    
    
    (2,639
    )
    
    
    (2,757
    )Long-term debt and capital leases of current portion
    
    $
    88,050
    
    
    $
    88,750
  Fiscal Year Ending March 31,Remaining portion of 2006
    
    $
    2,0082007
    
    
    1,4562008
    
    
    7692009
    
    
    86,4562010 and thereafter
    
    
    $
    90,689
 13




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Convertible Subordinated Notes
  Secured Straight Bonds
  Lines of Credit
     14




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8. EMPLOYEE STOCK OPTION AND STOCK PURCHASE PLANS
 Employee Stock Option Grants
  Employee Stock Purchase Plan
  Fair Value Disclosures
   Three Months EndedJune 30,2005
    
    2004Risk-free interest rate
    
    
    3.78
    %
    
    
    3.35
    %Expected term of options (in years)
    
    
    4.65
    
    
    
    4.60Expected volatility
    
    
    88.7
    %
    
    
    91.5
    %Expected dividend yield
    
    
    
    
    
    
    
   Three Months EndedJune 30,2005
    
    2004Risk-free interest rate
    
    
    3.31
    %
    
    
    1.55
    %Expected term of options (in years)
    
    
    0.50
    
    
    
    0.50Expected volatility
    
    
    45.7
    %
    
    
    78.7
    %Expected dividend yield
    
    
    
    
    
    
    
 15




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9. RELATED PARTY TRANSACTIONS
  June 30,
    
    March 31,2005
    
    2005Accounts payable due to Shinko
    
    $
    21,933
    
    
    $
    39,221Accrued liabilities due to Shinko
    
    
    613
    
    
    
    450Accounts receivable from MECS Korea
    
    
    49
    
    
    
    100Accounts payable due to MECS Korea
    
    
    
    
    
    
    21
  Three-Months Ended June 30,2005
    
    2004Material and service purchases from Shinko
    
    $
    11,176
    
    
    $
    6,400Sales to MECS Korea
    
    
    123
    
    
    
    20
 10. COMMITMENTS AND CONTINGENCIES
 Lease Commitments
  Capital
    
    Operating
    
    SubleaseFiscal Year Ending March 31,
    
    Lease
    
    Lease
    
    IncomeRemaining portion of 2006
    
    $
    212
    
    
    $
    4,112
    
    
    $
    (392
    )2007
    
    
    254
    
    
    
    1,989
    
    
    
    (44
    )2008
    
    
    173
    
    
    
    1,588
    
    
    
    2009
    
    
    156
    
    
    
    16
    
    
    
    Total
    
    $
    795
    
    
    $
    7,705
    
    
    $

    (436
    )Less: interest
    
    
    (31
    )Present value of minimum lease payments
    
    
    764Less: current portion of capital leases
    
    
    (273
    )Capital leases, net of current portion
    
    $
    491
  Legal Proceedings
  16




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Indemnifications
   
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 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 should be read in conjunction with the unaudited condensed
consolidated financial statements and related notes included in this report and our audited
consolidated financial statements and related notes as filed in our Annual Report Form 10-K for the
year ended March 31, 2005. Certain prior period amounts have been reclassified to conform to
current period presentation. Such reclassifications did not have an effect on the prior periods
net loss.
  17




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Overview
           Status of Material Weaknesses
  18




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If we continue to fail to achieve and maintain
effective disclosure controls and procedures and internal control over financial reporting on a
consolidated basis, our stock price and investor confidence in our company could be materially and
adversely affected We experienced additional risks and costs as a result of the delayed
filing of the Form 10-Q for our fiscal 2005 second quarter and delayed filing of the Form 10-K for
fiscal year 2005.
 Critical Accounting Policies and Estimates
   Results of Operations
  Three Months EndedJune 30,2005
    
    2004NET SALES
    
    
    100.0
    %
    
    
    100.0
    %COST OF SALES
    
    
    71.3
    
    
    
    80.6GROSS PROFIT
    
    
    28.7
    
    
    
    19.4OPERATING EXPENSES:Research and development
    
    
    6.0
    
    
    
    6.9Selling, general and administrative
    
    
    16.3
    
    
    
    12.1Amortization of acquired intangible assets
    
    
    4.2
    
    
    
    3.6Restructuring and other charges
    
    
    0.1
    
    
    
    0.2Total operating expenses
    
    
    26.6
    
    
    
    22.8INCOME (LOSS) FROM OPERATIONS
    
    
    2.1
    
    
    
    (3.4
    )INTEREST AND OTHER INCOME (EXPENSE), NET:Interest income
    
    
    0.4
    
    
    
    0.2Interest expense
    
    
    (1.4
    )
    
    
    (1.2
    )Other income, net
    
    
    0.5
    
    
    
    0.6Interest and other income (expense), net
    
    
    (0.5
    )
    
    
    (0.4
    )INCOME (LOSS) BEFORE (PROVISION FOR) BENEFIT FROM INCOME TAXES AND
MINORITY INTEREST
    
    
    1.6
    
    
    
    (3.8
    )(PROVISION FOR) BENEFIT FROM INCOME TAXES
    
    
    (2.6
    )
    
    
    1.2MINORITY INTEREST
    
    
    (2.0
    )
    
    
    1.0NET LOSS
    
    
    (3.0
    %)
    
    
    (1.6
    %)
 19




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##### Table of Contents



Three Months Ended June 30,2005
    
    2004AMHS:Net sales
    
    $
    77,377
    
    
    $
    67,670Cost of Sales
    
    
    57,097
    
    
    
    64,508Gross Profit
    
    
    20,280
    
    
    
    3,162Income (loss) from operations
    
    $
    7,828
    
    
    $
    (6,858
    )Fab Automation Products:Net sales
    
    $
    40,074
    
    
    $
    71,755Cost of Sales
    
    
    26,620
    
    
    
    47,822Gross Profit
    
    
    13,454
    
    
    
    23,933Income (loss) from operations
    
    $
    (5,351
    )
    
    $
    2,153Total:Net sales
    
    $
    117,451
    
    
    $
    139,425Cost of Sales
    
    
    83,717
    
    
    
    112,330Gross Profit
    
    
    33,734
    
    
    
    27,095Income (loss) from operations
    
    $
    2,477
    
    
    $
    (4,705
    )
 Net Sales
  Cost of Sales
  Gross Margin
   20




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##### Table of Contents



Research and Development
 Three Months Ended
    
    ChangeJune 30,
    
    Increase(in thousands, except percentage)
    
    2005
    
    2004
    
    (decrease)Research and development
    
    
    $7,067
    
    
    
    $9,679
    
    
    
    $(2,612
    )Percentage of total net sales
    
    
    6.0
    %
    
    
    6.9
    %
   Selling, General and Administrative
 Three Months Ended
    
    ChangeJune 30,
    
    Increase(in thousands, except percentage)
    
    2005
    
    2004
    
    (decrease)Selling, general and administrative
    
    
    $19,179
    
    
    
    $16,850
    
    
    
    $2,329Percentage of total net sales
    
    
    16.3
    %
    
    
    12.1
    %
  Amortization of Acquired Intangible Assets
 Three Months Ended
    
    ChangeJune 30,
    
    Increase(in thousands, except percentage)
    
    2005
    
    2004
    
    (decrease)Amortization of acquired intangible assets
    
    
    $4,918
    
    
    
    $5,052
    
    
    
    $(134
    )Percentage of total net sales
    
    
    4.2
    %
    
    
    3.6
    %
  Restructuring Charges
 Three Months Ended
    
    ChangeJune 30,
    
    Increase(in thousands, except percentage)
    
    2005
    
    2004
    
    (decrease)Restructuring charges
    
    
    $93
    
    
    
    $219
    
    
    
    $(126
    )Percentage of total net sales
    
    
    0.1
    %
    
    
    0.2
    %
 21




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##### Table of Contents



Severance
    
    Excessand Benefits
    
    Facilities
    
    TotalBalance, March 31, 2005
    
    $
    67
    
    
    $
    816
    
    

    
    $
    883Additional accruals
    
    
    
    
    
    
    93
    
    

    
    
    93Non-cash related adjustments
    
    
    27
    
    
    
    (16
    )
    

    
    
    11Amounts paid in cash
    
    
    
    
    
    
    (370
    )
    
    
    
    (370
    )Foreign currency translation adjustment
    
    
    (1
    )
    
    
    (1
    )
    

    
    
    (2
    )Balance, June 30, 2005
    
    $
    93
    
    
    $
    522
    
    

    
    $
    615
    Interest and Other Income (Expense), Net
 Three Months Ended
    
    ChangeJune 30,
    
    Increase(in thousands)
    
    2005
    
    2004
    
    (decrease)Interest income
    
$
   523
    
    
$
    337
    
    
$
    186Interest expense
    
$
    (1,599
    )
    
$
    (1,627
    )
    
$
    28Other income, net
    
$
    517
    
    
$
    734
    
    
$
    (217
    )
    Income Taxes
 Three Months Ended
    
    ChangeJune 30,
    
    Increase(in thousands, except percentage)
    
    2005
    
    2004
    
    (decrease)(Provision for) benefit from income taxes
    
$
    (3,101
    )
    
$
    1,654
    
    
$
    (4,755
    )Percentage of total net sales
    
    
    (2.6
    %)
    
    
    1.2
    %
 22




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##### Table of Contents



Liquidity and Capital Resources
    Three Months EndedJune 30,(in thousands)
    
    2005
    
    2004Net cash provided by (used in) operating activities
    
$
    (27,201
    )
    
$
    3,878Net cash provided by (used in) investing activities
    
$
    6,223
    
    
$
    (38,092
    )Net cash provided by financing activities
    
$
    33,528
    
    
$
    319
 Cash Flows from Operating Activities
    Cash Flows from Investing Activities
  23




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Cash Flows from Financing Activities
         24




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Recent Accounting Pronouncements
 The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments
 Inventory Costs  an Amendment of ARB No. 43, Chapter 4
 Exchange of Nonmonetary Assets  an amendment
of APB Opinion No. 29
 Share Based Payment. Accounting for Stock-Based Compensation
 25




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Accounting Changes and Error Corrections: a
Replacement of Accounting Principles Board Opinion No. 20 (APB 20) and FASB Statement No 3
 Risk Factors
 Risks Related to Our Business
 We have a history of significant losses.
  If we continue to fail to achieve and maintain effective disclosure controls and procedures and
internal control over financial reporting on a consolidated basis, our stock price and investor
confidence in our company could be materially and adversely affected.
     26




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We experienced additional risks and costs as a result of the delayed filing of the Form 10-Q for
our fiscal year 2005 second quarter and delayed filing of the Form 10-K for fiscal year 2005.
  27




---



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If we fail to manage effectively our ASI joint venture, our sales of Automated Material Handling
Systems could be adversely affected and the sales mix between AMHS and our other products could
affect our overall financial performance.
   28




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If we are unable to increase our sales of AMHS to FPD manufacturers, or if the FPD industry
enters a cyclical downturn, our growth prospects could be negatively affected.
   Our gross margins on 300mm products may be lower than on 200mm products, which could adversely
affect our ability to become and remain profitable.
   Most of our manufacturing is outsourced and we rely on a single contract manufacturer for much of
our Fab Automation Product manufacturing, which could disrupt the availability of our Fab
Automation Products and adversely affect our gross margins.
    29




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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.
  We have significant existing debts; the restrictive covenants under some of our debt agreements
may limit our ability to expand or pursue our business strategy; if we are forced to prepay some
or all of this indebtedness our financial position would be severely and adversely affected.
   
    
    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.
 30




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##### Table of Contents



We may need additional financing in the future to meet our capital needs; if we do need to secure
financing, it may not be available on favorable terms.
  If our fully integrated tool front-end solutions are not widely accepted, our growth prospects
could be negatively affected.
  Because we do not have long-term contracts with our customers, our customers may cease purchasing
our products at any time.
  
    
    our customers can cease purchasing our products at any time, without penalty;
    
    our customers are free to purchase products from our competitors;
 31




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##### Table of Contents




    
    we are exposed to competitive price pressure on each order; and
    
    our customers are not required to make minimum purchases.
  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.
    If we are unable to develop and introduce new products and technologies in a timely manner, our
business could be negatively affected.
  We may be unable to protect our intellectual property rights and we may become involved in
litigation concerning the intellectual property rights of others.
  32




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##### Table of Contents



We may not be able to integrate efficiently the operations of our acquisitions, and may incur
substantial losses in the divestiture of assets or operations.
  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.
  
    
    general trends in the overall economy, electronics industry and semiconductor and FPD manufacturing industries;
 33




---



##### Table of Contents




    
    fluctuations in the semiconductor and FPD equipment markets;
    
    changes in customer buying patterns;
    
    the degree of competition we face;
    
    the size, timing and product mix of customer orders;
    
    lost sales due to any failure in the outsourcing of our manufacturing;
    
    the availability of key components;
    
    the timing of product shipment and acceptance, which are factors in determining when we recognize revenue; and
    
    the timely introduction and acceptance of new products.
  Our operations are vulnerable to interruption or loss due to natural disasters, power loss,
strikes and other events beyond our control, which would adversely affect our business.
  We face significant economic and regulatory risks because a majority of our net sales are derived
from outside the United States.
  
    
    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;
 34




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##### Table of Contents




    
    terrorism and anti-American sentiment;
    
    trade restrictions;
    
    slowing economic growth and availability of investment capital and credit;
    
    changes in tariffs and taxes;
    
    longer product acceptance and payment cycles;
    
    the greater difficulty in administering business overseas; and
    
    inability to enforce payment obligations or recourse to legal protections accorded creditors to the same extent within the U.S.
    Our current and planned operations may strain our resources and increase our operating expenses.
   If we lose any of our key personnel or are unable to attract, train or retain qualified personnel,
our business would be harmed.
  35




---



##### Table of Contents



When we account for employee stock options using the fair value method, it will significantly
impact our results from operations.
  Risks Related to our Industry
 The semiconductor manufacturing equipment industry is highly cyclical and is affected by recurring
downturns in the semiconductor industry, and these cycles can harm our operating results.
    We may not effectively compete in a highly competitive semiconductor manufacturing equipment
industry.
   36




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk.
 Foreign Currency Exchange Risk
 
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
    37




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##### Table of Contents



Status of Material Weaknesses
    Internal Control  Integrated Framework
   38




---



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39




---



##### Table of Contents



40




---



##### Table of Contents



Changes in Internal Control Over Financial Reporting
   Managements Remediation Initiatives and Interim Measures
   General plan for hiring and training of personnel.
 
    
    We plan to hire additional qualified accounting personnel in the U.S. and Japan, in the
areas of general accounting, compliance reporting, internal audit and tax; and
 
    
    We plan to implement an enhanced formal training process for financial staff in an effort
to ensure that personnel have the necessary competency, training and supervision for their
assigned level of responsibility and the nature and complexity of our business.
 Accurate Preparation and Review of Financial Statements, Reconciliations, and Journal
Entries.
 
    
    training and improved monitoring of financial staff;
 
    
    implementing new month-end closing procedures with improved reconciliation and controls
over standardized checklists to help ensure such procedures are consistently and effectively
applied throughout the organization; and
 
    
    implementing procedures to more effectively accumulate and analyze financial information.
 General plan for documenting and enhancing internal controls at ASI.
 Interim Measures
   41




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##### Table of Contents



§
    
    We hired a chief financial officer in June for our majority-owned joint venture ASI and
in July a controller for our corporate headquarters in California;
 §
    
    We retained on an interim basis outside consultants with relevant international tax
experience, working under the supervision and direction of our management, to assist with
the fiscal 2006 interim reporting process;
 §
    
    Corporate finance staff spent several weeks at ASI during the close process and prior to
the reporting of fiscal year 2006 first quarter financial results and conducted a detailed
review of the reporting process at ASI and performed additional analyses and
reconciliations in an effort to ensure the accuracy of financial reporting;
 §
    
    Training and instruction has been provided to ASI accounting staff to enhance their
understanding of relevant U.S. accounting principles and regulatory reporting requirements;
 §
    
    New corporate accounting policies are being implemented at ASI and will be reviewed on a
regular basis for compliance; and
 §
    
    We conducted a detailed and extensive review of the following matters: revenue
recognition, income taxes, stock and stock option transactions, account reconciliations and
journal entries.
 
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
   42




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ITEM 6. EXHIBITS
 Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith3.1
    
    Amended and Restated Articles of Incorporation of the Company.
    
    S-1
    
    333-66184
    
    7/19/19933.2
    
    Bylaws of the Company.
    
    S-1
    
    333-66184
    
    7/19/19933.3
    
    Certificate of Amendment of the Amended and Restated Articles of
Incorporation, filed September 24, 1999.
    
    10-Q
    
    000-22430
    
    10/21/19993.4
    
    Certificate of Amendment of the Amended and Restated Articles of
Incorporation, filed October 5, 2000.
    
    DEF 14A
    
    000-22430
    
    7/31/20004.1
    
    Rights Agreement among the Company and Bank of Boston, N.A., as
Rights Agent, dated June 25, 1998.
    
    8-K
    
    000-22430
    
    6/29/19984.2
    
    Common Stock Purchase Agreement between the Company and various
purchasers, dated as of May 26, 1999.
    
    8-K
    
    000-22430
    
    6/18/19994.3
    
    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.
    
    10-Q
    
    000-22430
    
    8/14/20014.4
    
    Registration Rights Agreement dated as of July 3, 2001 between
the Company and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith, Incorporated, and ABN Amro Rothschild LLC.
    
    10-Q
    
    000-22430
    
    8/14/20014.5
    
    Amendment to Rights Agreement among the Company and Bank of
Boston, N.A. as Rights Agent, dated November 30, 2001.
    
    10-K
    
    000-22430
    
    6/28/200210.37
    
    Companys Compensation Program for Nonemployee Directors
effective July 1, 2003, as amended June 27, 2005.
    
    10-K
    
    000-22430
    
    6/29/200510.58
    
    Waiver and Amendment Number One to Amended and Restated Loan and
Security Agreement between the Company and Comerica Bank, dated
June 27, 2005
    
    10-K
    
    000-22430
    
    6/29/200531.1
    
    Certification of the Chief Executive Officer required by Rule
13a-14(a). (pursuant to Section 302 of the Sarbanes-Oxley Act of
2002).
    
    
    
    
    
    
    
    X31.2
    
    Certification of the Chief Financial Officer required by Rule
13a-14(a). (pursuant to Section 302 of the Sarbanes-Oxley Act of
2002).
    
    
    
    
    
    
    
    X32.1
    
    Combined Certifications of the Chief Executive Officer and Chief
Financial Officer required by Rule 13a-14(b). (pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002).
    
    
    
    
    
    
    
    X
 43




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##### Table of Contents



SIGNATURES
  ASYST TECHNOLOGIES, INC.Date: August 9, 2005
    By:
    /s/ Robert J. NiklRobert J. NiklSenior Vice President and
Chief Financial Officer  44




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Filing Date
    
    Herewith3.1
    
    Amended and Restated Articles of Incorporation of the Company.
    
    S-1
    
    333-66184
    
    7/19/19933.2
    
    Bylaws of the Company.
    
    S-1
    
    333-66184
    
    7/19/19933.3
    
    Certificate of Amendment of the Amended and Restated Articles of
Incorporation, filed September 24, 1999.
    
    10-Q
    
    000-22430
    
    10/21/19993.4
    
    Certificate of Amendment of the Amended and Restated Articles of
Incorporation, filed October 5, 2000.
    
    DEF 14A
    
    000-22430
    
    7/31/20004.1
    
    Rights Agreement among the Company and Bank of Boston, N.A., as
Rights Agent, dated June 25, 1998.
    
    8-K
    
    000-22430
    
    6/29/19984.2
    
    Common Stock Purchase Agreement between the Company and various
purchasers, dated as of May 26, 1999.
    
    8-K
    
    000-22430
    
    6/18/19994.3
    
    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.
    
    10-Q
    
    000-22430
    
    8/14/20014.4
    
    Registration Rights Agreement dated as of July 3, 2001 between
the Company and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith, Incorporated, and ABN Amro Rothschild LLC.
    
    10-Q
    
    000-22430
    
    8/14/20014.5
    
    Amendment to Rights Agreement among the Company and Bank of
Boston, N.A. as Rights Agent, dated November 30, 2001.
    
    10-K
    
    000-22430
    
    6/28/200210.37
    
    Companys Compensation Program for Nonemployee Directors
effective July 1, 2003, as amended June 27, 2005.
    
    10-K
    
    000-22430
    
    6/29/200510.58
    
    Waiver and Amendment Number One to Amended and Restated Loan and
Security Agreement between the Company and Comerica Bank, dated
June 27, 2005
    
    10-K
    
    000-22430
    
    6/29/200531.1
    
    Certification of the Chief Executive Officer required by Rule
13a-14(a). (pursuant to Section 302 of the Sarbanes-Oxley Act of
2002).
    
    
    
    
    
    
    
    X31.2
    
    Certification of the Chief Financial Officer required by Rule
13a-14(a). (pursuant to Section 302 of the Sarbanes-Oxley Act of
2002).
    
    
    
    
    
    
    
    X32.1
    
    Combined Certifications of the Chief Executive Officer and Chief
Financial Officer required by Rule 13a-14(b). (pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002).
    
    
    
    
    
    
    
    X