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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

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<S>                               <C>
FOR THE FISCAL YEAR ENDED             COMMISSION FILE NUMBER
   SEPTEMBER 30, 2000                         0-22248
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                            ------------------------
                       GASONICS INTERNATIONAL CORPORATION

               (Exact name of Registrant as specified in charter)

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<S>                                            <C>
               DELAWARE                                     94-2159729
    (State or other jurisdiction of            (I.R.S. Employer Identification No.)
    incorporation or organization)
</TABLE>

                             404 E. PLUMERIA DRIVE
                           SAN JOSE, CALIFORNIA 95134
                                 (408) 570-7400

    (Address, including ZIP code, and telephone number, including area code,
                  of Registrant's principal executive offices)

          Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

          Securities registered pursuant to Section 12(g) of the Act:
                                  COMMON STOCK
                            ------------------------

    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes / /  No /X/

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to this
Form 10-K.  / /

    The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based on the closing price of the Common Stock on December 12, 2000,
as reported on The Nasdaq National Market was approximately $201,147,138. Shares
of Common Stock held by each officer and director and by each person who owns 5%
or more of the outstanding Common Stock have been excluded from this computation
in that such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination for other
purposes.

    As of December 12, 2000, the Registrant had outstanding 17,499,274 shares of
Common Stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the Registrant's Proxy Statement for the Registrant's Annual
Meeting of Stockholders to be held on or about March 9, 2001 (if our transaction
with Novellus is not consummated) are incorporated by reference into Part III of
this Report on Form 10-K.

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                                     PART I

ITEM 1.  BUSINESS

    We are a leading developer and global supplier of photoresist and residue
removal solutions used in advanced semiconductor device manufacturing. We also
provide high-pressure furnaces for the semiconductor and optical device industry
and low-pressure chemical vapor deposition, or LPCVD, for the flat panel
display, or FPD, industry. We market and sell our products to leading
semiconductor device and FPD manufacturers worldwide including 15 of the top 20
semiconductor device manufacturers.

    Our technologically advanced systems offer a high degree of flexibility,
reliability and serviceability. Our photoresist removal systems use our
proprietary microwave downstream plasma technology, which is designed to
increase yields in the manufacturing of semiconductor devices. Our proprietary
microwave downstream processing technology offers our customers significant
advantages over traditional techniques by reducing the damage that typically
occurs to the wafer in the photoresist removal processes, thus increasing yield
and reducing cost of ownership.

    Our residue removal systems use our proprietary microwave downstream plasma
technology in concert with our directional RF plasma technology to remove
photoresist and the most difficult to remove residues. These systems are
designed to allow greater fab efficiency and reduced cost through a simplified
process flow. In addition, these systems provide industry leading technology for
the complex cleaning requirements associated with new materials, such as copper
and low-k dielectrics, as well as for smaller line widths. To further address
these new processing requirements for new materials and decreasing line widths,
we have entered into joint development agreements with a number of customers and
semiconductor equipment manufacturers.

    We began operations in 1968, incorporated in California in March 1971 and
reincorporated in Delaware in March 1994. In February 1991, we acquired Branson
International Plasma Corporation, a manufacturer of photoresist removal
equipment. In August 1995, we acquired Tekisco, Ltd. of Tokyo, Japan, a
manufacturer of LPCVC and thermal annealing equipment for the manufacture of
FPDs.

    On September 13, 2000, we completed our acquisition of Gamma Precision
Technology, Inc. ("GPT"), a global supplier of products and services used in the
fabrication of advanced integrated circuits ("semiconductors" or "ICs").

    On October 25, 2000, we entered into an Agreement and Plan of Reorganization
with Novellus Systems, Inc., a Delaware corporation and the leader in thin film
deposition technology for the semiconductor industry. Novellus will acquire all
outstanding shares of GaSonics in a stock-for-stock merger transaction. If the
merger is completed, GaSonics would become a wholly-owned subsidiary of
Novellus. Each share of GaSonics common stock outstanding as of the closing date
will be converted into 0.52 shares of Novellus common stock on a fixed exchange
ratio basis. The merger will be accounted for as a pooling transaction and is
intended to qualify as a tax-free reorganization under IRS regulations. The
transaction has been approved by the board of directors of both companies and is
expected to formally close in the first quarter of 2001.

    Our principal executive offices are located at 404 East Plumeria Drive, San
Jose, California 95134-1912. Our telephone number is (408) 570-7400.

INDUSTRY BACKGROUND

    Growth in the communications industry, particularly the Internet and mobile
electronic devices, as well as growth in the traditional markets for
semiconductors such as computers, automobiles and other consumer and industrial
products have driven and we expect will continue to drive an increase in the
demand for semiconductors. The growth in the semiconductor industry has also
driven the growth of the semiconductor capital equipment industry, which
consists of equipment for wafer manufacture and

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processing, including photoresist removal and residue removal equipment, and
equipment for assembly, packaging and testing of semiconductors.

    The fabrication of semiconductor devices requires a large number of complex
and repetitive processing steps, including deposition, photolithography and
etch, to layer different materials and imprint various features on a single
wafer. Prior to processing additional layers on the wafer, the photoresist and
post-etch residues from the previous layer must be carefully removed in order to
create a clean and functional foundation for deposition of the next layer. These
processes between etch and deposition, often referred to as photoresist removal,
or ashing, and residue removal are critical to the achievement of semiconductor
manufacturers' fundamental goals, including improved device performance, higher
yields and greater equipment effectiveness.

    The fabrication of advanced semiconductor devices, which offer increased
capabilities, more power and greater performance, requires increasing numbers of
photolithographic masking layers and corresponding photoresist removal and
residue removal steps. For example, a typical one megabit Dynamic Random Access
Memory, or DRAM, chip requires 11 masking steps, each with a corresponding
photoresist and residue removal step. By comparison, a 64 megabit DRAM is
expected to require between 20 and 25 masking steps. As line geometries, or
feature sizes, of a semiconductor device continue to decrease from 0.25 micron
to 0.18 micron, wafer cleanliness becomes increasingly important, and more
difficult to obtain. In addition, new materials such as copper, low-k
dielectrics, and deep ultraviolet photolithography resists, are complicating
preparation of the wafer surface and photoresist removal and residue removal for
subsequent masking steps. Because of these trends, the number and complexity of
photoresist and residue removal systems per production line of advanced
semiconductor devices are expected to increase. Consequently, the market for
cleaning solutions is expected to grow more rapidly than the overall
semiconductor or semiconductor capital equipment industries.

    In the 1970s, photoresist and residue were typically removed through wet
chemistry processing, which immersed semiconductor devices into large liquid
chemical baths. In the 1980s, dry chemistry processing, which utilizes gases to
remove unwanted materials, began to replace wet chemistry processing for those
advanced processing steps for which wet chemistry was no longer effective, such
as photoresist removal. The dry chemistry processing alternative for photoresist
removal has continued to become more widely used because this alternative is
believed to offer significant cost of ownership savings as compared with wet
chemistry processing, especially for complex semiconductor devices with small
feature sizes. Wet chemistry processing also poses certain environmental
concerns due to the risks associated with chemical storage, handling and
disposal.

    Traditional dry chemistry photoresist processing involves the creation of
plasma and exposure of the wafer to the plasma in a single chamber in order to
remove the photoresist. However, because certain elements of the plasma can
cause damage to the wafer, direct exposure of the wafer to the plasma results in
reduced yield. This damage becomes increasingly problematic as feature sizes
decrease and, at certain feature sizes, could result in significant reduced
yield. Accordingly, the creation of the plasma must be separated from the wafer
processing chamber.

    New interconnect materials, barrier layers, constantly evolving low-k
dielectrics and new etch techniques are also creating unprecedented residue
removal challenges that current wet chemistry technologies are not equipped to
address. The same factors that prompted the shift from wet to dry photoresist
removal is prompting the shift from wet to dry residue removal for specific
applications. These factors include reduction and inconsistency in yield, the
essential requirement for improved process control, the higher cost of ownership
associated with wet process steps and the hazardous nature of wet chemicals.
Semiconductor device manufacturers also want to reduce cost and simplify process
flow by utilizing systems that combine multiple cleaning technologies.

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THE GASONICS SOLUTION

    We are a leading developer and global supplier of photoresist and residue
removal solutions used in advanced semiconductor device manufacturing. We also
provide low pressure chemical vapor deposition for the FPD industry.

    We pioneered microwave downstream plasma technology in 1986 to address
challenges in removing photoresist. Our microwave downstream plasma technology
separates the creation of the plasma from its exposure to the wafer. We believe
this technology offers our customers significant yield advantages by reducing
the damage that typically occurs to the wafer in other plasma photoresist
removal systems.

    We have leveraged our market leadership by providing advanced photoresist
and residue removal systems that combine photoresist and residue removal
technologies. These solutions utilize a combination of our proprietary microwave
downstream processing technology along with directional RF plasma to remove
photoresist and residues. These systems meet the challenges of decreased line
geometries, increased wafer sizes, and new materials including copper and low-k
dielectrics. These systems allow greater fab efficiency and reduced cost through
a simplified process flow. Furthermore, our technologically advanced systems
offer a high degree of flexibility, reliability and serviceability.

THE GASONICS STRATEGY

    Our objective is to be the leading supplier of photoresist and residue
removal solutions for the advanced semiconductor device manufacturing industry.
Key elements of our strategy include:

    EXTENDING TECHNOLOGICAL EXPERTISE.  We believe we are a technological leader
in providing photoresist and residue removal solutions to the advanced
semiconductor device industry. We intend to continue to invest in research and
development to extend our technology solutions to meet the increasingly complex
cleaning requirements of our customers as a result of decreasing geometries,
increased wafer size and the utilization of new materials such as copper and
low-k dielectrics.

    EXPANDING LEADERSHIP IN PHOTORESIST AND RESIDUE REMOVAL SOLUTIONS.  We
believe we are a market leader for providing photoresist and residue removal
solutions. Our PEP Iridia product, which combines our microwave downstream
plasma and directional RF plasma technologies, integrates photoresist and
residue removal capabilities in one chamber. This enables us to expand our
portfolio of photoresist and residue removal applications to include new
materials such as copper and low-k dielectric. These systems also allow greater
fab efficiency and reduced cost through a simplified process flow.

    PROVIDING VERSATILE PROCESSING SYSTEMS.  We focus on providing multi-chamber
systems for a variety of process applications. This multi-chamber capability
enables our customers to configure our products based on their process
requirements. We also focus on providing flexible process chambers which allows
us to incorporate different technologies within any given chamber for process
optimization. We plan to continue to provide versatile processing systems as we
move to next generation products.

    ENHANCING STRATEGIC CUSTOMER RELATIONSHIPS.  Our longstanding relationships
with leading worldwide semiconductor device manufacturers are critical to extend
our position as a leading provider of photoresist and residue removal solutions
used in the fabrication of advanced semiconductor devices. We intend to continue
to focus our resources on our key customers in order to develop the process
equipment solutions needed to manufacture the next generation of semiconductor
devices. We also intend to build upon our relationship with leading FPD
manufacturers to expand our market share within the FPD industry.

    As part of this focus, we believe that providing dedicated personnel at key
customer facilities enables us to better understand the process requirements of
our customers, design new fabrication process equipment and position ourselves
as a principal vendor of volume equipment orders. In addition, we have a
worldwide customer service and support infrastructure that enables us to supply
parts and deploy support personnel to our customers quickly.

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    FURTHER PENETRATING THE PACIFIC RIM MARKET.  The Pacific Rim market for
semiconductor device processing equipment represents over one-half of the total
worldwide market. Although we have historically had lower market share in this
region compared to the rest of the world, we have successfully penetrated a
number of large customers in Korea, Singapore, Taiwan and Japan. We intend to
continue to invest in regional infrastructure and to leverage our leadership
position in photoresist and residue removal solutions to further penetrate the
Pacific Rim markets.

TECHNOLOGY

    MICROWAVE DOWNSTREAM PLASMA PROCESSING.  Our proprietary microwave
downstream plasma processing technology is a dry chemistry process that uses
elements created by plasma in order to remove photoresist and other materials on
a wafer. In traditional dry chemistry processing, the plasma is created in the
same chamber in which the active gases are exposed to the photoresist on the
wafer. This method typically causes significant damage to the wafer because
elements that result from the creation of the plasma react negatively with the
wafer. In our system, the plasma is generated in one chamber and, using our
proprietary technology, the active gases are separated from the rest of the
plasma and introduced downstream into the wafer processing chamber. We believe
the resulting reduction in damage to the wafer increases yield and lowers the
total cost of ownership of the photoresist removal process equipment in the
fabrication of advanced semiconductor devices.

    DIRECTIONAL RF PLASMA PROCESSING.  Directional RF plasma technology in our
Iridia product is a dry chemistry process that uses elements created by plasma
which can be directed to the wafer surface. Unlike non-directional, isotropic
technologies, this technology is designed to remove photoresist and other
materials in high aspect ratio structures. Residues such as fluoropolymers that
form on dielectric layers and carbonized resist surfaces, we believe is best
removed with a directional plasma process.

    DUAL PLASMA SOURCE AND TEMPERATURE OPERATION.  The combination of microwave
downstream plasma and directional RF plasma sources in the same chamber, either
together or separately, allow a high degree of flexibility in wafer processing.
In addition, temperature flexibility along with dual plasma sources allows
customers to combine photoresist and residue removal in the same chamber.
Specifically, microwave processing is possible at higher temperatures
(250-300 DEG.C) or at lower temperatures (30-100 DEG.C) while RF processing is
accomplished only in the lower temperature range. Dual source and temperature
flexibility allow independent optimization of processes for a wide variety of
process applications.

    INTERLACED, INDUCTIVELY COUPLED PLASMA SOURCE.  Though our acquisition of
Gamma Precision Technology (GPT), a new patented source technology provides
additional benefits for many customer applications. The I(2)CP technology,
utilized in the Gamma platform discussed below, lowers Cost of Consumables (CoC)
by reducing quartz tube contamination; minimizes device damage possibilities by
ensuring that the current return path is to the source, rather than the wafer;
and allows much lower power plasma conditions, and therefore more application
flexibility, than traditional Inductively Coupled Plasma sources.

PRODUCTS

    Our product line consists of photoresist and residue removal systems for the
semiconductor device industry, high-pressure furnace systems for the
semiconductor and optical device industry and LPCVD systems for the FPD
industry.

    PERFORMANCE ENHANCEMENT PLATFORM, OR PEP.  The PEP is a modular,
multi-chamber system that enables our customers to configure our products based
on their process requirements. The PEP's versatility provides a common platform
for new technology introductions. It accommodates interchangeable process
modules while delivering maximum utilization. The platform's architecture offers

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process flexibility through sequential, parallel or independent processing. We
offer both the PEP 3510A and the PEP Plus 3510 for photoresist removal and the
PEP Iridia for photoresist and residue removal.

    PEP 3510A. The PEP 3510A is a versatile photoresist removal system
    introduced in 1995. This system uses our proprietary microwave downstream
    plasma technology and is designed for clean, damage-free removal of
    photoresist. This system utilizes a combination of platen and lamp wafer
    heating resulting in high removal rates and uniformity.

    PEP Plus 3510. The PEP Plus 3510 is an enhanced version of the PEP 3510A
    product, introduced in March 2000 with shipment beginning in July 2000. It
    includes an advanced digital microwave power source and delivers improved
    photoresist removal rates. In addition, wafer transport and other
    reliability upgrades combine to reduce both cost of ownership and cost of
    consumables.

    PEP Iridia. The PEP Iridia is a versatile system combining photoresist and
    residue removal technologies. This system was introduced in June 1999.
    Iridia's Directional Downstream Plasma, or DDP, comprises a directional RF
    source paired with our proprietary downstream microwave source. This system
    also includes an integrated lamp module with our advanced, closed-loop wafer
    temperature control enabling multi-temperature processing in a single
    chamber. This system uses fluorine and reducing chemistries that provide
    flexibility in handling production needs, including high-dose implant strip,
    front-end-of-line cleans and back-end-of-line cleans, such as post-etch
    cleans for aluminum, copper and low-k dielectric interconnect structures.

    GAMMA PLATFORM.  The Gamma platform, a new product resulting from the recent
acquisition of Gamma Precision Technology, is characterized by its high
throughput for bulk strip and high-dose-implant-strip applications. The platform
comprises a single large chamber containing six process stations, each capable
of different processing conditions. By sequentially processing wafers around the
chamber without leaving the vacuum environment, the processing time associated
with intra-chamber wafer transfer can be eliminated. Additionally the platform
utilizes a unique approach to substrate loading by transferring batches of
wafers into the system loadlock in a single pass.

    Gamma 2100. The Gamma 2100 is a high throughput 200mm wafer system for bulk
    strip and high-dose-implant-strip applications. This system, introduced in
    1998, uses the patented I(2)CP technology to offer damage-free removal of
    photoresist. By combining a simple, reliable design with high productivity,
    the system achieves very low overall cost of ownership for strip
    applications.

    Gamma 2130. The 300mm version of the Gamma platform, the 2130 is a scale up
    of the proven Gamma 2100 and provides even higher throughput for both 200mm
    and 300mm strip applications. This system also uses the patented I(2)CP
    technology to offer damage-free removal of photoresist. By incorporating
    industry standard wafer handling systems with the Gamma platform's unique
    architecture, high productivity can be achieved.

    NEXT-GENERATION PLATFORM.  Our next-generation platform is a modular
multi-chamber system that enables customers to configure our products based on
their process requirements. This platform packages advanced process technology,
flexibility and high throughput in a compact footprint. The platform supports
configurations of up to three independent process chambers in a space-efficient,
linear layout for throughput and flexibility in handling 300mm wafer production
needs. Each process chamber includes innovative features such as a patented load
lock design, unique wafer transport sub-system and an integrated cooling
station. The independent process chamber design on the 300mm platform
accommodates direct transfer of photoresist removal processes from our large
installed base of 200mm PEP systems.

    LPCVD SYSTEMS.  In August 1995, we acquired Tekisco, Ltd., one of Japan's
leading manufacturers of LPCVD systems for the FPD industry, to create our LCD
Division. Our LPCVD systems have been sold to a number of leading Japanese and
Korean FPD manufacturers. Our GX-2104 vertical low pressure

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chemical deposition system and our GX-2106 horizontal low pressure chemical
deposition system provide uniform amorphous film deposition on large glass
substrates (up to 600 X 720mm) for low temperature poly-silicon thin-film
transistor LCD manufacturing.

    VERTICAL HIGH PRESSURE, OR VHP, DIFFUSION SYSTEM.  Our VHP system is a fully
automated, thermal processing, vertical high-pressure oxidation furnace. The VHP
is well established in high-speed communication devices utilizing silicon
germanium (SiGe), having received multiple orders for this application. We are
also seeing fast growth in the optical components sector with several recent
orders from leading optical companies worldwide. With the acceptance of VHP
utility for SiGe business, establishment in the optical components market, and
recent successes in ultra thin gate materials, we see growth potential for the
use of high-pressure technology in future generations of semiconductor and
optical devices.

    SPARE PARTS AND OTHER.  We also provide a series of products including spare
parts, retrofit and upgrade kits, contract and billable services, and training
designed to support or enhance the capability of our installed base of systems.

CUSTOMERS

    We sell our products to leading semiconductor device manufacturers and FPD
manufacturers located throughout the United States, Europe and the Asia/Pacific.
In fiscal 2000, Intel accounted for approximately 27% of our net sales. In
fiscal 1999, Intel accounted for approximately 23% of our net sales. Intel and
Motorola accounted for approximately 20% and 11%, respectively, of fiscal 1998
net sales. We expect that sales of our products to large customers, including
those listed above, will continue to account for a high percentage of our net
sales in the foreseeable future. None of our customers has entered into a
long-term agreement requiring them to purchase our products. Moreover, sales to
some of our customers have decreased as those customers have completed or
delayed purchasing requirements for new or expanded fabrication facilities.
Although the composition of the group comprising our largest customers has
varied from year to year, the loss of a significant customer or any reduction in
orders by any significant customer, including reductions due to customer
departures from traditional buying patterns, market, economic or competitive
conditions in the semiconductor industry or in the industries that manufacture
products utilizing integrated circuits, could harm our business, financial
condition and results of operations.

SALES, SERVICE AND CUSTOMER SUPPORT

    We believe our sales, service and process applications are critical to our
success in establishing and maintaining long-term customer relationships and
provide us with a competitive advantage in the process equipment market. Our
sales, service and applications organizations develop close working
relationships with customers in order to identify their current and future
semiconductor equipment requirements and to assist customers in overcoming their
technology challenges as they move to fabricating increasingly more complex
devices.

    We market, sell and service our products domestically and internationally
primarily through our marketing and direct sales and customer support
organizations, including service, applications and logistics personnel. Our
global infrastructure includes sales, service and process applications
personnel, as well as spare part depots in all of the major semiconductor
producing regions in the world such as the U.K., Ireland, France, Germany,
Israel, Korea, Japan, Italy, Singapore and Taiwan. We maintain three third party
representatives to sell and service our products. We have four United States
sales and service centers located in Austin, Texas, Orlando, Florida, Mesa,
Arizona and East Fishkill, New York in addition to our corporate headquarters in
San Jose, California.

    Our field service and applications engineering personnel based throughout
the United States, Europe and Asia/Pacific, directly support domestic and
international equipment installations, process

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development, training, spare parts logistics, warranty service and post-warranty
contract service. Our field service engineers include dedicated site-specific
engineers contracted by certain customers. In support of our numerous field
support centers located throughout the world, we also maintain a
headquarters-based customer satisfaction organization.

    We generally offer standard warranty terms for two years on parts and labor
on equipment sales. We also offer service contracts to our customers for
continued maintenance of systems that are not covered by warranty.

    To provide customers with rapid access to replacement service parts, we have
strategically placed inventory in sales and service centers, customers' sites,
and distribution hubs in locations with a significant installed base. These
satellite or mini-stock rooms are located in several European and Asian
countries and in the eastern, central and western regions of the United States.
In addition, the stock room at our headquarters in San Jose, California keeps
buffer inventory to support offsite stock rooms in case of unexpectedly
high-level demand from customers.

BACKLOG

    Backlog includes only those customer orders for systems for which we have
accepted purchase order numbers and assigned shipment dates within twelve months
as well as orders for spare parts and service and support of systems. Backlog
for our systems, spare parts and service and support was approximately
$87.0 million and $21.1 million as of September 30, 2000 and 1999. The increase
is due primarily to the upturn in the semiconductor industry that began in
fiscal 1999. Historically, our backlog fluctuates significantly primarily as a
result of the cyclical nature of construction and equipping of new semiconductor
device fabrication facilities. The equipment requirements of new fabrication
facilities cannot be determined with accuracy and, therefore, our backlog at any
certain date is not necessarily indicative of future sales. In addition, our
backlog at any particular date is not necessarily representative of actual sales
for any succeeding period. We have in the past experienced, and will likely
continue to experience, cancellations, deferrals and rescheduling of product
orders.

MANUFACTURING

    Our manufacturing strategy is to produce high quality, cost-effective, and
reliable systems and assemblies to support on-going and growing requirements for
more environmentally friendly semiconductor processing equipment. In order to
provide the best added value to our customers and to preserve standards in
performance, we are placing emphasis on in-house system integration and test
activities that require proprietary core technology or specialized knowledge and
are increasing our outsourcing of routine fabrication and assembly to strategic
suppliers. In addition, we have implemented a formalized reliability system to
further strengthen the quality of our products.

    To measure and improve customer satisfaction with our products and service,
metrics, such as cycle time, quality, installation discrepancies, on-time
deliveries, backorders, employee flexibility and productivity, are monitored,
measured and compared on a weekly basis.

RESEARCH AND DEVELOPMENT

    The markets for semiconductor manufacturing equipment, including the markets
that utilize our equipment, are characterized by rapid technological development
and product innovation. We intend to continue our commitment of substantial
resources to research and development in photoresist and residue removal and
LPCVD for existing and for new products.

    In order to maintain our long-term relationships with existing customers, we
work to continuously improve our existing products and develop new products and
technologies. Customers with large installed bases increasingly require their
suppliers to improve existing products with respect to cost-of-ownership,

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reliability, and process capability to meet their future needs in order to avoid
the long qualifying evaluations required with new equipment, which can be costly
and risky. Our goal is to continue to develop new products and technologies to
meet the changing needs of the marketplace.

    Historically, we have devoted a significant portion of our financial
resources to research and development programs and expect to continue to
allocate significant resources to these efforts. For fiscal 2000, 1999 and 1998,
total research and development expenditures were approximately $20.2 million,
$17.7 million and $20.5 million and represented approximately 13% of our total
net sales in fiscal 2000, 28% of our total net sales in fiscal 1999, and 20% of
total net sales in fiscal 1998. As of September 30, 2000, our research,
development and engineering staff included 98 full-time employees.

COMPETITION

    The semiconductor capital equipment industry is intensely competitive. We
currently experience intense competition worldwide from a number of leading
foreign and domestic manufacturers, including Eaton Corporation, Mattson
Technology, Inc., Plasma Systems and ULVAC. We believe that the semiconductor
equipment industry will continue to be subject to increased consolidation, which
will increase the number of larger, more powerful companies in the industry
sector in which we compete. We expect our competitors to continue to develop,
enhance or acquire competitive products that may offer improved price or
performance features. New product announcements, introductions and enhancements
by our competitors could cause a significant decline in sales or loss of market
acceptance of our systems in addition to intense price competition or otherwise
could make our systems or technology obsolete or noncompetitive. We also believe
competition will continue from current and new suppliers employing other
technologies, such as wet chemistry, traditional dry chemistry and other
techniques. Increased competitive pressure may lead to reduced demand and lower
prices for our products, thereby harming our business, financial condition and
results of operations.

    The principal competitive elements in dry chemistry processing for
photoresist and residue removal and etching are technological innovation, total
cost-of-ownership, including yield, price, product performance and throughput
capability, quality, and reliability, and customer service and support. Although
we believe that we compete favorably in these areas, competitive product
introductions could cause a decline in sales or loss of market acceptance of our
existing products. In addition, by virtue of our reliance on sales of advanced
dry chemistry processing equipment, we could be at a disadvantage compared to
some competitors that offer more diversified product lines. We believe that to
remain competitive we will have to commit significant financial resources to
develop new product features and enhancements, to introduce next generation
photoresist and residue removal products on a timely basis, and to maintain
customer service and support centers worldwide.

INTELLECTUAL PROPERTY RIGHTS

    We hold U.S. patents, corresponding foreign patents and patent applications
covering various aspects of our products and processes. Where appropriate, we
intend to file additional patent applications on inventions resulting from our
ongoing research and development and manufacturing activities to strengthen our
intellectual property rights. In addition, we own several trademarks including
the GaSonics name and others applicable to certain of our products.
Nevertheless, we rely primarily on innovation, technological expertise and
marketing abilities of our employees rather than patent, trademark, copyright or
other intellectual property rights protection.

    Although we attempt to protect our intellectual property rights through
patents, copyrights, trade secrets and other measures, there can be no assurance
that we will be able to protect our technology adequately or that competitors
will not develop similar technology independently. There can be no assurance
that any of our pending patent applications will be issued or that foreign
intellectual property laws will protect our intellectual property rights.
Patents issued to us could be challenged, invalidated or

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circumvented and the rights granted thereunder may not provide competitive
advantages to us. Furthermore, there can be no assurance that others will not
independently develop similar products, duplicate our products or, if patents
are issued to us, design around the patents issued to us.

EMPLOYEES

    As of September 30, 2000, we had approximately 536 full-time employees. We
believe our future success will depend in large part on our ability to attract
and retain highly skilled and motivated employees. None of our employees is
covered by a collective bargaining agreement or represented by a labor union. We
consider our relationships with our employees to be good.

ITEM 2.  FACILITIES

    Our corporate headquarters is located in San Jose, California in three
leased facilities totaling approximately 135,000 square feet used for
administration and finance, marketing and sales, customer service and support,
manufacturing and research and development. Also, in connection with the
acquisition of GPT in September 2000, we acquired a facility in Fremont,
California totaling approximately 17,350 square feet, which is used primarily
for engineering and manufacturing of our Gamma products. In addition, we lease
sales and service facilities in five U.S. locations. In Europe we have sales and
support offices in the United Kingdom, Germany, and Italy. In Asia our offices
are located in Korea, Taiwan, Singapore, China and in Japan, where we have
approximately 12,000 square feet used for the manufacturing of our LCD products.

ITEM 3.  LEGAL PROCEEDINGS

    We are not a party to any material legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    The following proposal was voted upon by our stockholders at a special
meeting of stockholders on July 17, 2000:

    An amendment to our Certificate of Incorporation to increase the authorized
shares of our common stock from 20,000,000 shares to 60,000,000 shares was
approved with 13,821,437 shares of our voting securities voting on the matter,
of which 9,174,395 voted for the proposal, 4,095,786 voted against, 551,256
abstained from voting and there were no broker non-votes.

EXECUTIVE OFFICERS OF THE REGISTRANT

    Our executive officers and their ages and positions as of September 30, 2000
are as follows:

<TABLE>
<CAPTION>
NAME                            AGE                              POSITION
----                          --------   --------------------------------------------------------
<S>                           <C>        <C>
Asuri Raghavan..............     47      Chief Executive Officer, President and Director
Jerauld Cutini..............     41      Senior Vice President of Marketing and Business
                                         Development
Rammy Rasmussen.............     57      Vice President of Finance, Chief Financial Officer and
                                         Secretary
Bill Alexander..............     44      Vice President, Worldwide Sales and Field Operations
Graham Hills................     51      Vice President, Chief Technical Officer
John Villadsen..............     48      Vice President, Manufacturing Operations
</TABLE>

    ASURI RAGHAVAN joined us as Chief Executive Officer, President and Director
in April 1998. Mr. Raghavan was formerly employed by Kulicke and Soffa
Industries, Inc. ("Kulicke") from June 1980 to October 1985 and from
November 1988 to March 1998 where he most recently served as President of the
Equipment Group. From 1993 to 1995 he served as Vice President of the wire
bonding business and from

                                       10
<PAGE>
1995 to 1997 served as Senior Vice President of Marketing. From 1991 to 1993,
Mr. Raghavan was Vice President of Strategic Development and from 1988 to 1991
was Director of Marketing for the Equipment Group. From 1985 to 1988,
Mr. Raghavan was employed by American Optical Corporation where he held the
position of Director of Research and Technology. From 1980 to 1985,
Mr. Raghavan held various engineering, marketing and product development
positions with Kulicke.

    JERAULD CUTINI joined us as Senior Vice President of Marketing and Business
Development in October 1999. Mr. Cutini co-founded OnTrak Systems and from
August 1990 to August 1997 served as OnTrak's Executive Vice President of
Marketing, Sales and Customer Service until the company was acquired by Lam
Research Corporation in August 1997. Following the acquisition, Mr. Cutini
served as President of OnTrak, a wholly-owned subsidiary of Lam Research until
October 1999. From 1988 to 1990 he served as an Account Manager for Applied
Materials, Inc. and from 1980 to 1988 he served at various times as a Field
Service Engineer, Product Marketing Engineer and Sales Engineer for Silicon
Valley Group.

    RAMMY RASMUSSEN joined us as Vice President of Finance, Chief Financial
Officer and Secretary in January 2000. Mr. Rasmussen served as Chief Financial
Officer for Vadem Limited throughout 1999, for Fujitsu Microelectronics from
March 1996 to January 1999, and for Exponent, Inc. from May 1994 to
February 1996. He also held senior financial positions at Raynet from 1990 to
1994, at Cypress Semiconductor from 1987 to 1990 and at Advanced Micro Devices
from 1979 to 1987.

    BILL ALEXANDER joined us as Vice President, Worldwide Sales and Field
Operations in August 1997. Prior to joining GaSonics, Mr. Alexander was employed
by Tencor Corporation (now KLA-Tencor Corporation) from November 1996 to
August 1997 where he served as Vice President of Asia-Pacific Operations. From
1993 to 1996 he first served as Director of Asia Operations and later as Vice
President of International Operations with Watkins-Johnson Company and from 1990
to 1993 held various senior sales and marketing positions at Lam Research
Corporation. From 1981 to 1990, Mr. Alexander held various management positions
with Watkins-Johnson Company, Innovus Corporation, VLSI Technology and FMC
Corporation.

    GRAHAM HILLS joined us as Vice President and Chief Technical Officer in
June 1999. Prior to joining us, Dr. Hills was employed by Lam Research
Corporation since August 1996 where he served as Vice President of Dielectric
Etch Technology and Engineering from January 1998 to June 1999 and Senior
Director of Dielectric Etch Technology from August 1996 to January 1998. From
1995 to 1996 Dr. Hills was employed by Applied Materials Corporation where he
served as Director of Silicon Etch Product Unit; Director of Technology from
1991 to 1996 and a senior technology staff member and an account technology
manager from 1989 to 1991. From 1984 to 1989 Dr. Hills served on the technical
staff of ATT, Bell Laboratories, was an Assistant Professor at the University of
North Carolina from 1978 to 1984 and did postdoctoral work at Rice University
and NRC, Canada from 1974 to 1977.

    JOHN VILLADSEN joined us as Vice President of Manufacturing Operations in
September 1999. Mr. Villadsen was employed by Watkins-Johnson Company from 1982
to 1999. From April 1998 to September 1999 he held the position of Vice
President of Customer Service and Manufacturing. From May 1995 to April 1998 he
served as Director of Assembly and Test for the Semiconductor Equipment Group.
From 1982 to 1985 Mr. Villadsen held various manufacturing management positions
for the Microwave Products Division of Watkins-Johnson.

    The executive officers serve at the discretion of the Board of Directors,
until their successors are appointed. No family relationships exist among our
executive officers.

                                       11
<PAGE>
                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
  MATTERS

    We have one class of stock outstanding, common stock, that has a par value
of $0.001 per share.

    Our common stock is traded on the Nasdaq National Market under the symbol
"GSNX". The following table sets forth the range of highest and lowest closing
sales prices for the periods indicated as reported by the Nasdaq National
Market. These prices do not include retail markups, markdowns, or commissions.

<TABLE>
<CAPTION>
FISCAL 2000                                                     HIGH       LOW
-----------                                                   --------   --------
<S>                                                           <C>        <C>
First Quarter...............................................   $19.13     $14.19
Second Quarter..............................................    46.19      17.88
Third Quarter...............................................    44.94      23.38
Fourth Quarter..............................................    39.44      12.25

FISCAL 1999
------------------------------------------------------------
First Quarter...............................................   $ 9.50     $ 3.56
Second Quarter..............................................    13.75       7.88
Third Quarter...............................................    15.06      10.88
Fourth Quarter..............................................    17.56      13.00
</TABLE>

    We have not paid cash dividends since our inception. We currently intend to
retain any earnings for use in developing and growing our business and do not
anticipate paying any cash dividends on our common stock in the foreseeable
future. Our bank line of credit with Union Bank of California permits stock
dividends but prohibits cash dividends. Any determination to pay dividends in
the future will be at the discretion of our board of directors and will be
dependent on results of operations, financial condition, contractual
restrictions, restrictions imposed by applicable law and other factors deemed
relevant by our board of directors. As of December 7, 2000, we had approximately
149 stockholders of record and approximately 3,479 beneficial stockholders.

                                       12
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                         YEARS ENDED SEPTEMBER 30,
                                            ----------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)      2000       1999       1998       1997       1996
----------------------------------------    --------   --------   --------   --------   --------
<S>                                         <C>        <C>        <C>        <C>        <C>
OPERATIONS:
Net sales.................................  $155,833   $ 64,279   $100,430   $121,256   $127,043
Gross margin..............................    71,370     24,385     41,304     53,964     62,626
Operating income (loss)...................    13,382    (15,357)    (9,597)     2,780     12,370
Net income (loss) 1,2,3,4.................    14,381    (14,082)    (5,713)     3,007      8,930
Net income (loss) per share--Basic
  1,2,3,4.................................  $   0.94   $  (0.98)  $  (0.41)  $   0.22   $   0.67
Net income (loss) per share--Diluted
  1,2,3,4.................................  $   0.88   $  (0.98)  $  (0.41)  $   0.21   $   0.65

BALANCE SHEET:
Cash, cash equivalents and marketable
  securities..............................  $ 67,550   $ 27,757   $ 32,338   $ 24,884   $ 25,909
Working capital...........................   103,730     49,575     59,735     62,971     59,224
Total assets..............................   190,038     84,208     97,216    104,382     96,430
Stockholders' equity......................  $140,613   $ 61,623   $ 75,408   $ 79,193   $ 72,689
</TABLE>

<TABLE>
<CAPTION>
QUARTERLY 2000
UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE DATA)             1ST        2ND        3RD        4TH
-----------------------------------------------           --------   --------   --------   --------
<S>                                                       <C>        <C>        <C>        <C>
Net sales...............................................  $25,603    $33,705    $43,863    $52,662
Gross margin............................................   11,310     14,926     20,351     24,783
Operating income........................................    1,029      3,484      6,359      2,510
Net income 4............................................    1,338      3,602      6,574      2,867
Net income per share--Basic 4...........................     0.09       0.25       0.43       0.17
Net income per share--Diluted 4.........................  $  0.09    $  0.23    $  0.40    $  0.16
</TABLE>

<TABLE>
<CAPTION>
QUARTERLY 1999
UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE DATA)             1ST        2ND        3RD        4TH
-----------------------------------------------           --------   --------   --------   --------
<S>                                                       <C>        <C>        <C>        <C>
Net sales...............................................  $10,022    $13,215    $17,902    $23,140
Gross margin............................................    2,152      4,557      7,622     10,054
Operating income (loss).................................   (7,194)    (6,241)    (1,983)        61
Net income (loss) 2.....................................   (6,879)    (5,978)    (1,622)       397
Net income (loss) per share--Basic 2....................    (0.49)     (0.42)     (0.11)      0.03
Net income (loss) per share--Diluted 2..................  $ (0.49)   $ (0.42)   $ (0.11)   $  0.03
</TABLE>

------------------------

1.  Net loss for the third quarter ended June 30, 1998 and fourth quarter and
    year ended September 30, 1998 includes after tax charges of approximately
    $644,000 or $0.05 per share, $482,000 or $0.03 per share and $1.1 million or
    $0.08 per share, respectively, for costs related to reductions in force
    completed in June and September 1998.

2.  Net loss for the first quarter ended December 31, 1998 and year ended
    September 30, 1999 included an after tax charge of approximately $407,000 or
    $0.03 per share for costs related to a reduction in force.

3.  Net income for the fiscal year ended September 30, 1997 includes a
    $2.9 million or $0.20 per share after tax-write-off of an uncollectible
    account receivable due from a customer in Thailand.

4.  Net income for the fiscal year ended September 30, 2000 includes a
    non-operating after tax charge of $6.0 million for in-process research and
    development due to the acquisition of Gamma Precision Technology or $0.39
    per basic share or $0.37 per diluted share (see Note 8 of Notes to the
    Consolidated Financial Statements).

                                       13
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

    The following Management's Discussion and Analysis of Financial Condition
and Results of Operations may contain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
including, but not limited to, statements relating to future sales, gross
margins, product development, operating expense levels, and the sufficiency of
financial resources to support future operations, and are subject to the Safe
Harbor provisions created by that statute. Such statements are based on current
expectations that involve inherent risks and uncertainties, including those
discussed below and under the heading "Risks Related to our Business" that could
cause actual results to differ materially from those expressed. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak as of the date hereof. We undertake no obligation to publicly release the
results of any revisions to any forward-looking statements, which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

OVERVIEW

    We are a leading developer and global supplier of photoresist and residue
removal solutions used in advanced semiconductor device manufacturing. Our
versatile solutions, which can combine photoresist removal and residue removal
technologies within a single platform, allow our customers to integrate
manufacturing process steps, increasing their yields and throughput. We also
provide high-pressure furnaces for the semiconductor and optical device
industries and low pressure chemical vapor deposition, or LPCVD, systems for the
flat panel display, or FPD, industry. We market and sell our products to leading
semiconductor device and FPD manufacturers worldwide, including 15 of the top 20
semiconductor device manufacturers.

    Our operating results have fluctuated significantly in the past and will
continue to fluctuate significantly in the future. We anticipate that factors
continuing to affect our future operating results will include the cyclicality
of the semiconductor industry and the markets served by our customers including
the prolonged and severe downturn in the worldwide semiconductor industry, among
others. Furthermore, announcements by us or our competitors of new products and
technologies could cause customers to defer purchases of our existing systems,
which would also harm our business. Our gross margins have varied and will
continue to vary significantly based on a variety of factors, including the
following:

    - Sales mix and average selling prices of our system;

    - Price-based competition;

    - Mix of revenues, including spare parts, service and support revenues;

    - Costs associated with new product introductions and enhancements;

    - Configuration and installation costs;

    - Delays, cancellations or rescheduling of customer orders;

    - Under-absorption of manufacturing overhead and field service and support
      infrastructure; and

    - Start-up inefficiencies associated with new products.

                                       14
<PAGE>
RESULTS OF OPERATIONS

    The following table presents consolidated statements of operations data
expressed as a percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>
                                                                YEARS ENDED SEPTEMBER 30,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net sales...................................................   100.0%     100.0 %    100.0 %
Cost of sales...............................................    54.2       62.1       58.9
                                                               -----      -----      -----
Gross margin................................................    45.8       37.9       41.1
                                                               -----      -----      -----
Operating expenses:
  Costs associated with reduction in force (1),(2)..........      --         .6        1.7
  In-process research & development (4).....................     3.8         --         --
  Research and development..................................    13.0       27.5       20.4
  Selling, general and administrative.......................    20.4       33.7       28.6
                                                               -----      -----      -----
  Total operating expenses..................................    37.2       61.8       50.7
                                                               -----      -----      -----
Operating income (loss).....................................     8.6      (23.9)      (9.6)
Other income (expense):
  Interest expense..........................................      --         --         --
  Interest and other income.................................     1.7        2.0        1.1
                                                               -----      -----      -----
Income (loss) before provision (benefit) for income taxes...    10.3      (21.9)      (8.5)
Provision (benefit) for income taxes........................     1.1         --       (2.8)
                                                               -----      -----      -----
Net income (loss)...........................................     9.2%     (21.9)%     (5.7)%
                                                               =====      =====      =====
</TABLE>

    NET SALES.  Net sales consists of revenues from systems sales, spare parts,
upgrade sales and maintenance and support. Net sales in fiscal 2000 increased
142% to $155.8 million compared to net sales of $64.3 million in fiscal 1999.
The severe worldwide business slowdown in the semiconductor industry, which
resulted in many semiconductor device manufacturers in most geographic regions
reducing and delaying capital equipment purchases, is the principal reason for
the lower sales in fiscal 1999. Conversely, the increase in fiscal 2000 sales
reflects increased demand across most geographies and most products, including
our new Iridia system which accounted for approximately 17% of system sales in
fiscal 2000. We anticipate that quarter to quarter sales for at least the first
half of fiscal 2001 will be relatively flat to slightly higher compared to the
fourth quarter of fiscal 2000. Beyond the first half of fiscal 2001, it is
difficult to project the level of business due to the cyclical nature of the
semiconductor industry. There are, however, some indications that the business
climate is changing as we are beginning to experience some weakness in orders
and other orders have been rescheduled for later delivery.

    Sales to customers in North America, Europe, Asia/Pacific and Japan
accounted for approximately 55%, 20%, 18% and 7%, respectively, of total net
sales for fiscal 2000, compared to approximately 54%, 20%, 19% and 7%,
respectively, of total net sales for fiscal 1999. Our percentage of
international sales will continue to fluctuate from period to period, but we
anticipate that international sales will continue to account for a significant
portion of net sales in fiscal 2001.

    GROSS MARGIN.  Our gross margin as a percentage of net sales was 45.8% in
fiscal 2000 compared to 37.9% in fiscal 1999 and 41.1% in fiscal 1998. The
increase in fiscal 2000 gross margin compared to the two prior years was
primarily due to increased utilization of our field service organization and
manufacturing capability resulting from higher sales volume in fiscal 2000 and a
product mix that included a relatively high concentration of single chamber
products that generally have higher gross margins than our multi-chamber
products. We continue to focus on our gross margin improvement programs,
including the introduction of new value-added applications, features and options
on our PEP and Iridia systems,

                                       15
<PAGE>
targeted cost reduction programs and controlled spending. We expect that our
gross margin rates for the next several quarters will be moderately higher than
prior year comparable periods and will be flat or slightly higher than that
reported in the fourth quarter of fiscal 2000 primarily due to further
utilization of field service and manufacturing capacity. Our gross margin,
however, will continue to be at risk and could be materially adversely impacted
by inefficiencies associated with new product introductions, sales of lower
margin flat panel display systems, competitive pricing pressures, the
semiconductor industry and economic climate, changes in product mix and other
factors.

    COSTS ASSOCIATED WITH REDUCTION IN WORKFORCE.  In the first quarter of
fiscal 1999, we reduced our workforce in response to market conditions and
recorded a charge of $407,000 primarily for severance costs. As of
September 30, 2000, these severance costs had been paid in full.

    IN-PROCESS RESEARCH AND DEVELOPMENT.  In the fourth quarter of fiscal 2000,
we recorded a charge of $6.0 million for the write-off of in-process research
and development associated with the acquisition of Gamma Precision
Technologies, Inc. because, in management's opinion, certain of GPT's ongoing
research and development projects have not reached technological feasibility and
had no alternative future use including development, engineering and testing
activities associated with the introduction of GPT's new technologies and
products.

    RESEARCH AND DEVELOPMENT (R&D).  Our research and development, or R&D,
expenses as a percentage of net sales decreased to 13.0% in fiscal 2000 compared
to 27.5% of net sales in fiscal 1999 and 20.4% of net sales in fiscal 1998 due
primarily to our higher sales volume. In absolute dollars, R&D expenses in
fiscal 2000 increased to $20.2 million from $17.7 million in fiscal 1999 and
$20.5 million in fiscal 1998. This $2.5 million increase in spending in fiscal
2000 compared to fiscal 1999 is primarily the result of higher development costs
associated with our 300mm product development program and new process
development for our advanced photoresist and advanced clean applications.
Additionally, our R&D expenses have increased in fiscal 2000 compared to fiscal
1999 due to the reduced work schedule that was in effect during the first half
of fiscal 1999.

    The $2.8 million decrease in spending in fiscal 1999 compared to fiscal 1998
was primarily due to the cumulative impact of three reductions in workforce that
occurred in the second half of fiscal 1998 and the first quarter of fiscal year
1999, a charge of $500,000 recorded in fiscal 1998 related to the accelerated
write-down of older generation engineering development equipment and other
engineering costs. Partially offsetting the above was a $1.8 million charge in
fiscal 1999 primarily for the accelerated write-off of equipment produced in
connection with our first generation 300mm product development program.

    We continue to focus our R&D efforts on areas where we believe we may be
able to gain market share. In particular, we focused our R&D spending on
programs to support the expanding number of available applications that target
the integration of our photoresist and residue removal technologies, the
development of our 300mm platform, the support of the LCD flat panel business
and applications development of our VHP technology. We anticipate that R&D
spending in absolute dollars for the next several quarters of fiscal 2001 will
increase when compared to prior year periods and from the level reported in the
fourth quarter of fiscal 2000. This increase will primarily result from 300mm
product development and new process applications primarily for photoresist and
residue removal solutions.

    SELLING, GENERAL AND ADMINISTRATIVE (SG&A).  Our SG&A expenses in fiscal
2000 of $31.8 increased from $21.6 million in fiscal 1999 and from
$28.7 million in fiscal 1998. As a percentage of net sales, SG&A expenses
decreased to 20.4% from 33.7% in fiscal 1999 and from 28.6% in fiscal 1998 due
to higher sales volume in fiscal 2000. The increase in absolute spending in
fiscal 2000 compared to fiscal 1999 was primarily attributable to higher labor
costs relating to an increase in personnel and salary rate increases, hiring and
performance related incentive costs and other sales and marketing activities,
specifically, equipment demonstration and evaluation costs, sales commissions
and travel. Additionally, SG&A

                                       16
<PAGE>
expenses were higher in fiscal 2000 due to the reduced work schedule that was in
effect during the first half of fiscal 1999.

    The spending decrease in fiscal 1999 compared to fiscal 1998 resulted in
part from charges of approximately $300,000 taken in fiscal 1998 for the
consolidation of our San Jose, California operations and for the write-down of
older generation demonstration and evaluation equipment of approximately
$700,000. The balance of the decrease primarily results from the cumulative
impact of our three reductions in workforce and lower third party sales
commissions on international sales.

    We anticipate that SG&A expenses for fiscal 2001 will increase from fiscal
2000 due to hiring and other expenses required to support current expected
increases in business levels throughout fiscal 2001 compared to 2000.

    OTHER INCOME (EXPENSE).  Other income and expense consists of interest
expense, interest income, currency translation gains and losses and royalty
income. Interest expense of approximately $90,000, $42,000 and $26,000 was
incurred in fiscal 2000, 1999 and 1998, respectively, primarily as a result of
borrowings under short-term credit facilities from the Bank of Tokyo-Mitsubishi
and Sumitomo Bank by our wholly-owned subsidiary in Japan, Gasonics
International Japan K.K. and to a lesser extent, due to an accounts receivable
factoring arrangement in Japan. Interest income, which is primarily received
from our short-term investment and money market accounts, was approximately
$2.6 million in fiscal 2000, $1.2 million in fiscal 1999 and $1.0 million in
fiscal 1998. The increase in fiscal 2000 interest income from fiscal 1999 is
principally from increased cash balance and investments in marketable securities
purchased with the net proceeds from our follow-on public offering completed in
May 2000. Additionally, interest income in fiscal 2000 increased as a result of
changing our investment portfolio during fiscal 1999 from tax exempt securities
to taxable securities due to net operating losses and an operating loss
carry-forward. Consequently, the increase in fiscal 1999 interest income
compared to fiscal 1998 is primarily the result of changing our investment
portfolio in fiscal 1999 from tax exempt securities to taxable securities partly
offset by a decrease in interest income received on a combined decrease of cash,
cash equivalents and marketable securities that were used to fund operating and
investing activities. Foreign exchange currency translations were a net loss of
approximately $45,000, $140,000 and $52,000 in fiscal 2000, 1999 and 1998,
respectively, due to fluctuations in currency exchange rates primarily in Japan.
Royalty income received in connection with the sale of our industrial plasma
cleaning products and services in July 1997 was approximately $192,000, $342,000
and $350,000 for fiscal 2000, 1999 and 1998, respectively.

    PROVISION FOR INCOME TAXES (BENEFIT).  We recorded a provision for income
taxes of $1.7 million or 10% of pretax income in fiscal 2000. In fiscal 1999, we
did not record a provision for tax benefits related to our net loss because the
net loss could not be carried back to offset previous amounts of taxable income.
The fiscal 1999 tax loss and other tax benefits, however, were carried forward
and are available to offset certain fiscal 2000 tax liabilities which resulted
in the reduced tax provision of only 10% in fiscal 2000. In fiscal 1998, we had
an effective tax benefit rate of 33% due to a carry back of current net
operating losses to prior periods. The effective tax rate in fiscal 2001 is
expected to be between 33% and 35%.

LIQUIDITY AND CAPITAL RESOURCES

    During fiscal 2000 cash, cash equivalents and marketable securities
increased by $39.8 million to $67.6 million at September 30, 2000 from
$27.8 million at September 30, 1999 due primarily to the proceeds from our
May 2000 follow-on offering. In fiscal 2000, operations provided cash of
approximately $8.4 million compared to fiscal 1999, which used cash of
$4.1 million and fiscal 1998, which provided cash of $9.5 million. The improved
cash flow from operations in fiscal 2000 compared to fiscal 1999 and 1998 is
primarily the result of our return to profitability in fiscal 2000 compared to
operating losses in the prior two fiscal years.

    Investing activities used cash of approximately $61.2 million and
$10.1 million in fiscal 2000 and 1998, respectively, while providing cash of
$5.2 million in fiscal 1999. In fiscal 2000 investing activities used cash

                                       17
<PAGE>
of $18.5 million for the acquisition of GPT (see note 8), $37.9 million for the
net purchases of marketable securities and approximately $4.8 million for the
acquisition of equipment and programs in progress for improved operating and
information systems. In fiscal 1999 and 1998, investing activities for the
purchase and sale of marketable securities provided cash of approximately
$6.7 million and used cash of approximately $6.1 million, respectively, and used
cash of $1.5 million and $4.0 million, respectively, for the acquisition of
equipment.

    Financing activities provided cash of approximately $54.6 million,
$1.0 million and $2.0 million in fiscal 2000, 1999 and 1998, respectively.
Financing activities in fiscal 2000 provided cash of approximately
$46.7 million that resulted from the sale of common stock in connection with our
follow-on public offering in May 2000, $5.3 million from the issuance of common
stock in connection with our employee stock purchase and stock option programs
and $2.7 million from borrowings by Gasonics International Japan K.K. under its
credit agreements with the Bank of Tokyo-Mitsubishi ("BTM") and Sumitomo Bank.
In fiscal 1999 and 1998, the sale of stock under our employee stock purchase and
stock option plans provided cash of $2.9 million and $1.9 million, respectively,
and $716,000 and $80,000, respectively, was provided from borrowings by Gasonics
K.K. under its line of credit facility with BTM. Additionally, financing
activities used cash in fiscal 1999 of approximately $2.6 million for the
open-market repurchase of 200,000 shares of our Common Stock.

    At September 30, 2000, we had working capital of approximately
$103.7 million. Accounts receivable increased to $41.7 million at the end of
fiscal 2000 from $19.0 at the end of fiscal 1999 reflecting our higher sales
volume. Inventory increased to $30.4 million at the end of fiscal 2000 from
$16.5 million at the end of fiscal 1999 due to the increased demand for our
products, additional demonstration and customer evaluation systems and due to
inventory that was acquired as part of the GPT acquisition. We expect future
inventory levels to fluctuate from period to period, and believe that because of
the relatively long manufacturing cycle of our equipment, our investment in
inventories will continue to require a significant portion of working capital.
As a result of such investment in inventories, we may be subject to an
increasing risk of inventory obsolescence, which could adversely affect our
operating results.

    At September 30, 2000, our principal sources of liquidity consisted of
approximately $18.7 million of cash and cash equivalents, $48.8 million in
marketable securities, and $20 million available under our unsecured working
capital line of credit with Union Bank of California, which expires on
March 31, 2001. A commercial letter of credit provision of $500,000 is also
provided under the line of credit. This line of credit bears interest at the
bank's LIBOR rate plus 1.25% per annum. Available borrowings under the credit
line are reduced by the amount of outstanding letters of credit. As of
September 30, 2000, except for the $140,358 outstanding under the letter of
credit provision, there were no borrowings under this line. This line of credit
contains certain covenants, including covenants relating to financial ratios and
tangible net worth, which we must maintain. As of September 30, 2000 we were in
compliance with all the financial covenants except for a covenant requiring
consent from the bank to use funds in excess of $10 million for acquisitions.
However, the bank has waived the breach of this covenant. Our wholly-owned
Japanese subsidiary, Gasonics International Japan K.K. has an overdraft credit
agreement with BTM with an available credit line totaling 300 million Japanese
yen which, as of September 30, 2000, was equivalent to approximately
$2.8 million U.S. dollars. This overdraft credit facility bears interest at a
rate of 1.375% per annum and expires on March 31, 2001. As of September 30,
2000, Gasonics International Japan K.K. had borrowed 299 million yen under this
credit facility, which is equivalent to approximately $2.8 million as of that
date. Additionally, Gasonics International Japan K.K. has a basic credit
agreement with BTM and Sumitomo Bank, which provides up to 200 million yen and
100 million yen, respectively, of credit issued in the form of notes payable. On
February 29, 2000 and on May 2, 2000 notes payable were issued under these
agreements totaling 200 million yen, which is equivalent to approximately
$1.9 million. Both notes bear interest at 1.5% per annum and expire on
January 31, 2001. Both agreements with BTM are secured by a Letter of Guarantee
issued by us. Under the credit agreement with Sumitomo Bank, an additional note
payable was issued on June 20, 2000 for 100 million yen, which is equivalent to
approximately

                                       18
<PAGE>
$900,000, which bears interest at 1.5% per annum and expires on January 31,
2001. The agreement with Sumitomo Bank is not secured by a Letter of Guarantee
from us. We believe that our existing cash, cash equivalents, marketable
securities and available lines of credit at September 30, 2000, are sufficient
to meet our cash requirements during the next twelve months. Beyond the next
twelve months, we may require additional equity or debt financing to achieve our
working capital or capital equipment needs. There can be no assurance that
additional financing will be available when required or, if available, will be
on reasonable terms.

    We have entered into an Agreement and Plan of Reorganization with Novellus
Systems, Inc. and its wholly-owned subsidiary which substantially limits our
ability to incur indebtedness without the consent of Novellus. In addition, the
merger agreement with Novellus precludes the issuance of debt or equity
securities except under certain limited circumstances with the prior consent of
Novellus. Further, we made certain covenants in the merger agreement which
prevent us from entering into certain agreements and prevent us from taking
certain actions without the consent of Novellus except agreements and actions
that arise in the ordinary course of business and are consistent with past
practices.

RISK RELATED TO OUR BUSINESS

    OUR OPERATING RESULTS COULD FLUCTUATE, WHICH MAY CAUSE OUR STOCK PRICE TO
DECLINE.

    Our operating results have fluctuated significantly in the past, and we
expect that our results will continue to fluctuate significantly in the future
for a number of reasons, including:

    - the cyclical nature of the semiconductor industry;

    - changes in pricing by us, our competitors, customers or suppliers;

    - inventory obsolescence;

    - accounts receivable write-offs;

    - product mix;

    - the timing of new product announcements and releases by us or our
      competitors;

    - delays, cancellations and/or rescheduling of customer orders;

    - our ability to produce systems in volume and meet customer requirements;

    - our ability of any customer to finance purchases of our equipment;

    - procedures and controls;

    - changes in overhead absorption levels due to changes in the number of
      systems manufactured; and

    - lengthy sales cycles.

    Fluctuations in our operating results may adversely impact our stock price.
Furthermore, if these factors are not adequately addressed, they may harm our
business.

                                       19
<PAGE>
    WE MAY NOT ACHIEVE THE BENEFITS WE EXPECT FROM THE MERGER WITH NOVELLUS.

    We entered into the merger agreement with Novellus with the expectation that
the merger will result in significant benefits to both parties. Achieving the
benefits of the merger depends on the timely, efficient and successful execution
of a number of post-merger events, including integrating the operations,
products, personnel and technologies of the two companies. In addition, the
attention and effort devoted to the integration of the two companies will
significantly divert management's attention from other important issues, and
could seriously harm the combined company.

    There may be fluctuations in the price of the common stock of Novellus,
which, based on the fixed exchange ratio set forth in our merger agreement with
Novellus and investors' belief that the merger will be consummated at such stock
price, may affect the market price of our common stock which could result in
substantial losses for investors.

    FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY IMPACT OUR STOCK PRICE AND
FUTURE BUSINESS AND OPERATIONS.

    If the merger is not completed for any reason, we may be subject to a number
of material risks, including the following:

    - we may be required under certain circumstances to pay Novellus a
      termination fee in cash equal to 3% of the value of Novellus' common stock
      that would have been issued in the merger as of the date of the
      termination of the merger agreement and reimburse Novellus for expenses;

    - the price of our common stock may decline to the extent that the current
      market price of our common stock reflects a market assumption that the
      merger will be completed; and

    - costs related to the merger, such as legal, accounting and financial
      advisor fees, must be paid even if the merger is not completed.

    In addition, our customers and suppliers, in response to the announcement of
the merger, may delay or defer decisions concerning us or decide to terminate
their relationship with us. Any delay or deferral in those decisions or any
decision to terminate such relationships by our customers or suppliers could
have a material adverse effect on our business, regardless of whether the merger
is ultimately completed. Similarly, this may adversely affect our ability to
attract and retain key management, sales, marketing and technical personnel to
the extent we need to keep such personnel.

    Further, if the merger is terminated and our board of directors determines
to seek another merger or business combination, there can be no assurance that
it will be able to find a partner willing to pay an equivalent or more
attractive price than the price to be paid in the merger. In addition, during
the period in which the merger agreement is in effect and subject to very
narrowly defined exceptions, we are prohibited from soliciting, initiating or
encouraging or entering into certain extraordinary transactions, such as a
merger, sale of assets or other business combination, with any party other than
Novellus.

    THE CYCLICAL NATURE OF THE SEMICONDUCTOR DEVICE INDUSTRY COULD HARM OUR
OPERATING RESULTS.

    Our operating results have varied, and may vary in the future, due to the
cyclical nature of the semiconductor device industry. Downturns in the
semiconductor device industry will likely lead to proportionately greater
downturns in our revenues. Our business depends upon the capital expenditures of
semiconductor device manufacturers, which, in turn, depend upon the current and
anticipated market demand for semiconductors and products using semiconductors.
The semiconductor device industry is cyclical and has historically experienced
periodic downturns, which have often resulted in substantial decreases in demand
for semiconductor capital equipment, including photoresist removal and residue
removal equipment. There is typically a six to twelve month lag between a change
in the economic condition of the semiconductor device industry and the resulting
change in the level of capital expenditures

                                       20
<PAGE>
by semiconductor device manufacturers. In most cases, the resulting decrease in
capital expenditures has been more pronounced than the precipitating downturn in
semiconductor device industry revenues. The semiconductor device industry
experienced downturns in 1998 and 1996, during which industry revenues declined
by an estimated 8.4% and 8.6% as reported by World Semiconductor Trade
Statistics, Inc. During these periods, we experienced significant cancellations
and delays of new orders and rescheduling of existing orders, which harmed our
financial results.

    The semiconductor device industry may experience severe and prolonged
downturns in the future. In fact, we have recently experienced some weakness in
orders and other orders have been rescheduled for later delivery, which may
indicate the start of a downturn in the semiconductor industry. Future downturns
in the semiconductor device industry, or any failure of that industry to fully
recover from its recent downturn, will seriously harm our business, financial
condition and results of operations.

    OUR QUARTERLY RESULTS MAY FLUCTUATE, WHICH MAY HARM OUR BUSINESS.

    In the past, we have experienced significant fluctuations in our quarterly
results and fluctuations may continue in the future. Specifically, our quarterly
net sales and operating results have in the past, and will in the future, depend
upon obtaining orders and shipping systems in the same quarter. Backlog at the
beginning of a quarter typically does not include all orders required to achieve
our sales objectives for that quarter. In addition, orders in backlog are
subject to cancellations or rescheduling by customers with limited or no
penalties. We cannot forecast the timing of these occurrences or their impact on
our sales and operating results. We have experienced and will continue to
experience cancellations and rescheduling of orders. Consequently, backlog at
any particular date is not necessarily representative of actual sales expected
for the succeeding period. Our business for a particular quarter may also be
harmed if an anticipated order is not received in time to permit shipment during
the same quarter.

    Moreover, our quarterly results fluctuate because a substantial portion of
our revenues is derived from the sale of our systems, which typically range in
price from approximately $150,000 to $2.0 million or more. As a result,
operating results for a particular quarter could be significantly impacted by
the timing of a single transaction.

    Furthermore, significant investments in research and development, capital
equipment and customer service and support capability worldwide have resulted in
significant fixed costs, which we have not been and will not be able to reduce
rapidly if sales goals for a particular period are not met. As a result, a delay
in generating or recognizing revenue for any reason could cause significant
variations in our operating results from quarter to quarter and could result in
greater than expected operating losses. Also, because we manufacture our systems
according to forecast, a reduction in customer orders or backlog could lead to
excess inventory and possible inventory obsolescence, increasing costs and
reducing margins that could harm our business, financial condition and results
of operations.

    OUR GROSS MARGINS MAY FLUCTUATE, WHICH MAY HARM OUR BUSINESS.

    Historically, our gross margins have varied significantly, and we expect
that our gross margins will continue to vary based on a variety of factors,
including:

    - sales mix and average selling prices of our systems;

    - price-based competition;

    - mix of revenues, including spare parts, service and support revenues;

    - costs associated with new product introductions and enhancements;

    - configuration and installation costs;

    - delays, cancellations or rescheduling of customer orders;

                                       21
<PAGE>
    - under-absorption of manufacturing overhead and field service and support
      infrastructure; and

    - start-up inefficiencies associated with new products.

    If the factors causing fluctuations are not adequately addressed, they may
harm our business and adversely impact our stock price.

    IF WE DO NOT CONTINUALLY IMPROVE OUR SYSTEMS IN RESPONSE TO RAPID
TECHNOLOGICAL CHANGES, WE WOULD ENCOUNTER A DECLINE IN SALES OR A LOSS OF MARKET
ACCEPTANCE.

    The semiconductor manufacturing industry is characterized by rapid
technological change resulting in new product introductions and enhancements.
Failure to keep pace with technological developments in the semiconductor
manufacturing industry, to translate technological development into new systems
and products on a timely and cost-effective basis, or to develop sufficient
manufacturing capacity for new products would significantly harm our business.
Furthermore, new product introductions or enhancements and new technologies
developed by our competitors could result in a decline in demand for our
products and could result in a loss of market acceptance of our existing
products.

    Our success in developing, introducing and selling new and enhanced systems
depends upon a variety of factors, including:

    - product selection relative to the technological and commercial needs of
      the industry;

    - timely and efficient completion of product design and development;

    - timely and efficient execution of the manufacturing and assembly
      processes;

    - effective sales and marketing; and

    - product performance and reliability in the field.

    Because new product development commitments must be made well in advance of
sales, new product decisions must anticipate both the future demand for the type
of semiconductor devices under development by leading semiconductor device
manufacturers and the equipment required to produce semiconductor devices. We
may not be successful in selecting, developing, manufacturing and marketing new
products or enhancing our existing products. If we are unable to offer these
products in a competitive manner, our business will be harmed. Additionally, our
future performance depends, in part, on the successful commercialization of our
300mm systems. However, these products may not lead to significant revenues or
enhance our profitability.

    A LIMITED NUMBER OF CUSTOMERS ACCOUNT FOR A SIGNIFICANT PORTION OF OUR NET
SALES, AND THE LOSS OF, OR REDUCTION IN ORDERS FROM, A MAJOR CUSTOMER COULD HARM
OUR BUSINESS.

    We sell a significant proportion of our systems to a limited number of
customers. Sales to our ten largest customers accounted for approximately 72% of
our net sales in fiscal 2000, 69% in fiscal 1999 and 64% in fiscal 1998. In
fiscal 2000 and 1999, Intel accounted for greater than 10% of net sales. In
fiscal 1998, Intel and Motorola each accounted for more than 10% of net sales.
We expect that a high percentage of our net sales will continue to come from a
limited number of customers.

    We have no long-term purchase agreements with our customers. If we lose a
significant customer, our sales could decline and our business will be harmed.
In addition, if sales to some customers decrease or those customers complete or
delay purchasing requirements for new or expanded fabrication facilities, our
business could be harmed. For example, Intel has recently announced a decision
to diversify its supplier base and may decrease its purchases from us in the
future.

                                       22
<PAGE>
    OUR LONG AND VARIABLE SALES CYCLE DEPENDS ON MANY FACTORS OUTSIDE OF OUR
CONTROL AND COULD CAUSE US TO EXPEND SIGNIFICANT TIME AND RESOURCES PRIOR TO
EARNING ASSOCIATED REVENUES.

    Sales of our systems depend, in part, upon the decision of prospective
customers to increase manufacturing capacity by expanding existing manufacturing
facilities or building new facilities. Because facilitization of these plants
requires significant capital commitment, equipment qualification and equipment
installation, we often experience delays in finalizing these sales following
initial system qualification. Due to these and other factors, our systems
typically have a lengthy and variable sales cycle during which we may expend
substantial funds and management effort to secure final sale and installation of
our products.

    The length of the sales cycle may increase if customers centralize
purchasing decisions or if they delay purchase decisions in periods of industry
downturns. The lengthy sales cycles may also intensify the evaluation process,
which may increase sales and marketing expenditures, exposing us to risks,
including obsolescence, fluctuations and the resulting difficulties in
forecasting operating results.

    THE COMPLEXITY OF OUR SYSTEMS MAY RESULT IN A SIGNIFICANT DELAY BETWEEN THE
INITIAL INTRODUCTION OF OUR SYSTEMS AND THE COMMENCEMENT OF VOLUME PRODUCTION.

    The large number of components in, and the complexity of our systems can
lead to significant delays between the initial introduction of our systems and
the commencement of volume production. As is typical in the semiconductor
capital equipment market, we experience occasional delays in the introduction of
some of our systems and enhancements, and we may continue to experience delays
in the future. We have experienced and will continue to experience technical,
quality and manufacturing difficulties with some of our systems and
enhancements. Any delay in the introduction of our systems could cause us to
lose revenue, incur substantial expenses and harm our reputation. In addition,
if new products have reliability or quality problems, our operating results will
be harmed because of additional expenses, such as service and warranty expenses.

    OUR OPERATIONS ARE CHARACTERIZED BY THE NEED FOR CONTINUED INVESTMENT IN
RESEARCH AND DEVELOPMENT AND, AS A RESULT, OUR ABILITY TO REDUCE COSTS IS
LIMITED.

    Our operations are characterized by the need for continued investment in
research and development. If our revenues are below expectations, our operating
results could be harmed because our ability to reduce these costs while
remaining competitive is limited. In addition, because of our emphasis on
research and development and technological innovation, there can be no assurance
that our operating costs will not increase in the future. We expect the level of
research and development expenses to increase in the near future in absolute
dollar terms.

    THE SEMICONDUCTOR CAPITAL EQUIPMENT INDUSTRY IS INTENSELY COMPETITIVE, WHICH
COULD IMPAIR SALES OF OUR PRODUCTS AND HARM OUR REVENUES AND RESULTS OF
OPERATIONS.

    We operate in the highly competitive semiconductor capital equipment
industry and face competition from a number of companies, including Eaton
Corporation, Mattson Technology, Plasma Systems and ULVAC, some of which have
greater financial, engineering, manufacturing, marketing and customer support
resources and broader product offerings than we do. As a result, our competitors
may be able to respond more quickly to new or emerging technologies or market
developments by devoting greater resources to the development, promotion and
sale of products, which could impair sales of our products. Moreover, there has
been significant merger and acquisition activity among our competitors and
potential competitors, particularly during the recent downturn in the
semiconductor device and semiconductor capital equipment industries. These
transactions by our competitors and potential competitors may provide them with
a competitive advantage over us by enabling them to rapidly expand their product
offerings and service capabilities to meet a broader range of customer needs.
Many of our customers and potential

                                       23
<PAGE>
customers in the semiconductor device manufacturing industry are large companies
that require global support and service for their semiconductor capital
equipment. While we believe that our global support and service infrastructure
is sufficient to meet the needs of our current customers, future or existing
competitors may have more extensive infrastructures than we do, or better
infrastructures in particular geographic regions, which could place us at a
disadvantage when competing for the business of global semiconductor device
manufacturers.

    In addition, because we rely on sales of our dry chemistry processing
equipment, we may be at a disadvantage to some competitors that offer more
diversified product lines. We believe that we will continue to face competition
from current and new suppliers employing other technologies, such as wet
chemistry, traditional dry chemistry and other techniques, as those competitors
attempt to extend the capabilities of their existing products.

    Furthermore, many of our competitors invest heavily in the development of
new systems that will compete directly with our systems. We expect our
competitors in each product area to continue to improve the design and
performance of their products and to introduce new products with competitive
prices and performance characteristics. Our systems may not be able to compete
successfully with those of our competitors. Increased competitive pressure has
led and may continue to lead to reduced demand and lower prices for some of our
products, which could harm our business.

    Competitors of our LCD division in Japan include Japan-based companies and
Japan-based joint ventures who manufacture alternative technologies and are well
established in Japan. At any time they could enter our markets with improved
technologies or with systems that directly compete with our LCD division.

    OUR FUTURE DEPENDS ON OUR ABILITY TO FURTHER PENETRATE THE ASIA/PACIFIC
MARKET, WHICH CONSISTS OF JAPAN, KOREA, SINGAPORE AND TAIWAN.

    In 2000, the Asia/Pacific market represented 25% of our revenue while the
Asia/Pacific market represents approximately 56% of the worldwide semiconductor
capital equipment industry. Some of our competitors have products that are
targeted to address the need for low-cost, high-throughput equipment found in
Taiwan foundries. Some of our competitors also have well entrenched positions in
these markets as a result of long personal relationships, robust infrastructures
and experienced management teams. We may not be able to displace our entrenched
competitors. As a result, our market share and overall global competitive
position may be harmed, and the future growth of our business may be limited.
Our efforts to further penetrate these increasingly important Pacific Rim
markets may not be successful.

    WE ARE DEPENDENT ON INTERNATIONAL SALES AND SUBJECT TO THE RISKS OF
INTERNATIONAL BUSINESS.

    International sales accounted for 45% of our total net sales in fiscal 2000,
46% in fiscal 1999 and 45% in fiscal 1998. As a result of our expanded
international operations, we anticipate that international sales will continue
to account for a significant portion of our total net sales in the foreseeable
future. These international sales will continue to be subject to a number of
risks, including:

    - unexpected changes in regulatory requirements;

    - difficulty in satisfying existing regulatory requirements;

    - exchange rates;

    - foreign currency fluctuations;

    - tariffs and other barriers;

    - political and economic instability;

    - potentially adverse tax consequences;

                                       24
<PAGE>
    - outbreaks of hostilities;

    - difficulties in accounts receivable collection;

    - longer collection cycles;

    - difficulties in managing distributors or representatives; and

    - difficulties in staffing and managing foreign subsidiary and branch
      operations.

    We are also subject to the risks associated with the imposition of domestic
and foreign legislation and regulations relating to the import or export of
semiconductor equipment. We cannot predict if the import or export of our
products will be subject to tariffs, quotas, duties, taxes or other charges or
restrictions imposed by the United States or any other country in the future.

    In addition, Taiwan accounts for a growing portion of the world's
semiconductor manufacturing. There are currently strained relations between
China and Taiwan. Any adverse development in those relations could significantly
impact the worldwide production of semiconductors, which would lead to reduced
sales of our products and harm our operating results.

    WE ARE HIGHLY DEPENDENT ON OUR KEY PERSONNEL AND THEY MAY BE DIFFICULT TO
REPLACE.

    Our success depends to a large extent upon the efforts and abilities of our
key managerial and technical employees. The loss of key employees could limit
our ability to develop new products and adapt existing products to our
customers' evolving requirements and result in lost sales and diversion of
management resources. We have no employment agreements preventing our officers
or key employees from joining our competitors or competing with us. Furthermore,
much of our competitive advantage and intellectual property is based on the
expertise, experience and know-how of our key personnel regarding our
technologies, systems and products. If we are unable to retain our key
personnel, or if any of our key personnel join a competitor or otherwise compete
with us, our business and operating results could be harmed.

    OUR FUTURE PERFORMANCE DEPENDS ON OUR ABILITY TO ATTRACT KEY PERSONNEL.

    Our growth depends in part on our ability to attract and retain qualified
management, engineering, financial and accounting, technical, marketing and
sales and support personnel for our operations. Competition for personnel is
intense, particularly in Northern California where we are based. We may not be
successful in attracting or retaining personnel, which could harm our business.

    In addition, our merger agreement with Novellus prevents us from hiring any
new director level or officer level employees or increasing the annual level of
compensation of any employee or granting any unusual bonuses, benefits or other
forms of direct or indirect compensation to any employee, officer, director or
consultant, except in the ordinary course of business and in amounts consistent
with past practices. Further, in the event that the proposed merger with
Novellus is not consummated and we adopt a strategy to grow our business, our
failure to attract and retain the key personnel during the period in which the
Novellus merger agreement was in effect could harm our business.

    IF WE ARE FOUND TO INFRINGE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, OUR
BUSINESS MAY BE HARMED.

    As is typical in the semiconductor industry, we occasionally receive notices
from third parties alleging infringement claims. Although we have no significant
claims or lawsuits regarding any possible infringement claims currently filed
against us, there can be no assurance that infringement claims by third parties,
or claims for indemnification by our customers resulting from infringement
claims, will not be asserted against us in the future. These assertions, whether
or not proven to be true, could harm our business.

                                       25
<PAGE>
    If any claims are asserted against us, we may seek to obtain a license under
the third party's intellectual property rights. However, whether such a license
would be available to us at all, or on terms acceptable to us is unclear. Any
license would likely increase our expenses. We could also decide to resort to
litigation to challenge claims or enforce our intellectual property rights.
Litigation against us, even if unsuccessful, could be very expensive and time
consuming and could harm our business.

    IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, OUR
BUSINESS MAY BE HARMED.

    We attempt to protect our intellectual property rights through patents,
copyrights, trade secrets and other measures. However, there can be no assurance
that we will be able to protect our technology adequately or that competitors
will not independently develop similar technology. Nor can we be sure that any
of our pending patent applications will be issued or that foreign intellectual
property laws will protect our intellectual property rights. Our issued patents
could be challenged, invalidated or circumvented and the rights granted may not
provide us with competitive advantages. Furthermore, we cannot be certain that
others will not independently develop similar products, duplicate our products
or design around our patents or patent applications.

    IF WE ENGAGE IN ACQUISITIONS, WE WILL INCUR A VARIETY OF EXPENSES, AND MAY
NOT BE ABLE TO REALIZE THE ANTICIPATED BENEFITS.

    Although the merger agreement with Novellus limits our ability to acquire
other entities without Novellus' consent, if the proposed merger is not
consummated we may pursue acquisitions of additional product lines, technologies
or businesses, such as our recent acquisition of GPT. We may have to issue debt
or equity securities to pay for future acquisitions, which could be dilutive,
and in the case of debt would have to be repaid, and could harm our business. In
addition, we have limited experience in the acquisition process. Acquisitions
involve a number of risks, including:

    - difficulties in and costs associated with the assimilation of the
      operations, technologies, personnel and products of the acquired
      companies;

    - assumption of known or unknown liabilities or other unanticipated events
      or circumstances;

    - diversion of management's attention;

    - risks of entering markets in which we have limited or no experience; and

    - potential loss of key employees.

    In September 2000 we acquired GPT for $34.3 million in cash and stock. We
cannot assure you that we will be successful in assimilating the operations,
technology, personnel or products of GPT or that this acquisition will add value
to our company. From time to time, we have engaged in preliminary discussions
with other third parties concerning potential acquisitions of product lines,
technologies and businesses. However, other than the merger agreement with
Novellus, there are currently no commitments or agreements with respect to any
such acquisitions.

    WE PRODUCE A MAJORITY OF OUR PRODUCTS AT A SINGLE FACILITY AND ANY
DISRUPTION IN THE OPERATIONS OF THAT FACILITY COULD HARM OUR BUSINESS.

    We produce most of our products in our manufacturing facility located in San
Jose, California. Our manufacturing processes are highly complex and require
sophisticated and costly equipment and a specially designed facility. As a
result, any prolonged disruption in the operations of our manufacturing
facility, whether due to technical or labor difficulties, destruction of or
damage to this facility as a result of an earthquake, fire or any other reason,
could harm our business, financial condition or results of operations.
Furthermore, San Jose is located on a primary fault line. We currently do not
have a disaster

                                       26
<PAGE>
recovery plan and may not carry sufficient business interruption insurance to
compensate us for losses that may occur.

    WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS FOR PRODUCTS, AND THE LOSS OF ANY
SUPPLIER MAY HARM OUR BUSINESS.

    We purchase a number of components and subassemblies necessary for
manufacturing our systems from a limited number of suppliers and, in some
instances, a sole supplier. Specifically, we rely on a limited number of
suppliers for robotics, microwave power supplies and platens, and on single
sources for magnetrons and microwave applicators used in our products. Our LCD
division in Japan is heavily dependent on a single supplier for quartz
fabrication used in our LPCVD systems.

    We are exploring alternative sources for these critical materials. In
addition, we have been establishing longer term contracts with some of these
suppliers to mitigate the potential risks of shortages, lack of control over
pricing and delays in delivery of components and subassemblies. However, we are
also increasingly relying on outside vendors to manufacture components and
subassemblies.

    Our reliance on sole or a limited number of suppliers and our increasing
reliance on subcontractors involve several risks, including shortages, lack of
control over pricing and delays in delivery of components and subassemblies.
Because our manufacturing process is typically a complex process and requires
long lead times, there may be delays or shortages caused by suppliers in the
future. Some of our suppliers may have relatively limited financial and other
resources, which could impact their ability to deliver products in a timely
manner. Inadequate deliveries or any other circumstance that would require us to
seek alternative sources of supply or to manufacture necessary components
internally could significantly delay shipments, which could damage relationships
with current and prospective customers and harm our business.

    Our merger agreement with Novellus prevents us from entering into any
material contracts without the consent of Novellus. To the extent we lose one of
our suppliers, we will not be able to enter into a new relationship without
Novellus' consent which may harm our business.

    A NEW ACCOUNTING PRONOUNCEMENT MAY CAUSE OUR OPERATING RESULTS TO FLUCTUATE.

    In December 1999, the SEC staff released Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements." As a result of this
pronouncement, companies will be required to recognize revenue only when they
substantially complete the applicable sales agreements, which will typically
occur upon customer acceptance. This pronouncement particularly impacts the
semiconductor manufacturing industry and the semiconductor capital equipment
industry. Historically, the industry has recognized revenue upon shipment, and
we have consistently applied this revenue recognition policy. In compliance with
this pronouncement, we will adopt the accounting change in revenue recognition
in the near future, which we expect will have a significant effect on our
operating results in the near future. Furthermore, adoption of this
pronouncement will impact the comparability of our financial statements from
period to period, relationships with customers and internal procedures and
controls.

    IF WE CANNOT SUCCESSFULLY EXPAND OUR OPERATIONS AND MANAGEMENT SYSTEMS, WE
MAY NOT BE ABLE TO GROW OR MAINTAIN OUR BUSINESS.

    Sales growth and expansion in the scope of our operations in the past placed
a considerable strain on our operations and management systems. To effectively
deal with changes brought on by the cyclical nature of the industry, we may be
required to initiate an extensive re-evaluation of our operating and financial
systems, procedures and controls. We will continue to upgrade and implement new
management systems as required. If we do not succeed in these efforts, we may
not be able to grow or maintain our business, and our business may be harmed.

                                       27
<PAGE>
    OUR OFFICERS, DIRECTORS AND RELATED FAMILY MEMBERS CAN CONTROL THE OUTCOME
OF MATTERS REQUIRING STOCKHOLDER APPROVAL.

    As of November 7, 2000, our officers, directors and members of their
families who may be deemed affiliates of such persons, beneficially owned
approximately 10% of our outstanding shares of common stock. Accordingly, these
stockholders will be able to significantly influence the election of our
directors and the outcome of corporate actions requiring stockholder approval,
such as mergers and acquisitions, including the upcoming vote on our merger with
Novellus, regardless of how our other stockholders may vote. With regard to the
vote on the Novellus merger, each of our officers and directors has executed a
voting agreement pursuant to which they have agreed to vote for the merger. Such
a high level of ownership by these persons or entities may impact the voting
power and other rights of other holders of our common stock.

    OUR FAILURE TO COMPLY WITH CURRENT OR FUTURE ENVIRONMENTAL REGULATIONS COULD
HARM OUR BUSINESS.

    We are subject to a variety of governmental regulations relating to the use,
storage, discharge, handling, emission, generation, manufacture and disposal of
toxic or other hazardous substances used to manufacture our products. We believe
that we are currently in compliance, in all material respects, with these
regulations and that we have obtained all necessary environmental permits to
conduct our business. Nevertheless, the failure to comply with current or future
regulations could result in substantial fines being imposed on us, suspension of
production, alteration of our manufacturing process or cessation of operations.
These regulations could require us to acquire expensive remediation equipment or
to incur substantial expenses to comply with environmental regulations. Our
failure to control the use, disposal or storage of, or adequately restrict the
discharge of, hazardous or toxic substances could subject us to significant
liabilities and could harm our business.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

INTEREST RATE RISK

    Our exposure to market risk for change in interest rates relates primarily
to our investment portfolio. We do not use derivative financial instruments in
our investment portfolio. We invest in high-credit quality issuers and, by
policy, limit the amount of credit exposure to any one issuer. As stated in our
policy, we ensure the safety and preservation of our invested principal funds by
limiting default risk, market risk and reinvestment risk.

    We mitigate default risk by investing in safe and high-credit quality
securities and by constantly positioning our portfolio to respond appropriately
to a significant reduction in a credit rating of any investment issuer,
guarantor or depository. The portfolio includes only marketable securities with
active secondary or resale markets to ensure portfolio liquidity.

    The table below presents principal amounts and related weighted average
interest rates by date of maturity for our investment portfolio (in thousands):

<TABLE>
<CAPTION>
                                                                       FISCAL YEARS
                                                              ------------------------------
                                                                2001       2002       2003
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Cash equivalents and short-term investments
  Taxable short term investments............................  $24,035     $2,001     $    0
  Average interest rate.....................................     6.66%      7.01%       N/A
  Tax-exempt and AMT tax-exempt short term investments......  $ 8,841     $8,936     $7,797
Average interest rate.......................................     4.47%      4.71%      4.81%
</TABLE>

                                       28
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                       GASONICS INTERNATIONAL CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 18,737   $ 16,858
  Marketable securities.....................................    48,813     10,899
  Trade accounts receivable, net of allowance for doubtful
    accounts of $591 in 2000 and $654 in 1999...............    41,735     18,986
  Inventories...............................................    30,382     16,523
  Net deferred tax asset....................................     7,890      5,697
  Prepaid expenses and other current assets.................     5,598      3,197
                                                              --------   --------
    Total current assets....................................   153,155     72,160
                                                              --------   --------
Property and equipment:
  Furniture and fixtures....................................       786        426
  Machinery and equipment...................................    25,241     21,160
  Leasehold improvements....................................     4,205      4,076
                                                              --------   --------
                                                                30,232     25,662
  Less--accumulated depreciation and amortization...........   (18,010)   (14,396)
                                                              --------   --------
  Net property and equipment................................    12,222     11,266
                                                              --------   --------
  Deposits and other assets.................................    24,661        782
                                                              --------   --------
    Total assets............................................  $190,038   $ 84,208
                                                              ========   ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Borrowings under credit facility..........................  $  5,546   $  2,832
  Accounts payable..........................................    13,519      5,691
  Income taxes payable......................................     6,211      4,616
  Other accrued liabilities.................................    24,149      9,446
                                                              --------   --------
    Total current liabilities...............................    49,425     22,585
                                                              --------   --------
Commitments (Note 13)
Stockholders' equity:
  Preferred stock, $0.001 par value: Authorized
    shares--2,000,000.......................................        --         --
  Common stock, $0.001 par value: Authorized
    shares--60,000,000......................................
    Outstanding shares--17,487,545 and 14,382,629...........        17         14
  Additional paid-in capital................................   105,231     40,623
  Treasury stock............................................    (2,639)    (2,639)
  Unrealized gain/loss on investment........................        (1)        --
  Subscription receivable...................................       (27)       (26)
  Retained earnings.........................................    38,032     23,651
                                                              --------   --------
    Total stockholders' equity..............................   140,613     61,623
                                                              --------   --------
    Total liabilities and stockholders' equity..............  $190,038   $ 84,208
                                                              ========   ========
</TABLE>

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

                                       29
<PAGE>
                       GASONICS INTERNATIONAL CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                YEARS ENDED SEPTEMBER 30,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net sales...................................................  $155,833   $ 64,279   $100,430
Cost of sales...............................................    84,463     39,894     59,126
                                                              --------   --------   --------
  Gross margin..............................................    71,370     24,385     41,304
                                                              --------   --------   --------
Operating expenses:
  Costs associated with reduction in force (Note 6).........        --        407      1,681
  In-process research and development (Note 8)..............     6,000         --         --
  Research and development..................................    20,218     17,696     20,493
  Selling, general and administrative.......................    31,770     21,639     28,727
                                                              --------   --------   --------
  Total operating expenses..................................    57,988     39,742     50,901
                                                              --------   --------   --------
  Operating income (loss)...................................    13,382    (15,357)    (9,597)

Other income (expense):
  Interest expense..........................................       (90)       (42)       (26)
  Interest and other income, net............................     2,740      1,317      1,096
                                                              --------   --------   --------
Income (loss) before provision (benefit) for income taxes...    16,032    (14,082)    (8,527)
Provision (benefit) for income taxes........................     1,651         --     (2,814)
                                                              --------   --------   --------
Net income (loss)...........................................  $ 14,381   $(14,082)  $ (5,713)
                                                              ========   ========   ========
Net income (loss) per share--basic..........................  $   0.94   $  (0.98)  $  (0.41)
                                                              ========   ========   ========
Net income (loss) per share--diluted........................  $   0.88   $  (0.98)  $  (0.41)
                                                              ========   ========   ========
Weighted average common shares--basic.......................    15,378     14,316     14,039
                                                              ========   ========   ========
Weighted average common and common equivalent
  shares--diluted...........................................    16,433     14,316     14,039
                                                              ========   ========   ========
</TABLE>

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

                                       30
<PAGE>
                       GASONICS INTERNATIONAL CORPORATION
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                           UNREALIZED
                                          COMMON STOCK        ADDITIONAL                  GAIN/LOSS ON                  TOTAL
                                      ---------------------    PAID-IN     SUBSCRIPTION    MARKETABLE    RETAINED   STOCKHOLDERS'
                                        SHARES      AMOUNT     CAPITAL      RECEIVABLE     SECURITIES    EARNINGS      EQUITY
                                        ------     --------   ----------   ------------   ------------   --------   -------------
<S>                                   <C>          <C>        <C>          <C>            <C>            <C>        <C>
Balance, September 30, 1997.........  13,916,101     $14       $ 35,833       $(100)          $--        $43,446      $ 79,193
  Issuance of common stock under
    employee stock purchase plan....     189,177      --          1,198          --            --             --         1,198
  Issuance of common stock under
    stock option plan...............      63,949      --            630         100            --             --           730
  Net loss..........................          --      --             --          --            --         (5,713)       (5,713)
                                      ----------     ---       --------       -----           ---        -------      --------
Balance, September 30, 1998.........  14,169,227      14         37,661          --            --         37,733        75,408
  Issuance of common stock under
    employee stock purchase plan....     171,753      --          1,131          --            --             --         1,131
  Issuance of common stock under
    stock option plan...............     241,649      --          1,831         (26)           --             --         1,805
  Stock repurchase..................    (200,000)     --         (2,639)         --            --             --        (2,639)
  Net loss..........................          --      --             --          --            --        (14,082)      (14,082)
                                      ----------     ---       --------       -----           ---        -------      --------
Balance, September 30, 1999.........  14,382,629      14         37,984         (26)           --         23,651        61,623
  Issuance of common stock under
    employee stock purchase plan....      94,474      --          1,279          --            --             --         1,279
  Issuance of common stock under
    stock option plan...............     351,865      --          4,008          (1)           --             --         4,007
  Follow-on offering................   2,003,000       2         46,643          --            --             --        46,645
  Acquisition of GPT................     655,577       1         12,678          --            --             --        12,679
  Change in unrealized gain on
    marketable securities...........          --      --             --          --            (1)            --            (1)
  Net income........................          --      --             --          --            --         14,381        14,381
                                      ----------     ---       --------       -----           ---        -------      --------
Balance, September 30, 2000.........  17,487,545     $17       $102,592       $ (27)          $(1)       $38,032      $140,613
                                      ==========     ===       ========       =====           ===        =======      ========
</TABLE>

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

                                       31
<PAGE>
                       GASONICS INTERNATIONAL CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 YEARS ENDED SEPTEMBER 30,
                                                              -------------------------------
                                                                2000        1999       1998
                                                              ---------   --------   --------
<S>                                                           <C>         <C>        <C>
Cash flows from operating activities:
  Net income (loss).........................................  $  14,381   $(14,082)  $ (5,713)
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
    Depreciation and amortization...........................      4,254      4,993      3,970
    Provision for doubtful accounts.........................        255        180        120
    In-process research and development charge..............      6,000         --         --
    Write-off of fixed assets...............................         17         62        173
Changes in assets and liabilities, net of effects of
  purchase of Gamma Precision Technology:
    Accounts receivable.....................................    (18,829)    (4,140)    13,168
    Inventories.............................................    (12,089)     4,299      6,254
    Prepaid expenses and other current assets...............     (4,565)     4,240     (5,650)
    Deposits and other assets...............................        344        304        596
    Accounts payable........................................      6,941      1,683     (2,804)
    Income taxes payable....................................      1,595        578        984
    Accrued liabilities.....................................     10,129     (1,977)    (1,464)
    Deferred rent...........................................         --       (223)      (178)
                                                              ---------   --------   --------
    Net cash provided by (used for) operating activities....      8,433     (4,083)     9,456
                                                              ---------   --------   --------
Cash flows from investing activities:
Payment for purchase of Gamma Precision Technology, net of
  cash acquired.............................................    (18,454)        --         --
Purchases of marketable securities..........................   (102,468)   (79,370)   (67,114)
Proceeds from sales of marketable securities................     64,554     86,111     61,051
Purchases of property and equipment.........................     (4,832)    (1,511)    (4,011)
                                                              ---------   --------   --------
    Net cash provided by (used for) investing activities....    (61,200)     5,230    (10,074)
                                                              ---------   --------   --------
Cash flows from financing activities:
Proceeds from borrowings under credit facility..............      2,714        716         80
Repurchases of common stock.................................         --     (2,639)        --
Proceeds from issuance of common stock......................     51,932      2,936      1,929
                                                              ---------   --------   --------
    Net cash provided by financing activities...............     54,646      1,013      2,009
                                                              ---------   --------   --------
Net increase in cash and cash equivalents...................      1,879      2,160      1,391
Cash and cash equivalents at beginning of period............     16,858     14,698     13,307
                                                              ---------   --------   --------
Cash and cash equivalents at end of period..................  $  18,737   $ 16,858   $ 14,698
                                                              =========   ========   ========
</TABLE>

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

                                       32
<PAGE>
                       GASONICS INTERNATIONAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000

1.  ORGANIZATION AND OPERATIONS OF THE COMPANY:

    GaSonics International Corporation is a leading global supplier of products
and services used in the fabrication of advanced integrated circuits
("semiconductors" or "ICs") and flat panel displays ("FPDs"). We market our
products in the United States, Europe, and the Asia/Pacific region primarily to
large semiconductor and liquid crystal manufacturing concerns. We are subject to
a number of risks including, but not limited to, volatility in the semiconductor
markets and the related demand for semiconductor equipment and the risk of
inventory obsolescence resulting from new product developments by competitors.
See "Risks Related to Our Business."

    On July 17, 2000 an amendment to our Certificate of Incorporation was
approved by the shareholders to increase the number of authorized shares of our
common stock from 20,000,000 shares to 60,000,000 shares.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements include the accounts of GaSonics
International Corporation and its wholly-owned subsidiaries and branches after
elimination of intercompany accounts and transactions.

USE OF ESTIMATES

    The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ materially from those
estimates.

FISCAL YEAR

    We maintain a fifty-two/fifty-three week fiscal year cycle ending on the
Saturday closest to September 30. Fiscal 2000 contains fifty-three weeks and
fiscal 1999 and fiscal 1998 contain fifty-two weeks. For external reporting
purposes, we indicate our fiscal period as ending on September 30.

CASH AND CASH EQUIVALENTS

    For purposes of the Consolidated Statements of Cash Flows, we consider all
highly liquid investments with an original maturity of 90 days or less to be
cash equivalents.

    Cash paid for interest, including amounts paid under capital lease
obligations, and domestic and foreign income taxes were as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                       YEARS ENDED
                                                                      SEPTEMBER 30,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Interest....................................................    $ 90       $140       $ 25
Income taxes................................................    $848       $590       $224
</TABLE>

                                       33
<PAGE>
INVESTMENTS IN MARKETABLE SECURITIES

    Pursuant to the provisions of Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", our investments are classified as available-for-sale and are stated
at fair value. Material unrealized gains and losses are recorded as a separate
component of stockholders' equity, net of tax. Our investments in debt
securities mature at various dates through July, 2003.

    The fair value of available-for-sale securities was determined based on
quoted market prices at the reporting date for the instruments.

    The components of available-for-sale securities by major security type as of
September 30, 2000 and 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                    AGGREGATE
                                                        AMORTIZED     FAIR         GROSS UNREALIZED
FISCAL 2000                                               COST        VALUE     HOLDING (GAINS)/LOSSES
-----------                                             ---------   ---------   ----------------------
<S>                                                     <C>         <C>         <C>
Debt securities issued by the United States Government
  and agencies of the United States...................   $12,064     $12,060             $ (4)
Debt securities issued by states of the United States
  and political subdivisions of the states............    25,566      25,533              (33)
Corporate bonds.......................................       997         995               (2)
Commercial paper......................................    12,883      12,912               29
                                                         -------     -------             ----
Total.................................................   $51,510     $51,500             $(10)
                                                         =======     =======             ====
FISCAL 1999
------------------------------------------------------
Debt securities issued by the United States Government
  and agencies of the United States...................   $23,001     $23,001             $ --
                                                         =======     =======             ====
</TABLE>

    Proceeds from sales of available-for-sale securities were approximately
$64.5 million, $86.1 million and $61.1 million in fiscal 2000, 1999 and 1998,
respectively. Gross realized gains on those sales were approximately $0, $27,500
and $8,000 in fiscal 2000, 1999 and 1998, respectively. We used specific
identification as the cost basis in computing realized gains.

REVENUE RECOGNITION AND PRODUCT WARRANTY

    Revenues from our products are generally recognized upon shipment. We
provide for the estimated costs of installation and warranty at the time revenue
is recognized. Maintenance and service revenues account for less than 10% of net
sales and are recognized as the related work is performed.

MAJOR CUSTOMERS

    One customer accounted for approximately 27%, 23% and 20% of net sales for
each of fiscal years 2000, 1999 and 1998, respectively. There was one other
customer in fiscal 1998 that accounted for approximately 11% of net sales.

SOFTWARE DEVELOPMENT COSTS

    SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed," requires the capitalization of certain computer
software development costs incurred after technological feasibility is
established. Amounts qualifying for capitalization under the statement are
immaterial and have not been capitalized to date.

                                       34
<PAGE>
PROPERTY AND EQUIPMENT

    Property and equipment are stated at cost and are generally depreciated over
the estimated useful lives of the assets (four to ten years) using the
straight-line method. Leasehold improvements are amortized on a straight-line
basis over the shorter of the useful lives of the assets or the remaining lease
term. Assets acquired under capital leases are recorded at the present value of
the related lease obligations and amortized on a straight-line basis over the
related lease term.

OTHER ACCRUED LIABILITIES

    Other accrued liabilities included the following (in thousands):

<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Warranty....................................................  $ 5,119     $2,252
Sales commissions...........................................    1,727      1,056
Employee compensation.......................................    9,021      3,538
Other.......................................................    8,282      2,600
                                                              -------     ------
                                                              $24,149     $9,446
                                                              =======     ======
</TABLE>

NET INCOME (LOSS) PER SHARE

    Net income (loss) per share data has been computed using the weighted
average number of shares of common stock outstanding for the basic net income
(loss) per share calculation, and using the weighted average number of shares of
common stock and common stock equivalent shares calculated under the treasury
stock method for the diluted net income (loss) per share calculation.

FOREIGN CURRENCY TRANSLATION

    The functional currency of our foreign subsidiaries is the U.S. dollar.
Accordingly, foreign translation and exchange gains and losses, which have not
been material, are reflected in the accompanying consolidated statements of
operations.

CONCENTRATION OF CREDIT RISK

    Financial instruments that potentially subject us to concentration of credit
risk consist principally of temporary cash investments and trade receivables. We
have cash investment policies that limit the amount of credit exposure to any
one financial institution evaluated as highly creditworthy. Concentration of
credit risk with respect to trade receivables exists because our revenues are
derived primarily from the sale of photoresist removal equipment to companies in
the semiconductor industry. We perform ongoing credit evaluations of our
customers and generally do not require collateral.

RECLASSIFICATIONS

    Certain prior year amounts have been reclassified to conform to the current
year presentation.

EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

    In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which requires
companies to record derivative financial instruments on the balance sheet as
assets or liabilities. It establishes accounting and reporting standards for
derivative instruments including standalone instruments, such as forward
currency exchange contracts and interest rate swaps or embedded derivatives and
requires that these instruments be marked-to-market

                                       35
<PAGE>
on an ongoing basis. These market value adjustments are to be included either in
the income statement or stockholders' equity, depending on the nature of the
transaction. SFAS No. 133 is effective for fiscal years beginning after
June 15, 2000 and cannot be applied retroactively. The effect of SFAS No. 133 is
not expected to be material to our financial statements.

    In December 1999, the SEC issued Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements." As a result of SAB No. 101, companies will
be required to recognize revenue only when they substantially complete the
applicable sales agreements, which will typically occur upon customer
acceptance. This pronouncement particularly impacts the semiconductor
manufacturing industry and the semiconductor equipment industry. Historically,
the industry has recognized revenue upon shipment, and we have consistently
applied this revenue recognition policy. In compliance with this pronouncement,
we will adopt the accounting change in the fourth quarter of fiscal 2001, and we
expect it to have a significant effect on our operating results in the fourth
quarter. Furthermore, adoption of this pronouncement will impact the
comparability of our financial statements from period to period, relationships
with customers and internal procedures and controls.

    In March 2000, the FASB issued Financial Standards Board Interpretation
("FIN") No. 44, "Accounting for Certain Transactions Involving Stock
Compensation-an Interpretation of APB Opinion No. 25." FIN No. 44 addressed the
application of APB No. 25 to clarify, among other issues, (a) the definition of
employee for purposes of applying APB No. 25, (b) the criteria for determining
whether a plan qualifies as a non-compensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. FIN No. 44 is effective July 1, 2000. We are
currently evaluating FIN No. 44 and we do not expect that it will have a
material effect on our financial position or results of operations.

3.  INVENTORIES:

    Inventories are stated at the lower of cost (first-in, first-out) or market
and include material, labor and manufacturing costs. Inventory is valued at
currently adjusted standards which approximate actual costs on a first-in,
first-out basis.

    We provide inventory reserves for excess, obsolete, damaged or lost
inventory. The estimation process for required inventory reserves is judgmental
and is based on a number of factors which require input from and discussion
among various members of management. Such factors include changes in customer
demand, changes in technology and other economic factors.

    Inventories consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Raw materials...............................................  $15,052    $ 7,784
Work-in-process.............................................    8,763      5,409
Finished goods..............................................    6,567      3,330
                                                              -------    -------
                                                              $30,382    $16,523
                                                              =======    =======
</TABLE>

                                       36
<PAGE>
4.  GEOGRAPHIC AREA DATA:

    Our operations by geographical area for the three years ended September 30,
2000 are as follows (in thousands):

<TABLE>
<CAPTION>
                                            UNITED                OTHER
                                            STATES     JAPAN     FOREIGN    ELIMINATIONS   CONSOLIDATED
                                           --------   --------   --------   ------------   ------------
<S>                                        <C>        <C>        <C>        <C>            <C>
2000
Net sales:
  Domestic...............................  $ 85,608   $10,284    $10,480      $     --       $106,372
  Exports Europe.........................    15,707        --         --            --         15,707
  Exports Asia/Pacific...................    33,754        --         --            --         33,754
  Exports Japan..........................        --        --         --            --             --
  Intercompany...........................     8,517       779      8,303       (17,599)            --
                                           --------   -------    -------      --------       --------
Total revenues...........................  $143,586   $11,063    $18,783      $(17,599)      $155,833
                                           ========   =======    =======      ========       ========
Operating income (loss)..................  $ 10,481   $   (15)   $ 2,641      $    275       $ 13,382
Identifiable assets......................  $173,368   $11,653    $ 6,492      $ (1,475)      $190,038
                                           ========   =======    =======      ========       ========
1999
Net sales:
  Domestic...............................  $ 34,727   $ 4,692    $ 3,794      $     --       $ 43,213
  Exports Europe.........................     5,004        --         --            --          5,004
  Exports Asia/Pacific...................    16,357        --         --            --         16,357
  Exports Japan..........................      (295)       --         --            --           (295)
  Intercompany...........................     3,805     1,767      6,726       (12,298)            --
                                           --------   -------    -------      --------       --------
Total revenues...........................  $ 59,598   $ 6,459    $10,520      $(12,298)      $ 64,279
                                           ========   =======    =======      ========       ========
Operating income (loss)..................  $(15,060)  $  (149)   $   143      $   (291)      $(15,357)
Identifiable assets......................  $ 76,006   $ 6,492    $ 3,432      $ (1,722)      $ 84,208
                                           ========   =======    =======      ========       ========
1998
Net sales:
  Domestic...............................  $ 55,294   $ 3,753    $ 3,596      $     --       $ 62,643
  Exports Europe.........................    21,360        --         --            --         21,360
  Exports Asia/Pacific...................    15,121     1,111         --            --         16,232
  Exports Japan..........................       195        --         --            --            195
  Intercompany...........................     2,303     1,675      7,649       (11,627)            --
                                           --------   -------    -------      --------       --------
Total revenues...........................  $ 94,273   $ 6,539    $11,245      $(11,627)      $100,430
                                           ========   =======    =======      ========       ========
Operating income (loss)..................  $(10,728)  $   378    $   755      $     (2)      $ (9,597)
Identifiable assets......................  $ 88,100   $ 7,541    $ 3,007      $ (1,432)      $ 97,216
                                           ========   =======    =======      ========       ========
</TABLE>

    Our operations are structured to achieve consolidated objectives. As a
result, significant interdependencies and overlaps exist among our various
operations. Accordingly, the revenue, operating income (loss) and identifiable
assets shown for each geographic area may not be indicative of the amounts that
would have been reported if the operating units were independent of one another.

    Intercompany sales between areas are accounted for based on established
intercompany sales prices.

    Operating income (loss) is revenue less related costs and direct and
allocated operating expenses, excluding interest and, for all areas except the
United States, the unallocated portion of corporate expenses. United States
operating income is net of corporate engineering and development and
administrative expenses.

                                       37
<PAGE>
    Corporate assets include assets maintained for general purposes, principally
cash equivalents and marketable securities.

5.  SEGMENT REPORTING:

    In 1999, we adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise", replacing the
"industry segment" approach with the "management" approach. The management
approach designates the internal organization that is used by management for
making operating decisions and assessing performance as the source of our
reportable segments. SFAS No. 131 also requires disclosures about products and
services, geographic areas and major customers. The adoption of SFAS No. 131 did
not affect our results of operations or financial position, but did affect the
disclosure of segment information. We are organized on the basis of products and
services. All of our business units have been aggregated into one operating
segment. Our service business is a separate operating segment; however, this
segment does not meet the quantitative thresholds as prescribed in SFAS
No. 131. As a result, in the opinion of management, no additional operating
segment information is required to be disclosed.

6.  CHARGES TAKEN DURING THE FISCAL YEAR:

    The twelve month period ended September 30, 1998 included pre-tax charges of
approximately $1.7 million, related to costs of reductions in force completed in
June 1998 and September 1998 and costs of facility consolidations. Also included
in the twelve month period ended September 30, 1998 are pre-tax charges of
approximately $4.0 million, related primarily to reserves for potential excess
inventory and accelerated write-downs of certain demonstration equipment. The
twelve month period ended September 30, 1999 included pre-tax charges of
approximately $407,000, related to costs of a reduction in force completed in
December 1998. As of September 30, 2000 all expenses related to these accruals
have been paid.

    The twelve month period ended September 30, 2000 included a pre-tax charge
to operations in connection with the acquisition of Gamma Precision Technology
("GPT") of $6.0 million for the write-off of in-process research and development
that had not reached technological feasibility and, in management's opinion, had
no alternative future use. The one time charge is reflected in our consolidated
statement of operations as in-process research and development within operating
expenses.

7.  COMPREHENSIVE INCOME:

    Effective December 31, 1998 we adopted SFAS No. 130 "Reporting Comprehensive
Income," which establishes standards for reporting and display of comprehensive
income and its components (revenue, expenses, gains and losses) in a full set of
general-purpose financial statements. For the twelve months ended September 30,
2000 and 1999, there were no material items of comprehensive income (loss), thus
comprehensive income for these periods did not differ materially from net income
as reported in the accompanying financial statements.

8.  ACQUISITION OF GAMMA PRECISION TECHNOLOGY:

    On September 13, 2000, we completed our acquisition of Gamma Precision
Technology ("GPT"), a global supplier of products and services used in the
fabrication of advanced integrated circuits ("semiconductors" or "ICs"). We
issued 655,577 shares of common stock and paid approximately $21.5 million in
cash in exchange for all outstanding GPT common stock, preferred stock, warrants
and vested options. In addition, we assumed all unvested options. The total cost
of the acquisition, including transaction costs, was approximately
$34.9 million.

                                       38
<PAGE>
    The acquisition was accounted for as a purchase business combination, and
the results of GPT from the date of acquisition forward have been recorded in
our consolidated financial statements. In connection with the acquisition, net
tangible assets of $10.4 million were acquired, of which $6.0 million is
reflected as a one time charge to operations for the write-off of in-process
research and development that had not reached technological feasibility and, in
management's opinion, had no probable alternative future use. The one time
charge is reflected in our consolidated statement of operations as in-process
research and development within operating expenses. The remaining intangible
assets of $24.5 million are included in deposits and other assets in the
accompanying balance sheet and are being amortized over the useful life of seven
years.

    The value assigned to acquired in-process research and development was
determined by identifying research projects in areas for which technological
feasibility had not been established. The value was determined by estimating the
costs to develop the acquired in-process technology into commercially viable
products, estimating the resulting net cash flows from such projects, and
discounting the net cash flows back to their present values. The discount rate
includes a factor that takes into account the uncertainty surrounding the
successful development of the acquired in-process technology. If these projects
are not successfully developed, future revenue and profitability of GPT products
may be adversely affected. There can be no assurance that the value of the other
purchased intangible assets may not become impaired prior to its amortization.

    The purchase price was allocated to the fair market value of net assets as
acquired as follows (in thousands):

<TABLE>
<S>                                                           <C>
Cash........................................................  $   928
Accounts receivable.........................................    4,175
Inventory...................................................    1,770
Property and equipment......................................      271
Other assets................................................       30
Intangibles, including in-process research and
  development...............................................   30,491
Accounts payable and accrued liabilities....................   (2,794)
                                                              -------
  Net assets acquired.......................................  $34,871
                                                              =======
</TABLE>

    The following unaudited pro forma condensed consolidated statements of
operations has been prepared as if the acquisition was consummated as of
October 1, 1998 and does not include the $6.0 million in-process research and
development charge.

<TABLE>
<CAPTION>
                                                           TWELVE MONTHS ENDED   TWELVE MONTHS ENDED
(IN THOUSANDS, EXCEPT PER SHARE DATA)                      SEPTEMBER 30, 2000    SEPTEMBER 30, 1999
-------------------------------------                      -------------------   -------------------
<S>                                                        <C>                   <C>
Revenue..................................................        $165,928              $ 64,848
Net income (loss)........................................        $ 18,289              $(18,953)
Net income per share--basic..............................        $   1.14              $  (1.27)
Net income per share--diluted............................        $   1.14              $  (1.27)
Weighted average common shares--basic....................          15,949                14,972
Weighted average common and common equivalent shares-
  diluted................................................          16,006                14,972
</TABLE>

9.  RECONCILATION OF EARNINGS AND SHARE AMOUNTS USED IN EARNINGS
    PER SHARE CALCULATION:

    Effective December 31, 1997, we adopted SFAS No. 128, "Earnings per Share."
Basic earnings (loss) per common share were computed by dividing net income
(loss) by the weighted average number of shares of common stock outstanding
during this period. Diluted earnings (loss) per common share for the twelve

                                       39
<PAGE>
months ended September 30, 2000, 1999 and 1998, were calculated using the
treasury stock method to compute the weighted average common stock outstanding.

<TABLE>
<CAPTION>
                                                                                    PER SHARE
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2000                 INCOME     SHARES     AMOUNT
----------------------------------------------                --------   --------   ---------
<S>                                                           <C>        <C>        <C>
Net income..................................................  $14,381

BASIC INCOME PER SHARE
Income available to common stockholders.....................  $14,381     15,378      $0.94
Effect of dilutive securities:
Options issued to purchase common stock.....................               1,055

DILUTED INCOME PER SHARE
Income available to common stockholders.....................  $14,381     16,433      $0.88
                                                              =======     ======      =====
</TABLE>

<TABLE>
<CAPTION>
                                                                                    PER SHARE
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1999                  LOSS      SHARES     AMOUNT
----------------------------------------------                --------   --------   ---------
<S>                                                           <C>        <C>        <C>
Net loss....................................................  $(14,082)

BASIC AND DILUTED LOSS PER SHARE
Loss to common stockholders.................................  $(14,082)   14,316     $(0.98)
                                                              ========    ======     ======
</TABLE>

<TABLE>
<CAPTION>
                                                                                    PER SHARE
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1998                  LOSS      SHARES     AMOUNT
----------------------------------------------                --------   --------   ---------
<S>                                                           <C>        <C>        <C>
Net loss....................................................  $(5,713)

BASIC AND DILUTED LOSS PER SHARE
Loss to common stockholders.................................  $(5,713)    14,039     $(0.41)
                                                              =======     ======     ======
</TABLE>

10. LINE OF CREDIT AGREEMENT AND CREDIT FACILITY:

    We have $20.0 million available under our unsecured working capital line of
credit with Union Bank of California, which expires March 31, 2001. As of
September 30, 2000, except for the $140,358 outstanding under the letter of
credit provision, there were no borrowings under this line. This line of credit
bears interest at the bank's LIBOR rate plus 1.25% per annum. The line of credit
contains certain covenants, including covenants relating to financial ratios and
tangible net worth, which we must maintain. As of September 30, 2000, we were in
compliance with all the financial covenants except for a covenant requiring from
the bank to use funds in excess of $10 million for acquisitions. However, the
bank has waived the breach of this covenant.

    Under the line of credit, there is a provision for standby letters of credit
not to exceed $500,000. As of September 30, 2000, there were letters of credit
outstanding in the amount of $140,358. Available borrowing under the credit line
is reduced by any amounts outstanding under the letter of credit provision.

                                       40
<PAGE>
    Our wholly-owned subsidiary in Japan, GaSonics K.K. has an overdraft
agreement with the Bank of Tokyo-Mitsubishi ("BTM") with an available credit
line totaling 300 million Japanese yen which, as of September 30, 2000, is
equivalent to approximately $2.8 million in U.S. dollars. This overdraft credit
facility was renewed on March 31, 2000, bears interest at a rate of 1.375% per
annum and expires on March 31, 2001. As of September 30, 2000, Gasonics K.K. had
borrowed approximately 300 million yen under this credit facility, which is
equivalent to approximately $2.8 million U.S. dollars as of that date.
Additionally, Gasonics K.K. has a basic credit agreement with BTM and Sumitomo
Bank, which provides up to 200 million and 100 million yen, respectively, of
credit issued in the form of notes payable. On February 29, 2000 and on May 2,
2000 notes payable were issued under this agreement totaling 200 million yen,
which is equivalent to approximately $1.9 million U.S. dollars. Both notes bear
interest at 1.5% per annum and expire on January 31, 2001. Both agreements with
BTM are secured by a Letter of Guarantee issued by us. Under the credit
agreement with Sumitomo Bank, an additional note payable was issued on June 20,
2000 for 100 million yen, which is equivalent to approximately $900,000 U.S.
dollars, bears interest at 1.5% and expires on January 31, 2001. The agreement
with Sumitomo is not secured by a Letter of Guarantee by us.

11.  INCOME TAXES:

    We account for income taxes using an asset and liability approach.

    The provision (benefit) for income taxes consists of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                 YEARS ENDED SEPTEMBER 30,
                                                              -------------------------------
                                                                2000       1999        1998
CURRENT                                                       --------   ---------   --------
<S>                                                           <C>        <C>         <C>
  Federal...................................................  $ 2,525    $     --    $(2,773)
  State.....................................................    1,038          --        130
                                                              -------    ---------   -------
    Total current...........................................    3,563          --     (2,643)
                                                              -------    ---------   -------

DEFERRED
  Federal...................................................     (140)         --       (149)
  State.....................................................   (1,772)         --        (22)
                                                              -------    ---------   -------
    Total deferred..........................................   (1,912)         --       (171)
                                                              -------    ---------   -------
  Provision (benefit) for income taxes......................  $ 1,651    $     --    $(2,814)
                                                              =======    =========   =======
</TABLE>

    The provision (benefit) for income taxes differs from the amount computed by
applying the statutory federal income tax rate, as follows:

<TABLE>
<CAPTION>
                                                                YEARS ENDED SEPTEMBER 30,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Statutory Federal tax rate..................................    35.0%     (35.0)%    (35.0)%
State income taxes, net.....................................     3.9       (3.8)        --
Foreign operations..........................................     2.0        4.2        3.2
Research and development credit.............................    (4.0)      (1.0)      (3.0)
Tax exempt income...........................................      --       (1.3)      (3.1)
In-process research and development.........................    14.1         --         --
Valuation allowance.........................................   (38.8)      44.1         --
Other.......................................................    (1.9)      (7.2)       4.9
                                                               -----      -----      -----
  Provision (benefit) for income taxes......................    10.3%      (0.0)%    (33.0)%
                                                               =====      =====      =====
</TABLE>

                                       41
<PAGE>
    The major components of the net deferred tax asset are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Inventory reserves..........................................   $3,254    $ 4,605
Accrued warranty............................................    1,757        859
Deferred rent...............................................       --         17
Accrued vacation............................................      161        299
Net operating loss carry-forwards...........................       --      3,153
Valuation allowance for deferred assets.....................       --     (6,215)
State tax carryovers........................................    1,148      1,186
Other temporary differences.................................    1,570      1,793
                                                               ------    -------
Deferred tax asset..........................................    7,890      5,697
Deferred tax liabilities....................................       --         --
                                                               ------    -------
  Total net deferred tax asset..............................   $7,890    $ 5,697
                                                               ======    =======
</TABLE>

12.  STOCK REPURCHASE PROGRAM:

    On December 16, 1998, our Board of Directors authorized a stock repurchase
program. Under this program 500,000 shares of our Common Stock may be
repurchased by us in the open market, from time-to-time at market prices not to
exceed $15.00 per share using available cash. As of September 30, 2000, we had
repurchased 200,000 shares of common stock in the open market at an aggregate
cost of approximately $2.6 million.

13.  COMMITMENTS:

    We lease our facilities and certain machinery and equipment under operating
lease agreements that expire at various dates through December 2006. Minimum
commitments under the non-cancelable leases as of September 30, 2000 were as
follows (in thousands):

<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S>                                                           <C>
2001........................................................  $ 3,784
2002........................................................    3,791
2003........................................................    4,359
2004........................................................    4,273
2005........................................................    4,445
Thereafter..................................................    5,815
                                                              -------
                                                              $26,467
                                                              =======
</TABLE>

    Rent expense was approximately $3,450,000, $2,235,000 and $2,263,000 and for
the years ended September 30, 2000, 1999 and 1998, respectively.

    The lease agreement for one of our facilities provided for the deferral of
three months cash rental payments in fiscal 1990 and subsequent scheduled rent
increases. Rent expense under this agreement was being recognized on a
straight-line basis over the term of the lease which expired in December 1999.
The difference between the amounts paid and the amounts expensed is classified
as deferred rent in the accompanying consolidated balance sheets.

    No new capital lease obligations were entered into during fiscal 2000 or
1999.

                                       42
<PAGE>
14.  INCENTIVE STOCK OPTION PLAN AND STOCK PURCHASE PLAN:

1994 STOCK OPTION/STOCK ISSUANCE PLAN

    In fiscal 1994, the Board adopted, and the stockholders subsequently
approved, the 1994 Stock Option/Stock Issuance Plan (the "1994 Stock Option
Plan") and authorized a total of 1,450,000 shares for issuance under the Plan.
The 1994 Stock Option Plan replaced our 1985 Stock Option Plan and our 1988
Stock Option Plan, which have both been terminated. During fiscal years 2000,
1998 and 1997, our Board of Directors authorized, and the stockholders
subsequently approved, an additional 750,000, 400,000 and 500,000 shares,
respectively, for issuance under the Plan. During fiscal 1999, there were no new
shares authorized. Also, during fiscal 2000, our Board of Directors amended, and
the shareholders approved, the vesting provisions of the 7,500 share automatic
grants to non-employee directors so that such grants will be fully exercisable
and vested as of the grant date.

    The 1994 Stock Option Plan is divided into three separate components:
i) the Discretionary Option Grant Program under which key employees (including
officers and directors) and consultants may, at the discretion of the plan
administrator, be granted options to purchase shares of common stock at an
exercise price not less than 85% of the fair market value of such shares on the
grant date, ii) the Automatic Option Grant Program under which option grants
will automatically be made at periodic intervals to the non-employee Board
members to purchase shares of common stock at an exercise price equal to 100% of
the fair market value of the option shares on the grant date, and iii) the Stock
Issuance Program under which key employees (including officers and directors)
and consultants may be issued shares of common stock directly, either through
the purchase of such shares at a price not less than 85% of their fair market
value at the time of issuance or as a bonus tied to the performance of services
or the attainment of our financial objectives. In no event may the aggregate
number of shares of common stock for which any individual participating in the
1994 Plan may be granted stock options and direct stock issuances exceed 825,000
shares over the term of the Plan. Options granted under the Discretionary and
Automatic Option Grant Programs have a maximum term of ten years and generally
vest over periods of one to five years from the date of grant, at the discretion
of the plan administrator. There were no stock issuances under the 1994 Stock
Option Plan in fiscal years 2000, 1999 and 1998.

    In August 1996, holders of the Company's options were given the opportunity
to exchange previously granted stock options for new common stock options.
Option holders, excluding non-employee directors of the Company, who held an
outstanding stock option with an exercise price in excess of $7.25 per share
were granted a new option with an exercise price of $7.25 per share, the market
price of the common stock on that date, in exchange for his or her higher-priced
option. Each optionee was given the choice of accepting the new option with a
new four year vesting schedule and having the higher-priced option canceled or
rejecting the new option and retaining the higher-priced option with its
original vesting schedule. Under the terms of the new options, one-quarter of
the shares vest one year from the date of grant and the remaining shares vest in
36 monthly installments. Options to purchase 416,725 shares were so exchanged.

    In November 1998, holders of the Company's options were given the
opportunity to exchange previously granted stock options for new common stock
options. Option holders, excluding non-employee directors of the Company, who
held an outstanding stock option with an exercise price in excess of $5.625 per
share were granted a new option with an exercise price of $5.625 per share, the
market price of the common stock on that date, in exchange for his or her
higher-priced option. Each optionee was given the choice of accepting the new
option with a new four year vesting schedule and having the higher-priced option
canceled or rejecting the new option and retaining the higher-priced option with
its original vesting schedule. Under the terms of the new options, one-quarter
of the shares vest one year from the date of grant and the remaining shares vest
in 36 monthly installments. Options to purchase 960,131 shares were so
exchanged.

                                       43
<PAGE>
    In September 2000, the Board of Directors adopted and approved the
Supplemental Stock Option Plan to which 200,000 shares of Common Stock shall be
reserved for issuance pursuant to stock option grants made to any and all of our
employees under which eligible persons of our employ (other than officers and
Board members) may be provided with an additional opportunity to acquire shares
of our common stock in connection with their performance of services for us. The
Plan shall supplement the authorized share reserve under the Corporation's 1994
Stock Option/Stock Issuance Plan, and share issuances under the Supplemental
Plan shall not reduce or otherwise affect the number of shares of the
Corporation's common stock available for issuance under the 1994 Stock
Option/Stock Issuance Plan. In addition, share issuances under the 1994 Stock
Option/Stock issuance Plan shall not reduce or otherwise affect the number of
shares of the Corporations' common stock available for issuance under the
Supplemental Plan.

    Option and stock issuance activity under the 1994 Stock Option Plan was as
follows:

<TABLE>
<CAPTION>
                                                                                        WEIGHTED
                                                                SHARES                  AVERAGE
                                                              AVAILABLE    NUMBER OF    EXERCISE
                                                              FOR GRANT      SHARES      PRICE
                                                              ----------   ----------   --------
<S>                                                           <C>          <C>          <C>
Balance at September 30, 1997...............................     799,947    1,506,061    $ 8.50
  Additional options authorized.............................     400,000           --        --
  Granted...................................................    (872,150)     872,150      9.27
  Exercised.................................................          --      (63,949)     7.83
  Canceled..................................................     221,973     (221,973)     9.04
                                                              ----------   ----------
Balance at September 30, 1998...............................     549,770    2,092,289      9.08
  Granted...................................................  (1,398,731)   1,398,731      7.86
  Exercised.................................................          --     (241,649)     7.60
  Canceled..................................................   1,278,341   (1,278,341)     9.83
                                                              ----------   ----------
Balance at September 30, 1999...............................     429,380    1,971,030      7.91
  Additional options authorized.............................     750,000           --        --
  Granted...................................................  (1,080,282)   1,080,282     21.38
  Exercised.................................................          --     (351,865)     7.52
  Canceled..................................................     133,725     (133,725)    11.10
                                                              ----------   ----------
Balance at September 30, 2000...............................     232,823    2,565,722    $13.47
                                                              ==========   ==========
</TABLE>

    The following table summarizes the options outstanding under the 1994 Stock
Option Plan as of September 30, 2000:

<TABLE>
<CAPTION>
                          OPTIONS OUTSTANDING                                    EXERCISABLE OPTIONS
------------------------------------------------------------------------   -------------------------------
                                            WEIGHTED
                            NUMBER          AVERAGE                            NUMBER          WEIGHTED
                         OUTSTANDING       REMAINING         WEIGHTED       EXERCISABLE        AVERAGE
      RANGE OF              AS OF         CONTRACTUAL        AVERAGE           AS OF           EXERCISE
   EXERCISE PRICES      SEPT. 30, 2000        LIFE        EXERCISE PRICE   SEPT. 30, 2000       PRICE
---------------------   --------------   --------------   --------------   --------------   --------------
<S>                     <C>              <C>              <C>              <C>              <C>
$ 3.06--$ 5.63              807,668           8.25            $ 5.40          321,170           $ 5.50
  6.88--  7.25              266,069           6.20              7.19          229,456             7.22
  7.88-- 12.13              360,410           7.65             10.68          178,962             9.88
 12.75-- 15.69              274,700           8.95             15.34           34,357            14.87
 15.75-- 19.63              304,600           9.61             17.68           18,750            15.79
 22.00-- 24.38              386,125           9.67             24.15               --               --
 24.50-- 44.94              166,150           9.60             33.25           15,000            29.88
                          ---------                                           -------
$ 3.06--$44.94            2,565,722           8.49            $13.47          797,695           $ 8.08
</TABLE>

                                       44
<PAGE>
1994 EMPLOYEE STOCK PURCHASE PLAN

    Our 1994 Employee Stock Purchase Plan (the "Purchase Plan") was adopted by
the Board of Directors on January 27, 1994 and approved by the stockholders in
March 1994. The Purchase Plan is designed to allow our eligible employees to
purchase shares of common stock, at semi-annual intervals, through their
periodic payroll deductions under the Purchase Plan. We had initially reserved
300,000 shares of Common Stock for issuance under the Purchase Plan. Our Board
of Directors authorized, and the stockholders subsequently approved, an
additional 550,000 in fiscal year 2000 and 400,000 shares of Common Stock under
the Purchase Plan in each of fiscal years 1997 and 1996.

    Participants in the Purchase Plan may purchase shares at 85% of the lower of
i) the fair market value of the common stock on the participant's entry date
into the offering period or ii) the fair market value on the semi-annual
purchase date. The Purchase Plan will, in all events, terminate on December 31,
2003.

    Of the 1,650,000 shares reserved for the 1994 Employee Stock Purchase Plan,
920,709 shares were purchased as of September 30, 2000.

STOCK-BASED COMPENSATION EXPENSE

    In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-Based Compensation," which establishes a fair
value based method of accounting for stock-based compensation plans and requires
additional disclosures for those companies who elect not to adopt the new method
of accounting. We adopted SFAS No. 123 in fiscal 1997, and in accordance with
the provisions of SFAS No. 123, we apply APB Opinion 25 and related
interpretations in accounting for our stock option and stock purchase plans.

    Our stock plans, as described above, are accounted for under APB Opinion
No. 25. Because the FASB Statement No. 123 method of accounting has not been
applied to options granted prior to October 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in future
years. Had compensation cost for these plans been determined consistent with
Statement No. 123, our consolidated net income and earnings per share would have
been reduced to the following pro forma amounts:

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)                       2000       1999       1998
-------------------------------------                     --------   --------   --------
<S>                                                       <C>        <C>        <C>
Net income (loss)--as reported..........................  $14,381    $(14,082)  $(5,713)
Net income (loss)--pro forma............................  $10,503    $(17,424)  $(7,682)
Earnings (loss) per share--Basic--as reported...........  $  0.94    $  (0.98)  $ (0.41)
Earnings (loss) per share--Diluted--as reported.........  $  0.88    $  (0.98)  $ (0.41)
Earnings (loss) per share--Basic--pro forma.............  $  0.68    $  (1.22)  $ (0.55)
Earnings (loss) per share--Diluted--pro forma...........  $  0.64    $  (1.22)  $ (0.55)
</TABLE>

    The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions:

<TABLE>
<CAPTION>
                                                     2000         1999         1998
                                                  ----------   ----------   ----------
<S>                                               <C>          <C>          <C>
Dividend yield..................................       0.0%         0.0%         0.0%
Expected life of options from vest date.........  0.9 Years    0.9 Years    0.9 Years
Expected stock volatility.......................      85.7%        83.5%        84.3%
Risk-free interest rates........................  5.4%-6.5%    4.3%-5.9%    4.3%-6.0%
</TABLE>

    The weighted average fair value of option grants using the Black-Scholes
option pricing model was $12.52, $4.48 and $5.55 for the fiscal years ended
September 30, 2000, 1999 and 1998, respectively.

                                       45
<PAGE>
15.  EMPLOYEE BENEFIT PLANS:

    We maintain a 401(k) benefit plan covering all employees meeting certain
requirements. The plan includes a deferred compensation arrangement permitting
elective contributions to be made by the participants. Contributions are made at
the discretion of the Board of Directors. Our contributions were approximately
$464,000, $437,000 and $506,000 in fiscal 2000, 1999 and 1998, respectively.

16.  FOLLOW-ON PUBLIC OFFERING:

    In May 2000, we closed our follow-on public offering of 2,003,000 shares of
common stock at $24.88 per share netting proceeds of approximately
$46.6 million. We intend to use the net proceeds from this offering for working
capital and general corporate purposes. Additionally, we may use portions of the
net proceeds to acquire complementary assets, technologies and businesses.

17.  SUBSEQUENT EVENT:

    On October 25, 2000, GaSonics International Corporation entered into an
Agreement and Plan of Reorganization with Novellus Systems, Inc., a Delaware
corporation and as a result of which, GaSonics would become a wholly-owned
subsidiary of Novellus. If the merger is completed, GaSonics' common stock will
be converted into the right to receive 0.52 of a share of Novellus common stock.

                                       46
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To GaSonics International Corporation:

    We have audited the accompanying consolidated balance sheets of GaSonics
International Corporation (a Delaware Corporation) and subsidiaries as of
September 30, 2000 and 1999, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended September 30, 2000. These financial statements and the schedule
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of GaSonics International
Corporation and subsidiaries as of September 30, 2000 and 1999, and the results
of their operations and cash flows for each of the three years in the period
ended September 30, 2000 in conformity with accounting principles generally
accepted in the United States.

    Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The schedule listed in the index under item
14(a)(2) is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

ARTHUR ANDERSEN LLP

San Jose, California
October 30, 2000

                                       47
<PAGE>
                                    PART III

    Certain information required by Part III is omitted from this Report in that
the Registrant intends to file with the Commission a definitive proxy statement
within 120 days after the end of its fiscal year pursuant to Regulation 14A for
its Annual Meeting of Stockholders to be held on or about March 9, 2001 (the
"Proxy Statement") and the information included therein is incorporated herein
by reference.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information concerning the Company's directors required by this Item is
incorporated by reference from the section captioned "Election of Directors" in
the Proxy Statement. The information required by this item relating to the
Company's executive officers is included under the caption "Executive Officers
of the Registrant" in Part I of this Report on Form 10-K. Information regarding
compliance with Section 16(a) of the Securities Exchange Act of 1934, as
amended, is incorporated by reference from the section captioned "Compliance
with Section 16(a) of the Exchange Act" in the proxy statement.

ITEM 11.  EXECUTIVE COMPENSATION

    The information required by this Item is incorporated by reference from the
Proxy Statement under the caption "Executive Compensation and Related
Information."

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information required by this Item is incorporated by reference from the
Proxy Statement under the caption "Election of Directors" and "Ownership of
Securities."

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information required by this Item is incorporated by reference from the
Proxy Statement under the caption "Certain Transactions."

                                       48
<PAGE>
                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K

    (a) The following documents are filed as part of this Report on Form 10-K:

       (1) Financial Statements

    The following consolidated financial statements of GaSonics International
Corporation are included in Part II, Item 8:

<TABLE>
<CAPTION>
                                                                PAGE
                                                               NUMBER
                                                              --------
<S>                                                           <C>
Consolidated Balance Sheets--September 30, 2000 and 1999....      29
Consolidated Statements of Operations--Years Ended
  September 30, 2000, 1999 and 1998.........................      30
Consolidated Statements of Stockholders' Equity--Years Ended
  September 30, 2000, 1999 and 1998.........................      31
Consolidated Statements of Cash Flows--Years Ended
  September 30, 2000, 1999 and 1998.........................      32
Notes to Consolidated Financial Statements..................   33-46
Report of Independent Public Accountants....................      47
</TABLE>

       (2) Financial Statement Schedules

<TABLE>
<CAPTION>

<S>                                                           <C>
Schedule II--Valuation and Qualifying Accounts..............      54
</TABLE>

       Schedules other than those listed above have been omitted since they are
       either not required, are not applicable, or the required information is
       shown in the financial statements or related notes.

       (3) Exhibits

       The following exhibits are referenced or included in this report:

<TABLE>
<CAPTION>
EXHIBIT                     DESCRIPTION
-------                     -----------
<C>                         <S>
         2.1 (1)            Form of Agreement and Plan of Merger between Gasonics
                            International Corporation, a California corporation, and the
                            Registrant
         2.2 (1)            Stock Purchase Agreement dated February 28, 1991 between
                            Emerson Electric Company and the Registrant
         2.3 (5)            Asset Purchase Agreement dated as of July 30, 1995 among the
                            Registrant, GaSonics International Japan, K.K., Tekisco,
                            Inc. and Kishimoto Sangyo Co. Ltd.
         2.4 (5)            Stock Purchase Agreement dated as of July 30, 1995 between
                            the Registrant and Kishimoto Sangyo Co. Ltd.
         2.5 (5)            Commission Agreement dated as of July 30, 1995 between the
                            Registrant and Kishimoto Sangyo Co. Ltd.
         3.1 (1)            Certificate of Incorporation of the Registrant
         3.2 (1)            Bylaws of the Registrant
         3.3 (10)           Amended and Restated Bylaws of the Registrant
         4.1 (1)            Form of Common Stock Certificate
        10.1 (1)            Form of Indemnification Agreement between the Company and
                            each of its officers and directors
        10.2 (13)           1994 Stock Option/Stock Issuance Plan and forms of
                            agreements thereunder, as amended and restated effective
                            April 17, 1998
        10.3 (11)           1994 Employee Stock Purchase Plan, as amended and restated
                            effective December 17, 1996
</TABLE>

                                       49
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT                     DESCRIPTION
-------                     -----------
<C>                         <S>
        10.4 (1)            Form of Light Industrial Lease between Teachers Insurance
                            and Annuity Association of America and the Registrant for
                            office space at 2730 Junction Avenue, San Jose, California
        10.5 (1)            Promissory Note dated November 10, 1993 in the principal
                            amount of $339,999.60 issued by Dave Toole in favor of the
                            Registrant
        10.6 (1)            Credit Agreement dated August 6, 1993 between Union Bank of
                            California, a California banking corporation, International
                            Plasma Corporation and the Registrant
        10.7 (2)            Business Loan Agreement dated April 28, 1994 between
                            Registrant and Union Bank of California, a California
                            banking corporation and related Promissory Note
        10.8 (3)            Lease Agreement dated November 14, 1994 between Registrant
                            and Realtech Properties I, L.P.
        10.9 (4)            Loan Agreement dated April 19, 1995 between Registrant and
                            Union Bank of California, a California banking corporation
        10.10(4)            Lease Agreement dated June 5, 1995 between Registrant and
                            Orchard Investment Company
        10.11(6)            Underwriting Agreement dated March 21, 1994 by and among the
                            Registrant, the underwriters named therein and the selling
                            stockholders named therein
        10.12(7)            Underwriting Agreement dated March 9, 1995 by and among the
                            Registrant, the underwriters named therein and the selling
                            stockholders named therein
        10.13(8)            Continuing Guarantee Agreement dated July 31, 1995, executed
                            by the Registrant in favor of the Bank of Tokyo, Ltd.
        10.14(12)           Loan Agreement dated May 1, 1997 between Registrant and Bank
                            of Tokyo-Mitsubishi
        10.15(13)           Loan Agreement dated March 23, 1998 between Registrant and
                            Union Bank of California, a California banking corporation
        10.16(13)           Asuri Raghavan Employment Agreement
        10.17(15)           Loan Agreement dated June 30, 1999 between Registrant and
                            Union Bank of California, a California banking corporation
        10.18(15)           Graham W. Hills Employment Agreement
        10.19(16)           John Villadsen Employment Agreement
        10.20(16)           Jerauld J. Cutini Employment Agreement
        10.21(17)           Rammy Rasmussen Employment Agreement
        10.22(18)           Loan Agreement dated March 31, 2000 between Registrant and
                            Bank of Tokyo-Mitsubishi
        10.23(18)           Amendment of Form of Light Industrial Lease between Teachers
                            Insurance and Annuity Association of America and the
                            Registrant for office space
        16.1 (1)            Letter from Ernst & Young dated March 8, 1994 regarding the
                            change in the Certifying Accountant of the Registrant
        21.1                List of Subsidiaries of the Registrant
        23.1                Consent of Independent Public Accountants
        24.1                Power of Attorney (Included on signature page)
        27                  Financial Data Schedule
</TABLE>

------------------------

 (1) Incorporated by reference to identically numbered exhibits included in
     Registrant's Registration Statement on Form S-1 (File No. 33-74872)
     declared effective with the Securities and Exchange Commission on
     March 21, 1994.

 (2) Incorporated by reference to identically numbered exhibit included in
     Registrant's Report on Form 10-Q for the quarter ended June 30, 1994.

 (3) Incorporated by reference to an exhibit in Registrant's Report on
     Form 10-Q for the quarter ended December 31, 1994.

 (4) Incorporated by reference to exhibits included in Registrant's Report on
     Form 10-Q for the quarter ended June 30, 1995.

                                       50
<PAGE>
 (5) Incorporated by reference to exhibits filed with Registrant's Current
     Report on Form 8-K filed   with the Securities and Exchange Commission on
     August 24, 1995.

 (6) Incorporated by reference to an exhibit in Registrant's Registration
     Statement on Form S-1 (File No. 33-74872) declared effective with the
     Securities and Exchange Commission on March 21, 1994.

 (7) Incorporated by reference to an exhibit in Registrant's Registration
     Statement on Form S-1 (File No. 33-89636) declared effective with the
     Securities and Exchange Commission on March 9, 1995.

 (8) Incorporated by reference to exhibits filed with the Registrant's Annual
     Report on Form 10-K for the year ended September 30, 1995.

 (9) Incorporated by reference to an exhibit included in Registrant's Report on
     Form 10-Q for the quarter ended March 31, 1996.

 (10) Incorporated by reference to exhibits filed with the Registrant's Annual
      Report on Form 10-K for the year ended September 30, 1996.

 (11) Incorporated by reference to an exhibit included in Registrant's Report on
      Form 10-Q for the quarter ended March 31, 1997.

 (12) Incorporated by reference to an exhibit included in Registrant's Report on
      Form 10-Q for the quarter ended June 30, 1997.

 (13) Incorporated by reference to an exhibit included in Registrant's Report on
      Form 10-Q for the quarter ended March 31, 1998.

 (14) Incorporated by reference to an exhibit included in Registrant's Report on
      Form 10-Q for the quarter ended June 30, 1998.

 (15) Incorporated by reference to an exhibit included in Registrant's Report on
      Form 10-Q for the quarter ended June 30, 1999.

 (16) Incorporated by reference to exhibits filed with the Registrant's Annual
      Report on Form 10-K for the year ended September 30, 1999.

 (17) Incorporated by reference to an exhibit included in Registrant's Report on
      Form 10-Q for the quarter ended December 30, 1999.

 (18) Incorporated by reference to an exhibit included in Registrant's Report on
      Form 10-Q for the quarter ended March 31, 2000.

 (19) Incorporated by reference to an exhibit included in Registration Statement
      on Form S-3/A filed on May 19, 2000.

 (20) Incorporated by reference to an exhibit included in Registrant's Report on
      Form 10-Q for the quarter ended June 30, 2000.

 (21) Incorporated by reference to an exhibit included in Registrant's Current
      Report on Form 8-K filed on September 27, 2000.

 (22) Incorporated by reference to an exhibit included in Registrant's
      Registration Statement on Form S-3/A filed on October 10, 2000.

 (23) Incorporated by reference to an exhibit included in Registrant's Current
      Report on Form 8-K filed on October 27, 2000.

 (24) Incorporated by reference to an exhibit included in Registrant's Current
      Report on Form 8-K/A filed on October 30, 2000.

                                       51
<PAGE>
 (25) Incorporated by reference to an exhibit included in Registrant's Current
      Report on Form 8-K filed on October 31, 2000.

 (26) Incorporated by reference to an exhibit included in Registrant's Current
      Report on Form 8-K/A filed on November 9, 2000.

 (27) Incorporated by reference to an exhibit included in Registrant's Current
      Report on Form 8-K/A filed on November 30, 2000.

    (b) Reports on Form 8-K.

    On September 27, 2000 we filed a Current Report on Form 8-K to report our
    acquisition of Gamma Precision Technology, Inc.

    (c) Exhibits. See list of exhibits under (a) (3) above.

    (d) Financial Statement Schedules. See list of schedules under (a) (2)
       above.

                                       52
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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.

<TABLE>
<S>                                                    <C>  <C>
Date: December 20, 2000                                GASONICS INTERNATIONAL CORPORATION

                                                       By:              /s/ ASURI RAGHAVAN
                                                            -----------------------------------------
                                                                          Asuri Raghavan
                                                               PRESIDENT & CHIEF EXECUTIVE OFFICER
</TABLE>

                               POWER OF ATTORNEY

    KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David Toole and Asuri Raghavan, jointly and
severally, his attorneys-in-fact, each with the power of substitution, for him
in any and all capacities, to sign any amendments to the Report on Form 10-K and
to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated below:

<TABLE>
<CAPTION>
                  SIGNATURE                                  TITLE                       DATE
                  ---------                                  -----                       ----
<C>                                            <S>                                 <C>
               /s/ DAVE TOOLE
    ------------------------------------       Chairman of the Board of Directors  December 20, 2000
                 Dave Toole

             /s/ MONTE M. TOOLE
    ------------------------------------       Vice Chairman of the Board of       December 20, 2000
               Monte M. Toole                    Directors

             /s/ ASURI RAGHAVAN                Chief Executive Officer, President
    ------------------------------------         and Director (Principal           December 20, 2000
               Asuri Raghavan                    Executive Officer)

             /s/ RAMMY RASMUSSEN
    ------------------------------------       Chief Financial Officer             December 20, 2000
               Rammy Rasmussen

          /s/ KENNETH L. SCHROEDER
    ------------------------------------       Director                            December 20, 2000
            Kenneth L. Schroeder

         /s/ F. JOSEPH VAN POPPELEN
    ------------------------------------       Director                            December 20, 2000
           F. Joseph Van Poppelen

           /s/ KENNETH M. THOMPSON
    ------------------------------------       Director                            December 20, 2000
             Kenneth M. Thompson
</TABLE>

                                       53
<PAGE>
                                                                     SCHEDULE II

                       GASONICS INTERNATIONAL CORPORATION
                       VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                              BALANCE AT   CHARGED TO   CHARGED                  BALANCE
                                              BEGINNING    COSTS AND    TO OTHER                 AT END
DESCRIPTIONS                                  OF PERIOD     EXPENSES    ACCOUNTS   DEDUCTIONS   OF PERIOD
------------                                  ----------   ----------   --------   ----------   ---------
<S>                                           <C>          <C>          <C>        <C>          <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Years ended September 30:
  1998......................................    $  720       $  120       $ --       $   --      $  840
  1999......................................    $  840       $  180       $ --       $  366      $  654
  2000......................................    $  654       $  255       $ --       $  318      $  591

INVENTORY RESERVES
Years ended September 30:
  1998......................................    $2,822       $3,352       $ --       $1,752      $4,422
  1999......................................    $4,422       $1,498       $ --       $  805      $5,115
  2000......................................    $5,115       $  933       $200       $1,197      $5,051
</TABLE>

                                       54