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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549
 FORM 10-Q (Mark One) þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 26, 2004 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
    
    94-2942251(State or other jurisdiction
    
    (IRS Employer identification Number)of incorporation or organization)
 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 þ No o Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes þ No o The number of shares of the registrants Common Stock, no par value,
outstanding as of August 3, 2004 was 47,455,197.




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ASYST TECHNOLOGIES, INC. TABLE OF CONTENTS PagePART I. FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial Statements:
    
    
    3Condensed Consolidated Balance Sheets  June 30, 2004 and March 31, 2004
    
    
    3Condensed Consolidated Statements of Operations  Three Months Ended June 30, 2004 and June 30, 2003
    
    
    4Condensed Consolidated Statements of Cash Flows  Three Months Ended June 30, 2004 and June 30, 2003
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.Managements Discussion and Analysis of Financial Condition and Results of
    
    
    15Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    31Item 4.Controls and Procedures
    
    
    31PART II. OTHER INFORMATIONItem 1.Legal Proceedings
    
    
    33Item 6.Exhibits and Reports on Form 8-K
    
    
    34Signatures
    
    
    36EXHIBIT 10.44EXHIBIT 10.45EXHIBIT 10.46EXHIBIT 10.47EXHIBIT 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
(Unaudited; in thousands) June 30,
    
    March 31,2004
    
    2004ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    106,157
    
    
    $
    112,907Restricted cash and cash equivalents
    
    
    
    
    
    
    1,904Short-term investments
    
    
    16,420
    
    
    
    4,953Accounts receivable, net of allowance for doubtful accounts of
$4,869 and $4,608 at June 30, 2004 and March 31, 2004,
respectively
    
    
    88,226
    
    
    
    74,139Unbilled receivables
    
    
    87,045
    
    
    
    73,800Inventories
    
    
    51,703
    
    
    
    27,694Prepaid expenses and other current assets
    
    
    18,442
    
    
    
    14,276Total current assets
    
    
    367,993
    
    
    
    309,673Property and equipment, net
    
    
    21,485
    
    
    
    22,868Goodwill
    
    
    70,893
    
    
    
    71,973Intangible assets, net
    
    
    59,398
    
    
    
    65,778Other assets
    
    
    3,401
    
    
    
    3,317Total assets
    
    $
    523,170
    
    
    $
    473,609LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Short-term loans and notes payable
    
    $
    17,002
    
    
    $
    18,161Current portion of long-term debt and capital leases
    
    
    2,708
    
    
    
    2,775Accounts payable
    
    
    124,691
    
    
    
    92,716Accounts payable  related party
    
    
    20,800
    
    
    
    17,194Accrued liabilities and other
    
    
    65,439
    
    
    
    48,571Deferred revenue
    
    
    5,320
    
    
    
    2,683Total current liabilities
    
    
    235,960
    
    
    
    182,100LONG-TERM LIABILITIES:Long-term debt and capital leases, net of current portion
    
    
    90,382
    
    
    
    91,074Deferred tax liability
    
    
    18,452
    
    
    
    20,704Other long-term liabilities
    
    
    12,196
    
    
    
    12,826Total long-term liabilities
    
    
    121,030
    
    
    
    124,604COMMITMENTS AND CONTINGENCIES (see Note 10)MINORITY INTEREST
    
    
    62,523
    
    
    
    63,796SHAREHOLDERS EQUITY:Common stock
    
    
    447,931
    
    
    
    445,981Deferred stock-based compensation
    
    
    (2,272
    )
    
    
    (2,619
    )Accumulated deficit
    
    
    (349,631
    )
    
    
    (348,697
    )Accumulated other comprehensive income
    
    
    7,629
    
    
    
    8,444Total shareholders equity
    
    
    103,657
    
    
    
    103,109Total liabilities, minority interest and shareholders equity
    
    $
    523,170
    
    
    $
    473,609
 The accompanying notes are an integral part of these condensed consolidated financial statements. 3




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ASYST TECHNOLOGIES, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share amounts) Three Months EndedJune 30,2004
    
    2003NET SALES
    
    $
    140,937
    
    
    $
    45,268COST OF SALES
    
    
    108,043
    
    
    
    40,824Gross profit
    
    
    32,894
    
    
    
    4,444OPERATING EXPENSES:Research and development
    
    
    9,679
    
    
    
    9,624Selling, general and administrative
    
    
    18,976
    
    
    
    17,605Amortization of acquired intangible assets
    
    
    5,052
    
    
    
    4,785Restructuring and other charges
    
    
    219
    
    
    
    4,363Asset impairment charges
    
    
    
    
    
    
    6,853Total operating expenses
    
    
    33,926
    
    
    
    43,230Loss from operations
    
    
    (1,032
    )
    
    
    (38,786
    )INTEREST AND OTHER INCOME (EXPENSE), NET:Interest income
    
    
    337
    
    
    
    248Interest expense
    
    
    (1,627
    )
    
    
    (1,791
    )Other income, net
    
    
    734
    
    
    
    618Interest and other expense, net
    
    
    (556
    )
    
    
    (925
    )Loss before benefit from income taxes and minority interest
    
    
    (1,588
    )
    
    
    (39,711
    )BENEFIT FROM INCOME TAXES
    
    
    349
    
    
    
    1,380MINORITY INTEREST
    
    
    305
    
    
    
    955NET LOSS
    
    $
    (934
    )
    
    $
    (37,376
    )BASIC AND DILUTED NET LOSS PER SHARE
    
    $
    (0.02
    )
    
    $
    (0.97
    )SHARES USED IN THE PER SHARE CALCULATION  Basic and Diluted
    
    
    47,179
    
    
    
    38,475
 The accompanying notes are an integral part of these condensed consolidated financial statements. 4




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ASYST TECHNOLOGIES, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands) Three Months EndedJune 30,2004
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (934
    )
    
    $
    (37,376
    )Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    7,041
    
    
    
    7,441Asset impairment charges
    
    
    
    
    
    
    6,853Minority interest in net loss in consolidated subsidiary
    
    
    (305
    )
    
    
    (955
    )Stock-based compensation
    
    
    540
    
    
    
    595Changes in assets and liabilities, net of acquisitions:Accounts receivable
    
    
    (29,386
    )
    
    
    5,969Inventories
    
    
    (24,674
    )
    
    
    4,848Prepaid expenses and other assets
    
    
    (4,554
    )
    
    
    (3,297
    )Accounts payable, accrued and other liabilities and deferred revenue
    
    
    56,150
    
    
    
    (5,281
    )Net cash provided by (used in) operating activities
    
    
    3,878
    
    
    
    (21,203
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of short-term investments
    
    
    (11,624
    )
    
    
    Release (purchase) of restricted cash and cash equivalents
    
    
    1,904
    
    
    
    (90
    )Purchases of property and equipment
    
    
    (856
    )
    
    
    (1,239
    )Net cash used in acquisitions
    
    
    
    
    
    
    (1,165
    )Net cash used in investing activities
    
    
    (10,576
    )
    
    
    (2,494
    )CASH FLOW FROM FINANCING ACTIVITIES:Payment of line of credit
    
    
    (727
    )
    
    
    Net proceeds from (payment of) short-term loans
    
    
    (711
    )
    
    
    2,013Proceeds from issuance of common stock
    
    
    1,757
    
    
    
    857Net cash provided by financing activities
    
    
    319
    
    
    
    2,870Effect of exchange rate changes on cash and cash equivalents
    
    
    (371
    )
    
    
    (2,271
    )DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (6,750
    )
    
    
    (23,098
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    112,907
    
    
    
    96,214CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    106,157
    
    
    $
    73,116
 The accompanying notes are an integral part of these condensed consolidated financial statements. 5




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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. In April 2003, our majority-owned joint venture, Asyst Shinko, Inc., or
ASI, acquired the portion of Shinko Technologies, Inc. that provides ongoing
support to ASIs North American Automated Material Handling Systems, or AMHS,
customers from Shinko Electric, Co., Ltd., or Shinko. ASI renamed this
subsidiary Asyst Shinko America, or ASAM. In October 2002, we purchased a 51.0 percent interest in ASI, a Japanese
corporation. The above transactions, which were unrelated, were accounted for using the
purchase method of accounting. Accordingly, our Condensed Consolidated
Statements of Operations and of Cash Flows for the three-month periods ended
June 30, 2004 and 2003, respectively, 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 Securities and Exchange Commission, or SEC, rules and
regulations. However, we believe that the disclosures are adequate to make the
information presented not misleading. All significant intercompany 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 ASI, our majority-owned joint venture 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 current presentations. We close
our books on the last Saturday of each quarter and thus the actual dates of the
quarter-end, June 26, 2004 and June 28, 2003 are different from the month-end
dates used for reference 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 year-end condensed
consolidated data was derived from audited financial statements but does not
include all disclosures required by accounting principles generally accepted in
the United States of America. As such, these condensed consolidated financial
statements should be read in connection with our consolidated financial
statements for the year ended March 31, 2004 included in our Annual Report on
Form 10-K. Recent Accounting Pronouncements At its March 2004 meeting, the EITF reached a consensus on recognition and
measurement guidance previously discussed under EITF 03-01. The consensus
clarifies the meaning of other-than-temporary impairment and its application to
investments classified as either available-for-sale or held-to-maturity under
SFAS No. 115 and investments accounted for under the cost method or the equity
method. The recognition and measurement guidance for which the consensus was
reached in the March 2004 meeting is to be applied to other-than-temporary
impairment evaluations in reporting periods beginning after June 15, 2004. We
do not believe that this consensus on the recognition and measurement guidance
will have a significant impact on our consolidated results of operations. 6




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ASYST TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Restricted Cash and Cash Equivalents Restricted cash and cash equivalents at March 31, 2004 primarily
represents amounts that were restricted as to their use in accordance with
Japanese debt agreements. This was no longer a requirement at June 30, 2004 as
the related debt was repaid. Inventories Inventories consist of the following (in thousands): June 30,
    
    March 31,2004
    
    2004Raw materials
    
    $
    21,183
    
    
    $
    16,241Work-in-process and finished goods
    
    
    30,520
    
    
    
    11,453Total
    
    $
    51,703
    
    
    $
    27,694
 During the fiscal year ended March 31, 2003, we began to transition
substantially all of our U.S. manufacturing to Solectron Corporation, or
Solectron. As part of the arrangement, Solectron purchased $20.0 million of
inventory from us. No revenue was recorded for the sale of this inventory to
Solectron. On an on-going basis, we may be obligated to acquire inventory
purchased by Solectron if the inventory is not used over a certain specified
period of time per the terms of our agreement. As of June 30, 2004, our best
estimate of the inventory expenses for our obligation to repurchase inventory
at Solectron has been reserved. As of June 30, 2004, we have inventory reserves
of approximately $13.9 million. Goodwill and Other Intangible Assets, net Intangible assets Intangible assets were as follows (in thousands): June 30, 2004
    
    March 31, 2004Gross Carrying
    
    Accumulated
    
    
    
    
    
    Gross Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Net
    
    Amount
    
    Amortization
    
    NetAmortizable intangible assets:Developed technology
    
    $
    63,488
    
    
    $
    24,784
    
    
    $
    38,704
    
    
    $
    64,317
    
    
    $
    21,778
    
    
    $
    42,539Customer base and other
intangible assets
    
    
    35,327
    
    
    
    19,291
    
    
    
    16,036
    
    
    
    35,676
    
    
    
    17,394
    
    
    
    18,282Licenses and patents
    
    
    7,296
    
    
    
    2,638
    
    
    
    4,658
    
    
    
    7,440
    
    
    
    2,483
    
    
    
    4,957Total
    
    $
    106,111
    
    
    $
    46,713
    
    
    $
    59,398
    
    
    $
    107,433
    
    
    $
    41,655
    
    
    $
    65,778
 Amortization expense was $5.1 million and $4.8 million for the quarters
ended June 30, 2004 and 2003, respectively. 7




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ASYST TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Expected future intangible amortization expense, based on current
balances, for the remainder of fiscal 2005 and for the following fiscal years,
is as follows (in thousands): Fiscal Years:Remainder of 2005
    
    $
    15,9872006
    
    
    19,6892007
    
    
    14,2752008
    
    
    8,8842009 and beyond
    
    
    563Total
    
    $
    59,398
 Goodwill Goodwill balances were as follows (in thousands): June 30,
    
    March 31,2004
    
    2004Carrying amount of goodwill
    
    $
    70,893
    
    
    $
    71,973
 The changes in the carrying amount of goodwill for the quarter ended June
30, 2004 are as follows (in thousands): Fab Automation
    
    AMHS
    
    TotalBalance at March 31, 2004
    
    $
    4,750
    
    
    $
    67,223
    
    
    $
    71,973Foreign currency translation
    
    
    
    
    
    
    (1,080
    )
    
    
    (1,080
    )Balance at June 30, 2004
    
    $
    4,750
    
    
    $
    66,143
    
    
    $
    70,893
 Warranty Reserve We provide for the estimated cost of product warranties at the time
revenue is recognized. The following table presents the activity in our
warranty reserve (in thousands): Three Months Ended
June 30,2004
    
    2003Balance at
beginning of period
    
    $
    8,185
    
    
    $
    7,561Accruals for warranties issued during the period
    
    
    3,180
    
    
    
    406Settlements made (in cash or in kind)
    
    
    (1,868
    )
    
    
    (1,148
    )Foreign currency translation
    
    
    (52
    )
    
    
    Balance at end of period
    
    $
    9,445
    
    
    $
    6,819
 Revenue Recognition We recognize revenue when persuasive evidence of an arrangement exists,
product delivery has occurred or service has been rendered, the sellers price
is fixed or determinable, and collectibility is reasonably assured. Some of our
products are large volume consumables that are tested to industry and/or
customer acceptance criteria prior to shipment. Our primary shipping terms are
FOB shipping point. Therefore, revenue for these types of products is
recognized when title transfers. Certain of our product sales are accounted for
as multiple-element arrangements. If we have met defined customer acceptance
experience levels with both the customer and the specific type of equipment, we
recognize the product revenue at the time of shipment and transfer of title,
with the remainder when the other elements, primarily installation, have been
completed. Some of our other products are highly customized systems and cannot
be completed or adequately tested to customer specifications prior to shipment
from the factory. We do not recognize revenue for these products until formal
acceptance by the customer. Revenue for spare parts sales is recognized at the
time of shipment and the transfer of title. Deferred revenue consists primarily
of product shipments creating legally enforceable receivables that did not meet
our revenue recognition policy. 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. 8




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ASYST TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) We recognize revenue for long-term contracts at ASI in accordance with the
American Institute of Certified Public Accountants, or AICPA, Statement of
Position 81-1, Accounting for Performance of Construction-Type and Certain
Production-Type Contracts.We use the percentage-of-completion method to
calculate revenue and related costs of these contracts because they are
long-term in nature and estimates of cost to complete and extent of progress
toward completion of long-term contracts are available and reasonably
dependable. We record revenue each period based on the percentage of completion
to date on each contract, measured by costs incurred to date relative to the
total estimated costs of each contract. We treat contracts as substantially
complete when we receive technical acceptance of our work by the customer. We
disclose material changes in our financial results that result from changes in
estimates. We account for software revenue in accordance with the AICPA 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 $6.5 million and $4.7 million at June 30, 2004 and
March 31, 2004, respectively. The balance at June 30, 2004 primarily related to
four AMHS contracts entered into by ASI during the fiscal year ended March 31,
2004 and one contract entered into during the quarter ended June 30, 2004. Comprehensive Loss Comprehensive income (loss) is defined as the change in equity of a
company during a period from transactions and other events and circumstances,
excluding transactions resulting from investments by owners and distributions
to owners, and is to include unrealized gains and losses that have historically
been excluded from net income and loss and reflected instead in equity. The
following table presents our comprehensive loss items (in thousands): Three Months EndedJune 30,2004
    
    2003Net loss, as reported
    
    $
    (934
    )
    
    $
    (37,376
    )Foreign currency translation adjustments
    
    
    (716
    )
    
    
    (1,041
    )Unrealized losses on investments
    
    
    (100
    )
    
    
    Comprehensive loss
    
    $
    (1,750
    )
    
    $
    (38,417
    )
 Earnings (Loss) Per Share Basic net income (loss) per share is computed using the weighted-average
number of common shares outstanding, while diluted net income (loss) per share
is computed using the sum of the weighted-average number of common and common
equivalent shares outstanding. Common equivalent shares used in the computation
of diluted earnings per share result from the assumed exercise of stock options
and warrants, using the treasury stock method. For periods for which there is a
net loss, the numbers of shares used in the computation of diluted net income
(loss) per share are the same as those used for the computation of basic net
income (loss) per share as the inclusion of dilutive securities would be
anti-dilutive. 9




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ASYST TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) The following table summarizes securities outstanding which were not
included in the calculation of diluted net loss per share reported in
the statement of operations, not in the table presented in the
Stock-Based Compensation section below, as to do so would be
anti-dilutive (in thousands): Three Months EndedJune 30,2004
    
    2003Restricted stock
    
    
    67
    
    
    
    53Stock options
    
    
    8,643
    
    
    
    10,003Convertible notes
    
    
    5,682
    
    
    
    5,682Total
    
    
    14,392
    
    
    
    15,738
 Stock-Based Compensation 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 in the three months ended June
30, 2004 and 2003, consistent with the provision of SFAS No. 123, and SFAS No.
148, our net loss for the three months ended June 30, 2004 and 2003 would have
increased as indicated below (in thousands, except per share amounts): Three Months EndedJune 30,2004
    
    2003Net loss  as reported
    
    $
    (934
    )
    
    $
    (37,376
    )Add: employee stock-based compensation expense
included in reported net loss, net of tax
    
    
    447
    
    
    
    426Less: total employee stock-based compensation
expense determined under fair value, net of tax
    
    
    (2,753
    )
    
    
    (4,253
    )As adjusted net loss
    
    $
    (3,240
    )
    
    $
    (41,203
    )Basic and diluted net loss per share  As reported
    
    $
    (0.02
    )
    
    $
    (0.97
    )Basic and diluted net loss per share  As adjusted
    
    $
    (0.07
    )
    
    $
    (1.07
    )Shares used in computing As Reported and As
Adjusted net loss per share
    
    
    47,179
    
    
    
    38,475
 3. RESTRUCTURING CHARGES Restructuring charges and related utilization for the quarter ended June
30, 2004 were (in thousands): Severance andBenefits
    
    Excess Facilities
    
    TotalBalance, March 31, 2004
    
    $
    64
    
    
    $
    2,190
    
    
    $
    2,254Additional accruals
    
    
    6
    
    
    
    213
    
    
    
    219Amounts paid in cash
    
    
    (37
    )
    
    
    (381
    )
    
    
    (418
    )Balance, June 30, 2004
    
    $
    33
    
    
    $
    2,022
    
    
    $
    2,055
 We incurred restructuring charges of $0.2 million and $4.4 million during
the quarters ended June 30, 2004 and 2003, respectively, consisting primarily
of severance costs resulting from a reduction in workforce in April 2003 and
future lease obligations on vacated facilities in excess of estimated future
sublease proceeds. As a result of these restructuring activities, we terminated
the employment of approximately 245 employees, including 129 in manufacturing,
34 in research and development and 82 in selling, general and administration,
from our U.S. operations as well as international operations. 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 10




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ASYST TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) land and subsequently decided not to build these facilities. Initially, we
leased the land from a syndicate of financial institutions pursuant to an
original lease agreement and an amended lease agreement. We purchased the land
on October 22, 2001 for $41.1 million, and paid the syndicate of financial
institutions approximately $2.9 million for engineering costs incurred in
preparation for making leasehold improvements to the land. Based upon market
data at June 30, 2001 and our non-cancelable commitment to purchase the land,
we estimated that the then market value of the land had been impaired and as
such recorded a $15.0 million write-down to its estimated market value during
the quarter ended June 30, 2001. We entered into a purchase agreement in
September 2002 to sell the land for $19.0 million, net of selling expenses.
This transaction did not close. As a result, an additional $7.1 million
write-down was recorded in the second quarter in fiscal 2003. In the quarter
ended June 30, 2003, we recorded a $6.9 million write-down based on our latest
estimate of market value as supported by the pending sale agreement at the
time. 5. INCOME TAXES We recorded a benefit from income taxes of $0.3 million for the quarter
ended June 30, 2004, or approximately 22.0 percent of our loss before income
taxes and minority interest. The tax benefit is primarily due to amortization
of deferred tax liabilities recorded in connection with the ASI acquisition of
$1.2 million, partially offset by $1.4 million of tax provisions in
international subsidiaries, primarily Japan. We recorded a benefit for income
taxes of $1.4 million for the quarter ended June 30, 2003, representing an
effective income tax rate of 3.5 percent. In fiscal 2003, we established a full
valuation allowance for our domestic net deferred tax assets. Deferred tax
assets are recognized to the extent realizable and relate to our Japanese
operations. We recognized a tax benefit in the three months ended June 30,
2004 as we expect to have net income in Japan for the 12-month period ended
March 31, 2005. 6. REPORTABLE SEGMENTS We have two reportable product segments: Fab Automation and AMHS. Fab
Automation products include interface products, substrate-handling robotics,
wafer and reticle carriers, auto-ID systems, sorters and connectivity software.
AMHS products include automated transport and loading systems for semiconductor
fabs and flat panel display manufacturers. We evaluate performance and allocate resources based on revenues and
operating income (loss). Operating income (loss) for each segment includes
selling, general and administrative expenses directly attributable to the
segment. Segment information is summarized as follows (in thousands): Three Months EndedJune 30,2004
    
    2003Fab Automation Products:Net sales
    
    $
    73,425
    
    
    $
    23,468Income (loss) from operations
    
    $
    2,369
    
    
    $
    (35,225
    )AMHS:Net sales
    
    $
    67,512
    
    
    $
    21,800Loss from operations
    
    $
    (3,401
    )
    
    $
    (3,561
    )Consolidated:Net sales
    
    $
    140,937
    
    
    $
    45,268Loss from operations
    
    $
    (1,032
    )
    
    $
    (38,786
    )
  June 30, 2004
    
    March 31, 2003Fab Automation Products:Total assets
    
    $
    224,782
    
    
    $
    205,002AMHS:Total assets
    
    $
    298,388
    
    
    $
    268,607Consolidated:Total assets
    
    $
    523,170
    
    
    $
    473,609
 We acquired 51.0 percent of ASI on October 16, 2002. Operating segment
data includes results from ASI for the period from the effective date of the
acquisition. Total operating loss is equal to consolidated loss from operations
for the periods presented. We do not allocate other income (expense), net to
individual segments. 11




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ASYST TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 7. DEBT We had $17.0 million and $18.2 million at June 30 and March 31, 2004,
respectively, of short-term debt issued by banks in Japan. As of June 30, and
March 31, 2004, the interest rate ranged from 1.4 percent to 3.0 percent.
Substantially all of the debt is guaranteed by Asyst in the United States. Long-term debt and capital leases consisted of the following (in
thousands): June 30,
    
    March 31,2004
    
    2004Convertible subordinated notes
    
    $
    86,250
    
    
    $
    86,250Secured straight bonds
    
    
    6,434
    
    
    
    7,110Capital leases
    
    
    406
    
    
    
    489Total long-term debt
    
    
    93,090
    
    
    
    93,849Less: Current portion of long-term debt and capital leases
    
    
    (2,708
    )
    
    
    (2,775
    )Long-term debt and capital leases net of current portion
    
    $
    90,382
    
    
    $
    91,074
 At June 30, 2004, maturities of all long-term debt and capital leases are
as follows (in thousands): Fiscal Year Ending March 31,
    
    AmountRemaining portion of 2005
    
    $
    3,2572006
    
    
    2,5532007
    
    
    8922008
    
    
    86,388$
    93,090
 Convertible Subordinated Notes On July 3, 2001, we completed the sale of $86.3 million of 5 3/4 percent
convertible subordinated notes that resulted in aggregate proceeds of $82.9
million to us, net of issuance costs. The notes are convertible, at the option
of the holder, at any time on or prior to maturity into shares of our common
stock at a conversion price of $15.18 per share, which is equal to a conversion
rate of 65.8718 shares per $1,000 principal amount of notes. The notes mature
July 3, 2008, pay interest on January 3 and July 3 of each year and are
redeemable at our option after July 3, 2004. Debt issuance costs of $2.9
million, net of amortization are being amortized over 84 months and are being
charged to other income (expense). Debt amortization costs totaled $0.1 million
during each of the quarters ended June 30, 2004 and 2003, respectively. 12




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ASYST TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) Secured Straight Bonds We had $6.4 million and $7.1 million of secured straight bonds from a bank
in Japan at June 30, 2004 and March 31, 2004, respectively. The bonds bore
interest at rates ranging from 1.4 percent to 3.0 percent as of June 30 and
March 31, 2004, and mature in fiscal year 2008. Certain of our assets in Japan
have been pledged as security for short-term debt and secured straight bonds. Line of Credit At
June 30, 2004, we had available to us, a $25 million two-year revolving
 credit agreement with a commercial bank, as amended during the first quarter of fiscal year 2005.
The amended agreement requires maintenance of compliance with certain financial covenants,
including a quarterly net income/loss target, calculated on an after-tax basis
(excluding depreciation, amortization and other non-cash items) and a requirement that we maintain with the bank during the term of the credit
agreement a minimum balance of $5.0 million of cash and cash
equivalents. In addition, the amended agreement was extended through
May 15, 2006, changed and expanded the base of assets under
which we qualify for borrowing under the credit facility
and reduced certain fees and interest charges applicable to borrowing
under the credit line. The specific amount of the credit line
available at any time, however, may change based on the amount of
current receivables we have outstanding. The credit line was
fully paid down during the quarter ended December 31, 2003.
As of the quarter ended June 30, 2004, there was no amount outstanding under the line of
credit, and we were in compliance with the financial covenants. In September 2003, ASI entered into a short-term bank facility with a
Japanese bank under which it may borrow up to approximately $27.9 million, at
the exchange rate as of June 30, 2004. As of June 30, 2004 and March 31, 2004,
ASI had outstanding borrowings of $4.6 million and $4.7 million, respectively,
that is recorded in short-term debt. Under terms of the ASI bank facility, ASI
must generate operating profits on a statutory basis. We were in compliance
with the loan covenants at June 30, 2004 and at March 31, 2004. We have guaranteed certain lease payments with respect to equipment and
real estate of our Japanese subsidiaries. 8. EMPLOYEE STOCK OPTION AND STOCK PURCHASE PLANS Employee Stock Option Grants Options to purchase 1,046,500 and 2,425,408 shares of common stock were
granted to employees during the quarters ended June 30, 2004 and 2003,
respectively. As of June 30, 2004, options to purchase 8,643,809 shares of
common stock were outstanding. Employee Stock Purchase Plan As of June 30, 2004, 1,834,101 shares had been purchased under the
Employee Stock Purchase Plan (the Purchase Plan). Fair Value Disclosures Information regarding net income and net income per share, as adjusted, is
required by SFAS No. 123, which also requires that the information be
determined as if we had accounted for our employee stock options granted under
the fair value method. The fair value for these options was estimated using the
Black-Scholes option pricing model. The per share weighted average estimated
fair value for employee options granted was $6.01 and $3.12 during the quarter
ended June 30, 2004 and 2003, respectively. The Black-Scholes model was
developed for use in estimating the fair value of traded options that have no
restrictions and are fully transferable and negotiable in a freely traded
market. Black-Scholes does not consider the employment, transfer or vesting
restrictions that are inherent in our employee options. The usage of an option
valuation model, as required by SFAS No. 123, includes highly subjective
assumptions based on long-term predictions, including the expected stock price
volatility and average life of each option grant. Because our employee options
have characteristics significantly different from those of freely traded
options, and because changes in the subjective input assumptions can materially
affect our estimate of the fair value of those options, it is our opinion that
the existing valuation models, including Black-Scholes, are not reliable single
measures and may misstate the fair value of our employee options. 13




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ASYST TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) The following weighted average assumptions are included in the estimated
fair value calculations for stock option grants in the quarters ended June 30,
2004 and 2003, respectively: Employee Stock OptionsThree Months EndedJune 30,2004
    
    2003Risk-free interest rate
    
    
    3.35
    %
    
    
    2.6
    %Expected term of options (in years)
    
    
    4.6
    
    
    
    4.3Expected volatility
    
    
    91.5
    %
    
    
    94.2
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
 Using Black-Scholes, the per share weighted average estimated fair value
of rights issued pursuant to our Employee Stock Purchase Plan during the
quarters ended June 30, 2004 and 2003 was $5.33 and $1.61, respectively. The following weighted average assumptions are included in the estimated
grant date fair value calculations for rights to purchase stock under the
Employee Stock Purchase Plan: Employee Stock PurchaseThree Months EndedJune 30,2004
    
    2003Risk-free interest rate
    
    
    1.55
    %
    
    
    1.20
    %Expected term of options (in years)
    
    
    0.5
    
    
    
    0.5Expected volatility
    
    
    78.7
    %
    
    
    85.0
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
 9. RELATED PARTY TRANSACTIONS At June 30, 2004 and March 31, 2004, we held notes from two current
non-officer employees totaling $0.3 million and $0.4 million, respectively. One
of the notes receivable is secured by a deed of trust on certain real property.
The fair market value of the property exceeds the loan amount. These notes
receivable are included in other assets in the condensed consolidated balance sheet. Our majority-owned subsidiary, ASI, has certain transactions with the
minority shareholder, Shinko. At June 30, 2004 and March 31, 2004 accounts payable due to Shinko
were $20.8 million and $17.2 million, respectively. During the quarters ended June 30, 2004 and 2003, materials and services purchased
from Shinko were $6.4 million and $5.1 million, respectively. 14




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ASYST TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) 10. COMMITMENTS AND CONTINGENCIES Lease Commitments We lease various facilities under non-cancelable capital and operating
leases. At June 30, 2004, the future minimum commitments under these leases are
as follows (in thousands): Fiscal Year Ending March 31,
    
    Capital Lease
    
    Operating Lease
    
    Sublease IncomeRemaining portion of 2005
    
    $
    202
    
    
    $
    5,507
    
    
    $
    (392
    )2006
    
    
    134
    
    
    
    3,566
    
    
    
    (523
    )2007
    
    
    78
    
    
    
    1,381
    
    
    
    (44
    )2008
    
    
    17
    
    
    
    1,128
    
    
    
    2009 and thereafter
    
    
    
    
    
    
    210
    
    
    
    Total
    
    
    431
    
    
    $
    11,792
    
    
    $
    (959
    )Less: interest
    
    
    25Present value of minimum lease payments
    
    
    406Less: current portion of capital leases
    
    
    223Capital leases, net of current portion
    
    $
    183
 Rent expense under our operating leases was approximately $1.9 million and
$1.6 million for the quarters ended June 30, 2004 and June 30, 2003,
respectively. Legal Commitments On October 28, 1996, we filed suit in the United States District Court for
the Northern District of California against Empak, Inc., Emtrak, Inc., Jenoptik
AG, and Jenoptik Infab, Inc., alleging, among other things, that certain
products of these defendants infringe our United States Patents Nos. 5,097,421
(the 421 patent) and 4,974,166 (the 166 patent). Defendants filed answers
and counterclaims asserting various defenses, and the issues subsequently were
narrowed by the parties respective dismissals of various claims, and the
dismissal of defendant Empak pursuant to a settlement agreement. The remaining
patent infringement claims against the remaining parties proceeded to summary
judgment, which was entered against us on June 8, 1999. We thereafter took an
appeal to the United States Court of Appeals for the Federal Circuit. On
October 10, 2001, the Federal Circuit issued a written opinion, Asyst
Technologies, Inc. v. Empak,268 F.3d 1365 (Fed. Cir. 2001), reversing the
decision of the trial court, and remanding the matter to the trial court for
further proceedings. The case was subsequently narrowed to the 421 patent, and
we sought monetary damages for defendants infringement, equitable relief, and
an award of attorneys fees. On October 9, 2003, the court: (i) granted
defendants motion for summary judgment to the effect that the defendants had
not infringed our patent claims at issue and (ii) directed that judgment be
entered for defendants. We have filed a notice of appeal of both the order and
the entry of judgment against us. The court also denied defendants motion for
judgment as to the invalidity of our asserted patents. Defendants have filed a
notice of appeal as to the courts denial of that motion. From time to time, we are also involved in other legal actions arising in
the ordinary course of business. We have incurred certain costs while defending
these matters. There can be no assurance third party assertions will be
resolved without costly litigation, in a manner that is not adverse to our
financial position, results of operations or cash flows or without requiring
royalty payments in the future which may adversely impact gross margins.
Litigation is inherently unpredictable, and we cannot predict the outcome of
the legal proceedings described above with any certainty. Because of
uncertainties related to both the amount and range of losses in the event of an
unfavorable outcome in the lawsuits listed above or in certain other pending
proceedings for which loss estimates have not been recorded, we are unable to
make a reasonable estimate of the losses that could result from these matters.
As a result, no losses have been accrued for the legal proceedings described
above in our financial statements as of June 30, 2004. Indemnifications We,
as permitted under California law and in accordance with our Bylaws,
indemnify our officers, directors and members of our senior
management for certain events or occurrences, subject to certain
limits, while they were serving at its request in such capacity. The
maximum amount of potential future indemnification is unlimited;
however, we have a Director and Officer Insurance Policy that enables
us to recover a portion of any future amounts paid. As a result of
the insurance policy coverage, we believe the fair value of these
indemnification agreements is minimal. Our sales agreements indemnify
our customers for any expenses or liability resulting from claimed
infringements of patents, trademarks or copyrights of third parties.
The terms of these indemnification agreements are generally perpetual
any time after execution of the agreement. The maximum amount of
potential future indemnification is unlimited. However, to date, we
have not paid any claims or been required to defend any lawsuits with
respect to any claim. Sale of
Receivables We
have an agreement with a Japanese banking institution to sell certain
of our trade receivables without recourse. The total amount available
under the facility is $14.0 million at June 30, 2004. 15




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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 onForm 10-Kmight 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 35.0 percent of our headcount in April 2003,
due to ongoing weakness in our business, our outsourcing of manufacturing
operation, and the sale of two discontinued operations and our wafer carrier
business. We also announced plans to outsource our Japanese manufacturing
operations. In October 2002, we began transitioning substantially all of our
U.S. manufacturing to Solectron Corporation, which we believe will reduce our
fixed manufacturing costs and improve our ability to respond to sales
fluctuations. The transition was substantially completed in June 2003. Over the
past two years, we have reduced our workforce from a peak of approximately
1,800 employees to approximately 513 employees, not including employees of
Asyst Shinko, Inc., as of June 30, 2004. The number of employees at
ASI totaled 368 as of June 30, 2004 We sell our products principally through a direct sales force worldwide.
Our functional currency is the U.S. dollar, except in Japan where our
functional currency is the Japanese yen. The costs and expenses of our Japanese
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. Critical Accounting Policies and Estimates 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, 2004. 16




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##### Table of Contents



Three Months Ended June 30, 2004 and 2003 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 EndedJune 30,2004
    
    2003NET SALES
    
    
    100.0
    %
    
    
    100.0
    %COST OF SALES
    
    
    76.7
    
    
    
    90.2Gross profit
    
    
    23.3
    
    
    
    9.8OPERATING EXPENSES:Research and development
    
    
    6.9
    
    
    
    21.3Selling, general and administrative
    
    
    13.5
    
    
    
    38.9Amortization of acquired intangible assets
    
    
    3.6
    
    
    
    10.6Restructuring and other charges
    
    
    0.2
    
    
    
    9.6Asset impairment charges
    
    
    
    
    
    
    15.1Total operating expenses
    
    
    24.2
    
    
    
    95.5Loss from operations
    
    
    (0.7
    )
    
    
    (85.7
    )Other expense, net
    
    
    (0.4
    )
    
    
    (2.0
    )Loss before benefit from income taxes and minority interest
    
    
    (1.1
    )
    
    
    (87.7
    )BENEFIT FROM INCOME TAXES
    
    
    0.2
    
    
    
    3.0MINORITY INTEREST
    
    
    0.2
    
    
    
    2.1NET LOSS
    
    
    (0.7
    )%
    
    
    (82.6
    )%
 Results of Operations Net Sales.Net sales for the first quarter of fiscal 2005
was $140.9 million, an increase of $95.7 million, or 211.3 percent, from net sales of $45.3 million in the first quarter of fiscal 2004. The increase
in sales for the first quarter of fiscal 2005 reflects growth across both our Fab Automation and AMHS segments, which experienced increases of
$50.0 million and $45.7 million, or 212.9% and 209.7%, respectively. We operate in two reportable segments: Fab Automation and AMHS. Fab
Automation products include interface products, substrate-handling robotics,
auto-ID systems, sorters and connectivity software.
AMHS products include automated transport and loading systems for semiconductor
fabs and flat panel display manufacturers. 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 thousands): Three Months EndedJune 30,Fab Automation Products:
    
    2004
    
    2003Net sales
    
    $
    73,425
    
    
    $
    23,468Income (loss) from operations
    
    $
    2,369
    
    
    $
    (35,225
    )AMHS:Net sales
    
    $
    67,512
    
    
    $
    21,800Loss from operations
    
    $
    (3,401
    )
    
    $
    (3,561
    )Total:Net sales
    
    $
    140,937
    
    
    $
    45,268Loss from operations
    
    $
    (1,032
    )
    
    $
    (38,786
    )
 17




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##### Table of Contents



The
$50.0 million increase in Fab Automation sales compared to the same quarter one year ago was primarily due to a $32.2 million increase in revenues
for factory interface products. Software connectivity and service revenues also contributed to the increase. The $45.7 million increase in AMHS sales compared to the same
quarter one year ago was primarily driven by a $15.5 million increase in sales to flat panel display manufacturers, predominantly in Korea and China,
and a $29.3 million increase in sales to 300mm semiconductor fabs, predominantly in Taiwan and Japan. Gross Profit. Gross profit
increased to $32.9 million, or 23.3 percent of
net sales, for the quarter ended June 30, 2004, compared to $4.4 million, or
9.8 percent of net sales, for the quarter ended June 30, 2003. The increase is
the result of cost reduction efforts attributable to our manufacturing
outsourcing activities with Solectron and increase in overall revenue levels
year-over-year. In the quarter
ended June 30, 2004, 300mm products contributed
approximately 40.1 percent to our net sales, as compared with
36.6 percent
for the quarter ended June 30, 2003. Net sales of 300mm products
increased by $40.0 million to $56.5 million in the quarter ended June 30, 2004. We expect 300mm product sales to
continue to trend upward, particularly as we expect new 300mm AMHS product
installations will commence in fiscal 2005, although quarterly fluctuations are
possible. Additionally, 200mm SMIF upgrades or new 200mm fabs may result in
significant mix changes. Our 300mm products are very early in their product
life cycle and currently have lower margins compared with 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 over time. 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. In the next several quarters, the change in product mix is expected to be
primarily driven by our recently announced $120.0 million Generation 6 flat panel
display order. 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 increased
slightly to $9.7 million for the quarter ended June 30, 2004, as compared with
$9.6 million for the quarter ended June 30, 2003. As a percentage of sales,
research and development decreased to 6.9 percent of sales in the quarter ended
June 30, 2004, as compared to 21.3 percent in the quarter ended June 30, 2003.
Our first quarter fiscal 2005 results include approximately $1.5 million of
research and development spending at ASI and $1.2 million in charges associated
with new product introductions.
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. Selling, General and Administrative.Selling, general and administrative,
or SG&A, expenses increased 7.8 percent to $19.0 million for the quarter ended
June 30, 2004, as compared to $17.6 million for the quarter ended June 30,
2003. As a percent of net sales, SG&A expenses decreased to 13.5 percent for
the quarter ended June 30, 2004 compared to 38.9 percent for the quarter ended
June 30, 2003. The increase on an absolute dollar basis for the quarter ended
June 30, 2004 as compared to the same quarter in the prior year resulted from
higher spending at ASI. The decrease in SG&A as a percentage of net sales was due
to the greater increase in net sales than the increase in SG&A expenses during
the quarter ended June 30, 2004. 18




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Amortization of Acquired Intangible Assets.Amortization expenses relating
to acquired intangible assets were $5.1 million or 3.6 percent of net sales for
the quarter ended June 30, 2004, and $4.8 million or 10.6 percent of net sales
for the quarter ended June 30, 2003. The increase in amortization expense in
the first quarter of fiscal 2005 is primarily due to exchange rate
fluctuations. Restructuring Charges. The following table summarizes the activities in
our restructuring accrual during the quarter ended June 30, 2004 (in
thousands): Severance andBenefits
    
    Excess Facilities
    
    TotalBalance, March 31, 2004
    
    $
    64
    
    
    $
    2,190
    
    
    $
    2,254Additional accruals
    
    
    6
    
    
    
    213
    
    
    
    219Amounts paid in cash
    
    
    (37
    )
    
    
    (381
    )
    
    
    (418
    )Balance, June 30, 2004
    
    $
    33
    
    
    $
    2,022
    
    
    $
    2,055
 We incurred restructuring charges of $0.2 million during the quarter ended June
30, 2004, consisting primarily of severance costs from a previously announced
reduction in workforce in fiscal 2004. We anticipate additional restructuring
charges during the second and third quarters of fiscal 2005 as we complete the
workforce reductions, facility consolidations and outsourcing of manufacturing
in Japan. We expect to utilize the remaining balance, primarily unused leased
facilities, over the following two fiscal years. All remaining accrual balances
are expected to be settled in cash. Asset
Impairment Charges.We completed the sale of land in Fremont, California, in the fiscal year
ended March 31, 2004. The net proceeds from the sale were $12.1 million. We had
intended to construct corporate headquarters facilities on the land and
subsequently decided not to build these facilities. In 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. Interest Income.Interest income was $0.3 million for the quarter ended
June 30, 2004, as compared to $0.2 million for the quarter
ended June 30, 2003, primarily due to higher average cash and
investment balances, offset by lower average interest rates. Interest Expense.Interest expense was $1.6 million for the quarter
ended June 30, 2004, as compared to $1.8 million for the quarter ended June 30,
2003, primarily due to a reduction in outstanding debt balances. Other Income.Other income increased to $0.7 million for the quarter
ended June 30, 2004, as compared to $0.6 million for the quarter ended June 30,
2003, primarily due to an increase in royalty income. Benefit from Income Taxes. We recorded a benefit from income taxes of
$0.3 million for the quarter ended June 30, 2004, or approximately 22.0 percent
of our loss before income taxes and minority interest. The tax benefit is
primarily due to $1.7 million amortization of deferred tax liabilities recorded
in connection with the ASI acquisition, offset by $1.4 million of tax
provisions in international subsidiaries, primarily Japan. We recorded a
benefit for income taxes of $1.4 million for the quarter ended June 30, 2003,
representing an annual effective income tax rate of 3.5 percent. In fiscal 2003
we established a full valuation allowance for our domestic net deferred tax
assets. Deferred tax assets are recognized to the extent realizable related to
our Japanese operations. We recognized a tax benefit in the three months ended
June 30, 2004 as we expect to have net income in Japan for the 12-month period
ended March 31, 2005. Minority Interest. Minority interest for the first quarter of fiscal 2005
and 2004 was $0.3 million and $1.0 million, respectively. The amount for
minority interest represents 49 percent interest in our joint venture, Shinko ASI. 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 June 30, 2004, we had approximately $122.6 million in cash,
cash equivalents and short-term investments, $132.0 million in working capital
and $90.4 million in long-term debt and capital leases, net of current portion. 19




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Operating
activities.Net cash provided by operating activities was $3.9
million in the quarter ended June 30, 2004, primarily resulting from increase
of $56.2 million in accounts payable, accrued and other liabilities and deferred revenue
and non-cash charges for depreciation and amortization of $7.0 million,
partially offset by a $29.4 million increase in accounts
receivable, a $24.7
million increase in inventories to support future growth and our net loss of
$0.9 million. Days sales outstanding
declined at June 30, 2004 to 113 days from 140 days at June 30, 2003. Inventory
turns on an annualized basis increased to 10.9 turns at June 30, 2004 from 8.2
turns at June 30, 2003. Net cash used in operating activities was $21.2 million in the quarter
ended June 30, 2003, primarily consisted of our $37.4 million net loss and
reductions in payables, accrued liabilities and deferred revenue of $5.3
million. These uses of cash were partially offset by non-cash charges of $7.4
million for depreciation and amortization, $6.9 million for impairment in our
land held for sale, as well as
reductions in accounts receivable of $6.0 million and inventory
of $4.8 million. The
reductions in the current asset and liability accounts reflect our lower sales
volume compared with the immediately preceding quarter. Investing
activities.Net cash used in investing activities was $10.6
million in the quarter ended June 30, 2004, due to $11.6 million in purchases
of short-term investments and $0.9 million in purchases of property and
equipment, partially offset by $1.9 million in proceeds from the
release of restricted cash
and cash equivalents. Net cash used in investing activities was $2.5 million in the quarter
ended June 30, 2003, due to $1.2 million in purchases of property and equipment
and net cash of $1.2 million used in ASIs acquisition of Shinko Technologies,
Inc., the American subsidiary of Shinko. Financing
activities. Net cash provided by financing activities was $0.3
million for the quarter ended June 30, 2004, due to $1.8 million in proceeds
from the issuance of common stock under our employee stock programs,
partially offset by pay downs against borrowings. Net cash provided by financing activities was $2.9 million for the quarter
ended June 30, 2003, due to net loan proceeds of approximately
$2.0 million for borrowings in Asyst Japan, Inc. and $0.9 million from issuance
of common stock under our employee stock programs. We had $17.0 million and $18.2 million at June 30, 2004 and March 31,
2004, respectively, of short-term debt issued by banks in Japan. As of June 30,
2004, the interest rate ranged from 1.4 percent to 3.0 percent. Interest rates
ranged from 1.4 percent to 3.0 percent at March 31, 2004. Substantially all of
the debt is guaranteed by Asyst in the United States. On July 3, 2001, we completed the sale of $86.3 million of 5 3/4 percent
convertible subordinated notes that resulted in aggregate proceeds of $82.9
million to us, net of issuance costs. The notes are convertible, at the option
of the holder, at any time on or prior to maturity into shares of our common
stock at a conversion price of $15.18 per share, which is equal to a conversion
rate of 65.8718 shares per $1,000 principal amount of notes. The notes mature
July 3, 2008, pay interest on January 3 and July 3 of each year and are
redeemable at our option after July 3, 2004. Debt issuance costs of $2.9
million, net of amortization, are included in other assets. Issuance costs are
being amortized over 84 months and are being charged to other
income (expense), net. We had $6.4 million and $7.1 million of secured straight bonds from a bank
in Japan at June 30, 2004 and March 31, 2004, respectively. The bonds bore
interest at rates ranging from 1.4 percent to 3.0 percent as of June 30, 2004
and 1.4 percent to 3.0 percent as of March 31, 2004 and mature in fiscal year
2008. Certain of our assets in Japan have been pledged as security for
short-term debt and secured straight bonds. As
at June 30, 2004, we had available to us, a
$25 million two-year revolving credit agreement with a
commercial bank, as amended during the first quarter of fiscal year
2005. The amended agreement requires maintenance of compliance with
certain financial covenants, including a quarterly net income/loss
target, calculated on an after-tax basis (excluding depreciation,
amortization and other non-cash items) and a requirement that we maintain with the bank during the term of the credit
agreement a minimum balance of $5.0 million of cash and cash
equivalents. In addition, the amended agreement was extended through
May 15, 2006, changed and expanded the base of assets under
which we qualify for borrowing under the credit facility
and reduced certain fees and interest charges applicable to borrowing
under the credit line. The specific amount of the credit line
available at any time, however, may change based on the amount of
current receivables we have outstanding. The credit line was
fully paid down during the quarter ended December 31, 2003. As
of the quarter ended June 30, 2004, there was no amount
outstanding under the line of credit, and we were in
compliance with the financial covenants. We may be unable to meet certain financial covenants contained
in the credit agreement with the bank in subsequent quarters. As
such, no assurance can be made that the bank will grant waivers and
amend the covenants, or that the bank wont terminate the
agreement, preclude further borrowings or require repayment of the
outstanding borrowings, if any. 20




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In September 2003, ASI entered into a short-term bank facility with a
Japanese bank under which it may borrow up to approximately $27.9 million at
the exchange rate as of June 30, 2004. As of June 30, 2004 and March 31, 2004,
ASI had outstanding borrowings of $4.6 million and $4.7 million, respectively
that is recorded in short-term debt. Under terms of the ASI bank facility, ASI
must generate operating profits on a statutory basis. We were in compliance
with the loan covenants at June 30, 2004 and at March 31, 2004. Continued operating losses may 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 June 30, 2005. At some point in the future we may require additional funds to support our
working capital and operating expense requirements or for other purposes and we
may seek to raise these additional funds through public or private debt or
equity financings or the sale of assets. These financings may not be available
to us on a timely basis if at all, or, if available, on terms acceptable to us
or not dilutive to our shareholders. If we fail to obtain acceptable additional
financing, we may be required to reduce planned expenditures or forego
investments, which could reduce our revenues, increase our losses, and harm our
business. Recent Accounting Pronouncements At its March 2004 meeting, the EITF reached a consensus on recognition and
measurement guidance previously discussed under EITF 03-01. The consensus
clarifies the meaning of other-than-temporary impairment and its application to
investments classified as either available-for-sale or held-to-maturity under
SFAS No. 115 and investments accounted for under the cost method or the equity
method. The recognition and measurement guidance for which the consensus was
reached in the March 2004 meeting is to be applied to other-than-temporary
impairment evaluations in reporting periods beginning after June 15, 2004. We
do not believe that this consensus on the recognition and measurement guidance
will have a significant impact on our consolidated results of operations. In July 2004, the EITF issued a draft abstract, EITF Issue No. 04-8, The
Effect of Contingently Convertible Debt on Diluted Earnings per Share,which
addressed the issue of when the dilutive effect of contingently convertible
debt instruments (Co-Cos) should be included in diluted earnings per share. The
draft abstract reflects the Task Forces tentative conclusion that Co-Cos
should be included in diluted earnings per share computations regardless of
whether the market price trigger has been met. The tentative conclusion reached
by the Task Force will not be finalized until it is ratified by the Financial
Accounting Standards Board, which is expected to be in September 2004. Risk Factors This Quarterly Report onForm 10-Qcontains forward-looking statements
that involve risks and uncertainties, including statements about our future
plans, objectives, intentions and expectations. Many factors, including those
described below, could cause actual results to differ materially from those
discussed in any forward-looking statements. Risk Related to Our Business If we fail to effectively manage our ASI joint venture, our sales of
Automated Material Handling Systems could be adversely affected and the mix
of sales between AMHS and our other products could affect our overall
financial performance. Net
sales of Automated Material Handling Systems, or AMHS, accounted for
approximately 56.0 percent of our net sales for the fiscal year ended March 31,
2004 and 47.9 percent of our net sales for the quarter ended
June 30, 2004, and are expected to be an important component of
our future sales.
Substantially all of our AMHS sales are through our majority-owned joint
venture subsidiary, Asyst Shinko, Inc., or ASI, of which we acquired 51.0
percent in the third quarter of fiscal year 2003. While we hold 21




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majority ownership of ASI, certain major operational decisions require the
approval and support of our joint venture partner, Shinko Electric Co., Ltd.,
or Shinko, and the future success of ASI depends in significant part on the strength of our
relationship with Shinko and ability to coordinate improvements in ASIs operating and business
process with Shinko. Other than a right of first refusal if Shinko is
proposing to sell some or all of  its stake in ASI, or in certain instances constituting a
material default by Shinko, we have no
mechanism to acquire the 49.0 percent of ASI that is currently owned by Shinko.
Even if Shinko were to offer to sell its stake in ASI to us, or the shares were
otherwise available to us for purchase by right of first refusal, we may not
have sufficient funds available to facilitate such acquisition or may not elect to purchase the shares. In addition, we
have limited experience managing operations in Japan, and our failure to manage
effectively ASI in Japan could harm our business. Orders for AMHS are relatively large, often exceeding $20 million for a
given project. Because of the size of these orders, our revenues are often
concentrated among a small number of customers in any fiscal period.
Additionally, the manufacture and installation of these systems at our
customers manufacturing facilities can take up to six months. We recognize
revenue and costs for AMHS based on percentage of completion because the
contracts are long-term in nature. Payments under these contracts often occur
well after we incur our manufacturing costs. For example, terms for our
Japanese AMHS customers require payment to be made six months after customer
acceptance of the installation. The consequence of the AMHS payment cycle is
that significant demands can be placed on our working capital, prior to our receipt of customer payments. Further, gross
margins on our AMHS sales are lower than those for our other products. If we
fail to effectively estimate costs and manage these long-term projects, we
could have loss contract exposure and additional gross margin pressure. Our
overall financial performance will therefore be impacted by the mix of sales
between AMHS and other products and our ability to manage AMHS projects in a given period. If we are unable to increase our sales of AMHS to FPD manufacturers, or if the
FPD industry enters a cyclical downturn, our growth prospects could be
negatively impacted. In recent quarters, ASI has begun to sell AMHS to flat panel display, or
FPD, manufacturers. While we believe that sales to the FPD industry present a
significant opportunity for growth, the size of this market opportunity depends
in large part on capital expenditures by FPD manufacturers. The market for FPD
products is highly cyclical and has experienced periods of oversupply,
resulting in unpredictable demand for manufacturing and automation
equipment. If the FPD market enters into a cyclical downturn, demand for AMHS
by the FPD market may be significantly reduced, impacting our growth prospects. As a relatively new entrant to the FPD equipment market, we do not have
the customer relationships that our competitors have. Similarly, our relative
inexperience in the FPD industry may cause us to misjudge important trends and
dynamics in this market. If we are unable to anticipate future customer needs
in the FPD market, our growth prospects may be severely reduced. The timing of the industrys transition to 300mm technology is uncertain and
competition may be intense, and could adversely affect our revenues. The 300mm market is still relatively new. We have invested, and are
continuing to invest, substantial resources to develop new systems and
technologies to automate the processing of 300mm wafers. However, the timing of
the industrys transition from the current, widely-used 200mm manufacturing
technology to 300mm manufacturing technology is uncertain, partly as a result
of the recent period of reduced wafer fabrication capacity utilization. Delay
in the adoption of 300mm manufacturing technology could adversely affect our
potential revenue. Manufacturers who are implementing factory automation in
300mm fabs may seek to purchase systems from multiple vendors. Competition,
including price competition, for these 300mm orders is intense. We face
increased competition for our 300mm products from a number of new entrants
because of the development of Semiconductor Equipment and Materials
International, or SEMI, standards for 300mm products. Our gross margins on 300mm products may be lower than on 200mm products, which
could adversely affect our ability to become and remain profitable. The gross margins on our 300mm products currently are not as favorable as
on our 200mm products. This is primarily because our 300mm products are early
in their production life, we face increased competition in this production
line, and we sell a greater percentage of our 300mm products to OEMs rather
than directly to semiconductor manufacturers. Manufacturing costs are generally
higher in the early stages of new product introduction and typically decrease
as demand increases, due to better economies of scale and efficiencies
developed in the manufacturing processes. However, we cannot assure you that we
will see such economies of scale and 22




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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, and could adversely affect our ability to become
and remain profitable. Most of our manufacturing is outsourced and we rely on a single contract
manufacturer for much of our product manufacturing, which could disrupt the
availability of our products and adversely affect our gross margins. We have outsourced the manufacturing of most of our products. Solectron
currently manufactures, under a long-term contract, our products, other than
AMHS and our Japanese robotics products. ASI also has outsourced a large
portion of its AMHS manufacturing to third parties. In the future we may
increase our dependence on contract manufacturers. Outsourcing may not yield
the benefits we expect, and instead could result in increased product costs and
product delivery delays. Outsourced manufacturing could create disruptions in the availability of
our products if the timeliness or quality of products delivered does not meet
our requirements or our customers expectations. From time to time, we have
experienced delays in receiving products from Solectron. Problems with quality
or timeliness could be caused by a number of factors including, but not limited
to: manufacturing process flow issues, financial viability of an outsourced
vendor, availability of raw materials or components to the outsourced vendor,
improper product specifications, and the learning curve to commence
manufacturing at a new outsourced site. Our contract with Solectron contains
minimum purchase commitments which, if not met, could result in increased
costs, which would adversely affect our gross margins. We must also provide
Solectron with forecasts and targets based on actual and anticipated demand,
which we may not be able to do effectively or efficiently. If Solectron
purchases inventory based on our forecasts, and that inventory is not used, we
must repurchase the unused inventory, which would adversely affect both our
cash flows and gross margins. If product supply is adversely affected because
of problems in outsourcing we may lose sales and profits. Our outsourcing agreement with Solectron includes commitments from
Solectron to adjust, up and down, manufacturing volume based on updates to our
forecast demand. However, Solectron may be unable to meet these commitments
and, even if it can, may be unable to react efficiently to rapid fluctuations
in demand. If our agreement with Solectron terminates, or if Solectron does not
perform its obligations under our agreement, it could take several months to
establish alternative manufacturing for these products and we may not be able
to fulfill our customers orders for most of our products in a timely manner.
If our agreement with Solectron terminates, we may be unable to find another
suitable outsource manufacturer. Any delays in meeting customer demand or quality problems resulting from
product manufactured at an outsourced location such as Solectron could result
in lost or reduced future sales to key customers and could have a material
negative impact on our net sales, gross profits and results of operations. Shortages of components necessary for product assembly by Solectron or us can
delay shipments to our customers and can lead to increased costs, which may
negatively impact our financial results. When demand for semiconductor manufacturing equipment is strong,
suppliers, both U.S. and international, strain to provide components on a
timely basis. We have outsourced the manufacturing of many of our products, and
disruption or termination of supply sources to our contract manufacturers or us
could have a serious adverse effect on our operations. Many of the components
and subassemblies used in our products are obtained from a limited group of
suppliers, or in some cases may come from a single supplier. A prolonged
inability to obtain some components could have an adverse effect on our
operating results and could result in damage to our customer relationships.
Shortages of components may also result in price increases for components and,
as a result, could decrease our margins and negatively impact our financial
results. 23




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We have significant existing debts; the restrictive covenants under some of
our debt agreements may limit our ability to expand or pursue our business
strategy; if we are forced to prepay some or all of this indebtedness our
financial position would be severely and adversely affected. We have a significant amount of outstanding indebtedness. At June 30,
2004, our long-term debt was $90.4 million, and our short-term debt was $19.7
million, for an aggregate of $110.1 million. This includes $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. ASI entered into a short-term facility with a Japanese bank
under which it may borrow up to approximately $27.9 million, of which $4.6
million is currently outstanding. We have also guaranteed the loans of our
wholly owned Japanese subsidiary, Asyst Japan, Inc., or AJI, which loans
currently total approximately $18.8 million as of June 30, 2004. Our $25 million two-year revolving credit agreement with a commercial
bank, as amended during the first quarter of fiscal year 2005, requires us to
maintain compliance with certain financial covenants, including a quarterly net
income/loss target, calculated on an after-tax basis (excluding depreciation,
amortization and other non-cash items) and a requirement that we maintain with
the bank during the term of the credit agreement a minimum balance of $5.0
million of cash and cash equivalents. The specific amount of the credit line
available at any time, however, may change based on the amount of current
receivables we have outstanding. The covenants contained in our credit
agreement with the bank also restrict our ability to take certain actions,
including our ability to:  
    
    incur additional indebtedness;
    
    pay dividends and make distributions in respect of our capital stock;
    
    redeem capital stock;
    
    make investments or other restricted payments;
    
    engage in transactions with shareholders and affiliates;
    
    create liens;
    
    sell or otherwise dispose of assets;
    
    make payments on our debt, other than in the ordinary course; and
    
    engage in mergers and acquisitions. The credit line has been fully paid down since the quarter ended December
31, 2003. As of the quarter ended December 31, 2003, we were not in compliance
with certain of these financial covenants. However, we obtained a waiver of
compliance from the bank for these certain covenants. As of June 30, 2004, there were no amounts outstanding under the line of credit and we were in compliance with the financial covenants. We entered
into an agreement with the bank, effective as of May 15, 2004, to amend and
restate the terms of our existing credit agreement which extended its term
through May 15, 2006, changed and expanded the base of assets under which we
qualify for borrowings under the credit facility and reduced certain fees and
interest charges applicable to borrowings under the credit line. While we have
experienced improvements in our financial results in the quarter ended June 30,
2004, we cannot assure you that we will meet the financial covenants contained
in our credit agreement with the bank in subsequent quarters. Specifically, we
may be unable to meet the maximum loss covenant or the minimum liquidity
covenant in future quarters. If we are unable to meet any covenants, we cannot
assure you that the bank will grant waivers and amend the covenants, or that the bank wont terminate the agreement, preclude further borrowings or require
us to repay the outstanding borrowings. Under terms of the ASI bank facility, ASI must generate operating profits
on a statutory basis. Additionally, upon an event of default, the Japanese
banks may call the loans outstanding at AJI, requiring immediate repayment,
which we have guaranteed. 24




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As long as our indebtedness remains outstanding, the restrictive covenants
could impair our ability to expand or pursue our business strategies. Forced
prepayment of some or all of our indebtedness would reduce our available cash
balances and have an adverse impact on our operating and financial performance. We may need additional financing in the future to meet our capital needs; if
we do need to secure financing, it may not be available on favorable terms. We recently raised capital by issuing 6.9 million shares of our common
stock in a public offering in November 2003; however, our operations are
currently consuming cash and are expected to continue to do so for the next few
quarters. As a consequence, in the future we may be required to seek additional
financing to meet our working capital needs and to finance capital
expenditures, as well as to fund operations. We may be unable to obtain any
required additional financing on terms favorable to us, if at all, or which is
not dilutive to our shareholders. If adequate funds are not available on
acceptable terms, we may be unable to fund our expansion, successfully develop
or enhance products, respond to competitive pressures or take advantage of
acquisition opportunities, any of which could have a material adverse effect on
our business. If we raise additional funds through the issuance of equity
securities, our shareholders may experience dilution of their ownership
interest, and the newly-issued securities may have rights superior to those of
the common stock. If we raise additional funds by issuing debt, we may be
subject to limitations on our operations. This strain on our capital resources
could adversely affect our business. If our fully integrated tool front-end solutions are not widely accepted, our
growth prospects could be negatively impacted. The decision by OEMs to adopt our tool front-end, or portal, solutions for
a large product line involves significant organizational, technological and
financial commitments by the OEMs. OEMs expect the portal solutions to meet
stringent design, reliability and delivery specifications. If we fail to
satisfy these expectations, whether based on limited or expanded sales levels,
OEMs will not adopt our portal solutions. We cannot ensure that these tools
will be widely accepted in the marketplace, that additional OEMs will adopt
them, or that our products will command pricing sufficient to achieve and maintain
profitability. We have invested significant time and expense in the
development of Spartan, our next generation portal offering specifically
designed for the 300mm market. While we believe Spartan may improve our
competitive position and gross margins in the 300mm industry, if the market
acceptance of Spartan is less than we have forecast, or if the timing of this
acceptance is delayed, our financial performance could be impacted. Further,
because Spartan is early in its production life, its manufacturing costs may be
higher (and resulting margins may be lower) in the early stage of new product
introduction. Notwithstanding our solutions, OEMs may purchase components to
assemble or invest in the development of their own comparable portals. If our
solutions are not adopted by OEMs, our prospects will be negatively impacted
and we may not be able to achieve profitability. Because we do not have long-term contracts with our customers, our customers
may cease purchasing our products at any time if we fail to meet their needs
on a timely basis. We do not have long-term contracts with our customers, and our sales are
typically made pursuant to individual purchase orders. Accordingly:  
    
    our customers can cease purchasing our products at any time, without penalty;
    
    our customers are free to purchase products from our competitors;
    
    we are exposed to competitive price pressure on each order; and
    
    our customers are not required to make minimum purchases. Customer orders are often received with extremely short lead times. If we
are unable to fulfill these orders in a timely manner, we could lose sales and
customers. 25




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We depend on large purchases from a few significant customers, and any loss,
cancellation, reduction or delay in purchases by, or failure to collect
receivables from, these customers could harm our business. The markets in which we sell our products comprise a relatively small
number of OEMs and semiconductor manufacturers. Large orders from a relatively
small number of customers account for a significant portion of our revenue and
make our relationship with each customer critical to our business. The sales
cycles to new customers range from six to 12 months from initial inquiry to
placement of an order, depending on the complexity of the project. These
extended sales cycles make the timing of customer orders uneven and difficult
to predict. A significant portion of the net sales in any quarter is typically
derived from a small number of long-term, multi-million dollar customer
projects involving upgrades of existing facilities or the construction of new
facilities. Generally, our customers may cancel or reschedule shipments with
limited or no penalty. Our customers demand for our products is largely driven by the timing of
new fab construction and the upgrading of existing fabs initiated by those
customers. As such, when we complete projects for a customer, business from
that customer will decline substantially unless it undertakes additional
projects incorporating our products. The high cost of building a fab is causing
increasing numbers of semiconductor manufacturers to outsource the
manufacturing of their semiconductors to foundries. This trend toward foundry
outsourcing, combined with increasing consolidation within the semiconductor
industry, could continue to decrease the number of our potential customers and
increase our dependency on our remaining customers. We may not be able to
retain our largest customers or attract additional customers, and our OEM
customers may not be successful in selling the OEM equipment in which our
systems are embedded. Our success will depend on our continued ability to
develop and manage relationships with significant customers. In addition, our
customers have in the past sought price concessions from us and may continue to
do so in the future, particularly during downturns in the semiconductor market.
Further, our current and prospective customers have exerted pressure on us to
shorten delivery times and to customize and improve the capabilities of our
products, thus increasing our manufacturing costs. In addition, some of our
customers may in the future shift their purchases of products from us to our
competitors. Failure to respond adequately to such pressures could result in a
loss of customers or orders and the inability to develop successful
relationships with new customers, which would have a negative impact on our
business. If we are unable to collect a receivable from a large customer, our
financial results will be negatively impacted. In addition, since each customer
represents a significant percentage of net sales, the timing of the completion
of an order can lead to a fluctuation in our quarterly results. If we are unable to develop and introduce new products and technologies in a
timely manner, our business could be negatively impacted. Semiconductor equipment and processes are subject to rapid technological
changes. The development of more complex semiconductors has driven the need for
new facilities, equipment and processes to produce these devices at an
acceptable cost. We believe that our future success will depend in part upon
our ability to continue to enhance our existing products to meet customer needs
and to develop and introduce new products in a timely manner. We often require
long lead times for development of our products, which requires us to expend
significant management effort and to incur material development costs and other
expenses. During development periods we may not realize corresponding revenue
in the same period, or at all. We may not succeed with our product development
efforts and we may not respond effectively to technological change, which could
have a negative impact on our financial condition and results of
operations. The impact could include charges to operating expense,
cost overruns on large projects or the loss of future revenue
opportunities. 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. In addition,
enforcement of our rights could impose significant expense and result in an
uncertain or non-cost-effective determination or confirmation of our rights. 26




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Intellectual property rights are uncertain and involve complex legal and
factual questions. We may infringe the intellectual property rights of others,
which could result in significant liability for us. If we do infringe the
intellectual property rights of others, we could be forced to either to seek a
license to intellectual property rights of others or alter our products so that
they no longer infringe the intellectual property rights of others. A license
could be very expensive to obtain or may not be available at all. Similarly,
changing our products or processes to avoid infringing the rights of others may
be costly or impractical, could detract from the value of our product, or could
delay our ability to meet customer demands or opportunities. There has been substantial litigation regarding patent and other
intellectual property rights in semiconductor-related industries. Litigation
may be necessary to enforce our patents, to protect our trade secrets or know
how, to defend us against claimed infringement of the rights of others, or to
determine the scope and validity of the patents or intellectual property rights
of others. Any litigation could result in substantial cost to us and divert the
attention of our management, which by itself could have an adverse material
effect on our financial condition and operating results. Further, adverse
determinations in any litigation could result in our loss of intellectual
property rights, subject us to significant liabilities to third parties,
require us to seek licenses from third parties, or prevent us from
manufacturing or selling our products. Any of these effects could have a
negative impact on our financial condition and results of operations. The intellectual property laws in Asia do not protect our intellectual
property rights to the same extent as do the laws of the United States. It may
be necessary for us to participate in proceedings to determine the validity of
our, or our competitors, intellectual property rights in Asia, which could
result in substantial cost and divert our efforts and attention from other
aspects of our business. If we are unable to defend our intellectual property
rights in Asia, our future business, operating results and financial condition
could be adversely affected. We may not be able to integrate efficiently the operations of our
acquisitions, and may incur substantial losses in the divestiture of assets or
operations. We have made and may continue to make additional acquisitions of, or
significant investments in, businesses that offer complementary products,
services, technologies or market access. If we are to realize the anticipated
benefits of past and future acquisitions or investments, 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 financial and reporting controls, processes, systems and technologies into our existing business environment. The
difficulties of integration may increase because of the necessity of combining
personnel with varied business backgrounds and combining different corporate
cultures and objectives. We may incur substantial costs associated with these
activities and we may suffer other material adverse effects from these
integration efforts which could materially reduce our earnings even over the long-term. We
may not succeed with the integration process and we may not fully realize the
anticipated benefits of the business combinations, or we could decide to divest
or discontinue existing or recently acquired assets or operations. For example,
in fiscal 2003, we decided to discontinue operations of our SemiFab and AMP
subsidiaries, both of which we had acquired in February 2001, as these
subsidiaries were generating significant operating losses and not considered
critical to our long-term strategy. These subsidiaries were sold at the end of
fiscal 2003 at a substantial loss. The dedication of management resources to
such integration or divestitures may detract attention from the day-to-day
business, and we may need to hire additional management personnel to mange our
acquisitions or divestitures successfully. 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; 27




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
    
    the size, timing and product mix of customer orders;
    
    lost sales due to any failure in the outsourcing of our manufacturing;
    
    the availability of key components;
    
    the timing of product shipment and acceptance, which are factors in
determining when we recognize revenue; and
    
    the timely introduction and acceptance of new products. These and other factors increase the risk of unplanned fluctuations in our
net sales. A shortfall in net sales in a quarter or a fiscal year as a result
of these factors could negatively impact our operating results for that period.
Given these factors, we expect quarter-to-quarter and year-to-year performance
to fluctuate for the foreseeable future. As a result, period-to-period
comparisons of our performance may not be meaningful, and you should not rely
on them as an indication of our future performance. In one or more future
periods, our operating results may be below the expectations of public market
analysts and investors, which may cause our stock price to decline. We face significant economic and regulatory risks because a majority of our
net sales are from outside the United States. A significant portion of our net sales is attributable to sales outside
the United States, primarily in Taiwan, Japan, China, Korea, Singapore and
Europe. International sales were 79.0 percent of our total net sales for fiscal
2004, 65.0 percent in fiscal 2003 and 55.0 percent in fiscal 2002. We expect
that international sales will continue to represent a significant portion of
our total revenue in the future. This concentration increases our exposure to
any risks in this area. Sales to customers outside the United States are
subject to various risks, including:  
    
    exposure to currency fluctuations;
    
    the imposition of governmental controls;
    
    the laws of certain foreign countries may not protect our
intellectual property to the same extent as do the laws of the United
States;
    
    the need to comply with a wide variety of foreign and U.S. export laws;
    
    political and economic instability;
    
    terrorism and anti-American sentiment;
    
    trade restrictions;
    
    changes in tariffs and taxes;
    
    longer product acceptance and payment cycles; and
    
    the greater difficulty of administering business overseas. Any kind of economic instability in parts of Asia where we do business can
have a severe negative impact on our operating results due to the large
concentration of our sales activities in this region. For example, during 1997
and 1998, several Asian regions, including Taiwan and Japan, experienced severe
currency fluctuation and economic deflation, which negatively impacted our
revenues and also negatively impacted our ability to collect payments from
customers. The economic situation during this period exacerbated a decline in
selling prices for our products as our competitors reduced product prices to
generate needed cash. Although we invoice a majority of our international sales in United States
dollars, for sales in Japan, we invoice our sales in Japanese yen. Future
changes in the exchange rate of the U.S. dollar to the Japanese yen may 28




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adversely affect our future results of operations. We do not currently
engage in active currency hedging transactions. Nonetheless, as we expand our
international operations, we may allow payment in additional foreign currencies
and our exposure to losses in foreign currency transactions may increase.
Moreover, the costs of doing business abroad may increase as a result of
adverse exchange rate fluctuations. For example, if the United States dollar
declined in value relative to a local currency, we could be required to pay
more for our expenditures in that market, including salaries, commissions,
local operations and marketing expenses, each of which is paid in local
currency. In addition, we may lose customers if exchange rate fluctuations,
currency devaluations or economic crises increase the local currency price of
our products or reduce our customers ability to purchase our products. Asian and European courts might not enforce judgments rendered in the
United States. There is doubt as to the enforceability in Asia and Europe of
judgments obtained in any federal or state court in the United States in civil
and commercial matters. The United States does not currently have a treaty with
many Asian and European countries providing for the reciprocal recognition and
enforcement of judgments in civil and commercial matters. Therefore, a final
judgment for the payment of a fixed debt or sum of money rendered by any
federal or state court in the United States would not automatically be
enforceable in many European and Asian countries. Our current and planned operations may strain our resources and increase our
operating expenses. We may expand our operations through both internal growth and
acquisitions. We expect that this expansion will strain our systems and
operational and financial controls. In addition, we may incur higher operating
costs and be required to expend substantial working capital to fund operations
during such an expansion. In addition, during an expansion, we may incur
significantly increased up-front costs of sale and product manufacture well in
advance of receiving revenue for such product sales. To manage our growth
effectively, we must continue to improve and expand our systems and controls.
If we fail to do so, our growth will be limited and our liquidity and ability
to fund our operations could be significantly strained. Our officers have
limited experience in managing large or rapidly growing businesses. Further, consideration for future acquisitions could be in the form of
cash, common stock, rights to purchase stock, or a combination thereof.
Dilution to existing shareholders, and to earnings per share, may result if
shares of common stock or other rights to purchase common stock are issued in
connection with any future acquisitions. If we lose any of our key personnel or are unable to attract, train or retain
qualified personnel, our business would be harmed. Our success depends, in large part, on the continued contributions of our
key management and other key personnel, many of whom are highly skilled and
would be difficult to replace. In particular, the services of Dr. Stephen
Schwartz, Chairman of our Board of Directors, Chief Executive Officer and
President, who has led our company since August 2002 (and Chairman since
January 2003), are very important to our business. None of our senior
management, key technical personnel or key sales personnel is bound by written
employment contracts to remain with us for a specified period. In addition, we
do not currently maintain key person life insurance covering our key personnel.
The loss of any of our senior management or key personnel could harm our
business. Our success also depends on our ability to attract, train and retain
highly skilled managerial, engineering, sales, marketing, legal and finance
personnel and on the abilities of new personnel to function effectively, both
individually and as a group. Competition for qualified senior employees can be
intense. If we fail to do this, business would be harmed. Moreover, some of the individuals on our management team have been in
their current positions for a relatively short period of time. For example, our
Chief Financial Officer joined us in October 2003, but recently announced his
resignation (to be effective in August 2004), and our Senior Vice
President of Worldwide Manufacturing Operations joined us in May 2004. Our
future success will depend to a significant extent on the ability of our
management team to work effectively together. There can be no assurance that
our management team will be able to integrate and work together effectively. If we account for employee stock options using the fair value method, it could
significantly impact our results from operations. There has been ongoing public debate whether stock options granted to
employees should be treated as a compensation expense and, if so, how to
properly value such charges. On March 31, 2004, the Financial Accounting 29




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Standard Board, or FASB, issued an Exposure Draft, Share-Based Payment: an
amendment of FASB statements No. 123 and 95, which would require a company to
recognize, as an expense, the fair value of stock options and other stock-based
compensation to employees beginning in 2005 and subsequent reporting periods.
If we elect or are required to record an expense for our stock-based
compensation plans using the fair value method as described in the Exposure
Draft, we could have significant and ongoing accounting charges, which could
adversely impact our results from operations. Risks Related to our Industry The semiconductor manufacturing equipment industry is highly cyclical and is
impacted by recurring downturns in the semiconductor industry, and these
cycles can harm our operating results. Our business is largely dependent upon the capital expenditures of
semiconductor manufacturers. Semiconductor manufacturers are dependent on the
then-current and anticipated market demand for semiconductors. The
semiconductor industry is cyclical and has historically experienced periodic
downturns. These periodic downturns, whether the result of general economic
changes or decreases in demand for semiconductors, are difficult to predict and
often have a severe adverse effect on the semiconductor industrys demand for
semiconductor manufacturing equipment. Sales of equipment to semiconductor
manufacturers may be significantly more cyclical than sales of semiconductors,
as the large capital expenditures required for building new fabs or
facilitizing existing fabs is often delayed until semiconductor manufacturers
are confident about increases in future demand. If demand for semiconductor
equipment remains depressed for an extended period, it will seriously harm our
business. Our industry began experiencing a significant downturn in 2000 due to
decreased worldwide demand for semiconductors. During this downturn, most of
our customers reduced capital expenditures, which adversely impacted our
business. Excluding sales of ASI, which was acquired during the third quarter
of fiscal 2003, our net sales declined sequentially in the third and fourth
quarter of fiscal 2003 and again in the first quarter of fiscal 2004. Although
our net sales have increased over the last four quarters, we cannot assure you that our sales will recover sufficiently for us to return to
profitability in the near future. As a result of substantial cost reductions in
response to the decrease in net sales and uncertainty over the timing and
extent of any industry recovery, we may be unable to make the investments in
marketing, research and development and engineering that are necessary to
maintain our competitive position, which could seriously harm our long-term
business prospects. We believe that the cyclical nature of the semiconductor and semiconductor
manufacturing equipment industries will continue, leading to periodic industry
downturns, which may seriously harm our business and financial position. We may not effectively compete in a highly competitive semiconductor
manufacturing equipment industry. The markets for our products are highly competitive and subject to rapid
technological change. We currently face direct competition with respect to all
of our products. A number of competitors may have greater name recognition,
more extensive engineering, research & development, manufacturing, and
marketing capabilities, and substantially greater financial, technical and
personnel resources than those available to us. Brooks Automation, Inc., or Brooks, and TDK Corporation of Japan are our
primary competitors in the area of isolation systems. Our SMART-Traveler System
products face competition from bar code technology as well as from Brooks, and
a number of smaller competitors. We also compete with several companies in the
robotics area, including, but not limited to, Brooks, Newport Corp., Rorze
Corporation and Yasukawa Super Mectronics Division. In the area of AMHS, our
products face competition from Daifuku Co., Ltd., Murata Co., Ltd., and Brooks.
In our FPD business, we compete with Daifuku and Murata. Our wafer sorters
compete primarily with products from Recif, Inc. and Brooks. In addition, the
industry transition to 300mm wafers is likely to draw new competitors to the
facility automation market. In the 300mm wafer market, we expect to face
intense competition from a number of established automation companies such as
Brooks, as well as new competition from semiconductor equipment and cleanroom
construction companies. We expect that our competitors will continue to develop new products in
direct competition with our systems, improve the design and performance of
their products and introduce new products with enhanced performance
characteristics. In order to remain competitive, we need to continue to improve
and expand our product line, which 30




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will require us to maintain a high level of investment in research and
development. Ultimately, we may not be able to make the technological advances
and investments necessary to remain competitive. Companies in the semiconductor capital equipment industry face continued
pressure to reduce costs. Pricing actions by our competitors may require us to
make significant price reductions to avoid losing orders. 
  ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There has not been a material change in our exposure to interest rate and
foreign currency risks since March 27, 2004, the end of our preceding fiscal
year. Interest Rate Risk.Our exposure to market risk for changes in interest
rates relate 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
constantly positioning our portfolio to respond appropriately to a significant
reduction in a credit rating of any investment issuer, guarantor or depository.
The portfolio includes only marketable securities with active secondary or
resale markets to ensure portfolio liquidity. These securities, like all fixed
income instruments, carry a degree of interest rate risk. Fixed rate securities
have their fair market value adversely affected due to rise in interest rates.
If market interest rates were to increase immediately and uniformly by 10
percent from levels at June 30, 2004, the fair market value of these
investments would decline by an immaterial amount. We also have the ability to
keep our fixed income investments fairly liquid. Therefore, we would not
expect our operating results or cash flows to be affected to any significant
degree by a sudden change in market interest rates on our securities 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 U.S. dollars, except in Japan,
thereby reducing our foreign currency risk. To date, the foreign currency
transactions and exposure to exchange rate volatility have not been
significant. If the Japanese Yen were to fluctuate by 10.0 percent from the
level at June 30, 2004, our results of operations may improve or deteriorate in
the range of $5.0 to $6.0 million. Although we do not anticipate any
significant fluctuations, there can be no assurance that foreign currency
exchange risk will not have a material impact on our financial position,
results of operations or cash flow in the future. 
  ITEM 4  CONTROLS AND PROCEDURES Introduction SEC rules define disclosure controls and procedures as controls and
procedures that are designed to ensure that information required to be
disclosed by public companies in the reports filed or submitted under the Act
is recorded, processed, summarized and reported, within the time periods
specified in the SECs rules and forms (Disclosure Controls). SEC rules define internal control over financial reporting as a process
designed by, or under the supervision of, a public companys principal
executive and principal financial officers, or persons performing similar
functions, and effected by the companys board of directors, management and
other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, or GAAP,
including those policies and procedures that: (i) pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of the company, (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that receipts
and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the companys assets that could have a
material effect on the financial statements (Internal Controls). 31




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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. Our CEO and CFO, after
evaluating the effectiveness of our Disclosure Controls as of June 30, 2004,
have concluded that our Disclosure Controls are effective to provide reasonable
assurances that our Disclosure Controls will meet their defined objectives. Changes
in Internal Controls.As previously reported in our
Form 10-K filed for fiscal 2004, during the fourth quarter of fiscal 2004, we instituted procedural changes in our Internal Controls intended to improve the timing and accuracy of reconciliation of certain accounts. During the first quarter of fiscal 2005, we continued to implement these procedural changes. However, we identified no additional change in our Internal Controls
that occurred during the first quarter of fiscal 2005 that has materially affected, or is reasonably likely to materially affect, our Internal Controls. 32




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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 claims, and the
dismissal of defendant Empak pursuant to a settlement agreement. The remaining
patent infringement claims against the remaining parties proceeded to summary
judgment, which was entered against us on June 8, 1999. We thereafter took an
appeal to the United States Court of Appeals for the Federal Circuit. On
October 10, 2001, the Federal Circuit issued a written opinion, Asyst
Technologies, Inc. v. Empak, 268 F.3d 1365 (Fed. Cir. 2001), reversing the
decision of the trial court, and remanding the matter to the trial court for
further proceedings. The case was subsequently narrowed to the 421 patent, and
we sought monetary damages for defendants infringement, equitable relief, and
an award of attorneys fees. On October 9, 2003, the court: (i) granted
defendants motion for summary judgment to the effect that the defendants had
not infringed our patent claims at issue and (ii) directed that judgment be
entered for defendants. We have filed a notice of appeal of both the order and
the entry of judgment against us. The court also denied defendants motion for
judgment as to the invalidity of our asserted patents. Defendants have filed a
notice of appeal as to the courts denial of that motion. From time to time, we are also involved in other legal actions arising in
the ordinary course of business. We have incurred certain costs while defending
these matters. There can be no assurance third party assertions will be
resolved without costly litigation, in a manner that is not adverse to our
financial position, results of operations or cash flows or without requiring
royalty payments in the future which may adversely impact gross margins.
Litigation is inherently unpredictable, and we cannot predict the outcome of
the legal proceedings described above with any certainty. Because of
uncertainties related to both the amount and range of losses in the event of an
unfavorable outcome in the lawsuits listed above or in certain other pending
proceedings for which loss estimates have not been recorded, we are unable to
make a reasonable estimate of the losses that could result from these matters.
As a result, no losses have been accrued for the legal proceedings described
above in our financial statements as of June 30, 2004. 33




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ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. ExhibitNumber
    
    Description of Document3.1(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, 2001.10.44
    
    Employment Agreement between the Company and Warren Kocmond, Jr., dated
April 5, 2004.10.45
    
    Change-in-Control Agreement between the Company and Warren Kocmond,
Jr., dated April 5, 2004.10.46
    
    Severance Agreement and Release of All Claims between the Company and
Frederick Tiso, dated May 19, 2004.10.47
    
    Amended and Restated Loan and Security Agreement between the Company
and Comerica Bank, dated May 15, 2004.31.1
    
    Certification of the Chief Executive Officer required by Rule 13a-14(a).31.2
    
    Certification of the Chief Financial Officer required by Rule 13a-14(a).32.1
    
    Combined Certifications of the Chief Executive Officer and Chief
Financial Officer required by Rule 13a-14(b).
   (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. 34




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(b) Reports on Form 8-K. On May 11, 2004, we furnished a Current Report on Form 8-K under Item 12
reporting our financial results for our fourth fiscal quarter ended March 27,
2004. 35




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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: August 5, 2004
    
    By:
    
    /s/ DAVID L. WHITEDavid L. WhiteSenior Vice President andChief Financial OfficerSigning on behalf of the registrant and as the
principal accounting and financial officer
 36




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EXHIBIT INDEX ExhibitNumber
    
    Description of Document3.1(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, 2001.10.44
    
    Employment Agreement between the Company and Warren Kocmond, Jr., dated April 5, 2004.10.45
    
    Change-in-Control Agreement between the Company and Warren Kocmond, Jr., dated April
5, 2004.10.46
    
    Severance Agreement and Release of All Claims between the Company and Frederick Tiso,
dated May 19, 2004.10.47
    
    Amended and Restated Loan and Security Agreement between the Company and Comerica
Bank, dated May 15, 2004.31.1
    
    Certification of the Chief Executive Officer required by Rule 13a-14(a).31.2
    
    Certification of the Chief Financial Officer required by Rule 13a-14(a).32.1
    
    Combined Certifications of the Chief Executive Officer and Chief Financial Officer
required by Rule 13a-14(b).
   (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.