##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File number: 000-22430
 ASYST TECHNOLOGIES, INC.
 (Exact name of Registrant, as specified in its charter)
 California
(State or other jurisdiction 
of incorporation or organization)
    
    94-2942251
(IRS Employer identification Number)
 46897 Bayside Parkway, Fremont, California 94538
 (510) 661-5000
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



ASYST TECHNOLOGIES, INC.
TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1.Financial Statements (unaudited):
    
    
    3Condensed Consolidated Balance Sheets  June 30, 2008 and March 31, 2008
    
    
    3Condensed Consolidated Statements of Operations  Three Months Ended June 30, 2008 and June 30, 2007
    
    
    4Condensed Consolidated Statements of Cash Flows  Three Months Ended June 30, 2008 and June 30, 2007
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    30Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    45Item 4.Controls and Procedures
    
    
    46PART II. OTHER INFORMATIONItem 1.Legal Proceedings
    
    
    47Item 1A.Risk Factors
    
    
    47Item 6.Exhibits
    
    
    58Signatures
    
    
    59Exhibit Index
    
    
    60EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  2




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Part I  FINANCIAL INFORMATION
 
 ITEM 1  FINANCIAL STATEMENTS
 ASYST TECHNOLOGIES, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
  June 30,
    
    
    March 31,2008
    
    
    2008 (1)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    62,501
    
    
    $
    95,669Restricted cash
    
    
    4,709
    
    
    
    Accounts receivable, net
    
    
    130,037
    
    
    
    119,717Inventories
    
    
    29,825
    
    
    
    39,407Deferred income taxes
    
    
    1,691
    
    
    
    2,663Prepaid expenses and other current assets
    
    
    18,700
    
    
    
    16,320Total current assets
    
    
    247,463
    
    
    
    273,776Property and equipment, net
    
    
    28,225
    
    
    
    29,452Goodwill
    
    
    92,605
    
    
    
    98,777Intangible assets, net
    
    
    24,220
    
    
    
    29,271Other assets
    
    
    16,237
    
    
    
    14,377Total assets
    
    $
    408,750
    
    
    $
    445,653LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Short-term loans and notes payable
    
    $
    76,340
    
    
    $
    36,167Current portion of long-term debt and capital leases
    
    
    8,293
    
    
    
    7,011Accounts payable
    
    
    83,195
    
    
    
    94,666Accrued and other liabilities
    
    
    69,120
    
    
    
    77,303Deferred margin
    
    
    4,592
    
    
    
    5,844Total current liabilities
    
    
    241,540
    
    
    
    220,991LONG-TERM LIABILITIES:Long-term debt and capital leases, net of current portion
    
    
    70,163
    
    
    
    112,667Deferred tax liability
    
    
    925
    
    
    
    2,833Other long-term liabilities
    
    
    18,709
    
    
    
    21,428Total long-term liabilities
    
    
    89,797
    
    
    
    136,928COMMITMENTS AND CONTINGENCIES (see Note 14)MINORITY INTEREST
    
    
    156
    
    
    
    134SHAREHOLDERS EQUITY:Common stock, no par value:Authorized shares  300,000,000; Outstanding shares 
50,471,923 and 50,045,235 shares at June 30, 2008 and March
31, 2008, respectively
    
    
    491,233
    
    
    
    490,283Accumulated deficit
    
    
    (411,053
    )
    
    
    (400,496
    )Accumulated other comprehensive loss
    
    
    (2,923
    )
    
    
    (2,187
    )Total shareholders equity
    
    
    77,257
    
    
    
    87,600Total liabilities, minority interest and shareholders equity
    
    $
    408,750
    
    
    $
    445,653
 
 (1)
    
    The year-end condensed balance sheet data was derived from audited financial statements, but
does not include all disclosures required by accounting principles generally accepted in the
United States of America. The accompanying notes are an integral part of these condensed consolidated inancial statements.
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ASYST TECHNOLOGIES, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   Three Months EndedJune 30,2008
    
    
    2007Net sales
    
    $
    100,344
    
    
    $
    121,620Cost of sales
    
    
    74,411
    
    
    
    81,457Gross profit
    
    
    25,933
    
    
    
    40,163Operating expenses:Research and development
    
    
    10,893
    
    
    
    8,299Selling, general and administrative
    
    
    20,208
    
    
    
    21,668Amortization of acquired intangible assets
    
    
    3,257
    
    
    
    5,807Restructuring and other charges
    
    
    476
    
    
    
    545Total operating expenses
    
    
    34,834
    
    
    
    36,319(Loss) income from operations
    
    
    (8,901
    )
    
    
    3,844Interest and other income (expense), net:Interest income
    
    
    221
    
    
    
    584Interest expense
    
    
    (3,016
    )
    
    
    (2,487
    )Other expense, net
    
    
    (3,868
    )
    
    
    (1,848
    )Interest and other income (expense), net
    
    
    (6,663
    )
    
    
    (3,751
    )(Loss) income before income taxes and minority interest
    
    
    (15,564
    )
    
    
    93Benefit from (provision for) income taxes
    
    
    5,009
    
    
    
    (474
    )Minority interest
    
    
    (2
    )
    
    
    (5
    )Net loss
    
    $
    (10,557
    )
    
    $
    (386
    )Basic and diluted net loss per share
    
    $
    (0.21
    )
    
    $
    (0.01
    )Shares used in computing basic and diluted net loss per share
    
    
    50,230
    
    
    
    49,457
 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
   Three Months EndedJune 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (10,557
    )
    
    $
    (386
    )Adjustments to reconcile net loss to net cash (used in) provided by operating activities:Depreciation and amortization
    
    
    5,220
    
    
    
    7,968Amortization of deferred financing costs
    
    
    273
    
    
    
    Allowance for doubtful accounts
    
    
    (183
    )
    
    
    (27
    )Unrealized foreign exchange transaction losses
    
    
    1,103
    
    
    
    2,896Minority interest in net income in consolidated subsidiary
    
    
    2
    
    
    
    5Loss on disposal of fixed assets
    
    
    16
    
    
    
    Write-off of fees related to the amendment of a credit facility
    
    
    906
    
    
    
    Share-based compensation expense
    
    
    1,454
    
    
    
    1,619Amortization of lease incentive payments
    
    
    (156
    )
    
    
    (156
    )Deferred taxes, net
    
    
    (5,834
    )
    
    
    (2,723
    )Changes in assets and liabilities, net of acquisitions:Accounts receivable
    
    
    (16,019
    )
    
    
    (22,103
    )Inventories
    
    
    7,722
    
    
    
    (811
    )Prepaid expenses and other assets
    
    
    (3,143
    )
    
    
    1,778Accounts payable, accrued and other liabilities and deferred margin
    
    
    (12,296
    )
    
    
    3,543Net cash used in operating activities
    
    
    (31,492
    )
    
    
    (8,397
    )CASH FLOWS FROM INVESTING ACTIVITIES:Net change in restricted cash
    
    
    (4,709
    )
    
    
    Purchases of property and equipment
    
    
    (3,143
    )
    
    
    (1,938
    )Net cash used in investing activities
    
    
    (7,852
    )
    
    
    (1,938
    )CASH FLOW FROM FINANCING ACTIVITIES:Proceeds from lines of credit, net
    
    
    44,088
    
    
    
    1,148Principal payments on long-term debt and capital leases, net
    
    
    (35,340
    )
    
    
    (1,381
    )Proceeds from issuance of common stock
    
    
    49
    
    
    
    415Repurchase of common stock on net settlement of stock awards
    
    
    (435
    )
    
    
    (185
    )Net cash provided by (used in) financing activities
    
    
    8,362
    
    
    
    (3
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (2,186
    )
    
    
    (864
    )DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (33,168
    )
    
    
    (11,202
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    95,669
    
    
    
    99,701CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    62,501
    
    
    $
    88,499
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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ASYST TECHNOLOGIES, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   1. BASIS OF PRESENTATION
   Majority Owners Accounting for a Transaction in the Shares of a Consolidated
Subsidiary and a Derivative Indexed to the Minority Interest in That Subsidiary
   6




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2. RECENT ACCOUNTING PRONOUNCEMENTS
 Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used in Future Research
and Development Activities
 Noncontrolling Interests in Consolidated
Financial Statementsan amendment of ARB No. 51
 Business Combinations
 Effective Date of FASB
Statement No. 157
 Disclosures about Derivative Instruments and
Hedging Activities Accounting for
Derivative Instruments and Hedging Activities
 Determination of the Useful Life of
Intangible Assets
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The Hierarchy of Generally Accepted Accounting
Principles The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles.
 Accounting by Lessees for Nonrefundable
Maintenance Deposits
 3. ACCOUNTING CHANGES
 Fair Value Measurements,
 Fair Value Measurements at June 30, 2008Quoted Prices in ActiveMarkets for Identical
    
    
    Significant Other
    
    
    Significant UnobservableAssets
    
    
    Observable Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    TotalAssetsCash and cash equivalentsMoney market funds
    
    $
    26,250
    
    
    $
    
    
    
    $
    
    
    
    $
    26,250Total
    
    $
    26,250
    
    
    $
    
    
    
    $
    
    
    
    $
    26,250
  The Fair Value Option for Financial Assets
and Financial Liabilities  Including an Amendment of FASB Statement No. 115
 8




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4. LIQUIDITY
      Debtors Accounting for Changes in
Line-of-Credit or Revolving-Debt Arrangements
 9




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5. SIGNIFICANT ACCOUNTING POLICIES
 Revenue Recognition
  Accounting for Performance of Construction-Type and Certain Production-Type Contracts
 Software Revenue
Recognition
 Comprehensive Income (Loss)
  11




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Three Months EndedJune 30,2008
    
    
    2007Net loss, as reported
    
    $
    (10,557
    )
    
    $
    (386
    )Net change in foreign currency translation adjustment
    
    
    (758
    )
    
    
    (845
    )Net change in unrealized losses on investments
    
    
    (3
    )
    
    
    8Net change in actuarial losses and prior service
cost of defined benefit plans
    
    
    25
    
    
    
    Comprehensive loss
    
    $
    (11,293
    )
    
    $
    (1,223
    )
 Net Loss Per Share
  Three Months EndedJune 30,2008
    
    
    2007Numerator:Net loss
    
    $
    (10,557
    )
    
    $
    (386
    )Denominator:Weighted average common shares outstanding, excluding unvested
restricted stock units
    
    
    50,230
    
    
    
    49,457Denominator for basic net loss per share
    
    
    50,230
    
    
    
    49,457Effect of dilutive employee stock options and restricted stock units
    
    
    
    
    
    
    Denominator for diluted net loss per share
    
    
    50,230
    
    
    
    49,457Net loss per share  basic
    
    $
    (0.21
    )
    
    $
    (0.01
    )Net loss per share  diluted
    
    $
    (0.21
    )
    
    $
    (0.01
    )
  As ofJune 30,2008
    
    2007Restricted stock awards and stock units
    
    
    3,383
    
    
    
    2,691Stock options
    
    
    4,658
    
    
    
    5,481Convertible notes
    
    
    
    
    
    
    5,682ESPP
    
    
    75
    
    
    
    449Total
    
    
    8,116
    
    
    
    14,303
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6. BALANCE SHEET COMPONENTS
 Cash and Cash Equivalents
  Restricted Cash
  Accounts Receivable, net of allowance for doubtful accounts
  June 30,
    
    
    March 31,2008
    
    
    2008Trade receivables
    
    $
    58,800
    
    
    $
    74,488Trade receivables-related party
    
    
    
    
    
    
    26Unbilled receivables
    
    
    73,180
    
    
    
    47,403Less: Allowance for doubtful accounts
    
    
    (1,943
    )
    
    
    (2,200
    )Total
    
    $
    130,037
    
    
    $
    119,717
    13




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Inventories
  June 30,
    
    
    March 31,2008
    
    
    2008Raw materials
    
    $
    10,925
    
    
    $
    12,938Work-in-process
    
    
    16,388
    
    
    
    23,765Finished goods
    
    
    2,512
    
    
    
    2,704Total
    
    $
    29,825
    
    
    $
    39,407
   Goodwill and Intangible Assets
 Goodwill
  Fab Automation
    
    
    AMHS
    
    
    TotalBalances at March 31, 2008
    
    $
    3,397
    
    
    $
    95,380
    
    
    $
    98,777Foreign currency translation
    
    
    
    
    
    
    (6,172
    )
    
    
    (6,172
    )Balances at June 30, 2008
    
    $
    3,397
    
    
    $
    89,208
    
    
    $
    92,605
 Intangible assets, net
  June 30, 2008
    
    
    March 31, 2008Gross
    
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    
    
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Net
    
    
    Amount
    
    
    Amortization
    
    
    NetAmortizable intangible assets:Developed technology
    
    $
    88,853
    
    
    $
    73,087
    
    
    $
    15,766
    
    
    $
    94,188
    
    
    $
    75,963
    
    
    $
    18,225Customer base and other intangible assets
    
    
    57,572
    
    
    
    50,162
    
    
    
    7,410
    
    
    
    60,708
    
    
    
    50,792
    
    
    
    9,916Licenses and patents
    
    
    5,299
    
    
    
    4,255
    
    
    
    1,044
    
    
    
    5,302
    
    
    
    4,172
    
    
    
    1,130Total
    
    $
    151,724
    
    
    $
    127,504
    
    
    $
    24,220
    
    
    $
    160,198
    
    
    $
    130,927
    
    
    $
    29,271
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Fiscal Year ending March 31,Remainder of 2009
    
    $
    9,2232010
    
    
    7,6932011
    
    
    5,4302012
    
    
    1,8322013
    
    
    42Total
    
    $
    24,220
 Accrued and other liabilities
  June 30,
    
    
    March 31,2008
    
    
    2008Deferred tax liability
    
    $
    924
    
    
    $
    1,586Income taxes payable
    
    
    4,230
    
    
    
    2,986Other taxes payable
    
    
    754
    
    
    
    1,381Warranty
    
    
    11,575
    
    
    
    12,505Employee compensation
    
    
    15,302
    
    
    
    17,781Customer deposits
    
    
    9,113
    
    
    
    11,072Payable to Shinko for 4.9% share in ATJ
    
    
    12,313
    
    
    
    13,204Other accrued expenses
    
    
    14,909
    
    
    
    16,788Total
    
    $
    69,120
    
    
    $
    77,303
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Warranty Accrual
  Three Months EndedJune 30,2008
    
    
    2007Beginning balance
    
    $
    12,505
    
    
    $
    11,982Accruals
    
    
    3,218
    
    
    
    3,496Settlements
    
    
    (3,496
    )
    
    
    (3,608
    )Foreign currency translation
    
    
    (652
    )
    
    
    (401
    )Ending balance
    
    $
    11,575
    
    
    $
    11,469
 7. SHARE-BASED COMPENSATION
 Stock Options Plans
     Weighted-Average
    
    
    AggregateTotal Number
    
    
    Weighted-Average
    
    
    Remaining
    
    
    Intrinsic Value (1)of Shares
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    (in thousands)Options outstanding as of March 31, 2008
    
    
    4,783,836
    
    
    $
    9.98Granted
    
    
    Exercised
    
    
    (15,640
    )
    
    
    3.42Cancelled
    
    
    (110,295
    )
    
    
    11.55Options outstanding as of June 30, 2008
    
    
    4,657,901
    
    
    
    9.96
    
    
    
    3.65
    
    
    $
    19Options vested and expected to vest at
June 30, 2008
    
    
    4,586,532
    
    
    
    10.03
    
    
    
    3.65
    
    
    $
    19Exercisable as of June 30, 2008
    
    
    4,413,304
    
    
    $
    10.14
    
    
    
    3.64
    
    
    $
    19
 
 (1)
    
    These amounts represent the difference between the exercise price and $3.57, the closing price
of Asyst stock on June 30, 2008, as reported on The NASDAQ Global Market, for all in-the-money
options outstanding. 16




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Restricted Stock Awards and Restricted Stock Units
  Weighted AverageNumber of
    
    
    Grant-DateShares
    
    
    Fair ValueOutstanding at March 31, 2008
    
    
    2,465,930
    
    
    $
    6.58Granted
    
    
    1,595,777
    
    
    
    3.56Vested
    
    
    (529,855
    )
    
    
    3.47Cancelled
    
    
    (149,071
    )
    
    
    5.74Outstanding at June 30, 2008
    
    
    3,382,781
    
    
    $
    5.68
  Stock Option Awards and Restricted Stock Units (RSUs) with Market and Performance Conditions
  Market Condition Awards and Options
  17




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WeightedAverageWeighted
    
    
    ContractualNumber of
    
    
    Average
    
    
    TermShares
    
    
    Grant Date Fair Value
    
    
    (Years)Outstanding at March 31, 2008
    
    
    230,666
    
    
    $
    2.23Awards granted
    
    
    
    
    
    
    Awards vested
    
    
    (27,500
    )
    
    
    0.64Awards cancelled
    
    
    (63,406
    )
    
    
    1.91Outstanding at June 30, 2008
    
    
    139,760
    
    
    $
    2.69
    
    
    
    0.89
  Performance Condition Awards and Options
  WeightedAverageWeighted
    
    
    ContractualNumber of
    
    
    Average
    
    
    TermShares
    
    
    Grant Date Fair Value
    
    
    (Years)Outstanding at March 31, 2008
    
    
    410,330
    
    
    $
    7.18Awards granted
    
    
    597,898
    
    
    
    3.55Awards cancelled
    
    
    
    
    
    
    Outstanding at June 30, 2008
    
    
    1,008,228
    
    
    $
    5.03
    
    
    
    2.61
  Employee Stock Purchase Plan
  18




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Share-Based Compensation Expense
     Three Months EndedJune 30,2008
    
    
    2007Share-based compensation expense by category:Cost of sales
    
    $
    193
    
    
    $
    153Research and development
    
    
    188
    
    
    
    185Selling, general and administrative
    
    
    1,073
    
    
    
    1,281Total share-based compensation expense
    
    $
    1,454
    
    
    $
    1,619
  19




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8. PENSION BENEFIT PLANS
  Three Months EndedJune 30,2008
    
    
    2007Service cost
    
    $
    348
    
    
    $
    280Interest cost
    
    
    89
    
    
    
    96Expected return on plan assets
    
    
    (58
    )
    
    
    (100
    )Amortization of prior service cost
    
    
    
    
    
    
    (1
    )Amortization of actuarial losses
    
    
    
    
    
    
    5Net periodic benefit cost
    
    $
    379
    
    
    $
    280
 Employer Contributions
  9. INCOME TAXES
 Three Months EndedJune 30,2008
    
    2007Benefit from (provision for) income taxes
    
    $
    5,009
    
    
    $
    (474
    )
   Accounting for Uncertainty in Income Taxes
  20




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10. RESTRUCTURING CHARGES
  Severance and
    
    
    ExcessBenefits
    
    
    Facilities
    
    
    TotalBalance at March 31, 2008
    
    $
    387
    
    
    $
    154
    
    
    $
    541Reclassification from other
long-term liability
    
    
    
    
    
    
    65
    
    
    
    65Additional accruals
    
    
    224
    
    
    
    252
    
    
    
    476Non-cash related utilization
    
    
    
    
    
    
    (99
    )
    
    
    (99
    )Amounts paid in cash
    
    
    (367
    )
    
    
    (162
    )
    
    
    (529
    )Foreign currency translation
    
    
    (16
    )
    
    
    (6
    )
    
    
    (22
    )Balance at June 30, 2008
    
    $
    228
    
    
    $
    204
    
    
    $
    432
  21




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##### Table of Contents



Severance and
    
    
    ExcessBenefits
    
    
    Facilities
    
    
    TotalBalance at March 31, 2007
    
    $
    
    
    
    $
    788
    
    
    $
    788Additional accruals
    
    
    545
    
    
    
    
    
    
    
    545Amounts paid in cash
    
    
    (433
    )
    
    
    (205
    )
    
    
    (638
    )Balance at June 30, 2007
    
    $
    112
    
    
    $
    583
    
    
    $
    695
  22




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##### Table of Contents



11. REPORTABLE SEGMENTS
 Disclosures about
Segments of an Enterprise and Related Information
  
    
    Automated Material Handling Systems (AMHS).This segment derives revenues from the sale
of products and services for automated transport and loading systems for semiconductor fabs
and flat panel display manufacturers.
    
    Fab Automation Product.This segment derives revenues from the sale of products and
services for interface products, substrate-handling robotics, Auto-ID systems, sorters,
EFEMs and connectivity software.
    23




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##### Table of Contents



Three Months EndedJune 30,2008
    
    
    2007AMHS:Net sales
    
    $
    67,597
    
    
    $
    76,309Cost of Sales
    
    
    57,096
    
    
    
    55,782Gross Profit
    
    $
    10,501
    
    
    $
    20,527(Loss) income from operations
    
    $
    (7,260
    )
    
    $
    2,892Fixed assets additions
    
    $
    1,270
    
    
    $
    795Amortization and Depreciation
    
    $
    4,135
    
    
    $
    6,335Fab Automation Products:Net sales
    
    $
    32,747
    
    
    $
    45,311Cost of Sales
    
    
    17,315
    
    
    
    25,675Gross Profit
    
    $
    15,432
    
    
    $
    19,636(Loss) income from operations
    
    $
    (1,641
    )
    
    $
    952Fixed assets additions
    
    $
    739
    
    
    $
    483Amortization and Depreciation
    
    $
    1,358
    
    
    $
    1,633Consolidated:Net sales
    
    $
    100,344
    
    
    $
    121,620Cost of Sales
    
    
    74,411
    
    
    
    81,457Gross Profit
    
    $
    25,933
    
    
    $
    40,163(Loss) income from operations
    
    $
    (8,901
    )
    
    $
    3,844Fixed assets additions
    
    $
    2,009
    
    
    $
    1,278Amortization and Depreciation
    
    $
    5,493
    
    
    $
    7,968
   Three Months EndedJune 30,2008
    
    2007Customer A
    
    
    24.0
    %
    
    
    18.8
    %Customer B
    
    
    16.8
    %
    
    
    
    *Customer C
    
    
    10.1
    %
    
    
    11.8
    %Customer D
    
    
    
    *
    
    
    11.5
    %
 
 *
    
    Less than 10%  24




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##### Table of Contents



12. DEBT
  June 30,
    
    
    March 31,2008
    
    
    2008Short-term loans
    
    $
    73,374
    
    
    $
    35,250Long-term loans
    
    
    78,308
    
    
    
    119,475Capital leases
    
    
    148
    
    
    
    203Total debt and capital leases
    
    
    78,456
    
    
    
    119,678Less: Current portion of long-term debt and capital
leases
    
    
    (8,293
    )
    
    
    (7,011
    )Long-term debt and capital leases, net of current portion
    
    $
    70,163
    
    
    $
    112,667
  Fiscal Year Ending March 31,
    
    AmountRemainder of 2009
    
    $
    4,1822010
    
    
    12,3202011
    
    
    18,5522012
    
    
    26,8552013 and thereafter
    
    
    16,547Total
    
    $
    78,456
 Credit Facility
   25




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Convertible Subordinated Notes
  Other Debt Financing Arrangements
  26




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##### Table of Contents



13. RELATED-PARTY TRANSACTIONS
   June 30,
    
    March 31,2008
    
    2008Accounts receivable from MECS Korea
    
    $
    6
    
    
    $
    26Accounts payable due to MECS Korea
    
    
    57
    
    
    
    67Accrued liabilities due to MECS Korea
    
    
    5
    
    
    
    6
  Three Months EndedJune 30,2008
    
    2007Sales to MECS Korea
    
    $
    8
    
    
    $
    17Purchases from MECS Korea
    
    
    154
    
    
    
    47
 14. COMMITMENTS AND CONTINGENCIES
 Lease Commitments
  Fiscal Year Ending March 31,
    
    Capital Lease
    
    
    Operating Lease
    
    
    TotalRemainder of 2009
    
    $
    129
    
    
    $
    4,292
    
    
    $
    4,4212010
    
    
    9
    
    
    
    4,021
    
    
    
    4,0302011
    
    
    9
    
    
    
    2,909
    
    
    
    2,9182012
    
    
    3
    
    
    
    2,618
    
    
    
    2,6212013
    
    
    
    
    
    
    1,731
    
    
    
    1,731Total
    
    
    150
    
    
    $
    15,571
    
    
    $
    15,721Less: interest
    
    
    (2
    )Present value of minimum lease payments
    
    
    148Less: current portion of capital leases
    
    
    (130
    )Capital leases, net of current portion
    
    $
    18
  27




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##### Table of Contents



Purchase Commitments
  Legal Contingencies
 Our Patent Infringement Action against Jenoptik AG
     Daifukus Patent Infringement Action Against Us
  28




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##### Table of Contents



Derivative Action filed Against Current and Former Directors & Officers Relating to Past Stock
Option Grants & Practices
  Other Matters
  Indemnifications
   29




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward Looking Statements
 Except for the historical information contained herein, the following discussion includes
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties. We intend
such forward-looking statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995 and we are including
this statement for purposes of complying with these safe harbor provisions. We have based these
forward-looking statements on our current expectations and projections about future events. Our
actual results could differ materially, as a result of certain factors including but not limited to
those discussed in Risk Factors in this report and our other Securities and Exchange Commission
(SEC) filings. These forward-looking statements are not guarantees of future performance and are
subject to risks, uncertainties and assumptions, including those set forth in this section as well
as those under the caption, Item 1A, Risk Factors.
 Words such as expect, anticipate, intend, plan, believe, and estimate, and
variations of such words and similar expressions are intended to identify such forward-looking
statements. Except as may be required by law, we do not intend 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
report might not occur.
 The following discussion should be read in conjunction with the unaudited condensed
consolidated financial statements and related notes included in this report and our audited
consolidated financial statements and related notes as filed in our Annual Report Form 10-K for the
fiscal year ended March 31, 2008. Certain prior period amounts have been reclassified to conform to
current period presentation.
   Overview
  
 
 
 30




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##### Table of Contents




 
  Majority Owners Accounting for a Transaction in the Shares of a Consolidated
Subsidiary and a Derivative Indexed to the Minority Interest in That Subsidiary
  Our Operating Segments
  
    
    AMHS.This segment derives revenues from the sale of products and services for automated
transport and loading systems for semiconductor fabs and flat panel display manufacturers.
    
    Fab Automation Product.This segment derives revenues from the sale of products and
services for interface products, substrate-handling robotics, Auto-ID systems, sorters,
EFEMs and connectivity software.
   31




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Status of Material Weakness
  New Developments
  Critical Accounting Policies and Estimates
   Results of Operations for the Three Months Ended June 30, 2008 and 2007
  32




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##### Table of Contents



Three Months EndedJune 30,2008
    
    
    2007AMHS:Net sales
    
    $
    67,597
    
    
    $
    76,309Cost of Sales
    
    
    57,096
    
    
    
    55,782Gross Profit
    
    $
    10,501
    
    
    $
    20,527(Loss) income from operations
    
    $
    (7,260
    )
    
    $
    2,892Fab Automation Products:Net sales
    
    $
    32,747
    
    
    $
    45,311Cost of Sales
    
    
    17,315
    
    
    
    25,675Gross Profit
    
    $
    15,432
    
    
    $
    19,636(Loss) income from operations
    
    $
    (1,641
    )
    
    $
    952Consolidated:Net sales
    
    $
    100,344
    
    
    $
    121,620Cost of Sales
    
    
    74,411
    
    
    
    81,457Gross Profit
    
    $
    25,933
    
    
    $
    40,163(Loss) income from operations
    
    $
    (8,901
    )
    
    $
    3,844
  Three Months EndedJune 30,2008
    
    
    2007AMHS:Net sales
    
    
    67.4
    %
    
    
    62.7
    %Cost of Sales
    
    
    56.9
    %
    
    
    45.9
    %Gross Profit
    
    
    10.5
    %
    
    
    16.9
    %(Loss) income from operations
    
    
    (7.3
    )%
    
    
    2.4
    %Fab Automation Products:Net sales
    
    
    32.6
    %
    
    
    37.3
    %Cost of Sales
    
    
    17.3
    %
    
    
    21.1
    %Gross Profit
    
    
    15.4
    %
    
    
    16.1
    %(Loss) income from operations
    
    
    (1.6
    )%
    
    
    0.8
    %Consolidated:Net sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of Sales
    
    
    74.2
    %
    
    
    67.0
    %Gross Profit
    
    
    25.8
    %
    
    
    33.0
    %(Loss) income from operations
    
    
    (8.9
    )%
    
    
    3.2
    %
 First Quarter of 2009 Compared to First Quarter of 2008
 33




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##### Table of Contents



Net Sales
 Consolidated
   AMHS
   Fab Automation
   Comparison of Expenses, Gross Margin, Interest & Other Income, and Income Taxes
 34




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##### Table of Contents



Three Months EndedJune 30,2008
    
    2007Net sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    74.2
    %
    
    
    67.0
    %Gross profit
    
    
    25.8
    %
    
    
    33.0
    %Operating expenses:Research and development
    
    
    10.9
    %
    
    
    6.8
    %Selling, general and administrative
    
    
    20.1
    %
    
    
    17.8
    %Amortization of acquired intangible assets
    
    
    3.2
    %
    
    
    4.8
    %Restructuring and other charges
    
    
    0.5
    %
    
    
    0.4
    %Total operating expenses
    
    
    34.7
    %
    
    
    29.8
    %(Loss) income from operations
    
    
    (8.9
    )%
    
    
    3.2
    %Interest and other income (expense), net:Interest income
    
    
    0.2
    %
    
    
    0.5
    %Interest expense
    
    
    (3.0
    )%
    
    
    (2.0
    )%Other expense, net
    
    
    (3.8
    )%
    
    
    (1.6
    )%Interest and other income (expense), net
    
    
    (6.6
    )%
    
    
    (3.1
    )%(Loss) income before income taxes and minority
interest
    
    
    (15.5
    )%
    
    
    0.1
    %Benefit from (provision for) income taxes
    
    
    5.0
    %
    
    
    (0.4
    )%Minority interest
    
    
    0.0
    %
    
    
    0.0
    %Net loss
    
    
    (10.5
    )%
    
    
    (0.3
    )%
 Gross Margin
 Consolidated
  AMHS
  35




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Fab Automation
  Research and Development
 Three Months EndedJune 30,(in thousands, except percentages)
    
    2008
    
    2007
    
    ChangeResearch and development
    
    $
    10,893
    
    
    $
    8,299
    
    
    $
    2,594Percentage of total net sales
    
    
    10.9
    %
    
    
    6.8
    %
   Selling, General and Administrative
 Three Months EndedJune 30,(in thousands, except percentage)
    
    2008
    
    2007
    
    ChangeSelling, general and administrative
    
    $
    20,208
    
    
    $
    21,668
    
    
    $
    (1,460
    )Percentage of total net sales
    
    
    20.1
    %
    
    
    17.8
    %
  36




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##### Table of Contents



Amortization of Acquired Intangibles Assets
 Three Months EndedJune 30,(in thousands, except percentage)
    
    2008
    
    2007
    
    ChangeAmortization of acquired intangible assets
    
    $
    3,257
    
    
    $
    5,807
    
    
    $
    (2,550
    )Percentage of total net sales
    
    
    3.2
    %
    
    
    4.8
    %
  Restructuring Charges
 Three Months EndedJune 30,(in thousands, except percentage)
    
    2008
    
    2007
    
    ChangeRestructuring charges
    
    $
    476
    
    
    $
    545
    
    
    $
    (69
    )Percentage of total net sales
    
    
    0.5
    %
    
    
    0.4
    %
    37




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##### Table of Contents



Severance and
    
    
    ExcessBenefits
    
    
    Facilities
    
    
    TotalBalance at March 31, 2008
    
    $
    387
    
    
    $
    154
    
    
    $
    541Reclassification from other long-term liability
    
    
    
    
    
    
    65
    
    
    
    65Additional accruals
    
    
    224
    
    
    
    252
    
    
    
    476Non-cash related utilization
    
    
    
    
    
    
    (99
    )
    
    
    (99
    )Amounts paid in cash
    
    
    (367
    )
    
    
    (162
    )
    
    
    (529
    )Foreign currency translation
    
    
    (16
    )
    
    
    (6
    )
    
    
    (22
    )Balance at June 30, 2008
    
    $
    228
    
    
    $
    204
    
    
    $
    432
 Interest and Other Income (Expense), Net
 Three Months EndedJune 30,(in thousands)
    
    2008
    
    
    2007
    
    
    ChangeInterest income
    
    $
    221
    
    
    $
    584
    
    
    $
    (363
    )Interest expense
    
    
    (3,016
    )
    
    
    (2,487
    )
    
    
    (529
    )Other expense, net
    
    
    (3,868
    )
    
    
    (1,848
    )
    
    
    (2,020
    )Interest and other income (expense),
net
    
    $
    (6,663
    )
    
    $
    (3,751
    )
    
    $
    (2,912
    )
  Debtors Accounting for Changes in
Line-of-Credit or Revolving-Debt Arrangements
  Income Taxes
 38




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##### Table of Contents



Three Months EndedJune 30,(in thousands, except percentage)
    
    2008
    
    2007
    
    ChangeBenefit from (provision for) income taxes
    
    $
    5,009
    
    
    $
    (474
    )
    
    $
    5,483Percentage of total net sales
    
    
    5.0
    %
    
    
    -0.4
    %
   Accounting
for Uncertainty in Income Taxes
    Liquidity and Capital Resources
   39




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##### Table of Contents



Three Months EndedJune 30,(in thousands)
    
    2008
    
    2007Net cash used in operating activities
    
    $
    (31,492
    )
    
    $
    (8,397
    )Net cash used in investing activities
    
    
    (7,852
    )
    
    
    (1,938
    )Net cash (used in) provided by financing activities
    
    
    8,362
    
    
    
    (3
    )
 Cash Flows from Operating Activities
  Net loss
    
    $
    (10,557
    )Depreciation and amortization
    
    
    5,220Amortization of deferred financing costs
    
    
    273Share-based compensation expense
    
    
    1,454Write-off of fees related to the amendment of a credit facility
    
    
    906Deferred taxes, net
    
    
    (5,834
    )Other non-cash charges
    
    
    782Increase in accounts receivable
    
    
    (16,019
    )Decrease in inventories
    
    
    7,722Increase in prepaid expenses and other assets
    
    
    (3,143
    )Decrease in accounts payable, accrued liabilities and deferred
margin
    
    
    (12,296
    )Net cash used in operating activities
    
    $
    (31,492
    )
     40




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##### Table of Contents



Cash Flows from Investing Activities
   Cash Flows from Financing Activities
   Credit Facility
   41




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Convertible Subordinated Notes
  Other Debt Financing Arrangements
  42




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##### Table of Contents



Acquisition and Related Debt Financing Facility
    Other Liquidity Considerations
    43




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##### Table of Contents



Recent Accounting Pronouncements
 Accounting for Nonrefundable Advance
Payments for Goods or Services to Be Used in Future Research and Development Activities
 Noncontrolling Interests in Consolidated
Financial Statementsan amendment of ARB No. 51
 Business Combinations
 Effective Date of FASB
Statement No. 157
 Disclosures about Derivative Instruments and
Hedging Activities Accounting for
Derivative Instruments and Hedging Activities
 44




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##### Table of Contents



Determination of the Useful Life of
Intangible Assets
 The Hierarchy of Generally Accepted Accounting
Principles The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles.
 Accounting by Lessees for Nonrefundable
Maintenance Deposits
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk.
   Foreign Currency Exchange Risk
 45




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##### Table of Contents



Strengthening in
    
    No change in
    
    Weakening inJapanese Yen of
    
    Japanese Yen
    
    Japanese Yen ofX percent
    
    exchange rate
    
    X percent10
    %
    
    
    5
    %
    
    
    
    
    
    
    5
    %
    
    
    10
    %Net loss for the
three months ended
June 30, 2008
    
    $
    (11,021
    )
    
    $
    (10,777
    )
    
    $
    (10,557
    )
    
    $
    (10,358
    )
    
    $
    (10,177
    )
  Accounting for Derivative Instruments and Hedging
Activities.
 
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
    46




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##### Table of Contents



Managements Remediation Initiatives
      Changes in Internal Control over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
 We have a history of significant losses.
  We continue to need to reduce costs in core areas; significant cost reductions could affect our
existing customer base, profitability and ability to benefit from future upturn in demand for our
products.
 47




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##### Table of Contents



We face potential risks in connection with our outstanding indebtedness; if we are not able to
comply with the requirements of this debt on a timely basis, our ability to discharge our
obligations under this indebtedness, liquidity and business may be harmed.
  Indebtedness Under Credit Agreement With KeyBank
     48




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##### Table of Contents



Other Credit Lines
   49




---



##### Table of Contents



If we need additional financing to meet our working capital needs, to finance capital expenditures
or to fund operations, we may not be able to obtain such financing on terms favorable to us, if at
all.
  We have risk of material losses including attorney fees and expenses in conjunction with ongoing
lawsuits.
 In re Asyst Technologies, Inc. Derivative Litigation
  50




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##### Table of Contents



If we continue to fail to achieve and maintain effective disclosure controls and procedures and
internal control over financial reporting on a consolidated basis, our stock price and investor
confidence in our Company could be materially and adversely affected.
    Our global operations subject us to risks that may negatively affect our results of operations and
financial condition.
  
    
    security concerns, such as armed conflict and civil or military unrest, crime, political
instability, and terrorist activity;
    
    trade restrictions; compliance with extensive foreign and U.S. export laws;
 51




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##### Table of Contents




    
    natural disasters;
    
    inability to enforce payment obligations or legal protections accorded creditors to the
same extent within the U.S.;
    
    differing employment practices and labor issues;
    
    local business and cultural factors that differ from our normal standards and practices;
    
    regulatory requirements and prohibitions that differ between jurisdictions;
    
    restrictions on our operations by governments seeking to support local industries,
nationalization of our operations, and restrictions on our ability to repatriate earnings;
and/or
    
    the laws of certain foreign countries may not protect our intellectual property to the
same extent as do the laws of the United States.
   Fluctuations in the demand for and mix of products sold may adversely affect our financial
results.
  
    
    competitive pressures from companies that have competing products;
    
    changes in customer product needs;
    
    changes in business and economic conditions, including a downturn in the semiconductor
industry;
    
    strategic actions taken by our competitors; and/or
    
    market acceptance of our products.
  Most of our Fab Automation Product manufacturing is outsourced to a single contract manufacturer,
which could disrupt the availability of our Fab Automation Products and adversely affect our gross
margins.
  52




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##### Table of Contents



Shortages of components necessary for product assembly by Flextronics or us can delay shipments to
our customers and can lead to increased costs, which may negatively impact our financial results.
  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.
  53




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##### Table of Contents



We operate in an intensely competitive industry, and our failure to respond quickly to
technological developments and introduce new products and features could have an adverse effect on
our ability to compete.
  We may be unable to protect our intellectual property rights and we may become involved in
litigation concerning the intellectual property rights of others.
     Our results of operations could vary as a result of the methods, estimates, and judgments we use
in applying our accounting policies.
 54




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##### Table of Contents



Share-Based Payment
 Changes in our effective tax rate may have an adverse effect on our results of operations.
  
    
    the jurisdictions in which profits are determined to be earned and taxed;
    
    the resolution of issues arising from tax audits with various tax authorities;
    
    changes in the valuation of our deferred tax assets and liabilities;
    
    adjustments to estimated taxes upon finalization of various tax returns;
    
    changes in share-based compensation expense;
    
    changes in tax laws or the interpretation of such tax laws and changes in generally
accepted accounting principles; and/or
    
    the repatriation of non-U.S. earnings for which we have not previously provided for U.S.
taxes.
  We may not be able to integrate efficiently the operations of our acquisitions, and may incur
substantial losses in the divestiture of assets or operations.
  55




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##### Table of Contents



We have experienced unexpected turnover in our finance department recently and in past years, and
this could have an adverse impact on our business; In order to compete, we must attract, retain,
and motivate key employees Company wide, and our failure to do so could have an adverse effect on
our results of operations.
    The unsolicited acquisition proposal from Aquest Systems Corp. and the attempt to gain control
of our Board from Riley Investment Partners Master Fund L.P. has created a distraction for our
management and uncertainty that may adversely affect our business.
   Risks Related to Our Industry
 The semiconductor manufacturing equipment industry is highly cyclical and is affected by recurring
downturns in the semiconductor industry, and these cycles can harm our operating results.
  56




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We may not effectively compete in a highly competitive semiconductor manufacturing equipment
industry.
      57




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ITEM 6. EXHIBITS
 Exhibit
    
    
    
    Incorporated by Reference
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    Ex. No.
    
    File No.
    
    Filing Date
    
    Herewith3.1
    
    Amended and Restated Articles of
Incorporation of the Company.
    
    S-1
    
    
    3.1
    
    
    333-66184
    
    7/19/19933.2
    
    Amended and Restated Bylaws of the
Company.
    
    8-K
    
    
    3.2
    
    
    000-22430
    
    5/20/20083.3
    
    Certificate of Amendment of the Amended
and Restated Articles of Incorporation, filed
September 24, 1999.
    
    10-Q
    
    
    3.2
    
    
    000-22430
    
    10/21/19993.4
    
    Certificate of Amendment of the Amended
and Restated Articles of Incorporation, filed
October. 5, 2000.
    
    14A
    
    App.
    
    000-22430
    
    7/31/20003.5
    
    Amended and Restated Certificate of
Determination of Series A Junior
Participating Preferred Stock, dated July 9,
2008
    
    8-K
    
    
    3.5
    
    
    000-22430
    
    7/15/20084.1
    
    Amended and Restated Rights Agreement
between the Company and Computershare
Trust Company, N.A., as Rights Agent, dated
July 9, 2008
    
    8-K
    
    
    4.3
    
    
    000-22430
    
    7/15/200831.1
    
    Certification of the Chief Executive Officer
required by Rule 13a-14(a). (pursuant to
Section 302 of the Sarbanes-Oxley Act of
2002).
    
    
    
    
    
    
    
    
    
    
    
    X31.2
    
    Certification of the Chief Financial Officer
required by Rule 13a-14(a). (pursuant to
Section 302 of the Sarbanes-Oxley Act of
2002).
    
    
    
    
    
    
    
    
    
    
    
    X32.1
    
    Combined Certifications of the Chief
Executive Officer and Chief Financial Officer
required by Rule 13a-14(b). (pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002).
    
    
    
    
    
    
    
    
    
    
    
    X
 58




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##### Table of Contents



ASYST TECHNOLOGIES, INC.Date: August 6, 2008
    By:
    /S/ MICHAEL A. SICUROMichael A. SicuroChief Financial OfficerBy:
    /S/ AARON L. TACHIBANAAaron L. TachibanaPrincipal Accounting Officer 59




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    
    
    Incorporated by Reference
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    Ex. No.
    
    File No.
    
    Filing Date
    
    Herewith3.1
    
    Amended and Restated Articles of
Incorporation of the Company.
    
    S-1
    
    
    3.1
    
    
    333-66184
    
    7/19/19933.2
    
    Amended and Restated Bylaws of the
Company.
    
    8-K
    
    
    3.2
    
    
    000-22430
    
    5/20/20083.3
    
    Certificate of Amendment of the Amended
and Restated Articles of Incorporation, filed
September 24, 1999.
    
    10-Q
    
    
    3.2
    
    
    000-22430
    
    10/21/19993.4
    
    Certificate of Amendment of the Amended
and Restated Articles of Incorporation, filed
October. 5, 2000.
    
    14A
    
    App.
    
    000-22430
    
    7/31/20003.5
    
    Amended and Restated Certificate of
Determination of Series A Junior
Participating Preferred Stock, dated July 9,
2008
    
    8-K
    
    
    3.5
    
    
    000-22430
    
    7/15/20084.1
    
    Amended and Restated Rights Agreement
between the Company and Computershare
Trust Company, N.A., as Rights Agent, dated
July 9, 2008
    
    8-K
    
    
    4.3
    
    
    000-22430
    
    7/15/200831.1
    
    Certification of the Chief Executive Officer
required by Rule 13a-14(a). (pursuant to
Section 302 of the Sarbanes-Oxley Act of
2002).
    
    
    
    
    
    
    
    
    
    
    
    X31.2
    
    Certification of the Chief Financial Officer
required by Rule 13a-14(a). (pursuant to
Section 302 of the Sarbanes-Oxley Act of
2002).
    
    
    
    
    
    
    
    
    
    
    
    X32.1
    
    Combined Certifications of the Chief
Executive Officer and Chief Financial Officer
required by Rule 13a-14(b). (pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002).
    
    
    
    
    
    
    
    
    
    
    
    X
 60