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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


Form 10-Q

(Mark One)

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

For the quarterly period ended December 31, 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
of incorporation or organization) |  | (IRS Employer identification No.)

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.

|     |  |         
|---- |  | --------
|Yesþ |  | No  [  ]

The number of shares of the registrants Common Stock, no par value,
outstanding as of January 31, 2003 was 38,561,611.



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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 6  Exhibits and Reports on Form 8-K                                                                
|SIGNATURES                    
|EXHIBIT INDEX                 
|EXHIBIT 10.43                 
|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  December 31, 2002 and March 31, 2002                   |    |          | 3 | 
|                              |                                                                                               | Condensed Consolidated Statements of Operations  Three Months and Nine Months Ended           |    |          |   | 
|                              |                                                                                               | December 31, 2002 and 2001                                                                     |    |          | 4 | 
|                              |                                                                                               | Condensed Consolidated Statements of Cash Flows  Nine Months Ended December 31, 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 |                                                                                                |    | 20       |  
|                              | Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |                                                                                                |    | 48       |  
|                              | Item 4. Controls and Procedures                                                               |                                                                                                |    | 48       |  
|Part II. Other Information    |                                                                                               |                                                                                                |    |         
|                              | Item 1. Legal Proceedings                                                                     |                                                                                                |    | 49       |  
|                              | Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                |    | 50       |  
|Signatures                    |                                                                                               |                                                                                                | 50 |         

2



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Part I  FINANCIAL INFORMATION




Item 1  Financial Statements




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

|                                     |                                                           |                                            |        |              |         |           |   |          |         | 
|------------------------------------ | --------------------------------------------------------- | ------------------------------------------ | ------ | ------------ | ------- | --------- | - | -------- | ------- | 
|                                     |                                                           |                                            |        | December 31, |         | March 31,
|                                     |                                                           |                                            |        | 2002         |         | 2002     
|                                     |                                                           |                                            |        |              |         |          
|ASSETS                               |                                                           |                                            |        |              |         |           |   |         
|Current assets:                      |                                                           |                                            |        |              |         |           |   |         
|                                     | Cash and cash equivalents                                 |                                            | $      | 60,133       |         |           | $ | 74,577   |        
|                                     | Restricted cash and cash equivalents                      |                                            |        | 2,836        |         |           |   | 5,052    |        
|                                     | Short-term investments                                    |                                            |        | 14,000       |         |           |   | 5,000    |        
|                                     | Accounts receivable, net                                  |                                            |        | 93,696       |         |           |   | 28,307   |        
|                                     | Inventories                                               |                                            |        | 16,269       |         |           |   | 39,296   |        
|                                     | Deferred tax asset                                        |                                            |        |             |         |           |   | 33,906   |        
|                                     | Prepaid expenses and other                                |                                            |        | 11,232       |         |           |   | 14,618   |        
|                                     |                                                           |                                            |        |              |         |           |   |         
|                                     |                                                           | Total current assets                       |        |              | 198,166 |           |   |          | 200,756 | 
|                                     |                                                           |                                            |        |              |         |           |   |         
|                                     | Property and equipment, net                               |                                            |        | 33,255       |         |           |   | 34,399   |        
|                                     | Deferred tax asset                                        |                                            |        |             |         |           |   | 30,294   |        
|                                     | Goodwill                                                  |                                            |        | 37,106       |         |           |   |         |        
|                                     | Intangible
assets, net                                    |                                            |        | 84,992       |         |           |   | 29,901   |        
|                                     | Other assets                                              |                                            |        | 21,678       |         |           |   | 32,180   |        
|                                     | Assets of discontinued operations                         |                                            |        | 8,985        |         |           |   | 16,885   |        
|                                     |                                                           |                                            |        |              |         |           |   |         
|                                     |                                                           | Total assets                               |        | $            | 384,182 |           |   | $        | 344,415 | 
|                                     |                                                           |                                            |        |              |         |           |   |          |        
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                           |                                            |        |              |         |           |   |         
|Current liabilities:                 |                                                           |                                            |        |              |         |           |   |         
|                                     | Short-term loans and notes payable                        |                                            | $      | 20,557       |         |           | $ | 16,707   |        
|                                     | Current portion of long-term debt and finance leases      |                                            |        | 1,199        |         |           |   | 1,076    |        
|                                     | Accounts payable                                          |                                            |        | 44,029       |         |           |   | 9,193    |        
|                                     | Accrued liabilities and other                             |                                            |        | 54,820       |         |           |   | 46,819   |        
|                                     | Deferred revenue                                          |                                            |        | 4,430        |         |           |   | 4,367    |        
|                                     |                                                           |                                            |        |              |         |           |   |         
|                                     |                                                           | Total current liabilities                  |        |              | 125,035 |           |   |          | 78,162  | 
|                                     |                                                           |                                            |        |              |         |           |   |         
|                                     | Long-term debt and finance leases, net of current portion |                                            |        | 115,297      |         |           |   | 90,331   |        
|                                     | Other long-term liabilities                               |                                            |        | 11,434       |         |           |   | 6,795    |        
|                                     | Liabilities of discontinued operations                    |                                            |        | 2,990        |         |           |   | 4,190    |        
|                                     |                                                           |                                            |        |              |         |           |   |         
|                                     |                                                           | Total liabilities                          |        |              | 254,756 |           |   |          | 179,478 | 
|                                     |                                                           |                                            |        |              |         |           |   |         
|Minority shareholders interest      |                                                           |                                            | 63,175 |              |         |           |  |         
|Shareholders equity:                |                                                           |                                            |        |              |         |           |   |         
|                                     | Common stock                                              |                                            |        | 325,857      |         |           |   | 294,351  |        
|                                     | Accumulated other comprehensive income                    |                                            |        | 2,207        |         |           |   | (35      | )      
|                                     | Accumulated deficit                                       |                                            |        | (261,813     | )       |           |   | (129,379 | )      
|                                     |                                                           |                                            |        |              |         |           |   |         
|                                     | Total shareholders equity                                |                                            |        | 66,251       |         |           |   | 164,937  |        
|                                     |                                                           |                                            |        |              |         |           |   |         
|                                     |                                                           | Total liabilities and shareholders equity |        | $            | 384,182 |           |   | $        | 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 |        | Nine Months Ended
|                                                                          |                                                                  |                          |         | December 31,       |        | December 31,     
|                                                                          |                                                                  |                          |         |                    |        |                  
|                                                                          |                                                                  |                          |         | 2002               |        | 2001              |         | 2002   |        | 2001
|                                                                          |                                                                  |                          |         |                    |        |                   |         |        |        |     
|Net sales                                                                 |                                                                  | $                        | 75,624  |                    |        | $                 | 35,631  |        |        | $    | 199,807  |        |         | $ | 147,461  |       
|Cost of sales                                                             |                                                                  |                          | 56,495  |                    |        |                   | 39,411  |        |        |      | 135,955  |        |         |   | 119,762  |       
|                                                                          |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       
|Gross profit                                                              |                                                                  |                          | 19,129  |                    |        |                   | (3,780  | )      |        |      | 63,852   |        |         |   | 27,699   |       
|                                                                          |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       
|Operating expenses:                                                       |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       
|                                                                          | Research and development                                         |                          |         | 11,160             |        |                   |         | 9,224  |        |      |          | 31,510 |         |   |          | 30,276 |        
|                                                                          | Selling, general and administrative                              |                          |         | 20,462             |        |                   |         | 18,020 |        |      |          | 54,346 |         |   |          | 59,996 |        
|                                                                          | Amortization of acquired intangible assets                       |                          |         | 5,707              |        |                   |         | 2,329  |        |      |          | 9,273  |         |   |          | 5,980  |        
|                                                                          | Restructuring charges                                            |                          |         | 2,519              |        |                   |         | 5,920  |        |      |          | 7,019  |         |   |          | 8,075  |        
|                                                                          | Asset impairment charges                                         |                          |         | 8,398              |        |                   |         | 22,574 |        |      |          | 15,519 |         |   |          | 40,499 |        
|                                                                          | In-process research and development costs of acquired businesses |                          |         | 5,750              |        |                   |         |       |        |      |          | 7,834  |         |   |          | 2,000  |        
|                                                                          |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       
|                                                                          |                                                                  | Total operating expenses |         |                    | 53,996 |                   |         |        | 58,067 |      |          |        | 125,501 |   |          |        | 146,826 |  
|Operating loss                                                            |                                                                  |                          | (34,867 | )                  |        |                   | (61,847 | )      |        |      | (61,649  | )      |         |   | (119,127 | )     
|Other income (expense), net                                               |                                                                  |                          | (2,578  | )                  |        |                   | (1,081  | )      |        |      | (5,228   | )      |         |   | (1,644   | )     
|                                                                          |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       
|Loss
from continuing operations before income taxes and minority interest |                                                                  |                          | (37,445 | )                  |        |                   | (62,928 | )      |        |      | (66,877  | )      |         |   | (120,771 | )     
|Provision (benefit) for income taxes                                      |                                                                  |                          |        |                    |        |                   | (14,459 | )      |        |      | 58,628   |        |         |   | (33,490  | )     
|                                                                          |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       
|Loss
from continuing operations before minority interest                  |                                                                  |                          | (37,445 | )                  |        |                   | (48,469 | )      |        |      | (125,505 | )      |         |   | (87,281  | )     
|Minority interest                                                         |                                                                  |                          | (4,824  | )                  |        |                   |        |        |        |      | (4,824   | )      |         |   |         |       
|                                                                          |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       
|Loss from continuing operations                                           |                                                                  |                          | (32,621 | )                  |        |                   | (48,469 | )      |        |      | (120,681 | )      |         |   | (87,281  | )     
|Loss from discontinued operations, net                                    |                                                                  |                          | (8,300  | )                  |        |                   | (41,379 | )      |        |      | (11,753  | )      |         |   | (48,462  | )     
|                                                                          |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       
|Net loss                                                                  |                                                                  | $                        | (40,921 | )                  |        | $                 | (89,848 | )      |        | $    | (132,434 | )      |         | $ | (135,743 | )     
|                                                                          |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       
|Basic and diluted loss per common share:                                  |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       
|                                                                          |                                                                  | Continuing operations    |         | $                  | (0.86  | )                 |         | $      | (1.37  | )    |          | $      | (3.23   | ) |          | $      | (2.48   | )
|                                                                          |                                                                  | Discontinued operations  |         |                    | (0.22  | )                 |         |        | (1.17  | )    |          |        | (0.32   | ) |          |        | (1.37   | )
|                                                                          |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       
|                                                                          |                                                                  | Net loss                 |         | $                  | (1.08  | )                 |         | $      | (2.54  | )    |          | $      | (3.55   | ) |          | $      | (3.85   | )
|                                                                          |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       
|Weighted average number of common shares outstanding  basic
and diluted  |                                                                  |                          | 37,932  |                    |        |                   | 35,419  |        |        |      | 37,316   |        |         |   | 35,237   |       
|                                                                          |                                                                  |                          |         |                    |        |                   |         |        |        |      |          |        |         |   |          |       

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)

|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |          |         |   |        |  
|------------------------------------------------------------ | ----------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ------- | --------------------------------------------------- | ------- | ----------------- | ------ | -------- | ------- | - | ------ | -
|                                                             |                                                                                           |                                                            |         |                                                     |         | Nine Months Ended
|                                                             |                                                                                           |                                                            |         |                                                     |         | December 31,     
|                                                             |                                                                                           |                                                            |         |                                                     |         |                  
|                                                             |                                                                                           |                                                            |         |                                                     |         | 2002              |        | 2001    
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|Cash flows from operating activities:                        |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|                                                             | Net loss                                                                                  |                                                            | $       | (132,434                                            | )       |                   | $      | (135,743 | )      
|                                                             |                                                                                           | Less: Loss from discontinued operations                    |         |                                                     | 11,753  |                   |        |          | 48,462  |  
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|                                                             | Net loss from continuing operations                                                       |                                                            |         | (120,681                                            | )       |                   |        | (87,281  | )      
|                                                             | Adjustments to reconcile net loss to net cash
provided by (used in) operating activities: |                                                            |         |                                                     |         |                   |        |          |        
|                                                             |                                                                                           | Depreciation and amortization                              |         |                                                     | 19,928  |                   |        |          | 13,438  |  
|                                                             |                                                                                           | Impairment
of goodwill and other intangible assets         |         |                                                     | 8,398   |                   |        |          | 22,541  |  
|                                                             |                                                                                           | Employee and non-employee stock compensation               |         |                                                     | 2,243   |                   |        |          | 371     |  
|                                                             |                                                                                           | Provision for doubtful accounts                            |         |                                                     | (400    | )                 |        |          | 690     |  
|                                                             |                                                                                           | Non-cash charges for restructuring and write-down of land  |         |                                                     | 10,317  |                   |        |          | 15,000  |  
|                                                             |                                                                                           | Provision for excess inventories                           |         |                                                     |        |                   |        |          | 12,810  |  
|                                                             |                                                                                           | In-process research and development costs                  |         |                                                     | 7,834   |                   |        |          | 2,000   |  
|                                                             |                                                                                           | Deferred tax asset, net                                    |         |                                                     | 59,432  |                   |        |          | (40,496 | )
|                                                             | Changes in assets and liabilities, net of acquisitions:                                   |                                                            |         |                                                     |         |                   |        |          |        
|                                                             |                                                                                           | Accounts receivable                                        |         |                                                     | (17,473 | )                 |        |          | 41,045  |  
|                                                             |                                                                                           | Inventories                                                |         |                                                     | 30,598  |                   |        |          | 14,440  |  
|                                                             |                                                                                           | Prepaid expenses and other assets                          |         |                                                     | 362     |                   |        |          | 7,967   |  
|                                                             |                                                                                           | Accounts payable, accrued liabilities and deferred revenue |         |                                                     | 23,210  |                   |        |          | (10,992 | )
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|                                                             |                                                                                           |                                                            |         | Net cash provided by (used in) operating activities |         |                   | 23,768 |          |         |   | (8,467 | )
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|Cash flows from investing activities:                        |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|                                                             | Purchase of short-term investments                                                        |                                                            |         | (9,000                                              | )       |                   |        | (23,077  | )      
|                                                             | Sale or maturity of short-term investments                                                |                                                            |         |                                                    |         |                   |        | 18,441   |        
|                                                             | Purchase of restricted cash equivalents and short-term investments                        |                                                            |         | (22,500                                             | )       |                   |        | (55,842  | )      
|                                                             | Sale or maturity of restricted cash equivalents and short-term investments                |                                                            |         | 24,716                                              |         |                   |        | 105,100  |        
|                                                             | Purchase of property and equipment, net                                                   |                                                            |         | (7,271                                              | )       |                   |        | (8,839   | )      
|                                                             | Net cash used in acquisitions                                                             |                                                            |         | (52,296                                             | )       |                   |        | (3,772   | )      
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|                                                             |                                                                                           | Net cash provided by (used in) investing activities        |         |                                                     | (66,351 | )                 |        |          | 32,011  |  
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|Cash flows from financing activities:                        |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|                                                             | Net proceeds from line of credit                                                          |                                                            |         | 25,000                                              |         |                   |        |         |        
|                                                             | Net proceeds (payments) on short-term loans                                               |                                                            |         | 2,995                                               |         |                   |        | (47,903  | )      
|                                                             | Net proceeds from the issuance of long-term debt and finance
leases                       |                                                            |         |                                                    |         |                   |        | 85,146   |        
|                                                             | Net payments on long-term debt and finance leases                                         |                                                            |         | (620                                                | )       |                   |        | (262     | )      
|                                                             | Issuance of shares of common stock                                                        |                                                            |         | 1,922                                               |         |                   |        | 4,410    |        
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|                                                             |                                                                                           | Net cash provided by (used in) financing activities        |         |                                                     | 29,297  |                   |        |          | 41,391  |  
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|Effect of exchange rate changes on cash and cash equivalents |                                                                                           |                                                            | 3,880   |                                                     |         |                   |       |         
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|Net cash provided by (used in) continuing operations         |                                                                                           |                                                            | (9,406  | )                                                   |         |                   | 64,935 |         
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|Net cash provided by (used in) discontinued operations       |                                                                                           |                                                            | (5,038  | )                                                   |         |                   | (3,719 | )       
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|Increase (decrease) in cash and cash equivalents             |                                                                                           |                                                            | (14,444 | )                                                   |         |                   | 61,216 |         
|Cash and cash equivalents, beginning of period               |                                                                                           |                                                            | 74,577  |                                                     |         |                   | 33,226 |         
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |         
|Cash and cash equivalents, end of period                     |                                                                                           | $                                                          | 60,133  |                                                     |         | $                 | 94,442 |         
|                                                             |                                                                                           |                                                            |         |                                                     |         |                   |        |          |        

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

5



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



|1. |  | ORGANIZATION OF THE COMPANY:
|-- |  | ----------------------------

The accompanying condensed consolidated financial statements include the
accounts of Asyst Technologies, Inc. (Asyst or the Company), which was
incorporated in California on May 31, 1984, its subsidiaries and its majority
owned joint venture. 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. (ASI), 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 Delaware 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. Accordingly, the Companys Consolidated
Statements of Operations and of Cash Flows for the period ended December 31,
2002 include the results of these acquired entities for the periods subsequent
to their respective acquisitions. The Company consolidates fully the financial
position and results of operations of ASI and accounts for the minority
interest in the consolidated financial statements.



|2. |  | SIGNIFICANT ACCOUNTING POLICIES:
|-- |  | --------------------------------

Basis of Preparation

While the financial information furnished is unaudited, the condensed
consolidated financial statements included in this report reflect all
adjustments (consisting of normal recurring accruals) which 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. Minority shareholders interest
represents the minority shareholders proportionate share of the net assets and
results of operations of the Companys majority-owned subsidiary, Asyst Shinko,
Inc. 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 December 31, 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

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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.

New Accounting Standards

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.

In November 2002, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. FIN 45 requires that a liability be recorded in the guarantors
balance sheet upon issuance of a guarantee. In addition, FIN 45 requires
disclosures about the guarantees that an entity has issued, including a
reconciliation of changes in the entitys product warranty liabilities. The
initial recognition and initial measurement provisions of FIN 45 are applicable
on a prospective basis to guarantees issued or modified after December 31,
2002, irrespective of the guarantors fiscal year-end. The disclosure
requirements of FIN 45 are effective for financial statements of interim or
annual periods ending after December 15, 2002. The Company
is currently assessing the impact of this standard on its consolidated
financial statements.

In November 2002, the Emerging Issues Task Force (EITF) reached a
consensus on Issue No. 00-21, Accounting for Revenue Arrangements with
Multiple Deliverables. EITF Issue No. 00-21 provides guidance on how to
account for arrangements that involve the delivery or performance of multiple
products, services and/or rights to use assets. The provisions of EITF Issue
No. 00-21 will apply to revenue arrangements entered into in fiscal periods
beginning after June 15, 2003. The Company is currently assessing the impact
of this standard on the on its consolidated financial statements.

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In December 2002, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure  an
amendment of SFAS 123. SFAS No.
148 provides alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation.
SFAS No. 148 also requires that disclosures of the pro forma effect of using
the fair value method of accounting for stock-based employee compensation be
displayed more prominently and in a tabular format. Additionally, SFAS No. 148
requires disclosure of the pro forma effect in interim financial statements.
The transition and annual disclosure requirements of SFAS No. 148 are effective
for fiscal years ended after December 15, 2002. The interim disclosure
requirements are effective for interim periods beginning after December 15,
2002. The Company believes that the adoption of this standard will have no
material impact on its consolidated financial statements.

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

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
(dollars in thousands):

|                  |                                                  |       |       |              |       |           |       |     |       | 
|----------------- | ------------------------------------------------ | ----- | ----- | ------------ | ----- | --------- | ----- | --- | ----- | 
|                  |                                                  |       |       | December 31, |       | March 31,
|                  |                                                  |       |       | 2002         |       | 2002     
|                  |                                                  |       |       |              |       |          
|                  |                                                  |       |       | (Unaudited)  |       |           |       |    
|Cash              |                                                  | $     | 2,836 |              |       | $         | 4,552 |    
|Cash equivalents: |                                                  |       |       |              |       |           |       |    
|                  | Institutional money market funds debt
securities |       | $     |             |       |           | $     | 500 |      
|                  |                                                  |       |       |              |       |           |       |    
|                  |                                                  | Total |       | $            | 2,836 |           |       | $   | 5,052 | 
|                  |                                                  |       |       |              |       |           |       |    

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Inventories

Inventories consist of the following (dollars in thousands):

|                                   |       |   |              |        |           |   |        |        | 
|---------------------------------- | ----- | - | ------------ | ------ | --------- | - | ------ | ------ | 
|                                   |       |   | December 31, |        | March 31,
|                                   |       |   | 2002         |        | 2002     
|                                   |       |   |              |        |          
|                                   |       |   | (Unaudited)  |        |           |   |       
|Raw materials                      |       | $ | 3,204        |        |           | $ | 22,492 |       
|Work-in-process and finished goods |       |   | 13,065       |        |           |   | 16,804 |       
|                                   |       |   |              |        |           |   |        |       
|                                   | Total |   | $            | 16,269 |           |   | $      | 39,296 | 
|                                   |       |   |              |        |           |   |        |       

During the quarter ended December 31, 2002, the Company outsourced the
bulk of its remaining manufacturing to Solectron Corporation. As part of the arrangement,
Solectron purchased $20 million of inventory from the Company.
No revenue was recorded for the sale of this inventory to Solectron. The
transition of manufacturing to Solectron is expected to be completed by March
31, 2003 at which time the Company will know what equipment and other assets
will be purchased by Solectron and which will have to be sold or otherwise
disposed of.

Goodwill and Intangible Assets, net

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.

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,
three 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. In connection with the DLC acquisition in May 2002, the
Company recorded goodwill of $2.1 million. In connection with
the ASI acquisition in October 2002, the Company recorded goodwill
of $34.9 million.

In connection with the annual impairment test in accordance with SFAS No.
142 during the quarter ended December 31, 2002, a goodwill impairment expense
of $2.1 million was recognized during the third quarter of
fiscal 2003. To determine
the amount of the impairment, the Company estimated the fair value of
its reporting
segments that contained goodwill (based primarily on expected future cash
flows), reduced the amount by the fair value of identifiable intangible assets
other than goodwill (also based primarily on expected future cash flows), and
then compared the unallocated fair value of the business to the carrying value
of goodwill. To the extent goodwill exceeded the unallocated fair value of the
business, an impairment expense was recognized. In connection with the annual
impairment analysis for goodwill, the Company assessed the recoverability of the
intangible assets subject to amortization in accordance with SFAS No. 144.
During the quarter ended December 31, 2002, an impairment expense of $6.2
million was recognized for acquired technology and $0.1 million was recognized
for customer base, based upon the Companys projection of significantly reduced future
cash flows of ACT.

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

|                               |                                            |       |   |                   |         |                |   |          |        |              |   |        |        |  |   |       |        | 
|------------------------------ | ------------------------------------------ | ----- | - | ----------------- | ------- | -------------- | - | -------- | ------ | ------------ | - | ------ | ------ |  | - | ----- | ------ | 
|                               |                                            |       |   | December 31, 2002 |         | March 31, 2002
|                               |                                            |       |   |                   |         |               
|                               |                                            |       |   | Gross             |         |                |   |          |        | Gross        |   |        |        | 
|                               |                                            |       |   | Carrying          |         | Accumulated    |   | Carrying |        | Accumulated 
|                               |                                            |       |   | Amount            |         | Amortization   |   | Amount   |        | Amortization
|                               |                                            |       |   |                   |         |                |   |          |        |             
|Amortizable intangible assets: |                                            |       |   |                   |         |                |   |          |        |              |   |        |        |  |   |      
|                               | Purchased technology                       |       | $ | 60,701            |         |                | $ | 7,472    |        |              | $ | 18,752 |        |  | $ | 7,673 |       
|                               | Customer lists and other intangible assets |       |   | 32,691            |         |                |   | 6,926    |        |              |   | 17,112 |        |  |   | 5,135 |       
|                               | Licenses and patents                       |       |   | 7,892             |         |                |   | 1,894    |        |              |   | 8,390  |        |  |   | 1,545 |       
|                               |                                            |       |   |                   |         |                |   |          |        |              |   |        |        |  |   |      
|                               |                                            | Total |   | $                 | 101,284 |                |   | $        | 16,292 |              |   | $      | 44,254 |  |   | $     | 14,353 | 
|Unamortized intangible assets: |                                            |       |   |                   |         |                |   |          |        |              |   |        |        |  |   |      
|                               | Goodwill                                   |       | $ | 37,106            |         |                | $ |         |        |              | $ |       |        |  | $ |      |       

Amortization expense was $9.3 million for the nine months ended December
31, 2002 and $6.0 million for the nine months ended December 31, 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):

|              |                   |            |   |        |       | 
|------------- | ----------------- | ---------- | - | ------ | ----- | 
|Fiscal Years: |                   |            |   |       
|              | Remainder of 2003 |            | $ | 4,935  |      
|              | 2004              |            |   | 19,740 |      
|              | 2005              |            |   | 19,740 |      
|              | 2006              |            |   | 17,740 |      
|              | 2007              |            |   | 13,722 |      
|              |                   | Thereafter |   |        | 9,115 | 

The changes in the carrying amount of goodwill for the nine months ended
December 31, 2002 are as follows (unaudited; dollars in thousands):

|                             |  |                |        |      |  |       |        |  |  |   |        |  
|---------------------------- |  | -------------- | ------ | ---- |  | ----- | ------ |  |  | - | ------ | -
|                             |  | Fab Automation |        | AMHS |  | Total
|                             |  |                |        |      |  |      
|Balance at March 31, 2002    |  | $              |       |      |  | $     |       |  |  | $ |       |  
|Reclass                      |  |                | 2,228  |      |  |       |       |  |  |   | 2,228  |  
|Acquisitions                 |  |                | 2,100  |      |  |       | 34,873 |  |  |   | 36,973 |  
|Impairment charges           |  |                | (2,100 | )    |  |       |       |  |  |   | (2,100 | )
|Foreign currency translation |  |                |       |      |  |       | 5      |  |  |   | 5      |  
|                             |  |                |        |      |  |       |        | 
|Balance at December 31, 2002 |  | $              | 2,228  |      |  | $     | 34,878 |  |  | $ | 37,106 |  
|                             |  |                |        |      |  |       |        | 

To
facilitate comparison with prior periods, the following table shows
the Companys results from continuing operations for the three and nine months ended December
31, 2001 and the three prior fiscal years, if goodwill was not amortized for
those periods (unaudited; dollars in thousands):

|                                     |  |              |       |              |  |                   |         |                 |  |                 |       |   |  |   |       |  
|------------------------------------ |  | ------------ | ----- | ------------ |  | ----------------- | ------- | --------------- |  | --------------- | ----- | - |  | - | ----- | -
|                                     |  |              |       |              |  | Net 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   
|                                     |  |              |       |              |  |                   |         |                
|Three months ended
December 31, 2001 |  | $            | 406   |              |  | $                 | (48,063 | )               |  | $               | (1.36 | ) |  | $ | (1.36 | )
|Nine months ended
December 31, 2001  |  | $            | 1,806 |              |  | $                 | (85,475 | )               |  | $               | (2.43 | ) |  | $ | (2.43 | )
|Fiscal 2002                          |  |              | 1,806 |              |  |                   | (94,102 | )               |  |                 | (2.66 | ) |  |   | (2.66 | )
|Fiscal 2001                          |  |              | 3,457 |              |  |                   | 31,498  |                 |  |                 | 0.96  |   |  |   | 0.90  |  
|Fiscal 2000                          |  |              | 345   |              |  |                   | 10,364  |                 |  |                 | 0.37  |   |  |   | 0.33  |  

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Warranty

The
Company provides for the estimated cost of product warranties at the time
revenue is recognized. The following table presents the activity in the
Companys warranty accrual (in millions):

|                                                 |  |        |        |  
|------------------------------------------------ |  | ------ | ------ | -
|                                                 |  | Amount
|                                                 |  |       
|Balance at March 31, 2002                        |  | $      | (5,028 | )
|Accruals for warranties issued during the period |  |        | (5,289 | )
|Settlements made (in cash or in kind)            |  |        | 3,009  |  
|                                                 |  |        |        |  
|Balance, December 31, 2002                       |  | $      | (7,308 | )
|                                                 |  |        |        |  

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. The Companys primary
shipping terms are FOB shipping point. Therefore, revenue for these types of
products is recognized 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.
Deferred revenue related to product sales is included in deferred revenue on
the balance sheet. 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 recognizes revenue for long-term contracts at ASI in
accordance with the American Institute of Certified Public Accountants
Statement of Position 81-1, Accounting for Performance of Construction-Type
and Certain Production-Type Contracts. The Company uses the percentage of
completion method to calculate revenue and related costs of these contracts
because they are long-term in nature and estimates of cost to complete and
extent of progress toward completion of long-term contracts are available and
reasonably dependable. The Company records revenue each period based on the
percentage of completion to date on each contract, measured by costs incurred
to date relative to the total estimated costs of each contract. The Company
treats contracts as substantially complete when the Company receives technical
acceptance of its work by the customer. No changes in estimates occurred in
the quarter ended December 31, 2002 that caused a material change in the
financial results of the Company for that period. The Company intends to
disclose material changes in its financial results that result from

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changes in estimates. Unbilled receivables relating to long-term
contracts were $16.7M at December 31, 2002 and are included in accounts
receivable.

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
persuasive evidence of an arrangement exists, delivery has occurred or services
have been rendered, the selling price is fixed or determinable and
collectibility is reasonably assured.

Contract Loss Reserve

The Company routinely evaluates the contractual commitments with its
customers and suppliers to determine if it is probable that a loss exists that
can be estimated in fulfillment of the contractual commitment. If so, a loss
reserve is recorded and included in accrued liabilities and other. The Company
recorded loss reserves from ASI totaling approximately $2.0 million for
contracts entered into prior to the acquisition date. These loss reserves are
included in the purchase accounting for ASI.

Loss Per Share

Basic loss per common share is
calculated by dividing net loss applicable
to common Shareholders by the weighted average number of common shares
outstanding during the period. Diluted loss per share is calculated by
dividing net loss applicable to common Shareholders by 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 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.

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 (in thousands):

|                  |       |  |                    |       |                   |  |       |       |      |  |       |       |  |  |       |       | 
|----------------- | ----- |  | ------------------ | ----- | ----------------- |  | ----- | ----- | ---- |  | ----- | ----- |  |  | ----- | ----- | 
|                  |       |  | Three Months Ended |       | Nine Months Ended
|                  |       |  | December 31,       |       | December 31,     
|                  |       |  |                    |       |                  
|                  |       |  | 2002               |       | 2001              |  | 2002  |       | 2001
|                  |       |  |                    |       |                   |  |       |       |     
|Restricted stock  |       |  | 53                 |       |                   |  | 43    |       |      |  | 50    |       |  |  | 43    |      
|Stock options     |       |  | 938                |       |                   |  | 1,259 |       |      |  | 1,342 |       |  |  | 1,626 |      
|Convertible notes |       |  | 5,682              |       |                   |  | 5,682 |       |      |  | 5,682 |       |  |  | 3,788 |      
|                  |       |  |                    |       |                   |  |       |       |      |  |       |       |  |  |       |      
|                  | Total |  |                    | 6,673 |                   |  |       | 6,984 |      |  |       | 7,074 |  |  |       | 5,457 | 
|                  |       |  |                    |       |                   |  |       |       |      |  |       |       |  |  |       |      

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

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investments by owners and distributions to owners and is to include
unrealized gains and losses that have historically been excluded from net
income (loss) and reflected instead in equity. The following table presents
the Companys comprehensive income items (in thousands):

|                                         |  |                    |         |                   |  |      |         |      |  |   |          |   |  |   |          |  
|---------------------------------------- |  | ------------------ | ------- | ----------------- |  | ---- | ------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                         |  | Three Months Ended |         | Nine Months Ended
|                                         |  | December 31, 2002, |         | September 30,    
|                                         |  |                    |         |                  
|                                         |  | 2002               |         | 2001              |  | 2002 |         | 2001
|                                         |  |                    |         |                   |  |      |         |     
|Net
income                               |  | $                  | (40,921 | )                 |  | $    | (89,848 | )    |  | $ | (132,434 | ) |  | $ | (135,743 | )
|Foreign
currency translation adjustments |  |                    | 2,242   |                   |  |      |        |      |  |   | 2,242    |   |  |   |         |  
|                                         |  |                    |         |                   |  |      |         |     
|Comprehensive
income                     |  | $                  | (38,679 | )                 |  | $    | (89,848 | )    |  | $ | (130,192 | ) |  | $ | (135,743 | )
|                                         |  |                    |         |                   |  |      |         |      |  |   |          |   |  |   |          |  



|3. |  | RESTRUCTURING CHARGES:
|-- |  | ----------------------

Restructuring charges and related utilization for the nine months ended
December 31, 2002 were (unaudited, in thousands):

|                             |  |           |        |            |  |             |        |       |  |   |        |   |  |   |        |  
|---------------------------- |  | --------- | ------ | ---------- |  | ----------- | ------ | ----- |  | - | ------ | - |  | - | ------ | -
|                             |  | Severance |        |            |  |             |        |       |  |   |        |   |  |  
|                             |  | and       |        | Excess     |  | Fixed Asset |        |       |  |  
|                             |  | Benefits  |        | Facilities |  | Impairment  |        | Total
|                             |  |           |        |            |  |             |        |      
|Balance, March 31, 2002      |  | $         | 741    |            |  | $           | 2,432  |       |  | $ | 200    |   |  | $ | 3,373  |  
|Additional Accruals          |  |           | 2,125  |            |  |             | 2,733  |       |  |   | 2,161  |   |  |   | 7,019  |  
|Non-cash related utilization |  |           | (331   | )          |  |             | (214   | )     |  |   | (1,745 | ) |  |   | (2,290 | )
|Amounts paid in cash         |  |           | (1,318 | )          |  |             | (1,352 | )     |  |   |       |   |  |   | (2,670 | )
|                             |  |           |        |            |  |             |        |       |  |   |        |   |  |   |        |  
|Balance, December 31, 2002   |  | $         | 1,217  |            |  | $           | 3,599  |       |  | $ | 616    |   |  | $ | 5,432  |  
|                             |  |           |        |            |  |             |        |       |  |   |        |   |  |   |        |  

In the quarter ended December 31, 2002, the Company recorded an excess
facility charge of $1.1 million reflecting revised estimates of future sublease
income based on continued weakness in the Austin commercial real estate market.
The Company also recorded severance charges of $0.7 million
resulting from
headcount reductions of 52 employees, including manufacturing, sales, research
and development and administrative staff. The Company also recorded a fixed
asset impairment charge of $0.7 million for assets to be disposed of due to
headcount reductions and vacating facilities.

In the quarter ended September 30, 2002, the Company recorded severance
charges of $0.8 million and contractual obligations of $0.6 million as a result
of workforce reduction measures affecting approximately 24 employees and a
manufacturing outsourcing agreement whereby approximately 191 employees joined
Solectron. The workforce reduction affected employees in manufacturing, sales,
research and development and administration. An additional charge of $1.6
million relates to excess facilities that the Company has under lease but has
abandoned as a result of the manufacturing outsourcing agreement. The Company
also recorded a fixed asset impairment charge of $1.5 million for assets that
will not be used as the Company consolidates facilities and integrates certain
programs into a joint venture.

The Company expects to utilize
approximately $3.5 million of the remaining
balance of $5.4 million during the remainder of the fiscal 2003, and the
remaining balance, primarily unused leased facilities, over the following three
fiscal years. All remaining accrual balances are expected to be settled in
cash.

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|4. |  | ASSET IMPAIRMENT CHARGES:
|-- |  | -------------------------

Asset impairment charges for the three and nine months ended December 31,
2002 and 2001 were (unaudited, in thousands):

|                                   |        |   |                    |       |                   |   |        |        |      |   |       |        |  |   |        |        | 
|---------------------------------- | ------ | - | ------------------ | ----- | ----------------- | - | ------ | ------ | ---- | - | ----- | ------ |  | - | ------ | ------ | 
|                                   |        |   | Three Months Ended |       | Nine
Months Ended
|                                   |        |   | December 31,       |       | December 31,     
|                                   |        |   |                    |       |                   |   |        |       
|                                   |        |   | 2002               |       | 2001              |   | 2002   |        | 2001
|                                   |        |   |                    |       |                   |   |        |        |      |   |       |        |  |   |        |       
|                                   |        |   |                    |       |                  
|Goodwill and intangible impairment |        | $ | 8,398              |       |                   | $ | 22,574 |        |      | $ | 8,398 |        |  | $ | 22,574 |       
|Land impairment                    |        |   |                   |       |                   |   |       |        |      |   | 7,121 |        |  |   | 17,925 |       
|                                   |        |   |                    |       |                   |   |        |        |      |   |       |        |  |   |        |       
|                                   | Totals |   | $                  | 8,398 |                   |   | $      | 22,574 |      |   | $     | 15,519 |  |   | $      | 40,499 | 
|                                   |        |   |                    |       |                   |   |        |        |      |   |       |        |  |   |        |       

In the quarter ended December 31, 2002, the Company completed a periodic
goodwill impairment test. As a result of its analysis, the Company determined
that impairment charges of $8.4 million were required because the forecasted
undiscounted cash flows were less than the book values of certain businesses.
The charges were measured on the basis of comparison of estimated fair values
with corresponding book values and relate to goodwill and intangible assets
recorded in connection with the Companys May 2002 acquisition of DLC.

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, which was 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 the Companys 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 $19.0 million, net of selling expenses,
which was 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 prospective buyer terminated the acquisition prior to
close and the land continues to be held for sale.



|5. |  | INCOME TAXES:
|-- |  | -------------

Statement of Financial Accounting Standards 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,

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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. 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.



|6. |  | REPORTABLE SEGMENTS:
|-- |  | --------------------

As a result of the acquisition of ASI in October 2002, the Company now
operates and tracks its results in two segments: Fab Automation and Automated
Material Handling Systems (AMHS). Fab Automation products include interface
products, substrate-handling robotics, wafer and reticle carriers, auto-ID
systems, sorters and connectivity software. AMHS products include automated
transport and loading systems for semiconductor fabs and flat panel display
manufacturers. The Chief Operating Decision Maker is our Chief Executive
Officer.

Segment information is summarized as follows (in millions):

|                |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |        |  
|--------------- |  | ------------------ | ----- | ----------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ------ | -
|                |  | Three Months Ended |       | Nine Months Ended
|                |  | December 31,       |       | December 31,     
|                |  |                    |       |                  
|                |  | 2002               |       | 2001              |  | 2002 |       | 2001
|                |  |                    |       |                   |  |      |       |     
|Fab
Automation: |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Revenues        |  | $                  | 51.5  |                   |  | $    | 35.6  |      |  | $ | 175.7 |   |  | $ | 147.5  |  
|Operating Loss  |  |                    | (22.5 | )                 |  |      | (61.8 | )    |  |   | (43.5 | ) |  |   | (119.1 | )
|AMHS:           |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Revenues        |  |                    | 24.1  |                   |  |      |      |      |  |   | 24.1  |   |  |   |       |  
|Operating Loss  |  |                    | (12.4 | )                 |  |      |      |      |  |   | (18.1 | ) |  |   |       |  
|Total:          |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Revenues        |  |                    | 75.6  |                   |  |      | 35.6  |      |  |   | 199.8 |   |  |   | 147.5  |  
|Operating Loss  |  |                    | (34.9 | )                 |  |      | (61.8 | )    |  |   | (61.6 | ) |  |   | (119.1 | )

The Company acquired ASI on October 16, 2002. Operating segment data includes
results from ASI for the period from the effective date of the acquisition.
Total operating loss is equal to consolidated loss from operations for the
periods presented. The Company does not allocate other income (expense), net
to individual segments.

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

|                   |       |   |                    |      |                   |   |      |      |      |   |      |       |  |   |      |       | 
|------------------ | ----- | - | ------------------ | ---- | ----------------- | - | ---- | ---- | ---- | - | ---- | ----- |  | - | ---- | ----- | 
|                   |       |   | Three Months Ended |      | Nine Months Ended
|                   |       |   | December 31,       |      | December 31,     
|                   |       |   |                    |      |                  
|                   |       |   | 2002               |      | 2001              |   | 2002 |      | 2001
|                   |       |   |                    |      |                   |   |      |      |     
|United States      |       | $ | 23.5               |      |                   | $ | 16.2 |      |      | $ | 71.6 |       |  | $ | 62.6 |      
|Taiwan             |       |   | 9.3                |      |                   |   | 3.7  |      |      |   | 38.4 |       |  |   | 16.7 |      
|Japan              |       |   | 16.7               |      |                   |   | 8.9  |      |      |   | 36.5 |       |  |   | 38.3 |      
|Other Asia/Pacific |       |   | 21.6               |      |                   |   | 3.8  |      |      |   | 39.1 |       |  |   | 13.6 |      
|Europe             |       |   | 4.5                |      |                   |   | 3.0  |      |      |   | 14.2 |       |  |   | 16.3 |      
|                   |       |   |                    |      |                   |   |      |      |      |   |      |       |  |   |      |      
|                   | Total |   | $                  | 75.6 |                   |   | $    | 35.6 |      |   | $    | 199.8 |  |   | $    | 147.5 | 
|                   |       |   |                    |      |                   |   |      |      |      |   |      |       |  |   |      |      



|7. |  | 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 based its decision on an evaluation of,
and decision to focus on its core business, concluding AMP and SemiFab were not
critical to the Companys long-term strategy. During the quarter ended
December 31, 2002, the Company estimated that the fair market value of the
subsidiaries based upon current quotes had been impaired and recorded a $6.6
million loss. 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 (unaudited, in thousands):

|                         |          |   |                    |        |                   |   |         |         |      |   |         |         |   |   |         |         |  
|------------------------ | -------- | - | ------------------ | ------ | ----------------- | - | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                         |          |   | Three Months Ended |        | Nine Months Ended
|                         |          |   | December 31,       |        | December 31,     
|                         |          |   |                    |        |                  
|                         |          |   | 2002               |        | 2001              |   | 2002    |         | 2001
|                         |          |   |                    |        |                   |   |         |         |     
|Net sales                |          | $ | 2,876              |        |                   | $ | 1,698   |         |      | $ | 10,859  |         |   | $ | 8,142   |        
|Loss before income taxes |          |   | (8,300             | )      |                   |   | (42,330 | )       |      |   | (11,753 | )       |   |   | (51,866 | )      
|Income taxes (benefit)   |          |   |                   |        |                   |   | (951    | )       |      |   |        |         |   |   | (3,404  | )      
|                         |          |   |                    |        |                   |   |         |         |      |   |         |         |   |   |         |        
|                         | Net loss |   | $                  | (8,300 | )                 |   | $       | (41,379 | )    |   | $       | (11,753 | ) |   | $       | (48,462 | )
|                         |          |   |                    |        |                   |   |         |         |      |   |         |         |   |   |         |        

The assets and liabilities of discontinued operations are stated separately as
of December 31, 2002 and March 31, 2002 on the statement of financial position
and consist of (unaudited, in thousands):

|                                       |  |                      |        |                   |  |   |        | 
|-------------------------------------- |  | -------------------- | ------ | ----------------- |  | - | ------ | 
|                                       |  | At December 31, 2002 |        | At March 31, 2002
|                                       |  |                      |        |                  
|Inventories                            |  | $                    | 3,908  |                   |  | $ | 5,814  | 
|Property and equipment, net            |  |                      | 3,895  |                   |  |   | 3,967  | 
|Other assets                           |  |                      | 7,782  |                   |  |   | 7,104  | 
|Accrued losses                         |  |                      | (6,600 | )                 |  |   |       | 
|                                       |  |                      |        |                   |  |   |        | 
|Assets of discontinued operations      |  | $                    | 8,985  |                   |  | $ | 16,885 | 
|Liabilities of discontinued operations |  | $                    | 2,990  |                   |  | $ | 4,190  | 



|8. |  | ACQUISITIONS
|-- |  | ------------

ASYST-SHINKO INC. (ASI):

On October 16, 2002, the Company established a joint venture with Shinko
Electric Co., Ltd. (Shinko), called Asyst Shinko, Inc. (ASI). The joint
venture develops, manufactures and markets Shinkos market-leading Automated
Materials Handling Systems (AMHS) with principal operations in Tokyo and Ise,
Japan. Under terms of the agreement, Asyst acquired 51% of the joint venture
for approximately $67.5 million of cash and transaction costs. Shinko
contributed its entire AMHS business, including intellectual property and other
assets, installed customer base and approximately 250 employees. The
consolidated financial statements for the period ended December 31, 2002
include the results of ASI for the quarter. The Company believes ASI has a
strong presence in the 300mm AMHS and flat panel display markets to date.

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The Company believes that ASI, in addition to Asysts FasTrack AMHS
solution, provides the Company an opportunity to benefit from growth
opportunities in the 300mm generation of the AMHS business. The acquisition
has been accounted for as a purchase transaction in accordance with FAS 141.

A portion of the excess of purchase price over fair value of net assets
acquired was allocated to identifiable intangible assets. The Company
will amortize developed technology over a period of five years and
the customer base and trademarks over a period of three years using the straight-line
method, with a weighted-average life of 4.4 years. The balance of the excess
purchase price was recorded as goodwill. A summary of the transaction is as
follows (in thousands):

|                                                                      |  |   |         | 
|--------------------------------------------------------------------- |  | - | ------- | 
|Consideration:                                                        |  |   |         | 
|Cash paid                                                             |  | $ | 65,700  | 
|Transaction costs                                                     |  |   | 1,796   | 
|                                                                      |  |   |         | 
|Total consideration                                                   |  |   | 67,496  | 
|Total Enterprise Value                                                |  |   | 132,345 | 
|                                                                      |  |   |         | 
|Fair value of net assets acquired                                     |  |   | 28,422  | 
|                                                                      |  |   |         | 
|Excess of consideration over fair value of net assets acquired        |  |   | 103,923 | 
|                                                                      |  |   |         | 
|Allocation of excess consideration to identifiable intangible
assets: |  |   |         | 
|Developed technology                                                  |  |   | 44,500  | 
|Customer base                                                         |  |   | 12,000  | 
|Trademarks                                                            |  |   | 6,800   | 
|In-process research and development                                   |  |   | 5,750   | 
|                                                                      |  |   |         | 
|                                                                      |  |   | 69,050  | 
|                                                                      |  |   |         | 
|Allocation of excess consideration to goodwill                        |  | $ | 34,873  | 
|                                                                      |  |   |         | 

The fair values of identifiable intangible assets are based on estimates
of future revenues and earnings to determine a discounted cash flow valuation
of identifiable intangible assets that meet the separate recognition criteria
of SFAS 141. The $34.9 million of goodwill arising from the acquisition is not
deductible for tax purposes. The Company acquired $5.8 million of in-process
research and development as part of the acquisition. The in-process research
and development costs were expensed in the quarter ended December 31, 2002.

Minority
interest of $63.2 million was recorded at December 31, 2002
representing the minority interest of 49% of the fair value of ASI at the time
of acquisition and the proportionate share of net income and cumulative
translation adjustment for the quarter ended December 31, 2002.

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

|                                        |  |   |         |  
|--------------------------------------- |  | - | ------- | -
|Cash and short-term investments         |  | $ | 15,200  |  
|Other current assets                    |  |   | 53,337  |  
|Property plant and equipment            |  |   | 3,332   |  
|Other assets                            |  |   | 782     |  
|Current liabilities                     |  |   | (32,063 | )
|Pension and other long-term liabilities |  |   | (12,166 | )
|                                        |  |   |         |  
|Net assets acquired                     |  | $ | 28,422  |  
|                                        |  |   |         |  

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Pro forma information will be presented in the future when available in
conformance with US GAAP. In addition, the Company expects to adjust the
opening balance sheet of ASI based on US GAAP adjustments required to properly
reflect unbilled receivables and work in process at the acquisition date.
These adjustments will be completed in the fourth quarter of fiscal 2003 ending
March 31, 2003.

As part of the acquisition, the Company assumed pension related
obligations. The balance recorded represents the initial estimated value. An
actuarial analysis will be performed prior to March 31, 2003. Related
disclosure of the pension obligations will be evaluated at year-end. In
addition, as certain pension obligations are included in the former owner of
ASIs pension plan, under certain remote circumstances including bankruptcy and
inability to pay by Shinko, the Company may have to assume up to $200 million
of pension obligations. No recognition of this amount has been recorded to
date as it is considered remote.

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. 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. 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.

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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.



|9. |  | DEBT
|-- |  | ----

The Company had short-term debt from banks in Japan of Japanese Yen 2,437
million ($20.5 million) and Japanese Yen 2,216 million ($16.7 million) at
December 31, 2002 and March 31, 2002, respectively. As of December 31, 2002,
the interest rate ranged from 1.4 percent to 1.9 percent.

In October 2002, the Company entered into and fully drew down a $25 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 required under the credit facility to maintain
compliance with certain financial covenants. These covenants include a total
liabilities to tangible net worth ratio, tangible net worth and minimum
liquidity covenants. The terms of the credit agreement also restrict
the Companys
ability to incur additional indebtedness; pay dividends and make distributions
in respect of its capital stock; redeem capital stock; make investments or
other restricted payments; engage in transactions with stockholders and
affiliates; create liens; sell or otherwise dispose of assets; make payments on
its subordinated debt; and engage in mergers and acquisitions.



|10. |  | RELATED PARTY TRANSACTIONS:
|--- |  | ---------------------------

At December 31, 2002 and March 31, 2002, the Company held notes from two
former employees totaling $0.2 million and notes from four current employees
totaling $0.9 million. At March 31, 2002, the Company held two notes
receivable from a former executive officer totaling $0.8 million. These two
notes were paid off in the quarter ended December 31, 2002. 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 $0.6 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 December 31, 2002 and March 31, 2002,
respectively.

The Companys majority owned subsidiary, ASI, has certain transactions
with the minority shareholder, Shinko. At December 31, 2002, significant
balances owed (to) from Shinko were (unaudited, in thousands):

|                                          |  |   |        |  
|----------------------------------------- |  | - | ------ | -
|Accounts and notes receivable from Shinko |  | $ | 1,522  |  
|Accounts payable due to Shinko            |  |   | (6,294 | )
|Accrued liabilities due to Shinko         |  |   | (4,881 | )

In addition, the consolidated condensed financial statements reflect that
ASI purchased various administrative and IT services from Shinko in order to
provide for an orderly transition. During the quarter ended December 31, 2002,
sales to and purchases from Shinko were (unaudited, in thousands):

|                   |  |   |       | 
|------------------ |  | - | ----- | 
|Sales              |  | $ | 218   | 
|Material purchases |  |   | 2,054 | 
|Services purchased |  |   | 825   | 

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|11. |  | LEGAL PROCEEDINGS:
|--- |  | ------------------

In October 1996, the Company filed a lawsuit in the United States
District Court for the Northern District of California against Jenoptik A.G.,
Jenoptik-Infab, Inc., Emtrak, Inc. and Empak, Inc., alleging, among other
things, infringement of two patents related to the Companys SMART Traveler
System. All defendants filed answers and counterclaims asserting various
defenses. The issues were subsequently narrowed by the parties respective
dismissals of various claims, and the dismissal of defendant Empak pursuant
to a settlement agreement. The remaining patent infringement claims against
the remaining parties proceeded to summary judgment, which was ultimately
entered against the Company in June 1999. The Company appealed, and in
October 2001 the appellate court reversed the district courts decision to
grant defendants motion for summary judgment and remanded the case back to
the district court. In July 2002, the Company and the remaining defendants
narrowed the case to the respective claims and counterclaims relating to one
of the two patents in suit, for which the Company continues to seek damages
and injunctive relief against further infringement. The court held a claims
construction hearing in September 2002, but has not yet issued its 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 alleged 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 pursuant to the achievement of milestones on specified dates. The plaintiffs sought the shares of common
stock, plus interest, attorney fees and other relief. Following
mediation, the Company
and the plaintiffs entered a settlement agreement that disposed of
the matter.

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.




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

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are not guarantees of future performance and are subject to risks,
uncertainties and assumptions, including those set forth in this section as
well as those under the caption, Risk Factors.

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

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, Reticle 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 primarily tied to capital expenditures at semiconductor fabrication
facilities, or fabs, and are cyclical in nature. We achieved our peak level of
sales in the last industry growth cycle in the quarter ended December 31, 2000.
Our sales declined significantly during the following year, and bottomed in the
quarter ended December 31, 2001. We then experienced three quarters of
sequential quarter-to-quarter growth, which peaked in the quarter ended
September 30, 2002. Although our sales in the succeeding quarter, which ended
December 31, 2002, increased slightly, the increase was entirely attributable
to the inclusion of the sales of Asyst-Shinko Inc., a Japanese joint venture
company of which we own 51%. Excluding the impact of Asyst-Shinko, sales in our
base business declined by 29% on a quarterly sequential basis in the quarter
ended December 31, 2002. Our current sales are still below the levels achieved
in the last industry growth cycle.

In response to the industry downturn, we have reduced costs in several
areas. In October 2002 we began transitioning substantially all of our
manufacturing to Solectron Corporation,

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which we believe will reduce our fixed manufacturing costs and improve our
ability to respond to sales fluctuations. This outsourcing agreement had a
negative impact on gross margin in the quarter ended December 31, 2002 due to
the accelerated depreciation of fixed assets that Solectron will not use after
fiscal 2003 as well as other transition-related costs. We anticipate that gross
margin will be negatively impacted due to the same factors in the quarter
ending March 31, 2003, and that the outsourcing will begin to have a positive
impact on gross margin beginning in the quarter ending June 30, 2003. Over the
past two years we also reduced our workforce from a peak of approximately 2,000
employees to approximately 800 employees after adjusting for the outsourcing to
Solectron and the planned sale of our AMP and SemiFab subsidiaries.

During the quarter ended December 31, 2002, sales increased 5 percent
while net bookings decreased 4 percent sequentially from the second quarter
ended September 30, 2002. Excluding the impact of the Asyst Shinko joint
venture, our sales declined 29 percent and our net bookings decreased 40
percent. We anticipate that sales in the quarter ending March 31, 2002 will be
essentially flat with the prior sequential quarter.

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 removed from our results of continuing operations for all periods
presented.

Acquisitions

During the fiscal year ended March 31, 2002 and thus far in fiscal 2003,
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
Delaware 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.

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The
results of operations for the third quarter ended December 31, 2002
include the revenues and expenses of Asyst-Shinko Inc. for the quarter.
Comparative pro forma information reflecting the acquisition of ASI as of the
beginning of the fiscal year will be reported when ASIs historical financial
information is reclassified to conform to US generally accepted accounting
principles. The Company expects to have such information for inclusion in its
Form 10K for the year ended March 31, 2003. The results of operations since
the first quarter ended June 30, 2002 include the revenues and expenses of ACT
from the date of the DLC asset 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 of DLC and GW have not been presented because the operations were
not material to the Companys financial statements.

Three and Nine Months Ended December 31, 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):

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|                                                                          |                                                                |  |                          |      |                    |      |                   |      |      |       |       |      |  |      |       |      |  |      | 
|------------------------------------------------------------------------- | -------------------------------------------------------------- |  | ------------------------ | ---- | ------------------ | ---- | ----------------- | ---- | ---- | ----- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | 
|                                                                          |                                                                |  |                          |      | Three Months Ended |      | Nine Months Ended
|                                                                          |                                                                |  |                          |      | December 31,       |      | December 31,     
|                                                                          |                                                                |  |                          |      |                    |      |                  
|                                                                          |                                                                |  |                          |      | 2002               |      | 2001              |      | 2002 |       | 2001 
|                                                                          |                                                                |  |                          |      |                    |      |                   |      |      |       |      
|Net sales                                                                 |                                                                |  | 100.0                    | %    |                    |      | 100.0             | %    |      |       | 100.0 | %    |  |      | 100.0 | %   
|Cost of sales                                                             |                                                                |  | 74.7                     |      |                    |      | 110.6             |      |      |       | 68.0  |      |  |      | 81.2  |     
|                                                                          |                                                                |  |                          |      |                    |      |                   |      |      |       |       |      |  |      |       |     
|Gross profit                                                              |                                                                |  | 25.3                     |      |                    |      | (10.6             | )    |      |       | 32.0  |      |  |      | 18.8  |     
|Operating expenses:                                                       |                                                                |  |                          |      |                    |      |                   |      |      |       |       |      |  |      |       |     
|                                                                          | Research and development                                       |  |                          | 14.8 |                    |      |                   | 25.9 |      |       |       | 15.8 |  |      |       | 20.5 | 
|                                                                          | Selling, general and administration                            |  |                          | 27.1 |                    |      |                   | 50.6 |      |       |       | 27.2 |  |      |       | 40.7 | 
|                                                                          | Amortization of acquired intangible assets                     |  |                          | 7.5  |                    |      |                   | 6.5  |      |       |       | 4.7  |  |      |       | 4.1  | 
|                                                                          | Restructuring charges                                          |  |                          | 3.3  |                    |      |                   | 16.6 |      |       |       | 3.5  |  |      |       | 5.5  | 
|                                                                          | Asset
impairment charges                                       |  |                          | 11.1 |                    |      |                   | 63.4 |      |       |       | 7.8  |  |      |       | 27.4 | 
|                                                                          | In-process research and development costs
of acquired business |  |                          | 7.6  |                    |      |                   | 0.0  |      |       |       | 3.9  |  |      |       | 1.4  | 
|                                                                          |                                                                |  |                          |      |                    |      |                   |      |      |       |       |      |  |      |       |     
|                                                                          |                                                                |  | Total operating expenses |      |                    | 71.4 |                   |      |      | 163.0 |       |      |  | 62.9 |       |      |  | 99.6 | 
|                                                                          |                                                                |  |                          |      |                    |      |                   |      |      |       |       |      |  |      |       |     
|Operating loss                                                            |                                                                |  | (46.1                    | )    |                    |      | (173.6            | )    |      |       | (30.9 | )    |  |      | (80.8 | )   
|Other income (expense), net                                               |                                                                |  | (3.4                     | )    |                    |      | (3.0              | )    |      |       | (2.6  | )    |  |      | (1.1  | )   
|                                                                          |                                                                |  |                          |      |                    |      |                   |      |      |       |       |      |  |      |       |     
|Loss from continuing operations before
income taxes and minority interest |                                                                |  | (49.5                    | )    |                    |      | (176.6            | )    |      |       | (33.5 | )    |  |      | (81.9 | )   
|                                                                          |                                                                |  |                          |      |                    |      |                   |      |      |       |       |      |  |      |       |     
|Minority interest                                                         |                                                                |  | (6.4                     | )    |                    |      |                  |      |      |       | (2.4  | )    |  |      |      |     
|Provision (benefit) for income taxes                                      |                                                                |  |                         |      |                    |      | (40.6             | )    |      |       | 29.3  |      |  |      | (22.7 | )   
|                                                                          |                                                                |  |                          |      |                    |      |                   |      |      |       |       |      |  |      |       |     
|Net loss from continuing operations                                       |                                                                |  | (43.1                    | )    |                    |      | (136.0            | )    |      |       | (60.4 | )    |  |      | (59.2 | )   
|                                                                          |                                                                |  |                          |      |                    |      |                   |      |      |       |       |      |  |      |       |     
|Loss from discontinued operations, net                                    |                                                                |  | (11.0                    | )    |                    |      | (116.2            | )    |      |       | (5.9  | )    |  |      | (32.9 | )   
|                                                                          |                                                                |  |                          |      |                    |      |                   |      |      |       |       |      |  |      |       |     
|Net loss                                                                  |                                                                |  | (54.1                    | )%   |                    |      | (252.2            | )%   |      |       | (66.3 | )%   |  |      | (92.1 | )%  
|                                                                          |                                                                |  |                          |      |                    |      |                   |      |      |       |       |      |  |      |       |     

Results of Operations

Net Sales.Net sales in the third quarter ended December 31, 2002
increased 112 percent to $75.6 million from $35.6 million in the corresponding
period of the prior year. Excluding the impact of Asyst-Shinko, net sales for
the quarter increased 45 percent to $51.5 million from $35.6 million one year
ago. Net sales for the first nine months ended December 31, 2002 increased 35
percent to $199.8 million from $147.5 million in the corresponding period of
the prior year. Excluding the impact of Asyst-Shinko, net sales increased 19
percent to $175.7 compared with $147.5 in the prior year. 300mm products
comprised 39 percent of our net sales in the third quarter ended December 31,
2002, compared to 35 percent of net sales for the corresponding period of the
prior year.

Capital spending by semiconductor manufacturers, as measured by our net
sales, began to decline from its peak levels during the quarter ended December
31, 2000 and continued to decline each quarter through the third quarter of
fiscal 2002. Since the third quarter of fiscal 2002, sales have continued to
increase on a quarterly basis through the third quarter of fiscal 2003.
However, we do not expect this trend to continue as the sales increase for the
third quarter of fiscal 2003 resulted from the acquisition of the Asyst-Shinko
joint venture and bookings declined in the quarter. Despite 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 suppress demand for our products.

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We operate in two business segments. Fab Automation Products
includes our equipment automation products and systems such as load ports,
robotics, mini-environments, portals, and connectivity software, as well as fab
automation products such as auto-ID systems, wafer and reticle carriers, and
sorters. AMHS,or automated material handling systems, includes inter-bay and
intra-bay track and vehicle systems, stockers, automated and rail guided
vehicles, and tool loading systems. Segment information is summarized as
follows (in millions):

|                         |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |        |  
|------------------------ |  | ------------------ | ----- | ----------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ------ | -
|                         |  | Three Months Ended |       | Nine Months Ended
|                         |  | December 31        |       | December 31,     
|                         |  |                    |       |                  
|                         |  | 2002               |       | 2001              |  | 2002 |       | 2001
|                         |  |                    |       |                   |  |      |       |     
|Fab Automation Products: |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Revenues                 |  | $                  | 51.5  |                   |  | $    | 35.6  |      |  | $ | 175.7 |   |  | $ | 147.5  |  
|Operating Loss           |  |                    | (22.5 | )                 |  |      | (61.8 | )    |  |   | (43.5 | ) |  |   | (119.1 | )
|AMHS:                    |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Revenues                 |  |                    | 24.1  |                   |  |      |      |      |  |   | 24.1  |   |  |   |       |  
|Operating Loss           |  |                    | (12.4 | )                 |  |      |      |      |  |   | (18.1 | ) |  |   |       |  
|Total:                   |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   |        |  
|Revenues                 |  |                    | 75.6  |                   |  |      | 35.6  |      |  |   | 199.8 |   |  |   | 147.5  |  
|Operating Loss           |  |                    | (34.9 | )                 |  |      | (61.8 | )    |  |   | (61.6 | ) |  |   | (119.1 | )

Fab Automation Products

Fab Automation Products net sales in the third quarter ended
December 31, 2002 increased 44 percent to $51.5 million from $35.6 million in
the corresponding period of the prior year. Fab Automation
Products net sales for the first nine months ended December 31, 2002 increased
19 percent to $175.7 million from $147.5 million in the corresponding period of
the prior year. We believe that increases in sales are attributable to market
share gains and the impact of new products.

Automated Material Handling Systems (AMHS)

AMHS revenues in the third quarter ended December 31, 2002 were $24.1
million. The AMHS segment was substantially increased with the acquisition of
ASI in October 2002. Prior to that date, AMHS included primarily development
costs of the companys continuous flow AMHS technology, FasTrack, which has
had limited sales to date.

Gross Margin. Gross margin was 25 percent of net sales for the third
quarter ended December 31, 2002, compared to (11) percent of net sales for the
corresponding period of the prior year. Gross margin was 32 percent of net
sales for the nine months ended December 31, 2002, compared to 19 percent of
net sales for the corresponding period of the prior year. Gross margin in the
quarter and nine months ended December 31, 2002 was negatively impacted by
accelerated depreciation and other costs related to the transition of our
manufacturing to Solectron. Gross margin in the comparable quarter and nine
months in the prior year was negatively impacted by a $12.8 million inventory
reserve taken in the quarter ended December 31, 2001. Excluding the impact of
the inventory reserve taken in fiscal 2002 and the accelerated depreciation and
other costs related to outsourcing in the most recent period, gross margin as a
percentage of net sales increased as a result of increased capacity utilization
from higher sales,

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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. Our
AMHS products and 300mm OEM products currently carry lower gross margins than
our 200mm OEM products and other products we sell directly to fabs. We have
enacted cost reduction initiatives related to our 300mm OEM 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 in the quarter ending
March 31, 2003 will remain essentially flat because sales are expected to
remain flat, margins will again be negatively impacted by accelerated
depreciation and other costs of outsourcing, and product mix is not expected to
change significantly. 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,
increased to $11.2 million in the third fiscal quarter of 2003, compared with
$9.2 million in the comparable quarter a year ago. The increase is primarily
attributable to the impact of Asyst-Shinko. As a percentage of sales, R&D
decreased to 15 percent of net sales, compared with 26 percent in the same
quarter a year ago, as a result of increased sales, primarily attributable to
Asyst-Shinko. Research and development expenses for the nine months ended
December 31, 2002 were $31.5 million or 16 percent of revenue as compared to
$30.3 million or 21 percent of revenue in the nine months ended December 31,
2002. The increase in R&D spending is attributable to the impact of
Asyst-Shinko. Our sales increased at a significantly faster rate than our R&D
expenses, both because of Asyst-Shinko and increases in our base business,
which resulted in the decrease in R&D as a percentage of sales. 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 expenditure
levels based on short-term changes in the actual or anticipated level of net
sales. We expect R&D spending to remain essentially flat both on an absolute
basis and as a percentage of sales for the quarter ending March 31, 2003.

Selling, General and Administrative.Selling, general and administrative,
or SG&A, expenses for the quarter ended December 31, 2002 were $20.5 million or
27 percent of net sales, compared to $18.0 million or 51 percent of net sales
for the corresponding period of the prior year. The increase in absolute
dollars is attributable to the impact of Asyst-Shinko, while the decrease as a
percentage of sales is attributable to increases in sales in the base business
and at Asyst-Shinko. SG&A expenses for the nine months ended December 31, 2002
were $54.3 million or 27 percent of net sales, compared to $60.0 million or 41
percent of net sales for the corresponding period of the prior year. The
decrease for the nine-month period reflects efforts to reduce SG&A
expenditures, partially offset by the impact of Asyst-Shinko. In response to
lower net sales, we implemented several targeted cost reduction initiatives to
lower our SG&A expenses through headcount reductions, process improvements and
supplier cost reductions. Our SG&A expenses vary as a percentage of net sales
because a significant portion of these expenses

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are fixed facilities and payroll costs, which we intend to keep
substantially constant regardless of quarterly fluctuations in net sales.

Restructuring Charges. Restructuring charges and
related utilization for the nine months ended December 31, 2002 were
(unaudited, in thousands):

|                             |  |           |        |            |  |             |        |       |  |   |        |   |  |   |        |  
|---------------------------- |  | --------- | ------ | ---------- |  | ----------- | ------ | ----- |  | - | ------ | - |  | - | ------ | -
|                             |  | Severance |        |            |  |             |        |       |  |   |        |   |  |  
|                             |  | and       |        | Excess     |  | Fixed Asset |        |       |  |  
|                             |  | Benefits  |        | Facilities |  | Impairment  |        | Total
|                             |  |           |        |            |  |             |        |      
|Balance, March 31, 2002      |  | $         | 741    |            |  | $           | 2,432  |       |  | $ | 200    |   |  | $ | 3,373  |  
|Additional Accruals          |  |           | 2,125  |            |  |             | 2,733  |       |  |   | 2,161  |   |  |   | 7,019  |  
|Non-cash related utilization |  |           | (331   | )          |  |             | (214   | )     |  |   | (1,745 | ) |  |   | (2,290 | )
|Amounts paid in cash         |  |           | (1,318 | )          |  |             | (1,352 | )     |  |   |       |   |  |   | (2,670 | )
|                             |  |           |        |            |  |             |        |       |  |   |        |   |  |   |        |  
|Balance, December 31, 2002   |  | $         | 1,217  |            |  | $           | 3,599  |       |  | $ | 616    |   |  | $ | 5,432  |  
|                             |  |           |        |            |  |             |        |       |  |   |        |   |  |   |        |  

In the quarter ended September 30, 2002, we recorded severance charges of
$0.8 million and contractual obligations of $0.6 million as a result of
workforce reduction measures affecting approximately 24 employees and a
manufacturing outsourcing agreement whereby approximately 191 employees joined
Solectron. The workforce reduction affected employees in manufacturing, sales,
research and development and administration. An additional charge of $1.6
million relates to excess facilities that we have under lease but have
abandoned as a result of the manufacturing outsourcing agreement. We also
recorded a fixed asset impairment charge of $1.5 million for assets that will
not be used as we consolidate facilities and integrates certain programs into a
joint venture.

In the quarter ended December 31, 2002, we recorded an excess facility
charge of $1.1 million reflecting revised estimates of future sublease income
based on continued weakness in the Austin commercial real estate market. We
also recorded severance charges of $0.7 million are the result of headcount
reductions of 52 employees, including manufacturing, sales, research and
development and administrative staff. We also recorded a fixed asset
impairment charge of $0.7 million for assets disposed of due to our headcount
reductions and vacating facilities.

We expect to utilize approximately $3.5 million of the remaining balance
of $5.4 million during the remainder of the fiscal 2003, and the remaining
balance, primarily unused leased facilities, over the following three fiscal
years.

Asset Impairment charges.Asset impairment charges for the three and nine
months ended December 31, 2002 and 2001 were (unaudited, in thousands):

|                                   |        |   |                    |       |                   |   |        |        |      |   |       |        |  |   |        |        | 
|---------------------------------- | ------ | - | ------------------ | ----- | ----------------- | - | ------ | ------ | ---- | - | ----- | ------ |  | - | ------ | ------ | 
|                                   |        |   | Three Months Ended |       | Nine Months Ended
|                                   |        |   | December 31,       |       | December 31,     
|                                   |        |   | 2002               |       | 2001              |   | 2002   |        | 2001
|                                   |        |   |                    |       |                  
|Goodwill and intangible impairment |        | $ | 8,398              |       |                   | $ | 22,574 |        |      | $ | 8,398 |        |  | $ | 22,574 |       
|Land impairment                    |        |   |                   |       |                   |   |       |        |      |   | 7,121 |        |  |   | 17,925 |       
|                                   |        |   |                    |       |                   |   |        |        |      |   |       |        |  |   |        |       
|                                   | Totals |   | $                  | 8,398 |                   |   | $      | 22,574 |      |   | $     | 15,519 |  |   | $      | 40,499 | 
|                                   |        |   |                    |       |                   |   |        |        |      |   |       |        |  |   |        |       

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In the quarter ended December 31, 2002, we completed a periodic goodwill
impairment test. As a result of our
analysis, we determined that impairment charges of $8.4 million were required
because the forecasted undiscounted cash flows were less than the book values
of certain businesses. The charges were measured on the basis of comparison of
estimated fair values with corresponding book values and relate to
goodwill and intangible assets recorded in connection with our May 2002
acquisition of DLC.

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 was 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 prospective buyer terminated the
acquisition prior to close and the land continues to be held for sale.

In-process Research and Development Costs of Acquired Business.On October
16, 2002, we acquired 51% of the common stock of Asyst-Shinko Inc., our
Japanese AMHS joint venture company. In connection with the purchase price
allocation, in the quarter ended December 31, 2002 we assigned $5.8 million to
in-process research and development, or IPR&D. The amounts allocated to IPR&D
were estimated through established valuation techniques in the high-technology
industry and were 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 $5.7 million or 8 percent of net sales for
the quarter ended December 31, 2002 and $2.3 million or 7 percent of net sales
for the corresponding period of the prior year. Amortization expenses relating
to acquired intangible assets were $9.3 million for the nine months ended
December 31, 2002 as compared to $6.0 million for the nine months ended
December 31, 2001. We amortize the acquired intangible assets over periods
ranging from three to ten years. The increase in the amortization expense is due
primarily to the acquisition of the Asyst-Shinko JV interest.

Other Income (Expense), Net.Other income (expense), net, was $(2.6)
million for the quarter ended December 31, 2002, compared to $(1.1) million for
the corresponding period of the prior year. Other income (expense), net, was
$(5.2) million for the nine months ended December 31, 2002 compared to $(1.6)
million for the nine months ended December 31, 2001. The increased expense for
the quarterly period is primarily attributable to financing costs and fees
related to funding the Asyst-Shinko JV transaction, increased interest expense
related to the $25 million credit facility which was established and drawn down
to partially fund the transaction, lower interest-bearing cash balances, and
lower interest rates on invested cash. The increase for the

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nine-month period is attributable to these factors as well as to increased
interest expense related to the sale of $86.3 million of 5 3/4 percent
convertible subordinated notes on July 3, 2001.

Provision
(Benefit) for Income Taxes. 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. We recorded no benefit or
expense related to taxes for the quarter ended December 31, 2002, and we expect
to continue this practice until we can sustain a level of profitability that
demonstrates the ability to utilize our deferred tax assets. For the nine
months ended December 31, 2002, we recorded tax expense of $58.6 million, which
reflects the impact of recording a full valuation allowance against our
deferred tax asset at September 30, 2002. We recorded a benefit for income taxes of
$14.5 million and $33.5 million for the quarter and nine months ended December
31, 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 during
the quarter ended December 31, 2002 recorded a one-time charge
of $6.6 million
related to the impairment of the value of assets in these companies based on
expected values. Including this charge, the loss from discontinued operations
for the quarter ended December 31, 2002 was $8.3 million. This compares with a
loss from discontinued operations of $41.4 million, which
included asset impairment
charges of $37.8 million related to impairment of intangible assets, for the
quarter ended December 31, 2001. The loss from discontinued operations in the
nine months ended December 31, 2002 was $11.8 million, compared to $48.5
million in the same period a year ago.

Liquidity and Capital Resources

Since inception, we have funded our operations primarily through the
private sale of equity securities and public stock offerings, customer
pre-payments, bank borrowings, long-term debt and cash generated from
operations. As of December 31, 2002, we had approximately $60.1 million in cash
and cash equivalents, $2.8 million in restricted cash equivalents, $14.0
million in short-term investments, $73.1 million in working capital and $115.3
million in long-term debt and finance leases.

During the quarter ended December 31, 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 $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 and fully drew down 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 $67.5 million in cash and related transaction costs.

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Operating activities.Net cash provided by operating
activities was $23.8
million in the nine months ended December 31, 2002, primarily
consisting non-cash charges of $59.4 million
for a valuation allowance on the Companys deferred tax asset;
$28.6 million of
charges primarily related to the impairment of intangible assets, restructuring
charges, write-down of land and fixed assets and the write-off of in-process research and development; $19.9 million of depreciation and amortization;
and $36.7 million of changes in assets and liabilities. The changes in assets
and liabilities are largely attributable to the sale of $20 million of
inventory to Solectron and usage of inventory in operations, higher payables in the base business,
offset by increased receivables due to higher sales. These sources of
cash were largely offset by the $120.7 million net loss from
operations. We expect accounts receivable and inventory to remain roughly
constant in the quarter ending March 31, 2003, based on the expectation of flat
sales. We expect to pay down our accounts payable and accrued liabilities
slightly in the quarter ending March 31, 2003.

Net cash used in operating activities in the nine months ended December 31,
2001 was $8.5 million, primarily consisting of a
$87.3 million loss from continuing operations, a $40.5
million increase in deferred tax asset and a $11.0 million
decrease in payables and deferred revenue. These uses of cash were largely offset by a reduction in accounts
receivable of $41.0 million, an inventory reduction of $14.4 million and a
reduction of prepaid expense and other assets of $8.0 million, combined with our non-cash charges to net
income including: $22.5 million impairment of goodwill and other long-lived
assets, $13.4 million in depreciation and amortization, $15.0 million
write-down of land held for sale, $12.8 million reserve for inventory and $2.0
million write-off of purchased in-process research and development.

Investing activities.Net cash used in investing activities for the nine months
ended December 31, 2002 was $66.4 million, This consisted primarily of $52.3
million of net cash used in the acquisition of the Asyst-Shinko JV interest;
$22.5 million of purchases of restricted cash equivalents and short-term
investments; $9.0 million of purchase of short-term investments;
and $7.3 million for the purchase of property, plant and equipment. These were partially
offset by the sale of $24.7 million of restricted cash equivalents and
short-term investments.

Net cash provided by investing activities during the
nine months ended December 31, 2001 was $32.0 million, consisting of $44.6
million net sales of short-term investments and restricted cash equivalents,
$3.8 million used to acquire AMP, SemiFab and GW and $8.8 million used to
modify our facilities and purchase new equipment and furniture used in our
operations. The net sales of short-term investments and restricted cash
equivalents include the sale of $43.2 million of restricted cash equivalents
related to a purchase commitment for land in Fremont.

Financing activities. Net cash
provided by financing activities of $29.3
million consisted primarily of $25 million of proceeds from our line of credit;
$2.3 million of proceeds from short-term loans net of payments;
and $1.9 million from the
issuance of common stock.

Net cash provided by financing
activities of $41.4 million for the nine months ended December 31, 2001, consisted of $86.3 million
from the sale of 5 3/4 percent convertible subordinated notes, which resulted
in net proceeds of $82.9 million; $1.6 million from the issuance of new
long-term debt with a Japanese bank; finance leases of $0.6 million and
proceeds of $4.4 million from the issuance of shares of common stock through our employee stock
programs. These provisions were partially offset by net payments of $48.2 million in connection with a short-term loan established in connection with the
land

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purchase discussed above and other
short- and long-term loans.

We continue to take measures to strengthen our cash position by selling
assets that do not enhance our core business. We are marketing for sale two
subsidiaries that have been accounted for as discontinued operations in the
accompanying financial statements.

In October 2002, we entered into and
fully drew down a $25 million two-year revolving credit agreement with
a commercial Bank. Borrowings under the credit agreement bear
interest at a rate indexed to LIBOR. We are required by the lender to maintain compliance with certain
financial covenants. These covenants include a total liabilities to
tangible net worth ratio, tangible net worth and minimum liquidity
covenants. The credit agreement also restricts our ability to incur additional
indebtedness; pay dividends and make distributions in respect of our capital
stock; redeem capital stock; make investments or other restricted payments;
engage in transactions with stockholders and affiliates; create liens; sell or
otherwise dispose of assets; make payments on our subordinated debt; and engage
in mergers and acquisitions.

We believe that we will
be able to maintain compliance with the financial
tests and covenants required in our credit agreement. However, covenants in the
credit agreement 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 agreement 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 agreement. New terms and conditions could be more restrictive than under
the current credit agreement. If the indebtedness under the credit
agreement 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.

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

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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
December 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 or the sale of assets. These financings may not be available
to us on a timely basis if at all or, if available, on terms acceptable to us
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.

New Accounting Pronouncements

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.

In November 2002, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. FIN 45 requires that a liability be recorded in the guarantors
balance sheet upon issuance of a guarantee. In addition, FIN 45 requires
disclosures about the guarantees that an entity has issued, including a
reconciliation of changes in the entitys product warranty liabilities. The
initial recognition and initial measurement provisions of FIN 45 are applicable
on a prospective basis to guarantees issued or modified after December 31,
2002, irrespective of the guarantors fiscal year-end. The disclosure
requirements of FIN 45 are effective for financial statements of interim or
annual periods ending after December 15, 2002. The Company is
currently assessing the impact of this standard on its consolidated
financial statements.

In November 2002, the Emerging Issues Task Force (EITF) reached a
consensus on Issue No. 00-21, Accounting for Revenue Arrangements with
Multiple Deliverables. EITF Issue No. 00-21 provides guidance on how to
account for arrangements that involve the delivery or

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performance of multiple products, services and/or rights to use assets.
The provisions of EITF Issue No. 00-21 will apply to revenue arrangements
entered into in fiscal periods beginning after June 15, 2003. The Company is
currently assessing the impact of EITF Issue No. 00-21 on its consolidated
financial statements.

In December 2002, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure  an amendment of FASB Statement No. 123. SFAS No.
148 provides alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation.
SFAS No. 148 also requires that disclosures of the pro forma effect of using
the fair value method of accounting for stock-based employee compensation be
displayed more prominently and in a tabular format. Additionally, SFAS No. 148
requires disclosure of the pro forma effect in interim financial statements.
The transition and annual disclosure requirements of SFAS No. 148 are effective
for fiscal years ended after December 15, 2002. The interim disclosure
requirements are effective for interim periods beginning after December 15,
2002. The Company believes that the adoption of this standard will have no
material impact on its consolidated financial statements.

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

Risk Factors

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

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

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or facilitizing existing fabs is often delayed until IC manufacturers are
confident about future demand growth. If demand for semiconductor equipment
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. Excluding sales of ASI, which was acquired during the third quarter of
fiscal 2003, our net sales declined 28.7% in the third quarter of fiscal 2003
from the second quarter of fiscal 2003. We currently expect sales to decline
further in the fourth quarter of fiscal 2003. 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 make the investments in marketing, research and development and
engineering that are necessary to maintain our competitive position, which
could seriously curtail our long-term business prospects.

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

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 December 2003. In October 2002, we entered into and fully
drew down a $25 million 2-year revolving credit agreement with
Comerica Bank - California. We are required under this agreement to
maintain compliance with financial covenants, including a total
liabilities to tangible net worth ratio, tangible net worth and
minimum liquidity covenants. Additionally, our Japanese subsidiary,
Asyst Japan, Inc., has loans outstanding with Japanese banks totaling
approximately $24.8 million, approximately $5.8 million of
which is guaranteed by the U.S. parent company.

We may
be unable to meet the financial covenants contained in our credit
agreement with Comerica. If we are unable to meet the covenants,
Comerica may require us to repay the outstanding balance.
Additionally, the Japanese banks may call our outstanding loans,
requiring repayment, some of which would be paid by the
U.S. parent under existing loan guarantees. This could leave the
Company with inadequate cash resources to effectively manage the
business and require the Company to obtain additional financing.

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, equity financings or
the sale of assets. If we raise additional funds through the issuance
of equity securities, our shareholders may experience dilution of
their ownership interest, and the newly-issued securities may have
rights superior to those of the common stock. If we raise additional
funds by issuing debt, we may be subject to limitations on our
operations. This strain on our capital resources could adversely
affect our business.

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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 restricts,
without agreement from our lender, Comerica Bank  California, our ability to:



| |  |  | incur additional indebtedness;                                       
| | - |  | ---------------------------------------------------------------------
|
| |  |  | pay dividends and make distributions in respect of our capital stock;
|
| |  |  | redeem capital stock;                                                
|
| |  |  | make investments or other restricted payments;                       
|
| |  |  | engage in transactions with 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
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 operating and financial performance, changes in business
conditions or results of operations, adverse regulatory developments or other
events beyond our control may impair our ability to comply with these covenants
and other provisions of the credit facility. 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.
Forced repayment of our indebtedness would reduce our available cash balances.
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

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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 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 most of our products to Solectron Corporation. Outsourcing
may not yield the benefits we expect, raise product costs, delay product
production and service delivery, and create inefficiencies in our business.

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.

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.

Prior to the transition to Solectron, we outsourced 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. The production of our wafer and
reticle carriers is being transitioned from Moll to Solectron.

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.

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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 may
be hampered by manufacturing commitments and accrued inventory based on earlier
and more optimistic projections of demand. 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 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 demand for our 200mm and 300mm automation products, we
could encounter additional problems with excess and obsolete inventory.

During periods of increasing 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
easily expand our manufacturing capacity, which could result in delays in
shipments and loss of customers. Even if we are able to sufficiently expand our
capacity, we may not be able to do so efficiently, which would adversely affect
our gross margin and profitability.

Our outsourcing agreement with Solectron includes commitments from Solectron as
to how quickly they can increase or decrease manufacturing based on updates to
our forecasted demand. However, we must provide adequate notice to Solectron
in order to receive this benefit. We may fail to do so, resulting in product
shortages or excess inventory.

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

The gross margins on our 300mm products currently are not as favorable as
on our 200mm products. This is primarily because our 300mm products are early
in their production life, we face increased competition in this production line
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, or FOUP, 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.

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These and other factors may prevent us from achieving or maintaining the
same relative pricing and gross margin performance on 300mm products as we have
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.
This is even more pronounced at ASI where the majority of sales each quarter
are attributable to relatively few customers . We may not be able to retain
our largest customers or attract additional customers, and our OEM customers
may not be successful in selling 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 take advantage of 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, and may not be able to help us gain market acceptance
for 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 wafer fabrication
capacity utilization. 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

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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.

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,

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as well as potential competition from semiconductor equipment and cleanroom
construction companies.

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

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
include our 51 percent ownership in ASI, as well as DLC, GW, SemiFab, AMP and
MECS. We subsequently merged MECS into Asyst Japan, Inc., or AJI.

In the future we may 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 the acquisition of a 51
percent ownership of Asyst Shinko, Inc. If we are to realize the anticipated
benefits of past and future acquisitions, the operations of these companies
must be integrated and combined efficiently with 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. For example, in the quarter ended September 30, 2002 we
decided to discontinue operations of our SemiFab and AMP subsidiaries, as these
subsidiaries were not considered critical to our long-term strategy. We are
currently marketing these subsidiaries for sale. We may be required to record
significant future impairment costs, such as the $22.6 million charge recorded
in fiscal 2002 and $8.4 million charge recorded in the quarter ended December
31, 2002, in the event that the carrying value exceeds the fair value of
acquired 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

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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 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

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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, 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.

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The sales cycle to new customers ranges from 6 to 12 months from initial
inquiry to placement of an order, depending on the complexity of the project.
This extended sales cycle makes the timing of customer orders uneven and
difficult to predict. A significant portion of the net sales in any quarter is
typically derived from a small number of long-term, multi-million dollar
customer projects involving upgrades of existing facilities or the construction
of new facilities. Generally, our customers may cancel or reschedule shipments
with limited or no penalty. 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;                                                                

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| |  |  | 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.

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

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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

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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;                                                    
| | - |  | ----------------------------------------------------------------------------------------------------
|
| |  |  | 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. On March
14, 2002, Andersen was indicted on federal obstruction of justice charges
arising from the governments investigation of Enron Corporation and on June
15, 2002, Andersen was found guilty. Arthur Andersen has ceased practicing
before the SEC. SEC rules require us to present historical audited financial
statements in various SEC filings, such as registration statements, along with
Arthur Andersens consent to our inclusion of its audit report in those
filings. In light of the

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cessation of Arthur Andersens SEC practice, we will not be able to obtain the
consent of Arthur Andersen to the inclusion of its audit report in our relevant
current and future filings. The SEC has provided regulatory relief designed
to allow companies that file reports with the SEC to dispense with the
requirement to file a consent of Arthur Andersen in certain circumstances.
Because representatives for Arthur Andersen 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, 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 these financial statements audited by Arthur Andersen LLP.




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 Form 10-K for the year ended March 31, 2002.

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. We cannot assure you 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
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|    |  | 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.,
Jenoptik-Infab, Inc., Emtrak, Inc. and Empak, Inc., alleging, amongst other
things, infringement of two patents related to the our SMART Traveler System.
All defendants filed answers and counterclaims asserting various defenses.
The issues were subsequently narrowed by the parties respective dismissals
of various claims, and the dismissal of defendant Empak pursuant to a
settlement agreement. The remaining patent infringement claims against the
remaining parties proceeded to summary judgment, which was ultimately entered
against us in June 1999. We appealed, and in October 2001 the appellate court
reversed the district courts decision to grant defendants motion for
summary judgment and remanded the case back to the district court. In July
2002, we and the remaining defendants narrowed the case to the respective
claims and counterclaims relating to one of the two patents in suit, for
which we continue to seek damages and injunctive relief against further
infringement. The court held a claims construction hearing in September 2002,
but has not yet issued its 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 alleged 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
alleged that they were entitled to receive approximately 450,000 shares of
Company stock pursuant to the achievement of milestones on specified
dates. The plaintiffs sought 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.
Following mediation, we
and the plaintiffs entered a settlement agreement that disposed of the matter.

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.

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Item 6  Exhibits and Reports on Form 8-K



|(a) |  | Exhibits
|--- |  | --------

|      |  |                                                                                                                                                               
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.43 |  | Amendment No. 1 to Shareholders
Agreement between Shinko Electric
Co., Ltd. and Asyst Japan Inc.,
dated as of October 16, 2002 (and
translated from Japanese).
|99.1  |  | Certification of Chief Executive Officer.                                                                                                                     
|99.2  |  | Certification of Chief Financial Officer.                                                                                                                     



|(b) |  | Reports on Form 8-K.
|--- |  | --------------------
|   
|    |  | None.               




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:  February 11, 2003 |  | 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 |  |                                                                

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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 officer 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 officer 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 officer 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:  February 11, 2003                                   |  | 
| |  |                                                            |  | 
| |  | /s/ Stephen S. Schwartz                                    |  | 
| |  |                                                            |  | 
| |  | Stephen S. Schwartz,
President and Chief Executive
Officer |  | 

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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 officer 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 officer 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 officer 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:  February 11, 2003                                             |  | 
| |  |                                                                      |  | 
| |  | /s/ Geoffrey G. Ribar                                                |  | 
| |  |                                                                      |  | 
| |  | Geoffrey G. Ribar,
Senior Vice President and
Chief Financial Officer |  | 

52



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##### Table of Contents






EXHIBIT INDEX

|        |  |                                                                                                                                                           
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                           
|Number  |  | Description                                                                                                                                               
|        |  |                                                                                                                                                           
|10.43   |  | Amendment No. 1 to Shareholders Agreement between Shinko Electric
Co., Ltd. and Asyst Japan Inc., dated as of
October 16, 2002
(translated from Japanese).
|99.1    |  | Certification of Chief Executive Officer.                                                                                                                 
|99.2    |  | Certification of Chief Financial Officer.                                                                                                                 

53