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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-Q

|                                                  |  |                                                                                         
|------------------------------------------------- |  | ----------------------------------------------------------------------------------------
|(Mark One)                                        |  |                                                                                         
|[X]                                               |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|                                                 
|For the quarterly period ended September 30, 2002
|                                                 
|OR                                               
|[   ]                                             |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                 
|For the transition period from      to           

Commission File number 000-22430

ASYST TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]     No [    ]

The number of shares of the registrants Common Stock, no par value,
outstanding as of October 31, 2002 was 38,361,072.



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TABLE OF CONTENTS



|                               |                                                                                                           |                                                      |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|Part I  FINANCIAL INFORMATION
|                               | Item 1  Financial Statements                                                                            
|                               |                                                                                                           | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                               |                                                                                                           | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
|                               |                                                                                                           | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                               |                                                                                                           | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                               | Item 2  Managements Discussion and Analysis of Results of Financial Condition and Results of Operations
|                               | Item 3  Quantitative and
Qualitative Disclosures About Market Risk                                      
|                               | Item 4  Controls and Procedures                                                                         
|PART II  OTHER INFORMATION   
|                               | Item 1  Legal Proceedings                                                                               
|                               | Item 4. Submission of Matters to a Vote of Security Holders                                              
|                               | Item 6  Exhibits and Reports on Form 8-K                                                                
|SIGNATURES                    
|EXHIBIT INDEX                 
|EXHIBIT 10.38                 
|EXHIBIT 10.39                 
|EXHIBIT 10.40                 
|EXHIBIT 10.41                 
|EXHIBIT 10.42                 
|EXHIBIT 99.1                  
|EXHIBIT 99.2                  



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ASYST TECHNOLOGIES, INC.

INDEX

|                                        |  |         |  |                                                                                                                                     |  |         
|--------------------------------------- |  | ------- |  | ----------------------------------------------------------------------------------------------------------------------------------- |  | --------
|                                        |  |         |  |                                                                                                                                     |  | Page No.
|                                        |  |         |  |                                                                                                                                     |  |         
|Part I.
          Financial Information |  |        
|                                        |  | Item 1. |  | Financial
          Statements                                                                                                      |  |         
|                                        |  |         |  | Condensed
          Consolidated Balance Sheets  September 30, 2002 and March 31,
          2002                                   |  | 3       
|                                        |  |         |  | Condensed
          Consolidated Statements of Operations  Three Months and Six Months
          Ended September 30, 2002 and 2001 |  | 4       
|                                        |  |         |  | Condensed
          Consolidated Statements of Cash Flows  Six Months Ended September 30,
          2002 and 2001                  |  | 5       
|                                        |  |         |  | Notes
          to Condensed Consolidated Financial Statements                                                                      |  | 6       
|                                        |  | Item 2. |  | Managements
          Discussion and Analysis of Financial Condition and Results of Operations                                     |  | 13      
|                                        |  | Item 3. |  | Quantitative
          and Qualitative Disclosures About Market Risk                                                                |  | 29      
|                                        |  | Item 4. |  | Controls
          and Procedures                                                                                                   |  | 29      
|Part II.
          Other Information    |  |        
|                                        |  | Item 1. |  | Legal
          Proceedings                                                                                                         |  | 29      
|                                        |  | Item 4. |  | Submission
          of Matters to a Vote of Security Holders                                                                       |  | 30      
|                                        |  | Item 6. |  | Exhibits
          and Reports on Form 8-K                                                                                          |  | 31      
|Signatures                              |  | 32     
|Certifications                          |  | 32     

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Part I  FINANCIAL INFORMATION




Item 1  Financial Statements




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

|                                     |                                                           |                                            |   |               |         |           |   |          |         | 
|------------------------------------ | --------------------------------------------------------- | ------------------------------------------ | - | ------------- | ------- | --------- | - | -------- | ------- | 
|                                     |                                                           |                                            |   | September 30, |         | March 31,
|                                     |                                                           |                                            |   | 2002          |         | 2002     
|                                     |                                                           |                                            |   |               |         |          
|ASSETS                               |                                                           |                                            |   |               |         |           |   |         
|Current assets:                      |                                                           |                                            |   |               |         |           |   |         
|                                     | Cash and cash equivalents                                 |                                            | $ | 61,604        |         |           | $ | 74,577   |        
|                                     | Restricted cash and cash equivalents                      |                                            |   | 4,228         |         |           |   | 5,052    |        
|                                     | Short-term investments                                    |                                            |   | 14,000        |         |           |   | 5,000    |        
|                                     | Accounts receivable, net                                  |                                            |   | 48,987        |         |           |   | 28,307   |        
|                                     | Inventories                                               |                                            |   | 29,364        |         |           |   | 39,296   |        
|                                     | Deferred tax asset                                        |                                            |   |              |         |           |   | 33,906   |        
|                                     | Prepaid expenses and other                                |                                            |   | 9,970         |         |           |   | 14,618   |        
|                                     |                                                           |                                            |   |               |         |           |   |         
|                                     |                                                           | Total current assets                       |   |               | 168,153 |           |   |          | 200,756 | 
|                                     |                                                           |                                            |   |               |         |           |   |         
|                                     | Property and equipment, net                               |                                            |   | 32,232        |         |           |   | 34,399   |        
|                                     | Deferred tax asset                                        |                                            |   |              |         |           |   | 30,294   |        
|                                     | Goodwill and intangible assets, net                       |                                            |   | 35,677        |         |           |   | 29,901   |        
|                                     | Other assets                                              |                                            |   | 21,742        |         |           |   | 32,180   |        
|                                     | Assets of discontinued operations                         |                                            |   | 15,372        |         |           |   | 16,885   |        
|                                     |                                                           |                                            |   |               |         |           |   |         
|                                     |                                                           | Total assets                               |   | $             | 273,176 |           |   | $        | 344,415 | 
|                                     |                                                           |                                            |   |               |         |           |   |         
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                           |                                            |   |               |         |           |   |         
|Current liabilities:                 |                                                           |                                            |   |               |         |           |   |         
|                                     | Short-term loans and notes payable                        |                                            | $ | 19,389        |         |           | $ | 16,707   |        
|                                     | Current portion of long-term debt and finance leases      |                                            |   | 1,128         |         |           |   | 1,076    |        
|                                     | Accounts payable                                          |                                            |   | 11,504        |         |           |   | 9,193    |        
|                                     | Accrued liabilities and other                             |                                            |   | 36,144        |         |           |   | 46,819   |        
|                                     | Deferred revenue                                          |                                            |   | 6,360         |         |           |   | 4,367    |        
|                                     |                                                           |                                            |   |               |         |           |   |         
|                                     |                                                           | Total current liabilities                  |   |               | 74,525  |           |   |          | 78,162  | 
|                                     |                                                           |                                            |   |               |         |           |   |         
|                                     | Long-term debt and finance leases, net of current portion |                                            |   | 90,257        |         |           |   | 90,331   |        
|                                     | Other long-term liabilities                               |                                            |   | 46            |         |           |   | 6,795    |        
|                                     | Liabilities of discontinued operations                    |                                            |   | 4,327         |         |           |   | 4,190    |        
|                                     |                                                           |                                            |   |               |         |           |   |         
|                                     |                                                           | Total liabilities                          |   |               | 169,155 |           |   |          | 179,478 | 
|                                     |                                                           |                                            |   |               |         |           |   |         
|Shareholders equity:                |                                                           |                                            |   |               |         |           |   |         
|                                     | Common stock                                              |                                            |   | 325,965       |         |           |   | 294,316  |        
|                                     | Accumulated deficit                                       |                                            |   | (221,944      | )       |           |   | (129,379 | )      
|                                     |                                                           |                                            |   |               |         |           |   |         
|                                     |                                                           | Total shareholders equity                 |   |               | 104,021 |           |   |          | 164,937 | 
|                                     |                                                           |                                            |   |               |         |           |   |         
|                                     |                                                           | Total liabilities and shareholders equity |   | $             | 273,176 |           |   | $        | 344,415 | 
|                                     |                                                           |                                            |   |               |         |           |   |         

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

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

|                                                                         |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |        |        |  
|------------------------------------------------------------------------ | -------------------------------------------------------------- | ------------------------ | ------- | ------------------ | ------ | ---------------- | ------- | ------ | ------ | ---- | ------- | ------ | ------ | - | ------- | ------ | ------ | -
|                                                                         |                                                                |                          |         | Three Months Ended |        | Six Months Ended
|                                                                         |                                                                |                          |         | September 30,      |        | September 30,   
|                                                                         |                                                                |                          |         |                    |        |                 
|                                                                         |                                                                |                          |         | 2002               |        | 2001             |         | 2002   |        | 2001
|                                                                         |                                                                |                          |         |                    |        |                  |         |        |        |     
|Net sales                                                                |                                                                | $                        | 72,319  |                    |        | $                | 48,494  |        |        | $    | 124,183 |        |        | $ | 111,830 |       
|Cost of sales                                                            |                                                                |                          | 44,150  |                    |        |                  | 34,394  |        |        |      | 79,459  |        |        |   | 80,352  |       
|                                                                         |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |       
|Gross profit                                                             |                                                                |                          | 28,169  |                    |        |                  | 14,100  |        |        |      | 44,724  |        |        |   | 31,478  |       
|                                                                         |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |       
|Operating expenses:                                                      |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |       
|                                                                         | Research and development                                       |                          |         | 10,058             |        |                  |         | 10,034 |        |      |         | 20,350 |        |   |         | 21,052 |       
|                                                                         | Selling, general and administrative                            |                          |         | 17,346             |        |                  |         | 20,280 |        |      |         | 33,884 |        |   |         | 41,976 |       
|                                                                         | Amortization of acquired intangible assets                     |                          |         | 1,916              |        |                  |         | 2,423  |        |      |         | 3,566  |        |   |         | 3,650  |       
|                                                                         | One-time charges                                               |                          |         | 11,621             |        |                  |         | 1,429  |        |      |         | 11,621 |        |   |         | 20,080 |       
|                                                                         | In-process research and development costs of acquired business |                          |         | (418               | )      |                  |         |       |        |      |         | 2,082  |        |   |         | 2,000  |       
|                                                                         |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |       
|                                                                         |                                                                | Total operating expenses |         |                    | 40,523 |                  |         |        | 34,166 |      |         |        | 71,503 |   |         |        | 88,758 |  
|Operating loss                                                           |                                                                |                          | (12,354 | )                  |        |                  | (20,066 | )      |        |      | (26,779 | )      |        |   | (57,280 | )     
|Other income (expense), net                                              |                                                                |                          | (945    | )                  |        |                  | (594    | )      |        |      | (2,652  | )      |        |   | (563    | )     
|                                                                         |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |       
|Loss from continuing operations before income taxes                      |                                                                |                          | (13,299 | )                  |        |                  | (20,660 | )      |        |      | (29,431 | )      |        |   | (57,843 | )     
|Provision (benefit) for income taxes                                     |                                                                |                          | 62,661  |                    |        |                  | (6,445  | )      |        |      | 58,628  |        |        |   | (19,031 | )     
|                                                                         |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |       
|Loss from continuing operations                                          |                                                                |                          | (75,960 | )                  |        |                  | (14,215 | )      |        |      | (88,059 | )      |        |   | (38,812 | )     
|Loss from discontinued operations, net                                   |                                                                |                          | (2,093  | )                  |        |                  | (4,126  | )      |        |      | (3,453  | )      |        |   | (7,083  | )     
|                                                                         |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |       
|Net loss                                                                 |                                                                | $                        | (78,053 | )                  |        | $                | (18,341 | )      |        | $    | (91,512 | )      |        | $ | (45,895 | )     
|                                                                         |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |       
|Basic and diluted loss per common share:                                 |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |       
|                                                                         |                                                                | Continuing operations    |         | $                  | (2.03  | )                |         | $      | (0.40  | )    |         | $      | (2.38  | ) |         | $      | (1.11  | )
|                                                                         |                                                                | Discontinued operations  |         |                    | (0.05  | )                |         |        | (0.12  | )    |         |        | (0.09  | ) |         |        | (0.20  | )
|                                                                         |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |       
|                                                                         |                                                                | Net loss                 |         | $                  | (2.08  | )                |         | $      | (0.52  | )    |         | $      | (2.47  | ) |         | $      | (1.31  | )
|                                                                         |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |       
|Weighted average number of common shares outstanding  basic
and diluted |                                                                |                          | 37,452  |                    |        |                  | 35,286  |        |        |      | 37,009  |        |        |   | 35,147  |       
|                                                                         |                                                                |                          |         |                    |        |                  |         |        |        |      |         |        |        |   |         |       

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

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

|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |         |         |        |  
|------------------------------------------------------------ | ----------------------------------------------------------------------------------------- | --------------------------------------------------------- | --------------------------------------------------- | ------- | ---------------- | ------ | ------ | ------- | ------- | ------ | -
|                                                             |                                                                                           |                                                           |                                                     |         | Six Months Ended
|                                                             |                                                                                           |                                                           |                                                     |         | September 30,   
|                                                             |                                                                                           |                                                           |                                                     |         |                 
|                                                             |                                                                                           |                                                           |                                                     |         | 2002             |        | 2001  
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |       
|Cash flows from operating activities:                        |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|                                                             | Net loss                                                                                  |                                                           | $                                                   | (91,512 | )                |        | $      | (45,895 | )      
|                                                             |                                                                                           | Less: Loss from discontinued operations                   |                                                     |         | 3,453            |        |        |         | 7,083   |       
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|                                                             | Net loss from continuing operations                                                       |                                                           |                                                     | (88,059 | )                |        |        | (38,812 | )      
|                                                             | Adjustments to reconcile net loss to net cash
provided by (used in) operating activities: |                                                           |                                                     |         |                  |        |        |         |        
|                                                             |                                                                                           | Depreciation and amortization                             |                                                     |         | 9,354            |        |        |         | 9,144   |       
|                                                             |                                                                                           | Employee and non-employee stock compensation              |                                                     |         | 1,608            |        |        |         | 58      |       
|                                                             |                                                                                           | Provision for doubtful accounts                           |                                                     |         | (463             | )      |        |         | 323     |       
|                                                             |                                                                                           | Non-cash charges for restructuring and write-down of land |                                                     |         | 9,840            |        |        |         | 15,000  |       
|                                                             |                                                                                           | In-process research and development costs                 |                                                     |         | 2,082            |        |        |         | 2,000   |       
|                                                             |                                                                                           | Deferred tax asset, net                                   |                                                     |         | 59,432           |        |        |         | (24,471 | )     
|                                                             | Changes in assets and liabilities, net of acquisitions:                                   |                                                           |                                                     |         |                  |        |        |         |        
|                                                             |                                                                                           | Accounts receivable                                       |                                                     |         | (18,754          | )      |        |         | 26,486  |       
|                                                             |                                                                                           | Inventories                                               |                                                     |         | 10,582           |        |        |         | 12,647  |       
|                                                             |                                                                                           | Prepaid expenses and other                                |                                                     |         | 502              |        |        |         | 3,408   |       
|                                                             |                                                                                           | Other assets                                              |                                                     |         | 1,870            |        |        |         | (2,075  | )     
|                                                             |                                                                                           | Accounts payable                                          |                                                     |         | 2,008            |        |        |         | (10,160 | )     
|                                                             |                                                                                           | Accrued liabilities and other                             |                                                     |         | 3,133            |        |        |         | 1,788   |       
|                                                             |                                                                                           | Deferred revenue                                          |                                                     |         | 1,986            |        |        |         | 3,240   |       
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|                                                             |                                                                                           |                                                           | Net cash provided by (used in) operating activities |         |                  | (4,879 | )      |         |         | (1,424 | )
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|Cash flows from investing activities:                        |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|                                                             | Purchase of short-term investments                                                        |                                                           |                                                     | (9,000  | )                |        |        | (18,077 | )      
|                                                             | Sale or maturity of short-term investments                                                |                                                           |                                                     |        |                  |        |        | 3,000   |        
|                                                             | Purchase of restricted cash equivalents and short-term investments                        |                                                           |                                                     | (22,500 | )                |        |        | (53,431 | )      
|                                                             | Sale or maturity of restricted cash equivalents and short-term investments                |                                                           |                                                     | 23,324  |                  |        |        | 61,950  |        
|                                                             | Purchase of property and equipment, net                                                   |                                                           |                                                     | (4,258  | )                |        |        | (6,797  | )      
|                                                             | Net cash used in acquisitions                                                             |                                                           |                                                     |        |                  |        |        | (3,772  | )      
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|                                                             |                                                                                           | Net cash provided by (used in) investing activities       |                                                     |         | (12,434          | )      |        |         | (17,127 | )     
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|Cash flows from financing activities:                        |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|                                                             | Net proceeds (payments) on short-term loans                                               |                                                           |                                                     | 1,259   |                  |        |        | (8,416  | )      
|                                                             | Net proceeds from the issuance of long-term debt and finance leases                       |                                                           |                                                     |        |                  |        |        | 88,068  |        
|                                                             | Net payments on long-term debt and finance leases                                         |                                                           |                                                     | (400    | )                |        |        | 1,790   |        
|                                                             | Issuance of shares of common stock                                                        |                                                           |                                                     | 4,666   |                  |        |        | 2,073   |        
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|                                                             |                                                                                           | Net cash provided by (used in) financing activities       |                                                     |         | 5,525            |        |        |         | 83,515  |       
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|Effect of exchange rate changes on cash and cash equivalents |                                                                                           |                                                           | 617                                                 |         |                  |        |       |        
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|Net cash provided by (used in) continuing operations         |                                                                                           |                                                           | (11,171                                             | )       |                  |        | 64,964 |        
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|Net cash provided by (used in) discontinued operations       |                                                                                           |                                                           | (1,802                                              | )       |                  |        | (3,970 | )      
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|Increase (decrease) in cash and cash equivalents             |                                                                                           |                                                           | (12,973                                             | )       |                  |        | 60,994 |        
|Cash and cash equivalents, beginning of period               |                                                                                           |                                                           | 74,577                                              |         |                  |        | 33,226 |        
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |        
|Cash and cash equivalents, end of period                     |                                                                                           | $                                                         | 61,604                                              |         |                  | $      | 94,220 |        
|                                                             |                                                                                           |                                                           |                                                     |         |                  |        |        |        

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

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

1. ORGANIZATION OF THE COMPANY:

The accompanying condensed consolidated financial statements include the
accounts of Asyst Technologies, Inc. (Asyst or the Company), which was
incorporated in California on May 31, 1984, and its subsidiaries. The Company
designs, develops, manufactures and markets isolation systems, work-in-process
materials management, substrate-handling robotics, automated transport and
loading systems, and connectivity automation software utilized primarily in
clean rooms for semiconductor manufacturing.

In October 2002, the Company purchased a 51% interest in Asyst Shinko,
Inc., a Japanese corporation.

In May 2002, Asyst Connectivity Technologies, Inc., a subsidiary of the
Company (ACT), purchased substantially all of the assets of domainLogix
Corporation, (DLC), a Texas corporation.

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

The above transactions, which were unrelated, were accounted for using the
purchase method of accounting.

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 the Company
considers necessary for the fair presentation of the results of operations for
the interim periods covered and of the financial condition of the Company at
the date of the interim balance sheet. All significant intercompany accounts
and transactions have been eliminated. Certain prior year amounts in the
condensed consolidated financial statements and the notes thereto have been
reclassified where necessary to conform to the quarter ended September 30,
2002. The Company closes its books on the last Saturday of each quarter and
thus the actual date of the quarter-end is usually different from the month-end
dates used throughout this Form 10-Q report. The results for interim periods
are not necessarily indicative of the results for the entire year. The
condensed consolidated financial statements should be read in connection with
the Asyst Technologies, Inc. consolidated financial statements for the year
ended March 31, 2002 included in its Annual Report on Form 10-K. The Advanced
Machine Programming, Inc. (AMP) and SemiFab, Inc. (SemiFab) businesses are accounted for as
discontinued operations and therefore, the results of operations and cash flows
have been removed from the Companys results of continuing operations for all
periods presented (see Note 6).

Restricted Cash and Cash Equivalents

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

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

|                  |                                                  |       |       |               |       |           |       |     |       | 
|----------------- | ------------------------------------------------ | ----- | ----- | ------------- | ----- | --------- | ----- | --- | ----- | 
|                  |                                                  |       |       | September 30, |       | March 31,
|                  |                                                  |       |       | 2002          |       | 2002     
|                  |                                                  |       |       |               |       |          
|                  |                                                  |       |       | (Unaudited)   |       |           |       |    
|Cash              |                                                  | $     | 3,728 |               |       | $         | 4,552 |    
|Cash equivalents: |                                                  |       |       |               |       |           |       |    
|                  | Institutional money market funds debt securities |       | $     | 500           |       |           | $     | 500 |      
|                  |                                                  |       |       |               |       |           |       |    
|                  |                                                  | Total |       | $             | 4,228 |           |       | $   | 5,052 | 
|                  |                                                  |       |       |               |       |           |       |    

Inventories

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Inventories consist
of the following (unaudited, dollars in thousands):

|                                   |       |   |               |        |           |   |        |        | 
|---------------------------------- | ----- | - | ------------- | ------ | --------- | - | ------ | ------ | 
|                                   |       |   | September 30, |        | March 31,
|                                   |       |   | 2002          |        | 2002     
|                                   |       |   |               |        |          
|                                   |       |   | (Unaudited)   |        |           |   |       
|Raw materials                      |       | $ | 19,839        |        |           | $ | 22,492 |       
|Work-in-process and finished goods |       |   | 9,525         |        |           |   | 16,804 |       
|                                   |       |   |               |        |           |   |        |       
|                                   | Total |   | $             | 29,364 |           |   | $      | 39,296 | 
|                                   |       |   |               |        |           |   |        |       

Goodwill and Intangible Assets, net

Goodwill and
intangible assets, net include the following (unaudited, in thousands):

|                                           |       |   |               |        |           |   |        |        | 
|------------------------------------------ | ----- | - | ------------- | ------ | --------- | - | ------ | ------ | 
|                                           |       |   | September 30, |        | March 31,
|                                           |       |   | 2002          |        | 2002     
|                                           |       |   |               |        |          
|                                           |       |   | (Unaudited)   |        |           |   |       
|Purchased technology                       |       | $ | 15,190        |        |           | $ | 11,079 |       
|Customer lists and other intangible assets |       |   | 9,529         |        |           |   | 11,977 |       
|Licenses and patents                       |       |   | 6,862         |        |           |   | 6,845  |       
|Goodwill                                   |       |   | 4,096         |        |           |   |       |       
|                                           |       |   |               |        |           |   |        |       
|                                           | Total |   | $             | 35,677 |           |   | $      | 29,901 | 
|                                           |       |   |               |        |           |   |        |       

The Company adopted Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets, or SFAS 142, in the first quarter of
fiscal 2003. SFAS 142 supersedes Accounting Principles Board Opinion No. 17,
Intangible Assets, and discontinues the amortization of goodwill. In
addition, SFAS 142 includes provisions regarding: 1) the reclassification
between goodwill and identifiable intangible assets in accordance with the new
definition of intangible assets set forth in Statement of Financial Accounting
Standards No. 141, Business Combinations; 2) the reassessment of the useful
lives of existing recognized intangibles; and 3) the testing for impairment of
goodwill and other intangibles.

In accordance with SFAS 142, beginning April 1, 2002, goodwill is no
longer amortized, but is reviewed periodically for impairment. The Company
expects to complete a periodic goodwill impairment test in the third quarter of
fiscal 2003.

Based on criteria set
out in SFAS 142, the Company reclassified $2.1 million of assets previously
classified as intangible assets to goodwill.
Intangible assets subject to amortization are being amortized over the
following estimated useful lives using the straight-line method: purchased
technology, four to eight years; customer lists and other intangible assets,
five to ten years; and licenses and patents, ten years. No changes were made to
the useful lives of amortizable intangible assets in connection with the
adoption of SFAS 142. No transitional impairment was recorded upon
the adoption of SFAS 142. In connection with the DLC acquisition in May 2002, the
Company recorded goodwill of $2.1 million.

Intangible assets were as follows (unaudited, in thousands):

|                               |                                            |       |   |                    |        |                |   |          |        |              |   |        |        |  |   |       |        | 
|------------------------------ | ------------------------------------------ | ----- | - | ------------------ | ------ | -------------- | - | -------- | ------ | ------------ | - | ------ | ------ |  | - | ----- | ------ | 
|                               |                                            |       |   | September 30, 2002 |        | March 31, 2002
|                               |                                            |       |   |                    |        |               
|                               |                                            |       |   | Gross              |        |                |   |          |        | Gross        |   |        |        | 
|                               |                                            |       |   | Carrying           |        | Accumulated    |   | Carrying |        | Accumulated 
|                               |                                            |       |   | Amount             |        | Amortization   |   | Amount   |        | Amortization
|                               |                                            |       |   |                    |        |                |   |          |        |             
|Amortizable intangible assets: |                                            |       |   |                    |        |                |   |          |        |              |   |        |        |  |   |      
|                               | Purchased technology                       |       | $ | 25,322             |        |                | $ | 10,132   |        |              | $ | 18,752 |        |  | $ | 7,673 |       
|                               | Customer lists and other intangible assets |       |   | 14,533             |        |                |   | 5,004    |        |              |   | 17,112 |        |  |   | 5,135 |       
|                               | Licenses and patents                       |       |   | 8,655              |        |                |   | 1,793    |        |              |   | 8,390  |        |  |   | 1,545 |       
|                               |                                            |       |   |                    |        |                |   |          |        |              |   |        |        |  |   |      
|                               |                                            | Total |   | $                  | 48,510 |                |   | $        | 16,929 |              |   | $      | 44,254 |  |   | $     | 14,353 | 
|Unamortized intangible assets: |                                            |       |   |                    |        |                |   |          |        |              |   |        |        |  |   |      
|                               | Goodwill                                   |       | $ | 4,096              |        |                | $ |         |        |              | $ | 5,971  |        |  | $ | 5,971 |       

Amortization expense
was $3.6 million for the six months ended September
30, 2002 and $3.7 million for the six months ended September 30, 2001.

Expected future intangible amortization expense, based on current
balances, for the remainder of fiscal 2003 and for the following fiscal years
is as follows (unaudited,in thousands):

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|              |                   |            |   |       |       | 
|------------- | ----------------- | ---------- | - | ----- | ----- | 
|Fiscal Years: |                   |            |   |      
|              | Remainder of 2003 |            | $ | 3,474 |      
|              | 2004              |            |   | 6,949 |      
|              | 2005              |            |   | 6,949 |      
|              | 2006              |            |   | 4,948 |      
|              | 2007              |            |   | 2,564 |      
|              |                   | Thereafter |   |       | 6,697 | 

To facilitate comparison with prior periods, the following table shows our
results for the six months ended September 30, 2001 and the three fiscal years
ended March 31, 2002, if goodwill was not amortized for those periods
(unaudited; dollars in thousands):

|                                    |  |              |       |              |  |                 |         |                 |  |                 |       |   |  |   |       |  
|----------------------------------- |  | ------------ | ----- | ------------ |  | --------------- | ------- | --------------- |  | --------------- | ----- | - |  | - | ----- | -
|                                    |  |              |       |              |  | Income (Loss)   |         | Basic EPS       |  | Diluted EPS    
|                                    |  |              |       |              |  | From
Continuing |         | From
Continuing |  | From
Continuing
|                                    |  |              |       |              |  | Operations      |         | Operations      |  | Operations     
|                                    |  |              |       |              |  | Excluding       |         | Excluding       |  | Excluding      
|                                    |  | Goodwill     |       | Goodwill     |  | Goodwill        |         | Goodwill       
|Fiscal Period                       |  | Amortization |       | Amortization |  | Amortization    |         | Amortization   
|                                    |  |              |       |              |  |                 |         |                
|Six months ended
September 30, 2001 |  | $            | 399   |              |  | $               | (38,413 | )               |  | $               | (1.09 | ) |  | $ | (1.09 | )
|Fiscal 2002                         |  |              | 1,806 |              |  |                 | (94,102 | )               |  |                 | (2.66 | ) |  |   | (2.66 | )
|Fiscal 2001                         |  |              | 2,009 |              |  |                 | 30,050  |                 |  |                 | 0.92  |   |  |   | 0.86  |  
|Fiscal 2000                         |  |              | 345   |              |  |                 | 10,364  |                 |  |                 | 0.37  |   |  |   | 0.33  |  

Other Assets

The Company owns land in Fremont, California. Initially, the Company leased
the land from a syndicate of financial institutions pursuant to an original
lease agreement dated June 30, 2000 and subsequently amended on February 21,
2001 and May 30, 2001. The Company 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 its
noncancelable commitment to purchase the land, the Company estimated that the
then market value of the land had been impaired and recorded a $15.0 million
write-down to its estimated market value during the quarter ended June 30,
2001. The Company entered into a purchase agreement in September 2002 to sell
the land for net $19 million, which is expected to close in the quarter ending
December 31, 2002. As a result, an additional $7.1 million write-down was
recorded in the quarter ended September 30, 2002.

Revenue Recognition

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

The Company accounts for software revenue in accordance with the American
Institute of Certified Public Accountants Statement of Position 97-2,
Software Revenue Recognition. Revenues for integration software work are
recognized on a percentage of completion basis. Software license revenue, which
is not material to the consolidated financial statements, is recognized when
the software is shipped, payment is due within one year, collectibility is
probable and there are no significant obligations remaining.

Loss Per Share

Basic loss per share is computed using the weighted average number of
actual common shares outstanding, while diluted loss per share is computed
using the weighted average number of common and common equivalent shares
outstanding. Common equivalent shares used in the computation of diluted loss
per share result from the assumed exercise of stock options and warrants, using
the treasury stock method and the conversion of the redeemable convertible
preferred stock. For periods for which there is a net loss, the

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number of shares used in the computation of diluted earnings (loss) per
share is the same as those used for the computation of basic earnings (loss)
per share as the inclusion of dilutive securities would be anti-dilutive.
There were no reconciling items between weighted average outstanding common
stock and shares used in the basic and diluted shares outstanding.

Securities outstanding that were not included in the calculation of diluted net loss per
share, as to do so would be anti-dilutive, consisted of the following
(unaudited, in thousands):

|                                 |       |  |                    |       |                  |  |       |       |      |  |       |       |  |  |       |       | 
|-------------------------------- | ----- |  | ------------------ | ----- | ---------------- |  | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- | 
|                                 |       |  | Three Months Ended |       | Six Months Ended
|                                 |       |  | September 30,      |       | September 30,   
|                                 |       |  |                    |       |                 
|                                 |       |  | 2002               |       | 2001             |  | 2002  |       | 2001
|                                 |       |  |                    |       |                  |  |       |       |     
|Unvested Restricted Stock Grants |       |  | 304                |       |                  |  |      |       |      |  | 304   |       |  |  |      |      
|Stock Options                    |       |  | 1,913              |       |                  |  | 1,674 |       |      |  | 2,524 |       |  |  | 1,809 |      
|Convertible Notes                |       |  | 5,682              |       |                  |  | 5,682 |       |      |  | 5,682 |       |  |  | 5,682 |      
|                                 |       |  |                    |       |                  |  |       |       |     
|                                 | Total |  |                    | 7,899 |                  |  |       | 7,356 |      |  |       | 8,510 |  |  |       | 7,491 | 
|                                 |       |  |                    |       |                  |  |       |       |     

Comprehensive Income

Comprehensive income is defined as the change in equity of a company
during a period from transactions and other events and circumstances excluding
transactions resulting from investments by owners and distributions to owners
and is to include unrealized gains and losses that have historically been
excluded from net income (loss) and reflected instead in equity. The Company
has not had any such transactions or events during the periods, which are
material to the condensed consolidated financial statements. Therefore
comprehensive income (loss) is the same as the net income (loss) reported in
the condensed consolidated financial statements.

New Accounting Standard

In June 2002, the Financial Accounting Standards Board issued SFAS No.
146, Accounting for Exit or Disposal Activities, or SFAS 146. SFAS 146
addresses significant issues regarding the recognition, measurement, and
reporting of costs that are associated with exit and disposal activities,
including restructuring activities that are currently accounted for under EITF
No. 94-3, Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring). The scope of SFAS 146 also includes costs related to
terminating a contract that is not a capital lease and termination benefits
that employees who are involuntarily terminated receive under the terms of a
one-time benefit arrangement that is not an ongoing benefit arrangement or an
individual deferred-compensation contract. SFAS 146 will be effective for exit
or disposal activities that are initiated after December 31, 2002 and early
application is encouraged. The Company will adopt SFAS 146 during the quarter
ending March 31, 2003. The provisions of EITF No. 94-3 shall continue to apply
for an exit activity initiated under an exit plan that met the criteria of EITF
No. 94-3 prior to the adoption of SFAS 146. The effect on adoption of SFAS 146
will change on a prospective basis the timing of when restructuring charges are
recorded from a commitment date approach to when the liability is incurred.

3. ONE-TIME CHARGES:

One-time charges in
the quarter for both the three and six months ended
September 30, 2002 were (unaudited, in thousands):

|                                    |       |   |           |       |            |  |            |       |       |  |       |       |  |   |       |        | 
|----------------------------------- | ----- | - | --------- | ----- | ---------- |  | ---------- | ----- | ----- |  | ----- | ----- |  | - | ----- | ------ | 
|                                    |       |   | Severance |       |            |  |            |       |       |  |       |       |  |   |      
|                                    |       |   | and       |       | Excess     |  | Asset      |       |       |  |      
|                                    |       |   | Benefits  |       | Facilities |  | write-offs |       | Total
|                                    |       |   |           |       |            |  |            |       |      
|Severance related                   |       | $ | 798       |       |            |  |           |       |       |  |      |       |  | $ | 798   |       
|Outsourcing
contractual obligations |       |   | 600       |       |            |  |            |       |       |  |       |       |  |   | 600   |       
|Excess facilities                   |       |   |          |       |            |  | 1,629      |       |       |  |      |       |  |   | 1,629 |       
|Land impairment                     |       |   |          |       |            |  |           |       |       |  | 7,121 |       |  |   | 7,121 |       
|Fixed asset impairments             |       |   |          |       |            |  |           |       |       |  | 1,473 |       |  |   | 1,473 |       
|                                    |       |   |           |       |            |  |            |       |       |  |       |       |  |   |       |       
|                                    | Total |   | $         | 1,398 |            |  | $          | 1,629 |       |  | $     | 8,594 |  |   | $     | 11,621 | 
|                                    |       |   |           |       |            |  |            |       |       |  |       |       |  |   |       |       

The Company incurred one-time charges of $11.6 million in the quarter and
the six months ended September 30, 2002. The charges include severance charges
of $0.8 million for approximately 215 manufacturing and other employees as a
result of workforce reduction measures and $0.6 million
contractual obligations related to our manufacturing outsourcing
agreement signed in September 2002. An additional charge of $1.6 million relates to excess facilities
that the Company has under lease but no longer intends to use as a result of
the manufacturing outsourcing agreement. Other charges include a $7.1 million
write down of land held for sale based on market values and a signed purchase
agreement to sell the land for approximately $19 million, net of selling
expenses, and $1.4 million to write-off abandoned fixed assets that will not be used as
the Company consolidates facilities and integrates certain programs
into a joint venture.

The following table summarizes the Companys utilization of accrued
restructuring expense during the six months ended September 30, 2002
(unaudited; dollars in thousands):

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|                             |  |           |       |            |  |       |       |   |  |   |        |  
|---------------------------- |  | --------- | ----- | ---------- |  | ----- | ----- | - |  | - | ------ | -
|                             |  | Severance |       |            |  |       |       |   |  |  
|                             |  | and       |       | Excess     |  |       |       |  
|                             |  | Benefits  |       | Facilities |  | Total
|                             |  |           |       |            |  |      
|Balance at March 31, 2002    |  | $         | 741   |            |  | $     | 2,432 |   |  | $ | 3,173  |  
|Additional Accruals          |  |           | 1,398 |            |  |       | 1,629 |   |  |   | 3,027  |  
|Non-cash related utilization |  |           | (331  | )          |  |       | (214  | ) |  |   | (545   | )
|Amounts paid in cash         |  |           | (521  | )          |  |       | (817  | ) |  |   | (1,338 | )
|                             |  |           |       |            |  |       |       |   |  |   |        |  
|Balance, September 30, 2002  |  | $         | 1,287 |            |  | $     | 3,030 |   |  | $ | 4,317  |  
|                             |  |           |       |            |  |       |       |   |  |   |        |  

The Company expects
to utilize approximately $2.6 million of the remaining balance
of $4.3 million during the remainder of fiscal 2003 and the remaining balance, primarily unused leased facilities, over the
following three fiscal years.

4. INCOME TAXES:

Statement of Financial Accounting Standards (SFAS) No. 109 Accounting
for Income Taxes (SFAS 109) requires that a valuation allowance be
established when it is more likely than not that all or a portion of deferred
tax assets will not be realized. A review of all available positive and
negative evidence needs to be considered, including a companys performance,
the market environment in which the company operates, the utilization of past
tax credits, length of carryback and carryforward periods and existing
contracts or sales backlog that will result in future profits. It further
states that forming a conclusion that a valuation allowance is not needed is
difficult when there is negative evidence such as cumulative losses in recent
years. Therefore, cumulative losses weigh heavily in the overall assessment. As
a result of current losses, difficult industry conditions and revised
downward future projections, a review was undertaken at
September 30, 2002 and the Company concluded
that it was appropriate to establish a full valuation allowance for its net
deferred tax assets. The valuation allowance for deferred tax assets increased
from $11.9 million at March 31, 2002, to approximately $74.5 million at
September 30, 2002. In addition, the Company expects to continue
to provide a full
valuation allowance on future tax benefits until it can sustain a level of
profitability that demonstrates its ability to utilize the assets.

5. REPORTABLE SEGMENTS:

The Company offers a family of products and related services to provide a
front-end automation and isolation system for wafer handling in semiconductor
manufacturing facilities. All of the Companys activities are aggregated into a
single operating segment. As a result, no operating segment information is
required.

Net sales by geography were as follows (unaudited; dollars in millions):

|                   |       |   |                    |      |                  |   |      |      |      |   |      |       |  |   |      |       | 
|------------------ | ----- | - | ------------------ | ---- | ---------------- | - | ---- | ---- | ---- | - | ---- | ----- |  | - | ---- | ----- | 
|                   |       |   | Three Months Ended |      | Six Months Ended
|                   |       |   | September 30,      |      | September 30,   
|                   |       |   |                    |      |                 
|                   |       |   | 2002               |      | 2001             |   | 2002 |      | 2001
|                   |       |   |                    |      |                  |   |      |      |     
|United States      |       | $ | 26.0               |      |                  | $ | 18.1 |      |      | $ | 48.2 |       |  | $ | 46.4 |      
|Taiwan             |       |   | 18.1               |      |                  |   | 3.4  |      |      |   | 29.1 |       |  |   | 13.0 |      
|Japan              |       |   | 12.1               |      |                  |   | 12.6 |      |      |   | 19.8 |       |  |   | 29.4 |      
|Other Asia/Pacific |       |   | 11.2               |      |                  |   | 6.7  |      |      |   | 17.4 |       |  |   | 9.7  |      
|Europe             |       |   | 4.9                |      |                  |   | 7.7  |      |      |   | 9.7  |       |  |   | 13.3 |      
|                   |       |   |                    |      |                  |   |      |      |      |   |      |       |  |   |      |      
|                   | Total |   | $                  | 72.3 |                  |   | $    | 48.5 |      |   | $    | 124.2 |  |   | $    | 111.8 | 
|                   |       |   |                    |      |                  |   |      |      |      |   |      |       |  |   |      |      

The net sales by product or service categories comprising the Companys
net sales were as follows (unaudited; dollars in millions):

|                       |       |   |                    |      |                  |   |      |      |      |   |      |       |  |   |      |       | 
|---------------------- | ----- | - | ------------------ | ---- | ---------------- | - | ---- | ---- | ---- | - | ---- | ----- |  | - | ---- | ----- | 
|                       |       |   | Three Months Ended |      | Six Months Ended
|                       |       |   | September 30,      |      | September 30,   
|                       |       |   |                    |      |                 
|                       |       |   | 2002               |      | 2001             |   | 2002 |      | 2001
|                       |       |   |                    |      |                  |   |      |      |     
|Equipment Solutions    |       | $ | 28.7               |      |                  | $ | 21.0 |      |      | $ | 49.1 |       |  | $ | 51.0 |      
|Fab Solutions          |       |   | 37.6               |      |                  |   | 22.0 |      |      |   | 63.6 |       |  |   | 53.4 |      
|Connectivity Solutions |       |   | 2.6                |      |                  |   | 2.4  |      |      |   | 4.9  |       |  |   | 3.5  |      
|Other                  |       |   | 3.4                |      |                  |   | 3.1  |      |      |   | 6.6  |       |  |   | 3.9  |      
|                       |       |   |                    |      |                  |   |      |      |      |   |      |       |  |   |      |      
|                       | Total |   | $                  | 72.3 |                  |   | $    | 48.5 |      |   | $    | 124.2 |  |   | $    | 111.8 | 
|                       |       |   |                    |      |                  |   |      |      |      |   |      |       |  |   |      |      

6. DISCONTINUED OPERATIONS:

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In
August, 2002, the Companys Board of Directors approved a plan to
discontinue operations of its AMP and SemiFab subsidiaries. Accordingly, these businesses are being held for sale and
accounted for as discontinued operations and therefore, the results of
operations and cash flows have been reclassified from the Companys results of
continuing operations to discontinued operations for all periods presented. The Company expects the final
sales price to approximate the current carrying value and no impairment
charge or gain has been recorded as a result of the decision to
discontinue the operations. The Company based its decision on an
evaluation of its core business and concluded that AMP and SemiFab were not critical to its long-term
strategy. The Company expects to complete the sale of each business
by March 31, 2003.

Summarized selected financial information for the discontinued operations is as
follows:

|                         |          |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |        |  
|------------------------ | -------- | - | ------------------ | ------ | ---------------- | - | ------ | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | -
|                         |          |   | Three Months Ended |        | Six Months Ended
|                         |          |   | September 30,      |        | September 30,   
|                         |          |   |                    |        |                 
|                         |          |   | 2002               |        | 2001             |   | 2002   |        | 2001
|                         |          |   |                    |        |                  |   |        |        |     
|Net sales                |          | $ | 3,946              |        |                  | $ | 2,521  |        |      | $ | 7,983  |        |   | $ | 6,444  |       
|Loss before income taxes |          |   | (2,093             | )      |                  |   | (5,594 | )      |      |   | (3,907 | )      |   |   | (9,536 | )     
|Income taxes (benefit)   |          |   |                   |        |                  |   | (1,468 | )      |      |   | (454   | )      |   |   | (2,453 | )     
|                         |          |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       
|                         | Net loss |   | $                  | (2,093 | )                |   | $      | (4,126 | )    |   | $      | (3,453 | ) |   | $      | (7,083 | )
|                         |          |   |                    |        |                  |   |        |        |      |   |        |        |   |   |        |       

The assets and liabilities of discontinued operations are stated separately as
of September 30, 2002 on the statement of financial position and consist of:

|                                       |  |                  |        | 
|-------------------------------------- |  | ---------------- | ------ | 
|                                       |  | At September 30,
|                                       |  | 2002            
|                                       |  |                 
|Inventories                            |  | $                | 5,014  | 
|Net property, plant and equipment      |  |                  | 3,938  | 
|Other assets                           |  |                  | 6,420  | 
|                                       |  |                  |        | 
|Assets of discontinued operations      |  | $                | 15,372 | 
|Liabilities of discontinued operations |  | $                | 4,327  | 

7. ACQUISITIONS

ASYST CONNECTIVITY TECHNOLOGIES, INC. (ACT):

In
May, 2002, ACT, a subsidiary of Asyst, purchased substantially all
of the assets of DLC, a developer of next-generation
software for tool communication and a provider of a variety of consulting,
development and integration services to customers. The acquisition
has been accounted for as a purchase of a business. Prior to this acquisition,
the Company owned approximately seven percent of the outstanding shares of DLC.
The results of ACT reflect the acquisition of DLCs assets from the purchase
date. The DLC assets were acquired for $2.2 million of cash, $1.0 million of
liabilities assumed, and 468,796 shares of Asyst common stock valued
at $8.0 million. In addition, there were acquisition costs of
$0.4 million and certain former employees of DLC upon acceptance
of employment with ACT received grants totaling 304,327
shares of Asyst common stock, to vest over four years based on continued
employment with ACT. The stock grants are valued at approximately $5.7 million,
based on their intrinsic value at the date of grant and will be
expensed over the vesting period. Assets acquired include
$768,000 of receivables and $40,000 of fixed assets. The majority of the
purchase price was recorded as goodwill and intangible assets, including
in-process research and development. The Company recorded the value of
intangible assets as follows (unaudited; in thousands):

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

Comparative pro forma information reflecting the acquisition of DLCs
assets has not been presented because the operations of DLC were not material
to the Companys financial statements.

GW ASSOCIATES, INC. (GW)

In
May, 2001 the Company acquired GW, a developer of factory
integration software used by electronics manufacturers, for $3.6 million of
cash, 451,263 shares of the Companys common stock valued at $8.0 million and a
note for $16.0 million. The note was paid in May 2002 using 841,308 shares of
the Companys common stock. The note payable was included in accrued
liabilities and other in the condensed consolidated balance sheet at March 31,
2002. The results of GW have been combined with those of the Company since the
date of acquisition.

Comparative pro forma
information reflecting the acquisition of GW has not been presented
because the operations of GW were not material to the Company's
financial statements.

8. SHORT-TERM LOANS:

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The Company had short-term debt from banks in Japan of Japanese Yen 2,382
million ($19.4 million) and Japanese Yen 2,216 million ($16.7 million) at
September 30, 2002 and March 31, 2002, respectively. As of September 30, 2002,
the interest rate ranged from 1.4 percent to 1.9 percent.

9. RELATED PARTY TRANSACTIONS:

At September 30, 2002 and March 31, 2002, the Company held two notes
receivable from a former executive officer totaling $0.8 million, notes from
two former employees totaling $0.2 million and notes from four current
employees totaling $0.9 million. In all but one case, loans were extended to
these individuals to assist them in their relocation. The
remaining loan was extended in connection with a personal matter.
Approximately $1.4 million of the
notes receivable are secured by deeds of trust on certain real property
and/or pledged securities of the Company owned by the employees and are included
in other assets at September 30, 2002 and March 31, 2002, respectively.

10. LEGAL PROCEEDINGS: subject to update...

In October 1996, the Company filed a lawsuit in the United States District
Court for the Northern District of California against Jenoptik A.G., or
Jenoptik, Jenoptik-Infab, Inc., or Infab, Emtrak, Inc., or Emtrak and Empak,
Inc., or Empak alleging infringement of two patents related to the Companys
SMART Traveler System. The Company amended its Complaint in April 1997 to
allege causes of action for breach of fiduciary duty against Jenoptik and
Meissner & Wurst, GmbH, and misappropriation of trade secrets and unfair
business practices against all defendants. The Complaint seeks damages and
injunctive relief against further infringement. All defendants filed counter
claims, seeking a judgment declaring the patents invalid, unenforceable and not
infringed. Jenoptik, Infab, and Emtrak also alleged that the Company violated
federal antitrust laws and engaged in unfair competition. The Company denied
these allegations. In May 1998, the Company along with Empak stipulated to a
dismissal, without prejudice, of the respective claims and counter claims
against each other. In November 1998, the court granted defendants motion for
partial summary judgment as to most of the patent infringement claims and
invited further briefing as to the remainder. In January 1999, the court
granted the Companys motion for leave to seek reconsideration of the November
summary judgment order and also, pursuant to a stipulation of the parties,
dismissed without prejudice two of the three antitrust counter claims brought
by the defendants. Since then, the parties stipulated to, and the court has
ordered, the dismissal with prejudice of the defendants unfair competition and
remaining antitrust counterclaim, and the Companys breach of fiduciary duty,
misappropriation of trade secrets and unfair business practices claims. On June
4, 1999, the court issued an order by which it granted a motion for
reconsideration in the sense that it considered the merits of the Companys
arguments, but decided that it would not change its prior ruling on summary
judgment and would also grant summary judgment for defendants on the remaining
patent infringement claim. The Company appealed and the trial date has since
been vacated. On October 10, 2001, the appellate court reversed the district
courts decision to grant defendants motion for summary judgement and remanded
the case back to the district court. On July 22, 2002, the Company along with
the remaining defendants stipulated to a dismissal of the respective claims and
counterclaims relating to one of the two patents in suit. On
September 30, 2002, the court held a construction hearing, but
has not yet issued a claims construction ruling. The Company expects
the court to set a trial date after issuance of the ruling.

In July 2002, three former shareholders of SemiFab, Inc., a corporation that
merged with a subsidiary of the Company in February 2001, filed a complaint in
San Benito County Superior Court against the Company claiming breach of
contract, declaratory relief, conversion, constructive trust, and injunctive
relief. The plaintiffs allege that the Company failed to provide sufficient
funding to SemiFab to make specified capital expenditures, as required by the
merger agreement under which SemiFab was acquired. They further allege that
they were entitled to receive approximately 450,000 shares of Company stock on
specified dates. The plaintiffs seek the shares of common stock, plus interest,
attorney fees and other relief. The Company denies that it failed to fulfill
its obligations under the merger agreement. The Company and the plaintiffs
have participated in a mediation hearing, and are in settlement discussions.

In the normal course
of business, the Company is subject to various claims. While the
Company cannot predict the results of litigation and claims with
certainty, the Company believes that the final outcome of these
matters will not seriously harm its business, operating results or
financial condition.

11. SUBSEQUENT EVENTS:

In October 2002, the Company established a previously announced joint
venture with Shinko Electric Co., Ltd. (Shinko), called Asyst Shinko, Inc. The
joint venture develops, manufactures and markets Shinkos market-leading
Automated Materials Handling Systems (AMHS). Under terms of the agreement,
Asyst acquired 51% of the joint venture for approximately $67.4 million of cash
and

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Shinko contributed its entire AMHS business, including intellectual
property and other assets, installed base and approximately 250 employees. The Company
intends to consolidate the financial statements of the joint venture.

The Company has not
finalized its allocation of the purchase price between assets and
liabilities of the joint venture. Preliminary figures, prior to
adjustments from Japanese to United States accounting standards, are:
cash, $15.3 million; receivables, $36.5 million, inventory,
$16.6 million goodwill and intangible assets,
$98.1 million, other assets, $4.8 million; total
liabilities, $39.1 million. Goodwill and intangible assets
include in-process research and development costs that are not yet
estimated and will be expensed in the quarter ended December 31,
2002.

In October 2002, the Company completed a 5-year outsourcing agreement with
Solectron to provide substantially all of the Companys manufacturing services.
As part of the agreement, Solectron purchased approximately
$20.0 million in inventory
from the Company that will be used in the manufacture of the Companys
products. In addition, approximately 180 Asyst employees joined Solectron as
part of the agreement.

In October 2002, the
Company entered into a $25.0 million 2-year revolving
credit agreement (the Credit Facility) with a commercial bank. Borrowings
under the Credit Facility bear interest at a rate indexed to LIBOR. The
Company is also required under the credit facility to maintain compliance with
certain financial tests, including a total leverage ratio and net worth and
liquidity covenants. The terms of the credit agreement contain, among other
provisions, limitations on total debt/leverage levels and net worth and
liquidity covenants.




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

Forward Looking Statements

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

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

ASYST, the Asyst
logo, FLUOROTRAC, KPOD, ADU and MANUFACTURING CONNECTIVITY are
registered trademarks of Asyst Technologies, Inc. or its subsidiaries
in the United States or in other countries. AXYS, Fastrack, Fastmove,
Fastload, Fastore, Asyst-SMIF System, SMIF-Pod, SMIF-FOUP, SMIF-Arms,
SMIF-Indexer, SMIF-LPI, SMIF-LPO, SMIF-LPT, SMIF-E, Versaport, Plus,
Inx, Advan Tag, Link-Manager, Smart-Fab, Smart-Tag, Smart-Station,
Smart-Storage, Smart-Traveler, Smart-Comm, Substrate Management
System, Retical Management System, Wafer Management System, Global
Lot Server and Fluorotrac Auto Id System are trademarks of Asyst
Technologies, Inc or its subsidiaries in the United States or in
other countries. All other brands, products, or service names are or
may be trademarks or service marks of, and are used to identify,
products or services of their respective owners.

Overview

We are a leading provider of integrated automation systems for the
semiconductor and related electronics manufacturing industries. We design
systems that enable semiconductor manufacturers to increase their manufacturing
productivity and protect their investment in silicon wafers during the
manufacture of integrated circuits, or ICs. We sell our systems directly to semiconductor
manufacturers, as well as to original equipment manufacturers, or
OEMs, that integrate our systems with their
equipment for sale to semiconductor manufacturers.

Our sales are tied to capital expenditures at semiconductor fabrication
facilities or fabs, and are cyclical in nature. During the year ended March 31,
2002, the worldwide semiconductor industry continued to suffer from
overcapacity and reduced capital spending in comparison to prior year levels,
continuing an industry downturn that began in the second half of fiscal 2001.
We did experience significant increases in sales during the six months
ended September 30, 2002. However, we do not believe this reflects a sustained
recovery and expect orders and revenue to decline in the quarter ending
December 31, 2002, consistent with declines in the overall semiconductor
capital equipment sector.

We have taken aggressive steps to reduce fixed and variable costs during
this downturn. We reduced our manufacturing facilities in the prior fiscal year
from eight to four. In October 2002, we began transitioning
substantially all of our manufacturing to Solectron Corporation, which we believe will allow us
to have more cost variability in response to revenue fluctuations. We expect
this outsourcing agreement to have a negative gross margin impact over the next
several quarters due to the accelerated depreciation of fixed assets that
Solectron will not use after fiscal 2003, but a positive gross margin impact
beginning in fiscal 2004 and allow us to further consolidate facilities and
better manage costs. We also reduced our workforce from a peak of
approximately 2,000 employees

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to approximately 850 employees after adjusting for the outsourcing to
Solectron and the planned sale of our AMP and
SemiFab subsidiaries. We have continued to eliminate subsidiaries
allowing us to improve our efficiency in general and administrative expenses.

In addition to the changes in the business cycle impacting demand for our
products, we have seen stronger increases in demand for our 200mm products than
our 300mm products. As a result of the downturn, the semiconductor industry
has put more focus on increasing production at 200mm fabs and delaying
construction on newer and more expensive 300mm fabs. We continue to monitor
these trends and adjust our resources to capitalize on these shifts.

During the second
quarter ended September 30, 2002, sales increased 39.4
percent while bookings decreased 35.0 percent sequentially from the first quarter
ended June 30, 2002. Excluding sales by the Asyst Shinko joint
venture, we anticipate a sales decline of approximately 25 to 30
percent in the third quarter of fiscal 2003 compared with the second quarter. Including the joint
venture, we anticipate that sales will increase slightly.

We sell our products principally through a direct sales force worldwide.
In Japan, we use a direct sales force as well as two distributors, one to sell
sorters and the other to sell software. Our functional currency is the U.S.
dollar, except in Japan where our functional currency is the Japanese yen. To
date, the impact of currency translation gains or losses has not been material
to our sales or results of operations.

In August 2002, we approved a plan to discontinue operations in our
AMP and SemiFab subsidiaries.
Accordingly, these businesses are accounted for as discontinued operations and
therefore, the results of operations and cash flows have been
reclassified from our
results of continuing operations to discontinued operations for all periods presented.

Acquisitions

During the fiscal
year ended March 31, 2002 and in fiscal
2003 to date, we acquired the following companies:

In October 2002, we
purchased a 51% interest in Asyst Shinko, Inc. (ASI), a
Japanese corporation.

In May 2002, Asyst Connectivity Technologies, Inc., or ACT, one of our
subsidiaries, purchased the assets of domainLogix Corporation, or DLC, a Texas
corporation. DLC is a developer of software for tool communication and a
provider of a variety of consulting, development and integration services to
its customers.

In May 2001, we acquired GW Associates, Inc., or GW, a California
corporation, a developer of factory integration software used by electronics
manufacturers.

The above transactions were accounted for using the purchase method of
accounting.

The results of operations since the first quarter ended June 30, 2002
include the revenues and expenses of ACT from the date of the acquisition. The results of operations since the first quarter ended June 30,
2001 include the revenues and expenses of GW from the date of
acquisition. Comparative pro forma information reflecting the
acquisitions has not been presented because the operations were not
material to the Company's financial statements.

Three and Six Months Ended September 30, 2002 and 2001

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

|              |  |  |       |                    |  |                  |       |      |  |      |       |   |  |  |       |   |  | 
|------------- |  |  | ----- | ------------------ |  | ---------------- | ----- | ---- |  | ---- | ----- | - |  |  | ----- | - |  | 
|              |  |  |       | Three Months Ended |  | Six Months Ended
|              |  |  |       | September 30,      |  | September 30,   
|              |  |  |       |                    |  |                 
|              |  |  |       | 2002               |  | 2001             |       | 2002 |  | 2001
|              |  |  |       |                    |  |                  |       |      |  |     
|Net sales     |  |  | 100.0 | %                  |  |                  | 100.0 | %    |  |      | 100.0 | % |  |  | 100.0 | %
|Cost of sales |  |  | 61.0  |                    |  |                  | 70.9  |      |  |      | 64.0  |   |  |  | 71.9  |  
|              |  |  |       |                    |  |                  |       |      |  |      |       |   |  |  |       |  

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|                                                    |                                                                |                          |        |      |      |  |       |      |      |  |       |      |      |  |       |      |      | 
|--------------------------------------------------- | -------------------------------------------------------------- | ------------------------ | ------ | ---- | ---- |  | ----- | ---- | ---- |  | ----- | ---- | ---- |  | ----- | ---- | ---- | 
|Gross profit                                        |                                                                |                          | 39.0   |      |      |  | 29.1  |      |      |  | 36.0  |      |      |  | 28.1  |     
|Operating expenses:                                 |                                                                |                          |        |      |      |  |       |      |      |  |       |      |      |  |       |     
|                                                    | Research and development                                       |                          |        | 13.9 |      |  |       | 20.7 |      |  |       | 16.4 |      |  |       | 18.8 |     
|                                                    | Selling, general and administration                            |                          |        | 24.0 |      |  |       | 41.8 |      |  |       | 27.3 |      |  |       | 37.5 |     
|                                                    | Amortization of acquired intangible assets                     |                          |        | 2.7  |      |  |       | 5.0  |      |  |       | 2.9  |      |  |       | 3.2  |     
|                                                    | One-time charges                                               |                          |        | 16.1 |      |  |       | 3.0  |      |  |       | 9.3  |      |  |       | 18.0 |     
|                                                    | In-process research and development costs
of acquired business |                          |        | (0.6 | )    |  |       | 0.0  |      |  |       | 1.7  |      |  |       | 1.8  |     
|                                                    |                                                                |                          |        |      |      |  |       |      |      |  |       |      |      |  |       |     
|                                                    |                                                                | Total operating expenses |        |      | 56.1 |  |       |      | 70.5 |  |       |      | 57.6 |  |       |      | 79.3 | 
|                                                    |                                                                |                          |        |      |      |  |       |      |      |  |       |      |      |  |       |     
|Operating loss                                      |                                                                |                          | (17.1  | )    |      |  | (41.4 | )    |      |  | (21.6 | )    |      |  | (51.2 | )   
|Other income (expense), net                         |                                                                |                          | (1.3   | )    |      |  | (1.2  | )    |      |  | (2.1  | )    |      |  | (0.5  | )   
|                                                    |                                                                |                          |        |      |      |  |       |      |      |  |       |      |      |  |       |     
|Loss
from continuing operations before income taxes |                                                                |                          | (18.4  | )    |      |  | (42.6 | )    |      |  | (23.7 | )    |      |  | (51.7 | )   
|Provision (benefit) for income taxes                |                                                                |                          | 86.6   |      |      |  | (13.3 | )    |      |  | 47.2  |      |      |  | (17.0 | )   
|                                                    |                                                                |                          |        |      |      |  |       |      |      |  |       |      |      |  |       |     
|Net loss from continuing operations                 |                                                                |                          | (105.0 | )    |      |  | (29.3 | )    |      |  | (70.9 | )    |      |  | (34.7 | )   
|                                                    |                                                                |                          |        |      |      |  |       |      |      |  |       |      |      |  |       |     
|Loss from discontinued operations, net              |                                                                |                          | (2.9   | )    |      |  | (8.5  | )    |      |  | (2.8  | )    |      |  | (6.3  | )   
|                                                    |                                                                |                          |        |      |      |  |       |      |      |  |       |      |      |  |       |     
|Net loss                                            |                                                                |                          | (107.9 | )%   |      |  | (37.8 | )%   |      |  | (73.7 | )%   |      |  | (41.0 | )%  
|                                                    |                                                                |                          |        |      |      |  |       |      |      |  |       |      |      |  |       |     

Results of Operations

Net Sales.Net sales in the second quarter ended September 30, 2002
increased 49.1 percent to $72.3 million from $48.5 million in the corresponding
period of the prior year. Net sales for the first six months ended September
30, 2002 increased 11.0 percent to $124.2 million from $111.8 million in the
corresponding period of the prior year.

Capital spending by semiconductor manufacturers, as measured by our new
bookings and net sales, began to decline from its peak levels during the
quarter ended December 31, 2000 and continued to decline each quarter through
the fourth quarter of fiscal 2002. Since the fourth quarter of fiscal 2002,
sales have continued to increase on a quarterly basis through the current
quarter. However, we do not expect this trend to continue as bookings have
declined and, consistent with industry guidance, we are forecasting a decline
in revenue for the quarter ending December 31, 2002, excluding the impact of the Asyst
Shinko joint venture. Despite the increase in sales and some encouraging
market indicators, such as unit shipments of chips, the semiconductor industry
continues to suffer from overcapacity. This overcapacity is expected to
continue to impact future quarters and result in lower sales levels.

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

|                   |       |   |                    |      |                  |   |      |      |      |   |      |       |  |   |      |       | 
|------------------ | ----- | - | ------------------ | ---- | ---------------- | - | ---- | ---- | ---- | - | ---- | ----- |  | - | ---- | ----- | 
|                   |       |   | Three Months Ended |      | Six Months Ended
|                   |       |   | September 30,      |      | September 30,   
|                   |       |   |                    |      |                 
|                   |       |   | 2002               |      | 2001             |   | 2002 |      | 2001
|                   |       |   |                    |      |                  |   |      |      |     
|United States      |       | $ | 26.0               |      |                  | $ | 18.1 |      |      | $ | 48.2 |       |  | $ | 46.4 |      
|Taiwan             |       |   | 18.1               |      |                  |   | 3.4  |      |      |   | 29.1 |       |  |   | 13.0 |      
|Japan              |       |   | 12.1               |      |                  |   | 12.6 |      |      |   | 19.8 |       |  |   | 29.4 |      
|Other Asia/Pacific |       |   | 11.2               |      |                  |   | 6.7  |      |      |   | 17.4 |       |  |   | 9.7  |      
|Europe             |       |   | 4.9                |      |                  |   | 7.7  |      |      |   | 9.7  |       |  |   | 13.3 |      
|                   |       |   |                    |      |                  |   |      |      |      |   |      |       |  |   |      |      
|                   | Total |   | $                  | 72.3 |                  |   | $    | 48.5 |      |   | $    | 124.2 |  |   | $    | 111.8 | 
|                   |       |   |                    |      |                  |   |      |      |      |   |      |       |  |   |      |      

We currently have a single reportable segment. The net sales by our
product groups were as follows (unaudited; dollars in millions):

|                       |  |   |                    |  |                  |   |      |  |      |   |      |  |  |   |      |  | 
|---------------------- |  | - | ------------------ |  | ---------------- | - | ---- |  | ---- | - | ---- |  |  | - | ---- |  | 
|                       |  |   | Three Months Ended |  | Six Months Ended
|                       |  |   | September 30,      |  | September 30,   
|                       |  |   |                    |  |                 
|                       |  |   | 2002               |  | 2001             |   | 2002 |  | 2001
|                       |  |   |                    |  |                  |   |      |  |     
|Equipment Solutions    |  | $ | 28.7               |  |                  | $ | 21.0 |  |      | $ | 49.1 |  |  | $ | 51.0 | 
|Fab Solutions          |  |   | 37.6               |  |                  |   | 22.0 |  |      |   | 63.6 |  |  |   | 53.4 | 
|Connectivity Solutions |  |   | 2.6                |  |                  |   | 2.4  |  |      |   | 4.9  |  |  |   | 3.5  | 

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|      |       |  |     |      |  |  |     |      |  |  |     |       |  |  |     |       | 
|----- | ----- |  | --- | ---- |  |  | --- | ---- |  |  | --- | ----- |  |  | --- | ----- | 
|Other |       |  | 3.4 |      |  |  | 3.1 |      |  |  | 6.6 |       |  |  | 3.9 |      
|      |       |  |     |      |  |  |     |      |  |  |     |       |  |  |     |      
|      | Total |  | $   | 72.3 |  |  | $   | 48.5 |  |  | $   | 124.2 |  |  | $   | 111.8 | 
|      |       |  |     |      |  |  |     |      |  |  |     |       |  |  |     |      

We have experienced strong growth in the Asia Pacific region,
especially in Taiwan and China where we enjoy a strong market position. Net
sales in the second quarter ended September 30, 2002 increased
39.4 percent from
the first quarter ended June 30, 2002, the second consecutive significant
quarter-over-quarter sales increase. However, we do not believe this reflects
a sustained recovery and expect orders and revenue to decline in the quarter
ending December 31, 2002, consistent with declines in the overall semiconductor
capital equipment sector.

300mm products comprised 33.6 percent of our net sales in the second
quarter ended September 30, 2002, compared to 37.9 percent of net sales for the
corresponding period of the prior year. This represents an increase
in net sales of 300mm products of $5.9 million or 29 percent compared with an overall
sales increase of 49.1
percent. The decline in 300mm sales as a percentage of total net sales is due
to a change in the product mix toward 200mm products.

Gross Margin. Gross margin increased to 39.0 percent of net sales for the
second quarter ended September 30, 2002, compared to 29.1 percent of net sales
for the corresponding period of the prior year. Gross margin increased to 36.0
percent of net sales for the six months ended September 30, 2002, compared to
28.1 percent of net sales for the corresponding period of the prior year. The
increase in gross margin as a percentage of net sales was due primarily to
increased capacity utilization from higher sales, changes in the product mix
and cost cutting measures initiated during the fiscal year. These measures
included consolidating manufacturing facilities, reducing manufacturing
headcount and adjusting variable costs to meet current manufacturing volumes.

Changes in the product mix will continue to impact our gross margin since
our 300mm products are very early in their product life cycle and currently have
low margins in comparison to our 200mm products. We have enacted cost reduction
initiatives related to our 300mm products and expect gross margin for these
products to improve. However, we face strong competition on price and features
for these products from existing and new competitors because of the anticipated
size of the emerging 300mm product market.

We believe that gross margin as a percent of sales, excluding the joint
venture, will decrease in the quarter ending December 31, 2002 from the current
quarter due to lower overall sales levels, partially offset by ongoing efforts
to reduce our manufacturing costs. Gross margin will be further impacted by
lower margins at our joint venture and accelerated depreciation of
fixed assets used in our manufacturing operations that have a shortened useful life due to our manufacturing
outsourcing agreement with Solectron. We also continue to monitor and take
steps to reduce inventory levels. Future changes in product mix, net
sales volumes and market competition may also impact our gross margin.

Research and
Development.Research and development expenses, or R&D, remained flat
in absolute dollars at $10 million for the quarter ended September 30, 2002 as
compared to the corresponding period of the prior year. Revenue increased in
the same periods, therefore research and development expenses as a percentage
of sales decreased to 13.9 percent from 20.7 percent. Research and development
expenses for the six months ending September 30, 2002 were $20.4 million or
16.4 percent of revenue as compared to $21.1 million or 18.8 percent of revenue
in the six months ended September 30, 2001. The decrease of $0.7 million or
3.3 percent is due to headcount reductions and other spending cuts during the
past year to reduce expenses in response to declines in our net sales. The
decrease in our research and development expenses was achieved even as we
accelerated efforts on key new products. Our research and development expenses
vary as a percentage of net sales because these expenditures are based on
long-term product development plans targeted toward future revenue
opportunities and we may or may not modify our expenditures levels based on
short-term changes in the actual or anticipated level of net sales. Based on
our short-term outlook of decreased revenues, we will continue to closely
monitor these costs and we expect R&D to decrease modestly in the second half
of fiscal 2003, excluding the impact of the joint venture, as several new
products near release.

Selling, General and Administrative.Selling, general and administrative, or SG&A, expenses for the quarter ended September 30, 2002 were $17.3 million
or 24.0 percent of net sales, compared to $20.3 million or 41.8 percent of net
sales for the corresponding period of the prior year. This represents a decline
of $2.9 million or 14.5 percent for the quarter. SG&A expenses for the six
months ended September 30, 2002 were $33.9 million or 27.3 percent of net
sales, compared to $42.0 million or 37.5 percent of net sales for the
corresponding period of the prior year. We reduced SG&A headcount throughout
fiscal 2002 in response to lower net sales, and have continued to assess and
adjust our headcount and expenses in light of anticipated future net sales. We
implemented several targeted cost reduction initiatives to lower our SG&A
expenses through process improvements and supplier cost reductions. Our SG&A
expenses vary as a percentage of net sales because we do not manage these
expenditures strictly to variations in our level of net sales.

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One-time
Charges. One-time charges in the quarter were (unaudited, in thousands):

| |                                     |  |           |       |            |  |            |       |       |  |   |       |  |  |   |        | 
| | ----------------------------------- |  | --------- | ----- | ---------- |  | ---------- | ----- | ----- |  | - | ----- |  |  | - | ------ | 
| |                                     |  | Severance |       |            |  |            |       |       |  |   |       |  |  |  
| |                                     |  | and       |       | Excess     |  | Asset      |       |       |  |  
| |                                     |  | Benefits  |       | Facilities |  | write-offs |       | Total
| |                                     |  |           |       |            |  |            |       |      
| | Severance related                   |  | $         | 798   |            |  |            |      |       |  |   |      |  |  | $ | 798    | 
| | Outsourcing
contractual obligations |  |           | 600   |            |  |            |      |       |  |   |      |  |  |   | 600    | 
| | Excess facilities                   |  |           |      |            |  |            | 1,629 |       |  |   |      |  |  |   | 1,629  | 
| | Land impairment                     |  |           |      |            |  |            |      |       |  |   | 7,121 |  |  |   | 7,121  | 
| | Fixed asset impairments             |  |           |      |            |  |            |      |       |  |   | 1,473 |  |  |   | 1,473  | 
| |                                     |  |           |       |            |  |            |       |       |  |   |       |  |  |   |       
| | Total                               |  | $         | 1,398 |            |  | $          | 1,629 |       |  | $ | 8,594 |  |  | $ | 11,621 | 
| |                                     |  |           |       |            |  |            |       |       |  |   |       |  |  |   |       

We incurred one-time charges of $11.6 million in the quarter and the six
months ended September 30, 2002. The charges include severance charges of $1.3
million for approximately 215 manufacturing and other employees as a result of
workforce reduction measures and a manufacturing outsourcing agreement. An
additional charge of $1.6 million relates to excess facilities that we have
under lease but no longer intend to use as a result of the manufacturing
outsourcing agreement. Other charges include a $7.1 million write down of land
held for sale based on market values and a signed purchase agreement to sell
the land for approximately $19.0 million net of selling expenses
and $1.5 million
to write-off fixed assets that will not be used as we consolidate facilities
and integrate our AMHS programs with our Shinko.

During the quarter and six months ended September 30, 2001, one-time
charges were $1.4 million and $20.1 million, respectively. During the quarter
ending September 30, 2001 we incurred $1.0 million in severance costs and $0.5
million of write-down of assets related to closure of facilities. The $18.7
million incurred during the quarter ended June 30, 2001 consisted of a $15.0
million impairment of the market value of land held for sale, the impairment of
approximately $2.9 million of engineering costs related to that land and
severance costs of approximately $0.8 million. We own land in Fremont,
California. Initially, we leased the land from a syndicate of financial
institutions pursuant to an original lease agreement dated
June 30, 2000, which was subsequently amended on February 21, 2001 and May 30, 2001. We purchased the
land on October 22, 2001 for $41.1 million, and we paid the syndicate of
financial institutions approximately $2.9 million for engineering costs
incurred in preparation for making leasehold improvements to the land. Based
upon market data at June 30, 2001 and our noncancelable commitment to purchase
the land, we estimated that the then market value of the land had been impaired
and recorded a $15.0 million write-down to its estimated market value during
the quarter ended June 30, 2001. We entered into a purchase agreement in
September 2002 to sell the land for $19.0 million, net of
selling expenses, which is expected to close
in the quarter ending December 31, 2002. As a result, an additional $7.1
million write-down was recorded in the quarter ended September 30, 2002.

The following table summarizes our utilization of accrued restructuring
expense during the six months ended September 30, 2002 (unaudited; dollars in
thousands):

|                             |  |           |       |            |  |       |       |   |  |   |        |  
|---------------------------- |  | --------- | ----- | ---------- |  | ----- | ----- | - |  | - | ------ | -
|                             |  | Severance |       |            |  |       |       |   |  |  
|                             |  | and       |       | Excess     |  |       |       |  
|                             |  | Benefits  |       | Facilities |  | Total
|                             |  |           |       |            |  |      
|Balance at March 31, 2002    |  | $         | 741   |            |  | $     | 2,432 |   |  | $ | 3,173  |  
|Additional accrual           |  |           | 1,398 |            |  |       | 1,629 |   |  |   | 3,027  |  
|Non-cash related utilization |  |           | (331  | )          |  |       | (214  | ) |  |   | (545   | )
|Amounts paid in cash         |  |           | (521  | )          |  |       | (817  | ) |  |   | (1,338 | )
|                             |  |           |       |            |  |       |       |   |  |   |        |  
|Balance, September 30, 2002  |  | $         | 1,287 |            |  | $     | 3,030 |   |  | $ | 4,317  |  
|                             |  |           |       |            |  |       |       |   |  |   |        |  

We expect to utilize
approximately $2.6 million of the remaining balance of approximately $4.3 million
during the remainder of the fiscal year 2003, and the remaining
balance, primarily unused leased facilities, over the following three
fiscal years.

In-process Research and Development Costs of Acquired Business.On May 29,
2002, ACT, a subsidiary of Asyst, purchased substantially all of the assets of
DLC. In connection with the estimated purchase price allocation in the quarter
ended June 30, 2002, $2.5 million was assigned to in-process research and
development costs of acquired business, or IPR&D. We completed our analysis of
the purchase price of DLC in the quarter ended September 30, 2002 and have
adjusted the allocation of IPR&D down to $2.1 million.
IPR&D expenses for the six months ended September 30, 2001
of $2.0 million related to the purchase of GW on May 20,
2001. The amount allocated to
IPR&D was estimated through established valuation techniques in the
high-technology industry and

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was expensed upon acquisition as we determined that the projects had
not reached technological feasibility at the time of our acquisition.

Amortization of Acquired Intangible Assets.Amortization expenses relating
to acquired intangible assets were $1.9 million or 2.6 percent of net sales for
the quarter ended September 30, 2002 and $2.4 million or 5 percent of net sales
for the corresponding period of the prior year. Amortization expenses relating
to acquired intangible assets were $3.6 million for the six months ending
September 30, 2002 as compared to $3.7 million for the six months ended
September 30, 2001. We amortize the acquired intangible assets over periods
ranging from four to ten years. The decrease in the amortization expense is due
mainly to a $22.6 million impairment charge during the fiscal year ended March
31, 2002 that substantially reduced the carrying value of acquired intangible
assets. Additionally, we reclassified intangible assets relating to acquired
workforce to goodwill and stopped amortizing goodwill as a result of
implementation of SFAS 142 during the quarter ended June 30, 2002.

Other Income (Expense), Net.Other income (expense), net, was $(0.9)
million for the quarter ended September 30, 2002, compared to ($0.8) million
for the corresponding period of the prior year. Other income (expense), net,
was $(2.7) million for the six months ended September 30, 2002 compared to
$(0.9) million for the six months ended September 30, 2001. The increase in
the six month period is due primarily to interest expense related to the sale
of $86.3 million of 5 3/4 percent convertible subordinated notes on July 3,
2001.

Benefit for Income Taxes. We recorded an expense for income taxes of $62.7
million and $58.6 million for the quarter and six months ended September 30,
2002, respectively. As a result of the review undertaken at September 30,
2002, we concluded that it was appropriate to establish a full valuation
allowance for our net deferred tax assets. The valuation allowance for
deferred tax assets increased from $11.9 million at March 31, 2002, to
approximately $74.5 million at September 30, 2002. In addition, we expect to
provide a full valuation allowance on future tax benefits until we can sustain
a level of profitability that demonstrates the ability to utilize the assets.
We recorded a benefit for income taxes of $6.4 million and $19.0 million for
the quarter and six months ended September 30, 2001.

Loss From
Discontinued Operations.We announced our intention to divest two
subsidiaries, AMP and SemiFab, in order to allow us to better focus
on our core business. We are actively marketing the subsidiaries for
sale and expect the final sales price to meet or exceed the current
carrying value. The loss from discontinued operations
for the quarter ended September 30, 2002 was $2.1 million, compared to $4.1
million in the same quarter a year ago. The loss from discontinued operations
in the six months ended September 30, 2002 was $3.5 million, compared to $7.1
million in the same period a year ago. The loss from discontinued operations
is lower in both the three and six month periods because of a $37.8 million
impairment charge during the fiscal year ended March 31, 2002 that
substantially reduced the carrying value and amortization expense for
intangible assets.

Liquidity and Capital Resources

Since inception, we have funded our operations primarily through the
private sale of equity securities and public stock offerings, customer
pre-payments, bank borrowings, and long-term debt and cash generated from
operations. As of September 30, 2002, we had approximately $61.6 million in
cash and cash equivalents, $4.2 million in restricted cash equivalents, $14.0
million in short-term investments, $93.6 million in working capital and $90.3
million in long-term debt and finance leases.

Operating activities.Net cash used in operating activities was $4.9
million in the six months ended September 30, 2002, primarily consisting of a
$88.1 million net loss from continuing operations, and a $18.8 million increase
in accounts receivable. These uses of cash were largely offset by a decrease in
the net deferred tax asset of $59.4 million, a decrease in inventory of $10.6
million, non-cash charges for restructuring and write-down of land of $9.8
million, an increase in accounts payable and accrued liabilities and other of
$5.1 million, an increase in deferred revenue of $2.0 million, a decrease in
other assets of $1.9 million and non-cash charges of $13.0 million including
depreciation and amortization, in-process research and development costs and
stock compensation charges. The increases in receivables, accounts payable,
accrued liabilities and deferred revenue reflect substantial sales growth
during the quarter. The decrease in inventory resulted from ongoing efforts to
improve inventory turns as well as increased sales. We expect accounts
receivable to decrease due to lower sales in the next quarter, excluding the
impact of the joint venture. Including the joint venture, we anticipate that
sales will increase slightly.

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Net cash used in operating activities in the six months ended September
30, 2001 was $1.4 million, primarily consisting of a $38.8 million net loss
from continuing operations, a $24.5 million increase in deferred tax asset and
a $10.2 million decrease in accounts payable. These uses of cash were largely
offset by reductions in accounts receivable, inventories and prepaid expenses
of $26.5 million, $12.6 million and $3.4 million respectively, combined with a
$3.2 million increase in deferred revenue and our non-cash charges to net
income including: $9.1 million in depreciation and amortization, $15.0 million
write-down of land held for sale and $2.0 million write-off of purchased
in-process research and development.

Investing activities.Net cash used in investing activities was $12.4
million in the six months ended September 30, 2002, due to net purchases of
short-term investments of $8.2 million and purchases of property and equipment
of $4.3 million.

Net cash used in investing activities during the six months ended
September 30, 2001 was $17.1 million consisting of $6.6 million net purchases
of short-term investments and restricted cash equivalents and short-term
investments, $3.8 million used to acquire AMP, SemiFab and GW and $6.8 million
used to modify our facilities and purchase new equipment and furniture used in
our operations.

Financing activities. Net cash provided by financing activities was $4.9
million for the six month period ended September 30, 2002, due mainly to net
proceeds from short- and long-term borrowing of $1.2 million and $4.7 million
from stock issuances under our employee stock programs.

Net cash provided by financing activities of $83.5 million for the six
months ended September 30, 2001, consisted of net proceeds of
$82.9 million from the sale of 5 3/4 percent convertible subordinated notes, $1.6 million from the issuance of new long-term debt with a
Japanese bank and proceeds from the issuance of common stock through our
employee stock programs of $2.1 million. These provisions were partially offset by net
payments of $8.4 million on short-term loans.

Subsequent to September 30, 2002, the following three transactions
impacted our liquidity. We completed an agreement with Solectron to outsource
our manufacturing. As part of the agreement, Solectron purchased approximately
$20.0 million in inventory from us that will be used in the
manufacturing of our products. Under circumstances detailed in our
agreement with Solectron, we may be
required to buy back a portion of the inventory. We entered into a
$25.0 million
2-year revolving credit agreement with a commercial bank. As part of this
agreement, we are required to maintain compliance with certain financial tests,
including a total leverage ratio and net worth and liquidity covenants. We
acquired a 51% interest in a new joint venture company, Asyst-Shinko, to
develop, manufacture and market Automated Materials Handling Systems (AMHS) for
approximately $67.4 million in cash.

We continue to take measures to strengthen our cash balance by selling
assets that do not enhance our core business. We have signed a purchase
agreement to sell land we own, which is in the due diligence process and is
expected to close in December 2002. We are also marketing for sale two
subsidiaries that have been accounted for as discontinued operations
in the accompanying financial statements.

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

We will, from time to time, continue to evaluate acquisitions or
investments in other businesses, technologies or product lines. Our ability to
fund these transactions with cash is restricted under the terms of the 2-year
revolving credit agreement.

We anticipate that operating expenses will constitute a material use of
our cash resources. The cyclical nature of the semiconductor industry makes it
very difficult for us to predict future liquidity requirements with 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 at least September 2003.

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. These financings may not be available to us on a timely
basis if at all or, if available, on terms acceptable to us and not dilutive to
our shareholders. If we fail to obtain acceptable additional financing, we may
be required to reduce planned expenditures or forego investments, which could
reduce our revenues, increase our losses, and harm our business.

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New Accounting Pronouncement

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

Risk Factors

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

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

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

The industry is currently experiencing a significant downturn due to
decreased worldwide demand for semiconductors from peak levels reached in 2000.
During this downturn, most of our customers have reduced capital expenditures,
which has adversely impacted our business. Our net sales declined 70.8% from
their peak in the third quarter of fiscal 2001 to the third quarter of fiscal
2002. We cannot assure you that our sales will recover sufficiently for us to
return to profitability in the near future. As a result of 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 continue to invest in
marketing, research and development and engineering at the levels we believe
are necessary to maintain our competitive position. Our failure to make these
investments could seriously curtail our long-term business prospects.

We believe that our future performance will continue to be affected by the
cyclical nature of the semiconductor industry and, as a result, be adversely
affected by such industry downturns.

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

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

During a downturn, our ability to quickly reduce our production costs is
impaired by our projections of manufacturing costs and inventory incurred. If
market demand does not match our projections, we will have to carry or write
off excess and obsolete inventory and our gross margins will decline which, in
turn, prevents us from operating profitably. For example, we incurred an
inventory

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reserve in the quarter ended December 31, 2001 of $12.8 million associated with
additional inventory reserves for obsolete and excess inventory. This inventory
accumulated largely due to the steep decline in demand for our products.
Furthermore, if we do not accurately predict the appropriate demand for our
200mm and 300mm automation products, this will increase the burden of excess
and obsolete inventory.

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

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

The gross margins on our 300mm products currently are not as favorable as
on our 200mm products. This is primarily because our 300mm products are early
in their production life, we face increased competition for our products and we
sell a greater percentage of our 300mm products directly to OEMs rather than IC
manufacturers.

The 300mm market is still relatively new. Manufacturing costs are
generally higher in the early stages of new product introduction and decrease
as demand increases, due to better economies of scale and efficiencies
developed in the manufacturing processes. However, we cannot assure you that we
will see such economies of scale and efficiencies in our future manufacturing
of 300mm products. We face increased competition for our 300mm products because
of the larger revenue opportunity for 300mm products and because of the
establishment of a front-opening unified pod interface standard. While IC
manufacturers purchased a majority of 200mm automation products, OEM
manufacturers are purchasing a higher percentage of tool automation products
for 300mm. OEMs can generally command lower prices from us and from their other
vendors because of the larger market opportunity they provide.

These and other factors may prevent us from achieving or maintaining the
same relative pricing and gross margin performance on 300mm products as we
achieved on 200mm products. Lower margins will result in decreased
profitability or require further cost reductions to achieve historical profit
levels.

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

The markets in which we sell our products are comprised of a relatively
small number of OEMs and semiconductor manufacturers. Large orders from a
relatively small number of customers account for a significant portion of our
revenue and makes our relationship with each customer critical to our business.
We may not be able to retain our largest customers or attract additional
customers, and our OEM customers may not be successful in selling our systems.
Our success will depend on our continued ability to develop and manage
relationships with significant customers. In addition, our customers have in
the past sought price concessions from us and may continue to do so in the
future, particularly during downturns in the semiconductor market. Further,
some of our customers may in the future shift their purchases of products from
us to our competitors. Additionally, the inability to successfully develop
relationships with additional customers or the need to provide future price
concessions would have a negative impact on our business.

If we are unable to collect a receivable from a large customer, our
financial results will be negatively impacted. In addition, since each customer
represents a significant percentage of net sales, the timing of the completion
of an order can lead to a fluctuation in our quarterly results. As we complete
projects for a customer, business from that customer will decline substantially
unless it undertakes additional projects incorporating our products.

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

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

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

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



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

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

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

We have invested, and are continuing to invest, substantial resources to
develop new systems and technologies to automate the processing of 300mm
wafers. However, the timing of the industrys transition from the current,
widely used 200mm manufacturing technology to 300mm manufacturing technology is
uncertain, partly as a result of the recent period of reduced demand for
semiconductors. Delay in the adoption of 300mm manufacturing technology could
adversely affect our potential revenue.

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

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

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

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

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

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

In an effort to focus on core competencies and reduce the impact of
cyclical peaks and troughs on our operating results, we have outsourced the
manufacturing of some of our products. Based on our outsourcing agreement with
Solectron we will rely more heavily on outsourced manufacturing in the future.
Outsourced manufacturing could create disruptions in the availability of our
products if the timeliness or quality of products delivered does not meet our
requirements. These problems could be caused by a number of factors including,
but not limited to: manufacturing process flow issues, financial viability of
an outsourced vendor, availability of raw materials to the outsourced vendor,
improper product specifications, and the learning curve to commence
manufacturing at a new outsourced site. If products are delayed because of
problems in outsourcing we may lose sales and profits.

We currently outsource the manufacturing of our SMART-Traveler System to
Paramit Corporation of Morgan Hill, California, and our wafer and reticle
carriers to Moll Corporation of Newberg, Oregon. We have experienced delays due
to financial difficulties at Moll Corporation. This negatively impacted our
ability to increase production in response to market demand. Moll Corporation
lacked the working capital resources to maintain an inventory of raw materials,
and we therefore purchased inventory on their behalf to assure continuity of
production.

In September 2002, we made the decision to consolidate our outsourcing
activities with Solectron, which will result in transitioning
production of our wafer and reticle carriers from Moll to Solectron. Following
this transition, Solectron will exclusively manufacture most of our products.
If our agreement with Solectron terminates or if Solectron does not perform its
obligations under our agreement, it could take several months to establish
alternative manufacturing for these products and we may not be able to fulfill
our customers orders for most of our products in a timely manner. If our
agreement with Solectron terminates, we may be unable to find another suitable
external manufacturer.

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

We may not be able to secure additional financing to meet our future capital
needs.

We currently anticipate that our available cash resources, which include
existing cash and cash equivalents, short-term investments, cash generated from
operations and other existing sources of working capital will be sufficient to
meet our anticipated needs for working capital and capital expenditures through
at least September 2003. If we are unable to generate sufficient cash flows
from operations to meet our anticipated needs for working capital and capital
expenditures we may need to raise additional funds to develop new or enhanced
products, respond to competitive pressures or make acquisitions. We may be
unable to obtain any required additional financing on terms favorable to us, if
at all. If adequate funds are not available on acceptable terms, we may be
unable to fund our expansion, successfully develop or enhance products, respond
to competitive pressures or take advantage of acquisition opportunities, any of
which could have a material adverse effect on our business. We may pursue
additional funds to support our working capital and operating expense
requirements or for other purposes. We may pursue these additional funds
through public or private debt or equity financings. 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. We have guaranteed AJIs unsecured loans from banks and secured
bonds with interest rates ranging between 1.4 percent to 1.9 percent per annum.
This strain on our capital resources could adversely affect our business.

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

The $25 million credit facility we entered into in October 2002 limits,
and in some circumstances prohibits, without agreement from our lender,
Comerica, our ability to:



| |  |  | incur additional indebtedness;                                       
| | - |  | ---------------------------------------------------------------------
|
| |  |  | pay dividends and make distributions in respect of our capital stock;
|
| |  |  | redeem capital stock;                                                

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| |  |  | make investments or other restricted payments;          
| | - |  | --------------------------------------------------------
|
| |  |  | engage in transactions with stockholders and affiliates;
|
| |  |  | create liens;                                           
|
| |  |  | sell or otherwise dispose of assets;                    
|
| |  |  | make payments on our subordinated debt; and             
|
| |  |  | engage in mergers and acquisitions.                     

We are also required under the credit facility to maintain compliance with
certain financial tests, including a total leverage ratio and net worth and
liquidity covenants. We may not be able to maintain these ratios. Covenants in
the credit facility may also impair our ability to expand or pursue our
business strategies. Our ability to comply with these covenants and other
provisions of the credit facility may be affected by our operating and
financial performance, changes in business conditions or results of operations,
adverse regulatory developments or other events beyond our control. In
addition, if we do not comply with these covenants, we may be required to
negotiate new terms and conditions with our lender, or the lender may
accelerate our debt under the credit facility. New terms and conditions could
be more restrictive than under the current credit facility. If the indebtedness
under the credit facility is accelerated, we may be required to repay all
outstanding indebtedness in full. This would reduce our available cash
balances, or we may need to raise cash by selling certain assets at levels
below what we believe to be fair market value, which we may not be able to do.
Any of these scenarios could have an adverse impact on our operating or
financial performance or could impair our ability to expand or pursue our
business strategies.

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

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

The markets for our products are highly competitive and subject to rapid
technological change. We currently face direct competition with respect to all
of our products. In addition, the facility automation market has periods of
rapid consolidation. Some of our competitors, especially following
consolidation, may have greater name recognition, more extensive engineering,
manufacturing and marketing capabilities and substantially greater financial,
technical and personnel resources than those available to us.

Brooks-PRI Automation, Inc, is our primary competitor in the area of
isolation systems. Our SMART-Traveler System products face competition from bar
code technology as well as a number of smaller competitors. We compete
primarily with Entegris, Inc. in the area of wafer carriers. We also compete
with several companies in the robotics area, including, but not limited to,
Brooks-PRI Automation, Kensington Labs, now part of Newport Corp., Rorze
Corporation and Yaskawa Super Mectronics Division. In the area of AMHS, our
products face competition from Daifuku Co., Ltd., Murata Co., Ltd., and
Brooks-PRI Automation. Our wafer and reticle sorters compete primarily with
products from Recif, Inc. and Brooks-PRI Automation.

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

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

New products developed by our competitors or more efficient production of
their products could increase pricing pressure on our products. In addition,
companies in the semiconductor capital equipment industry have been facing
pressure to reduce costs. Either of these factors may require us to make
significant price reductions to avoid losing orders. Further, our current and
prospective customers continuously exert pressure on us to lower prices,
shorten delivery times and improve the capabilities of our products. Failure to
respond adequately to such pressures could result in a loss of customers or
orders.

We may not be able to efficiently integrate the operations of our acquisitions.

We have made and may continue to make additional acquisitions of, or
significant investments in, businesses that offer complementary products,
services, technologies or market access. Our recent acquisitions include
Progressive Systems Technologies, Inc., Palo Alto Technologies, Inc.,
AMP, SemiFab, GW, MECS, DLC and our 51 percent ownership in
the Asyst Shinko joint venture. We subsequently merged MECS into Asyst Japan,
Inc., or AJI.

We are likely to make additional acquisitions of, or significant
investments in, businesses that offer complementary products, services,
technologies or market access. For example, in May 2002, we completed the asset
purchase from DLC and, in October 2002, completed
an agreement with Shinko Electric for a joint venture. If we are to realize the
anticipated benefits of past and future acquisitions, the operations of such
companies must be integrated and combined efficiently with those of Asyst. The
process of integrating supply and distribution channels, computer and
accounting systems and other aspects of operations, while managing a larger
entity, has in the past and will continue to present a significant challenge to
our management. In addition, it is not certain that we will be able to
incorporate different technologies into our integrated solution. We may not
succeed with the integration process nor may we fully realize the anticipated
benefits of the business combinations. We may be required to record significant
future impairment costs, such as the $22.6 million charge recorded in fiscal
2002, in the event that the carrying value exceeds the fair value of acquired
intangible assets. The dedication of management resources to such integration
may detract attention from the day-to-day business, and we may need to hire
additional management personnel to successfully rationalize our acquisitions.
The difficulties of integration may increase because of the necessity of
combining personnel with disparate business backgrounds and combining different
corporate cultures. We may incur substantial costs associated with these
activities and we may suffer other material adverse effects from these
integration efforts which could materially reduce our short-term earnings.
Consideration for future acquisitions could be in the form of cash, common
stock, rights to purchase stock or a combination thereof. Dilution to existing
shareholders and to earnings per share may result to the extent that shares of
common stock or other rights to purchase common stock are issued in connection
with any future acquisitions.

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

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

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

There has been substantial litigation regarding patent and other
intellectual property rights in semiconductor-related industries. Litigation
may be necessary to enforce our patents, to protect our trade secrets or know
how, to defend Asyst against claimed

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infringement of the rights of others or to determine the scope and validity of
the patents or intellectual property rights of others. Any litigation could
result in substantial cost to us and divert the attention of our management,
which by itself could have an adverse material effect on our financial
condition and operating results. Further, adverse determinations in any
litigation could result in our loss of intellectual property rights, subject us
to significant liabilities to third parties, require us to seek licenses from
third parties or prevent us from manufacturing or selling our products. Any of
these effects could have a negative impact on our financial condition and
results of operations.

Because of intense competition for highly skilled personnel, we may not be able
to recruit and retain necessary personnel.

Our future success will depend in large part upon our ability to recruit
and retain highly skilled technical, manufacturing, managerial, financial and
marketing personnel. Our future performance depends substantially on the
continued service of our senior management team. We do not have long term
employment agreements with any of our senior management team, except Mihir
Parikh, our Chairman of the Board, and we do not maintain any key-man life
insurance policies.

Due to the cyclical nature of the demand for our products, we have had to
reduce our workforce and then rebuild our workforce as our business has gone
through cyclical peaks and troughs. The labor markets in which we operate are
highly competitive and as a result, this type of employment cycle increases our
risk of not being able to retain and recruit key personnel.

If we are unable to recruit or retain key personnel, we may not have
enough personnel to promptly return to peak production levels. If we are unable
to expand our existing or outsourced manufacturing capacity to meet demand, a
customers placement of a large order for the development and delivery of
factory automation systems during a particular period might deter other
customers from placing similar orders with us for the same period. It could be
difficult for us to rapidly recruit and train the substantial number of
qualified engineering and technical personnel who would be necessary to fulfill
one or more large, unanticipated orders. A failure to retain, acquire or
adequately train key personnel could have a material adverse impact on our
performance.

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

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



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

The sales cycle to
new customers ranges from 6 to 12 months from
initial inquiry to placement of an order, depending on the complexity of the
project. This extended sales cycle makes the timing of customer orders uneven
and difficult to predict. A significant portion of the net sales in any quarter
is typically derived from a small number of long-term, multi-million dollar
customer projects involving upgrades of existing facilities or the construction
of new facilities. Generally, our customers may cancel or

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reschedule shipments with limited or no penalty. These factors increase the
risk of unplanned fluctuations in net sales. Moreover, a shortfall in net sales
in a quarter as a result of these factors could negatively impact our operating
results for the quarter. Given these factors, we expect quarter to quarter
performance to fluctuate for the foreseeable future. In one or more future
quarters, our operating results are likely to be below the expectations of
public market analysts and investors, which may cause our stock price to
decline.

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

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

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

A significant portion of our net sales are attributable to sales outside
the United States, primarily in Taiwan, Japan, China, Singapore and Europe. We
expect that international sales will continue to represent a significant
portion of our total revenue in the future. This concentration increases our
exposure to any risks in this area. Sales to customers outside the United
States are subject to various risks, including:



| |  |  | exposure to currency fluctuations;                                                                                                     
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the imposition of governmental controls;                                                                                               
|
| |  |  | the laws of certain foreign countries may not protect our intellectual
property to the same extent as do the laws of the United States;
|
| |  |  | the need to comply with a wide variety of foreign and U.S. export laws;                                                                
|
| |  |  | political and economic instability;                                                                                                    
|
| |  |  | trade restrictions;                                                                                                                    
|
| |  |  | changes in tariffs and taxes;                                                                                                          
|
| |  |  | longer payment cycles typically associated with foreign sales;                                                                         
|
| |  |  | the greater difficulty of administering business overseas; and                                                                         
|
| |  |  | general economic conditions.                                                                                                           

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

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

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Any kind of economic instability in Taiwan and Japan or other parts of
Asia where we do business can have a severe negative impact on our operating
results due to the large concentration of our sales activities in this region.
For example, during 1997 and 1998, several Asian countries, including Taiwan
and Japan, experienced severe currency fluctuation and economic deflation,
which negatively impacted our revenues and also negatively impacted our ability
to collect payments from customers. During this period, the lack of capital in
the financial sectors of these countries made it difficult for our customers to
open letters of credit or other financial instruments that are guaranteed by
foreign banks. The economic situation during this period exacerbated a decline
in selling prices for our products as our competitors reduced product prices to
generate needed cash. Although we invoice a majority of our international sales
in United States dollars, for sales in Japan, we invoice our sales in Japanese
yen. Future changes in the exchange rate of the U.S. dollar to the Japanese yen
may adversely affect our future results of operations.

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

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

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

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

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

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

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

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



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

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

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

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

Arthur Andersen LLP was previously our independent accountant.
Representatives for Arthur Andersen LLP are not available to provide the
consents required for the inclusion of their report on our consolidated
financial statements for the years ended March 31, 2001 and 2000, and we have
dispensed with the requirement to file their consent in reliance upon Rule 437a
of the Securities Act of 1933. Because Arthur Andersen LLP has not consented to
the inclusion of their reports incorporated by reference into this prospectus,
you will not be able to recover against Arthur Andersen LLP under Section 11 of
the Securities Act of 1933 for any untrue statements of a material fact
contained in the financial statements audited by Arthur Andersen LLP that are
incorporated by reference or any omissions to state a material fact required to
be stated therein.




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 the date
of our 2001 Form 10-K, as amended.

Interest Rate Risk.   Our
exposure to market risk for changes in interest rates relate
primarily to the investment portfolio. We do not use derivative
financial instruments in our investment portfolio. Our investment
portfolio consists of short-term fixed income securities and by
policy is limited by the amount of credit exposure to any one issuer.
As stated in our investment policy, we ensure the safety and
preservation of our invested principal funds by limiting default risk,
market risk and reinvestment risk. We mitigate default risk by
investing in safe and high-credit quality securities and by
constantly positioning our portfolio to respond appropriately to a
significant reduction in a credit rating of any investment issuer,
guarantor or depository. Our 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
rises in interest rates.

Foreign Currency Exchange
Risk.   We engage in international operations and
transact business in various foreign countries. The primary foreign
currency cash flows are located in Japan, Europe, Singapore and
Taiwan. We have approximately $26.2 million in short-term and
long-term debt and finance leases denominated in Japanese Yen.
Although we and our subsidiaries operate and sell products in various
global markets, substantially all sales are denominated in the U.S.
dollar, except in Japan, therefore reducing the foreign currency risk
factor. In March 2001, we began to employ a foreign currency hedge
program utilizing foreign currency forward exchange contracts in
Japan. To date, the foreign currency transactions and exposure to
exchange rate volatility have not been significant. There can be no
assurance that foreign currency risk will not have a material impact
on our financial position, results of operations or cash flow in the
future.




Item 4  Controls and Procedures

(a)   Under
the supervision and with the participation of our management,
including our principal executive officer and principal financial
officer, we conducted an evaluation of our disclosure controls and
procedures, as such term is defined under Rule 13a-14(c)
promulgated under the Securities Exchange Act of 1934, as amended,
within 90 days of the filing date of this report. Based on their
evaluation, our principal executive officer and principal accounting
officer concluded that Asyst's disclosure controls and procedures are
effective.

(b)   There have been no significant
changes, including corrective actions with regard to significant
deficiencies or material weaknesses, in our internal controls or in
other factors that could significantly affect these controls
subsequent to the date of the evaluation referenced in
paragraph (a) above.




PART II  OTHER INFORMATION




Item 1  Legal Proceedings

In October 1996, we filed a lawsuit in the United States District Court
for the Northern District of California against Jenoptik A.G., or Jenoptik,
Jenoptik-Infab, Inc., or Infab, Emtrak, Inc., or Emtrak and Empak, Inc., or
Empak alleging infringement of two patents related to our SMART Traveler
System. We amended its Complaint in April 1997 to allege causes of action for
breach of fiduciary duty against Jenoptik and Meissner & Wurst, GmbH, and
misappropriation of trade secrets and unfair business practices against all
defendants. The Complaint seeks damages and injunctive relief against further
infringement. All defendants filed counter claims, seeking a judgment declaring
the patents invalid, unenforceable and not infringed. Jenoptik, Infab, and
Emtrak also alleged that we violated federal antitrust laws and engaged in
unfair competition. We denied these allegations. In May 1998, we along with
Empak stipulated to a dismissal, without prejudice, of the respective claims
and counter claims against each other. In November 1998, the court granted
defendants motion for partial summary judgment as to most of the patent
infringement claims and invited further briefing as to the remainder. In
January 1999, the court granted our motion for leave to seek reconsideration of
the November summary judgment order and also, pursuant to a stipulation of the
parties, dismissed without prejudice two of the three antitrust counter claims
brought by the defendants. Since then, the parties stipulated to, and the court
has ordered, the dismissal with prejudice of the defendants unfair competition
and remaining antitrust counterclaim, and our breach of fiduciary duty,
misappropriation of trade secrets and unfair business practices claims. On June
4, 1999, the court issued an order by which it granted a motion for

29



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reconsideration in the sense that it considered the merits of our
arguments, but decided that it would not change its prior ruling on summary
judgment and would also grant summary judgment for defendants on the remaining
patent infringement claim. We appealed and the trial date has since been
vacated. On October 10, 2001, the appellate court reversed the district courts
decision to grant defendants motion for summary judgement and remanded the
case back to the district court. On July 22, 2002, we along with the remaining
defendants stipulated to a dismissal of the respective claims and counterclaims
relating to one of the two patents in suit. On September 30,
2002, the court held a claims construction hearing, but has not yet
issued a claims construction ruling. We expect the court to set a
trial date after issuance of the ruling.

In July 2002, three former shareholders of SemiFab, Inc., a corporation that
merged with a subsidiary of ours in February 2001, filed a complaint in San
Benito County Superior Court against us claiming breach of contract,
declaratory relief, conversion, constructive trust, and injunctive relief. The
plaintiffs allege that we failed to provide sufficient funding to SemiFab to
make specified capital expenditures, as required by the merger agreement under
which SemiFab was acquired. They further allege that they were entitled to
receive approximately 466,000 shares of our stock on specified dates. The
plaintiffs seek the shares of common stock, plus interest, attorney fees and
other relief. We deny that we failed to fulfill our obligations under the
merger agreement. We responded to the complaint in August 2002. We have
participated with the plaintiffs in a mediation hearing, and are in settlement
discussions.

In the normal course
of business, we are subject to various claims. While we cannot
predict the results of litigation and claims with certainty, we
believe that the final outcome of these matters will not seriously
harm our business, operating results or financial condition.




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

Our annual meeting of shareholders was held on September 12, 2002 and
adjourned to October 3, 2002 for the purpose of: (1) electing directors to our
Board of Directors to serve a one-year term expiring on the date of our 2003
annual meeting of the shareholders and until their successors are elected and
qualified; (2) approving amendments to our 1993 Employee Stock Option Plan, as
amended, including amendments to amend the expiration date of the plan from
June 22, 2003 to December 31, 2006, to amend the expiration of the existing
evergreen provision from April 2, 2003 to April 2, 2006, and to increase the
aggregate number of shares that may be issued pursuant to the exercise of
incentive stock options granted under the 1993 Stock Option Plan;
(3) ratifying
the selection of PricewaterhouseCoopers as the independent auditors of the
Company for the fiscal year ending March 31, 2003 and
(4) transacting such
other business as may have properly come before the meeting or any adjournment
or postponement thereof. Proxies for the meeting were solicited pursuant to
Section 14(a) of the Securities Exchange Act of 1934, as amended, and there was
no solicitation in opposition of managements solicitations. Shareholders
passed proposals 1 and 3 and did not approve Proposal 2. The final vote on the
proposals were recorded as follows:

| |                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------
| | Proposal 1:                                                                                                                                 
|
| | Mihir Parikh, Ph.D. was elected to the board of directors for a one-year
term with 28,372,942 votes for and 5,783,129 votes withheld.       
|
| | Stephen S. Schwartz, Ph.D. was elected to the board of directors for a
one-year term with 28,427,360 votes for and 5,728,711 votes withheld.
|
| | P. Jackson Bell was elected to the board of directors for a one-year term
with 33,579,038 votes for and 577,033 votes withheld.             
|
| | Stanley Grubel was elected to the board of directors for a one-year term
with 33,040,164 votes for and 1,115,907 votes withheld.            
|
| | Robert A. McNamara was elected to the board of directors for a one-year term
with 24,135,285 votes for and 10,020,786 votes withheld.       
|
| | Anthony E. Santelli was elected to the board of directors for a one-year
term with 33,064,862 votes for and 1,091,209 votes withheld.       
|
| | Walter W. Wilson was elected to the board of directors for a one-year term
with 33,509,967 votes for and 646,104 votes withheld.            
|
| | Proposal 2 (Not Approved):                                                                                                                  

30



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To approve amendments to our 1993 Employee Stock Option Plan, as
amended, including amendments to amend the expiration date of the plan from
June 22, 2003 to December 31, 2006, to amend the expiration of the existing
evergreen provision from April 2, 2003 to April 2, 2006, and to increase the
aggregate number of shares that may be issued pursuant to the exercise of
incentive stock options granted under the 1993 Stock Option Plan.

|           |  |           |            |           |  |             |        |  |  |          |           | 
|---------- |  | --------- | ---------- | --------- |  | ----------- | ------ |  |  | -------- | --------- | 
|           |  |           |            |           |  |             |        |  |  | BROKERED
|FOR      |  | AGAINST |            | ABSTAIN |  | NON-VOTES
|           |  |           |            |           |  |            
|12,276,169 |  |           | 14,381,123 |           |  |             | 64,025 |  |  |          | 7,434,754 | 

Proposal 3:

| |                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The selection of PricewaterhouseCoopers LLP as the Companys independent
auditors for the fiscal year ending March 31, 2003 was ratified by the
following vote:

|           |  |           |         |           |  |             |        |  |  |          |   | 
|---------- |  | --------- | ------- | --------- |  | ----------- | ------ |  |  | -------- | - | 
|           |  |           |         |           |  |             |        |  |  | BROKERED
|FOR      |  | AGAINST |         | ABSTAIN |  | NON-VOTES
|           |  |           |         |           |  |            
|33,317,509 |  |           | 808,712 |           |  |             | 29,850 |  |  |          |  | 




Item 6  Exhibits and Reports on Form 8-K

|             |  |                                                                          |  |                                                                                                                                                            
|------------ |  | ------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) Exhibits
|            
|10.38        |  |                                                                          |  | Share Purchase Agreement between Shinko
Electric Co., Ltd. and Asyst Japan Inc.,
dated as of May 24, 2002 (translated from Japanese).                      
|10.39        |  |                                                                          |  | Shareholders Agreement between Shinko
Electric Co., Ltd. and Asyst Japan Inc.,
dated as of May 24, 2002 (translated from Japanese).                        
|10.40*       |  |                                                                          |  | Manufacturing Services and Supply
Agreement among the Company and Solectron
Corporation and its subsidiaries and
affiliates, dated as of September 5, 2002.
|10.41        |  |                                                                          |  | Loan and Security Agreement between the
Company and Comerica Bank  California,
dated as of October 1, 2002.                                               
|10.42        |  |                                                                          |  | Amendment
No. 1 to Loan and Security agreement between the Company and
Comerica Bank  California, dated as of November 8,
2002.                           
|99.1         |  | Certification of Chief Executive Officer.                               
|99.2         |  | Certification of Chief Financial Officer.                               
|            
|*            |  | Confidential
treatment has been requested for portions of this
document.

(b)  Reports on Form 8-K.

| |                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On August 8, 2002, we filed a Current Report on Form 8-K dated August 1,
2002. On September 12, 2002 we filed a Current Report on Form 8-K dated
September 5, 2002.

31



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SIGNATURES

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

|                        |  |     |  |                                                                                          
|----------------------- |  | --- |  | -----------------------------------------------------------------------------------------
|                        |  |     |  | ASYST TECHNOLOGIES, INC.                                                                 
|                       
|                       
|Date: November 12, 2002 |  | By: |  | /s/ Geoffrey G. Ribar                                                                    
|                        |  |     |  |                                                                                          
|                        |  |     |  | Geoffrey G. Ribar
Senior Vice President
Chief Financial Officer                          
|                       
|                        |  |     |  | Signing on behalf of the registrant and as the principal
accounting and financial officer

CERTIFICATIONS

I, Stephen S. Schwartz, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of
Asyst Technologies, Inc.;                                                                                                                                                                                                                                               
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
|
| | 3. |  | Based on my knowledge, the financial statements, and
other financial information included in this quarterly report,
fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this quarterly report;                   
|
| | 4. |  | The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:                                                                                                     



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



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



| | (a) |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the
registrants auditors any material weaknesses in internal
controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | (b) |  | any fraud, whether or not material, that
involves management or other employees who have a significant
role in the registrants internal controls; and
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



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

| |  |                                                           
| |  | ----------------------------------------------------------
| |  | Date: November 12, 2002                                   
|
|
|
|
| |  |                                                           
|
|
|
|
| |  | /s/ Stephen S. Schwartz                                   
| |  |                                                           
| |  | Stephen S. Schwartz,
President and Chief Executive
Officer

I, Geoffrey G. Ribar, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of
Asyst Technologies, Inc.;                                                                                                                                                                                                                                               
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
|
| | 3. |  | Based on my knowledge, the financial statements, and
other financial information included in this quarterly report,
fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this quarterly report;                   
|
| | 4. |  | The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:                                                                                                     



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



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



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



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

| |  |                                                                     
| |  | --------------------------------------------------------------------
| |  | Date: November 12, 2002                                             
|
|
|
|
| |  |                                                                     
|
|
|
|
| |  | /s/ Geoffrey G. Ribar                                               
| |  |                                                                     
| |  | Geoffrey G. Ribar,
Senior Vice President and
Chief Financial Officer

33



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EXHIBIT INDEX

|        |  |                                                                                                                                                             |  |  |  | 
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit |  |                                                                                                                                                             |  |  |  | 
|Number  |  | Description                                                                                                                                                 |  |  |  | 
|        |  |                                                                                                                                                             |  |  |  | 
|10.38   |  | Share Purchase Agreement between Shinko Electric Co., Ltd. and Asyst
Japan Inc., dated as of May 24, 2002 (translated from Japanese).                      
|10.39   |  | Shareholders Agreement between Shinko Electric Co., Ltd. and Asyst
Japan Inc., dated as of May 24, 2002 (translated from Japanese).                        
|10.40*  |  | Manufacturing Services and Supply Agreement among the Company and Solectron Corporation and its
subsidiaries and affiliates, dated as of September 5, 2002.
|10.41   |  | Loan and Security Agreement between the Company and Comerica Bank  California, dated as of October 1,
2002.                                               
|10.42   |  | Amendment
No. 1 to Loan and Security Agreement between the Company and
Comerica and Comerica Bank  California, dated as of
November 8, 2002.              
|99.1    |  | Certification of Chief Executive Officer.                                                                                                                  
|99.2    |  | Certification of Chief Financial Officer.                                                                                                                  
|       
|*       |  | Confidential
treatment has been requested for portions of this document.                                                                                   

34