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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, 1997                           0-22248
</TABLE>
 
                            ------------------------
 
                       GASONICS INTERNATIONAL CORPORATION
               (Exact name of Registrant as specified in charter)
 
<TABLE>
<S>                              <C>
           DELAWARE                   94-2159729
(State or other jurisdiction of    (I.R.S. Employer
incorporation or organization)    Identification No.)
</TABLE>
 
                              2540 Junction Avenue
                           San Jose, California 95134
                                 (408) 570-7000
 
    (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 _X_ No ____
 
    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 16, 1997,
as reported on The Nasdaq National Market was approximately $86,314,592. 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 16, 1997, the Registrant had outstanding 13,918,910 shares of
Common Stock.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
1.  Portions of the Registrant's Annual Report to Stockholders for the fiscal
    year ended September 30, 1997 are incorporated into Parts II and IV of this
    Report on Form 10-K.
 
2.  Portions of the Registrant's Proxy Statement for the Annual Meeting of
    Stockholders to be held on March 6, 1998 are incorporated by reference into
    Part III of this Report on Form 10-K.
 
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                                     PART I
 
ITEM 1.  BUSINESS
 
THE COMPANY
 
    GaSonics International Corporation ("GaSonics" or the "Company") is a
leading global semiconductor equipment manufacturer for the dry photoresist and
residue removal segments of advanced integrated circuit ("IC") manufacturing.
The Company's products consist of photoresist removal systems, residue removal
systems, isotropic etch systems, high pressure furnaces for the semiconductor
industry and low pressure chemical vapor deposition ("LPCVD") systems for the
flat panel display ("FPD") industry. The photoresist removal, residual removal
and isotropic etch systems use proprietary downstream plasma processing
technology to increase yields in the manufacture of advanced ICs. The Company
markets and sells its products to many leading IC manufacturers worldwide
including Intel, Motorola, Samsung, Siemens and Lucent Technologies.
 
    The Company began operations in 1968 and was incorporated in California in
March 1971 and reincorporated in Delaware in March 1994. In February 1991, the
Company acquired Branson International Plasma Corporation, a manufacturer of
photoresist removal equipment. In August 1995, the Company acquired Tekisco,
Ltd. from Kishimoto Sangyo Co. Ltd. of Tokyo, Japan, a manufacturer of LPCVD
equipment for the manufacture of FPDs. The Company's principal executive offices
are located at 2540 Junction Avenue, San Jose, California 95134. The Company's
telephone number is (408) 570-7000 and worldwide website address is
http://www.gasonics.com.
 
INDUSTRY BACKGROUND
 
    Rapid growth in the worldwide market for advanced ICs and IC-related
products has escalated the demand for semiconductor manufacturing equipment. In
the highly sophisticated IC fabrication process, the Company's products
influence a large number of complex and repetitive processing steps, including
deposition, photolithography and etch. Deposition puts down a layer of either
electrically insulating or electrically conductive material on the surface of a
wafer. The photolithography process then imprints device features, using a
photomask on a light sensitive polymer (photoresist). After the photoresist is
developed, an etch process selectively removes the deposited material from the
portions of the wafer surface not covered by the imprinted pattern. 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", have become increasingly challenging as device geometries
have shrunk to less than 1/500th the size of a human hair.
 
    Today's advanced IC devices incorporate dozens of layers and use a variety
of materials in fabrication. After each layer, the resist and residue removal
process is repeated; as chips increase in capability, numbers of layers and
residue removal steps increase correspondingly. For example, a typical one
megabit Dynamic Random Access Memory chip ("DRAM") requires 11 masking and
subsequent photoresist removal steps. By comparison, a 64 megabit DRAM requires
20 to 25 masking and photoresist removal steps. As line geometries, or feature
sizes, of an IC continue to decrease to below 0.25 microns, wafer cleanliness
becomes increasingly important yet more difficult. New materials such as copper,
low K dielectrics (low dielectric constant materials) and deep ultraviolet
photolithography ("DUV") resists, will complicate photoresist removal and
preparation of the wafer surface for subsequent masking steps. As a result of
these trends, the Company believes that the number and complexity of photoresist
and residue removal systems per production line of advanced ICs will increase
along with the need for application-specific processes.
 
    In the 1970's, photoresist was usually removed by immersing ICs into large
liquid chemical baths ("wet chemistry processing"). In the early 1980's, dry
chemistry processing used gases to remove the photoresist
 
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and began to replace wet chemistry processing for those advanced processing
steps that wet chemistry processing was unable to complete or added too many
defects (particles). Dry chemical processing has grown as an alternative with
potentially significant cost of ownership savings as compared with wet chemical
processing, especially for complex ICs with feature sizes of 1.0 micron and
below. Wet chemical processing also poses environmental concerns associated with
chemical storage, handling, disposal and operator safety. In the fabrication of
advanced ICs, wet chemical processing for photoresist removal is now typically
used only for noncritical cleaning steps after the application of a dry process.
In traditional dry chemical plasma processing, plasma is created and the wafer
is exposed to the plasma in a single chamber in order to remove the residual
photoresist. However, because certain plasma elements can damage the wafer,
direct exposure can result in reduced yield.
 
THE GASONICS SOLUTION
 
    Addressing the photoresist removal needs of advanced IC manufacturers,
GaSonics pioneered in 1986 an advanced dry chemical process technology known as
"downstream microwave plasma." This technology separates the area for plasma
creation from that in which the wafer is exposed, thus shielding the wafer from
potential plasma damage while facilitating the chemical reaction. From there,
the Company has evolved a complex mix of product and technology to meet the
challenges of decreased line geometries, increased wafer sizes, new materials
and a series of difficult-to-remove residues. Called Integrated Clean: Solutions
between Etch and Deposition, these advanced photoresist and residue removal
technologies are believed by GaSonics to be critical for the manufacture of
advanced ICs at acceptable yields and costs. Yield, operating costs, throughput,
reliability, uptime and system cost are recognized industry-wide as
contributions to an IC manufacturer's total cost of ownership. The Company
believes that downstream microwave processing and Integrated Clean can impact
each of these factors, offering advanced IC manufacturers a simplified process
solution with cost of ownership benefits. Furthermore, GaSonics'
industry-leading platform technology combines a high degree of reliability,
serviceability, and overall equipment effectiveness to offer additional cost of
ownership benefits.
 
THE GASONICS STRATEGY
 
    In order to maintain its leadership position in advanced dry chemical
processing equipment for photoresist and residue removal, GaSonics business
strategy is designed to:
 
    ENHANCE STRATEGIC CUSTOMER RELATIONSHIPS.  The Company believes that its
long-standing relationships with many leading worldwide IC manufacturers such as
Intel, Motorola, Samsung, and Siemens are critical to ensure its position as a
leading supplier of photoresist removal equipment for semiconductor fabrication.
The Company intends to continue to focus its resources on its key customers in
order to develop future process equipment and to lower the customers' total cost
of ownership for photoresist removal equipment. As part of this focus, the
Company believes that providing dedicated personnel at key customer facilities
will enable relationships, assist in the design of new fabrication process
equipment, and position GaSonics as a principal supplier of volume equipment
orders.
 
    FOCUS ON CAPITAL PRODUCTIVITY.  By increasing yields in the manufacture of
advanced ICs, the Company believes its proprietary downstream microwave
processing technology offers customers cost of ownership advantages over wet
chemical processing and traditional dry chemical processing. For example,
consumable chemicals used in wet chemical processing of larger diameter wafers
increase the cost of ownership. Additionally, the Company believes that its
downstream technology offers better yields than traditional dry chemical
processes through reduced damage and contamination. Confident that these
combined advantages position GaSonics as a preferred provider of lower cost of
ownership solutions, the Company intends to introduce additional cost-effective
products and product enhancements, including a new platform for 300mm wafers
which further enhances capital productivity.
 
                                       2
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    CAPITALIZE ON ADVANCED WAFER FABRICATION TRENDS.  The Company will address
the worldwide market opportunity for advanced photoresist removal equipment
created by wafer fabs manufacturing eight-inch wafers with near 0.25 micron line
geometries. The Company believes that the yield benefits from dry chemical
processes in general and GaSonics' downstream processing technology, in
particular, increase significantly at line geometries of 0.25 micron and below.
GaSonics was one of the first companies to target the advanced photoresist
removal market by transitioning from traditional batch processing to a single
wafer design and it currently has an installed base of over 600 systems in the
eight-inch market. The Company intends to become a leading supplier for the 300
millimeter marketplace with the Millennia-TM- 300mm platform introduced in 1997.
 
    PENETRATE ASIA/PACIFIC MARKET.  The Asia/Pacific market for IC processing
equipment represents more than one-half of the worldwide market. The Company has
recently been successful with large customers in Korea, Singapore, Taiwan and
Japan, and intends to continue to invest significant resources to further
penetrate the Asia/Pacific market, particularly Japan. Japanese process
equipment manufacturers have typically dominated that market with traditional
dry chemical systems that process multiple wafers in a single batch. Since
advanced IC manufacturers who use larger diameter wafers are increasingly
adopting single wafer processing, the Company believes its single wafer systems,
which incorporate advanced dry chemical processing techniques, are particularly
well-positioned to compete in Japan.
 
    TARGET NEW SYSTEMS AND APPLICATIONS.  The Company believes that its strong
customer relationships and technology leadership will enable it to develop new
systems and target applications for specific customer needs. The Company's
fastest-ramping product, the Performance Enhancement Platform ("PEP") system,
illustrates that strategy. A dual chamber photoresist and residue removal system
designed to increase throughput and optimize clean room space, PEP systems allow
a mix-and-match option allowing photoresist removal, residue removal or a
combination of both process chambers on one platform. In addition, PEP's
advanced, flexible operating system with graphical user interface allows for
easy addition of new chamber and system features to continuously improve the
product's process capability. This insures the product spans multiple
generations of device manufacturing needs. For 300mm wafers, the Company has
devised a unique platform that further increases capital productivity over the
dual chamber PEP. It uses the concept of segmenting processes into multiple yet
parallel steps, minimizing wafer handling overhead. It is also being designed to
meet customers' advanced resist and residue removal needs below 0.18 micron.
 
GASONICS TECHNOLOGY
 
MICROWAVE DOWNSTREAM PROCESSING.
 
    GaSonics' proprietary microwave downstream processing technology for dry
chemical processing has been a key element in establishing product demand.
 
    In addition to separating the plasma source from the wafer exposure area
("downstream"), the Company's processing technology incorporates microwave
plasma generation. The Company believes that microwave frequency introduced for
semiconductor manufacturing by GaSonics in 1986, has become the preferred source
for plasma creation because it produces a higher concentration of neutral
species and fewer damaging ions than the alternative, radio frequency ("RF")
plasma. Thus, the Company believes its products have higher removal rates with
less damage and can operate at lower temperatures than competitive products that
utilize RF energy.
 
    GaSonics' proprietary microwave downstream processing technology can be
applied to other process applications, such as isotropic etch. In isotropic
etching, plasma selectively removes material such as silicon dioxide, silicon
nitride and polysilicon to create three-dimensional contours on the wafer. To
accommodate the increased number of mask layers, certain silicon layers on the
wafer must be carefully shaped prior to the deposition of the next layer of
material. These etching processes are typically completed by costly wet chemical
process steps. The Company believes that IC manufacturers will soon replace wet
chemical
 
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processes or high cost etching steps with more cost-effective downstream dry
chemical processes. The Company believes that its proprietary downstream
technology will enable manufacturers to complete these steps with increased
yield and lower cost.
 
    To meet the challenges of a marketplace increasing in complexity, GaSonics
has broadened the Company's offerings of solutions which remove unwanted
materials between the etch process and subsequent deposition. The Company's
twenty-five years of market share and technology leadership in photoresist
removal have facilitated its development of Integrated Clean. The critical
process steps between etch and deposition, specifically those that involve the
removal of unwanted materials, prepare the wafer surface for a better device
connection. These materials, which may be organic, inorganic, metallic or
particulate in nature, can impact device performance, reliability and yield if
they are not removed. GaSonics core business enables this critical process
sequence, which includes photoresist removal and residue removal. These steps
complete the preceding etch step and prepare the wafer for the subsequent
deposition.
 
HIGH PRESSURE THERMAL PROCESSING
 
    The Company introduced the concept of the application of high pressure to IC
thermal processing with the introduction of its high pressure furnace product.
In IC fabrication, there are a number of thermal process steps that involve the
exposure of the wafer to high temperature over an extended period of time. These
steps include oxidation, which is the growth of insulating materials on the
wafer, and reflow, which is a process that smoothes irregular topographies on a
wafer. By introducing high pressure as a parameter in thermal processing, the
amount of time a wafer must be exposed to high temperatures is reduced. Also, in
some instances, high pressure actually allows for a reduction in the process
temperature. The length of time an IC may be exposed to high temperatures is
known as the "thermal budget" of the device.
 
    Although high pressure is currently utilized primarily for specialized
applications, the Company believes that the use of high pressure in the
fabrication of advanced ICs will increase as feature sizes continue to decrease.
Advanced ICs are more sensitive to long exposure to high temperatures and
require lower processing temperatures and have a lower thermal budget. In
addition, the Company believes that high pressure thermal processing provides
benefits to the IC manufacturer including higher yields resulting from increased
process rates and reduced damage to the wafer that can result from long exposure
to high temperatures and increased die per wafer. The Company began shipping VHP
systems, its most recent high pressure product release, in August 1995.
 
PRODUCTS
 
    The Company's major product line consists of advanced dry chemical
processing equipment for photoresist removal. The Company also offers advanced
dry chemical processing equipment for post-etch residue removal, isotropic
etching, high pressure furnaces, low-pressure chemical vapor deposition
equipment used for flat panel display manufacturing and products using plasma
chemistry for a variety of non-semiconductor applications. In addition, the
Company provides upgrades, maintenance and spare parts for both current and
previous generation products.
 
DRY CHEMICAL PROCESSING SYSTEMS
 
    PHOTORESIST REMOVAL.  The Company's dry chemical downstream processing
systems are designed to provide advanced IC manufacturers with lower cost of
ownership solutions for photoresist removal. This product line currently
includes the Aura 1000, the Aura 2000-LL, the Aura 3010, the L3510, the PEP3510A
and the PEP3510C. All of these products incorporate the Company's proprietary
microwave downstream processing technology and are designed to be used in the
fabrication of ICs with feature sizes of 0.25 microns and below. Their
throughput rates range from approximately 45 to 140 wafers per hour for single
 
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chamber systems and up to 160 wafers per hour for dual chamber systems,
depending upon wafer size and customer application. System purchase prices range
from approximately $150,000 to $700,000.
 
    The Company introduced its high productivity platform, the PEP, in 1995. A
dual chamber platform with a proprietary wafer handler and high yield
photoresist removal capability, the PEP delivers a lower cost per wafer pass
while providing yield advantage with GaSonics' downstream microwave processing.
GaSonics introduced photoresist removal chambers for the PEP platform in 1995,
and the residue removal chambers were introduced in 1996. The PEP represents the
Company's migration to a platform strategy which offers flexibility and
customization of single wafer processing on an integrated platform. In 1994, the
Company introduced its two most recent single chamber product enhancements, the
L3510, an enhancement to the L3500, and the Aura 3010, an enhancement to the
Aura 3000, each of which has extended performance capabilities, including higher
reliability, increased operational flexibility and higher throughput.
 
    In 1997 the Company introduced its new 300mm platform the "Millennia" which
will be available for commerical shipment in calendar 1998. Millennia adds a
wafer loadlock giving it the capability to perform more processes with more
chemistry options than PEP. The loadlock allows the use of hazardous gases such
as Chlorine and some Fluorine compounds which gives Millennia the flexibility to
perform isotropic and backside etching as well as soft silicon etch and oxide
etching.
 
    Sales of dry chemistry processing equipment for photoresist removal
accounted for approximately 69%, 62% and 69% of the Company's net sales in
fiscal years 1995, 1996 and 1997, respectively.
 
    POST ETCH RESIDUE REMOVAL.  Post etch residue removal is defined as the
processes after etch (metal, poly or oxide) that remove unwanted materials from
the surface of the wafer. Plasma systems like the PEP have proven to be more
cost-effective at removing these materials than traditional wet chemistries.
 
    PEP integrated processing is typically used after a poly or oxide etch step.
Most metal etchers have a photoresist module incorporated in their platforms
designed to passivate the wafer and prevent corrosion. In this process,
photoresist is also removed, leaving behind residues. The PEP3510A has proven
effective at removing some of these residues with the addition of low
concentrations of Fluorine gases. In addition, a modular clean chamber
configured on the PEP becomes a PEP3510C (Clean) tool. This chamber is
specifically designed to accommodate large concentrations of Fluorine gas which
is sometimes needed for removing more difficult residues which form after metal
and oxide etch. The clean chamber optimizes the process chamber with a single
process, greatly improving wafer results, and has been qualified for production
at several fabs for this process. It has also shown capability for post oxide
etch residue removal.
 
    The next step for the Company will be the introduction of the PEP3600, a
dual chamber PEP which will further optimize process wafer flow in the fab. The
product is planned to launch in 1998.
 
    ISOTROPIC ETCHING.  Isotropic etching removes materials from a wafer both
horizontally and vertically at uniform rates. With isotropic etching, advanced
IC manufacturers can consistently and uniformly remove materials in a more
controlled environment, generally resulting in a lower cost than traditional wet
chemical processing. In fiscal 1995, the Company completed the development of
its high selectivity isotropic etch system, the Strata, for the removal of
silicon dioxide, silicon nitride and polysilicon from the wafer. The Strata
features the Company's downstream microwave technology.
 
HIGH PRESSURE FURNACE SYSTEMS
 
    Over the past 18 years, the Company has marketed a horizontal high pressure
furnace system, the HiPOx, and has sold over 150 of such systems to over 30
semiconductor manufacturers worldwide. In fiscal 1995, the Company completed
development of its vertical high pressure furnace system, the VHP. The VHP
system is intended to provide process simplification by eliminating a mask step
and reducing the time the wafer is exposed to elevated temperatures, thereby
permitting smaller geometries and increasing yields in the manufacture of
advanced ICs. As geometries continue to shrink, more customers are exploring the
 
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compatability of the VHP for ultra thin gate materials as a driver process for
0.18 micron devices. In these thin gate application, the VHP offers superior
nitrogen incorporation into the oxide to improve barrier and strength
characteristics. The VHP also addresses industry requirements for a vertical
furnace design with reduced footprint and small dual batch sizes of
approximately 50 waters.
 
LOW-PRESSURE CHEMICAL VAPOR DEPOSITION SYSTEMS
 
    In August 1995, the Company acquired its liquid crystal display ("LCD")
division in Japan (formerly called Tekisco, Ltd.), one of Japan's leading
manufacturers of low-pressure chemical vapor deposition systems used for flat
panel display manufacturing. Established in 1990, LCD began shipments of its
proprietary LPCVD systems for polysilicon-on-glass applications for flat panel
displays in 1991. LPCVD systems have been sold to a number of leading Japanese
and Korean flat panel display manufacturers. The Company believes that the
acquisition of LCD has expanded its market presence in Japan. The Company
believes that the equipment needs of flat panel or liquid crystal manufacturers
and semiconductor manufacturers are similar and appear to be converging as the
wafers used in IC manufacturing continue to increase in size.
 
SPARE PARTS, SERVICE AND SUPPORT
 
    GaSonics also provides a series of products, including spare parts,
retrofits and upgrade kits as well as service, training and support for its
growing installed based. Revenue from these sources accounted for approximately
20%, 21% and 20% of the Company's net sales in fiscal 1995, 1996 and 1997,
respectively. As both the industry's technology and the Company's systems have
become more complex, the Company believes that its customers will increasingly
rely on its expertise for service and support. Since the installed base of the
Company's equipment has increased and is expected to continue to increase, the
Company believes that service and support revenue may also increase in 1998.
 
CUSTOMERS
 
    The Company sells its products to leading IC manufacturers and flat panel
display manufacturers located throughout the United States, Europe and the
Asia/Pacific. Sales to Intel accounted for approximately 20% and 11% of net
sales in fiscal 1995 and 1996, respectively. In fiscal 1997, Samsung and Promos
Technologies each accounted for approximately 11% of net sales and Intel
accounted for approximately 10% of net sales. The Company expects that sales of
its products to relatively few customers, particularly Intel, Motorola, Samsung,
Siemens and Lucent Technologies will continue to account for a high percentage
of its net sales in the foreseeable future. None of the Company's customers has
entered into a long-term agreement requiring it to purchase the Company's
products. Moreover, sales to certain of the Company's 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 the Company's 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 materially adversely affect the Company's business, financial
condition and results of operations.
 
SALES, SERVICE AND CUSTOMER SUPPORT
 
    The Company believes its sales, service, applications and customer support
organizations are critical to its success in establishing and maintaining
long-term customer relationships and provide the Company with a competitive
advantage in the process equipment market. These relationships are of paramount
importance in the semiconductor capital equipment market, as the Company
believes that once a semiconductor manufacturer has selected a particular
supplier's capital equipment, that manufacturer generally relies upon that
equipment for delivering a technology solution against specific device
processing
 
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requirements and frequently will attempt to consolidate its other capital
equipment requirements with the same supplier. The Company's sales, service and
applications and customer support 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. As a result, the Company believes it is positioned to continue its
success in the development, marketing and servicing of products which provide
advanced semiconductor manufacturers enabling technology solutions.
 
    The Company markets, sells and services its products domestically and
internationally primarily through its marketing and direct sales and customer
support organization including service, applications and process development
engineering and logistics personnel. Since the end of fiscal 1993, the Company
has established subsidiaries in the U.K., Ireland, France, Israel, Korea and
Japan, and branch offices in Italy, Singapore and Taiwan and has staffed these
subsidiaries and branches with sales, service, technical support, applications
engineering and logistics personnel. During 1997, the Company reduced its
dependence on third party representatives to two representatives to sell and
service its products in Germany and China. The Company has eight United States
sales and service centers located in Austin, Texas; Dallas, Texas; Rockaway, New
Jersey; Aloha, Oregon; Mesa, Arizona; Hopewell, New York; Fishkill, New York;
and its corporate headquarters in San Jose, California.
 
    The Company's field service, technical support and applications engineering
personnel based throughout the United States, Europe and Asia, directly support
domestic and international equipment installations and commissioning, process
development, training, spare parts logistics, warranty service and post-warranty
contract service. The Company's field service engineers include dedicated
site-specific engineers contracted by certain customers, such as Intel,
Motorola, Lucent Technologies and Texas Instruments.
 
    The Company generally offers standard warranty terms for two years on parts
and labor on equipment sales. The Company also offers service contracts to its
customers for continued maintenance of systems that are not covered by warranty.
 
    In support of its numerous field support centers located throughout the
world, the Company also maintains a headquarters-based customer satisfaction
organization. This organization includes advanced technical/product support, a
central response center, technical publications, product training, global field
resource planning and spare parts logistics and planning. This organization,
working in concert with the Company's field sales, service, applications and
customer support centers, link customers with the Company's most advanced
technical problem solving expertise, with an overall goal of providing quality
products and services which meet customer's expectations. In support of the
Company's goal, it is preparing to be in compliance with ISO-9001, which
requires a strict system of standards used primarily in Europe to measure the
Company's ability to achieve certain quality milestones.
 
    The Company has increased and continues to increase its sales, service,
applications and customer support presence in Asia. The Company intends to
continue investing significant resources to further penetrate the Asia market.
The Company's goal is to develop knowledgeable local sales, service,
applications and customer support resources throughout the region to increase
communication between the Company and Asian semiconductor manufacturers, reduce
response times for sales and support inquiries, and co-develop next generation
processes.
 
    In August 1995, the Company acquired its LCD division in Japan from
Kishimoto Sangyo Co. Ltd. of Tokyo, Japan. The LCD division is a manufacturer of
LPCVD equipment used for the manufacture of flat panel displays ("FPD's"). FPDs
are important components of portable computing and telecommunications devices.
FPD or liquid crystal display manufacturing utilizes very similar processes to
IC processing. Approximately 90% of the advanced FPDs produced worldwide are
manufactured in Japan. This acquisition was intended to enable GaSonics to
continue to penetrate this market and to further establish the credibility of
GaSonics as a supplier in Japan.
 
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    Subsequent to 1997 fiscal year end, the Company announced that is has
established a direct presence in Japan for sales, maintenance and service of the
Company's photoresist and residue removal business to better serve its Japanese
customers. As a result, the Company will transition out of its relationship with
Seki Technotron, which has served as the Company's exclusive distributor,
providing sales and field support in Japan since 1995.
 
BACKLOG
 
    The Company schedules production of its systems based upon backlog, informal
customer commitments and general economic forecasts for its targeted markets.
The backlog includes only those customer orders for systems for which the
Company has accepted purchase order numbers and assigned shipment dates within
twelve months as well as orders for spare parts and service and support of
systems. The Company's backlog for its systems, spare parts and service and
support was approximately $32.4 million and $32.8 million at the end of fiscal
years 1996 and 1997, respectively. Historically, the Company's backlog has
fluctuated significantly primarily as a result of the cyclical nature of
construction and equipping of new IC fabrication facilities. The equipment
requirements of new fabrication facilities cannot be determined with accuracy,
and therefore the Company's backlog at any certain date is not indicative of
future growth. In addition, the Company's backlog at any particular date is not
necessarily representative of actual sales for any succeeding period. Orders are
often received and shipped in the same quarter, system delivery schedules can
change and have changed, cancellations and rescheduled system orders can occur
and have occurred, all orders are subject to cancellation, deferral or
rescheduling by the customer with limited or no penalties, and there are
potential delays, and there have been delays, in system shipments. The Company
has in the past experienced, and will likely continue to experience,
cancellations, deferrals and rescheduling of product orders
 
MANUFACTURING
 
    The Company's manufacturing strategy is to produce high quality,
cost-effective, and reliable systems and assemblies to support on-going and
growing requirements for more environmental friendly semiconductor processing
equipment. In order to provide the best added value to the customers and to
preserve standards in performance, the Company is placing emphasis on in-house
system integration and test activities that require proprietary core technology
or specialized knowledge and outsourcing routine fabrication and assembly to
subcontractors. The performance of subcontractors is monitored through a supply
management program to ensure that they comply with quality and on-time
expectations. In addition, as part of a continuous quality improvement process,
the Company has embarked on a IS9002 certification program for its Plasma
products manufacturing facility.
 
    The Company's principal manufacturing activities include assembly and test
work and are conducted at the Company's facility in San Jose, California and in
Atsugi City, Japan for the LPCVD business. Assembly includes subassembly and
final assembly. Test includes module test and final system test. The system
products are integrated and tested in Class 100 to 1000 clean rooms to
customers' acceptance criteria prior to shipment. In addition, Class 10 clean
rooms simulating a fab environment are available to provide equipment
performance demos to customers.
 
    The Company is 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 the
Company's products. The Company believes that it is currently in compliance in
all material respects with such regulations and that it has obtained all
necessary environmental permits to conduct its business. Nevertheless, the
failure to comply with current or future regulations could result in substantial
fines being imposed on the Company, suspension of production, alteration of its
manufacturing process or cessation of operations. Such regulations could require
the Company to acquire expensive remediation equipment or to incur substantial
expenses to comply with environmental regulations. Any failure by the Company to
control the use, disposal or storage of, or adequately restrict the discharge
of,
 
                                       8
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hazardous or toxic substances could subject the Company to significant
liabilities. To ensure that manufacturing and engineering activities are
conducted with heightened awareness on safety and compliance to regulations
regarding the use of toxic or other hazardous substances, training programs are
conducted on a year round basis for existing and new employees.
 
    To measure and improve customer satisfaction with the Company's products and
service, metrics are developed and measured on a weekly or monthly basis, such
as response time, quality, installation discrepancies, on-time, backorders,
employee flexibility, and productivity. In addition, the Company has established
a Customer Response Center ("CRC") to enhance the response time in providing
customers parts and systems support . The CRC has direct access to
Manufacturing, Engineering, and other resources to meet urgent and routine
requests.
 
RESEARCH AND DEVELOPMENT
 
    The markets for semiconductor manufacturing equipment, including the markets
that utilize the Company's equipment, are characterized by rapid technological
development and product innovation. The Company intends to continue to commit
substantial resources to research and development in both dry chemistry
processing, high pressure thermal processing and LPCVD for the flat panel
display market.
 
    In order to maintain its long-term relationships with existing customers,
the Company commits substantial resources to the continuous improvement of
existing products and developing new products and technology. Customers with
large installed bases increasingly require their suppliers to improve existing
products in order to avoid the long qualifying evaluations required with new
equipment, which can be costly and risky. The Company's research and development
for product improvement includes in-house validation tests of major hardware
changes as well as detailed process characterization in the Company's clean
rooms.
 
    Historically, the Company has devoted a significant portion of its financial
resources to research and development programs and expects to continue to
allocate significant resources to these efforts. For fiscal 1995, 1996 and 1997,
total research and development expenditures were approximately $12.3 million,
$18.0 million and $17.4 million, respectively, and represent approximately 12%,
14% and 14% of the Company's net sales, respectively.
 
COMPETITION
 
    The semiconductor capital equipment industry is intensely competitive. A
substantial investment is required by customers to install and integrate capital
equipment into a semiconductor production line. As a result, once a
semiconductor manufacturer has selected a particular supplier's capital
equipment, the manufacturer often relies upon that equipment for the specific
production line application and frequently will attempt to consolidate its other
capital equipment requirements with the same supplier. Accordingly, the Company
expects to experience difficulty in selling to a particular customer for a
significant period of time if that customer initially selects a competitor's
capital equipment. The Company currently has only one principal product line and
experiences intense competition worldwide from a number of leading foreign and
domestic manufacturers, including Canon, Applied Materials, Inc., Eaton
Corporation, Lam Research Corporation, Matrix Semiconductor Systems, Inc.,
Mattson Technology, Inc., Plasma Systems and MC Electronics, some of which have
substantially greater installed bases and greater financial, marketing,
technical and other resources than the Company. Certain of the Company's
competitors have announced the introduction of, or have introduced, competitive
products that offer other technologies and improvements. For example, Applied
Materials and Lam Research have introduced modules to their products which
remove photoresist using dry chemistry processing and thereby compete with the
Company's products. The Company expects its 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 the Company's competitors could cause a significant decline in
 
                                       9
<PAGE>
sales or loss of market acceptance of the Company's systems; intense price
competition or other factors that could make the Company's systems or technology
obsolete or noncompetitive. The Company believes that the industry will continue
to be subject to consolidation which will increase the number of larger more
powerful companies in the industry sector in which the Company competes. The
Company also believes competition will continue from current and new suppliers
employing other technologies, such as wet chemistry, traditional dry chemistry
and other techniques. This increased competitive pressure could lead to reduced
demand and lower prices for the Company's products, thereby materially adversely
affecting the Company's operating results.
 
    The principal competitive elements in dry chemistry processing for
photoresist and residue removal and etching are technological innovation, total
cost of ownership of the systems, including yield, price, product performance
and throughput capability, quality, and reliability, and customer service and
support. Although the Company believes that it competes favorably in these
areas, competitive product introductions could cause a decline in sales or loss
of market acceptance of the Company's existing products. In addition, by virtue
of its reliance on sales of advanced dry chemistry processing equipment, the
Company could be at a disadvantage compared to certain competitors that offer
more diversified product lines.
 
    The Company believes that to remain competitive it 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. In marketing its products, the Company will face competition from
suppliers employing new technologies in order to extend the capabilities of
competitive products beyond their current limits or increase their productivity.
In addition, increased competitive pressure could lead to intensified
price-based competition, resulting in lower prices and margins, which would
materially adversely affect the Company's business, financial condition and
operating results.
 
    In addition, Japanese IC process equipment manufacturers dominate the market
for certain types of integrated circuits which use the Company's systems.
Japanese manufacturers are well-established in the Japanese process equipment
market, making it difficult for non-Japanese manufacturers to penetrate the
Japanese market. Furthermore, Japanese semiconductor manufacturers have extended
their influence outside of Japan by licensing products and process technologies
to non-Japanese semiconductor manufacturers. Such licenses could result in a
recommendation to use certain semiconductor capital equipment manufactured by
Japanese companies. The Company has not established itself as a major competitor
in the Japanese market and there can be no assurance that the Company will be
able to achieve significant sales to Japanese IC manufacturers or compete
successfully in the future.
 
    LCD's competitors in the LPCVD market include Japan-based companies and
Japan-based joint ventures such as Applied Komatsu, Koyo Lindbergh and ULVAC.
These competitors manufacture alternative technology systems and they could, at
any time, enter the Company's markets with improved technology or with systems
that are directly competitive with those of LCD.
 
INTELLECTUAL PROPERTY RIGHTS
 
    The Company owns 17 United States patents which expire between 1998 and 2017
and has 5 U.S. patents pending. In addition, the Company has 15 foreign patents
which expire between 1998 and 2011 and has applied for 2 additional foreign
patents. Certain of these patents were acquired by the Company from Branson
International Plasma Corporation ("IPC"). One additional U.S. patent application
has been assigned to the Company in connection with the acquisition of LCD. The
Company seeks patents when appropriate on inventions resulting from its ongoing
research and development and manufacturing activities. The Company also has 7
trademarks and has an additional 2 trademarks pending. Nevertheless, the Company
looks primarily for its success from innovation, technological expertise and
marketing abilities of its employees rather than from patent, trademark,
copyright and other intellectual property rights protection.
 
                                       10
<PAGE>
    Although the Company attempts to protect its intellectual property rights
through patents, copyrights, trade secrets and other measures, there can be no
assurance that the Company will be able to protect its technology adequately or
that competitors will not develop similar technology independently. There can be
no assurance that any of the Company's pending patent applications will be
issued or that foreign intellectual property laws will protect the Company's
intellectual property rights. Patents issued to the Company could be challenged,
invalidated or circumvented and the rights granted thereunder may not provide
competitive advantages to the Company. Furthermore, there can be no assurance
that others will not independently develop similar products, duplicate the
Company's products or, if patents are issued to the Company, design around the
patents issued to the Company.
 
    As is typical in the semiconductor industry, the Company occasionally
receives notices from third parties alleging infringement claims. Although there
currently are no pending material claims or lawsuits against the Company
regarding any possible infringement claims, there can be no assurance that
infringement claims by third parties or claims for indemnification resulting
from infringement claims in the future will not be asserted or that such
assertions, if proven to be true, will not materially adversely affect the
Company's business, financial condition and results of operations. If any such
claims are asserted against the Company, the Company may seek to obtain a
license under the third party's intellectual property rights if available on
reasonable terms or at all. The Company could decide, in the alternative, to
resort to litigation to challenge such claims or enforce its proprietary rights.
Such challenges could be extremely expensive and time consuming and could
materially adversely affect the Company's business, financial condition and
results of operations.
 
EMPLOYEES
 
    At September 30, 1997, the Company had approximately 487 full-time
employees. The Company believes its future success will depend in large part on
its ability to attract and retain highly skilled and motivated employees. None
of the employees of the Company is covered by a collective bargaining agreement.
The Company considers its relationships with its employees to be good.
 
ADDITIONAL RISK FACTORS
 
SIGNIFICANT FLUCTUATIONS IN OPERATING RESULTS
 
    The Company's operating results have fluctuated significantly in the past
and will continue to fluctuate significantly in the future. The Company
anticipates that factors continuing to affect its future operating results will
include the cyclicality of the semiconductor industry and the markets served by
the Company's customers, the timing of significant orders, patterns of capital
spending by customers, the proportion of direct sales and sales through
distributors, the proportion of international sales to net sales, changes in
pricing by the Company, its competitors, customers or suppliers, market
acceptance of new and enhanced versions of the Company's products, inventory
obsolescence, accounts receivable writeoffs, the mix of products sold, financial
systems, procedures and controls, discounts, the timing of new product
announcements and releases by the Company or its competitors, delays,
cancellations or rescheduling of orders due to customer financial difficulties
or otherwise, the Company's ability to produce systems in volume and meet
customer requirements, the ability of any customer to finance its purchases of
the Company's equipment, changes in overhead absorption levels due to changes in
the number of systems manufactured, political and economic instability and
lengthy sales cycles. Gross margins have varied and will continue to vary
materially based on a variety of factors including the mix and average selling
prices of systems sales, the mix of revenues, including service and support
revenues, and the costs associated with new product introductions and
enhancements and the customization of systems. Furthermore, announcements by the
Company or its competitors of new products and technologies could cause
customers to defer purchases of the Company's existing systems, which would also
materially adversely affect the Company's business, financial condition and
results of operations. The Company's gross margin and overall gross
 
                                       11
<PAGE>
margin rate has sharply declined from the level attained in prior years, in
part, due to start-up inefficiencies associated with new products, competitive
pricing pressures, changes in product mix from fewer higher margin rate and
mature single chamber products to lower margin rate dual chamber products,
products sold by the Company's LCD division in Japan, and other factors.
Additionally, sales and earnings for the last half of fiscal 1996 and throughout
fiscal 1997 were materially adversely impacted by the current semiconductor
business slowdown and, although the Company has and is continuing to attempt to
manage its expenses to partially offset the loss of income from the decline in
revenue, it is anticipated that this slowdown in the industry will continue into
next fiscal year and will continue to have a material adverse effect on the
Company's future revenues and operating results. See "Expansion of Operations;
Management of Growth" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
 
LIMITED SYSTEM SALES; BACKLOG
 
    The Company derives a substantial portion of its sales from the sale of a
relatively small number of systems which typically range in purchase price from
approximately $150,000 to $700,000 for its photoresist removal systems and up to
approximately $2.0 million or more for its other products. As a result, the
timing of recognition of revenue for a single transaction could continue to have
a material adverse effect on the Company's sales and operating results. The
Company's backlog at the beginning of a quarter typically does not include all
sales required to achieve the Company's sales objectives for that quarter.
Moreover, all customer purchase orders are subject to cancellation or
rescheduling by the customer with limited or no penalties and, therefore,
backlog at any particular date is not necessarily representative of actual sales
for any succeeding period. The Company's net sales and operating results for a
quarter may depend upon the Company obtaining orders for systems to be shipped
in the same quarter that the order is received. The Company's business and
financial results for a particular period could be materially adversely affected
if an anticipated order for even one system is not received in time to permit
shipment during such period. Furthermore, most of the Company's quarterly net
sales have recently been realized near the end of the quarter. A delay in a
shipment near the end of a particular quarter, due, for example, to an
unanticipated shipment rescheduling, to cancellations or deferrals by customers,
to unexpected manufacturing difficulties experienced by the Company or to supply
shortages, may cause and has caused net sales in a particular quarter to fall
significantly below the Company's expectations and materially adversely affect
the Company's operating results for such quarter. In addition, significant
investments in research and development, capital equipment and customer service
and support capability worldwide have resulted in significant fixed costs which
the Company has not been able to reduce rapidly as sales goals for a particular
period have not been met. Because the Company builds its systems according to
forecast, a reduction in customer orders or backlog could present further
difficulties regarding the Company's ability to plan production and inventory
levels, which could materially adversely impact operating results. The impact of
these and other factors on the Company's operating results in any future period
cannot be forecasted accurately.See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
CYCLICALITY OF SEMICONDUCTOR INDUSTRY
 
    The Company's business depends in significant part upon capital expenditures
by manufacturers of semiconductor devices, including manufacturers that are
opening new or expanding existing fabrication facilities, which, in turn, depend
upon the current and anticipated market demand for such devices and products
utilizing such devices. The semiconductor industry is highly cyclical and
historically has experienced periods of oversupply, resulting in significantly
reduced demand for capital equipment, including systems manufactured and
marketed by the Company. The semiconductor industry has experienced significant
growth in recent years which has resulted in significant growth in the capital
equipment industry. However, beginning in 1996, the semiconductor industry began
experiencing a cyclical downturn. The Company has experienced significant delays
of new orders and reschedulings of existing orders that
 
                                       12
<PAGE>
have materially adversely affected the Company's results of operations for the
last two quarters of fiscal 1996 and all of fiscal 1997 financial results and
may materially adversely affect future financial results. Accordingly, the
Company can give no assurance that it will be able to achieve or maintain its
current level of sales. Additionally, the Company anticipates that a significant
portion of new orders depend upon demand from IC manufacturers building or
expanding large fabrication facilities, and there can be no assurance that such
demand will exist. See "Business--Industry Background."
 
HIGHLY COMPETITIVE INDUSTRY
 
    The semiconductor capital equipment industry is intensely competitive. A
substantial investment is required by customers to install and integrate capital
equipment into a semiconductor production line. As a result, once a
semiconductor manufacturer has selected a particular vendor's capital equipment,
the Company believes that the manufacturer generally relies upon that equipment
for the specific production line application and frequently will attempt to
consolidate its other capital equipment requirements with the same vendor.
Accordingly, the Company expects to experience difficulty in selling to a
particular customer for a significant period of time if that customer selects a
competitor's capital equipment. The Company currently has only one principal
product line and experiences intense competition worldwide from a number of
foreign and domestic manufacturers, including Canon, Applied Materials, Inc.,
Eaton Corporation, Lam Research Corporation, Matrix Semiconductor Systems, Inc.,
Mattson Technology, Inc., Plasma Systems and MC Electronics, many of which have
substantially greater installed bases and greater financial, marketing,
technical and other resources than the Company. One of the Company's
competitors, Fusion was recently acquired by Eaton Corporation, a very large
corporation. The Company believes that the industry will continue to be subject
to consolidation which will increase the number of larger more powerful
companies in the industry sector in which the Company competes. Certain of the
Company's competitors have announced the introduction of, or have introduced or
acquired, competitive products that offer other technologies and improvements.
Applied Materials and Lam Research have introduced and currently sell modules to
their products which remove photoresist using dry chemical processing and,
therefore, compete with the Company's products. The Company expects its
competitors to continue to develop enhancements to and future generations of
competitive products that may offer improved price or performance features. New
product introductions and enhancements by the Company's competitors could cause
a significant decline in sales or loss of market acceptance of the Company's
systems in addition to intense price competition or otherwise make the Company's
systems or technology obsolete or noncompetitive. In addition, by virtue of its
reliance on sales of advanced dry chemistry processing equipment, the Company
could be at a disadvantage compared to certain competitors that offer more
diversified product lines. The Company believes that it will continue to face
competition from current and new vendors employing other technologies, such as
wet chemistry, traditional dry chemistry and other ashing techniques, as such
competitors attempt to extend the capabilities of their existing products.
Increased competitive pressure has led to reduced demand and lower prices for
the Company's products, thereby materially adversely affecting the Company's
operating results. There can be no assurance that the Company will be able to
compete successfully in the future. See "Business--Competition."
 
    Competitors of the Company's LCD division in Japan include Japan-based
companies and Japan-based joint ventures such as Applied Komatsu, Koyo Lindbergh
and ULVAC. These competitors manufacture alternative technology systems and they
could, at any time, enter the Company's markets with improved technology or with
systems that are directly competitive with those of the Company's LCD division.
 
DEPENDENCE ON KEY CUSTOMERS
 
    Historically, the Company has sold a significant proportion of its systems
in any particular period to a limited number of customers. Sales to the
Company's ten largest customers in fiscal 1995, 1996 and 1997 accounted for
approximately 68%, 51% and 66% of net sales, respectively. Sales to Intel
accounted for
 
                                       13
<PAGE>
approximately 20% and 11% of net sales in fiscal 1995 and 1996, respectively. In
fiscal 1997, Samsung and Promos Technologies each accounted for approximately
11% of net sales and Intel accounted for approximately 10% of net sales. The
Company expects that sales of its products to relatively few customers will
continue to account for a high percentage of net sales in the foreseeable
future. None of the Company's customers has entered into a long-term agreement
requiring it to purchase the Company's products. Moreover, sales to certain of
its 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 the Company's largest customers has varied
from year to year, the loss of a significant customer or any reduction in orders
from any significant customer, including reductions from recent buying patterns,
market, economic or competitive conditions in the semiconductor industry or in
the industries that manufacture products utilizing ICs, could materially
adversely affect the Company's business, financial condition and results of
operations. The Company's ability to increase or maintain current sales levels
in the future will depend in part upon its ability to obtain orders from new
customers as well as the financial condition and success of its customers and
the general economy, of which there can be no assurance. See
"Business--Customers."
 
EXPANSION OF OPERATIONS; MANAGEMENT OF GROWTH
 
    The Company has undergone a period of rapid growth. From 1993 though mid
1996, the Company had significantly increased the scale of its operations to
support increased sales levels and has expanded its operations to address
critical infrastructure requirements, including the hiring of additional
personnel, commencement of independent operations in the United Kingdom,
Ireland, France, Italy, Korea, Japan, Singapore, Taiwan and Israel and
significant investments in research and development to support product
development. The Company's expansion has resulted in significantly higher
operating expenses and due to the recent slowdown in new orders, it is
anticipated that the Company's future operating results will be materially
adversely affected though at least 1998.
 
    The past growth in the Company's sales and expansion in the scope of its
operations has placed a considerable strain on its management, financial and
other resources and has required the Company to initiate an extensive
reevaluation of its operating and financial systems, procedures and controls.
The Company implemented new management information, manufacturing and cost
accounting systems during the second quarter of fiscal 1997. There can be no
assurance, however, that any existing or new systems, procedures or controls
will be adequate to support the Company's operations or that its new systems
will be implemented in a cost-effective and timely manner.
 
RAPID TECHNOLOGICAL CHANGE; IMPORTANCE OF TIMELY PRODUCT INTRODUCTION
 
    The semiconductor manufacturing industry is subject to rapid technological
change and new product introductions and enhancements. The Company's ability to
be competitive will depend in part upon its ability to develop new and enhanced
systems and to introduce these systems at competitive prices and in a timely and
cost effective manner to enable customers to integrate the systems into their
operations either prior to or upon commencement of volume product manufacturing.
In addition, new product introductions or enhancements by the Company's
competitors could cause a decline in sales or loss of market acceptance of the
Company's existing products. Increased competitive pressure has led to
intensified price-based competition resulting in lower prices and margins, which
has and could continue to materially adversely affect the Company's business,
financial condition and results of operations. Any success of the Company in
developing, introducing and selling new and enhanced systems depends upon a
variety of factors including product selection, timely and efficient completion
of product design and development, timely and efficient implementation of
manufacturing and assembly processes, effective sales and marketing and product
performance in the field. In particular, the Company's future performance will
depend in part upon the successful commercialization of the VHP, LPCVD systems
and the Millennia 300mm systems. There can be no assurance that any such product
will achieve any significant revenues or contribute to any
 
                                       14
<PAGE>
profitability of the Company. 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 ICs under development by leading IC manufacturers
and the equipment required to produce such ICs. There can be no assurance that
the Company will be successful in selecting, developing, manufacturing and
marketing new products or in enhancing existing products.
 
    Because of the large number of components in, and the complexity of, the
Company's systems, significant delays can occur between a system's initial
introduction and the commencement of volume production. As is typical in the
semiconductor capital equipment market, the Company has been experiencing delays
from time to time in the introduction of, and certain technical and
manufacturing difficulties with, certain of its systems and enhancements and may
continue to experience delays and technical and manufacturing difficulties in
future introductions or volume production of new systems or enhancements. The
Company's inability to complete the development or meet the technical
specifications of any of its new systems or enhancements or to manufacture and
ship these systems or enhancements in volume and in a timely manner would
materially adversely affect the Company's business, financial condition and
results of operations as well as its customer relationships. In addition, the
Company may incur substantial unanticipated costs to ensure the functionality
and reliability of its future product introductions early in the product's life
cycle. If new products have reliability or quality problems, reduced orders or
higher manufacturing costs, delays in collecting accounts receivable and
additional service and warranty expenses may result, which events could
materially adversely affect the Company's business, financial condition and
results of operations. See "Business--Research and Development."
 
LENGTHY SALES CYCLE
 
    Sales of the Company's systems depend, in significant part, upon the
decision of a prospective customer to increase manufacturing capacity through
the expansion of existing fabrication facilities or the opening of new
facilities, which typically involves a significant capital commitment. The
Company often experiences delays in finalizing system sales following initial
system qualification while the customer evaluates and receives approvals for the
purchase of the Company's systems and completes a new or expanded facility. Due
to these and other factors, the Company's systems typically have a lengthy sales
cycle during which the Company may expend substantial funds and management
effort. The Company believes that the length of the sales cycle will continue to
increase as certain of its customers centralize purchasing decisions into one
decision making entity, which is expected to intensify the evaluation process
and require additional sales and marketing expenditures by the Company.
 
RISKS ASSOCIATED WITH THE JAPANESE MARKET
 
    The Company believes that increased penetration of the Asia Pacific market,
particularly Japan, will be essential to its future financial performance. The
Company has sold a relatively few number of systems to Japanese semiconductor
manufacturers. Sales in Japan accounted for approximately 2% of the Company's
total net sales in fiscal 1995 and 9% of total net sales in both fiscal 1996 and
fiscal 1997. To date, for its photoresist business, the Company has not fully
developed a customer service and support capability in Japan and remains at a
disadvantage in selling, servicing and supporting such products in Japan. The
Japanese semiconductor market (including fabrication plants operated outside of
Japan by Japanese semiconductor manufacturers) represents a substantial
percentage of the worldwide semiconductor manufacturing capacity, and has been
difficult for non-Japanese companies to penetrate. Furthermore, the licensing of
products and process technologies by Japanese semiconductor manufacturers to
non-Japanese semiconductor manufacturers could result in a recommendation to use
certain semiconductor capital equipment manufactured by Japanese companies. Late
in fiscal 1995, the Company acquired its LCD division in Japan, but there can be
no assurance that this company will enable the Company to penetrate the
photoresist removal market in Japan. In addressing this market, the Company is
at a distinct competitive disadvantage compared to leading Japanese suppliers,
many of which have long-standing collaborative relationships with Japanese
semiconductor manufacturers. In addition, since 1992, Japanese
 
                                       15
<PAGE>
semiconductor manufacturers have substantially reduced their levels of capital
spending on new fabrication facilities and equipment, thereby increasing
competitive pressures in the Japanese market. Although the Company is investing
significant resources and has established a direct presence in Japan which has
significantly increased operating expenses, there can be no assurance that the
Company will be able to achieve significant sales to the Japanese semiconductor
market. See "Business--Sales, Service and Customer Support."
 
INTERNATIONAL SALES
 
    International sales accounted for 40%, 54% and 55% of net sales in fiscal
years 1995, 1996 and 1997, respectively. The Company has established independent
operations in the United Kingdom, France, Italy, Korea, Japan, Singapore, Taiwan
and during the third quarter of fiscal 1997, established subsidiaries in Israel
and Ireland. The Company anticipates that international sales will continue to
account for a significant portion of net sales. International sales are subject
to certain 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, natural disasters,
outbreaks of hostilities, difficulties in accounts receivable collection,
extended payment terms, difficulties in managing distributors or representatives
and difficulties in staffing and managing foreign subsidiary and branch
operations. The Company is also subject to the risks associated with the
imposition of legislation and import and export regulations. The Company cannot
predict whether tariffs, quotas, duties, taxes or other charges or restrictions
will be implemented by the United States, Japan or any other country upon the
importation or exportation of the Company's products in the future. There can be
no assurance that these factors will not have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business--Sales, Service and Customer Support."
 
INTELLECTUAL PROPERTY RIGHTS
 
    Although the Company attempts to protect its intellectual property rights
through patents, copyrights, trade secrets and other measures, it believes that
its financial performance will depend more upon the innovation, technological
expertise and marketing abilities of its employees than upon such protection.
There can be no assurance that any of the Company's pending patent applications
will be issued or that foreign intellectual property laws will protect the
Company's intellectual property rights. There can be no assurance that any
patent issued to the Company will not be challenged, invalidated or circumvented
or that the rights granted thereunder will provide competitive advantages to the
Company. Furthermore, there can be no assurance that others will not
independently develop similar products, duplicate the Company's products or, if
patents are issued to the Company, design around the patents issued to the
Company.
 
    As is typical in the semiconductor industry, the Company occasionally
receives notices from third parties alleging infringement claims. Although there
are currently no pending material claims or lawsuits against the Company
regarding any possible infringement claims, there can be no assurance that
infringement claims by third parties or claims for indemnification resulting
from infringement claims will not be asserted in the future or that such
assertions, if proven to have merit, will not materially adversely affect the
Company's business, financial condition and results of operations. If any such
claims are asserted against the Company, the Company may seek to obtain a
license under the third party's intellectual property rights if available on
reasonable terms or at all. The Company could decide, in the alternative, to
resort to litigation to challenge such claims or enforce its proprietary rights.
Such challenges could be extremely expensive and time consuming and could
materially adversely affect the Company's business, financial condition and
results of operations. See "Business--Intellectual Property Rights."
 
                                       16
<PAGE>
SOLE OR LIMITED SOURCES OF SUPPLY; RELIANCE ON SUBCONTRACTORS; COMPLEXITY IN
  MANUFACTURING PROCESS
 
    Certain components, subassemblies and services necessary for the manufacture
of the Company's systems are obtained from a sole supplier or a limited group of
suppliers. Specifically, the Company relies on three companies for supply of the
robotics used in its products, two other companies for microwave power supplies,
and one company for microwave applicators used in all of its ashing systems. The
Company's LCD division in Japan is heavily dependent on one key supplier for
quartz and ceramic fabrication and is seeking alternative sources. The Company
is exploring alternative sources or technology. In addition, the Company has
been establishing longer term contracts with these suppliers to mitigate the
potential risks of inadequate supply of required components and control over
pricing and timely delivery of components and subassemblies. However, the
Company is relying increasingly on outside vendors to manufacture certain
components and subassemblies. The Company's reliance on sole or a limited group
of suppliers and the Company's increasing reliance on subcontractors involve
several risks, including a potential inability to obtain an adequate supply of
required components and reduced control over pricing and timely delivery of
components and subassemblies. Because the manufacture of certain of these
components and subassemblies is an extremely complex process and requires long
lead times, there can be no assurance that delays or shortages caused by
suppliers will not occur in the future. Certain of the Company's suppliers have
relatively limited financial and other resources. Any inability to obtain
adequate deliveries or any other circumstance that would require the Company to
seek alternative suppliers or to manufacture such components internally could
delay the Company's ability to ship its products, which could damage
relationships with current and prospective customers and could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business--Manufacturing."
 
FUTURE ACQUISITIONS
 
    In August 1995, the Company acquired its liquid crystal display division in
Japan (formerly called Tekisco). In the future, the Company may pursue
acquisitions of additional product lines, technologies or businesses. Future
acquisitions by the Company may result in potentially dilutive issuances of
equity securities, incurrence of debt and amortization expenses related to
goodwill and other intangible assets, which could materially adversely affect
the Company's financial condition and results of operations. In addition,
acquisitions involve numerous risks, including difficulties in the assimilation
of the operations, technologies and products of the acquired companies, the
diversion of management's attention from other business concerns, risks of
entering markets in which the Company has no or limited direct prior experience,
and the potential loss of key employees of the acquired company. From time to
time, the Company has engaged in preliminary discussions with third parties
concerning potential acquisitions of product lines, technologies and businesses;
however, there are currently no agreements with respect to any acquisition. In
the event that such an acquisition does occur, there can be no assurance as to
the effect thereof on the Company's business, financial condition or operating
results.
 
DEPENDENCE ON KEY PERSONNEL
 
    The Company's financial performance will depend in significant part upon the
continued contributions of its officers and key personnel, many of whom would be
difficult to replace. No employee has an employment or noncompetition agreement
with the Company. The loss of any key person could have a material adverse
effect on the business, financial condition and results of operations of the
Company. During the last twelve months, a number of senior management personnel
have left the Company to pursue other opportunities. Although the Company has
replaced most of these senior management personnel, there can be no assurance
that these individuals will successfully integrate into the Company's senior
management team. In addition, the Company's future operating results depend in
part upon its ability to attract and retain other qualified management,
engineering, financial and accounting, technical, marketing and sales and
support personnel for its operations. Competition for such personnel is intense,
 
                                       17
<PAGE>
and there can be no assurance that the Company will be successful in attracting
or retaining such personnel. The failure to attract or retain such persons could
materially adversely affect the Company's business, financial condition and
results of operations. See "Business--Employees" and "Executive Officers of the
Registrant."
 
ENVIRONMENTAL REGULATIONS
 
    The Company is 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 the
Company's products. The Company believes that it is currently in compliance in
all material respects with such regulations and that it has obtained all
necessary environmental permits to conduct its business. Nevertheless, the
failure to comply with current or future regulations could result in substantial
fines being imposed on the Company, suspension of production, alteration of its
manufacturing process or cessation of operations. Such regulations could require
the Company to acquire expensive remediation equipment or to incur substantial
expenses to comply with environmental regulations. Any failure by the Company to
control the use, disposal or storage of, or adequately restrict the discharge
of, hazardous or toxic substances could subject the Company to significant
liabilities. See "Business-- Manufacturing."
 
CONCENTRATION OF OWNERSHIP; EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS
 
    As of September 30, 1997, the Company's officers, directors and members of
their families that may be deemed affiliates of such persons owned approximately
21.8% of the Company's outstanding shares of Common Stock. Accordingly, these
stockholders will be able to significantly influence the election of the
Company's directors and the outcome of corporate actions requiring stockholder
approval, such as mergers and acquisitions, regardless of how other stockholders
of the Company may vote. Such a high level of ownership by such persons or
entities may have a significant effect in delaying, deferring or preventing a
change in control of the Company and may adversely affect the voting and other
rights of other holders of Common Stock. Certain provisions of the Company's
Certificate of Incorporation, 1994 Stock Option/ Stock Issuance Plan, Bylaws and
Delaware law may also discourage certain transactions involving a change in
control of the Company. In addition to the foregoing, the ability of the
Company's Board of Directors to issue preferred stock without further
stockholder approval could have the effect of delaying, deferring or preventing
a change in control of the Company.
 
VOLATILITY OF STOCK PRICE
 
    The Company believes that factors such as announcements of developments
related to the Company's business, fluctuations in the Company's operating
results, sales of the Company's Common Stock into the market place, failure to
meet or changes in analysts' expectations, natural disasters, outbreaks of
hostilities, general conditions in the semiconductor industry or the worldwide
economy, announcements of technological innovations or new products or
enhancements by the Company or its competitors, developments in patents or other
intellectual property rights and developments in the Company's relationships
with its customers and suppliers could cause the price of the Company's common
stock to fluctuate, perhaps substantially. In addition, in recent years the
stock market in general, and the market for shares of small capitalization
stocks in particular, have experienced extreme price fluctuations, which have
often been unrelated to the operating performance of affected companies. There
can be no assurance that the market price of the Company's common stock will not
experience significant fluctuations in the future, including fluctuations that
are unrelated to the Company's performance.
 
                                       18
<PAGE>
ITEM 2.  PROPERTIES
 
    The Company maintains its headquarters in San Jose, California in three
leased facilities, aggregating approximately 148,500 square feet, which contain
general administration and finance, marketing and sales, customer service and
support, manufacturing and research and development. The three buildings have
separate leases with two of the leases expiring on December 31, 1999 and the
third lease expiring on August 31, 1998.
 
    The Company also leases seven sales and support offices in the United States
in Austin, Texas; Dallas, Texas; Rockaway, New Jersey; Aloha, Oregon; Mesa,
Arizona; Hopewell, New York; and Fishkill, New York under leases with terms of
one to three years.
 
    Additionally, the Company leases sales and support offices in Korea, Japan,
Scotland, Singapore and Taiwan and Israel. Lease terms vary from two to ten
years.
 
    The Company also leases two facilities totaling approximately 34,000 square
feet in Japan which is dedicated to the Company's LCD division. One of the
facilities totaling approximately 20,000 square feet is used for administration,
marketing and sales, customer service and support, manufacturing and research
and development. The lease on this facility expires September 30, 2000. The
other facility totaling approximately 14,000 square feet was acquired in
December 1995 to expand production capability. The lease on this facility
expires December 31, 1998.
 
    The Company believes that its existing facilities will adequately meet its
anticipated requirements for the next twelve months and that suitable additional
or substitute space will be available as needed.
 
ITEM 3.  LEGAL PROCEEDINGS
 
    The Company is not a party to any material litigation.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    No matters were submitted to a vote of security holders during the Company's
fiscal fourth quarter ended September 30, 1997.
 
                      EXECUTIVE OFFICERS OF THE REGISTRANT
 
    The executive officers of the Company are as follows:
 
<TABLE>
<CAPTION>
NAME                         AGE                                 POSITION
-----------------------      ---      ---------------------------------------------------------------
<S>                      <C>          <C>
Monte M. Toole.........          66   Chairman of the Board
Dave Toole.............          42   Chief Executive Officer, President and Director
Avner Shelem...........          44   Vice President, General Manager, Engineering and Operations
Terry Gibson...........          44   Vice President, Finance and Chief Financial Officer
Bill Alexander.........          41   Vice President, Worldwide Sales and Field Operations
</TABLE>
 
    MONTE M. TOOLE founded the Company in March 1971 and has served as Chairman
of the Board since the Company's inception and as Chief Executive Officer from
inception to December 31, 1994. Between March 1971 and May 1993, Mr. Toole also
served as President of the Company. Prior to founding the Company, Mr. Toole was
a representative of semiconductor equipment manufacturers at Monte Toole and
Associates, Inc., a manager at Fairchild Semiconductor and a systems analyst at
IBM. From October 1991 to June 1993, Mr. Toole served on the Board of Directors
of Integrated Process Equipment Corporation, a semiconductor equipment company.
 
    DAVE TOOLE became the Company's President in May 1993 and the Companys'
Chief Executive Officer on December 31, 1994. In addition, Mr. Toole served as
the Company's Chief Operating Officer from
 
                                       19
<PAGE>
May 1993 to December 1994. Prior to that time, Mr. Toole served as the Company's
Vice President, Sales and Marketing from October 1986 to April 1989 and has
served as a Director since April 1979. Mr. Toole also served as the Company's
Vice President and General Manager from April 1989 to May 1991 and as Vice
President, Commercial Operations from May 1991 to May 1993. Mr. Toole has held
various other positions in purchasing, manufacturing, marketing and sales since
joining the Company in 1979. Prior to 1979, Mr. Toole was employed by Advanced
Micro Devices, a semiconductor manufacturer.
 
    AVNER SHELEM joined the Company as Vice President, Research, Development and
Engineering in March 1994 and was promoted to Vice President, General Manager,
Engineering and Operations in September 1996. Between December 1992 and March
1994, Mr. Shelem was a partner at Intertech Management Group, a management
consulting firm. From September 1990 to December 1992, Mr. Shelem served as
Chief Operating Officer of AG Associates, a manufacturer of rapid thermal
processing equipment. From January 1983 to September 1990, Mr. Shelem held
various positions at Intel Corporation, including Material and General Site
Services Manager, Lithography Manager, Diffusion Manager and Industrial
Engineering Manager.
 
    TERRY GIBSON became the Company's Vice President, Finance and Chief
Financial Officer in May 1996. Before joining GaSonics, Mr. Gibson had been
employed by Lam Research Corporation since 1991 where he served as Vice
President, Corporate Controller. From 1990 to 1991, Mr. Gibson was the Corporate
Controller at Silicon Valley Group and from 1989 to 1990 served as Corporate
Controller of Flextronics, Inc. From 1983 to 1989, Mr. Gibson held various
financial management positions at National Semiconductor and prior to that began
his career with the independent public accounting firm of Deloitte, Haskins and
Sells.
 
    BILL ALEXANDER joined the Company 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 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.
 
    The executive officers serve at the discretion of the Board of Directors,
until their successors are appointed. No family relationships exist among the
officers and directors, except Monte Toole and Dave Toole are father and son.
 
                                       20
<PAGE>
                                    PART II
 
ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
  MATTERS
 
    The information required by this Item is incorporated by reference from page
22 of the Company's 1997 Annual Report to Stockholders.
 
ITEM 6.  SELECTED FINANCIAL DATA
 
    The information required by this Item is incorporated by reference from page
22 of the Company's 1997 Annual Report to Stockholders.
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS.
 
    The information required by this Item is incorporated by reference from
pages 23-27 of the Company's 1997 Annual Report to Stockholders.
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    The Report of Independent Public Accountants and consolidated financial
statements required by this Item are incorporated by reference from pages 28-43
of the Company's 1997 Annual Report to Stockholders.
 
                                       21
<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 March 6, 1998 ( 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".
 
                                       22
<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 set forth in the Company's 1997 Annual
            Report to the Stockholders and are incorporated by reference hereto
            in Item 8:
 
<TABLE>
<CAPTION>
                                                                        ANNUAL REPORT
                                                                         PAGE NUMBER
                                                                       ---------------
<S>                                                                    <C>
Consolidated Balance Sheets--September 30, 1997 and 1996.............            28
Consolidated Statements of Operations--Years Ended September 30,
  1997, 1996 and 1995................................................            29
Consolidated Statements of Stockholders' Equity--Years Ended
  September 30, 1997, 1996 and 1995..................................            30
Consolidated Statements of Cash Flows--Years Ended September 30,
  1997, 1996 and 1995................................................            31
Notes to Consolidated Financial Statements...........................         32-42
Report of Independent Public Accountants.............................            43
</TABLE>
 
        (2) Financial Statement Schedules
 
            The following consolidated financial statement schedule is included
            herein:
 
<TABLE>
<CAPTION>
                                                                         PAGE NUMBER
                                                                       ---------------
<S>                                                                    <C>
Report of Independent Public Accountants on Schedule.................            27
Schedule II--Valuation and Qualifying Accounts.......................            28
</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
</TABLE>
 
                                       23
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT                                                 DESCRIPTION
-----------  -----------------------------------------------------------------------------------------------------
<C>          <S>
       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(11) 1994 Stock Option/Stock Issuance Plan and forms of agreements thereunder, as amended and restated
               effective December 17, 1996
 
      10.3(11) 1994 Employee Stock Purchase Plan, as amended and restated effective December 17, 1996
 
      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) Secured Promissory Note dated February 28, 1991 in the principal amount of $4,500,000 issued by the
               Registrant and Branson International Plasma Corporation in favor of Emerson Electric Company
 
      10.6(1) Promissory Note dated November 10, 1993 in the principal amount of $359,375 issued by the Registrant
               in favor of Robert Champagne
 
      10.7(1) Continuing Guaranty dated November 10, 1993 in the principal amount of $359,375 issued by the
               Registrant in favor of Robert Champagne
 
      10.8(1) Promissory Note dated November 10, 1993 in the principal amount of $339,999.60 issued by Dave Toole
               in favor of the Registrant
 
      10.9(1) Demand Note dated November 30, 1993 in the principal amount of $62,500 issued by Dave Toole in favor
               of the Registrant
 
      10.10(1) Sale of Shares Pursuant to Redemption Agreement dated November 10, 1993 between Robert Champagne and
               the Registrant
 
      10.11(1) Non-Compete Agreement dated as of November 10, 1993 and Addendum to Non-Compete Agreement dated as of
               November 18, 1993 between Robert Champagne and the Registrant
 
      10.12(1) Credit Agreement dated August 6, 1993 between Union Bank, International Plasma Corporation and the
               Registrant
 
      10.13(2) Business Loan Agreement dated April 28, 1994 between Registrant and Union Bank and related Promissory
               Note
 
      10.14(3) Lease Agreement dated November 14, 1994 between Registrant and Realtech Properties I, L.P.
 
      10.15(4) Loan Agreement dated April 19, 1995 between Registrant and Union Bank, a California banking
               corporation
 
      10.16(4) Lease Agreement dated June 5, 1995 between Registrant and Orchard Investment Company
 
      10.17(6) Underwriting Agreement dated March 21, 1994 by and among the Registrant, the underwriters named
               therein and the selling stockholders named therein
 
      10.18(7) Underwriting Agreement dated March 9, 1995 by and among the Registrant, the underwriters named
               therein and the selling stockholders named therein
 
      10.19(8) Continuing Guarantee Agreement dated July 31, 1995, executed by the Registrant in favor of the Bank
               of Tokyo, Ltd.
 
      10.20(9) Loan Agreement dated March 4, 1996 between Registrant and Union Bank
 
      10.21(11) Loan Agreement dated March 4, 1997 between Registrant and Union Bank
</TABLE>
 
                                       24
<PAGE>
<TABLE>
<CAPTION>
  EXHIBIT                                                 DESCRIPTION
-----------  -----------------------------------------------------------------------------------------------------
<C>          <S>
      10.22(12) Loan Agreement dated May 1, 1997 between Registrant and Bank of Tokyo-Mitsubishi
 
      13     Annual Report to Stockholders for the year ended September 30, 1997
               Such Annual Report, except for those portions that are expressly incorporated herein by reference,
               is furnished for the information of the Securities and Exchange Commission and is not to be deemed
               as filed as a part of this Form 10-K
 
      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.
 
  (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
 
      (b) Reports on Form 8-K.
 
          No reports on Form 8-K were filed during the fourth quarter ended
          September 30, 1997.
 
      (c) Exhibits. See list of exhibits under (a) (3) above.
 
      (d) Financial Statement Schedules. See list of schedules under (a) (2)
above.
 
                                       25
<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.
 
Date:  December 22, 1997        GASONICS INTERNATIONAL CORPORATION
 
                                By:                /s/ DAVE TOOLE
                                     -----------------------------------------
                                                     Dave Toole
                                        PRESIDENT & CHIEF EXECUTIVE OFFICER
 
                               POWER OF ATTORNEY
 
    KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Monte M. Toole and David J. Toole, 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:
 
          SIGNATURE                       TITLE                    DATE
------------------------------  --------------------------  -------------------
 
      /s/ MONTE M. TOOLE
------------------------------  Chairman of the Board of     December 22, 1997
        Monte M. Toole            Directors
 
                                Chief Executive Officer,
        /s/ DAVE TOOLE            President and Director
------------------------------    (Principal Executive       December 22, 1997
          Dave Toole              Officer)
 
                                Vice President, Finance
     /s/ TERRY R. GIBSON          and Chief Financial
------------------------------    Officer (Principal         December 22, 1997
       Terry R. Gibson            Financial and Accounting
                                  Officer)
 
   /s/ KENNETH L. SCHROEDER
------------------------------  Director                     December 22, 1997
     Kenneth L. Schroeder
 
  /s/ F. JOSEPH VAN POPPELEN
------------------------------  Director                     December 22, 1997
    F. Joseph Van Poppelen
 
                                       26
<PAGE>
              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
 
To GaSonics International Corporation:
 
    We have audited in accordance with generally accepted auditing standards,
the financial statements included in GaSonics International Corporation's Annual
Report to Stockholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated October 27, 1997. Our audit was made for the
purpose of forming an opinion on those 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.
 
/s/ ARTHUR ANDERSEN LLP
 
ARTHUR ANDERSEN LLP
 
San Jose, California
October 27, 1997
 
                                       27
<PAGE>
                                                                     SCHEDULE II
 
                       GASONICS INTERNATIONAL CORPORATION
 
                       VALUATION AND QUALIFYING ACCOUNTS
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                      BALANCE AT    CHARGED TO   CHARGED TO                  BALANCE
                                                     BEGINNING OF    COSTS AND      OTHER                    AT END
DESCRIPTIONS                                            PERIOD       EXPENSES     ACCOUNTS    DEDUCTIONS    OF PERIOD
---------------------------------------------------  -------------  -----------  -----------  -----------  -----------
<S>                                                  <C>            <C>          <C>          <C>          <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Years Ended September 30,:
  1995.............................................    $     288     $     179    $      --    $      98    $     369
  1996.............................................    $     369     $     240    $       2    $      --    $     611
  1997.............................................    $     611     $   4,637    $   2,645    $   7,173    $     720
 
INVENTORY RESERVES
Years Ended September 30,:
  1995.............................................    $   1,201     $   1,212    $      --    $     851    $   1,562
  1996.............................................    $   1,562     $   2,266    $      --    $   1,593    $   2,235
  1997.............................................    $   2,235     $   1,725    $      --    $   1,138    $   2,822
</TABLE>
 
                                       28